EXHIBIT 10.4
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THE RIGHTS
EVIDENCED HEREBY (AND ANY OTHER SECURITIES THAT MAY BE RECEIVED UPON CONVERSION
THEREOF) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, OR PURSUANT TO A VALID EXEMPTION FROM REGISTRATION THEREFOR.
WARRANT TO PURCHASE
COMMON STOCK
OF
VALENCE TECHNOLOGY, INC.
VOID AFTER OCTOBER 5, 2005
This Warrant is issued to ▇▇▇▇ & ▇▇▇▇ Enterprises, LLC or its
registered assigns ("Holder") by Valence Technology, Inc., a Delaware
corporation (the "Company"), on January 4, 2002 (the "Warrant Issue Date").
This Warrant is issued pursuant to the terms of that Loan Agreement, between the
Company and ▇▇▇▇ & ▇▇▇▇ Enterprises, LLC, dated as of October 5, 2001 (the "Loan
Agreement").
1. PURCHASE SHARES. Subject to the terms and conditions hereinafter set forth
and set forth in the Loan Agreement, the Holder is entitled, upon surrender of
this Warrant at the principal office of the Company (or at such other place as
the Company shall notify the Holder in writing), to purchase from the Company up
to 1,402,743 fully paid and nonassessable shares of Common Stock of the Company,
as constituted on the Warrant Issue Date (the "Common Stock"). The number of
shares of Common Stock issuable pursuant to this Section 1 (the "Shares") shall
be subject to adjustment pursuant to Section 8 hereof. The term "Shares" also
shall be deemed to refer to any securities of the Company or any other issuer
for which Common Stock may be exchanged or surrendered or which may be declared
on or distributed with respect to the Common Stock at any time prior to the
Expiration Date.
2. EXERCISE PRICE. The purchase price for the Shares shall be $3.208 per share
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. Los
Angeles time on October 5, 2005 (the "Expiration Date"). The Company shall take
all such actions as may be reasonably necessary to assure that all such Shares
and all shares of Common Stock 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. While this Warrant remains outstanding and exercisable in
accordance with Section 3 above, the Holder may exercise, in whole or in part,
the purchase rights evidenced hereby. Such exercise shall be effected:
(a) by:
(i) the surrender of the Warrant, together with a duly executed copy of
the form of Notice of Election attached hereto, to the Secretary of the Company
at its principal offices; and
(ii) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased by check or wire
transfer.
(b) In lieu of exercising this Warrant pursuant to SECTION 4(A), 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 the Company's Common Stock
computed using the following formula:
X = Y (A-B)
A
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 (at the date of such calculation).
A = the fair market value 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).
For purposes of his subsection, the fair market value of one share of
the Company's Common Stock shall mean:
(i) (A) the closing price of a Share on the national securities exchange
on which the Shares are traded, or (B) if the Shares are not traded on a
national securities exchange but are quoted on any division of the Nasdaq Stock
Market (if not a national securities exchange), or a regional stock exchange or
an automated quotation system or over-the-counter market, the closing price on
the Nasdaq SmallCap Market or regional stock exchange, automated quotation
system or over-the-counter market, whichever is applicable, as published in the
Western Edition of THE WALL STREET JOURNAL for the five trading days prior to
the date of determination of the fair market value; or
(ii) If the shares are not publicly traded, the fair market valued shall
be represented, as mutually determined by the Company and the Holder(s)
representing at least a majority of the voting power of all Shares then subject
to Warrants outstanding and issued pursuant to the Loan Agreement, or, in the
alternative, such Holder(s) and the Company may each appoint one independent
investment-banker or qualified appraiser, and such persons shall in
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turn select a third investment-banker or qualified appraiser which group of
three persons shall then determine the fair market value thereof.
(c) The holder of this Warrant may, at its election, in full or partial
payment of the exercise price hereunder, instead of paying cash, surrender to
the Company a note or notes now or hereafter issued by the Company. The Company
shall apply to the exercise price payable the principal amount of such note or
notes to the extent requested by the Holder of such note or notes and shall
return a new note or notes for the balance, if any.
5. CERTIFICATES FOR SHARES. Upon the exercise of the purchase rights evidenced
by this Warrant, the Company shall issue one or more certificates for the number
of Shares so purchased, and a replacement Warrant for the unexercised balance of
Shares for which the Warrant is exercisable, as soon as practicable thereafter
(with appropriate restrictive legends, if applicable), and in any event within
30 days of the delivery of the subscription notice. The Company shall not be
required to issue any fractional shares upon the exercise of the Holder's
purchase rights under this Warrant. In lieu of any fractional shares, the
Company shall pay cash equal to such fraction multiplied by the per share market
price of the Common Stock as of the date of exercise. In the event of a partial
exercise of this Warrant, a new Warrant shall be issued to the Holder
representing the balance of the Shares purchasable under this Warrant, such new
Warrant to be issued within ten days after delivery of the subscription notice.
6. 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.
7. 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) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. 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 7(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.
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(b) RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. 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 of shares or stock dividend provided for above), the
Holder of this Warrant shall, on its exercise, be entitled to purchase, in lieu
of the Common Stock which the 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 the Holder on exercise of this Warrant immediately before
the change.
(c) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALE OF ASSETS. If at
any time there shall be a capital reorganization of the Company's Common Stock
(other than a combination, reclassification, exchange, or subdivision of shares
provided for elsewhere in this Warrant) or merger or consolidation of the
Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such capital reorganization, merger, consolidation or sale,
lawful provision shall be made so that the Holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified in this Warrant and upon payment of the Warrant Price then in
effect, the number of shares of stock or other securities or property of the
Company, or of the successor corporation resulting from such merger or
consolidation, to which a holder of the Common Stock deliverable upon exercise
of this Warrant would have been entitled in such capital reorganization, merger,
consolidation or sale if this Warrant had been exercised immediately before that
capital reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment (as determined pursuant to Section 3(b)(ii), above),
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder of this Warrant after the capital
reorganization, merger, consolidation or sale to the end that the provisions of
this Warrant (including adjustment of the Warrant Price then in effect and
number of shares purchasable upon exercise of this Warrant) shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant. The
provisions of this SECTION 7(C) shall similarly apply to successive capital
reorganizations, mergers, consolidations or sales.
(d) NOTICE OF ADJUSTMENTS. The Company shall give notice of each
adjustment or readjustment of the number of shares of Common Stock or other
securities issuable upon exercise of this Warrant and the Warrant Price to the
registered Holder of this Warrant at that Holder's address as shown on the
Company's books within 20 days after the occurrence of the event resulting in
such adjustment.
(e) NO CHANGE NECESSARY. 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.
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8. 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, excluding a cash dividend, 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 corporation; 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 the 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 any such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up. Such notice
in accordance with the foregoing clause shall also specify, in the case of any
such dividend or distribution, the date on which the holders of Common Stock
shall be entitled thereto, and such notice in accordance with the foregoing
clause shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, as the case may be. Each such written
notice shall be given by first-class mail, postage prepaid, addressed to the
Holder at the address of the Holder as shown on the books of the Company.
9. EXERCISE, TRANSFER AND EXCHANGE RESTRICTIONS. This Warrant may not be
transferred to a person or entity: (i) who proposes to acquire a Warrant for
less than 1000 shares of Common Stock (as adjusted for stock splits,
consolidations and the like), or (ii) who is a competitor of the Company or is
in any manner affiliated with a competitor of the Company (as determined in good
faith by the Company's Board of Directors). 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. Subject to the restrictions on transfer in this Section 9, 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 officer referred to
above of any of this Warrant or Common Stock by the registered Holder hereof, in
person or by duly authorized attorney, upon surrender or the Warrant properly
endorsed.
10. RIGHTS UNDER THE REGISTRATION RIGHTS AGREEMENT. The Holder of the Warrant is
entitled to certain rights as specified in the Registration Rights Agreement
dated as of February 13, 2001 by and between the Company and ▇▇▇▇▇ ▇. ▇▇▇▇,
Trustee, the 1981 Kara ▇▇▇ ▇▇▇▇ Trust, including, without limitation, the right
of the holder hereof to include shares of Common Stock in registration
statements filed under the Securities Act of 1933, as amended (the "Securities
Act"), upon the terms and conditions specified in the Registration Rights
Agreement, which is amended hereby without the necessity of further action or
writing by the parties to reflect the terms of this Section 10.
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11. REPLACEMENT. On receipt of evidence reasonable satisfactory to the Company
of the loss, theft, destruction or mutilation of the Warrant and, in the case of
loss, theft or destruction, on delivery of any indemnity agreement or bond
reasonably satisfactory and for the amount to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company, at its
expense will execute and deliver, in lieu of the Warrant, a new Warrant of like
tenor.
12. LEGENDS. It is understood that the certificates evidencing Shares may bear
the following legend:
"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
satisfactory to the Company that such registration is not required or
unless sold pursuant to Rule 144 of such Act."
13. NO STOCKHOLDER RIGHTS. Prior to exercise of this Warrant, the 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.
14. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant and the
Loan Agreement shall inure to the benefit of, and be binding upon, the Company
and the Holders hereof and their respective successors and assigns.
15. 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 the Holder. Any waiver or amendment effected in
accordance with this Section shall be binding upon each holder of any Shares
purchased under this Warrant at the time outstanding (including securities into
which such Shares have been converted), each future holder of all such Shares,
and the Company.
16. NOTICES. All notices required under this Warrant shall be deemed to have
been given or made for all purposes (i) upon personal delivery, (ii) upon
confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by recognized overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
17. 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.
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18. CAPTIONS. The section and subsection headings of this Warrant are inserted
for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
19. GOVERNING LAW. This Warrant shall be governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Company caused this Warrant to be executed by an
officer thereunto duly authorized.
VALENCE TECHNOLOGY, INC.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President of Finance
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