DATED December 21, 2004
(1) Valence Technology, BV
(2) Valence Technology, Inc
(3) Invest Northern Ireland
SETTLEMENT AGREEMENT
L'ESTRANGE & XXXXX
-------------------
SOLICITORS
(SMcG/KB/4221/340/8)
THIS AGREEMENT is made the 21st day of December 2004 BETWEEN:
(1) Valence Technology BV a company registered in the Netherlands and in
Northern Ireland as a foreign company with number FC 003149 whose
registered branch in Northern Ireland is at XxXxxxxx'x Road, Hydepark
Industrial Estate, Mallusk, Newtownabbey (the "COMPANY");
(2) Valence Technology, Inc a Delaware Corporation whose executive office is at
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 ("VALENCE INC");
and
(3) Invest Northern Ireland, a statutory corporation of Xxxxxxxx Xxxxx, 00-00
Xxx Xxxxxx, Xxxxxxx XX0 0XX ("INVEST NI")
WHEREAS:
(a) Under a letter dated 27th September 1993 from the Department of Economic
Development acting through the Executive of the Industrial Development
Board for Northern Ireland ("IDB") to the Company amended as described
below (the "Letter of Offer"), IDB agreed, amongst other things, to give
financial assistance to the Company to establish a manufacturing facility
to produce batteries and carry out associated research and development
work.
(b) The Letter of Offer was amended with the agreement of IDB and the Company
by letters dated 25th January 1994, 11 May 1994, 17 April 1997, 26 June
1998, 26 February 1999 and 2 March 2001 (the "Amendment Letters"). In
addition, under an agreement dated 12 May 1994, Valence Inc provided a
parent company guarantee to IDB in respect of the Company's liabilities
under the amended Letter of Offer (the "Guarantee") and the Company granted
debenture security on 21st August 1998, 9th March 2001 and 5th April 2001
in respect of such liabilities.
(c) Under a development agreement dated 16th December 1993 (the "1993
Development Agreement") IDB agreed, to acquire, refurbish, modify and sell
to the Company the factory building at Mallusk Road, Newtownabbey comprised
in Folio 41266 County Antrim (the "Property"). The liabilities of the
Company to IDB pursuant to the 1993 Development Agreement were secured by
way of a debenture dated 5th December 1996 executed by the Company in
favour of IDB
(d) Under a supplemental development agreement dated 20th December 2000 (the
"Supplemental Development Agreement") IDB agreed to construct an extension
to the factory building at the Property. The liabilities of the Company to
IDB pursuant to the Supplemental Development Agreement were secured by way
of a debenture dated 20th December 2000 executed by the Company in favour
of IDB.
(e) By virtue of the Industrial Development Act (Northern Ireland) 2002 the
functions of IDB under Article 7 of the Industrial Development (Northern
Ireland) Order 1983 together with all property rights and liabilities in
connection thereto have been transferred to Invest NI.
(f) Invest NI have agreed to the Company and Valence Inc. satisfying their
liabilities to Invest NI under the 1993 Development Agreement, the
Supplemental Development Agreement and the Letter of Offer (which
expression shall for the avoidance of doubt, include the Amendment Letters)
and the Guarantee on the terms and conditions of this Agreement.
NOW IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement (including the recitals) the following words and
expressions shall, where the context permits, have the following meanings:
"Approved Costs of Sale" means the costs of sale in respect of
any item or items subject to the Security
(excluding the Property and the plant and
machinery listed in the Second
Schedule) amounting to no greater
than 10% of the sale price of the
item sold;
"Completion" means completion of the subscription for
Shares in accordance with the provisions of
clause 3;
"Completion Date" means 21st December 2004
"Encumbrance" means any mortgage, charge, pledge, lien,
option or other security interest;
"Invest NI Solicitors" means L'Estrange & Xxxxx, Xxxxxx Xxxxx,
00/00 Xxxxxx Xxxxxx, Xxxxxxx XX0 0XX;
"Liabilities" means the total liabilities (whether
actual or contingent, present or
future) of the Company and Valence
Inc to Invest NI pursuant to the
1993 Development Agreement, the
Supplemental Development Agreement,
the Letter of Offer (as amended),
the Guarantee and the Security;
"Relevant Period" means any six month period the first of
which will commence on the Completion
Date and each subsequent period each of
which will commence six months following the
commencement of the prior such period;
"Sale Proceeds" means (a) in respect of the sale of the
Property and the plant and machinery listed
in the First Schedule the net sale proceeds
after discharge indebtedness secured by the
Deed of Charge dated 10th May 2001 in favor
of Ulster Bank Limited, the indebtedness
under the 1993 Development Agreement, the
Supplemental Development Agreement and
deduction of costs of sale up to a limit of
(pound) 250,000stg (two hundred and fifty
thousand pounds sterling) and (b) in respect
of any plant and machinery or other property
charged pursuant to the Security the net
sale proceeds after deduction of the Approved
Costs of Sale;
"Security" means the debentures dated 5th December
1996, 21st August 1998, 20th December 2000,
9th March 2001 and 5th April 2001 incorporating
fixed and floating security over the assets
of the Company;
"Shares" means shares of common stock, $ 0.001 par value
per share, together with any further shares,
stocks or other securities in Valence Inc which
are derived from the Shares or which are
distributed by Valence Inc in respect of the
Shares and any shares, stock and other
securities for the time being representing the
same by reason of any alteration in the
share capital of Valence Inc;
"Valence's Solicitors" means Xxxxxx Xxx Northern Ireland, Capital
House, 0 Xxxxx Xxxxx Xxxxxx, Xxxxxxx XX0 0XX.
1.2 In this Agreement, where the context admits:
1.2.1 words and phrases defined in the Companies (Northern
Ireland) Order 1986 (as amended), shall have the same
meanings unless otherwise defined;
1.2.2 references to statutory provisions shall be construed as
references to those provisions as amended or re-enacted or
as their application is modified by other provisions from
time to time and shall include references to any provisions
of which they are re-enactments (whether with or without
modification);
1.2.3 references to clauses, sub-clauses and Schedules are,
unless otherwise specified, references to clauses,
sub-clauses and Schedules of this Agreement;
1.2.4 references to any document being in agreed terms are to
that document in the form signed by or on behalf of the
parties for identification purposes;
1.2.5 references to this Agreement include a reference to the
Schedule;
1.2.6 references to the singular includes a reference to the
plural and vice versa and a reference to the masculine
includes a reference to the feminine and neuter and vice
versa; and
1.2.7 reference to a person includes a reference to any company
as well as to any natural or legal person;
1.3 The headings and sub-headings are inserted for convenience only and shall
not affect the construction of this Agreement.
2. AGREEMENT
In consideration of Invest NI agreeing to the release of the Liabilities in
accordance with the terms of this Agreement, Valence Inc has agreed to
issue Shares to Invest NI equivalent to the sum of (pound)1,000,000 (one
million pounds sterling) and Valence Inc and the Company have agreed to
make a cash payment to Invest NI in the sum of (pound)2,000,000 (two
million pounds sterling) and to repay all sums due under the 1993
Development Agreement and Supplement Development Agreement in accordance
with the terms of this Agreement.
3. ISSUE OF SHARES IN VALENCE INC
3.1 Valence Inc agrees that it shall issue to Invest NI on the Completion Date
the number of shares as is equivalent to the sum of (pound)1,000,000stg
(one million pounds sterling). The number of Shares shall be determined
using the average share value of the 4:00pm EST closing bid and ask price
for a share of Valence Inc Common Stock on the day prior to the Completion
Date from the NASDAQ corporate services network and a currency an exchange
rate of U.S. dollars to pounds sterling as listed in the Wall Street
Journal on the day prior to the Completion Date.
3.2 Valence Inc represents and warrants that the shares of common stock
issuable under paragraph 3.1 are the subject of an effective registration
under the Securities Act of 1933 as amended, are not subject to any
Encumbrance and may be resold without restriction save for any restriction
contained in paragraph 3.3 of this Agreement subject to compliance with the
laws of any country other than the United States of America. The
certificates representing the Shares shall be stamped or otherwise
imprinted with legends in substantially the following form (in addition to
any legend required or advisable under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTION
THAT THEY CANNOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR
OTHERWISE DISPOSED OF UNTIL (respectively (July 1, 2005), (January 1,
2006), (July 1, 2006) and (January 1, 2007).
3.3 Invest NI agrees that for a period of two years from the Completion Date it
shall not dispose of more than 25% of the total Shares issued to it on the
Completion Date in any Relevant Period.
3.4 Completion shall take place on the Completion Date at which time Valence
Inc shall in deliver to Invest NI (or its nominees);
3.4.1 share certificates in respect of the Shares; and
3.4.2 such consents or documents (if any) as Invest NI may reasonably
require to enable Invest NI (or its nominees) to be registered as
holders of the Shares.
3.5 All rights attached to the Shares shall accrue to Invest NI from the
Completion Date and Valence Inc shall account to Invest NI for all
dividends or other distributions of Valence Inc in respect of those Shares
declared or paid by reference to a record date subsequent to the Completion
Date up to the date of disposal of the Shares by Invest NI.
3.6 Valence Inc warrants to Invest NI that it has and until the Completion of
the issue of all Shares will have full power and authority to issue the
Shares on the terms and conditions of this Agreement.
3.7 Upon receipt of written request by Invest NI and surrender of the
certificates representing such Shares, Valance Inc agrees to issue new
certificates representing the Shares without legend set forth in paragraph
3.2 above as soon as the restriction contained in paragraph 3.3 no longer
applies.
4. CASH PAYMENT
4.1 Valence Inc and the Company agree that in accordance with the terms of this
Agreement they will pay to Invest NI the sum of (pound)2,000,000
(sterling). The full amount of such payment to be made on or before the
date six (6) months after the date of this Agreement (the "Longstop Date").
4.2 Valence Inc and the Company confirm, without prejudice to their obligation
to pay the full amount specified in paragraph 4.1, that it is their
intention that the sum mentioned in paragraph 4.1 above shall be repaid
from the Sale Proceeds as the Sale Proceeds are received by Valence Inc.
and the Company and is in addition to repayment of all sums due under the
1993 Development Agreement and the Supplemental Development Agreement. In
the event that the sale of the Property and/or plant and machinery and
other property has not been completed on or before the Longstop Date,
Invest NI reserves all rights to enforce the Security and/or the Guarantee
and to take all actions required to recover the Liabilities.
4.3 In the event that there is a shortfall between the Sale Proceeds realised
(if any) and the sum due under paragraph 4.1 above then Valence Inc and the
Company agree to make up that shortfall by way of payment of the balance
due no later than the Longstop Date.
5. PLANT AND MACHINERY
5.1 The Company and/or Valence Inc has paid the sum of (pound)150,000 stg to
Invest NI on 6 December 2004. In consideration of this payment Invest NI
consents to the transportation of the plant and machinery listed in the
First Schedule to this Agreement in accordance with the terms of the letter
dated 1 December 2004 entered into by the parties to this Agreement.
5.2 Valence Inc and the Company hereby agree that any plant and machinery
listed in the First Schedule and moved pursuant to this consent will remain
subject to the fixed charges created by the Security until a formal release
of the security is obtained in accordance with Clause 6.4 .
5.3 For the avoidance of doubt the parties hereby agree that any sums paid by
the Company and/or Valence Inc to Invest NI under the terms of paragraph
5.1 shall be set off against the sums payable under paragraph 4.1 above.
6. RELEASE OF LIABILITY/SECURITY/GUARANTEE
6.1 Upon Completion of the issue of the Shares and payment of all sums due
under the 1993 Development Agreement, the Supplement Development Agreement
and all sums payable under paragraph 4.1, Invest NI shall unconditionally
and irrevocably release the Company and Valence Inc and their respective
officers, employees and agents of its/their obligations, liabilities
(whether actual or contingent present or future) and claims under the 1993
Development Agreement, the Supplemental Development Agreement and the
Letter of Offer, the Guarantee and the Security (to the extent it has not
already been released under the remaining provisions of this paragraph 6)
and accordingly shall not exercise any rights to recover, grant monies paid
under the Letter of Offer, including, but not limited to, any rights under
clauses 13 and 14 of the Letter of Offer.
6.2 In respect of the Property, Invest NI shall execute and deliver to
Valence's Solicitors formal releases of the Security over the Property and
the plant and machinery listed in the Second Schedule upon receipt of all
sums due under the 1993 Development Agreement and the Supplemental
Development Agreement, the balance of the Sale Proceeds and upon Completion
of the issue of the Shares. In respect of the sale of the Property, Invest
NI's solicitors shall provide a written undertaking to Valence's Solicitors
confirming that they hold formal releases of the Security over the Property
in the agreed form duly executed by Invest NI and that they will forward
such releases to Valence's Solicitors upon receipt of the share
certificates in respect of the Shares in favour of Invest NI and the sums
referred to in this paragraph 6.2.
6.3 In respect of any plant and machinery which is subject to a fixed charge in
favour of Invest NI but which is not listed in the First or Second
Schedules, Invest NI shall execute and deliver to Valence's Solicitors a
formal release or releases of Security over such plant and machinery as is
to be sold to a third party upon receipt from Valence's of the Sale
Proceeds as is required to discharge the cash payment referred to in
paragraph 4.1, or on payment in full of the sum referred to in paragraph
4.1 whichever is the earlier.
6.4 For the avoidance of doubt, in the event that Valence Inc and/or the
Company fails to comply with any provision of this Agreement, or any
provision of this Agreement is deemed unenforceable, this may be deemed by
Invest NI to constitute a default under the terms of the Letter of Offer
and the 1993 Development Agreement and Supplemental Development
Agreement and Invest NI reserves the right to seek repayment of the full
amount of the Liabilities and enforce its rights under the said agreements,
the Letter of Offer and the Guarantee and the Security (to the extent that
it has not already been released under the foregoing provisions of this
Clause 6).
6.5 For the avoidance of doubt it is further agreed that Valence Inc and/or the
Company shall be and is released from all liabilities and obligations to
Invest NI (save as provided in respect of the Shares issued to Invest NI
under paragraph 3.1) upon payment to Invest NI of all sums due under the
1993 Development Agreement, the Supplemental Development Agreement, the
balance of the Sale Proceeds, all sums due under paragraph 4.1 of this
Agreement and upon Completion of the issue of the Shares.
7. GENERAL
7.1 Each party shall procure the passing of such resolutions, execute such
documents and waivers and generally do everything reasonably required to
give effect to the terms of this Agreement including, without limitation,
the release of the Security and the Guarantee and the vesting of the
beneficial and legal ownership of the Shares in Invest NI (or its
nominees).
7.2 This Agreement comprises the entire agreement between the parties in
relation to the matters referred to herein and therein and supersedes any
previous agreement or arrangement between the parties hereto or any of them
in relation to the sale of the Shares (or any of them) or any interest in
Valence Inc or the Company, and the parties acknowledge that, except as
provided in this Agreement (and without prejudice to the generality of the
foregoing in particular as provided for in paragraphs 4.2 and 6.3 of this
Agreement) and in the documents referred to above, no claim shall arise in
respect of any agreement or arrangement so superseded.
7.3 No delay or omission on the part of any party hereto in exercising any
right, power or privilege hereunder shall operate to impair such right,
power or privilege or be construed as a waiver thereof and no single or
partial exercise or non-exercise of any such right, power or privilege
shall in any circumstances preclude any further or other exercise thereof
or the exercise of any other right, power or privilege.
7.4 The provisions of this Agreement, insofar as the same shall not have been
performed at Completion, shall remain in full force and effect
notwithstanding Completion.
7.5 Save as otherwise specifically provided herein, any variation of this
Agreement shall be binding only if it is recorded in a document signed by
or on behalf of all the parties hereto.
7.6 Any time, date or period mentioned in this Agreement may be extended by
mutual agreement between Invest NI, the Company and Valence Inc.
7.7 Each party shall pay its own costs and expenses incurred in preparing and
implementation of this Agreement.
7.8 This Agreement may be executed in any number of documents or counterparts
each in the like form, all of which taken together shall constitute one and
the same document, and any party may execute this Agreement by signing any
one or more of such documents or counterparts.
7.9 Save as may be required (and to the extent so required) by law or by any
relevant national or supranational regulatory authorities or by the rules
of any recognized stock exchange, all
announcements and circulars by or on behalf of any of the parties hereto
relating to the subject matter of this Agreement shall be in terms to be
agreed by the parties in advance of issue.
8. NOTICES
8.1 The respective addresses (and facsimile numbers (if any)) of the parties
for service of notices under this Agreement shall be those set out below
provided always that any party may, by written notice to the others,
substitute another address or facsimile number for the service of notices
hereunder:
Postal Address: Invest Northern Ireland
00-00 Xxx Xxxxxx,
Xxxxxxx XX0 0XX
Attention of: the Accounting Officero
Facsimile number: 00 44 28 90 49 0490 o
Postal Address: Valence Technology, Inc
0000 Xxxxxxxxxx Xxxxxxx,
Xxxxx 000,
Xxxxxx, Xxxxx 00000
Attention of: President
Facsimile number: 000-000-0000
Postal Address: Valence Technology BV
0000 Xxxxxxxxxx Xxxxxxx,
Xxxxx 000,
Xxxxxx, Xxxxx 00000
Attention of: President
Facsimile number: 000-000-0000
8.2 Notices may be given by being delivered to the notice address of the
addressee (in which case the notice shall be deemed to be served at the
time of delivery) or by being sent by first class post (in which case the
notice shall be deemed to be served 72 hours after time of posting) or by
being sent by facsimile (in which case the notice shall be deemed to be
served upon transmission) provided that a confirming copy thereof is sent
by first class post within 72 hours of transmission.
8.3 In proving service of any notice, it shall be sufficient to prove that
delivery was made or that the envelope containing the notice was properly
addressed and posted or that the facsimile was transmitted to the correct
number, as the case may be.
8.4 Any notice which is sent or received after 5.00 pm on a working day shall
be deemed to be received on the next succeeding working day.
9. ADDRESS FOR SERVICE
9.1 Valence Inc authorises and appoints Xxxxxx Xxx Northern Ireland of Capital
House, 0 Xxxxx Xxxxx Xxxxxx, Xxxxxxx XX0 0XX to accept on its behalf
service of all legal process arising out of our connected with this
agreement.
9.2 Service of any such process on the person for the time being authorised
under clause 9.1 to accept it on behalf of Valence Inc shall be deemed to
be service of that process on Valence Inc.
10. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of Northern Ireland and each of the parties submits to the
non-exclusive jurisdiction of the Northern Irish courts.
IN WITNESS whereof this Agreement has been executed as a deed on the day and
year first above written.
EXECUTED as a deed by Valence Technology BV
acting by
and ______/s/_______________________
Director
_______/s/______________________
Director/Secretary
EXECUTED as a deed by Valence Technology Inc
___/s/____________________________
CEO
SIGNED as a deed for and on behalf of Invest Northern Ireland
by o
authorised officer: /s/_____________________________
