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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (14238)	9/3/1999 1:42:00 PM
From: Larry Brubaker	Read Replies (3) \| Respond to of 27311

Zeev, Section XI G of the same document follows. Do you think this language might give Castle Creek a claim to lower the conversion ceiling? "G. SPECIAL ADJUSTMENT. If the Company takes any actions (including underor by virtue of this Article XI) which would have a dilutive effect on the Holder or which would materially and adversely affect the Holder with respect to its investment in the Preferred Stock, and if the provisions of this Article XI are not strictly applicable to such actions or, if applicable to such actions, would not operate to equitably protect the Holder against such actions, then the Company shall promptly upon notice from a Holder appoint its independent certified public accountants to determine as promptly as practicable an appropriate adjustment to the terms hereof or another appropriate action to so equitably protect such Holder and prevent any such dilution and any such material adverse effect, as the case may be. Following such determination, the Company shall forthwith make the adjustments or take the other actions described therein."

To: Zeev Hed who wrote (14238)	9/3/1999 2:26:00 PM
From: John Curtis	Respond to of 27311

Zeev, Larry, et.al.: The SEC language Larry points to references any additional CONVERTIBLE tranches that might be entered into by VLNC with another purchaser, that is: "If, at any time after the Closing Date, the Company shall issue any securities which are convertible into or exchangeable for Common Stock" In the past two "on time financing" tranches VLNC has negotiated them on the basis of cashiesh for common. Period. At least, as far as I can tell. ;-) As such the above clause doesn't entitle C.C. to one iota more of VLNC common. Also, the "exchangeable" verbage can only apply in the event that somehow VLNC is providing these prior two purchasers with some form of paper exchangeable for common. I don't think U.S. greenbacks can be considered as exchangeable paper for common, eh? Besides, consider this. If what the CFO said about the "pound of flesh" is true, then WHY would C.C. feel the need to engage in this negotiation if they felt the SEC codicle provided them sufficient clout to glean additional concessions/common? Be that as it may, regardless of the wording there's nothing to prevent these types of negotiations should VLNC approach C.C., or vice-a-versa. As for the negotiations themselves....well....without knowing the details of the "I want 3lbs of your flesh; No, I'll give you 1", it's hard to determine its significance. I will say I'm not surprised by the initial foray of 3 for 1. That's classic business bargaining, no? One side asks for the sky, the other side retorts with a pitance, and you meet somewhere in the middle. In this case most probably at 2lbs of flesh. Of course, this is merely my opinion. I could be wrong. And hey, Larry, as for your guess about a division of Credit Swisse being one of VLNC's prior sugar daddys...well....one only need call up the transfer agent and ask them to pull the data on who received the common from VLNC at the time of the last two tranches. I haven't been able to reach her today, but I'm fairly certain she stated HSDC was the receiver of the 8/31 tranche. I'm open as to who HSDC actually is, since I'm dubious of it being that Hawaiian venture captialist group, too. John~