Exhibit 10.3
AMENDMENT NO. 12 TO ORIGINAL LOAN AGREEMENT
AND
AMENDMENT NO. 4 TO NEW LOAN AGREEMENT
This Amendment No. 12 to the Original Loan Agreement (as defined herein)
and Amendment No. 4 to the New Loan Agreement (as defined herein) is dated as of
July 13, 2005 (the "AMENDMENT"), by and between Valence Technology, Inc.,
formerly known as Ultracell, Inc., a Delaware corporation ("BORROWER") and Xxxx
& Xxxx Enterprises, LLC, a California limited liability company ("LENDER").
RECITALS
A. Borrower is indebted to Lender pursuant to that certain Loan Agreement,
dated as of July 17, 1990, between Borrower and Baccarat Electronics, Inc. (the
"ORIGINAL LENDER"), as amended by that certain Amendment No. 1, dated as of
March 15, 1991, as amended by that certain Amendment No. 2, dated as of March
24, 1992, as amended by that certain Amendment No. 3, dated as of August 17,
1992, as amended by that certain Amendment No. 4, dated as of September 19,
1997, as amended by that certain Amendment No. 5, dated as of July 17, 1998, as
amended by that certain Amendment No. 6, dated as of November 27, 2000, as
amended by that certain Amendment No. 7, dated as of October 10, 2001, as
amended by that certain Amendment No. 8, dated as of February 11, 2002, as
amended by that certain Amendment No. 9, dated as of November 8, 2002, as
amended by that certain Amendment No. 10, dated as of October 21, 2004, and as
amended by that certain Amendment No. 11, dated as of July 1, 2005 (collectively
the "ORIGINAL LOAN AGREEMENT").
B. Borrower and Lender subsequently entered into that certain Loan
Agreement, dated as of October 5, 2001, as amended by that certain Amendment No.
1, dated as of November 8, 2002, as amended by that certain Amendment No. 2,
dated as of October 21, 2004, and as amended by that certain Amendment No. 3,
dated as of July 1, 2005 (collectively the "NEW LOAN AGREEMENT").
C. Pursuant to a Second Amended Promissory Note, dated November 27, 2000,
as amended (the "ORIGINAL NOTE"), the loans made pursuant to the Original Loan
Agreement are due and payable in full on September 30, 2006 and pursuant to a
Promissory Note dated October 5, 2001 (the "NEW NOTE" and together with the
Original Note, the "NOTES")) the loans made pursuant to the New Loan Agreement
are due and payable in full on September 30, 2006
D. Borrower and Lender now desire to amend the Original Loan Agreement, the
New Loan Agreement and the Notes (the "LOANS") to (i) extend the maturity date
from September 30, 2006 to September 30, 2008, and (ii) provide for Lender to
have a 90 day option to convert the interest rate on the Loans to compound
interest exercisable beginning on October 1, 2006.
NOW THEREFORE, in consideration of the promises and mutual agreements
contained herein, the parties agree as follows.
1. MATURITY DATE. The maturity date of the Loans is extended from
September 30, 2006 to September 30, 2008.
2. INTEREST RATE. Lender is granted a 90 day option to convert the Loans
from accruing interest at a simple rate to a compound rate, accruing
interest on a quarterly basis, at the interest rate as specified in
the Original Loan Agreement and the New Loan Agreement, respectively.
The option may be exercised by Lender by providing written notice to
Borrower any time from October 1, 2006 through December 31, 2006, and
shall be effective as of the date of such written notice.
3. WARRANTS. The expiration date of the warrant to purchase 1,402,743
shares of common stock of Borrower issued to Lender on January 4, 2002
is hereby extended from October 5, 2005 to September 30, 2008.
Borrower at Lender's request, shall promptly, on receipt the existing
warrant agreements, issue a new warrant of like denomination and
tenor, with the amended expiration date.
4. WAIVER.
(a) Lender, pursuant to Section 5.2 of the Original Loan Agreement
and pursuant to Section 7.2 of the New Loan Agreement, hereby
waives the provisions of Section 3.2.4 of the Original Loan
Agreement and Section 5.4 of the New Loan Agreement as to the
granting of a security interest by Borrower to SFT I, Inc., in
the rate cap agreement obtained by Borrower, dated July 13, 2005
(the "CAP AGREEMENT"), in connection with that certain Loan and
Security Agreement entered into between Borrower and SFT I, Inc.,
dated July 13, 2005.
(b) Lender, pursuant to Section 11.2 of that certain Security
Agreement, dated as of October 5, 2001, by and between Borrower
and Lender, hereby waives its first prior security interest in
the Cap Agreement, solely with regards to SFT I, Inc. Lender
permits Borrower to take such further actions as are necessary to
allow SFT I, Inc. to obtain a first priority security interest in
the Cap Agreement.
5. INTEGRATION. This Amendment, the Original Loan Agreement, the New Loan
Agreement and all related agreements constitute the entire agreement
and understanding among the parties relating to the subject matter
hereof, and supersede all prior and contemporaneous proposals,
negotiations, agreements and understandings relating to the subject
matter. No modifications, rescission, waiver, release or amendment of
any provision of this Amendment shall be made, expect by a written
agreement signed by Lender and Borrower. Except as set forth herein,
all other terms and conditions of the Loans remain in full force and
effect.
[Signature page follows]
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By signing below, Borrower and Lender understand and agree to the terms of
this Amendment. This Amendment is executed as of the date first written above.
BORROWER:
VALENCE TECHNOLOGY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
LENDER:
XXXX & XXXX ENTERPRISES, LLC
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
Tile: Manager
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