AMENDMENT NO. 4 TO LOAN AGREEMENT AND PROMISSORY NOTE
This Amendment No. 4 is entered into as of September 19, 1997 between Valence
Technology, Inc. (previously Ultracell, Inc.), a Delaware corporation (the
"Borrower"), and Baccarat Electronics, Inc., whose address is 00000 Xxxxxxx
Xxxxx, Xxxxxxxxx, XX 00000 (the "Lender").
RECITALS
A. Borrower and the Lender have entered into that certain Loan Agreement
dated as of July 17, 1990 (the "Loan Agreement") and amended as of March 15,
1991 ("Amendment No. 1"), as of March 24, 1992 ("Amendment No. 2"), and as of
August 17, 1992 ("Amendment No. 3") ( the "Loan Agreement and Amendments Xx. 0,
Xx. 0 and No. 3 are referred to collectively herein as the "Agreements"),
pursuant to which Lender agreed to loan to Borrower the aggregate sum of five
million dollars ($5,000,000.00).
B. Under the Agreements, all amounts owed were to be paid back by July 31,
1995, however, the Agreements did not terminate under the terms of the
Agreements and the parties now desire to further amend those Agreements to
Borrowers rights to borrow under the Agreements.
C. Pursuant to the Loan Agreement, Borrower has executed and delivered to
the Lender that certain Promissory Note dated July 17, 1990 (the "Promissory
Note") and amended as of March 15, 1991 by Amendment No. 1 ( the Promissory Note
as amended by Amendment No. 1 is referred to herein as the "Amended Promissory
Note") for an aggregate of five million dollars ($5,000,000.00).
D. Pursuant to the Loan Agreement, Borrower has executed and delivered to
the Lender that certain Security Agreement dated July 17, 1990 (the "Security
Agreement") which granted to Lender a security interest in certain assets of the
Borrower.
E. The Agreements and Amended Promissory Note allowed the Borrower to
borrow, prepay and re-borrow principal up to the limit of the Amended Promissory
Note any number of times, prior to July 31, 1995, effectively converting the
loan to a "revolving line of credit." Additionally, to allow Borrower to obtain
credit from other lenders, the parties desire that when the loan balance between
the Borrower and Lender is zero, Lender will subordinate its security interest,
under the Security Agreement, to other lenders.
F. The Borrower and Lender now desire to extend the Agreements, Amended
Promissory Note to August 30, 2002, increase the amount of the loan to ten
million dollars ($10,000,000.00), and change the terms of the warrants.
Now Therefore, in consideration of the promises and mutual agreements contained
herein, the parties hereto agree as follows:
1. An amended Promissory Note ("New Amended Promissory Note") is hereby
incorporated in the Agreements and attached hereto. The total amount available
under the New Amended Promissory Note shall be ten million dollars
($10,000,000.00). Borrower shall make a draw-down on line of credit within
thirty (30) days of the date of this amendment for one million dollars
($1,000,000.00). Borrower and Lender shall mutually agree upon the dates and
amounts of future draw-downs on the line of credit.
2. The Expiration Date of any new Warrants is hereby amended to read as
follows: "the earliest of (i) the effective day of a reorganization of the
Company as set forth in Section 4.3 hereof or (ii) August 30, 2002.
Additionally, all new warrants granted according to the Agreements shall have an
exercise price equal to the last sale price per share of the Company's Common
Stock on the NASDAQ National Market on the date of issuance, as reported in THE
WALL STREET JOURNAL, which the Borrower's Board of Directors has determined,
after consideration of all relevant factors, to be equal to the fair market
value of the Borrower's Common Stock on the date thereof. Further, warrants
shall be granted at the rate 25 warrants for every two hundred dollars ($200.00)
borrowed, or reborrowed. The forgoing shall be deemed an amendment of the Loan
Agreement, and to Exhibit C attached thereto and to all warrants hereafter
issued.
3. In Section 1 of the Security Agreement add:
g. "Intellectual Property" shall mean all property protected under
copyright, patent rights, trademark rights, trade secret rights and all common
law rights connected therewith and all other intellectual property rights, and
know-how, and shall include rights to new inventions, discoveries, works of
authorship and improvements, whether created, purchased or licensed, and,
whether existing or later created, purchased or licensed."
3. In Section 2 of the Security Agreement, following "Party the following"
add "existing now, or later," following "Chattel Paper, Contracts," add
"Intellectual Property, Subsidiaries and all their assets," and after "obtained
by Debtor" add "from third parties, now or hereinafter, including from."
4. Except as stated herein, all provisions of the Agreements and the New
Amended Promissory Note shall remain in full force and effect. This Amendment
No. 4 shall be deemed effective as of the date first written above.
5. This Amendment No. 4 may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts taken together shall constitute and be considered a part of a
single original agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to be
duly executed and delivered by their proper and duly authorized officers as of
the date first written above.
Baccarat Electronics, Inc. Valence Technology, Inc.
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxxx X. Xxxx
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signature of authorized representative signature of authorized representative
XXXX X. XXXX XXXXXX X. XXXX
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printed name printed name
PRESIDENT PRESIDENT
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