SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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 4, 2002
LITHIUM TECHNOLOGY CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-10446 13-3411148
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(State or Other Jurisdiction of (Commission (IRS Employer
Incorporation or Organization) File Number) Identification No.)
5115 Campus Drive, Plymouth Meeting, PA 19462
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (610) 940-6090
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
See Item 2 below.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
SHARE EXCHANGE
On October 4, 2002 we closed a share exchange (the "Share Exchange") pursuant to
which we acquired an interest in GAIA Akkumulatorenwerke GmbH, ("GAIA"), a
lithium polymer battery company, headquartered in Nordhausen/Thuringia, Germany,
though our acquisition of 60% of the outstanding shares of GAIA Holding B.V.
("GAIA Holding"). GAIA Holding, a private limited liability company incorporated
under the laws of the Netherlands, is the 100% beneficial owner of GAIA. GAIA is
a private limited liability company incorporated under the laws of Germany.
The Share Exchange was consummated pursuant to the terms of a Share Exchange
Agreement (the "Share Exchange Agreement") that we entered into on June 7, 2002
with Hill Gate Capital N.V. ("Hill Gate"), which subsequently changed its name
to Arch Hill Real Estate N.V. ("Arch Hill Real Estate"). On September 6, 2002,
all of the outstanding shares of GAIA Holding and all of the rights and
obligations of Arch Hill Real Estate under the Share Exchange Agreement were
transferred to Arch Hill Ventures, N.V., a private company limited by shares,
incorporated under the laws of the Netherlands ("Arch Hill Ventures"). Arch Hill
Capital N.V., a private company limited by shares, incorporated under the laws
of the Netherlands ("Arch Hill Capital"), controls Arch Hill Ventures.
In the Share Exchange, Arch Hill Ventures transferred to us shares of GAIA
Holding that constitute 60% of the outstanding shares of GAIA Holding, and we
issued to Arch Hill Ventures 60,000 shares of our Series A Preferred Stock. Arch
Hill Ventures currently owns the remaining 40% of the outstanding shares of GAIA
Holding.
We and Arch Hill Ventures waived the requirement of receipt by us of at least $5
million in equity financing as a condition to the closing of the Share Exchange.
In connection with such waiver, Arch Hill Capital agreed to convert $1,914,567
principal of our promissory notes held by Arch Hill Capital into shares of our
common stock as described below (See Item 5(a) below "Bridge Financing by Arch
Hill Capital"). In order to have sufficient capital resources for our
development, production, operating and administrative needs and in order to
implement the strategy of combining our operations with GAIA, we will need to
close on an equity financing in the near term. We expect that Arch Hill Capital
will continue to provide bridge financing as needed until a new financing
transaction is completed although Arch Hill Capital has not entered into a
formal agreement to provide such bridge financing.
LTC SERIES A PREFERRED STOCK ISSUED IN THE SHARE EXCHANGE
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In the Share Exchange we issued to Arch Hill Ventures 60,000 shares of our
Series A Preferred Stock. Each share of the Series A Preferred Stock is
convertible at the option of the holder thereof into 1,113.40524 shares of our
common stock at any time following the authorization and reservation of a
sufficient number of shares of our common stock by all requisite action,
including action by our Board of Directors and by our shareholders, to provide
for the conversion of all outstanding shares of Series A Preferred Stock into
shares of our common stock.
Each share of the Series A Preferred Stock will automatically be converted into
1,113.40524 shares of our common stock one year following the authorization and
reservation of a sufficient number of shares of our common stock to provide for
the conversion of all outstanding shares of Series A Preferred Stock into shares
of our common stock. The shares of Series A Preferred Stock held by Arch Hill
Ventures are convertible, in the aggregate, into 66,804,314 shares of our common
stock.
The shares of Series A Preferred Stock are entitled to vote together with the
common stock on all matters submitted to a vote of the holders of the common
stock. On all matters as to which shares of common stock or shares of Series A
Preferred Stock are entitled to vote or consent, each share of Series A
Preferred Stock is entitled to the number of votes (rounded up to the nearest
whole number) that the common stock into which it is convertible would have if
such Series A Preferred Stock had been so converted into common stock as of the
record date established for determining holders entitled to vote, or if no such
record date is established, as of the time of any vote on such matters. Each
share of Series A Preferred Stock is initially entitled to the number of votes
that 1,114 shares of common stock would have.
In addition to the voting rights provided above, as long as any shares of Series
A Preferred Stock are outstanding, the affirmative vote or consent of the
holders of two-thirds of the then-outstanding shares of Series A Preferred
Stock, voting as a separate class, will be required in order for us to:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the terms of the Series A Preferred Stock or any
other provision of our Charter or Bylaws, in any way that
adversely affects any of the powers, designations, preferences
and relative, participating, optional and other special rights
of the Series A Preferred Stock;
(ii) issue any shares of capital stock ranking prior or superior
to, or on parity with, the Series A Preferred Stock; or
(iii) subdivide or otherwise change shares of Series A Preferred
Stock into a different number of shares whether in a merger,
consolidation, combination, recapitalization, reorganization
or otherwise.
The Series A Preferred Stock ranks on a parity with the common stock as to any
dividends, distributions or upon liquidation, dissolution or winding up, in an
amount per share equal to the amount per share that the shares of common stock
into which such Series A Preferred Stock are convertible would have been
entitled to receive if such Series A Preferred Stock had been so converted into
common stock prior to such distribution. A copy of the Amended Certificate of
Designation for the Series A Preferred Stock is attached as Exhibit 3.5 and
incorporated herein by reference.
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OWNERSHIP OF SHARES BY ARCH HILL VENTURES AND ARCH HILL CAPITAL
Including the Series A Preferred Stock issued to Arch Hill Ventures in the Share
Exchange, Arch Hill Capital beneficially owns 130,226,401 shares of our common
stock constituting approximately 67% of our outstanding shares and Arch Hill
Ventures beneficially owns 66,804,314 shares of our common stock constituting
approximately 43% of our outstanding shares. Shares of common stock beneficially
owned by Arch Hill Capital include the following:
(i) 23,932,087 shares of our common stock held by Arch Hill
Capital (issued upon conversion of $1,914,567 of promissory
notes held by Arch Hill Capital at the closing of the Share
Exchange - See Item 5(a) below); and
(ii) $3.94 million in principal of our convertible promissory notes
held by Arch Hill Capital convertible at any time into
39,490,000 shares of our common stock at $.10 per share.
In addition, both Arch Hill Capital and Arch Hill Ventures beneficially own:
(i) 60,000 shares of our Series A Preferred Stock held by Arch
Hill Ventures (issued in the Share Exchange) which are
entitled to 1,114 votes per share and are convertible into
66,804,314 shares of our common stock as described above.
AUTHORIZED AND OUTSTANDING LTC SHARES
As of October 4, 2002, including the 23,932,057 shares of common stock issued
upon conversion of $1,914,567 of bridge notes held by Arch Hill Capital and the
60,000 shares of Preferred Stock issued in the Share Exchange, we have
outstanding (i) 88,235,392 shares of common stock with one vote per share and,
(ii) 60,000 shares of Series A Preferred Stock, with 1,114 votes per share.
We plan to prepare and file with the Securities and Exchange Commission a proxy
or information statement to be mailed to our stockholders in connection with an
increase in the authorized number of shares of our common stock to make
available that number of shares of our common stock as will be required for the
conversion of the Series A Preferred Stock issued in the Share Exchange, all
outstanding convertible securities and any equity securities to be issued as
part of a new financing.
We currently have authorized (i) 125,000,000 shares of common stock and (ii)
100,000 shares of preferred stock, all of which have been designated Series A
Preferred Stock pursuant to the Amended Certificate of Designation filed with
the Delaware Secretary of State on August 27, 2002 (See Exhibit 3.5). We do not
have enough authorized shares of common stock to issue shares of common stock to
all holders of our convertible securities upon conversion of such securities. As
of October 4, 2002, we had outstanding (i) 88,235,392 shares of common stock
and (ii) options, warrants, notes and Series A Preferred Stock convertible into
an aggregate of 127,355,314 shares of common stock.
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LTC BOARD OF DIRECTORS
The Share Exchange Agreement provides that as soon as practicable after
consummation of the Share Exchange and filing by us of a Form 14-F for such
purpose, our Board of Directors will be increased to twelve members and Arch
Hill Ventures will be entitled to designate six nominees to our Board of
Directors. Ilion Technology Corporation is also entitled to designate one
nominee to our Board of Directors.
GAIA HOLDING BOARD OF DIRECTORS
Mr. Hendrikus Harold van Andel is the sole executive director of GAIA Holding.
In connection with the closing of the Share Exchange, GAIA Holding's Supervisory
Board of Directors has been increased to four members consisting of:
Mr. David J. Cade
Mr. William D. Walker
Dr. Franz Josef Kruger
Prof. Dr. Marnix Snijder
GAIA BOARD OF DIRECTORS
Dr. Franz Josef Kruger and Mr. Ralf Tolksdorf are the managing directors of
GAIA. As a condition of closing the Share Exchange, GAIA's Supervisory Board of
Directors has been increased to three members consisting of:
Mr. Hendrikus Harold van Andel
Prof. Dr. Marnix Snijder
Mr. David J. Cade
REGISTRATION RIGHTS
Arch Hill Ventures has the following registration rights, at our expense, with
respect to our common stock issuable upon conversion of the Series A Preferred
Stock issued in the Share Exchange: (i) upon the request of the holders of at
least 50% of the Series A Preferred Stock, one demand registration, (ii)
unlimited piggyback rights, and (iii) rights to register shares in up to three
shelf offerings pursuant to Form S-3. All registration rights will terminate
when the underlying common stock may be sold under Rule 144(k).
OPTION AGREEMENT WITH GAIA HOLDING STOCKHOLDER
On October 4, 2002, in connection with the closing of the Share Exchange we
entered into an Option
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Agreement with Arch Hill Ventures pursuant to which we have the right to acquire
additional shares of GAIA Holding owned by such stockholder in order to maintain
our ownership position in GAIA Holding and GAIA at not less than 60% of the
outstanding shares. The Option Agreement shall remain in full force and effect
until the earlier of (a) the consent of the parties to the Option Agreement; (b)
the termination of the Strategic Alliance Agreement (see Item 5(b) below); or
(c) the liquidation or dissolution of GAIA Holding. A copy of the Option
Agreement is attached as Exhibit 10.42 and incorporated herein by reference.
GAIA HOLDING BENEFICIAL OWNERSHIP INTEREST IN GAIA
GAIA Holding is the 100% beneficial owner of GAIA. The outstanding shares of
GAIA are held pursuant to certain Dutch and German trust agreements by two
Netherlands entities (the "Nominal Stockholders") for the risk and account of
GAIA Holding. Based on the Dutch and the German trust agreements, the Nominal
Stockholders are obliged to transfer the legal ownership of the shares in GAIA
without any further payments to GAIA Holding or to a third party designated by
GAIA Holding on the demand of GAIA Holding. Pursuant to the trust agreements,
GAIA Holding has the right to vote the shares of GAIA held by the Nominal
Stockholders.
In connection with the Share Exchange closing we entered into an Agreement with
GAIA Holding, Arch Hill Ventures and the Nominal Stockholders (the "Share
Transfer Agreement") which provides that without our prior written consent, GAIA
Holding may not directly or indirectly transfer or instruct any party to
transfer the legal ownership of the shares of GAIA held by the Nominal
Stockholders to any party other than to GAIA Holding and upon our written
direction, GAIA Holding will instruct the Nominal Stockholders to transfer the
legal ownership of the shares of GAIA held by the Nominal Stockholders to GAIA
Holding for no payment. The Share Transfer Agreement provides that
notwithstanding the foregoing, in the event that the transfer of the GAIA shares
to GAIA Holding results in a negative tax implication to GAIA (the "Tax Effect")
that would otherwise be avoided by not transferring the GAIA shares, then we
will compensate the shareholders of GAIA Holding other than us in the amount of
such Tax Effect multiplied by the percentage of shares of GAIA Holding that are
beneficially owned by shareholders of GAIA Holding other than us. The Share
Transfer Agreement further provides that at such time as the parties determine
that there would no longer be any possible Tax Effect as a result of the
transfer of the GAIA shares to GAIA Holding, then the legal ownership of the
GAIA shares held by the Nominal Stockholders shall be transferred to GAIA
Holding without any payment. A copy of the Share Transfer Agreement is attached
as Exhibit 10.43 and incorporated herein by reference.
ITEM 5. OTHER EVENTS
(a) BRIDGE FINANCING BY ARCH HILL CAPITAL
Effective October 4, 2002, we and Arch Hill Capital amended the terms of a
bridge financing agreement entered into as of January 8, 2002, as previously
amended on March 22, 2002, May 30, 2002 and July 29, 2002. Arch Hill Capital
advanced (i) a total of $1,914,567 prior to July 29, 2002 convertible into
23,932,075 shares of our common stock and (ii) a total of $787,375 in August
through October 2002 in exchange for non-convertible notes.
Notes issued to Arch Hill Capital under the bridge financing agreement prior to
July 29, 2002 were convertible, at any time prior to repayment of the promissory
notes, into LTC common stock at $.08 per share and were repayable upon the
issuance of the following amounts of new convertible notes by LTC in any ("New
Notes"): upon the issuance of $6,000,000 principal amount of New Notes -
one-third of the outstanding promissory notes were repayable; upon the issuance
of $7,000,000 principal amount of New Notes - two-thirds of the outstanding
promissory notes were repayable; upon the issuance of $8,000,000 principal
amount of New Notes - all of the promissory notes were repayable.
Notwithstanding the foregoing, in the event there was no closing of a financing
by October 31, 2002, all outstanding amounts under the promissory notes were due
and owing on October 31, 2002.
On October 4, 2002, in connection with waiving the $5 million financing
condition of closing of the Share Exchange (see Item 2 above ) we entered into
Amendment No. 4 to the bridge financing agreement pursuant to which Arch Hill
Capital agreed to amend the foregoing repayment terms of the notes. Amendment
No. 4 to the bridge financing agreement provides that the entire principal
balance and all other sums due and payable under (i) any promissory note issued
prior to July 29, 2002 shall be converted as of the closing of the Share
Exchange into our common stock on the conversion terms set forth in such notes
and (ii) any promissory notes issued on or after July 29, 2002 shall be applied
against the purchase price of equity securities being sold by us in any equity
financing after the closing of the Share Exchange. Pursuant to the terms of such
Amendment No. 4 to the bridge financing agreement, on October 4, 2002,
$1,914,567 in principal of outstanding promissory notes issued prior to July 29,
2002 were converted, at $.08 per share, into 23,932,087 shares of our common
stock, at $.08 per share, and $787,375 in principal of outstanding
non-convertible promissory notes issued on or after July 29, 2002 remain
outstanding.
A copy of Amendment No. 4 to the bridge financing agreement is attached as
Exhibit 10.44 and incorporated herein by reference.
(b) STRATEGIC ALLIANCE AGREEMENT WITH GAIA
On October 4, 2002, we entered into a Strategic Alliance Agreement with GAIA
(the "Strategic Alliance Agreement") covering technology sharing and licensing,
joint production, marketing, sales and distribution activities and similar
matters.
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The Strategic Alliance Agreement provides for the following, among other
matters:
OWNERSHIP OF TECHNOLOGY. As determined in accordance with the rules of
inventorship, we will have sole ownership of all inventions, patents, know-how,
trade secrets, technical information, data, manufacturing processes, designs,
ideas, and the like ("Technology") invented, discovered or developed solely by
us, by our employees, or by our agents prior to and during the term of the
Strategic Alliance Agreement ("LTC Technology") and GAIA will have sole
ownership of all Technology invented, discovered or developed solely by GAIA, by
GAIA's employees, or by GAIA's agents prior to and during the term of the
Strategic Alliance Agreement ("GAIA Technology"). We and GAIA will each own
jointly and equally with the other party all Technology invented, discovered or
developed jointly by the parties, their employees or agents during the term of
the Agreement ("Strategic Alliance Technology").
CROSS-LICENSE OF TECHNOLOGY. We granted to GAIA a worldwide, non-sublicensable,
royalty-free license of all LTC Technology and GAIA granted to us a worldwide,
non-sublicensable, royalty-free license of all GAIA Technology. Neither party
may sell, transfer, divest or license to any third party, any Strategic Alliance
Technology or any interest in the Technology that is the subject of the
foregoing licenses without the written consent of the other party.
PATENTS. Each party will have full responsibility for the application,
prosecution, and maintenance of patents and/or patent applications worldwide for
those inventions which are solely owned by such party. Unless the parties
determine otherwise, all patent applications relating to LTC Technology, GAIA
Technology and Strategic Alliance Technology will be filed in the United States
and Germany. We will be the owner of any resulting patents, approvals or
licenses issued by any governmental entity relating to any LTC Technology. GAIA
will be the owner of any resulting patents, approvals or licenses issued by any
governmental entity relating to any GAIA Technology. We and GAIA will be
co-owners on an equal basis, of any resulting patents, approvals or licenses
issued by any governmental entity relating to any Strategic Alliance Technology.
We and GAIA have the right to bring and maintain any appropriate suit or action
for infringement of any patent or other right with respect to Technology owned
by such party.
SUPPLIER AND MANUFACTURING AGREEMENTS. The parties will enter into mutually
acceptable manufacturing, supply, and other agreements.
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ACCOUNTING CONTROLS AND FINANCIAL INFORMATION. Each party must adhere to
specified accounting and internal financial controls and furnish to the other
party specified financial information.
TERMINATION OF AGREEMENT. The Agreement (including the licenses and rights
granted thereunder) will remain in full force and effect until the earlier of
(i) the mutual consent of both parties; (ii) the liquidation or dissolution of
either party; or (iii) termination in the event of a default. Default is defined
to occur when either party (the "Defaulting Party") (a) becomes bankrupt or
insolvent, or file a petition in bankruptcy or make a general assignment for the
benefit of creditors or otherwise acknowledge insolvency, or be adjudged
bankrupt; (b) goes or is placed in a process of complete liquidation other than
for an amalgamation or reconstructions; (c) suffers the appointment of a
receiver for any substantial portion of its business who shall not be discharged
within sixty days after his appointment or (d) breaches any material provision
of the Agreement and fails to cure such breach within thirty (30) days written
notice thereof by the other party. In the event of default, the non-Defaulting
party, at its option may terminate its obligation to and the rights of the
Defaulting Party under the Agreement upon ten days' written notice to the
Defaulting Party and such termination will take effect as of the occurrence on
the event giving rise to the option to terminate.
A copy of the Strategic Alliance Agreement will be filed as Exhibit 10.45 by
amendment to this Form 8-K.
(c) LTC/GAIA OPERATING PLAN
LTC and GAIA are in the process of combining operations and staff into a single,
cohesive entity. The consolidated organizational structure and business plan
provides for unified technology research and development; product development
procurement; production; marketing; sales and distribution. Under the new
structure, LTC/GAIA will have two operating locations -- Plymouth Meeting,
Pennsylvania and Nordhausen Germany. Mr. David J. Cade will remain as Chairman
and Chief Executive Officer of LTC, while Dr. Franz J. Kruger, CEO of GAIA, will
become the President and Chief Operating Officer of LTC.
(d) WARRANTS ISSUED
As compensation for services in connection with the Share Exchange, on October
4, 2002, we issued in a private transaction warrants to purchase 1,800,000
shares of our common stock at an exercise price of $0.185 per share. The
warrants are immediately exercisable and have a five year term. A copy of the
form of warrant is attached as Exhibit 10.46 and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENT PRO FORMA INFORMATION AND EXHIBITS.
(a) AND (b) FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION. To be
filed by Amendment by December 20, 2002.
(c) EXHIBITS
3.5 Amended Certificate of Designation of Lithium Technology Corporation
10.42 Option Agreement dated as of October 4, 2002 by and between Arch Hill
Ventures N.V., GAIA Holding, B.V. and Lithium Technology Corporation.
10.43 Agreement dated October 4, 2002 by and between GAIA Holding B.V., Arch
Hill Ventures, N.V., Arch Hill Real Estate, N.V., Stichting
Administratiekantoor GAIA and Lithium Technology Corporation.
10.44 Bridge Financing Amendment Agreement No. 4 dated as of October 4, 2002
between Lithium Technology Corporation and Arch Hill Capital N.V.
10.45 Strategic Alliance Agreement dated as of October 4, 2002 by and between
Lithium Technology Corporation and GAIA Akkumulatorenwerke GmbH. [To be
filed by Amendment]
10.46 Form of Warrant dated October 4, 2002 issued to principals of
Colebrooke Capital, Inc.
99.10 Press Release dated October 8, 2002.
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SIGNATURES
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 thereunto duly authorized.
Date: October 16, 2002
LITHIUM TECHNOLOGY CORPORATION
(Registrant)
By: /s/ David J. Cade
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David J. Cade
Chairman and Chief Executive Officer
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