Attached files
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| EX-10.1 - AMENDMENT NO. 14 TO LOAN AGREEMENT - VALENCE TECHNOLOGY INC | ex_10-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): October 13,
2009
VALENCE
TECHNOLOGY, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
(State
or other jurisdiction
of
incorporation)
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0-20028
(Commission
File
Number)
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77-0214673
(IRS
Employer Identification Number)
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|
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12303
Technology Boulevard, Suite 950
Austin,
Texas 78727
(Address
of principal executive offices)
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(512)
527-2900
(Registrant’s
telephone number, including area
code)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
□ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
□ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
□ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act(17 CFR
240.14d-2(b))
□ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act(17 CFR
240.13e-4(c))
Item
1.01. Entry
into a Material Definitive Agreement.
Valence
Technology, Inc. (the “Company”) and Berg & Berg Enterprises, LLC (“Berg
& Berg”) are parties to two loan agreements dated July 17, 1990 and October
5, 2001, respectively, both as amended. On October 13, 2009, Berg
& Berg and the Company agreed to amend these loan agreements to extend the
maturity date of the loans from September 30, 2010 to September 30,
2012. The letter amendment effecting this extension of maturity date
is attached to this Form 8-K as Exhibit 10.1 and is incorporated herein by
reference.
Item
2.06. Material
Impairments.
On
October 13, 2009, management of the Company concluded that, as a result of
damage caused by a fire in a leased, unoccupied, offsite warehouse facility
housing certain of its raw materials, finished goods inventory, and fixed
assets, in Suzhou, China, a material charge for impairment with respect to
certain inventory and fixed assets is required under generally accepted
accounting principles (“GAAP”). Ongoing Valence manufacturing
operations in the Company’s cathode powder plant and system assembly plant were
not affected.
The
materials consumed were not being used for current production, and therefore the
fire has not affected the Company’s ability to meet deliveries to its customers
and end-users. In addition, based on the results of the investigation
conducted by local Chinese authorities, the cause of the fire was not
determinable. It is management’s opinion that the Company’s
inventory, and more specifically, its lithium phosphate battery powder, was
neither the cause of nor contributed to the fire or its damage.
After an
assessment of the damage sustained at this facility, management determined that
a charge for impairment was required because under Accounting Standards
Codification 360-10-40-4, the Company must record an impairment charge when the
carrying amount of a long-lived asset or asset group exceeds its fair
value. As a result, the Company estimates it will record an
impairment charge from approximately $1.5 million to $2.9 million in the second
fiscal quarter of 2010. All worldwide Valence assets are insured,
therefore the Company believes it is probable that insurance proceeds will cover
all of the loss incurred. However, within established GAAP
guidelines, the Company is required to record an impairment charge estimated to
be from approximately $1.5 million to $2.9 million, and to record an offsetting
insurance recovery of approximately $1.5 million to $2.9
million. Accordingly, as a result of the expected offsetting
insurance recovery, which may not be determinable as of the second fiscal
quarter of 2010, the impairment charge should have no impact on the Company’s
net income for the fiscal year of 2010.
In
addition to the impairment charges, the Company also expects to incur a
liability of approximately $800,000 for the payment of Chinese VAT with respect
to the as-yet-untaxed and unused inventory which was consumed by the fire, which
also should also be covered by insurance. We expect this payment will
be due during the Company’s third fiscal quarter of 2010.
The
impairment charge, tax liability, and the corresponding insurance receivable
bear no relationship to the insurance claims which the Company has submitted or
will likely submit with respect to the damage to its inventory and fixed assets,
as well as the other costs it has incurred as a result of the fire; rather, the
impairment charge and its related insurance receivable relate to the net book
value of the assets that were impaired. To the extent that insurance
proceeds, which are on an incurred costs basis for inventory and a replacement
cost basis for fixed assets, ultimately exceed the net book value of the damaged
inventory and assets, a gain could be recorded in the period when all
contingencies related to the insurance claim have been resolved, including the
cash payment of Chinese VAT liability. While the Company expects the
insurance proceeds will be sufficient to cover the entire incurred cost of the
inventory and the replacement cost of the fixed assets at the damaged facility,
as well as a portion of the other costs it has incurred as a result of the fire,
certain deductibles and limitations will apply. No determination has
been made as to the total amount or timing of the receipt of those insurance
proceeds, and those insurance proceeds may not be sufficient to cover the
incurred costs of inventory, replacement costs of the fixed assets, and the
other costs it has incurred as a result of the fire.
2
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits
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Exhibit
10.1
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(Omnibus)
Amendment No. 14 to Loan Agreement dated July 17, 1990 between the Company
and Baccarat Electronics, Inc. (subsequently transferred to Berg &
Berg Enterprises, LLC) and Amendment No. 6 to Loan Agreement dated October
5, 2001 between the Company and Berg & Berg Enterprises, LLC, each
dated as of October 13, 2009.
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3
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Dated: October
13, 2009
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VALENCE
TECHNOLOGY, INC.
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By:
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/s/ Roger Williams | |
| Roger Williams | |||
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Vice
President, General Counsel and Assistant Secretary
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4
EXHIBIT
INDEX
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Exhibit
10.1
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(Omnibus)
Amendment No. 14 to Loan Agreement dated July 17, 1990 between the Company
and Baccarat Electronics, Inc. (subsequently transferred to Berg &
Berg Enterprises, LLC) and Amendment No. 6 to Loan Agreement dated October
5, 2001 between the Company and Berg & Berg Enterprises, LLC, each
dated as of October 13, 2009.
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