EXHIBIT 10.3
THIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT
September 16, 2003
XXXXX FARGO FOOTHILL, INC., as Agent and Lender
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
Xxxxx Fargo Foothill, Inc., as Arranger and Administrative Agent
("Agent") and Lender ("Foothill"), Ableco Finance LLC ("Ableco"; and together
with Foothill, "Lenders") and Advanced Lighting Technologies, Inc., an Ohio
corporation and a debtor and debtor-in-possession ("Parent") and each of
Parent's Subsidiaries identified as a borrower on the signature pages hereof
(such Subsidiaries, together with Parent, are referred to hereafter each
individually as a "Borrower", and individually and collectively, jointly and
severally, as "Borrowers") have entered into certain financing arrangements
pursuant to the Loan and Security Agreement dated June 30, 2003 among Agent,
Lenders, Borrowers and the other Loan Parties (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the "Loan Agreement") and all other Loan Documents at any time
executed and/or delivered in connection therewith or related thereto. All
capitalized terms used herein shall have the meaning assigned thereto in the
Loan Agreement, unless otherwise defined herein.
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties to this Third Amendment to Loan and Security Agreement (this
"Amendment"), the parties hereto hereby agree as follows:
1. AMENDMENTS TO LOAN AGREEMENT.
(a) As of the effective date of this Amendment, the definition of
"Adjusted EBITDA" appearing in Section 1.1 of the Loan Agreement is hereby
amended and restated in its entirety as follows:
"Adjusted EBITDA" means, for any period, Parent's and its
Subsidiaries consolidated net earnings (or loss) for such period plus
(a) interest expense, (b) income taxes, (c) depreciation and
amortization expense, (d) losses from minority interest and investments
accounted for in the equity method, up to a maximum of $500,000, (e)
non-recurring, non-cash charges, as approved in Lenders' Permitted
Discretion, (f) the amount of professional, bank and refinancing fees
related to the reorganization of Borrowers, which amount shall not
exceed the amount set forth in the projections approved by Agent,
styled "2004DraftModel108-28-03SaratogaFebExit1", minus (g) interest
income, (h) income tax benefit (i)
extraordinary gains, (j) gains resulting from minority interests or
investments accounted for on the equity method. All of the foregoing
only to the extent included in the calculation of consolidated net
earnings (or loss), without duplication, and determined in accordance
with GAAP.
(b) As of the effective date of this Amendment, Section 3.4 of the
Loan Agreement is hereby amended and restated in its entirety as follows:
"TERM. This Agreement shall become effective upon the
execution and delivery hereof by Borrowers, Agent, and the
Lenders and shall continue in full force and effect for a term
ending on the earliest of (a) the effective date of
confirmation by the Bankruptcy Court of Borrowers' plan of
reorganization in the Chapter 11 Cases, (b) February 28, 2004
(the "Maturity Date"), (c) at Lenders' option, the conversion
of the Chapter 11 Cases to a case under Chapter 7 of the
Bankruptcy Code, (d) at Lenders' option, the Loan Parties
ceasing or discontinuing their ordinary business operations,
and (e) at Lenders' option, the appointment of a trustee or an
examiner with expanded powers under the Bankruptcy Code. The
foregoing notwithstanding, the Lender Group, upon the election
of the Required Lenders, shall have the right to terminate
their obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an
Event of Default."
(c) As of the effective date of this Amendment, Section 7.20(a)(i)
of the Loan Agreement is hereby amended and restated in its entirety as follows:
"MINIMUM ADJUSTED EBITDA. Adjusted EBITDA, measured on a
monthly basis, of not less than the required amount set forth
in the following table for the applicable period set forth
opposite thereto;
Applicable Amount Applicable Period
--------------------------------------------------------
$ 6,900,000 Five months ending September 30, 2003
--------------------------------------------------------
$ 9,100,000 Six months ending October 31, 2003
--------------------------------------------------------
$10,113,000 Seven months ending November 30, 2003
--------------------------------------------------------
$11,238,000 Eight months ending December 31, 2003
--------------------------------------------------------
$12,715,000 Nine months ending January 31, 2004
--------------------------------------------------------
$14,554,000 Ten months ending February 28, 2004"
--------------------------------------------------------
(d) As of the effective date of this Amendment, Section 7.20(b) of
the Loan Agreement is hereby amended and restated in its entirety as follows:
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"CAPITAL EXPENDITURES. Make Capital Expenditures for any two
consecutive month period in an amount in excess of $1,000,000
beginning with the month ending August 31, 2003."
2. RIGHT OF FIRST REFUSAL. Borrowers hereby acknowledge, confirm
and agree that upon Borrowers' locating a source for financing arrangements for
the purpose of funding the Borrowers' plan of reorganization and other working
capital requirements, other than from the Lender Group, at any time prior to the
Maturity Date, Borrowers shall supply Agent with a copy of the commitment letter
("Commitment") obtained by Borrowers (but which Borrowers have not as yet
accepted) from the other financial institution (the "Replacement Financier"),
and which Commitment also obligates the Replacement Financier to make loans and
advances to Borrowers in an aggregate amount not less than the outstanding
Obligations due Agent and Lenders under the existing financing arrangements as
of Borrowers' anticipated closing date of the exit financing arrangements with
such Replacement Financier. Agent shall thereafter have the absolute,
unrestricted right for a period of time not to exceed fifteen (15) days from the
date of Agent's receipt of such Commitment, to agree to provide such exit
financing to Borrowers, which shall comply with all of the material terms and
provisions set forth in the Commitment supplied to Agent ("Right of First
Refusal"). If Agent shall notify Borrowers in writing of Agent's election to do
so, which Agent may exercise in Agent's sole option within the stated period of
time, Borrowers agree not to proceed with the Commitment or with such
Replacement Financier, and shall enter into the exit financing arrangements
among Agent, Lenders and Borrowers in accordance with the material terms and
provisions set forth in the Commitment. Should Agent elect at Agent's option not
to exercise such Right of First Refusal within the time period indicated above,
Borrowers shall be at liberty to proceed to implement the financing arrangements
with the Replacement Financier contemplated by the Commitment that Borrowers
have previously obtained. Any such arrangements with a Replacement Financier
would have to provide, among other things, for payment in full in immediately
available funds of all of the outstanding Obligations under the Loan Agreement
and Agent's receipt of an indemnity, from the Replacement Financier, in form and
substance satisfactory to Agent in all respects, as to any and all of Agent's
contingent Obligations.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Loan Parties to Agent and Lenders pursuant to the Loan Agreement and the
other Loan Documents, each Loan Party hereby represents, warrants and covenants
with and to Agent and Lenders as follows (which representations, warranties and
covenants are continuing and shall survive the execution and delivery hereof and
shall be incorporated into and made a part of the Loan Documents):
(a) No Event of Default exists on the date of this Amendment
(after giving effect to the amendments to the Loan Agreement set forth herein);
and
(b) This Amendment has been duly executed and delivered by each
Loan Party and is in full force and effect as of the date hereof, and the
agreements and obligations of each of the Loan Parties contained herein
constitute its legal, valid and binding obligations, enforceable against it in
accordance with the terms hereof.
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4. CONDITIONS PRECEDENT. The effectiveness of this Amendment and
the agreement of Agent to the modifications and amendments set forth in this
Amendment are subject to the fulfillment of the following conditions precedent:
(a) the United States Bankruptcy Court for the Northern District
of Illinois shall have entered a final, non-appealable order, in form and
substance satisfactory to Agent in its sole discretion, authorizing the
modifications and amendments set forth in this Amendment; and
(b) Agent shall have received, in form and substance satisfactory
to Agent in its sole discretion, an original of this Amendment duly authorized,
executed and delivered by Loan Parties.
5. EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto,
no other changes or modifications to the Loan Agreement and the other Loan
Documents are intended or implied and in all other respects the Loan Agreement
and the other Loan Documents are hereby specifically ratified, acknowledged and
confirmed by all parties hereto as of the effective date hereof. To the extent
of any conflict between the terms of this Amendment and any of the Loan
Documents, the terms of this Amendment shall control. The Loan Agreement, as
amended hereby, the other Loan Documents and this Amendment shall be read and be
construed as one agreement.
6. FURTHER ASSURANCES. The parties hereto shall execute and
deliver such additional documents and take such additional actions as may be
necessary or desirable to effectuate the provisions and purposes of this
Amendment.
7. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN THE
PARTIES HERETO, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW).
8. BINDING EFFECT. This Amendment shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.
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9. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, but all of such counterparts when executed shall together
constitute but one and the same agreement. In making proof of this Amendment, it
shall not be necessary to produce or account for more than one counterpart
thereof signed by each of the parties hereto. This Amendment may be executed and
delivered via telecopier with the same force and effect as if it were a manually
executed and delivered counterpart.
Very truly yours,
ADVANCED LIGHTING TECHNOLOGIES,
INC., an Ohio corporation, debtor and debtor-in-
possession, as a Borrower and a Loan Party
By: -s- Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
APL ENGINEERED MATERIALS, INC.,
an Illinois corporation, debtor and debtor-in-
possession, as a Borrower and a Loan Party
By: -s- Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
VENTURE LIGHTING INTERNATIONAL,
INC., an Ohio corporation, debtor and debtor-in-
possession, as a Borrower and a Loan Party
By: -s- Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
BALLASTRONIX (DELAWARE), INC.,
a Delaware corporation, debtor and debtor-in-
possession, as a Borrower and a Loan Party
By: -s- Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
MICROSUN TECHNOLOGIES, INC.,
an Ohio corporation, debtor and debtor-in-
possession, as a Borrower and a Loan Party
By: -s- Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
LIGHTING RESOURCES INTERNATIONAL,
INC., an Ohio corporation, debtor and debtor-in-
possession, as a Borrower and a Loan Party
By: -s- Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
ADLT SERVICES, INC., an Ohio corporation,
debtor and debtor-in-possession, as a Borrower
and a Loan Party
By: -s- Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
VENTURE LIGHTING POWER SYSTEMS,
NORTH AMERICA INC., a Nova Scotia corporation,
as a Loan Party
By: -s- R.G. Xxxxxxx Xxxxxx
--------------------------------------------
Name: R.G. Xxxxxxx Xxxxxx
Title: V.P. Finance & Admin
PARRY POWER SYSTEMS LIMITED,
a corporation organized under the laws of the
United Kingdom, as a Loan Party
By: -s- X. Xxxxx
--------------------------------------------
Name: X. Xxxxx
Title: Director
VENTURE LIGHTING EUROPE LTD.,
a corporation organized under the laws of the
United Kingdom, as a Loan Party
By: -s- X. Xxxxx
--------------------------------------------
Name: X. Xxxxx
Title: Director
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
DEPOSITION SCIENCES, INC.,
an Ohio corporation, as a Loan Party
By: -s- Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
ACKNOWLEDGED AND AGREED:
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent and as
a Lender
By: -s- Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: AVP
ABLECO FINANCE LLC, a Delaware
limited liability company, as a Lender
By: -s- Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: SVP
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