Lithium Technology Corporation (LTHUQ)

[Gbathat]

http://biz.yahoo.com/e/070604/lthu.pk8-k.html

Can someone interpret this article?

I interpret it as lthu paying off a debt, which would be a good sign, but I just want to make sure.

Item 1.01. Entry into a Material Definitive Agreement.
On October 7, 2005, Lithium Technology Corporation ("Lithium") entered into a Securities Purchase Agreement with Cornell Capital Partners, LP ("Cornell") pursuant to which Lithium issued a secured convertible debenture in the principal amount of $3,000,000 (the "Debenture"), with an original maturity date of October 7, 2006 and issued to Cornell five-year warrants to purchase shares of Lithium common stock (the "Warrants"). Lithium and Cornell entered into certain amendment agreements dated January 31, 2006, March 21, 2006, October 31, 2006, March 31, 2007 and April 23, 2007 (the "Amendments"). Pursuant to the April 23, 2007 amendment, the Debenture was repayable on or before July 1, 2007.

On May 30, 2007 Lithium entered into a further letter agreement with Cornell (the "Letter Agreement"). As of May 30, 2007 the principal and interest due to Cornell under the Debenture was $3,009,711.06. The Letter Agreement provided for the conversion by Cornell of $288,721.73 of the principal of the Debenture into 22,556,385 restricted shares of Lithium common stock (the "Conversion") and the repayment by Lithium of the balance due of principal and interest owing to Cornell under the Debenture (after taking into account the Conversion) in the amount of $2,720,989.33. Upon the Conversion by Cornell and the Repayment by Lithium, no amounts are outstanding to Cornell under the Debenture and Cornell agreed to release its security interest in Lithium's assets and return 250,000,000 shares of Lithium common stock that were pledged as security for the Debenture. In the Letter Agreement Section 3(a)(ii)(A) of the Debenture, which limited Cornell's ownership of Lithium common stock to 4.9% of Lithium's outstanding shares, was deleted in its entirety.

The Letter Agreement further provided that the exercise price of the 40,000,000 Warrants held by Cornell was changed from $0.0128 to $0.0328. In the Letter Agreement Lithium agreed to: (i) complete the audit of its financial statements for the years ended December 31, 2004, 2005 and 2006 by September 1, 2007 and file its required SEC periodic reporting filings by such date; and (ii) invest $3 million in capital expenses by December 31, 2007 for further capacity of its facility in Germany. In the event Lithium fails to meet either condition (i) or
(ii), the exercise price of the Warrants will be reduced to $0.0128 per share.