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

To: Larry Brubaker who wrote (14240)	9/3/1999 1:56:00 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 27311

Larry, that is the "land mine" they planted alright. Issuance of stock under the conversion ceiling is dilution for CC and thus their ceiling should be reduced to equal that of the new shares, IMHO. That is not a nice scenario, as long as VLNC has to go to the market for more money, that will happen at progressively lower price. I think that this clause introduces a "variable ceiling" which readjust the ceiling for securities as well as convertible. If that interpretation is correct, then one must assume that there is no pressure of conversion on CC since the bar has been permanently lowered to $4.35. I must say that the language there does not take the cumulative effect of different independent transactions that dilute CC (the last three tranches, the first of which was not truly dilutive), but CC could claim that any single transaction should be fixing the new conversion rate. So, if in two months, a new $3 MM is issued at let say $3/share, then, the new ceiling is fixed at $3/share and the floorless exercise starts from there. I think that only one thing will get this death spiral arrested, shipment of batteries, or at least the announcement of a major OEM PO. So, where are those PO? By the way, even a PO now may be looked at by the market as "too little too late". When it rains, it pours. Zeev

To: Larry Brubaker who wrote (14240)	9/3/1999 2:39:00 PM
From: John Curtis	Read Replies (1) \| Respond to of 27311

Hmmm....hadn't seen this prior to my last response. Clearly it gives you and Zeev's hypothesis a leg to stand on. But I see all sorts of words that allow for the 'ol Clintonesque legal dance. Those are "dilutive effect on the Holder", or "materially and adversely effect the Holder", etc., etc.. Legally, via that independent public accountant referenced, there'd have to be a meeting of the minds with regards to merit. One thing you've got to admit. This is one of the more interesting speculations followed right now, at least by me. Hey, by the way, thanks for reviewing the SEC filing and providing same here. Can you do the same with regard to the transfer agent? ;-) I would, but I'm on my way out the door. The holiday looms large, and so to does my fear of traffic. Everyone have a good one! John~

To: Larry Brubaker who wrote (14240)	9/3/1999 3:51:00 PM
From: Rich Wolf	Respond to of 27311

Larry, my read is that the wording in the SEC documents which you indicate, regarding Castle Creek's conversion price, is simply to include the effect of any issuance of new securities on the size of the FLOAT, in the time since the convertibles were issued. In no way can one reset the price of the convertible conversion ceiling to be equal to any new common's price. That would be unrepresentative of the 'effect' of the new issuance on CC's shares. Rather, only a minor expansion of the total float, which for the last 1.5M shares is about 5%. So my read is that CC would get 5% more shares to accomodate them. Basically, nothing here that bothers me.