JUNE 22, 2000
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BINDING LETTER OF INTENT FOR THE PURCHASE/SALE OF
UP TO $12,500,000 OF COMMON SHARES
OF
VALENCE TECHNOLOGY INC.
("VLNC" NASDAQ NATIONAL MARKET)
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Valence Technology Inc. (the "COMPANY") hereby agrees to sell and Carl E. Berg
(the "PURCHASER") agrees to purchase, in each case subject to the terms and
conditions set forth herein, up to $12,500,000 (the "PROPOSED INVESTMENT") of
the Company's common stock, par value $0.001 (the "SHARES"). This Agreement is
intended to be a binding agreement. The agreements between the parties will be
evidenced by a Common Stock Purchase Agreement (as described below), Warrant
Agreement and other related agreements described herein (collectively, the
"DEFINITIVE AGREEMENTS"). Upon the execution of this Agreement, the parties
shall be obligated to enter into Definitive Agreements memorializing the terms
described herein.
I. STRUCTURE OF TRANSACTION:
(a) MULTIPLE PURCHASES. The Company will be permitted to sell and
Purchaser agrees to purchase the Shares in one or more
transactions, each one of which will involve no less than
$500,000 in proceeds. The Company will initiate each sale by
providing an irrevocable written notice to Purchaser (the "SALE
NOTICE") specifying the number of shares it wishes to sell.
Purchaser's commitment to purchase the Shares hereunder will
expire, to the extent not utilized by the Company hereunder, on
March 31, 2001.
(b) PRICING PERIOD AND SETTLEMENT DATE. The pricing of the Shares
(the "PURCHASE PRICE") will be determined based on the average of
the Daily Prices (as defined below) over the five (5) trading
days on the Nasdaq National Market (each a "TRADING DAY")
starting on the first Trading Day following the date on which the
Sale Notice is delivered to Purchaser (a "PRICING PERIOD"). The
purchase of the Shares shall be settled on the third business day
following the expiration of the applicable Pricing Period (a
"SETTLEMENT DATE").
(c) DAILY PRICE. The "DAILY PRICE" for purposes of this Agreement
shall mean the Volume Weighed Average Price (based on a trading
day from 9:30 a.m. to 4:00 p.m.) on the Nasdaq National Market as
reported by Bloomberg Financial LP using the AQR function for the
Stock for such Trading Day.
(d) PURCHASE PRICE. The Purchase Price shall be 94% of the average
Daily Prices during the Pricing Period.
<PAGE>
(e) WARRANTS. The Company shall issue to the Purchaser warrants to
purchase up to 20% of the Shares purchased by Purchaser hereunder
(the "Warrants"). The warrants issued will have a three (3) year
life from the date of issuance and shall have an exercise price
of 125% of the average Daily Prices during the applicable Pricing
Period.
(f) RESTRICTED SECURITIES. The Shares, the Warrants and all Shares
issuable upon the exercise of the Warrants have been and will be
issued without registration under the Securities Act of 1933, as
amended (the "Securities Act") and may not be sold, offered for
sale, transferred, pledged or hypothecated without registration
under the Act unless either (i) the Company has received an
opinion of counsel, in form and substance satisfactory to the
Company, to the effect that registration is not required in
connection with such disposition or (ii) the sale of such
securities is made pursuant to SEC Rule 144.
II. SETTLEMENT
(a) On each Settlement Date, the Company and the Purchaser will each
execute and deliver a Common Stock Purchase Agreement in the form
of Exhibit A attached hereto. Upon delivery of the executed
agreement by the Purchaser, the Company will cause the physical
delivery of a certificate of whole shares of stock, as calculated
above, to the Purchaser against payment therefore to the
Company's designated account by wire transfer of immediately
available funds (provided that the Shares are received by the
Purchaser no later than 10:00 a.m. Eastern Time) or next day
available funds if the Shares are received thereafter.
III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
(a) ORGANIZATION, GOOD STANDING AND POWER. The Company is a
corporation duly incorporated, validly existing and in good
standing under the laws of Delaware and has the requisite
corporate power to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted.
The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement and
to issue and sell the Shares in accordance with the terms hereof
and thereof. The execution, delivery and performance of this
Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action. The undersigned
officer of the Company has full authority to execute this
Agreement and to bind the Company thereby. This Agreement has
been duly executed and delivered by the Company. This Agreement
constitutes, or shall constitute when executed and delivered, a
valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
(b) ISSUANCE OF SHARES. The Shares to be issued under this Agreement
and the Purchase Agreement have been duly authorized by all
necessary corporate action and, when paid for or issued in
accordance with the terms hereof, the Shares shall be validly
issued and outstanding, fully paid and non-assessable, and the
Purchaser shall be entitled to all rights accorded to a holder of
Common Stock.
Page 2
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IV. REPRESENTATION OF THE PURCHASER.
(a) AUTHORIZATION AND POWER. Purchaser is an "accredited investor"
within the meaning of Regulation D promulgated under the
Securities Act. The Shares purchased by Purchaser hereunder will
be acquired for Purchaser's own account, and not with a view to
the public resale or distribution thereof, and Purchaser has no
present intention of selling, granting any participation in, or
otherwise distributing the same. This Agreement constitutes, or
shall constitute when executed and delivered, a valid and binding
obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms.
Signature: /S/ JAY L. KING Telephone: (702) 558-1015
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Name: Jay L. King Fax: (702) 558-1310
Wire Instructions:
Address: Valence Technology Inc.
301 Conestoga Way
Henderson, NV 89015 Contact Name:
USA
THE TERMS SET FORTH HEREIN ARE ACCEPTED BY CARL E. BERG.
Signature: /S/ CARL E. BERG Date:
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Name: Mr. Carl E. Berg
Fax:
Telephone:
