Further to its announcement of 6th February 2009 Tanfield is pleased to announce that it has now entered into a licence agreement (the "Licence") and shareholders’ agreement ("Agreement") with its US Associate, Smith Electric Vehicles US Corporation (SEV US Corp).
Under the Agreement and following the completion of the SEV US Corp fundraising (the "Fundraising"), which is expected to be closed shortly, Tanfield will hold 49% of the equity of SEV US Corp. In addition, to protect Tanfield’s shareholding from dilution, Tanfield has been issued with a warrant with an exercise price of $0.01 per share over 49% of the aggregate of : (i) any shares issued pursuant to SEV US Corp’s 2009 Incentive Compensation Plan and (ii) any SEV US Corp’s shares issued pursuant to the Fundraising with a value of over $7,500,000 and up to $15,000,000.
In exchange, pursuant to the Licence Tanfield licenses Intellectual Property Rights (IPR), brand and all existing sales and sales enquiries in North America. Additionally, SEV US Corp will pay Tanfield a royalty calculated as 2% of the sales price of each vehicle up to £1m, and 1% per vehicle thereafter with an immediate advance against royalties of £1 million. The license can only be terminated in the event of non-payment of royalties and non-performance.