28 May 2004Australian Stock Exchange LimitedCompany...

28 May 2004
Australian Stock Exchange Limited
Company Announcements Office
Dear Sir
VRB Power Share Cancellation & Asset Transfer Proposal
Pinnacle VRB Limted ("Pinnacle") is pleased to announce that it has entered into a Heads of Agreement
with its major shareholder, VRB Power Systems Inc. ("VRB Power") to pursue the following
transaction:
1. VRB Power
· Pursuant to a selective capital reduction, VRB Power will submit for cancellation 45,359,492
million of its shares in Pinnacle. The effect of this share cancellation will be that VRB Power
will cease to be a shareholder of Pinnacle.
· VRB Power will procure the written resignations of its directors on the Board of Pinnacle.
2. Pinnacle
· Pinnacle will agree to the termination of the African Licence Agreement under which VRB
Power is currently obliged to pay to Pinnacle an annual licence fee of AUD $250,000 for a
remaining term of 20 years.
· Pinnacle will settle the outstanding debt owed to VRB Power at the conclusion of the transaction
and on terms to be agreed. As at 30 April 2004 the amount owed to VRB Power was AUD
$801,173.76.
· Pinnacle will irrevocably assign to VRB Power, with no retention of rights, patents relating to
the vanadium redox battery technology in the U.S., Canada and Brazil. Pinnacle will
exclusively retain the Australian, Japanese, Indonesian, Philippine and Malaysian patents. In
addition, Pinnacle will assign half of its interest in patents in certain other countries, including
South Africa, Hong Kong, South Korea, New Zealand, Europe and Thailand. Thereafter VRB
Power and Pinnacle will each hold an equal undivided share in those "shared" patents. The
parties will be entitled to use and exploit the shared patents as they see fit but will be restricted
from assigning or licensing the shared patents to third parties for a period of 5 years without
obtaining the other party's consent. Additionally, each party will grant the other a first right of
refusal to acquire its "shared" patents for a 2 year period. Reversion provisions for non-payment
of patent “upkeep” fees will be put in place for the shared patents.
· With respect to any installation Pinnacle may supply in the continent of Africa, Pinnacle must,
subject to relevant laws, purchase electrolyte exclusively through VRB Power on commercial
terms and conditions to be agreed. However, for any other installations outside of Africa, VRB
Power may, but is not obliged to, supply electrolyte to Pinnacle.
2
The transaction and negotiations include, but are not limited to, the points outlined above, and will be
documented in detail in a final agreement, expected to complete the latter part of June of 2004.
The transaction is subject to certain conditions precedent, including Pinnacle obtaining the necessary
shareholder approvals required under the Corporations Act and ASX Listing Rules to implement the
transaction, including Pinnacle obtaining shareholder approval of the selective capital reduction by
special resolution (for the cancellation of VRB Power’s shares in Pinnacle, which will take effect by no
later than April 2006, but which may take effect as early a shortly after the shareholder approvals are
obtained). VRB Power will be excluded from voting on this and certain other resolutions, although it
will be required to pass independently a special resolution at a separate special class meeting of Pinnacle
shareholders approving the cancellation of its shares in Pinnacle.
The transaction is also dependent on Pinnacle raising sufficient working capital to fully implement the
transaction and to ensure its future prospects.
To assist Pinnacle shareholders in deciding whether or not to approve the transaction, an independent
expert will be engaged by the independent directors of Pinnacle to report on the fairness and
reasonableness of the transaction. A copy of the report will be included in the information to be sent to
shareholders to seek their approval of the transaction.
It is currently expected that the necessary shareholder resolutions to implement the transaction will be
put to a meeting of Pinnacle shareholders in early August 2004. The shareholder approval documents
are currently expected to be available in early July 2004
Yours faithfully,
PINNACLE VRB LIMITED
Stephen Prior
Secretary.
PINNACLE VRB LTD ABN 75 060 111 784
SUITE 1502, 530 LITTLE COLLINS STREET, MELBOURNE VIC 3000, AUSTRALIA
TELEPHONE: +61 3 9909 7200 FACSIMILE: +61 3 9909 7217