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

To: Prasanna L Soni who wrote (4862)	11/11/1998 5:22:00 PM
From: mooter775	Read Replies (1) \| Respond to of 27311

Again, my recollections/notes from CC: (1) Lev indicated that 1/27 date did not require a contract but rather required a statement in writing from an OEM that the batteries produced were acceptable and met spec. - I interpret this to be one step short of a contract and more like a letter of intent to purchase. (2) Some confusion resulted on the question of the various features of the floorless conversion and Lev on several occasions referred to the SEC filings on the contract. My understanding is that the existing $ 6.00 conversion price for the first tranche is set at that price if a contract/acceptance letter is received by 1/27. If this condition is not met, then the conversion price for the first and second tranches becomes an average of the 10 day period prior to exercising the conversion feature. May be more or less than $ 6.00 - most people assume it would be less if no contract by then, but it conceivably could be > $6.00 if, for example, the company signed not a contract but a licensing deal. But I think it was this pricing feature which Dawson was referring to when he talked about the conversion of the tranches.

To: Prasanna L Soni who wrote (4862)	11/11/1998 6:08:00 PM
From: Greg Smith	Respond to of 27311

Here is the relevant section of the S-3A filed with the SEC (check out www.freeedgar.com): "Each share of Series A Preferred Stock is convertible into a number of shares of Common Stock equal to the quotient obtained by dividing (i) one thousand plus the product of 60x(N/365), where N is equal to the number of days from the closing to, and including, the date of conversion, by (ii) a conversion price which is $6.03 per share until July 28, 1999 (or January 27, 1999 in the event the Company has not signed and announced a material contract or contracts for the sale of batteries by January 27, 1999). After the applicable date, the conversion price will be the lower of $6.03 and 101% of the average of the two (2) lowest of the closing bid prices of the Common Stock for a period of 10-15 consecutive trading days ending on the trading day immediately preceding the conversion date (the "Variable Conversion Price"). When the variable Conversion Price is applicable, the number of shares of Common Stock issuable upon conversion will be inversely proportional to the market price of the Common Shares at the time of conversion at any time when the market price is less than $6.03 (i.e., the number of shares will increase as the market price of the Common Shares decreases); and, except with respect to certain redemption rights of the Company for the Series A Preferred Stock and the limitation under Nasdaq SmallCap regulations which limit the aggregate amount of Common Shares which the Company may issue at a discount from market price upon conversion of the Series A Preferred Stock and exercise of Warrants without stockholder approval (which stockholder approval the Company has agreed to request), there is no cap on the number of shares of Common Stock which may be issued. In addition, the number of Common Shares issuable upon the conversion of the Series A Preferred Stock and the exercise of Warrants is subject to adjustment upon the occurrence of certain dilutive events." Whew! I think the first part of the equation means that the conversion price is 1000 + (60 x N/365) divided by 6.03. The variable N is the number of days from "closing" to "conversion." But basically the conversion is 1000/6.03 = 165.84 common shares per preferred share. The weird part involves the variable rate. Frankly, I don't get it. But for sure, there is an effect if a material contract is not awarded by 1/27/99: ". . . until July 28, 1999 (or January 27, 1999 in the event the Company has not signed and announced a material contract or contracts for the sale of batteries by January 27, 1999). After the applicable date. . ." And then the language on variable conversion rates starts. You know, it's puzzling that Lev said that a contract had no effect on the conversion. It seems clear to me that a contract has a direct impact on the timing of when the variable conversion kicks in.