ex10-1.htm


    
      

      

    

    Exhibit
10.1

     

     

    COMMON
STOCK PURCHASE AGREEMENT

     

    This
Common Stock Purchase Agreement (this “Agreement”) is dated
as of October 14, 2009, by and between Valence Technology, Inc., a Delaware
corporation (the “Company”), and
Seaside 88, LP, a Florida limited partnership (such investor, including its
successors and assigns, “Seaside”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company
desires to issue and sell to Seaside, and Seaside desires to purchase from the
Company, up to an aggregate of 16,900,000 shares of Common Stock on the Closing
Dates;

     

    NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and Seaside agree as follows:

     

    ARTICLE
I

    DEFINITIONS

     

    1.1           Definitions.  In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings indicated in this Section
1.1:

     

    “3-Day VWAP” means the
daily volume weighted average of actual trading prices measured in hundredths of
cents of the Common Stock of the Company on the Trading Market for the three
consecutive Trading Days immediately prior to a Subsequent Closing
Date.

     

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are
used in and construed under Rule 144.

     

    “Closing” means the
Initial Closing and each Subsequent Closing.

     

    “Closing Dates” means
the Initial Closing Date and each Subsequent Closing Date.

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Common Stock” means
the common stock of the Company, par value $0.001 per share, and any securities
into which such common stock may hereafter be reclassified.

     

    “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

     

    “Company Counsel”
means Andrews Kurth LLP, or other counsel (including in-house counsel)
reasonably acceptable to Seaside.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Dollar Limit” shall
have the meaning ascribed to such term in Section 2.6(b).

     

    “DTC” means the
Depository Trust Company.

     

    “DWAC” means DTC’s
Deposit Withdrawal Agent Commission system.

     

    “Disclosure Schedules”
means the disclosure schedules of the Company delivered concurrently herewith,
as the same may be updated by the Company from time to time.

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    “Floor” shall mean
$1.00 (as the same may be proportionately adjusted in respect of any stock
split, stock dividend, combination, recapitalization or the like with respect to
the Common Stock).

     

     “GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

     

    “Initial Closing”
means the closing of the purchase and sale of the Common Stock pursuant to
Section 2.1.

     

    “Initial Closing Date”
means October 15, 2009 or such later date when all of the Transaction Documents
required to be executed and delivered in connection with the Initial Closing
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) Seaside’s obligations to purchase the Shares and
(ii) the Company’s obligations to issue and deliver the Shares have been
satisfied or waived.

     

    “Intellectual
Property” shall have the meaning ascribed to such term in Section
3.1(q).

     

    “Lien” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

     

    “Material Adverse
Effect” means any condition, event, change or effect that would
reasonably be expected to have a material adverse effect on (i) the legality,
validity or enforceability of any Transaction Document, (ii) the results of
operations, assets, business, or financial condition of the Company and its
Subsidiaries, taken as a whole, or (iii) the Company’s ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document, but shall not mean or include any condition, event, change or effect
which (1) is or results from events or occurrences relating to the economy in
general (including arising from terrorist attacks, acts of war or the outbreak
of war or international hostilities, or any escalation or material worsening
thereof, civil unrest, sabotage or military actions, whether in the United
States or elsewhere) or the Company’s industry in general and not specifically
relating to the Company or having a disproportionate impact on the Company, (2)
results from the announcement of this Agreement or the transactions contemplated
hereby or by the other Transaction Documents, or (3) is or results from any
breach of any representation, warranty, covenant or agreement contained in this
Agreement or the other Transaction Documents by Seaside.

     

     “Per Share Purchase
Price” shall be an amount equal to the daily volume weighted average of
actual trading prices measured in hundredths of cents of the Common Stock of the
Company on the Trading Market for the ten consecutive Trading Days immediately
prior to a Closing Date multiplied by 0.88.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Permits” shall have
the meaning ascribed to such term in Section 3.1(r).

     

    “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

     

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

     

    “Prospectus” means the
base prospectus, including all documents incorporated therein by reference,
included in the Registration Statement, as it may be supplemented by any
Prospectus Supplement, in the form of which such Prospectus and/or Prospectus
Supplement have been most recently filed by the Company with the Commission
pursuant to Rule 424(b) under the Securities Act with respect to the sale to
Seaside, or the resale by Seaside, of the Shares as contemplated
hereby.

     

    “Prospectus
Supplement” means the supplement or supplements to the base prospectus
contained in the Registration Statement, which supplement is filed in connection
with the sale to Seaside, or the resale by Seaside, of the Shares as
contemplated hereby.

     

    “Registration
Statement” means, collectively, the registration statement of the
Company, Commission File No. 333-148632, as the same may amended from time to
time to include  the sale to Seaside, or the resale by Seaside, of the
Shares as contemplated hereby, and including all documents filed as part thereof
or incorporated by reference therein and any information contained in a
Prospectus subsequently filed with the Commission pursuant to Rule 424(b) under
the Securities Act, and also including any other registration statement filed
pursuant to Rule 424(b) under the Securities Act. For the avoidance of doubt,
any reference herein to the Registration Statement, the Prospectus or any
amendment or supplement thereto shall be deemed to refer to and include the
documents incorporated by reference therein, and any reference herein to the
terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein.  For purposes of this Agreement,
all references to the Registration Statement, the Prospectus or to any amendment
or supplement thereto shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System.

     

    “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

     

    “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “Seaside Party” shall
have the meaning ascribed to such term in Section 4.6.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “SEC Reports” shall
have the meaning ascribed to such term in Section 3.1(h).

     

    “Securities Act” means
the Securities Act of 1933, as amended.

     

    “Shares” means the
shares of Common Stock issued or issuable to Seaside pursuant to this
Agreement.

     

    “Short Sales” shall
include, without limitation, all “short sales” as defined in Rule 200 of
Regulation SHO of the Exchange Act.

     

    “Subsequent Closing”
means each closing of the purchase and sale of the Common Stock pursuant to
Section 2.2.

     

    “Subsequent Closing
Date” means the day two weeks subsequent to the prior Closing Date (or,
if such day is not a Trading Day, then the first day thereafter that is a
Trading Day) commencing two weeks following the Initial Closing Date and ending
on or about the date that results in 26 Closings (including the Initial
Closing), subject to reduction pursuant to Section 2.6, over a 52-week period,
or such later dates when all conditions precedent to (i) Seaside’s obligations
to purchase the Shares and (ii) the Company’s obligations to issue and deliver
the Shares have been satisfied or waived, in each event with respect to such
Subsequent Closing. Solely for administrative use, Exhibit C sets forth
each anticipated Subsequent Closing Date, assuming that failure to satisfy the
conditions precedent does not delay any Subsequent Closing Date and otherwise
subject to adjustment as provided herein; Exhibit C shall be
revised from time to time by the parties to reflect changes arising based on the
application of the terms and conditions of this Agreement.

     

     “Subsidiary” shall
have the meaning ascribed to such term in Section 3.1(a).

     

    “Trading Day” means a
day on which the Common Stock is traded on a Trading Market.

     

    “Trading Market” means
whichever of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the New York Stock
Exchange, the NYSE Alternext Exchange, the NYSE AMEX, the Nasdaq Capital Market,
the Nasdaq Global Market or the Nasdaq Global Select Market.

     

    “Transaction
Documents” means this Agreement and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.

     

    ARTICLE
II

    PURCHASE
AND SALE

     

    2.1           Initial
Closing.  On the Initial Closing Date, Seaside shall purchase
from the Company, and the Company shall issue and sell to Seaside, 650,000
Shares at the Per Share Purchase Price.  Upon satisfaction or waiver
of the conditions set forth in Sections 2.3, 2.4, 2.5 and 2.6, the Initial
Closing shall occur at the offices of White White & Van Etten PC, 55
Cambridge Parkway, Cambridge, MA 02142, or such other location as the parties
shall mutually agree.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2.2           Subsequent
Closings.  On each Subsequent Closing Date, subject to Section
2.6, Seaside shall purchase from the Company, and the Company shall issue and
sell to Seaside, 650,000 Shares at the Per Share Purchase Price.  Upon
satisfaction or waiver of the conditions set forth in Sections 2.3, 2.4, 2.5 and
2.6, each Subsequent Closing shall occur at the offices of White White & Van
Etten PC, 55 Cambridge Parkway, Cambridge, MA 02142, or such other location as
the parties shall mutually agree.

     

    2.3           Deliveries by the
Company.  On each Closing Date, the Company shall deliver or
cause to be delivered to Seaside the following:

     

    (a)         subject
to Section 2.6(b), 650,000 Shares, registered in the name of Seaside, via the
DTC DWAC system, as specified on the signature pages hereto;

     

    (b)         an
officer’s certificate of the Company’s Chief Executive Officer or Chief
Financial Officer in substantially the form of Exhibit A attached
hereto; and

     

    (c)         solely
on the Initial Closing Date, a legal opinion of Company Counsel, in
substantially the form of Exhibit B attached
hereto.

     

    2.4           Deliveries by
Seaside.  On each Closing Date, Seaside shall deliver or cause
to be delivered to the Company an amount equal to the Per Share Purchase Price
for each such Closing multiplied by 650,000, subject to Section 2.6(b), in each
case by wire transfer of immediately available funds to the account as specified
in writing by the Company, and in each case less the amount due Seaside for
reimbursement of its expenses pursuant to Section 5.2 hereof.

     

    2.5           Closing
Conditions.

     

    (a)           The
obligations of the Company hereunder in connection with each Closing are subject
to the satisfaction by Seaside, or waiver by the Company, of the following
conditions:

     

    (i)           the
accuracy when made and on the Closing Date of the representations and warranties
of Seaside contained herein;

     

    (ii)           all
obligations, covenants and agreements of Seaside required to be performed at or
prior to the Closing Date shall have been performed;

     

    (iii)           the
delivery by Seaside of the items set forth in Section 2.4 of this Agreement;
and

     

    (iv)           with
respect to any Subsequent Closing, the Floor, as set forth in Section 2.6(a) of
this Agreement, has been reached.

     

    (b)           The
obligations of Seaside hereunder in connection with each Closing are subject to
the satisfaction by the Company, or waiver by Seaside, of the following
conditions:

     

    (i)           
 the accuracy when made and on the Closing Date of the representations and
warranties of the Company contained herein (as qualified and limited by the
Disclosure Schedules, as updated through such Closing Date);

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (ii)         
  all obligations, covenants and agreements of the Company required to
be performed at or prior to the Closing Date shall have been performed, and all
Required Approvals shall have been obtained;

     

    (iii)           the
delivery by the Company of the items set forth in Section 2.3 of this
Agreement;

     

    (iv)          with
respect to any Subsequent Closing, the Floor, as set forth in Section 2.6(a) of
this Agreement, has been reached;

     

    (v)           there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof that has not been cured;

     

    (vi)           the
Registration Statement shall have been declared effective by the Commission and
shall be in full force and effect; and

     

    (vii)      
   from the date hereof to each Closing Date, trading in the
Common Stock shall not have been suspended by the Commission and trading in
securities generally as reported by Bloomberg Financial Markets shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States or
New York State authorities nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of Seaside, makes it
impracticable or inadvisable to purchase the Shares at the Closing.

     

    2.6           The Floor; Dollar Limit on
Purchases.

     

    (a)           In
the event that the 3-Day VWAP does not equal or exceed the Floor, as calculated
with respect to any Subsequent Closing Date, then such Subsequent Closing will
not occur.  In each such event, there will be one fewer Subsequent
Closing pursuant to this Agreement and the aggregate number of Shares to be
purchased hereunder shall be reduced by 650,000 Shares for each such Subsequent
Closing that does not occur because the Floor has not been reached or
exceeded.

     

    (b)           If
for any Subsequent Closing the amount of the proposed investment by Seaside at
such Closing is greater than two times the amount invested by Seaside at the
immediately preceding Subsequent Closing (the “Dollar Limit”), then
Seaside shall have the option to reduce the number of Shares purchased at such
Subsequent Closing such that the amount of the investment at such Closing is an
amount equal to (as near as possible) the Dollar Limit.

     

     

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES

     

    3.1           Representations and
Warranties of the Company.  Except as set forth under the
corresponding section of the Disclosure Schedules, which Disclosure Schedules
may be updated before any Subsequent Closing and which shall be deemed a part
hereof, the Company hereby makes the representations and warranties set forth
below to Seaside as of the date hereof and as of each Closing Date (provided that
representations and warranties that speak as of a specific date shall continue
to be true and correct as of such Closing with respect to such
date):

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (a)         Subsidiaries.  All
of the significant subsidiaries (as that term is defined in Rule 1-02 of
Regulation S-X promulgated by the Commission) of the Company are listed in the
Company’s most recent Annual Report on Form 10-K as modified by any subsequent
SEC Reports filed with the SEC (each a “Subsidiary”).  The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

     

    (b)         Organization and
Qualification.  The Company and each of the Subsidiaries is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of organization, with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
reasonably be expected to result in a Material Adverse Effect.  To the
knowledge of the Company, no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

     

    (c)         Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
thereunder.  The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and its stockholders, and no further action is required by
the Company or its stockholders in connection therewith other than in connection
with the Required Approvals.  Each Transaction Document has been (or
upon delivery will have been) duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

     

    (d)         No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Shares at
each Closing and the consummation by the Company of the other transactions
contemplated thereby do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, violate or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any
Subsidiary pursuant to, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement (written or oral), credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected, except in the case of each of
clauses (ii) and (iii), such as could not reasonably be expected to result in a
Material Adverse Effect.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (e)         Filings, Consents and
Approvals.  The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority, the Trading Market or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filing of the Prospectus Supplement and (ii) any
notice filings or SEC Reports as are required to be made following each Closing
Date under applicable federal and state securities laws or under applicable
rules and regulations of the Trading Market (collectively, the “Required
Approvals”).

     

    (f)         Issuance of the
Shares.  The Shares are duly authorized and, when issued and
paid for in accordance with the Transaction Documents, will be duly and validly
issued, fully paid and non-assessable, free and clear of all
Liens.  The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement.  The issuance by the Company to Seaside, or the resale by
Seaside, of the Shares has been registered under the Securities Act and all of
the Shares when delivered will be freely transferable and tradable on the
Trading Market by Seaside without restriction (other than any restrictions
arising solely from an act or omission of Seaside).  The Registration
Statement is effective and available for the issuance or resale of the Shares
thereunder and the Company has not received any notice that the Commission has
issued or intends to issue a stop-order with respect to the Registration
Statement or that the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently,
or intends or has threatened in writing to do so.  The “Plan of
Distribution” section under the Prospectus as supplemented by the Prospectus
Supplement permits the issuance and sale or resale of the Shares
hereunder.

     

    (g)         Capitalization.  The
capitalization of the Company is as set forth in Section 3.1(g) of the
Disclosure Schedule.  The Company has not issued any capital stock
since its most recently filed periodic report under the Exchange Act, other than
pursuant to the exercise of employee stock options under the Company’s stock
option plans and pursuant to the conversion or exercise of outstanding Common
Stock Equivalents, and as otherwise set forth in the Disclosure
Schedules.  No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.  Except as
disclosed in the SEC Reports or Section 3.1(g) of the Disclosure Schedules,
there are no outstanding options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents.  Except as disclosed in the SEC Reports or
Section 3.1(g) of the Disclosure Schedules, the issue and sale of the Shares
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than Seaside) and will not result in a right of
any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under such securities.  All of the outstanding shares of
capital stock of the Company are validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws and
requirements of the Trading Market, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities.  No further approval or authorization of any
stockholder or the Board of Directors of the Company is required for the
issuance and sale of the Shares, other than the Required
Approvals.  There are no stockholders agreements, voting agreements or
other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company’s stockholders.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (h)         SEC Reports; Financial
Statements.  Except as set forth in Section 3.1(h) of the
Disclosure Schedules, the Company has filed or furnished all reports, schedules,
forms, statements and other documents required to be filed or furnished by it
under the Securities Act and the Exchange Act (including all required exhibits
thereto), including pursuant to Section 13(a) or 15(d) thereof, for the 12
months preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials, as the same may
be amended, and including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”) and any
notices, reports or other filings pursuant to applicable requirements of the
Trading Market on a timely basis or has received a valid extension of such time
of filing, and has filed any such SEC Reports and notices, reports or other
filings pursuant to applicable requirements of the Trading Market prior to the
expiration of any such extension.  As of their respective dates, the
SEC Reports complied in all material respects with the applicable requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing.  Such financial statements
(i) have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP and are subject to immaterial year-end audit
adjustments, and (ii) fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments.

     

    (i)         Material
Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that would reasonably be expected to result in a Material Adverse Effect,
except as has been reasonably cured by the Company, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting except as otherwise pursuant to GAAP, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock option and incentive plans.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (j)         Litigation.  Except
as disclosed in the SEC Reports, there is no Proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Shares or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect.  Neither the Company nor any Subsidiary, nor, to the knowledge
of the Company, any director or officer thereof (in his or her capacity as
such), is or has been the subject of any Proceeding involving a claim or
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been and, to the knowledge of the
Company, there is not currently pending or contemplated, any investigation by
the Commission involving the Company or any current or former director or
officer of the Company (in his or her capacity as such).  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act and, to the Company’s
knowledge, no proceeding for such purpose is pending before or threatened by the
Commission.

     

    (k)         Compliance.  Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, could reasonably be expected to result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is in violation of
any statute, rule or regulation of any governmental authority or the Trading
Market, including without limitation all foreign, federal, state and local laws
applicable to its business, except in each case as would not have a Material
Adverse Effect.

     

    (l)         Listing and Maintenance
Requirements.  The Company’s Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act, nor has
the Company received any notification that the Commission is contemplating
terminating such registration.  The Company has not, in the 12 months
preceding the date hereof or any Closing Date, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted (as applicable)
to the effect that the Company is not in compliance with the listing or
quotation (as applicable) and maintenance requirements of such Trading
Market.  The Company is, and immediately after the consummation of the
transactions contemplated hereby will be, in compliance with all such listing or
quotation (as applicable) and maintenance requirements.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (m)           Application of Takeover
Protections.  The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) and the laws of its
state of incorporation that is or could become applicable to Seaside as a result
of Seaside and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without limitation the
Company’s issuance of the Shares and Seaside’s ownership of the
Shares.

     

    (n)         Effective Registration
Statement.  The Registration Statement has been declared
effective by the Commission and remains effective as of the date hereof and the
Company knows of no reason why the Registration Statement will not continue to
remain effective for the foreseeable future.  The Company is eligible
to use Form S-3 registration statements for the issuance of
securities.

     

    (o)         Acknowledgment Regarding
Seaside’s Purchase of Shares.  The Company acknowledges and
agrees that Seaside is acting solely in the capacity of an arm’s length
purchaser with respect to this Agreement and the other Transaction Documents and
the transactions contemplated hereby and thereby.  The Company further
acknowledges that Seaside is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement or the
other Transaction Documents and the transactions contemplated hereby and thereby
and any advice given by Seaside or any of its representatives or agents in
connection with this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to Seaside’s
purchase of the Shares.  The Company further represents to Seaside
that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated thereby by the Company and its agents and
representatives.

     

    (p)         Approvals.  The
issuance and listing or quotation (as applicable) on the Trading Market of the
Shares requires no further approvals, including but not limited to, the approval
of stockholders.

     

    (q)         Intellectual
Property.  The Company possesses such right, title and interest
in and to, or possesses legal rights to use, all patents, patent rights, trade
secrets, inventions, know-how, trademarks, trade names, copyrights, service
marks and other proprietary rights (“Intellectual
Property”) material to the conduct of the Company’s business as currently
conducted, except Intellectual Property the failure of which to possess would
not have a Material Adverse Effect.  Except as disclosed in the SEC
Reports, the Company has not received any notice of infringement,
misappropriation or conflict from any third party as to Intellectual Property
owned by or exclusively licensed to the Company that has not been resolved or
disposed of, which infringement, misappropriation or conflict would if adversely
decided have a Material Adverse Effect.  To the Company’s knowledge,
it has not infringed, misappropriated, or otherwise conflicted with the
Intellectual Property of any third parties, which infringement, misappropriation
or conflict would if adversely decided have a Material Adverse
Effect.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (r)         Permits.  The
Company has made all filings, applications and submissions required by, and possesses all
approvals, licenses, certificates, certifications, clearances, consents,
exemptions, marks, notifications, orders, permits and other authorizations
issued by, the appropriate federal, state or foreign regulatory authorities
necessary to own or lease its properties and to conduct its businesses
(collectively, “Permits”), except for
such Permits the failure of which to possess or obtain would not reasonably be
expected to have a Material Adverse Effect.  The Company has not
received any written notice of proceedings relating to the limitation,
revocation, cancellation, suspension, modification or non-renewal of any such
Permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect, and has no
reason to believe that any such Permit will not be renewed in the ordinary
course.

     

    (s)         Disclosure.  The
Company confirms that neither the Company nor any officer, director or employee
of the Company acting on its behalf (as such term is used in Regulation FD) has
provided Seaside or its agents or counsel with any information that constitutes
or might reasonably be expected to constitute material, non-public information
except insofar as the existence and terms of the proposed transactions hereunder
may constitute such information.  The Company understands and confirms
that Seaside will rely on the foregoing representations and covenants in
effecting transactions in securities of the Company.  None of the
representations and warranties of the Company contained herein, nor any
statement made by the Company in any disclosure, schedule, exhibit, certificate
or other document furnished or to be furnished to Seaside in connection
herewith, contains or will contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

     

    3.2           Representations and
Warranties of Seaside.  Seaside hereby makes the
representations and warranties set forth below to the Company as of the date
hereof and as of each Closing Date (provided that
representations and warranties that speak as of a specific date shall continue
to be true and correct as of such Closing with respect to such
date):

     

    (a)         Organization;
Authority.  Seaside is a limited partnership duly organized,
validly existing and in good standing under the laws of the state of Florida,
with full right, power and authority to own and use its properties and assets
and to carry on its business as currently conducted and to enter into and to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder.  The execution, delivery and performance by Seaside of the
transactions contemplated by this Agreement and each other Transaction Document
have been duly authorized by all necessary action on the part of Seaside and its
general partner and no such further action is required.  Each
Transaction Document to which Seaside is a party has been (or upon delivery will
have been) duly executed by Seaside, and, when delivered by Seaside in
accordance with the terms thereof, will constitute the valid and legally binding
obligation of Seaside, enforceable against it in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (b)         Experience of
Seaside.  Seaside, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Shares, and has so evaluated the merits and
risks of such investment.  Seaside is able to bear the economic risk
of an investment in the Shares and, at the present time, is able to afford a
complete loss of such investment.

     

    (c)         Short
Sales.  Seaside has not directly or indirectly executed any
Short Sales or other hedging transactions in the securities of the
Company.

     

    (d)         Agreement for Distribution;
Broker-Dealer.  Seaside does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Shares.  Seaside is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act or otherwise.

     

    ARTICLE
IV

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1           No Transfer
Restrictions.  Certificates evidencing the Shares shall not
contain any legend restricting their transferability by Seaside.  The
Company shall cause its counsel to issue a legal opinion to the Company’s
transfer agent if required by the Company’s transfer agent to effect a transfer
of any of the Shares; such opinion shall be provided by the Company’s counsel at
no expense to Seaside.

     

    


     

    4.2           Furnishing of
Information.  As long as Seaside owns Shares, the Company
covenants to use its best efforts to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act.  As long as Seaside owns Shares that are “restricted
securities” as that term is defined in Rule 144 that it has owned for less than
one year in accordance with Rule 144(d), if the Company is not required to file
reports pursuant to the Exchange Act, it will prepare and furnish to Seaside and
make publicly available in accordance with Rule 144(c) such information as is
required for Seaside to sell the Shares under Rule 144.

     

    4.3           Securities Laws Disclosure;
Publicity.  The Company shall, by 9:00 a.m. Eastern time on the
Trading Day following the date hereof, file a Current Report on Form 8-K which
attaches as an exhibit this Agreement, in a form reasonably acceptable to
Seaside and its counsel, disclosing the material terms of the transactions
contemplated hereby.

     

    4.4           Shareholders Rights
Plan.  No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person that Seaside is an “Acquiring
Person” or similar designation under any shareholders rights plan or similar
plan or arrangement in effect or hereafter adopted by the Company, or that
Seaside could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Shares under the Transaction
Documents.  The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act of 1940, as
amended.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    4.5           Non-Public
Information.  The Company covenants and agrees that neither it
nor any other Person acting on its behalf will provide Seaside or its agents or
counsel with any information that the Company believes constitutes material
non-public information.  The Company understands and confirms that
Seaside shall be relying on the foregoing representations in effecting
transactions in securities of the Company.

     

    4.6           Indemnification of
Seaside.  Subject to the provisions of this Section 4.6, the
Company will indemnify and hold Seaside, Seaside’s Affiliates and their
respective directors, officers, stockholders, partners, members, employees and
agents (each, a “Seaside Party”)
harmless from any and all losses, liabilities, obligations, claims, demands,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and actual and reasonable attorneys’ fees and
costs of investigation reasonably incurred in connection with defending or
investigating any suit or action in respect thereof to which any Seaside Party
is, or reasonably believes it may become, a party under the Securities Act, the
Exchange Act or any other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, liabilities, obligations,
claims, demands, contingencies, damages, costs and expenses arise out of or are
based on (a) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any Prospectus Supplement, or (b) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, provided that the
Company will not be liable in any such case to the extent that any such
liability, obligation, claim, demand, contingency, damage, cost or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by and regarding Seaside
expressly for inclusion therein.  If any action shall be brought
against any Seaside Party in respect of which indemnity may be sought pursuant
to this Agreement, such Seaside Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing.  Any Seaside Party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Seaside Party except to the extent that (i) the employment thereof has been
specifically authorized by the Company in writing, (ii) the Company has failed
after a reasonable period of time to assume such defense and to employ counsel
or (iii) in such action there is, in the reasonable opinion of such separate
counsel, a material conflict on any material issue between the position of the
Company and the position of such Seaside Party.  The Company will not
be liable to any Seaside Party under this Agreement (x) for any settlement by a
Seaside Party effected without the Company’s prior written consent, which
consent shall not be unreasonably withheld or delayed; or (y) to the extent, but
only to the extent, that a loss, liability, obligation, claim, demand, damage,
cost or expense is attributable to any Seaside Party’s breach of any of the
representations, warranties, covenants or agreements made by Seaside in this
Agreement or in the other Transaction Documents.

     

    4.7           Listing or Quotation of
Common Stock.  The Company hereby agrees to use its best
efforts to maintain the listing or quotation (as applicable) of the Common Stock
on its current Trading Market.  The Company further agrees that, if
the Company applies to have the Common Stock traded on any other Trading Market,
it will include in such application all of the Shares and will take such other
action as is necessary to cause all of the Shares to be listed or quoted on such
other Trading Market as promptly as possible.  The Company will take
all action reasonably necessary to continue the listing or quotation (as
applicable) and trading of its Common Stock on each Trading Market on which the
Common Stock is listed or quoted (as applicable) and will comply in all respects
with the Company’s reporting, filing and other obligations under the bylaws or
rules of such Trading Market(s).

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    4.8           Stockholder
Approval.  The Company shall not issue shares of Common Stock
or Common Stock Equivalents if such issuance would require stockholder approval
pursuant to applicable rules of the Trading Market unless and until such
stockholder approval is obtained.

     

    4.9           Short
Sales.  Seaside covenants that neither it nor any Affiliates
acting on its behalf or pursuant to any understanding with it will execute any
Short Sales in the securities of the Company from the date hereof until the
settlement of the final Subsequent Closing contemplated hereby.

     

         
4.10           Prospectus
Supplement.  The Company will use its best efforts to file the
Prospectus Supplement in accordance with the requirements of Rule 424
promulgated under the Securities Act on or before the Initial Closing Date and,
if required, before each Subsequent Closing Date.

     

    ARTICLE
V

    MISCELLANEOUS

     

    5.1           Termination; Liquidated
Damages.  This Agreement may be terminated:

     

    (a)           by
Seaside, by written notice to the Company, if the Initial Closing has not been
consummated on or before October 22, 2009,

     

    (b)           by
Seaside, immediately upon written notice to the Company, if at any time prior to
the final Subsequent Closing Date the Company consummates a financing to which
Seaside is not a party, and

     

    (c)           by
the Company, upon at least 30 days’ prior written notice to Seaside, at any time
after the fifth Subsequent Closing Date,

     

    provided, however, that no such
termination pursuant to this Section 5.1 will affect the right of any party to
sue for any breach by the other party (or parties) (if such shall exist) and
provided, further, that in the
event the Company exercises its termination right pursuant to subsection (c) of
this Section 5.1 and within six months of such termination initiates another
financing having committed funding dates scheduled at pre-determined intervals
of between one week and two months then the Company shall be obligated to pay to
Seaside liquidated damages in the amount of $500,000 immediately upon the first
closing of any such subsequent financing.  Notwithstanding the
foregoing, the parties expressly agree and acknowledge that sales pursuant to
that certain At-Market Issuance Sales Agreement, by and between the Company and
Wm Smith & Co., dated February 22, 2008, as amended by that certain
Amendment No. 1 to At-Market Issuance Sales Agreement, by and between the
Company and Wm Smith & Co., dated July 2, 2009, shall not give rise to any
liability for liquidated damages under this Section 5.1.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    5.2           Fees and
Expenses.  Except as otherwise set forth in this Agreement and
as set forth in this Section 5.2 below, each party shall pay the fees and
expenses of its own advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this
Agreement.  The Company shall pay all stamp and other taxes and duties
levied in connection with the delivery of the Shares.  Notwithstanding
the foregoing, at the Initial Closing the Company shall reimburse Seaside for
the fees and expenses of its counsel, White White & Van Etten PC, in an
amount equal to $20,000 and at each Subsequent Closing the Company shall
reimburse Seaside for the fees and expenses of its counsel, White White &
Van Etten PC, in an amount equal to $2,500.  Such legal fees may be
withheld by Seaside from the amount to be paid for the Shares purchased at the
Initial Closing and any Subsequent Closing.

     

    5.3           Entire
Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto (including the Disclosure Schedules), contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.

     

    5.4           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via electronic mail or facsimile at the facsimile
number set forth on the signature pages attached hereto prior to 5:30 p.m.
(Eastern time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via electronic mail
or facsimile at the facsimile number set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (Eastern time)
on any Trading Day, (c) the second Trading Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given.  The
address for such notices and communications shall be as set forth on the
signature pages attached hereto or as otherwise provided in writing from time to
time by the addressee to the other party.

     

    5.5           Amendments;
Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and Seaside or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought.  No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.

     

    5.6           Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    5.7           Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. Neither party
may assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other party; provided that Seaside
may assign its rights and obligations under this Agreement to an affiliate of
Seaside without obtaining the Company’s prior written consent so long as the
assignee shall agree in writing to be bound by such obligations and provided
that Seaside shall in any event remain liable for the obligations of any such
assignee under this Agreement.

     

    5.8           No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.6.

     

    5.9           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.  The parties hereby waive all rights to a trial by
jury.  If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

     

      5.10           Survival.  The
representations and warranties herein shall survive the Closings and delivery of
the Shares for the applicable statute of limitations.

     

      5.11           Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile or email transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or email signature
page were an original thereof.

     

      5.12           Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

     

      5.13           Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents,
whenever one party exercises a right, election, demand or option under a
Transaction Document and the other party does not timely perform its related
obligations within the periods therein provided, then the exercising party may
rescind or withdraw, in its sole discretion from time to time upon written
notice to the other party, any relevant notice, demand or election in whole or
in part without prejudice to its future actions and rights.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

      5.14           Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, Seaside and the Company will be entitled to
specific performance under the Transaction Documents.  The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of the obligations set forth herein and hereby
agree to waive in any such action for specific performance of any such
obligation the defense that a remedy at law would be adequate.

     

      5.15           Payment Set
Aside.  To the extent that either party hereto makes a payment
or payments to the other party hereto pursuant to any Transaction Document or
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the other party, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

     

      5.16           Construction.  The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.

     

    (Signature
Page Follows)

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Common Stock Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

     

    
      
        	
                Valence
      Technology, Inc.

                 

              	
                Address for
      Notice:

              
	
                By: /s/Roger A.
      Williams                                                                           

                      Name:  Roger
      A. Williams

                      Title:    Vice
      President, General Counsel and Assistant Secretary

              	
                12303
      Technology Boulevard

                Suite
      950

                Austin,
      Texas 78727

                Attention:  Robert
      L. Kanode and Ross A. Goolsby

                Fax:
      (512) 527-2910

              
	
                 

                With
      copies (which shall not constitute notice) to:

              	
                 

                Andrews
      Kurth LLP

                111
      Congress Avenue

                Suite
      1700

                Austin,
      TX 78701

                Attention:  J.
      Matthew Lyons

                Fax:
      (512) 320-9292

                 

                and

                 

                Valence
      Technology, Inc.

                1889
      East Maule Avenue

                Suite
      A

                Las
      Vegas, NV 89119

                Attention:  Roger
      Williams

                Fax:
      (702) 558-1310

              


      

    

    


    
      
        	
                Seaside
      88, LP

                 

                By:  Seaside
      88 Advisors, LLC

              	
                Address for Notice:

              
	
                 

                 

                By: /s/William J.
      Ritger                                                                           

                     
      Name: William J. Ritger

                     
      Title:  Manager

                 

              	
                750
      Ocean Royale Way

                Suite
      805

                North
      Palm Beach, FL 33408

                Attention:  William
      J. Ritger and

                Denis
      M. O’Donnell, M.D.

                Fax:  866-358-6721

                 

              
	
                With
      a copy (which shall not constitute notice) to:

              	
                White
      White & Van Etten PC

                55
      Cambridge Parkway

                Cambridge,
      MA 02142

                Attention:  David
      A. White, Esq.

                Fax:  617-225-0205

              


      

    

     

     

    19