Document:

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

              

      

    

     

     

    19ex4-13.htm

    EXHIBIT
4.13

    

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR UNDER APPLICABLE STATE SECURITIES ACTS (THE “STATE ACTS”). NOR IS SUCH
REGISTRATION CONTEMPLATED.  SUCH SECURITIES MAY NOT BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT
OR THE STATE ACTS, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE BOARD OF DIRECTORS OF THE COMPANY AND TO LEGAL COUNSEL FOR
THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE
SUBMISSION TO THE BOARD OF DIRECTORS AND SUCH COUNSEL SATISFACTORY EVIDENCE THAT
ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE ACT OR STATE ACTS OR ANY RULE
OR REGULATION PROMULGATED THEREUNDER.THESE SECURITIES ARE ALSO SUBJECT TO
CERTAIN ADDITIONAL RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 3
HEREOF.

     

     

    NEOMAGIC
CORPORATION

     

    CLASS
A WARRANT

     

    
      	 
      	 
      	 
      
	
              Warrant
      No. A__ 

            	
                

            	
              Original
      Issue Date: October ,2009

            

    

     

    NEOMAGIC CORPORATION, a
Delaware corporation (the “Company”), hereby certifies that, for
value received, ________________________ or
its permitted registered assigns (the “Holder”), is entitled to purchase
from the Company up to a total of ______ shares of common stock, $0.001 par
value (the “Common
Stock”), of the Company (each such share issued upon exercise of this
Warrant , a “Warrant
Share” and all
such shares, the “Warrant
Shares”) at an
exercise price equal to $.06 per share (as adjusted from time to time as
provided herein, the “Exercise
Price”), at any time and from time to time during the two (2) year period
commencing on the date hereof (the "Commencement
Date") and expiring on October__, 2011 or earlier, upon thirty (30) days
notice given to Holder following  the occurrence of a Trading Price
Termination Event ( as defined below in Section 4(c)) (the “Expiration
Date”), subject
to  the following terms and conditions:

     

    This Warrant is one of a series of
Class A Warrants issued pursuant to that certain Subscription Agreement, dated
October___, 2009, by and among the Company and the Investors identified therein
(the “Subscription 
Agreement”).  All such Class A Warrants are referred to herein,
collectively, as the “Warrants.”

     

    1.           Definitions. In
addition to the terms defined elsewhere in this Warrant, capitalized terms that
are not otherwise defined herein have the meanings given to such terms in the
Subscription Agreement.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2.           
List of Warrant
Holders.  The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the “Warrant
Register”), in
the name of the record Holder (which shall include the initial Holder or, as the
case may be, any registered assignee to which this Warrant is permissibly
assigned hereunder from time to time).  The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.

     

    3.           List of Transfers;
Restrictions on Transfer.

     

    (a)           This
Warrant and the Warrant Shares are subject to the restrictions on transfer set
forth in this Section 3.

     

    (b)           The
Company shall register any such transfer of all or any portion of this Warrant
in the Warrant Register, upon (i) surrender of this Warrant, with the Form of
Assignment attached hereto duly completed and signed, to the Company at its
address specified herein and (ii) delivery by the transferee of a written
statement to the Company certifying that the transferee is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and making the
representations and certifications set forth in Section 9(a) of the Subscription
Agreement, to the Company at its address specified in the Subscription
Agreement. Upon any such registration or transfer, a new Warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new Warrant, a
“New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations in respect of
the New Warrant that the Holder has transferred in respect of this
Warrant.

     

    (c)           This
Warrant may only be transferred to a transferee who is an “accredited
investor.”  If a  registration statement is
not  in effect at any time that this Warrant is exercised, (i) the
Warrant Shares issued upon such exercise shall be “restricted securities,” (ii)
the stock certificate evidencing the Warrant Shares shall bear a restrictive
legend referring to the Act, and (iii) as a condition precedent to issuance of
the Warrant Shares upon such exercise, the Holder shall be required to execute
an investment representation statement in the form provided by the Company as
evidence of the Holder’s qualifications to purchase Common Stock in a “private
placement” that is exempt from registration pursuant to Section 4(2) of the
Act.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    4.           Exercise and Duration of
Warrants.

     

     (a)           All
or any part of this Warrant shall be exercisable by the registered Holder
pursuant to Section 10 of this Warrant at any time and from time to time on
or after the Commencement Date (as defined above and through and including the
Expiration Date. Subject to Section 11 hereof, at 5:00 p.m., New York City time,
on the Expiration Date the portion of this Warrant not exercised prior thereto
shall be and become void and of no value and this Warrant shall be terminated
and no longer outstanding.

     

     (b)           The
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the “Exercise
Notice”), completed and duly signed, and (ii) payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is being
exercised.  The date such items are delivered to the Company (as
determined in accordance with the notice provisions hereof) is an “Exercise
Date.” The delivery by (or on behalf of) the Holder of the Exercise
Notice and the applicable Exercise Price as provided above shall constitute the
Holder’s certification to the Company that its representations contained in
Section 9(a) of the Subscription Agreement are true and correct as of the
Exercise Date as if remade in their entirety (or, in the case of any transferee
Holder that is not a party to the Subscription Agreement, such transferee
Holder’s certification to the Company that such representations are true and
correct as to such assignee Holder as of the Exercise Date).  The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder.  Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.

    

    (c) The term “Trading
Price Termination Event” shall mean the occurrence, at any time that the
Common Stock is listed for trading on a national securities exchange, other
nationally recognized trading system, or is quoted on the Pink Sheets LLC or
similar over-the-counter service (including, without limitation, the OTC
Bulletin Board), for  a period of fifteen (15) consecutive trading
days (each a "Trading
Day") during which the quoted bid price of the Common Stock has been
greater than two hundred percent (200%) of the Exercise Price.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

      5.           Delivery of Warrant
Shares.

     

     (a)           Upon
exercise of this Warrant in accordance with Section 4 above, the Company shall
promptly (but in no event later than three(3) Trading Days after the Exercise
Date) issue or cause to be issued and cause to be delivered to or upon the
written order of the Holder and in such name or names as the Holder may
designate), a certificate for the Warrant Shares issuable upon such exercise,
with  restrictive legends  complying with the Act and
applicable state securities or blue sky laws unless  (i)a registration
statement is then in effect with respect to the Warrant Shares issued hereunder
or (ii) the Warrant Shares are freely transferable without volume restrictions
pursuant to Rule 144(k) promulgated under the Securities Act. If
a  registration statement with respect to the Warrant Shares issued
hereunder is not then in effect and the Holder directs the Company to deliver a
certificate for the Warrant Shares in a name other than that of the Holder or an
Affiliate of the Holder, the Holder shall deliver to the Company on the Exercise
Date an opinion of counsel reasonably satisfactory to the Company to the effect
that the issuance of such Warrant Shares in such other name may be made pursuant
to an available exemption from the registration requirements of the Act and all
applicable state securities or blue sky laws. The Holder, or any Person so
designated by the Holder, in accordance with the terms of this Warrant
Agreement, to receive Warrant Shares shall be deemed to have become the holder
of record of such Warrant Shares as of the Exercise Date.  If the
Warrant Shares can be issued without restrictive legends, the Company shall,
upon the written request of the Holder, use its best efforts to deliver, or
cause to be delivered, Warrant Shares hereunder electronically through the
Depository Trust and Clearing Corporation or another established clearing
corporation performing similar functions, if available; provided, that, the
Company may, but will not be required to, change its transfer agent if its
current transfer agent cannot deliver Warrant Shares electronically through the
Depository Trust and Clearing Corporation.

     

    (b)           
If by the close of the third Trading Day after delivery of an Exercise Notice,
the Company fails to deliver to the Holder a certificate representing the
requisite number of Warrant Shares in the manner required pursuant to Section
5(a), and if after such third Trading Day and prior to the receipt of such
Warrant Shares, the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”),
then the Company shall, within three (3) Trading Days after the Holder’s request
and in the Holder’s sole discretion, either (1) pay in cash to the Holder an
amount equal to the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Warrant Shares) shall terminate or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing  such Warrant Shares and pay cash to the Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A)
such number of Warrant Shares, times (B) the closing bid price  on a
national securities exchange, other nationally recognized trading system, or on
the Pink Sheets LLC or similar over-the-counter service (including, without
limitation, the OTC Bulletin Board), on the date of the event giving rise to the
Company’s obligation to deliver such certificate.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    6.           Charges, Taxes and
Expenses. Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder
for any issue or transfer tax, withholding tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares
or Warrants in a name other than that of the Holder. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares upon exercise
hereof.

     

    7.           Replacement of
Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third party costs as the Company may prescribe. If a New Warrant is requested as
a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company’s
obligation to issue the New Warrant.

     

    8.           Reservation of Warrant
Shares. The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares that are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other contingent purchase rights of
persons other than the Holder (taking into account the adjustments and
restrictions of Section 9). The Company covenants that all Warrant Shares so
issuable and deliverable shall, upon issuance and the payment of the applicable
Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable.

     

    9.           Certain Adjustments.
The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section
9.

     

    (a)           
Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding,
(i) pays a stock dividend on its Common Stock or otherwise makes a distribution
on any class of capital stock that is payable in shares of Common Stock, (ii)
subdivides outstanding shares of Common Stock into a larger number of shares, or
(iii) combines outstanding shares of Common Stock into a smaller number of
shares, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this Section 9(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this  Section 9(a)
shall become effective immediately after the effective date of such subdivision
or combination.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (b)           Pro Rata
Distributions.  If the Company, at any time while this Warrant
is outstanding, distributes to all holders of Common Stock for no consideration
(i) evidences of its indebtedness, (ii) any security (other than a distribution
of Common Stock covered by Section 9(a)), (iii) rights or warrants to subscribe
for or purchase any security, or (iv) any other asset (in each case, “Distributed
Property”), then, upon any exercise of this Warrant that occurs after the
record date fixed for determination of stockholders entitled to receive such
distribution, the Holder shall be entitled to receive, in addition to any
Warrant Shares otherwise issuable upon such exercise, the Distributed Property
that such Holder would have been entitled to receive in respect of such number
of Warrant Shares had the Holder been the record holder of such Warrant Shares
immediately prior to such record date.

     

    (c)           Fundamental
Transactions. If, at any time while this Warrant is
outstanding  (i) the Company effects any merger or consolidation of
the Company with or into another person, in which the shareholders of the
Company as of immediately prior to the transaction own less than a majority of
the outstanding stock of the surviving entity, (ii) the Company effects any sale
of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or another person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, or (iv) the Company effects any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(each such transaction under (i), (ii) (iii) or (iv), a “Fundamental
Transaction”), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the “Alternative
Consideration”).  The Company
shall not effect any such Fundamental Transaction unless prior to or
simultaneously with the consummation thereof, any successor to the Company,
surviving entity or the corporation purchasing or otherwise acquiring such
assets or other appropriate corporation or entity shall assume(a) the obligation
to deliver to the Holder, the  Alternative Consideration which, in
accordance with the foregoing provisions, the Holder may be entitled to receive,
and (b) the other obligations under this Warrant.  The provisions of
this Section 9 (c) shall similarly apply to subsequent transactions analogous to
a Fundamental Transaction.

     

    (d)           Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise Price pursuant
to Section 9(a) above, the number of Warrant Shares that may be purchased upon
exercise of this Warrant shall be increased or decreased proportionately, so
that after such adjustment the aggregate Exercise Price payable hereunder for
the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    (e)           Subsequent Equity
Sales.

     

    (i)           Except
as provided in subsection (e)(iii) hereof, if and whenever the Company shall
issue or sell, or is, in accordance with any of subsections (e)(ii)(l) through
(e)(ii)(4) hereof, deemed to have issued or sold, any shares of Common Stock for
no consideration or for a consideration per share less than the Exercise Price
in effect immediately prior to the time of such issue or sale, then, in each
such case (a “Trigger
Issuance”), the then-existing Exercise Price shall be reduced, as of the
close of business on the effective date of the Trigger Issuance, to a price
determined as follows:

     

    
      Adjusted
Exercise Price = (A x
B) + D

                  A+C

    

    where

     

    “A”
equals the number of shares of Common Stock outstanding, including Additional
Shares of Common Stock (as defined below) deemed to be issued hereunder,
immediately preceding such Trigger Issuance;

     

    “B”
equals the Exercise Price in effect immediately preceding such Trigger
Issuance;

     

    “C”
equals the number of Additional Shares of Common Stock issued or deemed issued
hereunder as a result of the Trigger Issuance; and

     

    “D”
equals the aggregate consideration, if any, received or deemed to be received by
the Company upon such Trigger Issuance;

     

    provided, however, that in no
event shall the Exercise Price after giving effect to such Trigger Issuance be
greater than the Exercise Price as of immediately prior to such Trigger
Issuance.

     

    For
purposes of this subsection (e), “Additional
Shares of Common Stock” shall mean all shares of Common Stock issued by
the Company or deemed to be issued pursuant to this subsection (e), other than
Excluded Issuances (as defined in subsection (e)(iii) hereof).

     

    (ii)           For
purposes of this Section 9(e), the following subsections (e) (ii) (1) to
(e) (ii) (4) shall also be applicable:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (1)           Issuance of Rights or
Options. If at any time the Company shall in any manner grant (directly
and not by assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of, Common Stock
or any stock or security convertible into or exchangeable for Common Stock (such
warrants, rights or options being called “Options” and such convertible or
exchangeable stock or securities being called “Convertible Securities”), whether
or not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
sum  of (x) the total amount, if any, received or receivable by
the Company as consideration for the granting of such Options, plus (y) the
aggregate amount of additional consideration payable to the Company upon the
exercise of all such Options, plus (z), in the case of such Options that relate
to Convertible Securities, the aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Exercise Price in effect
immediately prior to the time of the granting of such Options, then the total
number of shares of Common Stock issuable upon the exercise of such Options or
upon conversion or exchange of the total amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been issued
for such price per share as of the date of granting of such Options or the
issuance of such Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Exercise Price. Except as otherwise
provided in subsection 9(e)(ii)(3), no adjustment of the Exercise Price
shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible
Securities.

     

    (2)           Issuance of Convertible
Securities. If the Company shall in any manner issue (directly and not by
assumption in a merger or otherwise) or sell any Convertible Securities, whether
or not the rights to exchange or convert any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (i) the
sum  of (x) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus (y) the aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (ii) the total
number of shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities shall be less than the Exercise Price in effect
immediately prior to the time of such issuance or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issuance or sale of such Convertible Securities
and thereafter shall be deemed to be outstanding for purposes of adjusting the
Exercise Price, provided that (a) except as otherwise provided in
subsection 9(e)(ii)(3), no adjustment of the Exercise Price shall be made
upon the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities and (b) no further adjustment of the Exercise Price
shall be made by reason of the issuance or sale of Convertible Securities upon
exercise of any Options to purchase any such Convertible Securities for which
adjustments of the Exercise Price have been made pursuant to the other
provisions of Section 9(e).

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    (3)           Change in Option Price or
Conversion Rate. Upon the happening of any of the following events,
namely, if the purchase price provided for in any Option referred to in
subsection 9(e)(ii)(1) hereof, the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities referred
to in subsections 9(e)(ii)(1) or 9(e)(ii)(2), or the rate at which Convertible
Securities referred to in subsections 9(e)(ii)(1) or 9(e)(ii)(2) are convertible
into or exchangeable for Common Stock shall change at any time (including, but
not limited to, changes under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such event shall
forthwith be readjusted to the Exercise Price that would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold. On the
termination of any Option for which any adjustment was made pursuant to this
Section 9(e) or any right to convert or exchange Convertible Securities for
which any adjustment was made pursuant to this Section 9(e) (including
without limitation upon the redemption or purchase for consideration of such
Convertible Securities by the Company), the Exercise Price then in effect
hereunder shall forthwith be changed to the Exercise Price that would have been
in effect at the time of such termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such termination,
never been issued.

     

    (4)           Consideration for
Stock.  If any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for cash, the consideration received therefor
shall be deemed to be the gross amount received by the Company therefor. If any
shares of Common Stock, Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company. If any Options shall be issued in connection with the issuance and sale
of other securities of the Company, together comprising one integral transaction
in which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Company. If Common
Stock, Options or Convertible Securities shall be issued or sold by the Company
and, in connection therewith, other Options or Convertible Securities (the
“Additional
Rights”) are issued, then the consideration received or deemed to be
received by the Company shall be reduced by the fair market value of the
Additional Rights (as determined using the Black-Scholes option pricing model or
another method mutually agreed to by the Company and the Holder). The Board of
Directors of the Company shall respond promptly, in writing, to an inquiry by
the Holders as to the fair market value of the Additional Rights. If the Board
of Directors of the Company and the Holder are unable to agree upon the fair
market value of the Additional Rights, the Company and the Holder shall jointly
select an appraiser experienced in such matters. The decision of such appraiser
shall be final and conclusive, and the cost of such appraiser shall be borne
evenly by the Company and the Holder.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (iii)           Notwithstanding
the foregoing, no adjustment will be made under this Section 9 (e) in respect
of: (i) the issuance of securities upon the exercise or conversion of any
Common Stock or Common Stock equivalents issued by the Company prior to the date
hereof, (ii) the grant of options, warrants, Common Stock or other Common
Stock equivalents under any duly authorized Company stock option, restricted
stock plan or stock purchase plan, whether now existing or hereafter approved by
the Company and its stockholders, and the issuance of Common Stock in respect
thereof, (iii) the issuance of securities in connection with a Strategic
Transaction ( as defined below), (iv) the issuance of securities to
vendors, or (v) the issuance of securities in a transaction described in
Section 9(a) or 9(b). For purposes of this paragraph, a “Strategic
Transaction” means a transaction or relationship in which (1) the
Company issues shares of Common Stock to a person that the Board of Directors of
the Company determined in good faith is, itself or through its Subsidiaries, an
operating company in a business synergistic with the business of the Company (or
a shareholder thereof) and (2) the Company expects to receive benefits in
addition to the investment of funds, but shall not include (x) a
transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to a person whose primary business is investing in
securities or (y) issuances to lenders.

     

    (iv)           Upon
any adjustment to the Exercise Price pursuant to Section 9(e) (i) above, the
number of Warrant Shares purchasable hereunder shall be adjusted by multiplying
such number by a fraction, the numerator of which shall be the Exercise Price in
effect immediately prior to such adjustment and the denominator of which shall
be the Exercise Price in effect immediately
thereafter.  Notwithstanding any other provisions in this Section 9 to
the contrary, the Exercise Price shall in no event
be reduced to a price less than $.06 per share
(subject to adjustment pursuant to Section 9(a) above).  This
provision shall not restrict the number of shares of Common Stock that a Holder
may receive or beneficially own in order to determine the amount of securities
or other consideration that such Holder may receive in the event of a
transaction contemplated by Section 9 of this Warrant.

     

    (f)           Calculations. All
calculations under this Section 9 shall be made to the nearest cent or the
nearest 1/100th of a
share, as applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issuance
or sale of Common Stock.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    (g)           Notice of
Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will, at the written request of the
Holder, promptly compute such adjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment, including a
statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s Transfer Agent.

     

    (h)           Notice of Corporate
Events. If, while this Warrant is outstanding, the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
subsidiary, (ii) authorizes or approves, enters into any agreement which
contemplates or requires stockholder approval for any Fundamental Transaction or
(iii) authorizes the voluntary dissolution, liquidation or winding up of the
affairs of the Company, then, unless such notice and the contents thereof shall
be deemed to constitute material non-public information, the Company shall
deliver to the Holder a notice describing the material terms and conditions of
transaction described in (i), (ii) or (iii) above at least ten (10)( Trading
Days prior to the applicable record or effective date on which a person would
need to hold Common Stock in order to participate in or vote with respect to
such transaction, and the Company will take all reasonable steps to give Holder
the practical opportunity to exercise this Warrant prior to such time; provided, however, that the
failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such
notice.

     

    10.           Payment of Exercise
Price. The Holder shall pay the Exercise Price to the Company in
immediately available funds.

     

     11.           Limitations on
Exercise. Subject to the last sentence hereof, the number of Warrant
Shares that may be acquired by the Holder upon any exercise of this Warrant (or
otherwise in respect hereof) shall be limited to the extent necessary to insure
that, following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its affiliates, as
defined in Rule 501 of Regulation D ("Affiliates"),
and any other Persons whose beneficial ownership of Common Stock would be
aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act,
does not exceed 9.999% (the “Maximum
Percentage”) of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. Each delivery of an Exercise Notice
hereunder will constitute a representation by the Holder that it has evaluated
the limitation set forth in this Section and determined that issuance of the
full number of Warrant Shares requested in such Exercise Notice is permitted
under this Section.  The Company’s obligation to issue shares of
Common Stock in excess of the limitation referred to in this Section shall be
suspended (and, except as provided below, shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if any, as such
shares of Common Stock may be issued in compliance with such limitation;
provided, that, if, as of 5:00 p.m., New York City time, on the Expiration Date,
the Company has not received written notice that the shares of Common Stock may
be issued in compliance with such limitation, the Company’s obligation to issue
such shares shall terminate.  This provision shall not restrict the
number of shares of Common Stock that a Holder may receive or beneficially own
in order to determine the amount of securities or other consideration that such
Holder may receive in the event of a Fundamental Transaction as contemplated in
Section 9 of this Warrant. By written notice to the Company, the Holder may
waive the provisions of this Section but any such waiver will not be effective
until the 61st day
after such notice is delivered to the Company, nor will any such waiver effect
any other Holder.  This provision shall not apply to Holders who as of
the Closing Date beneficially own in excess of ten percent (10%) of the total
number of issued and outstanding shares of Common Stock.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    12.           No Fractional Shares.
No fractional Warrant Shares will be issued in connection with any exercise of
this Warrant. In lieu of any fractional shares that would otherwise be issuable,
the Company shall pay cash equal to the product of such fraction multiplied by
the closing price of one Warrant Share as reported by the applicable Trading
Market on the Exercise Date.

     

    13.           Notices. Any and all
notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section at or prior to 5:00 p.m. (New York City
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 5:00 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such notices or communications shall
be:  if to the Company, to NeoMagic Corporation, 780 Montague
Expressway, Suite 504, San Jose, California 95131  Attn: Chief
Executive Officer or to facsimile number 408 428-9712 (or such other
address  and facsimile number as the Company shall indicate in writing
in accordance with this Section) or (ii) if to the Holder, to the address or
facsimile number appearing on the Warrant Register (or such other address as the
Company shall indicate in writing in accordance with this Section).

     

    14.           Warrant Agent. The
Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholder services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    15.           Miscellaneous.

     

    (a)           This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder, or their successors and assigns.

     

    (b)           All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the
principles of conflicts of law thereof. Each party agrees that any legal
proceeding concerning the interpretation, enforcement and defense of this
Warrant and the transactions herein contemplated (“Proceeding")
,whether brought against a party hereto or its respective Affiliates ( as
defined above), employees or agents. shall be commenced and maintained
exclusively in the federal or state courts located within Santa Clara County,
California. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of such courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or referenced
herein, and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
such courts, or that any such Proceeding has been commenced in an improper or
inconvenient forum. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such Proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any
Proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of this Warrant, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    (c)           The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.

     

    (d)           In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the remaining provisions of this Warrant shall
continue in effect to the maximum extent permitted by law. (e) Prior to exercise
of all of this Warrant, the Holder hereof shall not be entitled to any rights of
a stockholder with respect to unexercised portion of this Warrant.

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its
authorized officer as of the date first indicated above.

     

    
      
        
          
            	 	 
      	 
      	 
      
	 	
                    NEOMAGIC
      CORPORATION

                  
	 	 
      	 
      
	 	
                    By:

                  	 
      	 
      
	 	
                    Name:

                  	Douglas
      R. Young	
                     

                  
	 	
                    Title:

                  	Chief
      Executive Officer	
                     

                  

          

        

      

    

     

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    EXERCISE
NOTICE

    

    NeoMagic
Corporation

    
      
        	 
      	 
      	 
      
	
                
                  WARRANT
      NO.
      A___                                                          

                

              	
                  

              	
                DATED
      OCTOBER__, 2009

              

      

    

     

    Ladies
and Gentlemen:

    

    (1)           The
undersigned hereby elects to exercise the above-referenced Warrant with respect
to _________ shares of Common Stock.  Capitalized terms used herein
and not otherwise defined herein have the respective meanings set forth in the
Warrant.

      

    (2)           The
Holder shall pay the sum of $_______ to the Company in immediately available
funds in accordance with the terms of the Warrant.

    

    (3)           Pursuant
to this Exercise Notice, the Company shall deliver to the Holder the number of
Warrant Shares determined in accordance with the terms of the
Warrant.

     

    (4)           By
its delivery of this Exercise Notice, the undersigned represents and warrants to
the Company that in giving effect to the exercise evidenced hereby the Holder
will not beneficially own in excess of the number of shares of Common Stock (as
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934) permitted to be owned under Section 11 of the Warrant to which this notice
relates.

     

    
      
        
          
            
              
                	 	
                      	 
	 	HOLDER:	 
	 	 	 
	
                         

                      	 	 
	 	
                        (Print
      name)

                      	 
	 	
                      	 
	 	By: 	 
	 	 	 
	 	Title:    	 

              

            

          

        

      

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    WARRANT
ORIGINALLY ISSUED OCTOBER__, 2009

    WARRANT
NO. A___

    

    FORM
OF ASSIGNMENT

     

    To be
completed and signed only upon transfer of Warrant

     

    FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto                             
the right represented by the within Warrant to purchase                 
shares of Common Stock to which the within Warrant relates and appoints                             
attorney to transfer said right on the books of the Company with full power of
substitution in the premises.

                      

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	Dated:
      	 	TRANSFEROR:	 
	 	 	 	 
	 	
                                       

                                    	 	 
	 	 	
                                      (Print
      name)

                                    	 
	 	 	
                                    	 
	 	 	By: 	 
	 	 	 	 
	 	 	Title:    	 

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
          
            
              
                
                  
                    
                      
                        
                          	 	
                                	 
	 	
                                  TRANSFEREE:

                                	 
	 	 	 
	
                                   

                                	 	 
	 	
                                  (Print
      name)

                                	 
	 	
                                	 
	 	(Address of Transferee)	 
	 	 	 
	 	   	 
	 	 	 
	 	 	 

                        

                      

                    

                  

                

              

            

          

        

      

      
        
          	In the presence of:	 	
                	 
	 	 	 	 

           

           

           

          16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}]]