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Exhibit 10.5
[CONFORMED COPY]
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
September 28, 1999, is between Advanced Lighting Technologies, Inc., an Ohio
corporation (the "Company"), and General Electric Company, a New York
corporation ("Purchaser").
The parties hereto agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall, except
where the context otherwise requires, have the following meanings (such
definitions to be equally applicable to the singular and plural forms thereof):
"AFFILIATE" shall mean, as applied to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGREEMENT" shall mean this Stock Purchase Agreement as
originally executed and as amended, modified or supplemented from time to time.
"AMENDED ARTICLES" shall have the meaning provided in Section
2.1.
"AMENDMENT TO ARTICLES" shall have the meaning provided in
Section 2.1.
"ANNUAL FINANCIAL STATEMENTS" shall have the meaning provided
in clause a of Section 7.4.
"BOARD OF DIRECTORS" shall mean the board of directors of the
Company.
"BUSINESS" shall mean the business of (a) designing,
manufacturing, marketing and selling metal halide lighting products and metal
halide and other HID lamp system components used in the production of lamps and
other components for lighting systems, (b) manufacturing, marketing and selling
metal halide fixtures, (c) manufacturing, marketing and selling photometric
measuring equipment and (d) designing, manufacturing, marketing and selling
coatings and coatings equipment.
"CLOSING" and "CLOSING DATE" shall have the meanings provided
in Section 3.1.
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"COLLATERAL AGREEMENTS" shall have the meaning provided in
clause g of Section 4.1.
"COMMISSION" means the Securities and Exchange
Commission.
"COMMON SHARES" shall mean the Common Shares, par value
$.001, of the Company.
"COMPANY" shall mean Advanced Lighting Technologies, Inc., an
Ohio corporation.
"CONTINGENT SHARES" shall mean Common Shares to be issued upon
the exercise of the First Contingent Warrant and the Second Contingent Warrant
pursuant to the Contingent Warrant Agreement.
"CONTINGENT WARRANT AGREEMENT" shall mean the contingent
warrant agreement in the form of EXHIBIT 2.2 attached hereto for the issuance of
the First Contingent Warrant and the Second Contingent Warrant.
"CONVERSION SHARES" shall mean the Common Shares to be issued
upon the conversion of Series A Shares.
"CREDIT AGREEMENT" shall mean the Credit Agreement dated as of
May 21, 1999, among the Company, certain Subsidiaries and PNC Bank, National
Association.
"DISCLOSURE STATEMENT" shall mean the Supplemental Disclosure
Statement, dated as of the date of this Agreement, provided by the Company to
the Purchaser in connection with certain representations and warranties made in
this Agreement.
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" shall mean any
federal, state, or local statute, law, ordinance, code, order, injunction,
decree, ruling; any regulations promulgated thereunder, or any common law theory
of liability which regulates or controls (i) pollution, contamination, or the
condition of groundwater, surface water, soil, sediment, air or the workplace or
(ii) a spill, leak, emission, discharge, release or disposal into groundwater,
surface water, soil, sediment, air or the workplace, including without
limitation the federal Comprehensive, Environmental Response, Compensation, and
Liability Act ("CERCLA"), 42 U.S.C. Sec. 9601 et seq., as amended; the federal
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Sec. 6901 et seq., as
amended; the Hazardous Materials Transportation Act ("HMTA"), 49 U.S.C. Sec.
1801 et seq., as amended; the Toxic Substances Control Act ("TSCA"), 15 U.S.C.
Sec. 2601 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C Sec. 7401 et
seq. as amended; the Clean Water Act ("CWA"), 33 U.S.C. Sec. 1251 et seq. as
amended; the Safe Drinking Water Act ("SDWA"), 42 U.S.C. Sec. 300F et seq., as
amended; the Emergency Planning and Community Right to Know Act ("EPCRA"), 42
U.S.C. Sec. 11001 et seq., as amended; the Federal, Insecticide, Fungicide and
Rodenticide Act ("FIFRA"), 7 U.S.C. Sec. 136 et seq., as amended; the
Occupational Safety and Health Act ("OSHA"), 29 U.S.C. Sec. 651 et seq., as
amended; the National Environmental Policy Act ("NEPA"), 42 U.S.C. Sec. 4321 et
seq., as amended; any similar state or local statutes or ordinances, and the
regulations promulgated thereunder.
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"EVENT OF DEFAULT" shall mean any default by the Company under
this Agreement or any Collateral Agreement beyond any applicable cure period.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"FIRST CONTINGENT WARRANT" shall have the meaning provided in
the Contingent Warrant Agreement.
"GAAP" shall mean generally accepted accounting principles as
in effect on the date hereof and consistently applied and maintained throughout
the period indicated. Whenever any accounting term is used herein which is not
otherwise defined, it shall have the meaning ascribed thereto under GAAP.
"GOVERNMENTAL BODY" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, in each case to the extent the same has jurisdiction over the
Person or property in question, including, but not limited to, any governmental
authority, agency, board, commission, court, department or instrumentality of
the United States, any State of the United States or any political subdivision
thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any
self-regulatory groups of which the Company, any Subsidiary or Purchaser is a
member or is subject.
"HAZARDOUS SUBSTANCES" shall mean any toxic substance,
hazardous substance, hazardous waste, hazardous material, solid waste, residual
waste, infectious waste, contaminant, pollutant, or constituent thereof, whether
solid, semi-solid, liquid or gaseous, which are regulated, listed or controlled
by Environmental, Health and Safety Laws.
"XXXXXXX LTD." shall have the meaning provided in clause m of
Section 4.1.
"XXXXXXX LTD. SHARES" shall mean the Common Shares of the
Company held, of record or beneficially, by Xxxxxxx, Ltd.
"XXXXXXX VOTING TRUST" shall mean the Voting Trust Agreement,
dated as of October 10, 1995, as amended, between Xxxxx X. Xxxxxxx, as voting
trustee, and certain shareholders of the Company. As used herein, the term
Xxxxxxx Voting Trust shall include any irrevocable proxies granted to Xxxxx X.
Xxxxxxx with respect to shares withdrawn from the Xxxxxxx Voting Trust and
deposited in margin accounts by the beneficial holders thereof.
"INDEBTEDNESS FOR BORROWED MONEY" shall mean as to any Person,
at a particular time, all items which constitute, without duplication (a)
indebtedness for borrowed money, (b) indebtedness in respect of the deferred
purchase price of property, (c) indebtedness evidenced by notes, bonds,
debentures or similar instruments, (d) capital lease obligations (i.e.,
obligations with respect to leases which are required to be capitalized for
financial reporting purposes in accordance with GAAP), (e) all obligations of
such Person in respect of capital stock subject to mandatory redemption or
redemption at the option of the holder thereof, in whole or in part, and (f) all
contingent obligations of such Person in respect of any of the foregoing. As to
the Company and any Subsidiary, the term Indebtedness for Borrowed Money shall
not include indebtedness to the Company from any Subsidiary, indebtedness to any
Subsidiary from the Company or indebtedness to any Subsidiary from any
Subsidiary.
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"INDENTURE" shall mean the Indenture, dated as of March 18,
1998, between the Company and The Bank of New York, Trustee, as supplemented as
of September 25, 1998, relating to the 8% Senior Notes due 2008 of the Company.
"OPTION AGREEMENT" shall have the meaning provided in the
Contingent Warrant Agreement.
"PERMITTED LIENS" shall mean: (a) Security Interests existing
on the Closing Date and disclosed to the Purchaser in writing prior to the date
hereof; (b) Security Interests securing indebtedness which is incurred to
refinance indebtedness secured by Security Interests; provided that such liens
do not extend to or cover any property or assets of the Company or any
Subsidiary other than the property or assets securing the indebtedness being
refinanced; (c) liens for taxes, assessments, governmental charges or claims
that are being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made; (d) statutory and common law liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made; (e) liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security; (f) liens incurred or deposits made to secure
the performance of tenders, bids, leases, statutory or regulatory obligations,
bankers' acceptances, surety and appeal bonds, government contracts, performance
and return-of-money bonds and other obligations of a similar nature incurred in
the ordinary course of business (exclusive of obligations for the payment of
borrowed money); (g) easements, rights-of-way, municipal and zoning ordinances
and similar charges, encumbrances, title defects or other irregularities that do
not materially interfere with the ordinary course of business of the Company or
any of its Subsidiaries; (h) liens (including extensions and renewals thereof)
upon real or personal property acquired after the Closing Date; provided that
(i) the principal amount of the indebtedness secured by such lien does not
exceed 100% of such cost and (ii) any such lien shall not extend to or cover any
property or assets other than such item of property or assets and any
improvements on such item; (i) leases or subleases granted to others that do not
materially interfere with the ordinary course of business of the Company and its
Subsidiaries, taken as a whole; (j) liens encumbering property or assets under
construction arising from progress or partial payments by a customer of the
Company or its Subsidiaries relating to such property or assets; (k) any
interest or title of a lessor in the property subject to any capitalized lease
or operating lease; (l) liens arising from filing Uniform Commercial Code
financing statements regarding leases; (m) liens on property of, or on shares of
capital stock or indebtedness of, any Person existing at the time such Person
becomes, or becomes a part of, any Subsidiary; provided that such liens do not
extend to or cover any property or assets of the Company or any Subsidiary other
than the property or assets acquired; (n) liens in favor of the Company or any
Subsidiary; (o) liens arising from the rendering of a final judgment or order
against the Company or any Subsidiary that does not give rise to an Event of
Default (as defined in the Credit Agreement); (p) liens securing reimbursement
obligations with respect to letters of credit that encumber documents and other
property relating to such letters of credit and the products and proceeds
thereof; (q) liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection
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with the importation of goods; (r) liens encumbering customary initial deposits
and margin deposits, and other liens that are within the general parameters
customary in the industry and incurred in the ordinary course of business, in
each case, securing indebtedness under interest rate agreements and currency
agreements and forward contracts, options, future contracts, future options or
similar agreements or arrangements designed solely to protect the Company or any
of its Subsidiaries form fluctuations in interest rates, currencies or the price
of commodities; (s) liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Company or any of its Subsidiaries in the ordinary course of business in
accordance with the past practices of the Company and its Subsidiaries prior to
the Closing Date; and (t) liens on or sales of receivables.
"PERSON" shall mean any natural person, corporation, firm,
partnership, association, government, governmental agency or other entity,
whether acting in an individual, fiduciary or other capacity.
"PREFERRED SHARES" shall mean the Series A Shares.
"PURCHASED SHARES" shall have the meaning provided in Section
2.1.
"PURCHASER" shall mean General Electric Company, a New York
corporation.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement delivered pursuant to Section 4.1(g)(ii).
"RUUD VOTING TRUST" shall mean the Voting Trust Agreement,
dated as of January 2, 1998, as amended, between Xxxx X. Xxxx, as voting
trustee, and certain shareholders of the Company. As used herein, the term Ruud
Voting Trust shall include any irrevocable proxies granted to Xxxx X. Xxxx with
respect to shares withdrawn from the Ruud Voting Trust and deposited in margin
accounts by the beneficial holders thereof.
"SECOND CONTINGENT WARRANT" shall have the meaning provided in
the Contingent Warrant Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SECURITY INTEREST" shall mean any lien, pledge, mortgage,
encumbrance, charge or security interest of any kind whatsoever (including,
without limitation, the lien or retained security title of a conditional vendor)
whether arising under a security instrument or as a matter of law, judicial
process or otherwise or the agreement by any Person to grant any lien, security
interest or pledge, mortgage or encumber any asset.
"SERIES A SHARES" shall mean shares of Series A Convertible
Preferred Stock, par value $.001, of the Company.
"STOCK PLANS" shall mean the Company's 1995 Incentive Award
Plan, the Company's Billion Dollar Market Capitalization Incentive Award Plan,
the Company's 1998 Incentive Award Plan, the Company's Employee Stock Purchase
Plan and the Company's 401(k) Retirement and Savings Plan.
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"SUBSIDIARY" of the Company shall mean any other corporation
of which more than 50% of the outstanding shares of capital stock having
ordinary voting power for the election of directors is owned directly or
indirectly by the Company, by the Company and one or more Subsidiaries, or by
one or more other Subsidiaries.
"WARRANT" shall mean the warrant in the form of EXHIBIT 1
attached hereto for the right to purchase additional Common Shares.
"WARRANT SHARES" shall mean Common Shares to be issued upon
exercise of the Warrant.
"YEAR 2000 COMPLIANT" shall mean that, with respect to data
entry controlled by those modules of a party's intellectual property which are
(i) proprietary to such party ("Party Proprietary Modules") and (ii) used in
accordance with that party's user documentation or as instructed by that party:
(a) such Party Proprietary Modules will accurately process, provide and/or
receive all date/time data (including calculating, comparing, sequencing,
processing, and outputting), within, from, into, and between centuries
(including the twentieth and twenty-first centuries and the years 1999 and
2000), including leap year calculations; (b) neither the performance nor the
functionality of the Party Proprietary Modules will be affected by any
dates/times, prior to, on, after, or spanning January 1, 2000; (c) the design of
the Party Proprietary Modules includes proper date/time data century recognition
and recognition of 1999 and 2000, calculations that accommodate single century
and multi-century formulae, and date/time values before, on, after and spanning
January 1, 2000, and date/time data interface values that reflect the century,
1999, and 2000; (d) no value for current date/time will cause any error,
interruption, or decreased performance in or of the Party Proprietary Modules;
(e) all manipulations of date and time related data (including calculating,
comparing, sequencing, processing, and outputting) will produce correct results
for all valid dates and times when used independently; (f) date/time elements in
interfaces and data storage will specify the century to eliminate date ambiguity
without human intervention, including leap year calculations; (g) where any
date/time element is represented without a century, the correct century will be
unambiguous for all manipulations involving that element; and (h) authorization
codes, passwords, and zaps (purge functions) will function normally and in the
same manner during, prior to, on, and after January 1, 2000, including the
manner in which they function with respect to expiration dates and CPU serial
numbers.
SECTION 2
PURCHASE OF THE PURCHASED SHARES
2.1 AUTHORIZATION OF THE PURCHASED SHARES AND WARRANT. The
Company has authorized the issuance and sale on the terms and subject to the
conditions of this Agreement of (a) 761,250 Series A Shares (the "Purchased
Shares") having the rights, restrictions, privileges and preferences as set
forth in the amendment ("Amendment to Articles"), attached hereto as EXHIBIT
2.1, to the Second Amended and Restated Articles of Incorporation of the Company
(the Articles, as so amended, the "Amended Articles") and (b) a Warrant for the
right to purchase 1,000,000 Common Shares for an exercise price of $.01 per
share in accordance with the form of Warrant set forth in EXHIBIT 1 attached
hereto. In addition, the Company has authorized the
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issuance and sale of the First Contingent Warrant and the Second Contingent
Warrant and an additional number of Common Shares issuable upon the exercise by
Purchaser of the First Contingent Warrant and the Second Contingent Warrant on
the terms and subject to the conditions of the Contingent Warrant Agreement, and
at a purchase price established in accordance with the Contingent Warrant
Agreement. The Company shall adopt and file the Amendment to Articles with the
Office of the Secretary of the State of Ohio on or before the Closing Date.
2.2 PURCHASE OF THE PURCHASED SHARES; AGREEMENT TO ISSUE
SECURITIES AND PROVIDE FINANCIAL ACCOMMODATION. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties, covenants and agreements contained in this Agreement, the Company
agrees to sell to Purchaser and Purchaser agrees to purchase from the Company,
761,250 Series A Shares for the purchase price of $27.00 per share, and the
Company agrees to issue to Purchaser the Warrant in the form of EXHIBIT 1
attached hereto for the right to purchase additional Common Shares. This
Agreement is and is intended to be an agreement for the issuance of securities
by the Company and the providing of financial accommodation to the Company
within the meaning of Section 365(c)(2) of Title 11 of the United States Code.
SECTION 3
CLOSING
3.1 CLOSING. The closing ("Closing") of the sale and purchase
of the Purchased Shares and the issuance of the Warrant under this Agreement
shall take place at the offices of Xxxxx & Xxxxxxxxx LLP, 3200 National City
Center, 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000, on September 30,
1999 (the "Closing Date"), or such other date that is mutually agreeable to the
Company and Purchaser. At the Closing, the Company shall deliver to Purchaser
certificates for the Purchased Shares and the Warrant described in Section 2.2,
registered in the name of Purchaser, against payment to the Company of the
purchase price therefor, by wire transfer, check or other method acceptable to
the Company. If at the time of the Closing any of the conditions specified in
Sections 4.1 or 4.2 shall not have been fulfilled, Purchaser or the Company,
respectively, shall, at its election, be relieved of all of its obligations
under this Agreement without thereby waiving any other rights it may have by
reason of such failure or such nonfulfillment.
SECTION 4
CONDITIONS
4.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to purchase the Purchased Shares are subject to the satisfaction of
each of the following conditions precedent, to the extent applicable, on or
before the Closing Date, unless waived by Purchaser in writing:
a. PERFORMANCE OF THE COMPANY. The Company shall have
performed all obligations and agreements and complied with all covenants and
other items contained in this Agreement required to be performed or fulfilled by
the Company on or before the Closing Date.
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b. REPRESENTATIONS TRUE. All of the representations and
warranties made by the Company to Purchaser in this Agreement shall be true and
correct when made and, in all material respects, as of the Closing Date.
c. NO DEFAULT. There shall exist as of the Closing Date no
condition or event that constitutes, or that after notice or lapse of time, or
both, would constitute, an Event of Default under this Agreement or the
Collateral Agreements.
d. CONSENTS. The waiver of any preemptive or first refusal
rights by the Shareholders of the Company or any third party with respect to the
Purchased Shares, the Warrant, the Warrant Shares, the First Contingent Warrant,
the Second Contingent Warrant, the Contingent Shares, the Conversion Shares and
the Xxxxxxx Ltd. Shares shall have been duly made or obtained on terms and
conditions satisfactory to Purchaser.
e. NO MATERIAL ADVERSE CHANGE. Except as disclosed in reports
filed pursuant to the Exchange Act or otherwise disclosed in writing to
Purchaser, since March 31, 1999, there shall have been no material adverse
change to the business, assets or condition (financial or otherwise), earnings,
results of operations or prospects of the Company and its Subsidiaries taken as
a whole.
f. PROCEEDINGS. All corporate and other proceedings and all
documents incidental to the transactions involved in the purchase of the
Purchased Shares, the issuance of the Warrant, the issuance of the Conversion
Shares upon conversion of the Purchased Shares, the issuance of the Warrant
Shares upon exercise of the Warrant, the issuance of the First Contingent
Warrant and the Second Contingent Warrant and the issuance of the Contingent
Shares upon exercise of the First Contingent Warrant or the Second Contingent
Warrant shall be reasonably satisfactory in substance and form to Purchaser and
Purchaser and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as Purchaser or its counsel may
reasonably request, including, without limitation, the following:
(i) Amendment to Articles, certified by the Secretary of State
of the State of Ohio;
(ii) a Certificate, as of the most recent practicable date
prior to the Closing, as to the corporate good standing of the Company issued by
the Secretary of State of the State of Ohio;
(iii) the Code of Regulations of the Company, certified by its
Secretary or Assistant Secretary as of the Closing Date; and
(iv) resolutions of the Board of Directors of the Company,
authorizing and approving all matters in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, a specific
resolution adopted in accordance with Section 1704.05(D)(1) of the Ohio Revised
Code authorizing and approving the issuance of the Warrant Shares upon exercise
of the Warrant, the Conversion Shares upon conversion of the Purchased Shares
and the Contingent Shares upon exercise of the First Contingent Warrant or the
Second Contingent Warrant, certified by the Secretary or Assistant Secretary of
the Company as of the Closing Date.
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g. COLLATERAL AGREEMENTS. The Company shall have delivered
duly executed originals of the following agreements to Purchaser, each of which
shall be in form and substance satisfactory to Purchaser:
(i) the Contingent Warrant Agreement;
(ii) a Registration Rights Agreement; and
(iii) a Lamp Materials Purchase Agreement and related
License Agreement.
(The agreements set forth in this clause g. of this Section 4.1, collectively,
the "Collateral Agreements".)
h. BOARD OF DIRECTORS/AMENDED CODE OF REGULATIONS. The Code of
Regulations of the Company shall be amended, if necessary, to provide that the
Board of Directors shall consist of ten members. The Purchaser shall have the
right to propose five individuals none of whom are directors, executive
officers, employees or the beneficial owner of 10% or more of any class of
equity securities of Purchaser as potential members of the Board of Directors of
the Company (the "Purchaser's Nominees"). The Company shall cause to be
appointed to the Board of Directors that number of the Purchaser's Nominees
necessary to give Purchaser representation equaling 20% of the total members of
the Board of Directors.
i. AMENDMENT TO ARTICLES. The Board of Directors, on behalf of
the Company, shall have adopted the Amendment to Articles and filed the
Amendment to Articles with the Secretary of State of the State of Ohio.
j. OPINION OF COUNSEL. Purchaser shall have received an
opinion from Xxxxxx, Xxxxxxxx & Sarlson Co., L.P.A., counsel for the Company,
dated as of the Closing Date, addressed to it, in form and substance reasonably
satisfactory to Purchaser.
k. FINANCIAL DUE DILIGENCE. Purchaser shall be satisfied, in
its sole and absolute discretion, with its financial due diligence review of the
Company.
l. REGULATORY APPROVALS. Purchaser and the Company shall have
received all governmental and other approvals required under any applicable
laws, statutes, orders, rules, regulations or policies, or any guidelines
promulgated thereunder, including, without limitation, under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act, as amended.
m. PROXIES. Purchaser shall have received from each of Xxxxx
X. Xxxxxxx and Xxxx X. Xxxx a proxy, duly executed in blank, entitling Purchaser
to vote all Common Shares held by Messrs. Xxxxxxx and Ruud, individually, and
all shares as to which they have voting power as voting trustee of the Xxxxxxx
Voting Trust and the Ruud Voting Trust, respectively, on all matters submitted
to a vote of the shareholders of the Company, in accordance with and subject to
the provisions of the Contingent Warrant Agreement. Purchaser shall have
received from Xxxxxxx Ltd., an Ohio limited liability company ("Xxxxxxx Ltd."),
a proxy, duly executed in blank, entitling Purchaser to vote all of the Xxxxxxx
Ltd. Shares on all
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matters submitted to a vote of the shareholders of the Company, in accordance
with and subject to the provisions of the Contingent Warrant Agreement.
n. NO PROCEEDINGS. There shall be no action or proceeding,
pending or threatened, before any Governmental Body (i) against Purchaser or the
Company for the purpose of enjoining or preventing the consummation of this
Agreement or the transactions contemplated hereby, or otherwise claiming that
this Agreement or the consummation of the transactions contemplated hereby is
illegal, or (ii) against any beneficial owner of 5% or more of any class of
equity securities of the Company (a "Beneficial Owner") seeking to adjudicate
him or her a bankrupt or insolvent or seeking the appointment of a receiver,
trustee, custodian or other similar official for him or her or for any
substantial part of his or her assets or (iii) in which any Beneficial Owner
shall seek protection or relief under any law relating to bankruptcy,
insolvency, relief or protection of debtors.
o. NO EVENT OF DEFAULT. There shall exist as of the Closing
Date no condition or event that constitutes, or that after notice or lapse of
time, or both, would constitute, an event of default under the Indenture, the
Credit Agreement or any other agreement evidencing any Indebtedness for Borrowed
Money in excess of $250,000.
p. WARRANT. The Company shall have executed and delivered to
Purchaser the Warrant.
q. INDEPENDENT CPA. The Company shall have retained as its
auditor an independent certified public accounting firm acceptable to Purchaser
and such independent certified public accounting firm shall have accepted such
engagement.
r. OPTION AGREEMENT. Xxxxx X. Xxxxxxx and Xxxx X. Xxxx shall
have executed and delivered to Purchaser the Option Agreement.
s. RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT. Xxxxx X.
Xxxxxxx, Xxxxxxx Ltd. and Xxxx X. Xxxx shall have executed and delivered to
Purchaser a Right of First Refusal and Co-Sale Agreement in form and substance
reasonably satisfactory to Purchaser.
4.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations
of the Company to sell the Purchased Shares are subject to the satisfaction of
each of the following conditions precedent, to the extent applicable, on or
before the Closing Date, unless waived by the Company in writing:
a. PERFORMANCE OF PURCHASER. Purchaser shall have performed
all obligations and agreements and complied with all covenants and other items
contained in this Agreement required to be performed or fulfilled by Purchaser
on or before the Closing Date.
b. REPRESENTATIONS TRUE. All of the representations and
warranties made by Purchaser to the Company in this Agreement shall be true and
correct when made and, in all material respects, as of the Closing Date.
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c. COLLATERAL AGREEMENTS. Purchaser shall have delivered duly
executed originals of the Collateral Agreements referred to in clauses (i) and
(iii) of Subsection 4.1(g) to the Company, each of which shall be in form and
substance satisfactory to the Company.
d. REGULATORY APPROVALS. Purchaser and the Company shall have
received all governmental and other approvals required under any applicable
laws, statutes, orders, rules, regulations or policies, or any guidelines
promulgated thereunder, including, without limitation, under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act, as amended.
e. NO PROCEEDINGS. There shall be no action, pending or
threatened, against Purchaser or the Company for the purpose of enjoining or
preventing the consummation of this Agreement or the transactions contemplated
hereby, or otherwise claiming that this Agreement or the consummation of the
transactions contemplated hereby hereof is illegal.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as follows:
5.1 ORGANIZATION; AUTHORITY. Each of the Company and each
Subsidiary: (a) is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of its incorporation and (b) has all
requisite corporate power and authority to own its properties and to carry on
its business as now being conducted. Each of the Company and each Subsidiary is
qualified to do business in each state in which the nature of its business makes
such qualification necessary, except where failure to so qualify would not have
a material adverse effect on the Company. The Company has all requisite
corporate power and authority to enter into this Agreement and the Collateral
Agreements, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. All necessary
corporate action has been (or will timely be) taken by and on behalf of the
Company and its shareholders with respect to the execution, delivery, and
performance by the Company of this Agreement and the Collateral Agreements and
the consummation of the transactions contemplated hereby and thereby. This
Agreement and the Collateral Agreements constitute (or will constitute when
executed and delivered) legal, valid, and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.
Neither the execution, delivery, and performance of this Agreement, the
Collateral Agreements, and the other instruments and transactions contemplated
hereby, nor the issuance of the Purchased Shares, the Warrant, the Warrant
Shares, the First Contingent Warrant, the Second Contingent Warrant, the
Contingent Shares or the Conversion Shares, will violate any provision of any
law (provided, with respect to the Warrant Shares, the Contingent Shares and the
Conversion Shares, that the Purchaser complies with applicable provisions of the
Ohio Control Share Acquisition Act), any order of any court or other agency of
government, the Amended Articles or Code of Regulations of the Company or any
agreement or instrument to which the Company is a party or by which the Company
is bound, or be in conflict with, result in a breach of, or constitute (with
notice or lapse of time, or both) a default under any such agreement or
instrument provided, however, that the purchase or redemption of Purchased
Shares upon exercise of the Put Option (as defined in the Amendment to Articles)
would violate (i) the terms of the Credit Agreement,
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unless prior consent of the lenders thereunder is obtained and (ii) the terms of
the Indenture, unless Restricted Payments (as defined in the Indenture) in an
amount equal to the purchase price are then permitted pursuant to the terms of
the Indenture.
5.2 CAPITALIZATION. The authorized capital stock of the
Company consists of (a) 80,000,000 Common Shares, of which 20,237,706 were
issued and outstanding on April 1, 1999, and (b) 1,000,000 Preferred Shares,
none of which are issued or outstanding. All of the issued and outstanding
Common Shares are duly authorized, validly issued, fully paid and nonassessable,
and were issued in conformity with all applicable state and federal securities
laws. All of the Preferred Shares are duly authorized. The Purchased Shares
shall have the rights, preferences and privileges set forth in the Amended
Articles. Except for the 3,279,254 Common Shares reserved for issuance under the
Stock Plans, the Company has no other equity securities of any class authorized,
issued, reserved for issuance, or outstanding. Except for the conversion right
contained in the Preferred Shares, the purchase rights contained in the
Contingent Warrant Agreement, and options and rights to shares issued under the
Stock Plans, there are no outstanding options, offers, warrants, conversion
rights, agreements, or other rights to subscribe for or to purchase from the
Company, or, except for Common Shares issued or to be issued in respect of
acquisitions of securities or assets of any Persons in connection with contracts
entered into prior to the date hereof (which in the aggregate do not exceed
110,000 Common Shares), commitments by the Company to issue, transfer, or sell
(either written or oral, formal or informal, firm or contingent) shares of or
interests in the capital stock or, except for the Company's obligations to use
its best efforts to effect the registration under the Securities Act of 8%
Senior Notes to be issued in exchange for 8% Senior Notes of the Company issued
in a private offering, other securities of the Company (whether debt, equity, or
a combination thereof) or obligating the Company to grant, extend or enter into
any such agreement or commitment. No securities of the Company carry, and no
shareholder of the Company has been granted, any preemptive rights. The Company
is not obligated under any agreement, arrangement or understanding to redeem or
otherwise purchase any of its shares of capital stock. SCHEDULE 5.2 to the
Disclosure Statement lists, by creditor, the total Indebtedness for Borrowed
Money of the Company and its Subsidiaries as of May 1, 1999.
5.3 FINANCIAL STATEMENTS AND REPORTS; ABSENCE OF UNDISCLOSED
LIABILITIES. The Company has filed all forms, reports and documents with the
Securities and Exchange Commission required to be filed by it pursuant to the
Exchange Act, and the rules and regulations promulgated thereunder, all of which
have complied in all material respects with the applicable requirements of the
Exchange Act, and such rules and regulations (hereinafter collectively referred
to as the "Company Reports"). None of the Company Reports, at the time filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Company
Reports complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission applied
on a consistent basis (except as otherwise noted in such financial statements)
and present fairly in all material respects the financial position, results of
operations, cash flows and changes in financial position of the Company and its
consolidated Subsidiaries as of the dates stated or the periods indicated,
subject, in the case of unaudited interim consolidated financial statements, to
normal year-end adjustments. Except as reflected in the most recent financial
statements of the Company included in the Company Reports or obligations
incurred for the payment of money
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only in the ordinary course of business consistent with past practice since the
date of the most recent balance sheet included in the Company Reports, the
Company does not have any material liabilities or obligations of any nature,
whether accrued, contingent or otherwise and whether due or to become due.
5.4 SECURITIES. The Conversion Shares issuable upon conversion
of the Purchased Shares have been duly authorized and reserved for issuance and,
following issuance and delivery of the Purchased Shares in accordance with this
Agreement, upon conversion in accordance with the terms of the Purchased Shares,
the Conversion Shares shall be validly issued, fully paid, and nonassessable and
will be free of restrictions on transfers other than restrictions contained in
this Agreement and under applicable state and federal securities laws. The
Warrant Shares issuable upon exercise of the Warrant and the Contingent Shares
issuable upon exercise of the First Contingent Warrant and the Second Contingent
Warrant have been duly authorized and reserved for issuance and, when payment is
made therefor in accordance with the Warrant or the First Contingent Warrant or
the Second Contingent Warrant, as the case may be, shall be validly issued,
fully paid, and nonassessable and will be free of restrictions on transfers
other than restrictions contained in this Agreement and under applicable state
and federal securities laws and subject to applicable provisions of the Ohio
Control Share Acquisition Act.
5.5 SECURITIES LAWS. No consent, authorization, approval,
permit, or order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the execution and
delivery of either this Agreement, or the offer, issuance, sale, or delivery of
the Purchased Shares, the Warrant, the Warrant Shares, the First Contingent
Warrant, the Second Contingent Warrant, the Contingent Shares or the Conversion
Shares to Purchaser (assuming the Conversion Shares are issued to Purchaser in
conformity with the terms hereof and thereof) other than the qualification
thereof or notification with respect thereto, if required, under applicable
federal and state securities laws, which qualification or notification has been
or will be effected as a condition of such sales. The Company has not: (a)
issued any securities in violation of the requirements of Section 5 of the
Securities Act or any other law; (b) violated any rule, regulation or
requirement under the Securities Act or the Exchange Act; (c) issued any
securities in violation of any state securities laws; or (d) redeemed any
securities in violation of any applicable state or federal securities law or any
agreement or contract governing the redemption of such securities.
5.6 NO PREEMPTIVE RIGHTS. No Person has any right of first
refusal or any preemptive rights in connection with the issuance of the
Purchased Shares or the Warrant, the issuance of the Warrant Shares upon
exercise of the Warrant, the issuance of the Contingent Shares upon exercise of
the First Contingent Warrant or the Second Contingent Warrant, the issuance of
the Conversion Shares upon conversion of the Purchased Shares, or any future
issuances of securities by the Company.
5.7 REGISTRATION RIGHTS. Except as set forth in SCHEDULE 5.7
to the Disclosure Statement and in the Registration Rights Agreement, the
Company is not under any contractual obligation to register with the Commission
any of its currently outstanding securities or any of its securities that may
hereafter be issued, other than the Company's obligation to use its best efforts
to effect the registration under the Securities Act of 8% Senior Notes.
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5.8 COMPLIANCE WITH LAWS. Each of the Company and each
Subsidiary is and has been in compliance in all respects with all applicable
laws, ordinances, regulations and orders, including, without limitation
Environmental, Health and Safety Laws, except to the extent that any such
noncompliance would not have a material adverse effect on the business, assets,
condition (financial or otherwise), earnings, results of operations or prospects
of the Company.
5.9 LITIGATION. Except as described in SCHEDULE 5.9 to the
Disclosure Statement, there is no claim, litigation, action, suit, proceeding,
investigation or inquiry, administrative or judicial, at law, in equity or
before or by any Governmental Body, pending or, to the best knowledge of the
Company, threatened against or affecting the Company or any of its properties or
assets, which if adversely determined would have a material adverse effect on
the Company. There is no claim, litigation, action, suit or proceeding pending
or, to the best knowledge of the Company, threatened against the Company for the
purpose of enjoining or preventing the consummation of the transactions
contemplated by this Agreement, or otherwise claiming that this Agreement, the
transactions contemplated hereby, or the consummation thereof are improper. The
Company and its properties and assets are not subject to any order, writ,
injunction or decree of any court or any Governmental Body.
5.10 MATERIAL ADVERSE CHANGE. Except as disclosed in the
Company Reports, there has not been any material adverse change in the business,
assets, condition (financial or otherwise), earnings, results of operations or
prospects of the Company and its Subsidiaries taken as a whole, since the date
of the latest balance sheet filed in connection with the Company Reports.
5.11 YEAR 2000 COMPLIANCE. The Company and each Subsidiary are
or will be, prior to December 31, 1999, Year 2000 Compliant.
5.12 SUBSIDIARIES. Except as set forth on SCHEDULE 5.12 to the
Disclosure Statement, the Company has no subsidiaries and does not otherwise own
or control, directly or indirectly, any interest in any corporation,
partnership, limited liability company, joint venture or other entity or
business concern.
5.13 MATERIAL CONTRACTS AND AGREEMENTS. SCHEDULE 5.13 to the
Disclosure Statement lists all contracts, agreements, leases, commitments,
instruments, arrangements and understandings, whether written or oral, to which
the Company is a party and which are considered material contracts for purposes
of Item 601 of Regulation S-K promulgated by the Commission under the Securities
Act (the "Material Contracts"). The Material Contracts are valid and binding,
are in full force and effect and are enforceable in accordance with their
respective terms. Except for Permitted Liens, the Company has not assigned,
mortgaged, pledged, encumbered or otherwise hypothecated any of its right, title
and interest under the Material Contracts. Except as set forth on SCHEDULE 5.13
to the Disclosure Statement, neither the Company nor, to the best knowledge of
the Company, any other party thereto is in violation of, or in default, in any
material respect, in respect of any Material Contract. No notice has been
received by the Company claiming any such violation or default by the Company or
indicating the desire or intention of any other party thereto to amend, modify,
rescind or terminate the same.
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5.14 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company
has good and marketable title to its properties and assets and good title to all
its leasehold estates, in each case subject to no mortgage, pledge, lien,
encumbrance or charge, other than Permitted Liens. With respect to the property
and assets the Company leases, the Company is in compliance in all material
respects with all terms of each such lease and holds a valid leasehold interest
free of any liens, claims or encumbrances, other than Permitted Liens.
5.15 TAXES. The amount shown on the most recent financial
statements included in the Company Reports as provision for taxes is sufficient
in all material respects for payment of all accrued and unpaid federal, state,
county, local and foreign taxes for the period then ended and all prior periods.
The Company has filed or has obtained presently effective extensions with
respect to all federal, state, county, local and foreign tax returns which have
been required to be filed by it, such returns are true and correct and all taxes
shown thereon to be due have been timely paid with exceptions not material to
the Company. Except as set forth on SCHEDULE 5.15 to the Disclosure Statement,
federal income tax returns of the Company have not been audited by the Internal
Revenue Service, and no controversy with respect to taxes of any type is pending
or, to the best of the Company's knowledge, threatened.
5.16 PROPRIETARY RIGHTS. SCHEDULE 5.16 to the Disclosure
Statement lists or describes all material patents, trademarks, service names,
trade names, copyrights, licenses, trade secrets or other proprietary rights
necessary to its business as now conducted or proposed to be conducted (the
"Proprietary Rights"), together with a description of the Company's rights
therein. The Company owns, or has the right to use all of the Proprietary
Rights, and has taken all actions reasonably necessary to protect the
Proprietary Rights. The Company has not received a notice that it is infringing
upon or otherwise acting adversely to the right or claimed right of any Person
under or with respect to any of the foregoing, and to the best knowledge of the
Company there is no basis for any such claim. Except as set forth on Schedule
5.16 to the Disclosure Statement, the Company is not aware of any violation by a
third party of any of the Proprietary Rights. The Company is not aware that any
of its employees is obligated under any contract (including licenses, covenants
or commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Company or that would conflict with the Company's business
as proposed to be conducted. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees made prior to their
employment by the Company, except for inventions that have been assigned to the
Company.
5.17 AGREEMENTS OF EMPLOYEES. Except as set forth on SCHEDULE
5.17 to the Disclosure Statement, to the best knowledge of the Company, no
officer, director, stockholder, or employee of the Company is a party to or
bound by any agreement, contract, or commitment that materially and adversely
affects the business, assets, condition (financial or otherwise), earnings,
results of operations or prospects of the Company, or the right of any such
person to participate in the Company's affairs and perform the duties of his
office or capacity in connection therewith, or that obligates any such person to
perform any duty for any prior employer or principals.
5.18 EMPLOYEES. To the best knowledge of the Company, no
employee of or consultant to the Company is in violation of any term of any
employment contract or any other contract or agreement relating to the
relationship of any such person with the Company or any other party because of
the nature of the business conducted or to be conducted by the Company.
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To the best of knowledge of the Company, there is no information that is
proprietary to another party that the Company is now utilizing that was provided
by any employee of the Company. The Company is not aware of any key employee of
the Company who has any plans to terminate his or her employment with the
Company.
5.19 LABOR AGREEMENTS AND ACTIONS. Except as set forth on
SCHEDULE 5.19 to the Disclosure Statement, the Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the best knowledge of
the Company, has sought to represent any of the employees, representatives or
agents of the Company. Except as described on SCHEDULE 5.19 to the Disclosure
Statement, there is no strike or other labor dispute involving the Company
pending, or, to the best knowledge of the Company, threatened, nor is the
Company aware of any labor organization activity involving employees of the
Company.
5.20 ENVIRONMENTAL MATTERS. Except as disclosed to Purchaser,
the Company's ownership, operation and use of its properties have been and
currently are in compliance in all respects with all applicable Environmental,
Health and Safety Laws, except to the extent that any such noncompliance would
not have a material adverse effect on the business, assets, condition (financial
or otherwise), earnings, results of operations or prospects of the Company.
Except as disclosed to Purchaser: (i) the Company is not currently liable for
any penalties, fines, liens or forfeitures for its failure to comply with any
Environmental, Health and Safety Laws, (ii) to the best of its knowledge, the
Company does not have any liability under any Environmental Health and Safety
Laws for personal injury, property damage, natural resource damage or cleanup
obligations at or in connection with any of its properties, (iii) the Company is
in compliance with, and is not in breach of or default under any writ, order,
judgment, injunction, or decree issued pursuant to Environmental, Health and
Safety Laws, (iv) the Company has obtained, or caused to be obtained, and is in
compliance with all licenses, certificates, permits, approvals and registrations
("Licenses") required by Environmental, Health and Safety Laws for the Company's
ownership of its properties and the operation of its business as presently
conducted, (v) the Company is in compliance in all material respects with all
terms, conditions and requirements of the Licenses, (vi) there are no
administrative or judicial investigations, notices, claims or other proceedings
pending or, to the Company's knowledge, threatened by any governmental
authorities or third parties against the Company, its business, operations or
any of the Company's property which question the validity or entitlement of the
Company to any License required by the Environmental, Health and Safety Laws for
the ownership of the property and the operations of the Company's business,
(vii) the Company has not performed, arranged for or allowed, by any method or
procedure, the generation, manufacture, use, transportation, transfer, storage,
treatment, spillage, leakage, dumping, pouring, emitting, discharging, releasing
or disposing of Hazardous Substances or other waste in contravention of any
Environmental, Health and Safety Laws or in a manner which would subject any of
the Company's property or the Company to liability, (viii) the Company has not
received notice that in relation to any of its property the Company is a
potentially responsible party for a federal or state environmental cleanup site
or for corrective action under CERCLA, RCRA or any other applicable
Environmental, Health and Safety Laws, (ix) the Company has not received any
written request for information in connection with any federal or state
environmental cleanup site, or in connection with any of the sites where it has
transported, transferred or disposed of Hazardous Substances or other wastes
from any of the Company's property, and (x) to the extent
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that information has been disclosed to Purchaser under this SECTION 5.20, Seller
has fully complied with all informational requests or demands arising under
Environmental, Health and Safety Laws relating to such disclosure.
5.21 ERISA AND BENEFITS MATTERS. The most recent financial
statements contained in the Company Reports reflects the approximate total
pension, group health and other benefit expense for all "employee benefit plans"
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) and all "employee pension benefit plans"
(within the meaning of Section 3(2) of ERISA) of the Company for the 12-month
period then ended, and no material funding changes or irregularities exist in
said 12-month period which would cause such period not to be representative of
most prior periods. Except (and to the extent) expressly set forth on SCHEDULE
5.21 to the Disclosure Statement, full payment has been made or accrued in the
most recent financial statements contained in the Company Reports of all amounts
which the Company is required to pay under the employee benefit plans and the
employee pension benefit plans as of the last day of the most recent fiscal year
of each of such plans ending prior to the date of this Agreement; and no
accumulated funding deficiencies (as defined in Section 302 of ERISA and Section
412 of the Internal Revenue Code of 1986, as amended (the "Code") , exist as of
such date, whether or not waived. No transaction prohibited under Code Section
4975 and/or prohibited under ERISA Sections 406, 407 or 502(i) has occurred, nor
is alleged by any third party to have occurred, with respect to the Company's
employee benefit plans or employee pension benefit plans. A favorable
determination letter has been issued by the Internal Revenue Service with
respect to the tax-qualified status under Code Section 401(a) of each plan which
is an employee pension benefit plan. With respect to the Company's benefit plans
and any other employee pension benefit plan maintained by any member of a
"controlled group" (as defined in ERISA Section 4001(a)(14)) which includes the
Company, the Company does not have any direct or indirect liability under ERISA
Title IV whatsoever to the Pension Benefit Guaranty Corporation or otherwise,
including any withdrawal liability or other obligation to contribute to any
"multiemployer pension plan" (as defined in ERISA Section 4001(a)(14)).
5.22 REPRESENTATIONS COMPLETE. No representation or warranty
of the Company made in this Agreement or any Collateral Agreement, or in any
schedule, document or certificate furnished pursuant to this Agreement or any
Collateral Agreement, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
any statement of fact contained herein or therein not misleading. There is no
fact or circumstance which is not disclosed in this Agreement or the schedules
to the Disclosure Statement which could reasonably be expected to have a
material adverse effect on the Company's financial condition, operating results,
assets, supplier relations, customer relations, employee relations or business
prospects.
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SECTION 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants as follows to the Company:
6.1 AUTHORITY. Purchaser has full power and authority to enter
into this Agreement and the Collateral Agreements to which it is a party, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby.
6.2 ACCREDITED INVESTOR. Purchaser is an "Accredited Investor"
as that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act. Purchaser is able to bear the economic risk of the purchase of
the Purchased Shares pursuant to the terms of this Agreement, including a
complete loss of Purchaser's investment in the Purchased Shares.
6.3 INVESTMENT. Purchaser is acquiring the Purchased Shares
and the Warrant for investment for Purchaser's own account, not as a nominee or
agent and not with the view to, or for resale in connection with, any
distribution thereof. Purchaser understands that none of the Purchased Shares,
the Warrant Shares or the Conversion Shares have been, nor will they be (other
than in accordance with the terms of the Registration Rights Agreement referred
to in Section 4.1(g)(ii)), registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act that
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of Purchaser's representations as expressed herein. Purchaser
has not been formed for the specific purpose of acquiring the Purchased Shares,
the Warrant, the Warrant Shares or the Conversion Shares.
6.4. RESTRICTIVE LEGENDS.
(a) Except as otherwise provided in this Section 6.4, each
certificate for Purchased Shares, Warrant Shares initially issued upon the
exercise of the Warrant, Conversion Shares initially issued upon the conversion
of Series A Shares, and each certificate for Purchased Shares, Warrant Shares or
Conversion Shares issued to any subsequent transferee of any such certificate,
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be transferred in violation of such Act or the rules
and regulations thereunder."
(b) Except as otherwise provided in this Section 6.4, the
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and the securities represented hereby have not
been registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act, the
rules and regulations thereunder or the provisions of this
Warrant."
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SECTION 7
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company, for itself and for each Subsidiary (including
those that are hereafter formed or acquired), covenants to and agrees with
Purchaser that, until the date on which Purchaser no longer owns any Common
Shares or the date which is eleven (11) years from the Closing Date, whichever
is earlier:
7.1 CORPORATE EXISTENCE. The Company, and each Subsidiary,
shall maintain in full force and effect their respective corporate existences,
rights, and franchises, and all material licenses, permits, authorizations,
trademarks, trade names, copyrights, patents, or processes owned or possessed by
them and necessary to the conduct of the Business and shall comply with all
applicable laws and regulations, whether now in effect or hereafter enacted or
promulgated by any governmental authority having jurisdiction.
7.2 TAXES. The Company and each Subsidiary shall timely pay
and discharge, or cause to be timely paid and discharged, all taxes (including
all employment and payroll taxes), assessments, and other governmental charges
imposed upon them or any of their properties or in respect of their franchises
or income; provided, however, that no such tax or charge need be paid if being
contested in good faith by proceedings diligently conducted and if such
reservation or other appropriate provisions, if any, as shall be required by
GAAP shall have been made therefor.
7.3 INSURANCE. The Company and each Subsidiary shall maintain
or cause to be maintained insurance with respect to their properties and
businesses against such casualties and contingencies and in such types and
amounts as is customary or as may be required by law in the case of corporations
engaged in the same or similar Business. Certificates evidencing such insurance
shall be delivered to Purchaser upon request.
7.4 FINANCIAL STATEMENTS. The Company shall deliver the
following to Purchaser :
(a) As soon as available and in any event within ninety (90)
days after the end of each fiscal year of the Company: (i) a consolidated
balance sheet of the Company and each Subsidiary as of the end of such year, a
consolidated statement of income and of surplus for such year and a consolidated
statement of changes in financial position during such year (collectively the
"Annual Financial Statements") and annual financial statements which set forth
in comparative form, if practicable, the corresponding figures for the preceding
year and the budgeted figures for the then-current year; and (ii) an audit
report on the Annual Financial Statements prepared by an accounting firm of
nationally recognized standing reasonably satisfactory to Purchaser stating that
(x) the examination by such accountants with respect to the consolidated Annual
Financial Statements was made in accordance with generally accepted auditing
standards and (y) in the opinion of such accountants, the consolidated Annual
Financial Statements present fairly the consolidated financial position of the
Company, the consolidated results of its operations, and the changes in its
consolidated financial position as of the dates and for the periods of time
covered thereby in conformity with GAAP.
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(b) As soon as available and in any event within forty-five
(45) days after the end of the first three quarters of each fiscal year of the
Company, a consolidated balance sheet of the Company and each Subsidiary as of
the end of such period(s), a consolidated statement of income and surplus for
such period(s) and the fiscal year to that date, and a consolidated statement of
changes in financial position for the fiscal year to that date, subject to
changes resulting from normal year-end adjustments, setting forth in each case
in comparative form, if possible, the corresponding figures for the
corresponding period of the preceding fiscal year and the corresponding figures
for sales, gross profit, net income and the heading titled "EBIT" for the
corresponding period for the budget for the current fiscal year. Such balance
sheet and statements are to be certified by an officer of the Company as
complete and accurate to the best of his information and belief, subject to
normal year-end adjustments.
(c) Concurrent with the furnishing of the Annual Financial
Statements pursuant to paragraph (a) and each of the quarterly statements
pursuant to paragraph (b), a certificate of an officer of the Company which
shall contain a statement, in form and substance satisfactory to Purchaser, to
the effect that, to the best of his knowledge and belief, no Event of Default,
or any event that, upon notice or lapse of time, or both, would constitute an
Event of Default, has occurred without having been waived by Purchaser in
writing, or if there shall have been an Event of Default not previously waived
in writing pursuant to the provisions hereof, or an event that upon notice or
lapse of time, or both, would constitute an Event of Default, such certificate
shall disclose the details thereof. In each such certificate the officer of the
Company shall also certify that the financial statements furnished pursuant to
(a) and (b) above were prepared in accordance with GAAP (except for the lack of
footnotes).
(d) Within ten (10) days after transmission thereof, copies
of all financial statements, proxy statements, reports and any other written
communications which the Company sends to its shareholders and copies of all
registration statements and all regular, special or periodic reports which it
files with the Commission or with any securities exchange on which any of its
securities are then listed, and copies of all press releases and other
statements made available generally by the Company to the public concerning
material developments in the Company's business.
(e) As soon as practicable after a request by Purchaser, the
Company shall provide Purchaser with such information as it may reasonably
require in order to effect timely and proper filing of any reports that
Purchaser is required to submit to any governmental authority in connection with
the business of the Company or any Subsidiary.
7.5 NOTICE OF DEFAULT. In the event that all or any portion of
any Indebtedness for Borrowed Money of the Company or any Subsidiary shall be
declared due and payable before its express maturity, or if the Company or any
Subsidiary shall otherwise be in default under any agreement with respect to
Indebtedness for Borrowed Money, the Company shall give written notice thereof
to Purchaser within ten (10) days of the occurrence of each such event.
7.6 NOTICE OF COMMENCEMENT OF PROCEEDINGS OR CHANGE IN
CONDITION. The Company shall give notice to Purchaser as soon as practicable and
in any event within ten (10) days after the occurrence of any of the following
events, stating in detail the nature thereof: (a) any proceeding instituted
against the Company or any Subsidiary by or in any federal or state court or
before any commission, board, or other regulatory body, federal, state, or
local, that
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would be required to be disclosed under Section 5.9 if it had been in existence
on or prior to the date of this Agreement; or (b) any condition or event which
may have a materially adverse effect on the Company's business, assets,
condition (financial or otherwise), earnings, results of operations or
prospects.
7.7 APPLICATION OF PROCEEDS. The Company shall use the
proceeds from the issuance of the Purchased Shares for reduction of outstanding
indebtedness and general business purposes.
7.8 COMPLIANCE WITH LAW. The Company will comply in all
material respects with all applicable laws (whether federal, state or local and
whether statutory, administrative or judicial or other) and with every
applicable lawful governmental order (whether administrative or judicial).
7.9 RULE 144A INFORMATION. The Company shall, upon the written
request of Purchaser, provide to Purchaser and to any prospective institutional
transferee designated by Purchaser, such financial and other information as is
available to the Company or can be obtained by the Company without material
expense and as Purchaser may reasonably determine is required to permit such
transfer to comply with the requirements of Rule 144A promulgated under the
Securities Act.
7.10 SECURITIES FILINGS. The Company will file all required
forms, reports and documents with the Securities and Exchange Commission
required to be filed by it pursuant to the Securities Act and the Exchange Act,
and the rules and regulations promulgated thereunder, all of which will comply
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, respectively, and such rules and regulations (hereinafter
collectively referred to as the "Subsequent Reports"). None of the Subsequent
Reports, at the time filed, will contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The financial statements of the Company included
in the Subsequent Reports will comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Securities and Exchange Commission applied on a consistent basis (except as
otherwise noted in such financial statements) and will present fairly in all
material respects the financial position, results of operations, cash flows and
changes in financial position of the Company and its consolidated Subsidiaries
as of the dates stated or the periods indicated, subject, in the case of
unaudited interim consolidated financial statements, to normal year-end
adjustments.
7.11 REGULATORY FILINGS. The Company shall file all
Notification and Report Forms and related materials the Company may be required
to file with the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice under the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act.
7.12 BOARD REPRESENTATION. The Company shall at all times
cause the number of Purchaser's Nominees serving on the Board of Directors of
the Company to be equal to the greater of (i) 20% of the number of members of
the Board of Directors, or (ii) that number of members of the Board of Directors
that corresponds most nearly to Purchaser's percentage ownership interest in the
Company.
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7.13 AMENDMENT TO ARTICLES. The Company shall submit to a vote
of its shareholders at its 1999 annual meeting a proposal to amend its Articles
of Incorporation to provide that Section 1701.831 of the Ohio Revised Code shall
not apply to "control share acquisitions" (as defined in Section 1701.01 of the
Ohio Revised Code) of shares of capital stock of the Company (the "Control Share
Acquisition Proposal"). The Board of Directors shall recommend to the
shareholders of the Company that they vote in favor of and adopt the Control
Share Acquisition Proposal.
SECTION 8
NEGATIVE COVENANTS OF THE COMPANY
The Company, for itself and for each Subsidiary (including those that are
hereafter formed or acquired), covenants to and agrees with Purchaser that,
until the date on which Purchaser no longer owns any Common Shares or the date
which is eleven (11) years from the Closing Date, whichever is earlier, neither
the Company nor any Subsidiary shall do any of the following without the prior
written consent of Purchaser:
8.1 CORPORATE CHARTER; PURCHASED SHARES. The Company shall
not, and shall not permit any of its Subsidiaries to, (a) amend its Articles of
Incorporation or Code of Regulations, (b) amend, alter, change or modify in any
way the preferences or rights of the Purchased Shares, the Warrant Shares, the
Contingent Shares, the Conversion Shares or any class of equity securities of
the Company having rights and preferences in parity with or senior to the Series
A Shares or (c) adopt or approve what is commonly referred to as a "shareholder
rights plan" or "poison pill".
8.2 INTENTIONALLY OMITTED.
8.3 DISSOLUTION OR LIQUIDATION. The Company shall not adopt
any plan or arrangement for the dissolution or liquidation of the Company.
8.4 BOARD OF DIRECTORS. Subject to the Company's fulfillment
of the condition contained in Section 4.1(h) hereof, the Company shall not
increase or decrease the authorized number of directors constituting the Board
of Directors.
8.5 DIVIDENDS AND DISTRIBUTIONS. The Company shall not, and
shall not permit any of its Subsidiaries to, (a) declare or pay dividends or
make other distributions (whether by reduction of capital or otherwise) with
respect to the capital stock of the Company or any Subsidiary other than the
Preferred Shares and dividends from the Subsidiaries to the Company; (b)
purchase, redeem, retire or otherwise acquire any of its Common Shares or other
capital stock now or hereafter outstanding, other than in a transaction or
related transactions involving (i) payment by the Company of less than $250,000
in the aggregate or (ii) payment by any Subsidiary to its parent; (c) incur any
indebtedness for the purpose of paying dividends or making other distributions;
or (d) recapitalize, reorganize or restructure.
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8.6 ENCUMBRANCES. The Company shall not, and shall not permit
any Subsidiary to, create, incur, assume, or permit to exist, any Security
Interest on any of its properties or assets whether now owned or hereafter
acquired, other than Permitted Liens.
8.7 INTENTIONALLY OMITTED.
8.8 INCONSISTENT AGREEMENTS. The Company shall not, and shall
not permit any of its Subsidiaries to, enter into any agreement containing any
provision which would be violated or breached by the performance by the Company
of its obligations under this Agreement or the Collateral Agreements or which
would be inconsistent with the obligations of the Company under this Agreement
or the Collateral Agreements.
8.9 REGISTRATION RIGHTS. Except as provided in the
Registration Rights Agreement, the Company shall not grant to any of its
shareholders rights to register with the Commission any of the Company's
securities.
SECTION 9
REMEDIES
9.1 INDEMNIFICATION. The Company shall defend, indemnify, and
hold harmless Purchaser against all liability, loss, cost, damages, claims or
expenses (including reasonable attorneys' fees) arising out of the breach by the
Company of any of its representations and warranties hereunder or the
nonfulfillment by the Company of any of its covenants contained herein.
SECTION 10
MISCELLANEOUS
10.1 EXPENSES. The Company will pay, or reimburse Purchaser
and hold Purchaser harmless against liability for the payment of, all stamp and
other taxes which may be payable in respect of the execution and delivery of
this Agreement or the issuance, purchase and delivery of the Purchased Shares
and Warrant.
10.2 BINDING AGREEMENT; ASSIGNMENT. The provisions of this
Agreement shall be binding upon and inure to the benefit of the successors and
permitted assigns of the parties hereto. Purchaser shall not have the right to
assign this Agreement or any of its rights and obligations hereunder without the
prior written consent of the Company; provided, however, that Purchaser may
assign this Agreement or any of its rights and obligations hereunder to any
Affiliate of Purchaser without having to obtain the consent of the Company.
10.3 NOTICES. All notices and other communications required or
permitted under this Agreement shall be deemed to have been duly given and made
if in writing and if served either by personal delivery to the party for whom
intended (which shall include delivery by Federal Express or similar service) or
three (3) business days after being deposited, postage prepaid, certified or
registered mail, return receipt requested, in the United States mail bearing
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the address shown in this Agreement for, or such other address as may be
designated in writing hereafter by, such party:
(a) If to Purchaser:
GE Lighting
0000 Xxxxx Xx.
Xxxxxxxxx, XX 00000
Attention: President and Chief
Executive Officer
Facsimile: (000) 000-0000
with a copy to:
GE Lighting
0000 Xxxxx Xx.
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(b) If to the Company:
Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: CEO
with a copy to:
Xxxxxx, Xxxxxxxx & Sarlson Co., L.P.A.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
10.4 WAIVER. No delay on the part of any party hereto with
respect to the exercise of any right, power, privilege, or remedy under this
Agreement or the Collateral Agreements shall operate as a waiver thereof, nor
shall any exercise or partial exercise of any such right, power, privilege, or
remedy preclude any further exercise thereof or the exercise of any other right,
power, privilege, or remedy. No modification or waiver by either party hereto of
any provision of this Agreement, the Collateral Agreements, the Warrant or of
the Purchased Shares, or consent to any departure by the other party therefrom,
shall be effective in any event unless in writing as set forth in Section 10.14,
and then only in the specific instance and for the purpose for which given.
Notwithstanding the foregoing, each party hereto shall have the right to waive
compliance by the other party with any of the provisions hereof, or to modify
such provisions to a less restrictive obligation of the other party on such
terms as such party shall determine, with or without prior notice to the other
party.
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10.5 REMEDIES. The rights, powers, privileges, and remedies
hereunder, and under the Purchased Shares, the Warrant and the Collateral
Agreements, are cumulative and not exclusive of any other right, power,
privilege, or remedy the parties hereto would otherwise have.
10.6 ENTIRE AGREEMENT. This Agreement and the Collateral
Agreements constitute the entire agreement and understanding among Purchaser and
the Company, and supersede all prior agreements and understandings relating to
the subject matter hereof.
10.7 LAW GOVERNING. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law.
10.8 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.9 SEVERABILITY. Any provision of this Agreement or any
Collateral Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions of this
Agreement or Collateral Agreement affecting the validity or enforceability of
such provision in any other jurisdiction.
10.10 CROSS-REFERENCES. References in this Agreement or in any
Collateral Agreement to any section are, unless otherwise specified, to such
section of this Agreement or such Collateral Agreement, as the case may be.
10.11 HEADINGS. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof.
10.12 EXHIBITS AND SCHEDULES INCORPORATED. The exhibits and
schedules to this Agreement are incorporated into and constitute an integral
part of this Agreement.
10.13 CONFLICT. In the event, and to the extent, that any
terms or provisions of the Company's Articles of Incorporation or Code of
Regulations are amended after the date hereof in violation of Section 8.1
contrary to the terms of this Agreement, the terms of this Agreement shall
control.
10.14 AMENDMENT AND WAIVER. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
will be effective unless such modification, amendment or waiver is approved in
writing by the Company and Purchaser. The failure of any party to enforce any of
the provisions of this Agreement will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement.
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10.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company and Purchaser hereunder shall
survive the Closing for a period of three (3) years commencing on the Closing
Date.
10.16 COVENANTS OF CERTAIN SHAREHOLDERS. Xxxx X. Xxxx shall
vote all Common Shares held, beneficially and of record, by him individually and
all Common Shares as to which he has voting power as voting trustee of the Ruud
Voting Trust in favor of the Control Share Acquisition Proposal. Xxxxxxx Ltd.
shall vote all Common Shares held, beneficially and of record, by it in favor of
the Control Share Acquisition Proposal.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be executed in the name and on behalf of each of them by one of
their respective officers, thereunto duly authorized, as of the date first above
written.
THE COMPANY:
ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
------------------------------
Title: CEO
-----------------------------
PURCHASER:
GENERAL ELECTRIC COMPANY
By: /s/ XX Xxxxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxxxx
------------------------------
Title: President and CEO
-----------------------------
GE Lighting
-----------------------------
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the following shareholders of the Company are signing this
Agreement solely for the purpose of evidencing their intent and agreement to be
bound by the provisions of Section 10.16 hereof:
Xxxxxxx Ltd.
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Its: Managing Member
--------------------------------
/s/ Xxxx X. Xxxx
------------------------------------
Xxxx X. Xxxx
/s/ Xxxx X. Xxxx
------------------------------------
Xxxx X. Xxxx, as voting trustee under Voting
Trust Agreement dated January 2, 1998, as
amended
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EXHIBITS
1 Form of 1,000,000 Share Warrant
2.1 Amendment to Articles
2.2 Contingent Warrant Agreement
SCHEDULES TO DISCLOSURE STATEMENT
5.2 Indebtedness for Borrowed Money
5.7 Registration Rights
5.9 Material Litigation
5.12 List of Subsidiaries
5.13 Material Contracts
5.15 IRS Audits
5.16 Proprietary Rights
5.17 Certain Employee Agreements
5.19 Labor Agreements
5.21 Benefits Matters
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EXHIBIT 1
---------
SERIES A1 WARRANT
to Purchase Common Shares of
ADVANCED LIGHTING TECHNOLOGIES, INC.
30
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. DEFINITIONS .....................................................................1
2. EXERCISE OF WARRANT..............................................................5
2.1. Manner of Exercise......................................................5
2.2. Payment of Taxes........................................................6
2.3. Fractional Shares.......................................................6
2.4. Continued Validity......................................................6
3. TRANSFER, DIVISION AND COMBINATION...............................................7
3.1. Transfer................................................................7
3.2. Division and Combination................................................7
3.3. Expenses................................................................7
3.4. Maintenance of Books....................................................7
4. ADJUSTMENTS......................................................................7
4.1. Share Dividends, Subdivisions and Combinations..........................7
4.2 Certain Other Distributions and Adjustments.............................8
4.3. Issuance of Additional Common Shares....................................8
4.4. Issuance of Warrants or Other Rights....................................9
4.5. Issuance of Convertible Securities......................................9
4.6. Superseding Adjustment.................................................10
4.7. Other Provisions Applicable to Adjustments Under This Section .........11
4.8. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets..................................................13
4.9. Other Action Affecting Common Shares...................................13
5. NOTICES TO WARRANT HOLDERS......................................................14
5.1. Notice of Adjustments..................................................14
5.2. Notice of Corporate Action.............................................14
6. NO IMPAIRMENT...................................................................15
7. RESERVATION AND AUTHORIZATION OF COMMON SHARES; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY..................................15
8. TAXING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS..............................16
9. RESTRICTIONS ON TRANSFERABILITY.................................................16
9.1. Restrictive Legend.....................................................16
9.2. Notice of Proposed Transfers; Requests for Registration................16
10. SUPPLYING INFORMATION...........................................................17
11. LOSS OR MUTILATION..............................................................17
12. OFFICE OF THE COMPANY...........................................................17
13. FINANCIAL AND BUSINESS INFORMATION..............................................17
13.1. Quarterly Information..................................................17
13.2. Annual Information.....................................................18
13.3. Filings................................................................18
14. LIMITATION OF LIABILITY.........................................................18
15. MISCELLANEOUS...................................................................18
15.1. Nonwaiver and Expenses.................................................18
15.2. Notice Generally.......................................................19
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15.3. Remedies...............................................................19
15.4. Successors and Assigns.................................................19
15.5. Amendment..............................................................19
15.6. Severability...........................................................20
15.7. Headings...............................................................20
15.8. Governing Law..........................................................20
SIGNATURES
EXHIBITS
Exhibit A - Subscription Form
Exhibit B - Assignment Form
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.
SERIES A1 WARRANT
To Purchase Common Shares of
ADVANCED LIGHTING TECHNOLOGIES, INC.
THIS IS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, or
registered assigns, is entitled, at any time during the Exercise Period (as
hereinafter defined), to purchase from ADVANCED LIGHTING TECHNOLOGIES, INC., an
Ohio corporation (the "Company"), up to 1,000,000 Common Shares (as hereinafter
defined and subject to adjustment as provided herein) as described herein, in
whole or in part, including fractional parts, at a purchase price of $.01 per
share (subject to adjustment as provided herein) all on the terms and conditions
and pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
-----------
Terms used in this Warrant have the respective meanings set
forth below:
"Additional Issuance" shall have the meaning set forth in
Section 4.3(a).
"Additional Common Shares" shall mean all Common Shares issued
by the Company after the date hereof, other than Conversion Shares, Contingent
Shares or Warrant Shares.
"Appraised Value" shall mean, in respect of any Common Share
on any date herein specified, the fair saleable value of such Common Share
(determined without giving affect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Share or (iii) to the fact that the
Company may have no class of equity registered under the Exchange Act) based on
the equity value of the Company, as determined by an investment banking or
valuation firm selected in accordance with the following sentences, divided by
the number of Common Shares outstanding on a Fully Diluted Basis as determined
in accordance with GAAP (assuming the payment of the exercise prices for such
shares). The determination of the Appraised Value per Common Share shall be made
by an investment banking or valuation firm of nationally recognized standing
selected by the Company and acceptable to the Majority Holders. If the
investment banking or valuation firm selected by Company is not acceptable to
the Majority Holders and the Company and the Majority Holders cannot agree on a
mutually acceptable investment banking or valuation firm, then the Majority
Holders and the Company shall each choose one such investment banking or
valuation firm and the respective chosen firms shall
33
agree on another investment banking or valuation firm which shall make the
determination. The Company shall retain, at its sole cost, such investment
banking or valuation firm as may be necessary for the determination of Appraised
Value required by the terms of this Warrant.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required to be closed in the State of New
York.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act, the Exchange
Act and other federal securities laws.
"Common Share" shall mean (except where the context otherwise
indicates) a Common Share, $0.001 par value, of the Company as constituted on
the date hereof, and any capital stock into which such Common Share may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
Common Shares upon any reclassification thereof which is also not preferred as
to dividends or assets over any other class of capital stock of the Company and
which is not subject to redemption and (ii) capital stock of any successor or
acquiring corporation (as defined in Section 4.8) received by or distributed to
the holders of Common Shares of the Company in the circumstances contemplated by
Section 4.8.
"Contingent Shares" shall mean Common Shares to be issued upon
the exercise of any right to purchase Common Shares pursuant to the Contingent
Warrant Agreement.
"Contingent Warrant Agreement" shall mean the Contingent
Warrant Agreement of even date herewith between the Company and General Electric
Company.
"Conversion Shares" shall mean the Common Shares issued or
issuable upon the conversion of the Series A Shares.
"Convertible Securities" shall mean evidences of indebtedness,
shares of capital stock or other securities that are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Common Shares, either immediately or upon the
occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any Common
Share on any date herein specified, if there shall then be a public market for
the Common Shares, the average of the daily market prices for 20 consecutive
Business Days immediately preceding such date or, if there is no such public
market, the Appraised Value per Common Share. The daily market price for each
such Business Day shall be (i) the last sale price on such day on the principal
stock exchange or NASDAQ-NMS on which such Common Shares are then listed or
admitted to trading, or (ii) if no sale takes place on such day on any such
exchange or NASDAQ-NMS, the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange or NASDAQ-NMS, or
(iii) if the Common Shares are not then listed or admitted to trading on any
stock exchange or NASDAQ-NMS, the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by the
NASDAQ or
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the National Quotation Bureau, Inc., or (iv) if neither such corporation at the
time is engaged in the business of reporting such prices, as furnished by any
similar firm then engaged in such business, or (v) if there is no such firm, as
furnished by any member of the NASD selected mutually by the Majority Holders
and the Company or, if they cannot agree upon such selection, as selected by two
such members of the NASD, one of which shall be selected by the Majority Holders
and one of which shall be selected by the Company.
"Current Warrant Price" shall mean $.01 per Common Share.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean September 30, 2009.
"Fully Diluted Basis" means, with respect to any determination
or calculation, that such determination or calculation is performed on a fully
diluted basis (assuming the issuance of all Common Shares issuable under any
then outstanding options, warrants or convertible securities of any kind)
determined in accordance with GAAP for purposes of determining book value or net
income per share.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"GE" shall mean General Electric Company, a New York
corporation.
"Holder" shall mean the Person in whose name the Warrant set
forth herein is registered on the books of the Company maintained for such
purpose.
"HSR Triggered Put" shall mean a put right under Section
VII(c) of the Company's Second Amended and Restated Articles of Incorporation.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of Common Shares then
purchasable upon exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation System.
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"NASDAQ Approval" shall mean approval of the transactions
contemplated by the Stock Purchase Agreement by the shareholders of the Company
pursuant to NASDAQ Rule 4460(i)(D).
"NASDAQ-NMS" shall mean the NASDAQ National Market System.
"Other Property" shall have the meaning set forth in Section
4.8.
"Permitted Issuances" shall mean (a) the issuance or
conversion of options issued to employees pursuant to any stock option plan or
employee incentive plan approved by the Company's board of directors, (b) the
issuance of Warrant Shares, Contingent Shares or Conversion Shares and (c) the
issuance of Common Shares to satisfy obligations in respect of acquisitions of
securities or assets of any Person, provided that (i) such contracts were
entered into prior to September 30, 1999, and (ii) the number of Common Shares
subject to this Subparagraph (c) shall not exceed 110,000 in the aggregate.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"Purchase Price" shall mean $6.75 per Common Share (as the
same may be adjusted from time to time to take into account any action taken by
the Company in respect of its Common Shares, including, without limitation,
stock splits, dividends, combinations and reclassifications).
"Registration Statement" shall have the meaning set forth in
Section 9.4.
"Restricted Common Shares" shall mean Common Shares that are,
or upon their issuance on the exercise of this Warrant would be, evidenced by a
certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Series A Shares" shall mean shares of Series A Convertible
Preferred Stock, par value $.001, of the Company.
"Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, of even date herewith, between GE and the Company.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, association or other business entity
in respect of which that Person owns securities or other ownership interests
having ordinary voting power to elect a majority of
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36
the board of directors, partnership committee, board of managers or trustees or
other managerial body thereof, whether directly or indirectly through one or
more of the other Subsidiaries of such Person or a combination thereof. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Company and
"Subsidiaries" means all Subsidiaries of the Company.
"Transfer" shall mean any disposition of any Warrant or
Warrant Share or of any interest in either thereof that would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, this Warrant.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of Common Shares for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number
of Common Shares being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Shares" shall mean the Common Shares issued or
issuable to the Holders of Warrants upon exercise of the Warrants.
2. EXERCISE OF WARRANT
-------------------
2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., New York time, on the Expiration Date (the "Exercise Period"),
subject to the last sentence of this Section 2.1, Holder may exercise this
Warrant, on any Business Day, for all or any part of 1,000,000 Common Shares. In
order to exercise this Warrant, in whole or in part, Holder shall deliver to the
Company at its principal office at 00000 Xxxxxx Xxxx, Xxxxx, Xxxx 00000, or at
the office or agency designated by the Company pursuant to Section 12: (i) a
written notice of Holder's election to exercise this Warrant, which notice shall
specify the number of Common Shares to be purchased, (ii) payment of the Warrant
Price and (iii) this Warrant. Such notice shall be substantially in the form of
the subscription form appearing at the end of this Warrant as Exhibit A, duly
executed by Holder or its agent or attorney. Upon receipt thereof, the Company
shall, as promptly as practicable, and in any event within five Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to Holder a certificate or certificates representing the aggregate number of
full Common Shares issuable upon such exercise, together with cash in lieu of
any fraction of a share, as hereinafter provided. The share certificate or
certificates so delivered shall be, to the extent possible, in such denomination
or denominations as such Holder shall request in the notice and shall be
registered in the name of Holder or, subject to Section 9, such other name as
shall be designated in the notice. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued, and Holder or any other Person so designated to be named therein shall
be deemed to have become a holder of record of such shares for all purposes, as
of the date the notice, together with the cash or check or other payment as
provided below and this Warrant, is received by the
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Company as described above and all taxes required to be paid by Holder, if any,
pursuant to Section 2.2 prior to the issuance of such shares have been paid. If
this Warrant shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Common Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant, or, at the request of Holder,
appropriate notation may be made on this Warrant and the same returned to
Holder. Payment of the Warrant Price shall be made at the option of Holder by
(i) certified or official bank check, and/or (ii) by Holder's surrender to the
Company of that number of Warrant Shares (or the right to receive such number of
shares) or Common Shares having an aggregate Current Market Price equal to or
greater than the Current Warrant Price for all shares then being purchased
(including those being surrendered), or (iii) any combination thereof, duly
endorsed by or accompanied by appropriate instruments of transfer duly executed
by Holder or by Holder's attorney duly authorized in writing. This Warrant and
Holder's right to exercise this Warrant shall, to the extent not previously
exercised, terminate at such time as GE has received the Put Option Purchase
Price (as defined in Section VII(c) of the Company's Second Amended and Restated
Articles) upon an HSR Triggered Put.
2.2. PAYMENT OF TAXES. All Common Shares issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Common Shares issuable upon
exercise of this Warrant in any name other than that of Holder, and in such case
the Company shall not be required to issue or deliver any share certificate
until such tax or other charge has been paid or it has been established to the
reasonable satisfaction of the Company that no such tax or other charge is due.
2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional Common Share upon exercise of any Warrant. If any fraction of
a share would, but for this Section, be issuable upon exercise of this Warrant,
in lieu of such fractional share, the Company may, at its option, pay a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per Common Share on the date of exercise
or, if there is no Current Market Price on such date, $6.75 per whole Common
Share, adjusted to reflect equitably share dividends, subdivisions and
combinations after the date hereof.
2.4. CONTINUED VALIDITY. A holder of Common Shares issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10 and
15 of this Warrant. The Company will, at the time of each exercise of this
Warrant, in whole or in part, upon the request of the holder of the Common
Shares issued upon such exercise hereof, acknowledge in writing, in form
reasonably satisfactory to such holder, its continuing obligation
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to afford to such holder all such rights; PROVIDED, HOWEVER, that if such holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
----------------------------------
3.1. TRANSFER. Subject to compliance with Section 9 hereof,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred to in
Section 2.1 or the office or agency designated by the Company pursuant to
Section 12, together with a written assignment of this Warrant substantially in
the form of Exhibit B hereto duly executed by Holder or its agent or attorney
and funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall,
subject to Section 9, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned in compliance with
Section 9, may be exercised by a new Holder for the purchase of Common Shares
without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer that may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at
its own expense (other than transfer taxes) the new Warrant or Warrants under
this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at
its aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.
4. ADJUSTMENTS
-----------
Subject to NASDAQ Approval, the number of Common Shares for
which this Warrant is exercisable shall be subject to adjustment from time to
time as set forth in this Section 4. The Company shall give each Holder notice
of any event described below in accordance with Section 5.1.
4.1. SHARE DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any
time the Company shall:
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(a) take a record of the holders of its Common Shares for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Common Shares,
(b) subdivide its outstanding Common Shares into a larger
number of Common Shares, or
(c) combine its outstanding Common Shares into a smaller
number of Common Shares,
then the number of Common Shares for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of Common Shares that a record holder of the same number of Common
Shares for which this Warrant is exercisable immediately prior to the occurrence
of such event would own or be entitled to receive after the happening of such
event.
4.2 CERTAIN OTHER DISTRIBUTIONS AND ADJUSTMENTS. (a) If at any
time the Company shall take a record of the holders of its Common Shares for the
purpose of entitling them to receive any dividend or other distribution of:
(i) cash,
(ii) any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever
(other than cash, Convertible Securities or Additional Common Shares),
or
(iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Common Shares),
then Holder shall be entitled to receive such dividend or distribution as if
Holder had exercised this Warrant.
(b) A reclassification of the Common Shares (other than a
change in par value, or from par value to no par value or from no par value to
par value) into Common Shares and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Shares of such
shares of such other class of stock within the meaning of paragraph (a) above
and, if the outstanding Common Shares shall be changed into a larger or smaller
number of Common Shares as a part of such reclassification, such change shall be
deemed a subdivision or combination, as the case may be, of the outstanding
Common Shares within the meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL COMMON SHARES. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any Additional
Common Shares or any security convertible or exchangeable into Additional Common
Shares (an "Additional Issuance"), other than Permitted Issuances, in exchange
for consideration in an amount per
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Additional Common Share less than either the Purchase Price or the Current
Market Price on the date of such Additional Issuance (before giving effect to
such Additional Issuance), then, effective upon such Additional Issuance, the
number of Common Shares subject to purchase upon exercise of this Warrant shall
be increased to a number determined by multiplying the number of Common Shares
subject to purchase immediately before such Additional Issuance by a fraction,
the numerator of which shall be the number of Common Shares outstanding
immediately prior to such Additional Issuance plus the number of Additional
Common Shares so issued and the denominator of which shall be the number of
Common Shares outstanding immediately prior to such issuance of Additional
Common Shares plus the number of Common Shares which the aggregate consideration
received by the Company for the total number of Additional Common Shares so
issued would purchase at the greater of the Purchase Price or the Current Market
Value at the time of such Additional Issuance. In computing adjustments under
this paragraph, fractional interests in Common Shares shall be taken into
account to the nearest one-thousandth of a share.
(b) The provision of paragraph (a) of Section 4.3 shall not
apply to any issuance of Additional Common Shares for which an adjustment is
provided under Section 4.1 or 4.2. No adjustment of the number of Common Shares
for which this Warrant shall be exercisable shall be made under paragraph (a) of
Section 4.3 upon the issuance of any Additional Common Shares that are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights or pursuant to the exercise of any conversion or exchange rights in any
Convertible Securities, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Section 4.4 or Section 4.5.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the
Company shall take a record of the holders of its Common Shares for the purpose
of entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Common Shares or any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which a Common Share is issuable upon the exercise
of such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than either the Purchase Price or the
Current Market Price on the date of such issue or sale, then the number of
Common Shares for which this Warrant is exercisable shall be adjusted as
provided in Section 4.3 on the basis that the maximum number of Additional
Common Shares issuable pursuant to all such warrants or other rights necessary
to effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall be deemed to
have received all of the consideration payable therefor, if any, as of the date
of the issuance of such warrants or other rights. No further adjustments of the
number of Common Shares for which this Warrant is exercisable shall be made upon
the actual issue of such Common Shares or of such Convertible Securities upon
exercise of such warrants or other rights or upon the actual issue of such
Common Shares upon such conversion or exchange of such Convertible Securities.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the
Company shall take a record of the holders of its Common Shares for the purpose
of entitling them to receive a
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distribution of, or shall in any manner (whether directly or by assumption in a
merger in which the Company is the surviving corporation) issue or sell, any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which a
Common Share is issuable upon such conversion or exchange shall be less than
either the Purchase Price or the Current Market Price on the date of such issue
or sale, then the number of Common Shares for which this Warrant is exercisable
shall be adjusted as provided in Section 4.3 on the basis that the maximum
number of Additional Common Shares necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
and outstanding and the Company shall have received all of the consideration
payable therefor, if any, as of the date of issuance of such Convertible
Securities. No adjustment of the number of Common Shares for which this Warrant
is exercisable shall be made under this Section 4.5 upon the issuance of any
Convertible Securities that are issued pursuant to the exercise of any warrants
or other subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to Section 4.4. No further adjustments of the number of Common Shares
for which this Warrant is exercisable shall be made upon the actual issue of
such Common Shares upon conversion or exchange of such Convertible Securities
and, if any issue or sale of such Convertible Securities is made upon exercise
of any warrant or other right to subscribe for or to purchase any such
Convertible Securities for which adjustments of the number of Common Shares for
which this Warrant is exercisable have been or are to be made pursuant to other
provisions of this Section 4, no further adjustments of the number of Common
Shares for which this Warrant is exercisable and the Current Warrant Price shall
be made by reason of such issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any
adjustment of the number of Common Shares for which this Warrant is exercisable
shall have been made pursuant to Section 4.4 or Section 4.5 as the result of any
issuance of warrants, rights or Convertible Securities,
(a) such warrants or rights, or the right of conversion or
exchange in such other Convertible Securities, shall expire, and all or a
portion of such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the case
may be, shall not have been exercised, or
(b) the consideration per share for which Common Shares are
issuable pursuant to such warrants or rights, or the terms of such other
Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per share upon
the occurrence of a specified date or event,
then for each outstanding Warrant such previous adjustment shall be rescinded
and annulled and the Additional Common Shares that were deemed to have been
issued by virtue of the computation made in connection with the adjustment so
rescinded and annulled shall no longer be deemed to have been issued by virtue
of such computation. Thereupon, a recomputation shall be made of the effect of
such rights or options or other Convertible Securities on the basis of
(c) treating the number of Additional Common Shares or other
property, if any, theretofore actually issued or issuable pursuant to the
previous exercise of any such
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warrants or rights or any such right of conversion or exchange, as having been
issued on the date or dates of any such exercise and for the consideration
actually received and receivable therefor, and
(d) treating any such warrants or rights or any such other
Convertible Securities that then remain outstanding as having been granted or
issued immediately after the time of such increase of the consideration per
share for which Common Shares or other property are issuable under such warrants
or rights or other Convertible Securities; whereupon a new adjustment of the
number of Common Shares for which this Warrant is exercisable shall be made,
which new adjustment shall supersede the previous adjustment so rescinded and
annulled.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION. The following provisions shall be applicable to the making of
adjustments of the number of Common Shares for which this Warrant is exercisable
and the Current Warrant Price provided for in this Section 4:
(a) COMPUTATION OF CONSIDERATION. To the extent that any
Additional Common Shares or any Convertible Securities or any warrants or other
rights to subscribe for or purchase any Additional Common Shares or any
Convertible Securities shall be issued for cash consideration, the consideration
received by the Company therefor shall be the amount of the cash received by the
Company therefor, or, if such Additional Common Shares or Convertible Securities
are offered by the Company for subscription, the subscription price, or, if such
Additional Common Shares or Convertible Securities are sold to underwriters or
dealers for public offering without a subscription offering, the initial public
offering price (in any such case subtracting any amounts paid or receivable for
accrued interest or accrued dividends and without taking into account any
compensation, discounts or expenses paid or incurred by the Company for and in
the underwriting of, or otherwise in connection with, the issuance thereof). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at the
time of such issuance as determined in good faith by the Board of Directors of
the Company. In case any Additional Common Shares or any Convertible Securities
or any warrants or other rights to subscribe for or purchase such Additional
Common Shares or Convertible Securities shall be issued in connection with any
merger in which the Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair value, as determined in good faith by
the Board of Directors of the Company, of such portion of the assets and
business of the nonsurviving corporation as such Board in good faith shall
determine to be attributable to such Additional Common Shares, Convertible
Securities, warrants or other rights, as the case may be. The consideration for
any Additional Common Shares issuable pursuant to any warrants or other rights
to subscribe for or purchase the same shall be the consideration received by the
Company for issuing such warrants or other rights plus the additional
consideration payable to the Company upon exercise of such warrants or other
rights. The consideration for any Additional Common Shares issuable pursuant to
the term of any Convertible Securities shall be the consideration received by
the Company for issuing warrants or other rights to subscribe for or purchase
such Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the Company
upon
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the exercise of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any Additional Common Shares
or Convertible Securities in payment or satisfaction of any dividends upon any
class of stock other than Common Shares, the Company shall be deemed to have
received for such Additional Common Shares or Convertible Securities a
consideration equal to the amount of such dividend so paid or satisfied.
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
Common Shares for which this Warrant is exercisable that would otherwise be
required may be postponed (except in the case of a subdivision or combination of
Common Shares, as provided for in Section 4.1) up to, but not beyond the date of
exercise if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than 1% of the Common Shares for which
this Warrant is exercisable immediately prior to the making of such adjustment.
Any adjustment representing a change of less than such minimum amount (except as
aforesaid) that is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 4 and not
previously made, would result in a minimum adjustment or on the date of
exercise. For the purpose of any adjustment, any specified event shall be deemed
to have occurred at the close of business on the date of its occurrence.
(c) FRACTIONAL INTERESTS. In computing adjustments under this
Section 4, fractional interests in Common Shares shall be taken into account to
the nearest 1/1000th of a share.
(d) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Shares for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to shareholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(e) ESCROW OF WARRANT SHARES. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Shares, but prior to the occurrence of the event for
which such record is taken, and Holder exercises this Warrant, any Additional
Common Shares issuable upon exercise by reason of such adjustment shall be
deemed the last Common Shares for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for Holder by the Company to be issued to
Holder upon and to the extent that the event actually takes place, upon payment
of the then Current Warrant Price. Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to occur or
is rescinded, then such escrowed shares shall be cancelled by the Company and
escrowed property returned to the Company.
(f) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board
of Directors of the Company shall be required to make a determination in good
faith of the fair value of any
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item under this Section 4, such determination may be challenged in good faith by
the Majority Holders, and any dispute shall be resolved by an investment banking
or valuation firm of recognized national standing selected by the Company and
acceptable to the Majority Holders.
(g) PROHIBITION ON ADJUSTMENT. The provisions of Section 4.3,
4.4 and 4.5 shall not operate to reduce the number of Common Shares subject to
purchase upon exercise of this Warrant.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Shares), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, Common Shares of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Shares
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of such Warrant, the number of Common Shares of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of Common Shares for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Warrant to be performed and observed by the Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of Common Shares for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.8,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class that is not preferred as to dividends or assets
over any other class of stock of such corporation and that is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities that are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON SHARES. In case at any time
or from time to time the Company shall take any action in respect of its Common
Shares, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of Holders, the
number of Common Shares or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
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5. NOTICES TO WARRANT HOLDERS
--------------------------
5.1. NOTICE OF ADJUSTMENTS. Not less than 10 nor more than 30
days prior to the record date or effective date, as the case may be, of any
action that requires or might require an adjustment or readjustment pursuant to
Section 4, the Company shall forthwith prepare and deliver to each Holder a
signed copy of a certificate executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated (including a description
of the basis on which the Board of Directors of the Company determined the fair
value of any evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights referred to in
Section 4.7 (a)), specifying the number of Common Shares for which this Warrant
is exercisable and (if such adjustment was made pursuant to Section 4.8 or 4.9)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. The Company
shall keep at its office or agency designated pursuant to Section 12 copies of
all such certificates and cause the same to be available for inspection at said
office during normal business hours by any Holder or any prospective purchaser
of a Warrant designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its
Common Shares for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation, person or entity, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 30 days prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Shares
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale,
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transfer, disposition, dissolution, liquidation or winding up is to take place
and the time, if any such time is to be fixed, as of which the holders of Common
Shares shall be entitled to exchange their Common Shares for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 15.2.
6. NO IMPAIRMENT
-------------
The Company shall not by any action, including, without
limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Common Shares upon the exercise of this Warrant, including
taking such action as is necessary for the Current Warrant Price to be not less
than the par value of the Common Shares issuable upon exercise of this Warrant,
and (b) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON SHARES;
-----------------------------------------------
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY
-----------------------------------------------------------
From and after the date hereof, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued Common Shares as will be sufficient to permit the
exercise in full of all outstanding Warrants. All Common Shares that shall be so
issuable, when issued upon exercise of any Warrant and payment therefor in
accordance with the terms of such Warrant, shall be duly and validly issued and
fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action that would result in an adjustment in
the number of Common Shares for which this Warrant is exercisable, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto,
as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
If any Common Shares required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
law (otherwise than as provided in
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47
Section 9) before such shares may be so issued, the Company will in good faith
and as expeditiously as possible and at its expense endeavor to cause such
shares to be duly registered or such approval to be obtained or filing made.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
--------------------------------------------------
In the case of all dividends or other distributions by the
Company to the holders of its Common Shares with respect to which any provision
of Section 4 refers to the taking of a record of such holders, the Company will
in each such case take such a record and will take such record as of the close
of business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY; REGISTRATIONS
----------------------------------------------
The Warrants and the Warrant Shares shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Share. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Section 9, each certificate for Warrant Shares initially issued upon the
exercise of this Warrant, and each certificate for Warrant Shares issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act
or the rules and regulations thereunder."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This warrant and the securities represented hereby have not
been registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act, the rules
and regulations thereunder or the provisions of this Warrant."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION.
Prior to any Transfer of any Warrant or any Restricted Common Share, the holder
of such Warrant or Restricted Common Share shall give written notice (a
"Transfer Notice") to the Company of such Transfer. Each certificate, if any,
evidencing such Restricted Common Share issued upon such Transfer shall bear the
restrictive legend set forth in Section 9.1(a), and each Warrant issued upon
such Transfer shall bear the restrictive legend set forth in Section 9.1(b),
unless in the
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48
opinion of counsel to such holder that is reasonably acceptable to the Company
such legend is not required in order to ensure compliance with the Securities
Act.
9.3. REGISTRATION. Each holder of Warrant Shares has certain
registration rights under the Registration Rights Agreement of even date
herewith between the Company and General Electric Company, as amended from time
to time. Any Holder may obtain a copy of such agreement by notice to the
Company.
10. SUPPLYING INFORMATION
---------------------
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Shares in supplying such information as may be
reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Shares.
11. LOSS OR MUTILATION
------------------
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably satisfactory
to it (it being understood that the written agreement of GE shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant of like tenor
to such Holder; PROVIDED, in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
---------------------
As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive offices
of the Company) where the Warrants may be presented for exercise, registration
of transfer, division or combination as provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
----------------------------------
13.1. QUARTERLY INFORMATION. The Company will deliver to each
Holder, as soon as practicable after the end of each of the first three quarters
of the Company, and in any event within 45 days thereafter, one copy of an
unaudited consolidated balance sheet of the Company and its subsidiaries as at
the close of such quarter, and the related unaudited consolidated statements of
income and cash flows of the Company for such quarter and, in the case of the
second and third quarters, for the portion of the fiscal year ending with such
quarter, setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year. Such financial statements
shall be prepared by the Company in accordance with GAAP (without period-end
adjustments or footnotes) and accompanied by the certification of the Company's
chief executive officer or chief financial officer that such financial
statements are complete and correct and present fairly the consolidated
financial position, results of operations
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49
and cash flows of the Company and its subsidiaries as at the end of such quarter
and for such year-to-date period, as the case may be.
13.2. ANNUAL INFORMATION. The Company will deliver to each
Holder as soon as practicable after the end of each fiscal year of the Company,
and in any event within 90 days thereafter, one copy of:
(a) an audited consolidated balance sheet of the Company and
its subsidiaries as at the end of such year, and
(b) audited consolidated statements of income and cash flows
of the Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming any adjustment made pursuant
to Section 4 during such year.
13.3. FILINGS. The Company will file with the Commission all
regular or periodic reports required pursuant to the Exchange Act and will
deliver to Holder promptly upon their becoming available one copy of each
report, notice or proxy statement sent by the Company to its shareholders
generally, and of each regular or periodic report (pursuant to the Exchange
Act), filed by the Company with (i) the Commission or (ii) any securities
exchange on which Common Shares are listed.
14. LIMITATION OF LIABILITY
-----------------------
No provision hereof, in the absence of affirmative action by
Holder to purchase Common Shares, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Share or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
15. MISCELLANEOUS
-------------
15.1. NONWAIVER AND EXPENSES. No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If the Company fails to comply with any provision of this Warrant,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in enforcing any of
its rights, powers or remedies hereunder.
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50
15.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid, or
by telecopy and confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Shares, at its last
known address appearing on the books of the Company maintained for such purpose.
(b) If to the Company at
Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: President
Telecopy Number: (000)000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, one Business Day after the same shall have been delivered to a
nationally recognized courier service, or three Business Days after the same
shall have been deposited, postage prepaid, in the United States mail. Failure
or delay in receipt of copies of any notice, demand, request, approval,
declaration, delivery or other communication to the Person designated above
shall in no way adversely affect the effectiveness of such notice, demand,
request, approval, declaration, delivery or other communication.
15.3. REMEDIES. Each holder of a Warrant or a Warrant Share,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under Section 9 of this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of Section 9 of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and, with
respect to Section 9 hereof, holders of Warrant Shares, and shall be enforceable
by any such Holder or holder of Warrant Shares.
15.5. AMENDMENT. This Warrant may be modified or amended or
the provisions hereof waived only with the written consent of the Company and
the Majority Holders; PROVIDED that no such Warrant may be modified or amended
to reduce the number of Common Shares for
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51
which such Warrant is exercisable or to increase the price at which such Common
Shares may be purchased upon exercise of such Warrant (before giving effect to
any adjustment as provided therein) without the prior written consent of each
Holder.
15.6. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
15.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
15.8. GOVERNING LAW. This Warrant shall be governed by the
laws of the State of New York, without regard to the provisions thereof relating
to conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and attested by its Secretary or an Assistant Secretary.
Dated: ______________, 1999
ADVANCED LIGHTING TECHNOLOGIES, INC.
By:____________________________________
Name:
Title:
Attest:
By:__________________________________
Name:
Title:
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52
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Common Shares of ADVANCED
LIGHTING TECHNOLOGIES, INC. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the Common Shares hereby purchased (and any securities or
other property issuable upon such exercise) be issued in the name of and
delivered to ______________________________ whose address is
____________________________ and, if such Common Shares shall not include all of
the Common Shares issuable as provided in this Warrant, that a new Warrant of
like tenor and date for the balance of the Common Shares issuable hereunder be
delivered to the undersigned.
_________________________________________
(Name of Registered Owner)
_________________________________________
(Signature of Registered Owner)
_________________________________________
(Street Address)
_________________________________________
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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53
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
Common Shares set forth below:
Name and Address of Assignee No. of Common Shares
---------------------------- --------------------
and does hereby irrevocably constitute and appoint ________________________
attorney-in-fact to register such transfer on the books of ADVANCED LIGHTING
TECHNOLOGIES, INC. maintained for the purpose, with full power of substitution
in the premises.
Dated:____________________ Print Name:_______________________
Signature:_________________________
Witness:___________________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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54
EXHIBIT 2.1
-----------
[INSERT TO ALT'S SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION]
-----------------------------------------------------------------------
The following should be inserted as Paragraph 3 to Part A of the Fourth
Article of ALT's Second Amended and Restated Articles of Incorporation:
3. Series A Convertible Preferred Shares.
I. DEFINITIONS. For purposes of this Paragraph 3 of this Part A of this
Article Fourth, the following terms shall have the following meanings:
(a) "Additional Common Shares" shall mean Common Shares issued by the
Corporation after the Effective Date.
(b) "Additional Issuance" shall have the meaning ascribed to such term
in Subsection V(c)(iii)(A) hereof.
(c) "Appraised Value" shall mean, in respect of any Common Share on any
date herein specified, the fair saleable value of such Common Share (determined
without giving affect to the discount for (i) a minority interest or (ii) any
lack of liquidity of the Common Share or (iii) the fact that the Corporation may
have no class of equity registered under the Exchange Act) based on the equity
value of the Corporation, as determined by an investment banking or valuation
firm selected in accordance with the following sentences, divided by the number
of Common Shares outstanding on a Fully Diluted Basis as determined in
accordance with GAAP (assuming the payment of the exercise prices for such
shares). The determination of the Appraised Value per Common Share shall be made
by an investment banking or valuation firm of nationally recognized standing
selected by the Corporation and acceptable to the Majority Holders. If the
investment banking or valuation firm selected by the Corporation is not
acceptable to the Majority Holders and the Corporation and the Majority Holders
cannot agree on a mutually acceptable investment banking or valuation firm, then
the Majority Holders and the Corporation shall each choose one such investment
banking or valuation firm and the respective chosen firms shall agree on another
investment banking or valuation firm which shall make the determination. The
Corporation shall retain, at its sole cost, such investment banking or valuation
firm as may be necessary for the determination of Appraised Value required by
the terms of these Third Amended and Restated Articles of Incorporation.
(d) "Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required to be closed in the State of New York.
(e) "Closing Period" shall have the meaning ascribed to such term in
Subsection VII(f) hereof.
55
(f) "Common Shares" shall mean the Common Shares, par value one
thousandth of one cent ($.001), of the Corporation.
(g) "Contingent Shares" shall mean the Common Shares issued upon
exercise of the Contingent Warrants.
(h) "Contingent Warrant Agreement" shall mean the Contingent Warrant
Agreement, dated the Effective Date, among the Original Purchaser, the
Corporation, Xxxxxxx, Ltd., Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, as voting
trustee under Voting Trust Agreement dated October 10, 1995, Xxxx X. Xxxx and
Xxxx X. Xxxx, as voting trustee under Voting Trust Agreement dated January 2,
1998.
(i) "Contingent Warrants" shall mean the First Contingent Warrant and
the Second Contingent Warrant issued under the Contingent Warrant Agreement,
dated as of the Effective Date, between the Corporation and the Original
Purchaser.
(j) "Control Share Acquisition Resolution" shall mean the resolution to
be voted upon by the shareholders of the Corporation at the Corporation's 1999
annual meeting to amend the Corporation's Articles of Incorporation to provide
that Section 1701.831 of the Ohio Revised Code shall not apply to "control share
acquisitions" (as defined in Section 1701.01 of the Ohio Revised Code) of shares
of capital stock of the Corporation.
(k) "Conversion Ratio" shall have the meaning ascribed to such term in
Subsection V(a) hereof.
(l) "Conversion Shares" shall mean the Common Shares to be issued upon
the conversion of Series A Preferred Shares.
(m) "Convertible Securities" shall mean evidences of indebtedness,
shares of capital stock or other securities that are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Common Shares, either immediately or upon the
occurrence of a specified date or a specified event.
(n) "Corporation Put Right Notice" shall have the meaning ascribed to
such term in Subsction VII(e) hereof.
(o) "Credit Agreements" shall have the meaning ascribed to such term in
Subsection VII(f) hereof.
(p) "Current Market Price" shall mean, in respect of any Common Share
on any date herein specified, if there shall then be a public market for the
Common Shares, the average of the daily market prices for 20 consecutive
Business Days immediately preceding such date or, if there is no such public
market, the Appraised Value per Common Share. The daily market price for each
such Business Day shall be (i) the last sale price on such day on the principal
stock exchange or NASDAQ-NMS on which such Common Shares are then listed or
admitted to trading, or (ii) if no sale takes place on such day on any such
exchange or NASDAQ-NMS, the
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56
average of the last reported closing bid and asked prices on such day as
officially quoted on any such exchange or NASDAQ-NMS, or (iii) if the Common
Shares are not then listed or admitted to trading on any stock exchange or
NASDAQ-NMS, the average of the last reported closing bid and asked prices on
such day in the over-the-counter market, as furnished by the NASDAQ or the
National Quotation Bureau, Inc., or (iv) if neither such corporation at the time
is engaged in the business of reporting such prices, as furnished by any similar
firm then engaged in such business, or (v) if there is no such firm, as
furnished by any member of the NASD selected mutually by the Majority Holders
and the Corporation or, if they cannot agree upon such selection, as selected by
two such members of the NASD, one of which shall be selected by the Majority
Holders and one of which shall be selected by the Corporation.
(q) "Effective Date" shall mean the date on which the Amendment to
these Articles of Incorporation designating the Series A Preferred Shares became
effective.
(r) "Fully Diluted Basis" means, with respect to any determination or
calculation, that such determination or calculation is performed on a fully
diluted basis (assuming the issuance of all Common Shares issuable under any
then outstanding options, warrants or convertible securities of any kind)
determined in accordance with GAAP for purposes of determining book value or net
income per share.
(s) "Governmental Approval" shall have the meaning ascribed to such
term in Subsection VII(c) hereof.
(t) "Indebtedness for Borrowed Money" shall mean as to any Person, at a
particular time, all items which constitute, without duplication (a)
indebtedness for borrowed money, (b) indebtedness in respect of the deferred
purchase price of property, (c) indebtedness evidenced by notes, bonds,
debentures or similar instruments, (d) capital lease obligations (i.e.,
obligations with respect to leases which are required to be capitalized for
financial reporting purposes in accordance with GAAP), (e) all obligations of
such Person in respect of capital stock subject to mandatory redemption or
redemption at the option of the holder thereof, in whole or in part, and (f) all
contingent obligations of such Person in respect of any of the foregoing. As to
the Corporation and any Subsidiary, the term Indebtedness for Borrowed Money
shall not include indebtedness to the Corporation from any Subsidiary,
indebtedness to any Subsidiary from the Corporation or indebtedness to any
Subsidiary from any Subsidiary.
(u) "Liquidation Preference Amount" shall have the meaning ascribed to
such term in Subsection III(a) hereof.
(v) "Majority Holders" shall mean the holders of Series A Preferred
Shares convertible into more than 50% of the aggregate number of Conversion
Shares then issuable upon conversion of all then outstanding Series A Preferred
Shares.
(w) "NASDAQ Approval" shall mean approval of the transactions
contemplated by the Stock Purchase Agreement by the shareholders of the
Corporation pursuant to NASDAQ Rule 4460(i)(D).
Page 3
57
(x) "Original Purchaser" shall mean General Electric Company, a New
York corporation.
(y) "Other Property" shall have the meaning ascribed to such term in
Subsection V(c)(viii) hereof.
(z) "Permitted Issuances" shall mean (i) the issuance or conversion of
options issued pursuant to any stock option plan, employee incentive plan,
employee stock purchase plan or employee retirement and savings plan approved by
the Corporation's Board of Directors, (ii) the issuance of Conversion Shares,
Contingent Shares or Warrant Shares, and (iii) the issuance of Common Shares to
satisfy obligations in respect of acquisitions of securities or assets of any
Person, provided (A) such contracts were entered into prior to September 30,
1999, and (B) the number of Common Shares subject to this subclause (iii) shall
not exceed 110,000 in the aggregate.
(aa) "Person" shall mean any natural person, corporation, firm,
partnership, association, government, governmental agency or other entity,
whether acting in an individual, fiduciary or other capacity.
(bb) "Preferred Shares" shall mean the Series A Preferred Shares and
the shares of any other series of Preferred Shares created in accordance with
these Articles of Incorporation.
(cc) "Purchase Price" shall mean $6.75 per Common Share (as the same
may be adjusted from time to time to take into account any action by the
Corporation in respect of its Common Shares, including, without limitation,
stock splits, dividends, combinations and reclassifications).
(dd) "Put Option" shall have the meaning ascribed to such term in
Subsection VII(h) hereof.
(ee) "Put Option Date" shall have the meaning ascribed to such term in
Subsection VII(h) hereof.
(ff) "Put Option Notice" shall have the meaning ascribed to such term
in Subsection VII(h) hereof.
(gg) "Put Option Purchase Price" shall have the meaning ascribed to
such term in Subsection VII(h) hereof.
(hh) "Put Shares" shall have the meaning ascribed to such term in
Subsection VII(h) hereof.
(ii) "Redemption Date" shall have the meaning ascribed to such term in
Subsection VI(a) hereof.
(jj) "Redemption Notice" shall have the meaning ascribed to such term
in Subsection VI(c) hereof.
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58
(kk) "Redemption Price" shall have the meaning ascribed to such term in
Subsection VI(a) hereof.
(ll) "Second Occurrence Failure" shall have the meaning ascribed
thereto in the Contingent Warrant Agreement.
(mm) "Series A Preferred Shares" shall mean the Series A Convertible
Preferred Shares, par value one thousandth of one cent ($.001), of the
Corporation.
(nn) "Stock Purchase Agreement" shall mean the Stock Purchase Agreement
dated September 28, 1999, between Advanced Lighting Technologies, Inc., an Ohio
corporation, and the Original Purchaser.
(oo) "Stock Plans" shall mean the Corporation's 1995 Incentive Award
Plan, the Corporation's Billion Dollar Market Capitalization Incentive Award
Plan, the Corporation's 1998 Incentive Award Plan, the Corporation's Employee
Stock Purchase Plan and the Corporation's 401(k) Retirement and Savings Plan.
(pp) "Subsequent Closing Period" shall have the meaning ascribed to
such term in Subsection VII(f) hereof.
(qq) "Subsidiaries" shall mean any other corporations of which more
than 50% of the outstanding shares of capital stock having ordinary voting power
for the election of directors is owned directly or indirectly by the
Corporation, by the Corporation and one or more Subsidiaries, or by one or more
other Subsidiaries.
(rr) "Warrant" shall mean the warrant in the form of EXHIBIT 1 attached
to the Stock Purchase Agreement for the right to purchase additional Common
Shares.
(ss) "Warrant Shares" shall mean Common Shares to be issued upon
exercise of the Warrant.
II. DIVIDENDS. No dividends shall be declared and set aside for any Series A
Preferred Shares of the Corporation except in the event that the Board of
Directors of the Corporation shall declare a dividend payable upon the then
outstanding Common Shares of the Corporation, in which event the holders of the
Series A Preferred Shares shall be entitled to the amount of dividends per share
as would be declared payable on the number of Common Shares into which each
Series A Preferred Share held by each holder thereof could be converted pursuant
to the provisions of Subsection V hereof, such number determined as of the
record date for the determination of holders of Common Shares entitled to
receive such dividend.
III. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) TREATMENT AT LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of Series A Preferred Shares shall be entitled to
receive, prior and in preference to any distribution
Page 5
59
of any of the assets or surplus funds of the Corporation to the holders of the
Common Shares by reason of their ownership thereof, the amount of $27.00 per
Series A Preferred Share (as adjusted for any stock dividends, combinations or
splits with respect to such shares), plus interest thereon calculated at a rate
per annum equal to 8% compounded annually from the date of issuance of each
Series A Preferred Share until the date of payment (the "Liquidation Preference
Amount"). Interest shall be determined on the basis of a 365 day year for the
actual number of days elapsed from the date of issuance until the date of
payment. If upon the occurrence of any liquidation, dissolution or winding up,
the assets and surplus funds required to be distributed among the Series A
Preferred Shares shall be insufficient to permit the payment to such holders of
the full preferential amount, then the entire assets and surplus funds of the
Corporation legally available for distribution shall be distributed among the
holders of the Series A Preferred Shares so that all holders of Series A
Preferred Shares shall receive an amount per share pro rata in accordance with
the preferential amount payable with respect to each Series A Preferred Share.
After payment to the holders of the Series A Preferred Shares of the amounts
set forth above, the entire remaining assets and funds of the Corporation
legally available for distribution, if any, shall be distributed among the
holders of the Common Shares in proportion to the Common Shares then held by
them; provided, however, that the holders of Series A Preferred Shares shall be
entitled by reason of their ownership thereof to participate in any such
distribution of any remaining assets or surplus funds to the holders of the
Common Shares as if the holders of the Series A Preferred Shares converted such
securities into Common Shares at the Conversion Ratio set forth in Subsection V
below (as adjusted as set forth herein) immediately prior to the date of such
event in addition to receipt of the amounts to which they are entitled on
account of their ownership of the Series A Preferred Shares as set forth above.
(b) TREATMENT OF REORGANIZATIONS, CONSOLIDATIONS, MERGERS, AND SALES
OF ASSETS. For purposes of this Section III, any acquisition of the Corporation
by means of (i) consolidation, merger or other form of corporate reorganization
in which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring
corporation or its subsidiary, or (ii) a sale of all or substantially all of
the assets of the Corporation, shall be treated as a liquidation, dissolution
or winding up of the Corporation and the holders of the Series A Preferred
Shares, at their option, shall have the right to receive, in lieu of the
preferential distributions described in this Section III, at the closing, the
same consideration per share payable to holders of the Common Shares as if the
holders of the Series A Preferred Shares converted such securities into Common
Shares at the Conversion Ratio set forth in Section V below (as adjusted as set
forth herein) immediately prior to the closing of such transaction.
(c) DISTRIBUTIONS OTHER THAN CASH. Whenever a distribution provided
for in this Section III shall be payable in securities or property other than
cash, the value of such distribution shall be the fair market value of such
securities or other property as determined in good faith by the Board of
Directors.
IV. VOTING.
(a) GENERAL. In addition to special voting rights provided by
applicable law, each holder of Series A Preferred Shares shall be entitled to
vote on all matters and shall be entitled to cast four (4) votes for each
Series A Preferred Share held at the record date for the determination
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60
of shareholders entitled to vote on such matter or, if no record date is
established, at the date such vote is taken or any written consent of
shareholders is first executed, such votes to be counted together with all
other shares of capital stock having general voting powers and not separately
as a class. Notwithstanding any adjustment to the Conversion Ratio (as defined
in Section V) pursuant to Section V, Section VI or Section VII hereof, no
holder of Series A Preferred Shares shall at any time be entitled to cast more
than four (4) votes for each Series A Preferred Share held by such holder. In
all cases where the holders of Series A Preferred Shares have the right to vote
separately as a class, such holders shall be entitled to one vote for each such
share held by them.
(b) SPECIAL MEETINGS. The holders of at least a majority of the
aggregate number of Series A Preferred Shares then outstanding (evidenced in
writing by such holders or by vote at a meeting of shareholders called for such
purpose) shall have the right at any time to call for a special meeting of the
Board of Directors of the Corporation for such specified purposes as such
holders may deem desirable. Such special meeting shall be convened in
accordance with the applicable notice provisions of the Corporation's Code of
Regulations.
V. CONVERSION. The holders of Series A Preferred Shares shall have
conversion rights as follows:
(a) OPTIONAL CONVERSION; FRACTIONAL SHARES. Each issued and outstanding
Series A Preferred Share shall be convertible, at the option of the holder
thereof, at any time and from time to time without the payment of additional
consideration, at the office of the Corporation or any transfer agent for such
stock, into 4 fully paid and nonassessable Common Shares (the "Conversion
Ratio"). The Corporation shall not be required to issue a fractional Common
Share upon conversion of any Series A Preferred Share. If any fraction of a
share would, but for this provision, be issuable upon conversion of a Series A
Preferred Share, in lieu of such fractional share, the Corporation may, at its
option, pay a cash adjustment in respect of such final fraction in an amount
equal to the same fraction of the Current Market Price per Common Share on the
date of conversion.
(b) RESERVATION OF COMMON SHARES. The Corporation shall at all times
reserve and keep available out of its authorized but unissued Common Shares,
solely for the purpose of issuance upon the conversion of the Series A
Preferred Shares, such number of Common Shares issuable upon the conversion of
all outstanding Series A Preferred Shares. All Common Shares which are so
issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such Common Shares
may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
Common Shares may be listed (except for official notice of issuance which shall
be immediately delivered by the Corporation upon each such issuance).
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(c) ADJUSTMENTS. Subject to NASDAQ Approval, the following adjustments
shall apply as set forth in this Section V. The Corporation shall give each
holder of Preferred Shares notice of any event described below in accordance
with Section V(d) below.
(i) SHARE DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any
time the Corporation shall:
(A) take a record of the holders of its Common
Shares for the purpose of entitling them to receive a dividend
payable in, or other distribution of, Additional Common Shares,
(B) subdivide its outstanding Common Shares
into a larger number of Common Shares, or
(C) combine its outstanding Common Shares into
a smaller number of Common Shares,
then, the Conversion Ratio shall be adjusted such that the number of Common
Shares into which each Series A Preferred Share is convertible immediately
after the occurrence of any such event shall be adjusted to equal the number
of Common Shares that a record holder of the same number of Common Shares into
which a Series A Preferred Share is convertible immediately prior to the
occurrence of such event would own or be entitled to receive after the
happening of such event.
(ii) CERTAIN OTHER DISTRIBUTIONS AND ADJUSTMENTS.
(A) If at any time the Corporation shall take a
record of the holders of its Common Shares for the purpose of
entitling them to receive any dividend or other distribution
of:
(1) cash,
(2) any evidences of its
indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever
(other than cash, Convertible Securities or
Additional Common Shares), or
(3) any warrants or other rights to
subscribe for or purchase any evidences of its
indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever
(other than cash, Convertible Securities or
Additional Common Shares),
then, the holders of Series A Preferred Shares shall be entitled
to receive such dividend or distribution as if such holder had
converted such Series A Preferred Shares into Common Shares.
(B) A reclassification of the Common Shares
(other than a change in par value, or from par value to no par
value or from no par value to par value) into
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Common Shares and shares of any other class of stock shall be
deemed a distribution by the Corporation to the holders of its
Common Shares of such shares of such other class of stock
within the meaning of Subsection (c)(ii)(A) above and, if the
outstanding Common Shares shall be changed into a larger or
smaller number of Common Shares as a part of such
reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding Common
Shares within the meaning of Subsection (c)(i) hereof.
(iii) ISSUANCE OF ADDITIONAL COMMON SHARES.
(A) If at any time the Corporation shall
(except as hereinafter provided) issue or sell any Additional
Common Shares (an "Additional Issuance"), other than Permitted
Issuances, in exchange for consideration in an amount per
Additional Common Share less than either the Purchase Price or
the Current Market Price on the date of such Additional
Issuance (before giving effect to such Additional Issuance)
then, effective at the time of such Additional Issuance, the
number of Common Shares which will be issued upon conversion of
the Series A Preferred Shares shall be increased to a number
determined by multiplying the number of Common Shares subject
to issuance upon conversion of the Series A Preferred Shares
immediately before such Additional Issuance by a fraction, the
numerator of which shall be the number of Common Shares
immediately after giving effect to such Additional Issuance
(calculated on a Fully Diluted Basis) and the denominator of
which shall be the sum of:
(1) the number of Common Shares outstanding
immediately before giving effect to such Additional Issuance
(calculated on a Fully Diluted Basis), plus
(2) the number of Common Shares that the
aggregate consideration received by the Corporation with
respect to such Additional Issuance would purchase at the
"Calculation Price" on the date of such Additional Issuance
(before giving effect to such Additional Issuance).
For purposes of the preceding calculation, the term "Calculation
Price" shall mean (a) the Purchase Price if the consideration
received per Additional Common Share is less than the Purchase
Price but greater than the Current Market Price, (b) the Current
Market Price if the consideration received per Additional Common
Share is less than the Current Market Price but greater than the
Purchase Price and (c) the greater of the Purchase Price and the
Current Market Price if the consideration received per Additional
Common Share is less than both the Purchase Price and the Current
Market Price.
In computing adjustments under this Subsection, fractional
interests in Common Shares shall be taken into account to the
nearest one-thousandth of a share.
(B) Subsection (c)(iii)(A) shall not apply to any
issuance of Additional Common Shares for which an adjustment is
provided under Subsections (c)(i) and (c)(ii). No adjustment of
the number of Common Shares
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into which the Series A Preferred Shares are convertible shall be
made under Subsection (c)(iii)(A) upon the issuance of any
Additional Common Shares that are issued pursuant to the exercise
of any warrants or other subscription or purchase rights or
pursuant to the exercise of any conversion or exchange rights in
any Convertible Securities, if any such adjustment shall
previously have been made upon the issuance of such warrants or
other rights or upon the issuance of such Convertible Securities
(or upon the issuance of any warrant or other rights therefor)
pursuant to Subsections (c)(iv) and (c)(v).
(iv) ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the
Corporation shall take a record of the holders of its Common Shares for the
purpose of entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Corporation is the
surviving corporation) issue or sell, any warrants or other rights to subscribe
for or purchase any Additional Common Shares or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which a Common Share is issuable upon
the exercise of such warrants or other rights or upon conversion or exchange of
such Convertible Securities shall be less than either the Purchase Price or the
Current Market Price on the date of such issue or sale, then the number of
Common Shares which will be issued upon conversion of the Series A Preferred
Shares shall be adjusted as provided in Subsection (c)(iii)(A) on the basis that
the maximum number of Additional Common Shares issuable pursuant to all such
warrants or other rights necessary to effect the conversion or exchange of all
such Convertible Securities shall be deemed to have been issued and outstanding
and the Corporation shall be deemed to have received all of the consideration
payable therefor, if any, as of the date of the issuance of such warrants or
other rights. No further adjustments to the number of Common Shares which will
be issued upon conversion of the Series A Preferred Shares shall be made upon
the actual issue of Common Shares or of Convertible Securities upon exercise of
warrants or other rights contemplated by this Subsection (c)(iv) or upon the
actual issue of Common Shares upon conversion or exchange of Convertible
Securities contemplated by this Subsection (c)(iv).
(v) ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the
Corporation shall take a record of the holders of its Common Shares for the
purpose of entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Corporation is the
surviving corporation) issue or sell, any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which a Common Share is issuable upon such conversion or
exchange shall be less than either the Purchase Price or the Current Market
Price on the date of such issue or sale, then the number of Common Shares which
will be issued upon conversion of the Series A Preferred Shares shall be
adjusted as provided in Subsection (c)(iii)(A) on the basis that the maximum
number of Additional Common Shares necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
and outstanding and the Corporation shall have received all of the consideration
payable therefor, if any, as of the date of issuance of such Convertible
Securities. No adjustment to the number of Common Shares into which the Series A
Preferred Shares are convertible shall be made under this Subsection (c)(v) upon
the issuance of any Convertible Securities that are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Subsection (c)(iv). No
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further adjustments of the number of Common Shares into which the Series A
Preferred Shares are convertible shall be made upon the actual issue of such
Common Shares upon conversion or exchange of such Convertible Securities and,
if any issue or sale of such Convertible Securities is made upon exercise of
any warrant or other right to subscribe for or to purchase any such Convertible
Securities for which adjustments of the number of Common Shares into which the
Series A Preferred Shares are convertible have been or are to be made pursuant
to other provisions of this Subsection (c), no further adjustments of the
number of Common Shares into which the Preferred Shares are convertible shall
be made by reason of such issue or sale.
(vi) SUPERSEDING ADJUSTMENT. If, at any time after any
adjustment of the number of Common Shares into which the Series A Preferred
Shares are convertible shall have been made pursuant to Subsections (c)(iv) and
(c)(v) as the result of any issuance of warrants, rights or Convertible
Securities,
(A) such warrants or rights, or the right of
conversion or exchange in such other Convertible Securities, shall
expire, and all or a portion of such warrants or rights, or the right
of conversion or exchange with respect to all or a portion of such
other Convertible Securities, as the case may be, shall not have been
exercised, or
(B) the consideration per share for which Common
Shares are issuable pursuant to such warrants or rights, or the terms
of such other Convertible Securities, shall be increased solely by
virtue of provisions therein contained for an automatic increase in
such consideration per share upon the occurrence of a specified date or
event,
then the previous adjustment made to the number of Common Shares into which the
Preferred Shares are convertible shall be rescinded and annulled and the
Additional Common Shares that were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such rights or options
or other Convertible Securities on the basis of
(C) treating the number of Additional Common Shares
or other property, if any, theretofore actually issued or issuable
pursuant to the previous exercise of any such warrants or rights or any
such right of conversion or exchange, as having been issued on the date
or dates of any such exercise and for the consideration actually
received and receivable therefor, and
(D) treating any such warrants or rights or any such
other Convertible Securities that then remain outstanding as having
been granted or issued immediately after the time of such increase of
the consideration per share for which Common Shares or other property
are issuable under such warrants or rights or other Convertible
Securities; whereupon a new adjustment of the number of Common Shares
into which the Series A Preferred Shares are convertible shall
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be made, which new adjustment shall supersede the previous adjustment
so rescinded and annulled.
(vii) OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION. The following provisions shall be applicable to the making of
adjustments to the number of Common Shares into which the Series A Preferred
Shares are convertible provided for in this Subsection (c):
(A) COMPUTATION OF CONSIDERATION. To the extent that
any Additional Common Shares or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional
Common Shares or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Corporation therefor
shall be the amount of the cash received by the Corporation therefor,
or, if such Additional Common Shares or Convertible Securities are
offered by the Corporation for subscription, the subscription price,
or, if such Additional Common Shares or Convertible Securities are sold
to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case
subtracting any amounts paid or receivable for accrued interest or
accrued dividends and without taking into account any compensation,
discounts or expenses paid or incurred by the Corporation for and in
the underwriting of, or otherwise in connection with, the issuance
thereof). To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided,
the amount of such consideration shall be deemed to be the fair value
of such consideration at the time of such issuance as determined in
good faith by the Board of Directors of the Corporation. In case any
Additional Common Shares or any Convertible Securities or any warrants
or other rights to subscribe for or purchase such Additional Common
Shares or Convertible Securities shall be issued in connection with any
merger in which the Corporation issues any securities, the amount of
consideration therefor shall be deemed to be the fair value, as
determined in good faith by the Board of Directors of the Corporation,
of such portion of the assets and business of the nonsurviving
corporation as such Board in good faith shall determine to be
attributable to such Additional Common Shares, Convertible Securities,
warrants or other rights, as the case may be. The consideration for any
Additional Common Shares issuable pursuant to any warrants or other
rights to subscribe for or purchase the same shall be the consideration
received by the Corporation for issuing such warrants or other rights
plus the additional consideration payable to the Corporation upon
exercise of such warrants or other rights. The consideration for any
Additional Common Shares issuable pursuant to the term of any
Convertible Securities shall be the consideration received by the
Corporation for issuing warrants or other rights to subscribe for or
purchase such Convertible Securities, plus the consideration paid or
payable to the Corporation in respect of the subscription for or
purchase of such Convertible Securities, plus the additional
consideration, if any, payable to the Corporation upon the exercise of
the right of conversion or exchange in such Convertible Securities. In
case of the issuance at any time of any Additional Common Shares or
Convertible Securities in payment or satisfaction of any dividends upon
any class of stock other than Common Shares, the Corporation shall be
deemed to have received for such Additional Common Shares or
Convertible Securities a consideration equal to the amount of such
dividend so paid or satisfied.
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(B) WHEN ADJUSTMENTS TO BE MADE. The adjustments
required by this Subsection (c) shall be made whenever and as often as
any specified event requiring an adjustment shall occur, except that
any adjustment to the number of Common Shares into which the Series A
Preferred Shares are convertible that would otherwise be required may
be postponed (except in the case of a subdivision or combination of
Common Shares, as provided for in Subsection (c)(i)) up to, but not
beyond the date of conversion if such adjustment either by itself or
with other adjustments not previously made adds or subtracts less than
1% of the Common Shares into which the Series A Preferred Shares are
convertible immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount
(except as aforesaid) that is postponed shall be carried forward and
made as soon as such adjustment, together with other adjustments
required by this Subsection (c) and not previously made, would result
in a minimum adjustment or on the date of conversion. For the purpose
of any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence.
(C) FRACTIONAL INTERESTS. In computing adjustments
under this Subsection (c), fractional interests in Common Shares shall
be taken into account to the nearest 1/1000th of a share.
(D) WHEN ADJUSTMENT NOT REQUIRED. If the Corporation
shall take a record of the holders of its Common Shares for the purpose
of entitling them to receive a dividend or distribution or subscription
or purchase rights and shall, thereafter and before the distribution to
shareholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(E) ESCROW OF SHARES. If after any property becomes
distributable pursuant to this Subsection (c) by reason of the taking
of any record of the holders of Common Shares, but prior to the
occurrence of the event for which such record is taken, and the holders
of Series A Preferred Shares convert such Series A Preferred Shares,
any Additional Common Shares issuable upon exercise by reason of such
adjustment shall be deemed the last Common Shares into which the Series
A Preferred Shares have been converted (notwithstanding any other
provision to the contrary herein) and such shares or other property
shall be held in escrow for such holder by the Corporation to be issued
to such holder upon and to the extent that the event actually takes
place. Notwithstanding any other provision to the contrary herein, if
the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by the
Corporation and escrowed property returned to the Corporation.
(F) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever
the Board of Directors of the Corporation shall be required to make a
determination in good faith of the fair value of any item under this
Subsection (c), such determination may be challenged in good faith by
the Majority Holders, and any dispute shall be resolved by an
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investment banking or valuation firm of recognized national standing
selected by the Corporation and acceptable to the Majority Holders.
(G) PROHIBITION ON ADJUSTMENT. The provisions of
Subsections (c)(iii), (c)(iv) and (c)(v) shall not operate to reduce
the number of Common Shares which will be issued upon conversion of the
Series A Preferred Shares.
(viii) REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case the Corporation shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Corporation is not the surviving corporation or where
there is a change in or distribution with respect to the Common Shares), or
sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, Common Shares of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Shares
of the Corporation, then each holder of Series A Preferred Shares shall have the
right thereafter to receive, upon conversion of such Series A Preferred Shares,
the number of Common Shares of the successor or acquiring corporation or of the
Corporation, if it is the surviving corporation, and Other Property receivable
upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a holder of the number of Common
Shares into which the Series A Preferred Shares owned by such holder are
convertible immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Corporation) shall expressly assume
the due and punctual observance and performance of each and every covenant and
condition of the Series A Preferred Shares to be performed and observed by the
Corporation and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Corporation) in order to provide for adjustments of
Common Shares into which the Series A Preferred Shares are convertible which
shall be as nearly equivalent as practicable to the adjustments provided for in
this Subsection (c). For purposes of this Subsection (c)(viii), "common stock of
the successor or acquiring corporation" shall include stock of such corporation
of any class that is not preferred as to dividends or assets over any other
class of stock of such corporation and that is not subject to redemption and
shall also include any evidences of indebtedness, shares of stock or other
securities that are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Subsection (c)(viii) shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
(ix) OTHER ACTION AFFECTING COMMON SHARES. In case at any time
or from time to time the Corporation shall take any action in respect of its
Common Shares, other than any action described in this Subsection (c), then,
unless such action will not have a materially adverse effect upon the rights of
holders of Series A Preferred Shares, the number of Common
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Shares or other stock into which the Series A Preferred Shares are convertible
shall be adjusted in such manner as may be equitable in the circumstances.
(d) NOTICES TO HOLDERS OF SERIES A PREFERRED SHARES.
(i) NOTICE OF ADJUSTMENTS. Not less than 10 nor more than 30
days prior to the record date or effective date, as the case may be, of any
action that requires or might require an adjustment or readjustment pursuant to
Subsection (c), the Corporation shall forthwith prepare and deliver to each
holder of Series A Preferred Shares, a signed copy of a certificate executed by
the chief financial officer of the Corporation setting forth, in reasonable
detail, the event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis on which the
Board of Directors of the Corporation determined the fair value of any evidences
of indebtedness, shares of stock, other securities or property or warrants or
other subscription or purchase rights referred to in Subsection (c)(vii)(A),
specifying the number of Common Shares into which the Series A Preferred Shares
are convertible and (if such adjustment was made pursuant to Subsections
(c)(viii) or (c)(ix)) describing the number and kind of any other shares of
stock or Other Property into which the Series A Preferred Shares are
convertible, after giving effect to such adjustment or change. The Corporation
shall keep at its office or agency copies of all such certificates and cause the
same to be available for inspection at said office during normal business hours
by any holder of Series A Preferred Shares or any prospective purchaser of
Series A Preferred Shares designated by a holder thereof.
(ii) NOTICE OF CORPORATE ACTION. If at any time:
(A) the Corporation shall take a record of the
holders of its Common Shares for the purpose of entitling them to
receive a dividend or other distribution, or any right to subscribe for
or purchase any evidences of its indebtedness, any shares of stock of
any class or any other securities or property, or to receive any other
right, or
(B) there shall be any capital reorganization of the
Corporation, any reclassification or recapitalization of the capital
stock of the Corporation or any consolidation or merger of the
Corporation with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Corporation
to, another corporation, person or entity, or
(C) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, in any one or more of such cases, the Corporation shall give to each
holder of Series A Preferred Shares (A) at least 30 days prior written notice of
the date on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, and (B) in the case of any
such reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 30 days prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (A) the date on which
any such
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record is to be taken for the purpose of such dividend, distribution or right,
the date on which the holders of Common Shares shall be entitled to any such
dividend, distribution or right, and the amount and character thereof, and (B)
the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Shares shall be entitled to exchange their Common Shares
for securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to each holder of Series A Preferred Shares at
the last address of such holder appearing on the books of the Corporation.
VI. REDEMPTION OF SERIES A PREFERRED SHARES.
(a) MANDATORY REDEMPTION. The Corporation shall redeem all of the
issued and outstanding Series A Preferred Shares on September 30, 2010 (the
"Redemption Date"). The redemption price for the Series A Preferred Shares
redeemed shall be the Liquidation Preference Amount (the "Redemption Price"). If
on the Redemption Date the funds of the Corporation legally available are
insufficient to redeem all of the Series A Preferred Shares, the number of
Series A Preferred Shares legally permitted to be redeemed shall be redeemed and
Series A Preferred Shares which the Corporation is legally unable to redeem
shall be redeemed as soon thereafter as funds become legally available for such
redemption. In addition, with respect to any Series A Preferred Shares that the
Corporation is legally or otherwise unable to redeem within the one year period
commencing on the Redemption Date and, if the Conversion Ratio has not been
increased pursuant to Section VII, then, subject to NASDAQ Approval, the
Conversion Ratio applicable to such Series A Preferred Shares shall increase
from 4 Common Shares for each Series A Preferred Share to 8 Common Shares for
each Series A Preferred Share and the holders of the Series A Preferred Shares
shall have the right to convert such Series A Preferred Shares at any time prior
to redemption thereof by the Corporation.
(b) PRORATION. To the extent the Corporation is legally unable to
redeem all Series A Preferred Shares on the Redemption Date, the Series A
Preferred Shares to be redeemed shall be selected pro rata in accordance with
the ratio the number of Series A Preferred Shares held by each respective holder
bears to the total number of Series A Preferred Shares then issued and
outstanding. Not less than 30 or more than 60 days' previous notice shall be
given to the holders of record of the Series A Preferred Shares to be redeemed,
by registered or certified mail, postage prepaid.
(c) MECHANICS. At least 60 days prior to the Redemption Date, written
notice (hereinafter referred to as the "Redemption Notice") shall be mailed,
postage prepaid, to each holder of record of the Series A Preferred Shares, at
its address shown on the records of the Corporation; PROVIDED, HOWEVER, that the
Corporation's failure to give such Redemption Notice shall in no way affect its
obligation to redeem Series A Preferred Shares as provided in Section VI(a)
hereof. The Redemption Notice shall contain the following information:
(i) the number of Series A Preferred Shares held by the holder
and the total number of Series A Preferred Shares held by all holders.
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(ii) the Redemption Date and the applicable Redemption Price;
(iii) the number of Series A Preferred Shares to be redeemed;
and
(iv) a statement that the holder is to surrender to the
Corporation, at the place designated herein, its certificate or certificates
representing the Series A Preferred Shares to be redeemed.
(d) SURRENDER OF CERTIFICATES. Each holder of Series A Preferred Shares
to be redeemed shall surrender the certificate or certificates representing such
shares to the Corporation, and thereupon the applicable Redemption Price for
such shares as set forth in this Section 6 shall be paid to the order of the
person whose name appears on such certificate or certificates and each
surrendered certificate shall be cancelled and retired and new certificates
representing any Series A Preferred Shares not redeemed shall be issued to the
holder at no additional cost.
VII. PUT OPTIONS.
(a) GENERAL PUT OPTION. On September 30, 2004, the Majority Holders
shall have the right to require the Corporation to purchase all or part of the
Series A Preferred Shares that the Majority Holders then own at a purchase price
equal to the Put Option Purchase Price. If the Corporation fails to so purchase
any Put Shares under this Section VII(a) within any applicable Closing Period or
any applicable Subsequent Closing Period (each as defined in clause (f) below),
then, subject to NASDAQ Approval, the Conversion Ratio applicable to all
outstanding Series A Preferred Shares shall increase from 4 Common Shares for
each Series A Preferred Share to 8 Common Shares for each Series A Preferred
Share.
(b) OPT OUT/NASDAQ PUT. If either (i) the Control Share Acquisition
Resolution is not approved by the affirmative vote of the holders of shares
entitling them to exercise a majority of the voting power of the Corporation at
the Corporation's 1999 annual meeting of shareholders, or (ii) NASDAQ Approval
is not obtained at the Corporation's 1999 annual meeting of shareholders, then
the Majority Holders shall have the right to require the Corporation to purchase
all or part of the Series A Preferred Shares that the Majority Holders then own
at a purchase price equal to the Put Option Purchase Price.
(c) GOVERNMENTAL APPROVAL PUT. If within 365 days after the Original
Purchaser has filed its Notification and Report Form as required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, in connection
with a Second Occurrence Failure by the Corporation under the Contingent Warrant
Agreement, the Corporation and the Original Purchaser are unable to obtain all
governmental and other approvals required under any applicable laws, statutes,
orders, rules, regulations or policies, or any guidelines promulgated
thereunder, including, without limitation, under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("Government Approval"), then the Majority
Holders shall have the right to require the Corporation to purchase all or part
of the Series A Preferred Shares that the Majority Holders then own at a
purchase price equal to the Put Option Purchase Price.
(d) OCCURRENCE BASED PUT. If the Corporation or any of its Subsidiaries
shall (i) authorize or issue any shares of capital stock of any class or any
options, warrants, or rights to
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purchase capital stock of any class or any securities convertible into capital
stock of any class, other than (A) Conversion Shares issued upon conversion of
the Series A Preferred Shares, (B) Warrant Shares issued upon exercise of the
Warrant, (C) Common Shares issued to employees of the Corporation pursuant to
the Stock Plans, (D) Contingent Shares issued upon exercise of the Contingent
Warrants, (E) capital stock of any Subsidiary issued to the Corporation or any
Subsidiary or (F) Common Shares issued to satisfy obligations in respect of
acquisitions of securities or assets of any Person, provided that (I) such
contracts were entered into prior to September 30, 1999, and (II) the number of
Common Shares subject to this subparagraph (F) shall not exceed 110,000 in the
aggregate, or (ii) directly or indirectly sell, lease, or otherwise dispose of
more than 10% of the properties and assets of the Corporation and its
Subsidiaries on a consolidated basis, in the aggregate, to any Person (other
than the Corporation any Subsidiary), whether in one transaction or in a series
of transactions over any period of twelve consecutive months, or (iii) merge
into or with or consolidate with any other Person other than a Subsidiary, or
(iv) create, incur, assume, or otherwise become or remain liable, directly or
indirectly, for any Indebtedness for Borrowed Money that would cause the
Corporation to have Indebtedness for Borrowed Money in excess of $210,000,000
in the aggregate at any time, whether by loan, guaranty, mortgage, or
otherwise, excluding indebtedness incurred in connection with a redemption of
Series A Preferred Shares, then in any such case the Majority Holders shall
have the right to require the Corporation to purchase all or part of the Series
A Preferred Shares that the Majority Holders then own at a purchase price equal
to the Put Option Purchase Price. If the Corporation fails to so purchase any
Put Shares under this Section VII(d) within any applicable Closing Period or
any applicable Subsequent Closing Period, then, subject to NASDAQ Approval, the
Conversion Ratio applicable to all outstanding Series A Preferred Shares shall
increase from 4 Common Shares for each Series A Preferred Share to 8 Common
Shares for each Series A Preferred Share.
(e) MECHANICS. The Corporation shall deliver written notice to each
holder of Series A Preferred Shares at such holder's address on the books and
records of the Corporation of each event giving rise to a Put Option under
clauses (b), (c) and (d) of this Section VII (the "Corporation Put Right
Notice"). The Corporation Put Right Notice shall be mailed by first class
certified mail, return receipt requested, no later than two (2) business days
after the occurrence of the event giving rise to the Put Option. In order to
exercise a Put Option under clause (b), (c) or (d) of this Section VII, a holder
of the Series A Preferred Shares shall, no later than ninety (90) days after
receipt of the Corporation Put Right Notice, send written notice to the
Corporation specifying that the holder has elected to exercise its Put Option.
In order to exercise a Put Option under clause (a) of this Section VII, a holder
of the Series A Preferred Shares shall, no later than September 30, 2004, send
written notice to the Corporation specifying that it has elected to exercise the
Put Option.
(f) CLOSING PERIOD. If the purchase or redemption of Put Shares under
clauses (a), (b), (c) or (d), as the case may be, would not cause or constitute
a default under any agreement or indenture relating to indebtedness of the
Corporation then outstanding (collectively, the "Credit Agreements"), the
closing of the purchase of Put Shares under this Section VII shall occur as soon
as practicable after the delivery of a Put Option Notice with respect to such
Put Shares on a date mutually acceptable to the Majority Holders and the
Corporation, but in no event later than one year from the date of delivery of
the applicable Put Option Notice (the "Closing Period"). If the Corporation may
purchase part but not all of the Put Shares without causing a default under
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the Credit Agreements, the Corporation shall purchase, within the Closing
Period, that number of Put Shares (pro rata from each holder based on the
number of Put Shares held by each holder and the total number of Put Shares
held by all holders) that it may purchase without causing or constituting a
default under the Credit Agreements. Subject to any earlier conversion of any
Put Shares, the Corporation shall from time to time purchase Put Shares at any
time that any such purchase would not cause or constitute a default under the
Credit Agreements. The closing of the purchase of any Put Shares under the
preceding sentence shall occur as soon as practicable after the date that the
determination is made that such purchase will not cause or constitute a default
under the Credit Agreements on a date mutually acceptable to the Majority
Holders and the Corporation, but in no event later than sixty (60) days after
the date of such determination (each, a "Subsequent Closing Period"). Until
purchased by the Corporation in accordance with the terms of this Section VII,
the holders of the Put Shares shall have the right to convert Put Shares
notwithstanding delivery of a Put Option Notice.
(g) SURRENDER OF CERTIFICATES. Each holder of Put Shares to be
purchased pursuant to a Put Option shall surrender the certificate or
certificates representing all such Put Shares to the Corporation on or before
the closing of the purchase of the Put Shares, and thereupon the applicable Put
Option Purchase Price for such shares as set forth in this Section VII shall be
paid to the order of the person whose name appears on such certificate or
certificates for each Put Share purchased and each surrendered certificate shall
be cancelled and retired and new certificates representing any Series A
Preferred Shares not purchased shall be issued to the holder at no additional
cost. If any Put Shares are not purchased within the Closing Period or
Subsequent Closing Period, as the case may be, each certificate issued
representing such shares shall bear a legend indicating the increase, if any, in
the Conversion Ratio pursuant to this Section VII.
(h) CERTAIN DEFINITIONS. For purpose of this Section VII, the following
terms shall have the following meanings:
"Put Option" shall mean the option of the Majority Holders to
require the Corporation to purchase the Series A Preferred Shares owned by the
Majority Holders under clauses (a), (b), (c) and (d) of this Section VII.
"Put Option Date" shall mean the date on which the Original
Purchaser has actual notice that an event giving rise to a Put Option under this
Section VII has occurred.
"Put Option Notice" shall mean the written notice sent by the
Original Purchaser to the Corporation pursuant to which the Original Purchaser
notifies the Corporation that it is exercising its Put Option right under clause
(a), (b), (c) or (d) of this Section VII.
"Put Option Purchase Price" shall mean the Liquidation
Preference Amount.
"Put Shares" shall mean any Series A Preferred Shares with
respect to which the Majority Holders have elected to exercise their right to
require the Corporation to purchase under clauses (a), (b), (c) or (d) of this
Section VII.
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VIII. NO REISSUANCE OF PREFERRED STOCK. No Series A Preferred Share or Series
A Preferred Shares acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall
be cancelled, retired and eliminated from the shares which the Corporation
shall be authorized to issue. The President or any Vice President and the
Secretary or any Assistant Secretary of the Corporation are hereby authorized
and directed on behalf of the Corporation to file such documents from time to
time as may be necessary to reduce the authorized number of Series A Preferred
Shares accordingly.
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EXHIBIT 2.2
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CONTINGENT WARRANT AGREEMENT
----------------------------
THIS CONTINGENT WARRANT AGREEMENT (this "Agreement"), dated as of
September 30, 1999, is among Advanced Lighting Technologies, Inc., an Ohio
corporation (the "Company"), General Electric Company, a New York corporation
("Purchaser"), Xxxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxxx, Ltd., an Ohio limited
liability company ("Xxxxxxx Ltd."), Xxxxx X. Xxxxxxx, as voting trustee under
Voting Trust Agreement dated October 10, 1995, Xxxx X. Xxxx ("Ruud"), and Xxxx
X. Xxxx, as voting trustee under Voting Trust Agreement dated January 2, 1998.
The parties hereto agree as follows:
SECTION 1
DEFINITIONS
The following terms when used in this Agreement shall, except where the
context otherwise requires, have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):
"ACCOUNTANT'S CERTIFICATE" shall have the meaning provided in clause f.
of Section 2.2.
"AFFILIATE" shall mean, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGREEMENT" shall mean this Contingent Warrant Agreement as originally
executed and as amended, modified or supplemented from time to time.
"APPRAISED VALUE" shall mean, in respect of any Common Share on any
date herein specified, the fair saleable value of such Common Share (determined
without giving effect to the discount for (i) a minority interest, or (ii) any
lack of liquidity of the Common Share, or (iii) to the fact that the Company may
have no class of equity registered under the Exchange Act) based on the equity
value of Company, as determined by an investment banking or valuation firm
selected in accordance with the following sentences, divided by the number of
Common Shares outstanding on a Fully Diluted Basis as determined in accordance
with GAAP (assuming the payment of the exercise prices for such shares). The
determination of the Appraised Value per Common Share shall be made by an
investment banking or valuation firm of nationally recognized standing selected
by the Company and acceptable to Purchaser. If the investment banking or
valuation firm selected by Company is not acceptable to Purchaser and the
Company and Purchaser cannot agree on a mutually acceptable investment banking
or valuation firm, then
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Purchaser and the Company shall each choose one such investment banking or
valuation firm and the respective chosen firms shall agree on another investment
banking or valuation firm which shall make the determination. The Company shall
retain, at its sole cost, such investment banking or valuation firm as may be
necessary for the determination of Appraised Value required by the terms of this
Agreement.
"BUSINESS DAY" shall mean any day that is not a Saturday or Sunday or
a day on which banks are required to be closed in the State of New York.
"COMMON SHARES" shall mean the Common Shares, par value $.001, of the
Company.
"COMPANY" shall mean Advanced Lighting Technologies, Inc., an Ohio
corporation.
"COMPANY BENEFICIAL OWNER" shall have the meaning provided in Section
2.3.
"CONTINGENT SHARES" shall have the meaning provided in Section 2.1.
"CONVERSION SHARES" shall mean the Common Shares to be issued upon the
conversion of Series A Shares.
"CURRENT MARKET PRICE" shall mean, in respect of any Common Share on
any date herein specified, if there shall then be a public market for the Common
Shares, the average of the daily market prices for twenty (20) consecutive
Business Days immediately preceeding such date or, if there is no such public
market, the Appraised Value per Common Share. The daily market price for each
such Business Day shall be (i) the last sale price on such day on the principal
stock exchange or NASDAQ-NMS on which such Common Shares are then listed or
admitted to trading, or (ii) if no sale takes place on such day on any such
exchange or NASDAQ-NMS, the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange or NASDAQ-NMS, or
(iii) if the Common Shares are not then listed or admitted to trading on any
stock exchange or NASDAQ-NMS, the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by the
NASDAQ or the National Quotation Bureau, Inc., or (iv) if neither such
corporation at the time is engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business, or (v) if there is
no such firm, as furnished by any member of the NASD selected mutually by the
Company and Purchaser or, if they cannot agree upon such selection, as selected
by two such members of the NASD, one of which shall be selected by the Company
and one of which shall be selected by Purchaser.
"EBITDA" shall mean, for any period and without duplication, net
earnings (loss) of the Company and its Subsidiaries determined on a consolidated
basis for such period plus the sum of the following amounts (but only to the
extent included in determining net income (loss) for such period): (i)
depreciation and amortization expense for such period, plus (ii) Interest
Expense for such period, plus (iii) the amount of any reduction pursuant to the
proviso of the definition of Interest Expense in this Section 1, plus (iv)
income tax expense in respect of such period, minus (v) extraordinary gains and
gains from sales of assets for such period, plus (vi) extraordinary losses and
losses from sales of assets for such period. EBITDA shall be
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determined using generally accepted accounting principles and practices in
effect on the date of this Agreement.
"EBITDA RATIO" shall mean, for any period of determination, the ratio
of (i) EBITDA to (ii) Interest Expense.
"EXCESS XXXXXXX SHARES PROXY" shall mean the irrevocable proxy granted
by Xxxxx X. Xxxxxxx, individually, Xxxxx X. Xxxxxxx, in his capacity as trustee
of the Xxxxxxx Voting Trust, and Xxxxxxx Ltd. to Purchaser, the form of which is
attached hereto as Exhibit A, to, among other things, vote the Excess Xxxxxxx
Shares.
"EXCESS XXXXXXX SHARES" shall mean that number of Common Shares equal
to the sum of the number of Xxxxxxx Option Shares and the Ruud Option Shares.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FIRST CONTINGENT WARRANT" shall have the meaning provided in
subclause (vi) of clause c. of Section 2.2.
"FULLY DILUTED BASIS" means, with respect to any determination or
calculation, that such determination or calculation is performed on a fully
diluted basis (assuming the issuance of all Common Shares issuable under any
then outstanding options, warrants or convertible securities of any kind)
determined in accordance with GAAP for purposes of determining book value or net
income per share.
"GAAP" shall mean generally accepted accounting principles as in effect
on the date hereof and consistently applied and maintained throughout the period
indicated. Whenever any accounting term is used herein which is not otherwise
defined, it shall have the meaning ascribed thereto under GAAP.
"GOVERNMENTAL BODY" shall mean any nation or government, any state or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, in each case to the extent the same has jurisdiction over the
Person or property in question, including, but not limited to, any governmental
authority, agency, board, commission, court, department or instrumentality of
the United States, any State of the United States or any political subdivision
thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any
self-regulatory groups of which the Company, any Subsidiary or Purchaser is a
member or is subject.
"XXXXXXX LTD." shall mean Xxxxxxx Ltd., an Ohio limited liability
company.
"XXXXXXX OPTION SHARES" shall mean Common Shares owned by Xxxxx X.
Xxxxxxx, individually, in an amount equal to fifty percent (50%) of the Total
Option Shares.
"XXXXXXX OPTION SHARES PROXY" shall mean the irrevocable proxy granted
by Xxxxx X. Xxxxxxx, individually, to Purchaser, the form of which is attached
hereto as Exhibit B, to, among other things, vote the Xxxxxxx Option Shares.
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"XXXXXXX SHARES" shall mean, collectively, all Common Shares held, of
record or beneficially, by Xxxxx X. Xxxxxxx, individually, Xxxxx X. Xxxxxxx, in
his capacity as trustee of the Xxxxxxx Voting Trust, and Xxxxxxx Ltd.
"XXXXXXX SHARES PROXY" shall mean the irrevocable proxy granted by
Xxxxx X. Xxxxxxx, individually, Xxxxx X. Xxxxxxx, in his capacity as trustee of
the Xxxxxxx Voting Trust, and Xxxxxxx Ltd. to Purchaser, the form of which is
attached hereto as Exhibit C, to, among other things, vote the Net Xxxxxxx
Shares.
"XXXXXXX VOTING TRUST" shall mean the Voting Trust Agreement, dated as
of October 10, 1995, as amended, between Xxxxx X. Xxxxxxx, as voting trustee,
and certain shareholders of the Company. As used herein, the term Xxxxxxx Voting
Trust shall include any irrevocable proxies granted to Xxxxx X. Xxxxxxx with
respect to shares withdrawn from the Xxxxxxx Voting Trust and deposited in
margin accounts by the beneficial holders thereof.
"INTEREST EXPENSE" shall mean, for any period (a) the total
consolidated interest expense of the Company and its Subsidiaries determined on
a consolidated basis and in any event shall include all interest expense with
respect to any indebtedness in respect of which the Company or any Subsidiary is
wholly or partially liable excluding interest on indebtedness to the Company
from any Subsidiary and interest on indebtedness to any Subsidiary from the
Company; provided, however, the amount of interest expense determined in
accordance with GAAP for any period shall be reduced by any amortization of
deferred financing costs in an amount up to but not exceeding $125,000 with
respect to any single fiscal quarter, minus (b) gross interest income of the
Company and its Subsidiaries determined on a consolidated basis.
"NASDAQ APPROVAL" shall mean approval of the transactions contemplated
by the Stock Purchase Agreement by the shareholders of the Corporation pursuant
to NASDAQ Rule 4460(i)(D).
"NET XXXXXXX SHARES" shall mean the Xxxxxxx Shares less that number of
Common Shares that are represented by the Xxxxxxx Option Shares Proxy plus the
Ruud Option Shares Proxy.
"NET RUUD SHARES" shall mean the Ruud Shares less that number of Common
Shares that are represented by the Ruud Option Shares Proxy.
"OPTION AGREEMENT" shall mean the Option Agreement, of even date
herewith, among Purchaser, Xxxxxxx and Xxxx, under which Purchaser is granted an
option to purchase the Xxxxxxx Option Shares and the Ruud Option Shares.
"PERMITTED ISSUANCES" shall mean (i) the issuance or conversion of
options issued pursuant to any stock option plan, employee incentive plan,
employee stock purchase plan or employee retirement and savings plan approved by
the Company's Board of Directors, (ii) the issuance of Conversion Shares,
Contingent Shares or Warrant Shares, and (iii) the issuance of Common Shares to
satisfy obligations in respect of acquisitions of securities or assets of any
Person, provided (A) such contracts were entered into prior to September 30,
1999, and (B) the number of Common Shares subject to this subclause (iii) shall
not exceed 110,000 in the aggregate.
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"PERSON" shall mean any natural person, corporation, firm, partnership,
association, government, governmental agency or other entity, whether acting in
an individual, fiduciary or other capacity.
"PREFERRED SHARES" shall mean the Series A Shares.
"PROCEEDING" shall have the meaning provided in Section 2.3.
"PURCHASER" shall mean General Electric Company, a New York
corporation.
"REQUIRED RATIO" shall mean 2 to 1.
"RUUD OPTION SHARES" shall mean Common Shares owned by Xxxx X. Xxxx,
individually, in an amount equal to fifty percent (50%) of the Total Option
Shares.
"RUUD OPTION SHARES PROXY" shall mean the irrevocable proxy granted by
Xxxx X. Xxxx, individually, to Purchaser, the form of which is attached hereto
as Exhibit D, to, among other things, vote the Ruud Option Shares.
"RUUD SHARES" shall mean, collectively, all Common Shares held, of
record or beneficially, by Xxxx X. Xxxx, individually, and Xxxx X. Xxxx, in his
capacity as trustee of the Ruud Voting Trust.
"RUUD SHARES PROXY" shall mean the irrevocable proxy granted by Xxxx X.
Xxxx, individually, and Xxxx X. Xxxx, in his capacity as trustee of the Ruud
Voting Trust, to Purchaser, the form of which is attached hereto as Exhibit E,
to, among other things, vote the Net Ruud Shares.
"RUUD VOTING TRUST" shall mean the Voting Trust Agreement, dated as of
January 2, 1998, as amended, between Xxxx X. Xxxx, as voting trustee, and
certain shareholders of the Company. As used herein, the term Ruud Voting Trust
shall include any irrevocable proxies granted to Xxxx X. Xxxx with respect to
shares withdrawn from the Ruud Voting Trust and deposited in margin accounts by
the beneficial holders thereof.
"SECOND CONTINGENT WARRANT" shall have the meaning provided in
subclause (ii) of clause d. of Section 2.2.
"SECOND OCCURRENCE FAILURE" shall have the meaning provided in clause
c. of Section 2.2.
"SERIES A SHARES" shall mean shares of Series A Convertible Preferred
Stock, par value $.001, of the Company.
"STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement,
dated September 28, 1999, between the Company and Purchaser.
"SUBSIDIARY" of the Company shall mean any other corporation of which
more than 50% of the outstanding shares of capital stock having ordinary voting
power for the election
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of directors is owned directly or indirectly by the Company, by the Company and
one or more Subsidiaries, or by one or more other Subsidiaries.
"THIRD OCCURRENCE FAILURE" shall have the meaning provided in clause d.
of Section 2.2.
"TOTAL OPTION SHARES" shall mean the number of Common Shares that when
combined with all other Common Shares owned by Purchaser or its Affiliates at
the time of determination will result in Purchaser having twenty-five percent
(25%) of the voting power of the Company's capital stock. The time of
determination of the Total Option Shares shall be the first Business Day
immediately following Purchaser's receipt of the Accountant's Certificate
indicating a Second Occurrence Failure.
"WARRANT" shall mean the warrant in the form of Exhibit 1 attached to
the Stock Purchase Agreement.
"WARRANT SHARES" shall mean Common Shares to be issued upon exercise of
the Warrant.
SECTION 2
THE CONTINGENT WARRANTS AND THE CONTINGENT SHARES
2.1 AUTHORIZATION OF THE CONTINGENT SHARES; AGREEMENT TO ISSUE
SECURITIES AND PROVIDE FINANCIAL ACCOMMODATION. The Company has authorized the
issuance and sale on the terms and subject to the conditions of this Agreement
of such number of Common Shares as are necessary for the Company to fulfill its
obligations under the provisions of Sections 2.2.c(vi) and 2.2.d(iii) of this
Agreement (the "Contingent Shares"), in the event Purchaser exercises its rights
under either or both of such Sections. This Agreement is and is intended to be
an agreement for the issuance of securities by the Company and the providing of
financial accommodation to the Company within the meaning of Section 365(c)(2)
of Title 11 of the United States Code.
2.2 EBITDA COVERAGE RATIO; VESTING OF RIGHTS UNDER WARRANTS; ISSUANCE
OF CONTINGENT WARRANTS; PROXIES.
a. The Company shall not permit the average of the Company's
EBITDA Ratio for any two consecutive fiscal quarters, commencing with the
average for the fiscal quarters ending September 30, 1999 and December 31, 1999,
and continuing each fiscal quarter thereafter (each, a "Determination Period"),
to be less than the Required Ratio.
b. Intentionally Omitted.
c. Except as provided in clause e. below and subject to
with the terms of the Ohio Control Share Acquisition Act, if applicable, upon
the second occurrence of the EBITDA Ratio being ess than the Required Ratio for
any Determination Period (a "Second Occurrence Failure"):
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(i) The Xxxxxxx Shares Proxy shall become effective upon
expiration of the waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 applicable to the acquisition of an option and a proxy
in respect of the Xxxxxxx Option Shares and the Ruud Option Shares pursuant to
the Option Agreement, the Xxxxxxx Option Shares Proxy and the Ruud Option Shares
Proxy (the "Option Waiting Period") and from and after such date Purchaser may
exercise its rights under the Xxxxxxx Shares Proxy, including, without
limitation, its rights to vote the Net Xxxxxxx Shares; and
(ii) The Xxxxxxx Option Shares Proxy shall become effective
upon expiration of the Option Waiting Period and from and after such date
Purchaser may exercise its rights under the Xxxxxxx Option Shares Proxy,
including, without limitation, its rights to vote the Xxxxxxx Option Shares; and
(iii) The Ruud Option Shares Proxy shall become effective
upon expiration of the Option Waiting Period and from and after such date
Purchaser may exercise its rights under the Ruud Option Shares Proxy, including,
without limitation, its rights to vote the Ruud Option Shares; and
(iv) Purchaser shall exercise the Warrant; and
(v) Purchaser shall have the right and option to purchase
the Ruud Option Shares and the Xxxxxxx Option Shares pursuant to the terms of
the Option Agreement, the form of which is attached hereto as Exhibit F. The
parties acknowledge and agree that in determining the number of Total Option
Shares the Warrant Shares will be counted among the Common Shares owned by
Purchaser. The Option Agreement shall provide, among other things, that the
Options (as defined in the Option Agreement) may be exercised only after all
governmental and regulatory approvals (including, without limitation, any
approvals required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended) necessary in connection with Purchaser's ownership of a 25%
interest in the Company have been obtained and that the Option Period (as
defined in the Option Agreement) shall be extended so that it expires on the
later of: (A) the one-year anniversary of the date of Purchaser's receipt of the
Accountant's Certificate indicating a Second Occurrence Failure and (B) the
close of business on the 30th day following receipt of all necessary
governmental and regulatory approvals necessary in connection with Purchaser's
ownership of a 25% interest in the Company; and
(vi) Subject to NASDAQ Approval, the Company shall issue to
Purchaser a warrant in the form attached hereto as EXHIBIT 2.2(c) (the "First
Contingent Warrant") granting Purchaser the right to purchase, in accordance
with the terms set forth in such First Contingent Warrant and at the Current
Market Price (determined at the time the event giving rise to the issuance of
the First Contingent Warrant occurred), that number of additional Common Shares
necessary to give Purchaser a majority of the voting power of the Company's
capital stock (assuming for purposes of making such determination that (A)
Purchaser has fully exercised the Warrant, (B) Purchaser has not transferred, or
transferred the right to vote, any Warrant Shares, Preferred Shares or
Conversion Shares, and (C) Purchaser has the power and authority to vote the
Xxxxxxx Shares and the Ruud Shares). The First Contingent Warrant shall be
delivered to Purchaser no later than the third Business Day following the
Purchaser's receipt of the Accountant's Certificate indicating a Second
Occurrence Failure.
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d. Except as provided in clause e. below and subject to
compliance with the terms of the Ohio Control Share Acquisition Act, if
applicable, upon the third occurrence of the EBITDA Ratio being less than the
Required Ratio for any Determination Period (a "Third Occurrence Failure"):
(i) The Ruud Shares Proxy shall become effective (provided
the Option Waiting Period has lapsed as of such date) and from and after such
date Purchaser may exercise its rights under the Ruud Shares Proxy, including,
without limitation, its rights to vote the Net Ruud Shares; and
(ii) The Excess Xxxxxxx Shares Proxy shall become effective
(provided the Option Waiting Period has lapsed as of such date) and from and
after such date Purchaser may exercise its rights under the Excess Xxxxxxx
Shares Proxy, including, without limitation, its rights to vote the Excess
Xxxxxxx Shares; and
(iii) Subject to NASDAQ Approval, the Company shall issue
to Purchaser a warrant (in addition to any First Contingent Warrant issued to
Purchaser in accordance with Section 2.2.c (vi) hereof) in the form attached
hereto as EXHIBIT 2.2(d) (the "Second Contingent Warrant") granting Purchaser
the right to purchase, in accordance with the terms set forth in such Second
Contingent Warrant and at the Current Market Price (determined at the time the
event giving rise to the issuance of the Second Contingent Warrant occurred)
that number of additional Common Shares necessary to give Purchaser a majority
of the voting power of the Company's capital stock (taking into account the
Xxxxxxx Shares and the Ruud Shares over which the Company has actual voting
control pursuant to the provisions of this Section 2.2 and assuming for the
purpose of making such determination that (A) Purchaser has fully exercised the
Warrant and (B) Purchaser has not transferred, or transferred the right to vote,
any Warrant Shares, Preferred Shares or Conversion Shares). The Second
Contingent Warrant shall be delivered to Purchaser no later than the third
Business Day following the Third Occurrence Failure.
e. If the EBITDA Ratio for any three consecutive fiscal
quarters immediately preceding a failure by the Company to meet the Required
Ratio for a Determination Period, other than the first Determination Period
ending December 31, 1999, is at least 2 to 1, then the failure to meet the
Required Ratio for such Determination Period (the "Most Recent Determination
Period") shall not be deemed to be a "Second Occurrence Failure" or a "Third
Occurrence Failure", as the case may be, for the purposes of this Section 2.2;
provided, however, that the EBITDA Ratio for the last full fiscal quarter
included in the Most Recent Determination Period will be the EBITDA Ratio for
the first full fiscal quarter included in the determination of the Required
Ratio for the Determination Period immediately succeeding the Most Recent
Determination Period.
f. The Company shall deliver to Purchaser (i) as soon as
practicable following, but in no event later than the 45th Business Day
following, the end of each fiscal quarter of the Company, commencing with the
fiscal quarter ending December 31, 1999, an "agreed upon procedures" letter of
the Company's independent certified public accountants in the form of Exhibit
2.2f(i) setting forth the calculation of the EBITDA Ratio (together with such
supporting information as Purchaser may reasonably request to verify the EBITDA
Ratio) for the most recently completed Determination Period, and (ii) as soon as
practicable following, but in
8
82
no event later than the 90th Business Day following the end of each fiscal year
of the Company, commencing with the fiscal year ending June 30, 2000, a
certificate of the Company's independent certified public accountants in the
form of Exhibit 2.2f(ii) setting forth the calculation of the EBITDA Ratio
(together with such supporting information as Purchaser may reasonably request
to verify the EBITDA Ratio) for such fiscal year and for the most recently
completed Determination Period and certifying that such calculations are true
and correct (each such letter and certificate is referred to as an "Accountant's
Certificate").
2.3 PURCHASER'S RIGHTS IN THE EVENT OF GOVERNMENTAL PROCEEDING. If
any action or proceeding (a "Proceeding") before any Governmental Body or agency
is pending or threatened against the Company or any beneficial owner of 5% or
more of any class of equity securities of the Company (a "Company Beneficial
Owner"), including, without limitation, any Proceeding (i) seeking to adjudicate
the Company or any Company Beneficial Owner a bankrupt or insolvent or seeking
the appointment of a receiver, trustee, custodian or other similar official for
it, him or her or for any substantial part of its, his or her assets, or (ii) in
which the Company or any Company Beneficial Owner shall seek protection or
relief under any law relating to bankruptcy, insolvency, relief or protection of
debtors, and such Proceeding, directly or indirectly, prevents Purchaser from
exercising or realizing any of its rights under clauses c. or d. of Section 2.2
of this Agreement, then, automatically and without further action on the part of
the Company or Purchaser, Purchaser shall be entitled to simultaneously exercise
or realize its rights under clauses c. and d.of Section 2.2 of this Agreement to
the same extent as if there had occurred a Second Occurrence Failure and a Third
Occurrence Failure.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.1 INVESTMENT. At the time of any Second Occurrence Failure or a
Third Occurrence Failure, and at the time of any exercise by Purchaser of any of
its purchase rights under the First Contingent Warrant or the Second Contingent
Warrant, Purchaser will be acquiring, respectively, the First Contingent Warrant
and the Second Contingent Warrant, and the Contingent Shares, for investment for
Purchaser's own account, not as a nominee or agent and not with the view to, or
for resale in connection with, any distribution thereof. Purchaser understands
that none of the Contingent Shares have been, nor will they be (other than in
accordance with the terms of the Registration Rights Agreement referred to in
Section 4.1(g)(ii) of the Stock Purchase Agreement), registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act that depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of Purchaser's
representations as expressed herein.
SECTION 4
CONDITIONS TO OBLIGATIONS OF THE COMPANY
4.1 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to issue the First Contingent Warrant and the Second Contingent Warrant
are subject to the satisfaction of each of the following conditions precedent,
to the extent applicable, on or
9
83
before the applicable Second Occurrence Failure and Third Occurrence Failure,
respectively, unless waived by the Company in writing:
a. REPRESENTATIONS TRUE. All of the representations and
warranties made by Purchaser to the Company in this Agreement shall be true and
correct when made and, in all material respects, as of the applicable Second
Occurrence Failure and Third Occurrence Failure, respectively.
b. REGULATORY APPROVALS. Purchaser and the Company shall have
received all governmental and other approvals required under any applicable
laws, statutes, orders, rules, regulations or policies, or any guidelines
promulgated thereunder, including, without limitation, under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act, as amended.
SECTION 5
MISCELLANEOUS
5.1 EXPENSES. The Company will pay, or reimburse Purchaser and hold
Purchaser harmless against liability for the payment of, all stamp and other
taxes which may be payable in respect of the execution and delivery of this
Agreement, the issuance of the First Contingent Warrant or the Second Contingent
Warrant and the issuance, purchase and delivery of Contingent Shares.
5.2 BINDING AGREEMENT; ASSIGNMENT. The provisions of this Agreement
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto. Purchaser shall not have the right to assign this
Agreement or any of its rights and obligations hereunder, except to any
Affiliate of Purchaser, without the consent of the Company.
5.3 NOTICES. All notices and other communications required or
permitted under this Agreement shall be deemed to have been duly given and made
if in writing and if served either by personal delivery to the party for whom
intended (which shall include delivery by Federal Express or similar service) or
three (3) business days after being deposited, postage prepaid, certified or
registered mail, return receipt requested, in the United States mail bearing the
address shown in this Agreement for, or such other address as may be designated
in writing hereafter by, such party:
a. If to Purchaser:
GE Lighting
0000 Xxxxx Xx.
Xxxxxxxxx, XX 00000
Attention: President and Chief Executive Officer
Facsimile: (000) 000-0000
10
84
with a copy to:
GE Lighting
0000 Xxxxx Xx.
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
b. If to the Company:
Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: CEO
with a copy to:
Xxxxxx, Xxxxxxxx & Sarlson Co., L.P.A.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
5.4 WAIVER. No delay on the part of any party hereto with respect to
the exercise of any right, power, privilege, or remedy under this Agreement
shall operate as a waiver thereof, nor shall any exercise or partial exercise of
any such right, power, privilege, or remedy preclude any further exercise
thereof or the exercise of any other right, power, privilege, or remedy. No
modification or waiver by either party hereto of any provision of this
Agreement, or consent to any departure by the other party therefrom, shall be
effective in any event unless in writing as set forth in Section 5.3, and then
only in the specific instance and for the purpose for which given.
Notwithstanding the foregoing, each party hereto shall have the right to waive
compliance by the other party with any of the provisions hereof, or to modify
such provisions to a less restrictive obligation of the other party on such
terms as such party shall determine, with or without prior notice to the other
party.
5.5 REMEDIES. The rights, powers, privileges, and remedies hereunder
are cumulative and not exclusive of any other right, power, privilege, or remedy
the parties hereto would otherwise have.
5.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding between Purchaser and the Company with respect to the subject
matter hereof, and supersedes all prior agreements and understandings relating
to the subject matter hereof.
5.7 LAW GOVERNING. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of law.
11
85
5.8 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
5.9 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
5.10 CROSS-REFERENCES. References in this Agreement to any section are,
unless otherwise specified, to such section of this Agreement.
5.11 HEADINGS. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
5.12 AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement will be
effective unless such modification, amendment or waiver is approved in writing
by the Company and Purchaser. The failure of any party to enforce any of the
provisions of this Agreement will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement.
5.13 TERM. This Agreement shall commence on the date hereof and end on
the eleventh anniversary of the date hereof.
5.14 RIGHT TO PURCHASE. Except for Permitted Issuances, if at any time
after a Third Occurrence Failure the Company authorizes the issuance or sale of
any equity securities or securities containing options or rights to acquire any
shares of equity securities of the Company (any such securities or debt, the
"Offered Securities"), then, subject to NASDAQ Approval, the Company shall first
offer to sell the Offered Securities to Purchaser by written notice to Purchaser
(the "Company Notice"). Purchaser may elect to purchase Purchaser's pro rata
share (determined by the ratio of Purchaser's then existing holdings of Common
Shares and Common Share equivalents (including, without limitation, Conversion
Shares) to the total holdings of all shareholders of the Company on a fully
diluted basis (assuming exercise of the Warrant immediately prior to the date of
the applicable purchase in accordance with the terms of the Warrant) of the
Offered Securities at the price and on the terms specified in the Company Notice
by delivering written notice of such election to the Company within 20 days
after delivery of the Company Notice. Upon the expiration of the offering period
described above, the Company shall be entitled to sell such of the Offered
Securities which the Purchaser has not elected to purchase during the 90 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to the Purchaser. Any Offered Securities
offered or sold by the Company after such 90-day period must be reoffered to the
Purchaser pursuant to the terms of this Section 5.14. The rights of Purchaser
under this Section 5.14 shall terminate upon expiration of the term of this
Agreement as set forth in Section 5.13 hereof.
12
86
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be executed in the name and on behalf of each of them by one of their
respective officers, thereunto duly authorized, as of the date first above
written.
THE COMPANY:
ADVANCED LIGHTING TECHNOLOGIES, INC.
By:
------------------------------------
Name:
--------------------------------
Title:
-------------------------------
---------------------------------------
Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx, as voting trustee
under Voting Trust Agreement dated
October 10, 1995, as amended
Xxxxxxx Ltd.
By:
------------------------------------
Its:
----------------------------------
---------------------------------------
Xxxx X. Xxxx
---------------------------------------
Xxxx X. Xxxx, as voting trustee under
Voting Trust Agreement dated
January 2, 1998, as amended
PURCHASER:
GENERAL ELECTRIC COMPANY
By:
------------------------------------
Name:
--------------------------------
Title:
------------------------------
13
87
EXHIBIT A
EXCESS XXXXXXX SHARES
---------------------
IRREVOCABLE PROXY
-----------------
The undersigned each hereby appoint GENERAL ELECTRIC COMPANY, a New York
corporation ("GE"), attorney and proxy of each of the undersigned, with full
power of substitution, with respect to the Excess Xxxxxxx Shares (as defined in
the Contingent Warrant Agreement of even date herewith between Advanced Lighting
Technologies, Inc., an Ohio corporation (the "Company"), and GE (the "Contingent
Warrant Agreement")), to exercise and enjoy the right to vote the Excess Xxxxxxx
Shares and to participate in and consent or refuse to consent to any and all
corporate or shareholders' actions of any character, all in its sole and
absolute discretion. The undersigned shall retain the exclusive right to receive
and retain any distributions of property (except common or preferred shares of
the Company) made by the Company in the form of dividends with respect to the
Excess Xxxxxxx Shares or upon the liquidation, dissolution or winding up of the
Company. The matters regarding which GE shall be entitled to vote in its sole
and absolute discretion shall include, by way of example but not limitation, any
sale of substantially all of the assets of, or any liquidation of, the Company;
any increase or decrease in the authorized or outstanding number of shares of
any class of shares of the Company; any merger or consolidation involving the
Company; any acquisition by the Company of any other business or of
substantially all of the assets thereof; any election of directors of the
Company; any amendment to the articles of incorporation or code of regulations
of the Company; or any recapitalization or reorganization of the Company. The
proxy granted hereunder shall be effective from and after the later of (i) the
date of expiration of the Option Waiting Period (as defined in Section 2.2(c)(i)
of the Contingent Warrant Agreement), or (ii) the date of receipt by GE of the
Accountant's Certificate (as defined in the Contingent Warrant Agreement)
indicating a Third Occurrence Failure (as defined in the Contingent Warrant
Agreement), and shall terminate on the date of termination of the Xxxxxxx Shares
Proxy (as defined in the Contingent Warrant Agreement). The proxy granted
hereunder shall be irrevocable and shall be coupled with an interest and shall
be binding and enforceable on and against the respective heirs, personal
representatives, successors, and assigns of each of the undersigned, and the
proxy shall not be revoked or terminated by the death, disability, bankruptcy,
incompetency, dissolution or termination of any of the undersigned, or their
respective successors and assigns. In the event of any conflict between the
provisions of this document and the provisions of the Contingent Warrant
Agreement, the provisions of this document shall govern. This document shall be
governed by the laws of the State of Ohio.
The undersigned hereby execute and grant this proxy as of the _______ day of
__________, 1999.
---------------------------------------
Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx, as voting trustee
under Voting Trust Agreement dated
October 10, 1995, as amended
XXXXXXX, LTD.
By:____________________________________
Its:___________________________________
88
EXHIBIT B
---------
XXXXXXX OPTION SHARES
---------------------
IRREVOCABLE PROXY
-----------------
The undersigned hereby appoints GENERAL ELECTRIC COMPANY, a New York corporation
("GE"), attorney and proxy of the undersigned, with full power of substitution,
with respect to the Xxxxxxx Option Shares (as defined in the Contingent Warrant
Agreement of even date herewith between Advanced Lighting Technologies, Inc., an
Ohio corporation (the "Company"), and GE (the "Contingent Warrant Agreement")),
to exercise and enjoy the right to vote the Xxxxxxx Option Shares and to
participate in and consent or refuse to consent to any and all corporate or
shareholders' actions of any character, all in its sole and absolute discretion.
The undersigned shall retain the exclusive right to receive and retain any
distributions of property (except common or preferred shares of the Company)
made by the Company in the form of dividends with respect to the Xxxxxxx Option
Shares or upon the liquidation, dissolution or winding up of the Company. The
matters regarding which GE shall be entitled to vote in its sole and absolute
discretion shall include, by way of example but not limitation, any sale of
substantially all of the assets of, or any liquidation of, the Company; any
increase or decrease in the authorized or outstanding number of shares of any
class of shares of the Company; any merger or consolidation involving the
Company; any acquisition by the Company of any other business or of
substantially all of the assets thereof; any election of directors of the
Company; any amendment to the articles of incorporation or code of regulations
of the Company; or any recapitalization or reorganization of the Company. The
proxy granted hereunder shall be effective upon expiration of the Option Waiting
Period (as defined in Section 2.2(c)(i) of the Contingent Warrant Agreement) and
shall end on the earlier of: (i) the Redemption Date (as defined in Second
Amended and Restated Articles of Incorporation of the Company, as amended), if
during the three (3) year period immediately preceding the Redemption Date GE
shall not have received an Accountant's Certificate (as defined in the
Contingent Warrant Agreement) indicating an occurrence of the EBITDA Ratio (as
defined in the Contingent Warrant Agreement) being less than the Required Ratio
(as defined in the Contingent Warrant Agreement) for any Determination Period
(as defined in the Contingent Warrant Agreement), or (ii) eleven (11) years
after the date GE has received the Accountant's Certificate indicating a Second
Occurrence Failure (as defined in the Contingent Warrant Agreement). The proxy
granted hereunder shall be irrevocable and shall be coupled with an interest and
shall be binding and enforceable on and against the heirs, personal
representatives, successors, and assigns of the undersigned, and the proxy shall
not be revoked or terminated by the death, disability, bankruptcy, or
incompetency of the undersigned, or his respective successors and assigns. In
the event of any conflict between the provisions of this document and the
provisions of the Contingent Warrant Agreement, the provisions of this document
shall govern. This document shall be governed by the laws of the State of Ohio.
The undersigned hereby executes and grants this proxy as of the _______ day of
__________, 1999.
---------------------------------------
Xxxxx X. Xxxxxxx
89
EXHIBIT C
---------
NET XXXXXXX SHARES
------------------
IRREVOCABLE PROXY
-----------------
The undersigned each hereby appoint GENERAL ELECTRIC COMPANY, a New York
corporation ("GE"), attorney and proxy of each of the undersigned, with full
power of substitution, with respect to the Net Xxxxxxx Shares (as defined in the
Contingent Warrant Agreement of even date herewith between Advanced Lighting
Technologies, Inc., an Ohio corporation (the "Company"), and GE (the "Contingent
Warrant Agreement")), to exercise and enjoy the right to vote the Net Xxxxxxx
Shares and to participate in and consent or refuse to consent to any and all
corporate or shareholders' actions of any character, all in its sole and
absolute discretion. The undersigned shall retain the exclusive right to receive
and retain any distributions of property (except common or preferred shares of
the Company) made by the Company in the form of dividends with respect to the
Net Xxxxxxx Shares or upon the liquidation, dissolution or winding up of the
Company. The matters regarding which GE shall be entitled to vote in its sole
and absolute discretion shall include, by way of example but not limitation, any
sale of substantially all of the assets of, or any liquidation of, the Company;
any increase or decrease in the authorized or outstanding number of shares of
any class of shares of the Company; any merger or consolidation involving the
Company; any acquisition by the Company of any other business or of
substantially all of the assets thereof; any election of directors of the
Company; any amendment to the articles of incorporation or code of regulations
of the Company; or any recapitalization or reorganization of the Company. To the
extent either of the Xxxxxxx Option Shares Proxy (as defined in the Contingent
Warrant Agreement) or the Ruud Option Shares Proxy (as defined in the Contingent
Warrant Agreement) is deemed to be invalid or unenforceable, additional Xxxxxxx
Shares (as defined in the Contingent Warrant Agreement) in an amount equal to
the number of Common Shares (as defined in the Contingent Warrant Agreement)
subject to such invalid or unenforceable proxy shall be subject to the proxy
granted hereunder. The proxy granted hereunder shall be effective upon
expiration of the Option Waiting Period (as defined in Section 2.2(c)(i) of the
Contingent Warrant Agreement) and shall end on the earlier of: (i) the
Redemption Date (as defined in Second Amended and Restated Articles of
Incorporation of the Company, as amended), if during the three (3) year period
immediately preceding the Redemption Date GE shall not have received an
Accountant's Certificate (as defined in the Contingent Warrant Agreement)
indicating an occurrence of the EBITDA Ratio (as defined in the Contingent
Warrant Agreement) being less than the Required Ratio (as defined in the
Contingent Warrant Agreement) for any Determination Period (as defined in the
Contingent Warrant Agreement), or (ii) eleven (11) years after the date GE has
received the Accountant's Certificate indicating a Second Occurrence Failure (as
defined in the Contingent Warrant Agreement). The proxy granted hereunder shall
be irrevocable and shall be coupled with an interest and shall be binding and
enforceable on and against the respective heirs, personal representatives,
successors, and assigns of each of the undersigned, and the proxy shall not be
revoked or terminated by the death, disability, bankruptcy, incompetency,
dissolution or termination of any of the undersigned, or their respective
successors and assigns. In the event of any conflict between the provisions of
this document and the provisions of the Contingent Warrant Agreement, the
provisions of this document shall govern. This document shall be governed by the
laws of the State of Ohio.
The undersigned hereby execute and grant this proxy as of the _______ day of
__________, 1999.
----------------------------------------
Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx, as voting trustee
under Voting Trust Agreement dated
October 10, 1995, as amended
XXXXXXX, LTD.
By:_____________________________________
Its:____________________________________
90
EXHIBIT D
---------
RUUD OPTION SHARES
------------------
IRREVOCABLE PROXY
-----------------
The undersigned hereby appoints GENERAL ELECTRIC COMPANY, a New York corporation
("GE"), attorney and proxy of the undersigned, with full power of substitution,
with respect to the Ruud Option Shares (as defined in the Contingent Warrant
Agreement of even date herewith between Advanced Lighting Technologies, Inc., an
Ohio corporation (the "Company"), and GE (the "Contingent Warrant Agreement")),
to exercise and enjoy the right to vote the Ruud Option Shares and to
participate in and consent or refuse to consent to any and all corporate or
shareholders' actions of any character, all in its sole and absolute discretion.
The undersigned shall retain the exclusive right to receive and retain any
distributions of property (except common or preferred shares of the Company)
made by the Company in the form of dividends with respect to the Ruud Option
Shares or upon the liquidation, dissolution or winding up of the Company. The
matters regarding which GE shall be entitled to vote in its sole and absolute
discretion shall include, by way of example but not limitation, any sale of
substantially all of the assets of, or any liquidation of, the Company; any
increase or decrease in the authorized or outstanding number of shares of any
class of shares of the Company; any merger or consolidation involving the
Company; any acquisition by the Company of any other business or of
substantially all of the assets thereof; any election of directors of the
Company; any amendment to the articles of incorporation or code of regulations
of the Company; or any recapitalization or reorganization of the Company. The
proxy granted hereunder shall be effective upon expiration of the Option Waiting
Period (as defined in Section 2.2(c)(i) of the Contingent Warrant Agreement) and
shall end on the earlier of: (i) the Redemption Date (as defined in Second
Amended and Restated Articles of Incorporation of the Company, as amended), if
during the three (3) year period immediately preceding the Redemption Date GE
shall not have received an Accountant's Certificate (as defined in the
Contingent Warrant Agreement) indicating an occurrence of the EBITDA Ratio (as
defined in the Contingent Warrant Agreement) being less than the Required Ratio
(as defined in the Contingent Warrant Agreement) for any Determination Period
(as defined in the Contingent Warrant Agreement), or (ii) eleven (11) years
after the date GE has received the Accountant's Certificate indicating a Second
Occurrence Failure (as defined in the Contingent Warrant Agreement). The proxy
granted hereunder shall be irrevocable and shall be coupled with an interest and
shall be binding and enforceable on and against the heirs, personal
representatives, and assigns of the undersigned, and the proxy shall not be
revoked or terminated by the death, disability, bankruptcy, or incompetency of
the undersigned, or his respective successors and assigns. In the event of any
conflict between the provisions of this document and the provisions of the
Contingent Warrant Agreement, the provisions of this document shall govern. This
document shall be governed by the laws of the State of Ohio.
The undersigned hereby executes and grants this proxy as of the _______ day of
__________, 1999.
---------------------------------------
Xxxx X. Xxxx
91
EXHIBIT E
---------
RUUD SHARES
-----------
IRREVOCABLE PROXY
-----------------
The undersigned each hereby appoint GENERAL ELECTRIC COMPANY, a New York
corporation ("GE"), attorney and proxy of each of the undersigned, with full
power of substitution, with respect to the Net Ruud Shares (as defined in the
Contingent Warrant Agreement dated _________, 1999, between Advanced Lighting
Technologies, Inc., an Ohio corporation (the "Company"), and GE (the "Contingent
Warrant Agreement")), to exercise and enjoy the right to vote the Net Ruud
Shares and to participate in and consent or refuse to consent to any and all
corporate or shareholders' actions of any character, all in its sole and
absolute discretion. The undersigned shall retain the exclusive right to receive
and retain any distributions of property (except common or preferred shares of
the Company) made by the Company in the form of dividends with respect to the
Net Ruud Shares or upon the liquidation, dissolution or winding up of the
Company. The matters regarding which GE shall be entitled to vote in its sole
and absolute discretion shall include, by way of example but not limitation, any
sale of substantially all of the assets of, or any liquidation of, the Company;
any increase or decrease in the authorized or outstanding number of shares of
any class of shares of the Company; any merger or consolidation involving the
Company; any acquisition by the Company of any other business or of
substantially all of the assets thereof; any election of directors of the
Company; any amendment to the articles of incorporation or code of regulations
of the Company; or any recapitalization or reorganization of the Company. The
proxy granted hereunder shall be effective from and after the later of (i) the
date of expiration of the Option Waiting Period (as defined in Section 2.2(c)(i)
of the Contingent Warrant Agreement), or (ii) the date of receipt by GE of the
Accountant's Certificate (as defined in the Contingent Warrant Agreement)
indicating a Third Occurrence Failure (as defined in the Contingent Warrant
Agreement), and shall terminate on the date of termination of the Xxxxxxx Shares
Proxy (as defined in the Contingent Warrant Agreement). The proxy granted
hereunder shall be irrevocable and shall be coupled with an interest and shall
be binding and enforceable on and against the respective heirs, personal
representatives, successors, and assigns of each of the undersigned, and the
proxy shall not be revoked or terminated by the death, disability, bankruptcy,
incompetency, dissolution or termination of any of the undersigned, or their
respective successors and assigns. In the event of any conflict between the
provisions of this document and the provisions of the Contingent Warrant
Agreement, the provisions of this document shall govern. This document shall be
governed by the laws of the State of Ohio.
The undersigned hereby execute and grant this proxy as of the _______ day of
__________, 1999.
---------------------------------------
Xxxx X. Xxxx
---------------------------------------
Xxxx X. Xxxx, as voting trustee
under the Voting Trust Agreement dated
January 2, 1998, as amended
92
EXHIBIT F
---------
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (this "Agreement"), dated as of
September 30, 1999, is among General Electric Company, a New York corporation
("Purchaser"), Xxxxx X. Xxxxxxx ("Xxxxxxx"), and Xxxx X. Xxxx ("Ruud"). Xxxxxxx
and Xxxx are hereinafter sometimes collectively referred to the "Shareholders".
RECITALS:
---------
A. The Shareholders are shareholders of Advanced Lighting Technologies,
Inc., an Ohio corporation (the "Company").
B. The Company and Purchaser are parties to a Stock Purchase Agreement,
dated September 28, 1999, under which the Company has agreed, among other
things, to sell and Purchaser has agreed to purchase 761,250 shares of preferred
stock of the Company (the "Stock Purchase Agreement").
C. The Company, Purchaser, the Shareholders and certain trusts
controlled by the Shareholders are parties to a Contingent Warrant Agreement of
even date herewith (the "Contingent Warrant Agreement"), under which the Company
has agreed to issue to Purchaser warrants to purchase Common Shares of the
Company upon the happening of certain events and the Shareholders have agreed to
grant Purchaser proxies to vote and options to purchase certain shares of common
stock of the Company held by the Shareholders.
D. It is a condition to Purchaser's consummating the transactions
contemplated by the Stock Purchase Agreement that the Shareholders enter into
this Agreement and grant the options contemplated hereby on the terms and
subject to the conditions contained herein.
NOW, THEREFORE, based upon the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS.
--------- ------------
The following terms when used in this Agreement shall, except where the
context otherwise requires, have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):
"Accountant's Certificate" shall have the meaning ascribed thereto in
clause f. of Section 2.2 of the Contingent Warrant Agreement.
"Affiliate" shall mean, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Option Agreement as originally executed and
as amended, modified or supplemented from time to time.
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"Appraised Value" shall mean, in respect of any Common Share on any
date herein specified, the fair saleable value of such Common Share (determined
without giving effect to the discount for (i) a minority interest, or (ii) any
lack of liquidity of the Common Share, or (iii) to the fact that the Company may
have no class of equity registered under the Exchange Act) based on the equity
value of Company, as determined by an investment banking or valuation firm
selected in accordance with the following sentences, divided by the number of
Common Shares outstanding on a Fully Diluted Basis as determined in accordance
with GAAP (assuming the payment of the exercise prices for such shares). The
determination of the Appraised Value per Common Share shall be made by an
investment banking or valuation firm of nationally recognized standing selected
by Purchaser and acceptable to the Shareholders. If the investment banking or
valuation firm selected by Purchaser is not acceptable to the Shareholders and
the Purchaser and the Shareholders cannot agree on a mutually acceptable
investment banking or valuation firm, then Purchaser and the Shareholders,
collectively, shall each choose one such investment banking or valuation firm
and the respective chosen firms shall agree on another investment banking or
valuation firm which shall make the determination. The Shareholders shall
retain, at their sole cost, such investment banking or valuation firm as may be
necessary for the determination of Appraised Value required by the terms of this
Agreement.
"Business Day" shall mean any day that is not a Saturday or Sunday or a
day on which banks are required to be closed in the State of New York.
"Common Shares" shall mean the Common Shares, par value $.001, of the
Company.
"Company" shall mean Advanced Lighting Technologies, Inc., an Ohio
corporation.
"Contingent Warrant Agreement" shall mean the Contingent Warrant
Agreement, of event date herewith, among the Company, Purchaser, the
Shareholders and certain trusts controlled by the Shareholders.
"Current Market Price" shall mean, in respect of any Common Share on
any date herein specified, if there shall then be a public market for the Common
Shares, the average of the daily market prices for twenty (20) consecutive
Business Days immediately preceding such date or, if there is no such public
market, the Appraised Value per Common Share. The daily market price for each
such Business Day shall be (i) the last sale price on such day on the principal
stock exchange or NASDAQ-NMS on which such Common Shares are then listed or
admitted to trading, or (ii) if no sale takes place on such day on any such
exchange or NASDAQ-NMS, the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange or NASDAQ-NMS, or
(iii) if the Common Shares are not then listed or admitted to trading on any
stock exchange or NASDAQ-NMS, the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by the
NASDAQ or the National Quotation Bureau, Inc., or (iv) if neither such
corporation at the time is engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business, or (v) if there is
no such firm, as furnished by any member of the NASD selected mutually by
Purchaser and the Shareholders or, if they cannot agree upon such selection, as
selected by two such members of the NASD, one of which shall be selected by
Purchaser and one of which shall be selected by the Shareholders.
"Determination Period" shall mean any two consecutive fiscal quarters,
commencing with the fiscal quarters ending September 30, 1999 and December 31,
1999, and continuing each fiscal quarter thereafter.
"EBITDA" shall mean, for any period and without duplication, net
earnings (loss) of the Company and its Subsidiaries determined on a consolidated
basis for such period plus the sum of the
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following amounts (but only to the extent included in determining net income
(loss) for such period): (i) depreciation and amortization expense for such
period, plus (ii) Interest Expense for such period, plus (iii) the amount of any
reduction pursuant to the proviso of the definition of Interest Expense in this
Section 1, plus (iv) income tax expense in respect of such period, minus (v)
extraordinary gains and gains from sales of assets for such period, plus (vi)
extraordinary losses and losses from sales of assets for such period. EBITDA
shall be determined using generally accepted accounting principles and practices
in effect on the date of this Agreement.
"EBITDA Ratio" shall mean, for any period of determination, the ratio
of (i) EBITDA to (ii) Interest Expense.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fully Diluted Basis" means, with respect to any determination or
calculation, that such determination or calculation is performed on a fully
diluted basis (assuming the issuance of all Common Shares issuable under any
then outstanding options, warrants or convertible securities of any kind)
determined in accordance with GAAP for purposes of determining book value or net
income per share.
"GAAP" shall mean generally accepted accounting principles as in effect
on the date hereof and consistently applied and maintained throughout the period
indicated. Whenever any accounting term is used herein which is not otherwise
defined, it shall have the meaning ascribed thereto under GAAP.
"Xxxxxxx" shall mean Xxxxx X. Xxxxxxx.
"Xxxxxxx Option" shall have the meaning provided in Section 2.1.
"Xxxxxxx Option Shares" shall mean Common Shares owned by Xxxxxxx,
individually, in an amount equal to fifty percent (50%) of the Total Option
Shares.
"Interest Expense" shall mean, for any period (a) the total
consolidated interest expense of the Company and its Subsidiaries determined on
a consolidated basis and in any event shall include all interest expense with
respect to any indebtedness in respect of which the Company or any Subsidiary is
wholly or partially liable excluding interest on indebtedness to the Company
from any Subsidiary and interest on indebtedness to any Subsidiary from the
Company; provided, however, the amount of interest expense determined in
accordance with GAAP for any period shall be reduced by any amortization of
deferred financing costs in an amount up to but not exceeding $125,000 with
respect to any single fiscal quarter, minus (b) gross interest income of the
Company and its Subsidiaries determined on a consolidated basis.
"Option Closing" shall have the meaning provided in Section 2.5.
"Option Notice" shall have the meaning provided in Section 2.5.
"Option Period" shall have the meaning provided in Section 2.3.
"Option Purchase Price" shall have the meaning provided in Section 2.4.
"Options" shall have the meaning provided in Section 2.2.
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"Person" shall mean any natural person, corporation, firm, partnership,
association, government, governmental agency or other entity, whether acting in
an individual, fiduciary or other capacity.
"Purchaser" shall mean General Electric Company, a New York
corporation.
"Required Ratio" shall mean 2 to 1.
"Ruud" shall mean Xxxx X. Xxxx.
"Ruud Option" shall have the meaning provided in Section 2.2.
"Ruud Option Shares" shall mean Common Shares owned by Ruud,
individually, in an amount equal to fifty percent (50%) of the Total Option
Shares.
"Second Occurrence Failure" shall mean the second occurrence of the
Company's EBITDA Ratio being less than the Required Ratio for any Determination
Period.
"Shareholders" shall mean Xxxxxxx and Xxxx, collectively.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement,
dated September 28, 1999, between the Company and Purchaser.
"Subsidiary" of the Company shall mean any other corporation of which
more than 50% of the outstanding shares of capital stock having ordinary voting
power for the election of directors is owned directly or indirectly by the
Company, by the Company and one or more Subsidiaries, or by one or more other
Subsidiaries.
"Total Option Shares" shall mean the number of Common Shares that when
combined with all other Common Shares owned by Purchaser or its Affiliates at
the time of determination will result in Purchaser having twenty-five percent
(25%) of the voting power of the Company's capital stock. The time of
determination of the Total Option Shares shall be the first Business Day
immediately following Purchaser's receipt of the Accountant's Certificate
indicating a Second Occurrence Failure.
ARTICLE II. OPTION AGREEMENT
----------- ----------------
SECTION 2.1. GRANT OF XXXXXXX OPTION. Xxxxxxx does hereby
grant to Purchaser, or Purchaser's nominee, the exclusive and irrevocable right,
privilege and option (the "Xxxxxxx Option") to purchase at any time or from time
to time during the Option Period, upon the terms and conditions set forth
herein, all but not less than all of the Xxxxxxx Option Shares (such Xxxxxxx
Option Shares being subject to adjustment from time to time to take into account
any action taken by the Company in respect of its Common Shares, including,
without limitation, stock splits, dividends, combinations and
reclassifications), or any securities into which the Xxxxxxx Option Shares
hereafter may be converted.
SECTION 2.2. GRANT OF RUUD OPTION. Ruud does hereby grant to
Purchaser, or Purchaser's nominee, the exclusive and irrevocable right,
privilege and option (the "Ruud Option") to purchase at any time or from time to
time during the Option Period, upon the terms and conditions set forth herein,
all but not less than all of the Ruud Option Shares (such Ruud Option Shares
being subject to adjustment from time to time to take into account any action
taken by the Company in respect of its Common Shares, including, without
limitation, stock splits, dividends, combinations and reclassifications), or any
securities
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96
into which the Ruud Option Shares hereafter may be converted. The Xxxxxxx Option
and the Ruud Option are hereinafter sometimes collectively referred to as the
"Options".
SECTION 2.3. OPTION PERIOD. The Options are granted on the date hereof
and may be exercised by Purchaser from and after the date Purchaser has received
the Accountant's Certificate indicating a Second Occurrence Failure and ending
on the date that is the later of (i) the one (1) year anniversary of the date of
Purchaser's receipt of the Accountant's Certificate indicating a Second
Occurrence Failure, and (ii) the close of business on the 30th day following
receipt of all governmental and regulatory approvals (including, without
limitation, any approvals required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended) necessary in connection with Purchaser's
ownership of a twenty-five percent (25%) interest in the Company (the "Option
Period").
SECTION 2.4. PURCHASE PRICE. The purchase price of the Xxxxxxx Option
Shares and the Ruud Option Shares shall be the Current Market Price of such
shares at the time of the Second Occurrence Failure.
SECTION 2.5. EXERCISE OF THE OPTIONS. Purchaser may exercise the
Options at any time during the Option Period by delivery to Xxxxxxx, with
respect to the exercise of the Xxxxxxx Option, and to Ruud, with respect to the
exercise of the Ruud Option, of written notice thereof at the notice address for
Xxxxxxx and Xxxx, respectively, set forth in Section 4.4 hereof (an "Option
Notice"). The Xxxxxxx Option and the Ruud Option must both be exercised if
either is exercised. The closing (an "Option Closing") of the purchase and sale
of the Xxxxxxx Option Shares or the Ruud Option Shares, as the case may be,
shall occur as soon as practicable after the delivery of the Option Notice
pertaining to such shares but in no event later than ten (10) days from the date
of delivery of that Option Notice. The obligation of Purchaser to consummate the
purchase of any of the Xxxxxxx Option Shares or the Ruud Option Shares at any
Option Closing is conditioned upon the receipt by the Company and the
Shareholders of all governmental and regulatory approvals required for the
ownership of the Xxxxxxx Option Shares or the Ruud Option Shares, as the case
may be. At an Option Closing, certificates representing the Xxxxxxx Option
Shares or the Ruud Option Shares, as the case may be, shall be delivered,
together with stock powers duly executed in blank, to the Purchaser free and
clear of any and all claims, liens, charges, pledges or encumbrances and the
Purchaser shall deliver to Xxxxxxx and Xxxx, as the case may be, their
respective allocable portion of the Option Purchase Price. Xxxxxxx and Ruud
shall pay any and all transfer and similar taxes imposed in connection with the
sale of the Xxxxxxx Option Shares and the Ruud Option Shares to Purchaser.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
----------- ------------------------------
The Shareholders jointly and severally represent and warrant to
Purchaser as follows:
SECTION 3.1. CAPACITY; BINDING OBLIGATION. Each Shareholder has the
capacity to enter into this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby. This Agreement constitutes
(or will constitute when executed and delivered) a legal, valid, and binding
obligation of each Shareholder, enforceable against each Shareholder in
accordance with its terms. Neither the execution, delivery, and performance of
this Agreement, nor the sale of the Xxxxxxx Option Shares or the Ruud Option
Shares will violate any provision of any law, any order of any court or other
agency of government, the Second Amended and Restated Articles of Incorporation
of the Company, as amended, the Code of Regulations of the Company or any
agreement or instrument to which either Shareholder is a party or by which
either Shareholder is bound, or be in conflict with, result in a breach of, or
constitute (with notice or lapse of time, or both) a default under any such
agreement or instrument.
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SECTION 3.2. SECURITIES. As of the date hereof, the Xxxxxxx Option
Shares and the Ruud Option Shares are duly authorized, validly issued, fully
paid and nonassessable. As of the date hereof, except as disclosed in writing to
the Purchaser, the Xxxxxxx Option Shares and the Ruud Option Shares are owned by
Xxxxxxx and Xxxx, respectively, free and clear of all liens, encumbrances and
restrictions on transfer, other than restrictions contained in this Agreement,
the Contingent Warrant Agreement and under applicable state and federal
securities laws. Following the sale of the Xxxxxxx Option Shares or the Ruud
Option Shares or both to Purchaser in accordance with this Agreement, such
shares will be duly authorized, validly issued, fully paid and nonassessable and
will be owned by Purchaser free and clear of all liens, encumbrances and
restrictions on transfer, other than restrictions under applicable state and
federal securities laws.
ARTICLE IV. MISCELLANEOUS
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SECTION 4.1. BINDING EFFECT. The Options granted herein shall be
binding upon and inure to the benefit of the parties hereto and their respective
executors, heirs, administrators, successors and assigns.
SECTION 4.2. NO OUTSIDE REPRESENTATIONS. This Agreement shall be deemed
to contain all of the terms and conditions agreed upon by the parties, it being
understood that there are no outside representations or oral agreements of the
parties other than those contained in the Contingent Warrant Agreement.
SECTION 4.3. ASSIGNMENT. Purchaser shall not have the right to assign
this Agreement or any of its rights and obligations hereunder, except to any
Affiliate of Purchaser, without the consent of the Company.
SECTION 4.4. NOTICES. All notices given hereunder shall be in writing
and deemed given when mailed by registered or certified mail, return receipt
requested, postage prepaid, or sent by Federal Express or other similar
overnight service, addressed to the party to whom directed at the address set
forth below, or to such other address as may from time to time be designated by
notice given in the manner provided in this Section 4.4 or when delivered
personally.
Purchaser: GE Lighting
0000 Xxxxx Xx.
Xxxxxxxxx, XX 00000
Attention: President and Chief Executive Officer
With a copy to: GE Lighting
0000 Xxxxx Xx.
Xxxxxxxxx, XX 00000
Attention: General Counsel
The Shareholders: Xxxxx X. Xxxxxxx
c/o Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, Xxxx 00000
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With a copy to: Xxxxxx, Xxxxxxxx & Sarlson Co., L.P.A.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
and: Xxxx X. Xxxx
c/o Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, Xxxx 00000
With a copy to: Xxxxxx, Xxxxxxxx & Sarlson Co., L.P.A.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
SECTION 4.5. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 4.6. PRUDENTIAL LETTER. At the time of execution of this
Agreement, the Shareholders shall deliver to Purchaser a letter executed by a
duly authorized officer of Prudential Securities substantially in the form of
Exhibit A attached hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
PURCHASER:
GENERAL ELECTRIC COMPANY
By:_______________________________________
Name:______________________________
Title:_____________________________
THE SHAREHOLDERS:
------------------------------------------
Xxxxx X. Xxxxxxx
------------------------------------------
Xxxx X. Xxxx
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EXHIBIT 2.2(c)
[First Contingent Warrant]
WARRANT
to Purchase Common Shares of
ADVANCED LIGHTING TECHNOLOGIES, INC.
100
TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS..........................................................1
2. EXERCISE OF WARRANT..................................................5
2.1. Manner of Exercise..........................................5
2.2. Payment of Taxes............................................6
2.3. Fractional Shares.......................................... 6
2.4. Continued Validity......................................... 6
3. TRANSFER, DIVISION AND COMBINATION.................................. 6
3.1. Transfer................................................... 6
3.2. Division and Combination................................... 7
3.3. Expenses................................................... 7
3.4. Maintenance of Books....................................... 7
4. ADJUSTMENTS......................................................... 7
4.1. Share Dividends, Subdivisions and Combinations............. 7
4.2 Certain Other Distributions and Adjustments................ 8
4.4. Other Provisions Applicable to Adjustments
Under This Section ........................................ 8
4.5. Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets .................... 9
4.6. Other Action Affecting Common Shares.......................10
5. NOTICES TO WARRANT HOLDERS..........................................10
5.1. Notice of Adjustments......................................10
5.2. Notice of Corporate Action.................................10
6. NO IMPAIRMENT.......................................................11
7. RESERVATION AND AUTHORIZATION OF COMMON SHARES;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY ........11
8. TAXING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS..................12
9. RESTRICTIONS ON TRANSFERABILITY; REGISTRATIONS......................12
9.1. Restrictive Legend.........................................12
9.2. Notice of Proposed Transfers; Requests for Registration ...13
9.3. Registration...............................................13
10. SUPPLYING INFORMATION...............................................13
11. LOSS OR MUTILATION..................................................13
12. OFFICE OF THE COMPANY...............................................13
13. FINANCIAL AND BUSINESS INFORMATION..................................13
13.1. Quarterly Information......................................13
13.2. Annual Information.........................................14
13.3. Filings....................................................14
14. LIMITATION OF LIABILITY.............................................14
15. MISCELLANEOUS.......................................................15
15.1. Nonwaiver and Expenses.....................................15
15.2. Notice Generally...........................................15
15.3. Remedies...................................................15
15.4. Successors and Assigns.....................................16
15.5. Amendment..................................................16
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15.6. Severability............................................16
15.7. Headings................................................16
15.8. Governing Law...........................................16
SIGNATURES
EXHIBITS
Exhibit A - Subscription Form
Exhibit B - Assignment Form
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.
INITIAL WARRANT PRICE
$____________ PER SHARE
WARRANT
To Purchase Common Shares of
ADVANCED LIGHTING TECHNOLOGIES, INC.
THIS IS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, or registered assigns, is
entitled, at any time during the Exercise Period (as hereinafter defined), to
purchase from ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the
"Company"), up to __________________ Common Shares (as hereinafter defined)
(such Common Shares, subject to adjustment as provided herein, are referred to
herein as the "Warrant Shares") as described herein, in whole or in part,
including fractional parts, at the Current Warrant Price (as defined herein) per
share (subject to adjustment as provided herein) all on the terms and conditions
and pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
Terms used in this Warrant have the respective meanings set
forth below:
"Additional Issuance" shall have the meaning set forth in
Section 4.3(a).
"Additional Common Shares" shall mean all Common Shares issued
by the Company after the date hereof, other than Conversion Shares, Contingent
Shares or Warrant Shares.
"Appraised Value" shall mean, in respect of any Common Share
on any date herein specified, the fair saleable value of such Common Share
(determined without giving affect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Share or (iii) to the fact that the
Company may have no class of equity registered under the Exchange Act) based on
the equity value of the Company, as determined by an investment banking or
valuation firm selected in accordance with the following sentences, divided by
the number of Common Shares outstanding on a Fully Diluted Basis as determined
in accordance with GAAP (assuming the payment of the exercise prices for such
shares). The determination of the Appraised Value per Common Share shall be made
by an investment banking or valuation firm of nationally recognized standing
selected by the Company and acceptable to the Majority Holders. If the
investment banking or valuation firm selected by Company is not acceptable to
the Majority
103
Holders and the Company and the Majority Holders cannot agree on a mutually
acceptable investment banking or valuation firm, then the Majority Holders and
the Company shall each choose one such investment banking or valuation firm and
the respective chosen firms shall agree on another investment banking or
valuation firm which shall make the determination. The Company shall retain, at
its sole cost, such investment banking or valuation firm as may be necessary for
the determination of Appraised Value required by the terms of this Warrant.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required to be closed in the State of New
York.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act, the Exchange
Act and other federal securities laws.
"Common Share" shall mean (except where the context otherwise
indicates) a Common Share, $0.001 par value, of the Company as constituted on
the date hereof, and any capital stock into which such Common Share may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
Common Shares upon any reclassification thereof which is also not preferred as
to dividends or assets over any other class of capital stock of the Company and
which is not subject to redemption and (ii) capital stock of any successor or
acquiring corporation received by or distributed to the holders of Common Shares
of the Company in the circumstances contemplated by Section 4.5.
"Contingent Shares" shall mean Common Shares to be issued upon
the exercise of any right to purchase Common Shares pursuant to the Contingent
Warrant Agreement.
"Contingent Warrant Agreement" shall mean the Contingent
Warrant Agreement, dated as of September 30, 1999, between the Company and
General Electric Company.
"Conversion Shares" shall mean the Common Shares issued or
issuable upon the conversion of the Series A Shares.
"Convertible Securities" shall mean warrants, evidences of
indebtedness, shares of capital stock or other securities that are exercisable
for, convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for Additional Common Shares, either
immediately or upon the occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any Common
Share on any date herein specified, if there shall then be a public market for
the Common Shares, the average of the daily market prices for 20 consecutive
Business Days immediately preceding such date or, if there is no such public
market, the Appraised Value per Common Share. The daily market price for each
such Business Day shall be (i) the last sale price on such day on the principal
stock exchange or NASDAQ-NMS on which such Common Shares are then listed or
admitted to trading, or (ii) if no sale takes place on such day on any such
exchange or NASDAQ-NMS, the average of the last reported closing bid and asked
prices on such day as officially quoted on any
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104
such exchange or NASDAQ-NMS, or (iii) if the Common Shares are not then listed
or admitted to trading on any stock exchange or NASDAQ-NMS, the average of the
last reported closing bid and asked prices on such day in the over-the-counter
market, as furnished by the NASDAQ or the National Quotation Bureau, Inc., or
(iv) if neither such corporation at the time is engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business, or (v) if there is no such firm, as furnished by any member of the
NASD selected mutually by the Majority Holders and the Company or, if they
cannot agree upon such selection, as selected by two such members of the NASD,
one of which shall be selected by the Majority Holders and one of which shall be
selected by the Company.
"Current Warrant Price" shall mean the Initial Warrant Price,
as adjusted from time to time in the case of share dividends, subdivisions and
combinations as set forth in Section 4.1 hereof.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean ______________, 200__.
"Fully Diluted Basis" means, with respect to any determination
or calculation, that such determination or calculation is performed on a fully
diluted basis (assuming the issuance of all Common Shares issuable under any
then outstanding options, warrants or convertible securities of any kind)
determined in accordance with GAAP for purposes of determining book value or net
income per share.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"GE" shall mean General Electric Company, a New York
corporation.
"Holder" shall mean the Person in whose name the Warrant set
forth herein is registered on the books of the Company maintained for such
purpose.
"Initial Warrant Price" shall mean the Initial Warrant Price
per Common Share set forth on the first page hereof.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of Common Shares then
purchasable upon exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
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"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation System.
"NASDAQ-NMS" shall mean the NASDAQ National Market System.
"New Securities" shall have the meaning set forth in Section
4.3(a).
"New Securities Warrant" shall have the meaning set forth in
Section 4.3(a).
"Other Property" shall have the meaning set forth in Section
4.5.
"Permitted Issuances" shall mean (a) the issuance or
conversion of options issued to employees pursuant to any stock option plan or
employee incentive plan approved by the Company's board of directors, (b) the
issuance of Warrant Shares, Contingent Shares or Conversion Shares and (c) the
issuance of Common Shares to satisfy obligations in respect of acquisitions of
securities or assets of any Person, provided that (i) such contracts were
entered into prior to September 30, 1999, and (ii) the number of Common Shares
subject to this Subparagraph (c) shall not exceed 110,000 in the aggregate.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"Registration Statement" shall have the meaning set forth in
Section 9.4.
"Restricted Common Shares" shall mean Common Shares that are,
or upon their issuance on the exercise of this Warrant would be, evidenced by a
certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Series A Shares" shall mean shares of Series A Convertible
Preferred Stock, par value $.001, of the Company.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, association or other business entity
in respect of which that Person owns securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors,
partnership committee, board of managers or trustees or other managerial body
thereof, whether directly or indirectly through one or more of the other
Subsidiaries of such Person or a combination thereof. Unless otherwise
specified, "Subsidiary" means a Subsidiary of the Company and "Subsidiaries"
means all Subsidiaries of the Company.
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"Transfer" shall mean any disposition of any Warrant or
Warrant Share or of any interest in either thereof that would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, this Warrant.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of Common Shares for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number
of Common Shares being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Shares" shall have the meaning set forth in the
introductory paragraph on the first page hereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., New York time, on the Expiration Date (the "Exercise Period"),
Holder may exercise this Warrant, on any Business Day, for all or any part of
the Warrant Shares. In order to exercise this Warrant, in whole or in part,
Holder shall deliver to the Company at its principal office at 00000 Xxxxxx
Xxxx, Xxxxx, Xxxx 00000, or at the office or agency designated by the Company
pursuant to Section 12: (i) a written notice of Holder's election to exercise
this Warrant, which notice shall specify the number of Common Shares to be
purchased, (ii) payment of the Warrant Price and (iii) this Warrant. Such notice
shall be substantially in the form of the subscription form appearing at the end
of this Warrant as Exhibit A, duly executed by Holder or its agent or attorney.
Upon receipt thereof, the Company shall, as promptly as practicable, and in any
event within five Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full Common Shares issuable upon such
exercise, together with cash in lieu of any fraction of a share, as hereinafter
provided. The share certificate or certificates so delivered shall be, to the
extent possible, in such denomination or denominations as such Holder shall
request in the notice and shall be registered in the name of Holder or, subject
to Section 9, such other name as shall be designated in the notice. This Warrant
shall be deemed to have been exercised and such certificate or certificates
shall be deemed to have been issued, and Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the notice, together with the
cash or check or other payment as provided below and this Warrant, is received
by the Company as described above and all taxes required to be paid by Holder,
if any, pursuant to Section 2.2 prior to the issuance of such shares have been
paid. If this Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Common Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or,
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at the request of Holder, appropriate notation may be made on this Warrant and
the same returned to Holder. Payment of the Warrant Price shall be made at the
option of Holder by (i) certified or official bank check, and/or (ii) Holder's
surrender to the Company of that number of Warrant Shares (or the right to
receive such number of shares) or Common Shares having an aggregate Current
Market Price equal to or greater than the Current Warrant Price for all shares
then being purchased (including those being surrendered), or (iii) any
combination thereof, duly endorsed by or accompanied by appropriate instruments
of transfer duly executed by Holder or by Holder's attorney duly authorized in
writing.
2.2. PAYMENT OF TAXES. All Common Shares issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Common Shares issuable upon
exercise of this Warrant in any name other than that of Holder, and in such case
the Company shall not be required to issue or deliver any share certificate
until such tax or other charge has been paid or it has been established to the
reasonable satisfaction of the Company that no such tax or other charge is due.
2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional Common Share upon exercise of any Warrant. If any fraction of
a share would, but for this Section, be issuable upon exercise of this Warrant,
in lieu of such fractional share, the Company may, at its option, pay a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per Common Share on the date of exercise
or, if there is no Current Market Price on such date, the Current Warrant Price
per Common Share, adjusted to reflect equitably share dividends, subdivisions
and combinations after the date hereof.
2.4. CONTINUED VALIDITY. A holder of Common Shares issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10 and
15 of this Warrant. The Company will, at the time of each exercise of this
Warrant, in whole or in part, upon the request of the holder of the Common
Shares issued upon such exercise hereof, acknowledge in writing, in form
reasonably satisfactory to such holder, its continuing obligation to afford to
such holder all such rights; PROVIDED, HOWEVER, that if such holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9 hereof,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal
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office of the Company referred to in Section 2.1 or the office or agency
designated by the Company pursuant to Section 12, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Section 9, execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned in compliance with Section 9, may be exercised by a new Holder
for the purchase of Common Shares without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer that may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at
its own expense (other than transfer taxes) the new Warrant or Warrants under
this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at
its aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.
4. ADJUSTMENTS
The number of Common Shares for which this Warrant is
exercisable, and the price at which such shares may be purchased upon exercise
of this Warrant, shall be subject to adjustment from time to time as set forth
in this Section 4. The Company shall give each Holder notice of any event
described below in accordance with Section 5.1.
4.1. SHARE DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any
time the Company shall:
(a) take a record of the holders of its Common Shares for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Common Shares,
(b) subdivide its outstanding Common Shares into a larger
number of Common Shares, or
(c) combine its outstanding Common Shares into a smaller
number of Common Shares,
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then (i) the number of Common Shares for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of Common Shares that a record holder of the same number of Common
Shares for which this Warrant is exercisable immediately prior to the occurrence
of such event would own or be entitled to receive after the happening of such
event, and (ii) the Current Warrant Price shall be adjusted to equal (A) the
Current Warrant Price multiplied by the number of Common Shares for which this
Warrant is exercisable immediately prior to the adjustment divided by (B) the
number of shares for which this Warrant is exercisable immediately after the
adjustment.
4.2 CERTAIN OTHER DISTRIBUTIONS AND ADJUSTMENTS. (a) If at any
time the Company shall take a record of the holders of its Common Shares for the
purpose of entitling them to receive any dividend or other distribution of:
(i) cash,
(ii) any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever
(other than cash, Convertible Securities or Additional Common Shares),
or
(iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Common Shares),
then Holder shall be entitled to receive such dividend or distribution as if
Holder had exercised this Warrant.
(b) A reclassification of the Common Shares (other than a
change in par value, or from par value to no par value or from no par value to
par value) into Common Shares and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Shares of such
shares of such other class of stock within the meaning of paragraph (a) above
and, if the outstanding Common Shares shall be changed into a larger or smaller
number of Common Shares as a part of such reclassification, such change shall be
deemed a subdivision or combination, as the case may be, of the outstanding
Common Shares within the meaning of Section 4.1.
4.3.[INTENTIONALLY OMITTED]
4.4. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION. The following provisions shall be applicable to the making of
adjustments of the number of Common Shares for which this Warrant is exercisable
and to the Current Warrant Price provided for in Section 4:
(a) FRACTIONAL INTERESTS. In computing adjustments under this
Section 4, fractional interests in Common Shares shall be taken into account to
the nearest 1/1000th of a share.
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(b) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Shares for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to shareholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(c) ESCROW OF WARRANT SHARES. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Shares, but prior to the occurrence of the event for
which such record is taken, and Holder exercises this Warrant, any Additional
Common Shares issuable upon exercise by reason of such adjustment shall be
deemed the last Common Shares for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for Holder by the Company to be issued to
Holder upon and to the extent that the event actually takes place, upon payment
of the then Current Warrant Price. Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to occur or
is rescinded, then such escrowed shares shall be cancelled by the Company and
escrowed property returned to the Company.
4.5. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Shares), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, Common Shares of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Shares
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of such Warrant, the number of Common Shares of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of Common Shares for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Warrant to be performed and observed by the Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of Common Shares for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.5,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class that is not preferred as to dividends or assets
over any other class of stock of such corporation and that is not subject to
redemption and shall
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also include any evidences of indebtedness, shares of stock or other securities
that are convertible into or exchangeable for any such stock, either immediately
or upon the arrival of a specified date or the happening of a specified event
and any warrants or other rights to subscribe for or purchase any such stock.
The foregoing provisions of this Section 4.5 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
4.6. OTHER ACTION AFFECTING COMMON SHARES. In case at any time
or from time to time the Company shall take any action in respect of its Common
Shares, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of Holders, the
number of Common Shares or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Not less than 10 nor more than 30
days prior to the record date or effective date, as the case may be, of any
action that requires or might require an adjustment or readjustment pursuant to
Section 4, the Company shall forthwith prepare and deliver to each Holder a
signed copy of a certificate executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated, specifying the number of
Common Shares for which this Warrant is exercisable and (if such adjustment was
made pursuant to Section 4.5 or 4.6) describing the number and kind of any other
shares of stock or Other Property for which this Warrant is exercisable, and any
change in the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall keep at its office or agency designated
pursuant to Section 12 copies of all such certificates and cause the same to be
available for inspection at said office during normal business hours by any
Holder or any prospective purchaser of a Warrant designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its
Common Shares for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation, person or entity, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days prior written notice of the date on which a record date shall be
selected for such dividend,
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distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, and (ii) in the case of any
such reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 30 days prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Shares shall be entitled to any
such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Shares shall be entitled to exchange their Common Shares
for securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
15.2.
6. NO IMPAIRMENT
The Company shall not by any action, including, without
limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Common Shares upon the exercise of this Warrant, including
taking such action as is necessary for the Current Warrant Price to be not less
than the par value of the Common Shares issuable upon exercise of this Warrant,
and (b) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON SHARES; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the date hereof, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued Common Shares as will be sufficient to permit the
exercise in full of all outstanding Warrants. All Common Shares that shall be so
issuable, when issued upon exercise of any Warrant and payment therefor in
accordance with the terms of such Warrant, shall be duly and validly issued and
fully paid and nonassessable, and not subject to preemptive rights.
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Before taking any action that would result in an adjustment in
the number of Common Shares for which this Warrant is exercisable, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto,
as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
If any Common Shares required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
law (otherwise than as provided in Section 9) before such shares may be so
issued, the Company will in good faith and as expeditiously as possible and at
its expense endeavor to cause such shares to be duly registered or such approval
to be obtained or filing made.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Shares with respect to which any provision
of Section 4 refers to the taking of a record of such holders, the Company will
in each such case take such a record and will take such record as of the close
of business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY; REGISTRATIONS
The Warrants and the Warrant Shares shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Share. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Section 9, each certificate for Warrant Shares initially issued upon the
exercise of this Warrant, and each certificate for Warrant Shares issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act
or the rules and regulations thereunder."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended,
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and may not be transferred in violation of such Act, the rules and
regulations thereunder or the provisions of this Warrant."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION.
Prior to any Transfer of any Warrant or any Restricted Common Share, the holder
of such Warrant or Restricted Common Share shall give written notice (a
"Transfer Notice") to the Company of such Transfer. Each certificate, if any,
evidencing such Restricted Common Share issued upon such Transfer shall bear the
restrictive legend set forth in Section 9.1(a), and each Warrant issued upon
such Transfer shall bear the restrictive legend set forth in Section 9.1(b),
unless in the opinion of counsel to such holder that is reasonably acceptable to
the Company such legend is not required in order to ensure compliance with the
Securities Act.
9.3. REGISTRATION. Each holder of Warrant Shares has certain
registration rights under the Registration Rights Agreement dated September 30,
1999, between the Company and General Electric Company, as amended from time to
time. Any Holder may obtain a copy of such agreement by notice to the Company.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Shares in supplying such information as may be
reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Shares.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably satisfactory
to it (it being understood that the written agreement of GE shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant of like tenor
to such Holder; PROVIDED, in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive offices
of the Company) where the Warrants may be presented for exercise, registration
of transfer, division or combination as provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1. QUARTERLY INFORMATION. The Company will deliver to each
Holder, as soon as practicable after the end of each of the first three quarters
of the Company, and in any event
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within 45 days thereafter, one copy of an unaudited consolidated balance sheet
of the Company and its subsidiaries as at the close of such quarter, and the
related unaudited consolidated statements of income and cash flows of the
Company for such quarter and, in the case of the second and third quarters, for
the portion of the fiscal year ending with such quarter, setting forth in each
case in comparative form the figures for the corresponding periods in the
previous fiscal year. Such financial statements shall be prepared by the Company
in accordance with GAAP (without period-end adjustments or footnotes) and
accompanied by the certification of the Company's chief executive officer or
chief financial officer that such financial statements are complete and correct
and present fairly the consolidated financial position, results of operations
and cash flows of the Company and its subsidiaries as at the end of such quarter
and for such year-to-date period, as the case may be.
13.2. ANNUAL INFORMATION. The Company will deliver to each
Holder as soon as practicable after the end of each fiscal year of the Company,
and in any event within 90 days thereafter, one copy of:
(a) an audited consolidated balance sheet of the Company and
its subsidiaries as at the end of such year, and
(b) audited consolidated statements of income and cash flows
of the Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming any adjustment made pursuant
to Section 4 during such year.
13.3. FILINGS. The Company will file with the Commission all
regular or periodic reports required pursuant to the Exchange Act and will
deliver to Holder promptly upon their becoming available one copy of each
report, notice or proxy statement sent by the Company to its shareholders
generally, and of each regular or periodic report (pursuant to the Exchange
Act), filed by the Company with (i) the Commission or (ii) any securities
exchange on which Common Shares are listed.
14. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase Common Shares, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Share or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
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15. MISCELLANEOUS
15.1. NONWAIVER AND EXPENSES. No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If the Company fails to comply with any provision of this Warrant,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in enforcing any of
its rights, powers or remedies hereunder.
15.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid, or
by telecopy and confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Shares, at its last
known address appearing on the books of the Company maintained for such purpose.
(b) If to the Company at
Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: President
Telecopy Number: (000)000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, one Business Day after the same shall have been delivered to a
nationally recognized courier service, or three Business Days after the same
shall have been deposited, postage prepaid, in the United States mail. Failure
or delay in receipt of copies of any notice, demand, request, approval,
declaration, delivery or other communication to the Person designated above
shall in no way adversely affect the effectiveness of such notice, demand,
request, approval, declaration, delivery or other communication.
15.3. REMEDIES. Each holder of a Warrant or a Warrant Share,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under Section 9 of this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of Section 9 of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
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15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and, with
respect to Section 9 hereof, holders of Warrant Shares, and shall be enforceable
by any such Holder or holder of Warrant Shares.
15.5. AMENDMENT. This Warrant may be modified or amended or
the provisions hereof waived only with the written consent of the Company and
the Majority Holders; PROVIDED that no such Warrant may be modified or amended
to reduce the number of Common Shares for which such Warrant is exercisable or
to increase the price at which such Common Shares may be purchased upon exercise
of such Warrant (before giving effect to any adjustment as provided therein)
without the prior written consent of each Holder.
15.6. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
15.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
15.8. GOVERNING LAW. This Warrant shall be governed by the
laws of the State of New York, without regard to the provisions thereof relating
to conflict of laws.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and attested by its Secretary or an Assistant Secretary.
Dated: ______________, 200___
ADVANCED LIGHTING TECHNOLOGIES, INC.
By:_________________________________
Name:
Title:
Attest:
By:__________________________________
Name:
Title:
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Common Shares of ADVANCED
LIGHTING TECHNOLOGIES, INC. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the Common Shares hereby purchased (and any securities or
other property issuable upon such exercise) be issued in the name of and
delivered to ______________________________ whose address is
____________________________ and, if such Common Shares shall not include all of
the Common Shares issuable as provided in this Warrant, that a new Warrant of
like tenor and date for the balance of the Common Shares issuable hereunder be
delivered to the undersigned.
-----------------------------------------
(Name of Registered Owner)
-----------------------------------------
(Signature of Registered Owner)
-----------------------------------------
(Street Address)
-----------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
Common Shares set forth below:
Name and Address of Assignee No. of Common Shares
---------------------------- --------------------
and does hereby irrevocably constitute and appoint _____________________________
attorney-in-fact to register such transfer on the books of ADVANCED LIGHTING
TECHNOLOGIES, INC. maintained for the purpose, with full power of substitution
in the premises.
Dated:____________________ Print Name:______________________
Signature:________________________
Witness:__________________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT 2.2(d)
--------------
[Second Contingent Warrant]
WARRANT
to Purchase Common Shares of
ADVANCED LIGHTING TECHNOLOGIES, INC.
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TABLE OF CONTENTS
SECTION PAGE
------- ----
1. DEFINITIONS..........................................................1
2. EXERCISE OF WARRANT..................................................5
2.1. Manner of Exercise..........................................5
2.2. Payment of Taxes............................................6
2.3. Fractional Shares...........................................6
2.4. Continued Validity..........................................6
3. TRANSFER, DIVISION AND COMBINATION...................................6
3.1. Transfer....................................................6
3.2. Division and Combination....................................7
3.3. Expenses....................................................7
3.4. Maintenance of Books........................................7
4. ADJUSTMENTS..........................................................7
4.1. Share Dividends, Subdivisions and Combinations..............7
4.2 Certain Other Distributions and Adjustments.................8
4.4. Other Provisions Applicable to Adjustments under
this Section ...............................................8
4.5. Reorganization, Reclassification, Merger, Consolidation
or Disposition of Assets ...................................9
4.6. Other Action Affecting Common Shares.......................10
5. NOTICES TO WARRANT HOLDERS..........................................10
5.1. Notice of Adjustments.....................................10
5.2. Notice of Corporate Action................................10
6. NO IMPAIRMENT.......................................................11
7. RESERVATION AND AUTHORIZATION OF COMMON SHARES;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY .......11
8. TAXING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.................12
9. RESTRICTIONS ON TRANSFERABILITY....................................12
9.1. Restrictive Legend................................. 12
9.2. Notice of Proposed Transfers; Requests for
Registration .............................................13
9.3. Registration..............................................13
10. SUPPLYING INFORMATION..............................................13
11. LOSS OR MUTILATION.................................................13
12. OFFICE OF THE COMPANY..............................................13
13. FINANCIAL AND BUSINESS INFORMATION.................................13
13.1. Quarterly Information.....................................13
13.2. Annual Information........................................14
13.3. Filings...................................................14
14. LIMITATION OF LIABILITY............................................14
15. MISCELLANEOUS......................................................15
15.1. Nonwaiver and Expenses....................................15
15.2. Notice Generally..........................................15
15.3. Remedies..................................................15
15.4. Successors and Assigns....................................16
15.5. Amendment.................................................16
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15.6. Severability..............................................16
15.7. Headings..................................................16
15.8. Governing Law.............................................16
SIGNATURES
EXHIBITS
Exhibit A - Subscription Form
Exhibit B - Assignment Form
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.
INITIAL WARRANT PRICE
$___________ PER SHARE
WARRANT
To Purchase Common Shares of
ADVANCED LIGHTING TECHNOLOGIES, INC.
THIS IS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, or
registered assigns, is entitled, at any time during the Exercise Period (as
hereinafter defined), to purchase from ADVANCED LIGHTING TECHNOLOGIES, INC., an
Ohio corporation (the "Company"), up to __________________ Common Shares (as
hereinafter defined) (such Common Shares, subject to adjustment as provided
herein, are referred to herein as the "Warrant Shares") as described herein, in
whole or in part, including fractional parts, at the Current Warrant Price (as
defined herein) per share (subject to adjustment as provided herein) all on the
terms and conditions and pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
Terms used in this Warrant have the respective meanings set
forth below:
"Additional Issuance" shall have the meaning set forth in
Section 4.3(a).
"Additional Common Shares" shall mean all Common Shares issued
by the Company after the date hereof, other than Conversion Shares, Contingent
Shares or Warrant Shares.
"Appraised Value" shall mean, in respect of any Common Share
on any date herein specified, the fair saleable value of such Common Share
(determined without giving affect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Share or (iii) to the fact that the
Company may have no class of equity registered under the Exchange Act) based on
the equity value of the Company, as determined by an investment banking or
valuation firm selected in accordance with the following sentences, divided by
the number of Common Shares outstanding on a Fully Diluted Basis as determined
in accordance with GAAP (assuming the payment of the exercise prices for such
shares). The determination of the Appraised Value per Common Share shall be made
by an investment banking or valuation firm of nationally recognized standing
selected by the Company and acceptable to the Majority Holders. If the
investment banking or valuation firm selected by Company is not acceptable to
the Majority
125
Holders and the Company and the Majority Holders cannot agree on a mutually
acceptable investment banking or valuation firm, then the Majority Holders and
the Company shall each choose one such investment banking or valuation firm and
the respective chosen firms shall agree on another investment banking or
valuation firm which shall make the determination. The Company shall retain, at
its sole cost, such investment banking or valuation firm as may be necessary for
the determination of Appraised Value required by the terms of this Warrant.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required to be closed in the State of New
York.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act, the Exchange
Act and other federal securities laws.
"Common Share" shall mean (except where the context otherwise
indicates) a Common Share, $0.001 par value, of the Company as constituted on
the date hereof, and any capital stock into which such Common Share may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
Common Shares upon any reclassification thereof which is also not preferred as
to dividends or assets over any other class of capital stock of the Company and
which is not subject to redemption and (ii) capital stock of any successor or
acquiring corporation received by or distributed to the holders of Common Shares
of the Company in the circumstances contemplated by Section 4.5.
"Contingent Shares" shall mean Common Shares to be issued upon
the exercise of any right to purchase Common Shares pursuant to the Contingent
Warrant Agreement.
"Contingent Warrant Agreement" shall mean the Contingent
Warrant Agreement, dated as of September 30, 1999, between the Company and
General Electric Company.
"Conversion Shares" shall mean the Common Shares issued or
issuable upon the conversion of the Series A Shares.
"Convertible Securities" shall mean warrants, evidences of
indebtedness, shares of capital stock or other securities that are exercisable
for, convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for Additional Common Shares, either
immediately or upon the occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any Common
Share on any date herein specified, if there shall then be a public market for
the Common Shares, the average of the daily market prices for 20 consecutive
Business Days immediately preceding such date or, if there is no such public
market, the Appraised Value per Common Share. The daily market price for each
such Business Day shall be (i) the last sale price on such day on the principal
stock exchange or NASDAQ-NMS on which such Common Shares are then listed or
admitted to trading, or (ii) if no sale takes place on such day on any such
exchange or NASDAQ-NMS, the average of the last reported closing bid and asked
prices on such day as officially quoted on any
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such exchange or NASDAQ-NMS, or (iii) if the Common Shares are not then listed
or admitted to trading on any stock exchange or NASDAQ-NMS, the average of the
last reported closing bid and asked prices on such day in the over-the-counter
market, as furnished by the NASDAQ or the National Quotation Bureau, Inc., or
(iv) if neither such corporation at the time is engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business, or (v) if there is no such firm, as furnished by any member of the
NASD selected mutually by the Majority Holders and the Company or, if they
cannot agree upon such selection, as selected by two such members of the NASD,
one of which shall be selected by the Majority Holders and one of which shall be
selected by the Company.
"Current Warrant Price" shall mean the Initial Warrant Price,
as adjusted from time to time in the case of share dividends, subdivisions and
combinations as set forth in Section 4.1 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean ______________, 200__.
"Fully Diluted Basis" means, with respect to any determination
or calculation, that such determination or calculation is performed on a fully
diluted basis (assuming the issuance of all Common Shares issuable under any
then outstanding options, warrants or convertible securities of any kind)
determined in accordance with GAAP for purposes of determining book value or net
income per share.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"GE" shall mean General Electric Company, a New York
corporation.
"Holder" shall mean the Person in whose name the Warrant set
forth herein is registered on the books of the Company maintained for such
purpose.
"Initial Warrant Price" shall mean the Initial Warrant Price
per Common Share set forth on the first page hereof.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of Common Shares then
purchasable upon exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
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"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation System.
"NASDAQ-NMS" shall mean the NASDAQ National Market System.
"New Securities" shall have the meaning set forth in Section
4.3(a).
"New Securities Warrant" shall have the meaning set forth in
Section 4.3(a).
"Other Property" shall have the meaning set forth in Section
4.5.
"Permitted Issuances" shall mean (a) the issuance or
conversion of options issued to employees pursuant to any stock option plan or
employee incentive plan approved by the Company's board of directors, (b) the
issuance of Warrant Shares, Contingent Shares or Conversion Shares and (c) the
issuance of Common Shares to satisfy obligations in respect of acquisitions of
securities or assets of any Person, provided that (i) such contracts were
entered into prior to September 30, 1999, and (ii) the number of Common Shares
subject to this Subparagraph (c) shall not exceed 110,000 in the aggregate.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"Registration Statement" shall have the meaning set forth in
Section 9.4.
"Restricted Common Shares" shall mean Common Shares that are,
or upon their issuance on the exercise of this Warrant would be, evidenced by a
certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Series A Shares" shall mean shares of Series A Convertible
Preferred Stock, par value $.001, of the Company.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, association or other business entity
in respect of which that Person owns securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors,
partnership committee, board of managers or trustees or other managerial body
thereof, whether directly or indirectly through one or more of the other
Subsidiaries of such Person or a combination thereof. Unless otherwise
specified, "Subsidiary" means a Subsidiary of the Company and "Subsidiaries"
means all Subsidiaries of the Company.
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"Transfer" shall mean any disposition of any Warrant or
Warrant Share or of any interest in either thereof that would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in
Section 9.2.
"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, this Warrant.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of Common Shares for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number
of Common Shares being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Shares" shall have the meaning set forth in the
introductory paragraph on the first page hereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., New York time, on the Expiration Date (the "Exercise Period"),
Holder may exercise this Warrant, on any Business Day, for all or any part of
the Warrant Shares. In order to exercise this Warrant, in whole or in part,
Holder shall deliver to the Company at its principal office at 00000 Xxxxxx
Xxxx, Xxxxx, Xxxx 00000, or at the office or agency designated by the Company
pursuant to Section 12: (i) a written notice of Holder's election to exercise
this Warrant, which notice shall specify the number of Common Shares to be
purchased, (ii) payment of the Warrant Price and (iii) this Warrant. Such notice
shall be substantially in the form of the subscription form appearing at the end
of this Warrant as Exhibit A, duly executed by Holder or its agent or attorney.
Upon receipt thereof, the Company shall, as promptly as practicable, and in any
event within five Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full Common Shares issuable upon such
exercise, together with cash in lieu of any fraction of a share, as hereinafter
provided. The share certificate or certificates so delivered shall be, to the
extent possible, in such denomination or denominations as such Holder shall
request in the notice and shall be registered in the name of Holder or, subject
to Section 9, such other name as shall be designated in the notice. This Warrant
shall be deemed to have been exercised and such certificate or certificates
shall be deemed to have been issued, and Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the notice, together with the
cash or check or other payment as provided below and this Warrant, is received
by the Company as described above and all taxes required to be paid by Holder,
if any, pursuant to Section 2.2 prior to the issuance of such shares have been
paid. If this Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Common Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or,
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at the request of Holder, appropriate notation may be made on this Warrant and
the same returned to Holder. Payment of the Warrant Price shall be made at the
option of Holder by (i) certified or official bank check, and/or (ii) Holder's
surrender to the Company of that number of Warrant Shares (or the right to
receive such number of shares) or Common Shares having an aggregate Current
Market Price equal to or greater than the Current Warrant Price for all shares
then being purchased (including those being surrendered), or (iii) any
combination thereof, duly endorsed by or accompanied by appropriate instruments
of transfer duly executed by Holder or by Holder's attorney duly authorized in
writing.
2.2. PAYMENT OF TAXES. All Common Shares issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Common Shares issuable upon
exercise of this Warrant in any name other than that of Holder, and in such case
the Company shall not be required to issue or deliver any share certificate
until such tax or other charge has been paid or it has been established to the
reasonable satisfaction of the Company that no such tax or other charge is due.
2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional Common Share upon exercise of any Warrant. If any fraction of
a share would, but for this Section, be issuable upon exercise of this Warrant,
in lieu of such fractional share, the Company may, at its option, pay a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per Common Share on the date of exercise
or, if there is no Current Market Price on such date, the Current Warrant Price
per Common Share, adjusted to reflect equitably share dividends, subdivisions
and combinations after the date hereof.
2.4. CONTINUED VALIDITY. A holder of Common Shares issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10 and
15 of this Warrant. The Company will, at the time of each exercise of this
Warrant, in whole or in part, upon the request of the holder of the Common
Shares issued upon such exercise hereof, acknowledge in writing, in form
reasonably satisfactory to such holder, its continuing obligation to afford to
such holder all such rights; PROVIDED, HOWEVER, that if such holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9 hereof,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal
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office of the Company referred to in Section 2.1 or the office or agency
designated by the Company pursuant to Section 12, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Section 9, execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned in compliance with Section 9, may be exercised by a new Holder
for the purchase of Common Shares without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer that may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at
its own expense (other than transfer taxes) the new Warrant or Warrants under
this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at
its aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.
4. ADJUSTMENTS
The number of Common Shares for which this Warrant is
exercisable, and the price at which such shares may be purchased upon exercise
of this Warrant, shall be subject to adjustment from time to time as set forth
in this Section 4. The Company shall give each Holder notice of any event
described below in accordance with Section 5.1.
4.1. SHARE DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any
time the Company shall:
(a) take a record of the holders of its Common Shares for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Common Shares,
(b) subdivide its outstanding Common Shares into a larger
number of Common Shares, or
(c) combine its outstanding Common Shares into a smaller
number of Common Shares,
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then (i) the number of Common Shares for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of Common Shares that a record holder of the same number of Common
Shares for which this Warrant is exercisable immediately prior to the occurrence
of such event would own or be entitled to receive after the happening of such
event, and (ii) the Current Warrant Price shall be adjusted to equal (A) the
Current Warrant Price multiplied by the number of Common Shares for which this
Warrant is exercisable immediately prior to the adjustment divided by (B) the
number of shares for which this Warrant is exercisable immediately after the
adjustment.
4.2 CERTAIN OTHER DISTRIBUTIONS AND ADJUSTMENTS. (a) If at any
time the Company shall take a record of the holders of its Common Shares for the
purpose of entitling them to receive any dividend or other distribution of:
(i) cash,
(ii) any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever
(other than cash, Convertible Securities or Additional Common Shares),
or
(iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Common Shares),
then Holder shall be entitled to receive such dividend or distribution as if
Holder had exercised this Warrant.
(b) A reclassification of the Common Shares (other than a
change in par value, or from par value to no par value or from no par value to
par value) into Common Shares and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Shares of such
shares of such other class of stock within the meaning of paragraph (a) above
and, if the outstanding Common Shares shall be changed into a larger or smaller
number of Common Shares as a part of such reclassification, such change shall be
deemed a subdivision or combination, as the case may be, of the outstanding
Common Shares within the meaning of Section 4.1.
4.3.[INTENTIONALLY OMITTED]
4.4. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION. The following provisions shall be applicable to the making of
adjustments of the number of Common Shares for which this Warrant is exercisable
and to the Current Warrant Price provided for in Section 4:
(a) FRACTIONAL INTERESTS. In computing adjustments under this
Section 4, fractional interests in Common Shares shall be taken into account to
the nearest 1/1000th of a share.
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(b) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Shares for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to shareholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(c) ESCROW OF WARRANT SHARES. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Shares, but prior to the occurrence of the event for
which such record is taken, and Holder exercises this Warrant, any Additional
Common Shares issuable upon exercise by reason of such adjustment shall be
deemed the last Common Shares for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for Holder by the Company to be issued to
Holder upon and to the extent that the event actually takes place, upon payment
of the then Current Warrant Price. Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to occur or
is rescinded, then such escrowed shares shall be cancelled by the Company and
escrowed property returned to the Company.
4.5. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Shares), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, Common Shares of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Shares
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of such Warrant, the number of Common Shares of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of Common Shares for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Warrant to be performed and observed by the Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of Common Shares for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.5,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class that is not preferred as to dividends or assets
over any other class of stock of such corporation and that is not subject to
redemption and shall
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also include any evidences of indebtedness, shares of stock or other securities
that are convertible into or exchangeable for any such stock, either immediately
or upon the arrival of a specified date or the happening of a specified event
and any warrants or other rights to subscribe for or purchase any such stock.
The foregoing provisions of this Section 4.5 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
4.6. OTHER ACTION AFFECTING COMMON SHARES. In case at any time
or from time to time the Company shall take any action in respect of its Common
Shares, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of Holders, the
number of Common Shares or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Not less than 10 nor more than 30
days prior to the record date or effective date, as the case may be, of any
action that requires or might require an adjustment or readjustment pursuant to
Section 4, the Company shall forthwith prepare and deliver to each Holder a
signed copy of a certificate executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated, specifying the number of
Common Shares for which this Warrant is exercisable and (if such adjustment was
made pursuant to Section 4.5 or 4.6) describing the number and kind of any other
shares of stock or Other Property for which this Warrant is exercisable, and any
change in the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall keep at its office or agency designated
pursuant to Section 12 copies of all such certificates and cause the same to be
available for inspection at said office during normal business hours by any
Holder or any prospective purchaser of a Warrant designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its
Common Shares for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation, person or entity, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days prior written notice of the date on which a record date shall be
selected for such dividend,
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distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, and (ii) in the case of any
such reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 30 days prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Shares shall be entitled to any
such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Shares shall be entitled to exchange their Common Shares
for securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
15.2.
6. NO IMPAIRMENT
The Company shall not by any action, including, without
limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Common Shares upon the exercise of this Warrant, including
taking such action as is necessary for the Current Warrant Price to be not less
than the par value of the Common Shares issuable upon exercise of this Warrant,
and (b) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON SHARES;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the date hereof, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued Common Shares as will be sufficient to permit the
exercise in full of all outstanding Warrants. All Common Shares that shall be so
issuable, when issued upon exercise of any Warrant and payment therefor in
accordance with the terms of such Warrant, shall be duly and validly issued and
fully paid and nonassessable, and not subject to preemptive rights.
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Before taking any action that would result in an adjustment in
the number of Common Shares for which this Warrant is exercisable, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto,
as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
If any Common Shares required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
law (otherwise than as provided in Section 9) before such shares may be so
issued, the Company will in good faith and as expeditiously as possible and at
its expense endeavor to cause such shares to be duly registered or such approval
to be obtained or filing made.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Shares with respect to which any provision
of Section 4 refers to the taking of a record of such holders, the Company will
in each such case take such a record and will take such record as of the close
of business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY; REGISTRATIONS
The Warrants and the Warrant Shares shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Share. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Section 9, each certificate for Warrant Shares initially issued upon the
exercise of this Warrant, and each certificate for Warrant Shares issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act
or the rules and regulations thereunder."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended,
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and may not be transferred in violation of such Act, the rules and
regulations thereunder or the provisions of this Warrant."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION.
Prior to any Transfer of any Warrant or any Restricted Common Share, the holder
of such Warrant or Restricted Common Share shall give written notice (a
"Transfer Notice") to the Company of such Transfer. Each certificate, if any,
evidencing such Restricted Common Share issued upon such Transfer shall bear the
restrictive legend set forth in Section 9.1(a), and each Warrant issued upon
such Transfer shall bear the restrictive legend set forth in Section 9.1(b),
unless in the opinion of counsel to such holder that is reasonably acceptable to
the Company such legend is not required in order to ensure compliance with the
Securities Act.
9.3. REGISTRATION. Each holder of Warrant Shares has certain
registration rights under the Registration Rights Agreement dated September 30,
1999, between the Company and General Electric Company, as amended from time to
time. Any Holder may obtain a copy of such agreement by notice to the Company.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Shares in supplying such information as may be
reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Shares.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably satisfactory
to it (it being understood that the written agreement of GE shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant of like tenor
to such Holder; PROVIDED, in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive offices
of the Company) where the Warrants may be presented for exercise, registration
of transfer, division or combination as provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1. QUARTERLY INFORMATION. The Company will deliver to each
Holder, as soon as practicable after the end of each of the first three quarters
of the Company, and in any event
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within 45 days thereafter, one copy of an unaudited consolidated balance sheet
of the Company and its subsidiaries as at the close of such quarter, and the
related unaudited consolidated statements of income and cash flows of the
Company for such quarter and, in the case of the second and third quarters, for
the portion of the fiscal year ending with such quarter, setting forth in each
case in comparative form the figures for the corresponding periods in the
previous fiscal year. Such financial statements shall be prepared by the Company
in accordance with GAAP (without period-end adjustments or footnotes) and
accompanied by the certification of the Company's chief executive officer or
chief financial officer that such financial statements are complete and correct
and present fairly the consolidated financial position, results of operations
and cash flows of the Company and its subsidiaries as at the end of such quarter
and for such year-to-date period, as the case may be.
13.2. ANNUAL INFORMATION. The Company will deliver to each
Holder as soon as practicable after the end of each fiscal year of the Company,
and in any event within 90 days thereafter, one copy of:
(a) an audited consolidated balance sheet of the Company and
its subsidiaries as at the end of such year, and
(b) audited consolidated statements of income and cash flows
of the Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming any adjustment made pursuant
to Section 4 during such year.
13.3. FILINGS. The Company will file with the Commission all
regular or periodic reports required pursuant to the Exchange Act and will
deliver to Holder promptly upon their becoming available one copy of each
report, notice or proxy statement sent by the Company to its shareholders
generally, and of each regular or periodic report (pursuant to the Exchange
Act), filed by the Company with (i) the Commission or (ii) any securities
exchange on which Common Shares are listed.
14. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase Common Shares, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Share or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
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15. MISCELLANEOUS
15.1. NONWAIVER AND EXPENSES. No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If the Company fails to comply with any provision of this Warrant,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in enforcing any of
its rights, powers or remedies hereunder.
15.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid, or
by telecopy and confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Shares, at its last
known address appearing on the books of the Company maintained for such purpose.
(b) If to the Company at
Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: President
Telecopy Number: (000)000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, one Business Day after the same shall have been delivered to a
nationally recognized courier service, or three Business Days after the same
shall have been deposited, postage prepaid, in the United States mail. Failure
or delay in receipt of copies of any notice, demand, request, approval,
declaration, delivery or other communication to the Person designated above
shall in no way adversely affect the effectiveness of such notice, demand,
request, approval, declaration, delivery or other communication.
15.3. REMEDIES. Each holder of a Warrant or a Warrant Share,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under Section 9 of this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of Section 9 of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
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15.4. SUCCESSORS AND ASSIGN. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and, with
respect to Section 9 hereof, holders of Warrant Shares, and shall be enforceable
by any such Holder or holder of Warrant Shares.
15.5. AMENDMENT. This Warrant may be modified or amended or
the provisions hereof waived only with the written consent of the Company and
the Majority Holders; provided that no such Warrant may be modified or amended
to reduce the number of Common Shares for which such Warrant is exercisable or
to increase the price at which such Common Shares may be purchased upon exercise
of such Warrant (before giving effect to any adjustment as provided therein)
without the prior written consent of each Holder.
15.6. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
15.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
15.8. GOVERNING LAW. This Warrant shall be governed by the
laws of the State of New York, without regard to the provisions thereof relating
to conflict of laws.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and attested by its Secretary or an Assistant Secretary.
Dated: ______________, 200___
ADVANCED LIGHTING TECHNOLOGIES, INC.
By:_________________________________
Name:
Title:
Attest:
By:__________________________________
Name:
Title:
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Common Shares of ADVANCED
LIGHTING TECHNOLOGIES, INC. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the Common Shares hereby purchased (and any securities or
other property issuable upon such exercise) be issued in the name of and
delivered to ______________________________ whose address is
____________________________ and, if such Common Shares shall not include all of
the Common Shares issuable as provided in this Warrant, that a new Warrant of
like tenor and date for the balance of the Common Shares issuable hereunder be
delivered to the undersigned.
________________________________________
(Name of Registered Owner)
________________________________________
(Signature of Registered Owner)
________________________________________
(Street Address)
________________________________________
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
Common Shares set forth below:
Name and Address of Assignee No. of Common Shares
---------------------------- --------------------
and does hereby irrevocably constitute and appoint _____________________________
attorney-in-fact to register such transfer on the books of ADVANCED LIGHTING
TECHNOLOGIES, INC. maintained for the purpose, with full power of substitution
in the premises.
Dated:______________________ Print Name:______________________
Signature:_______________________
Witness:_________________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT 2.2(f)(i)
-----------------
INDEPENDENT ACCOUNTANTS' REPORT
ON APPLYING AGREED-UPON PROCEDURES
To the Management of
Advanced Lighting Technologies, Inc.
We have performed the procedures enumerated below, which were agreed to by the
Management of Advanced Lighting Technologies, Inc., solely to assist you in
evaluating the accompanying EBITDA Coverage Ratio Calculation Schedule defined
in accordance with Section 2.2 of the Contingent Warrant Agreement dated
_________________ (prepared in accordance with the criteria specified therein)
for the quarter ended ______________________. This agreed-upon procedures
engagement was performed in accordance with standards established by the
American Institute of Certified Public Accountants. The sufficiency of these
procedures is solely the responsibility of the specified users of the report.
Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been
requested or for any other purpose.
(This paragraph will enumerate yet to be defined procedures followed and the
associated findings.)
We were not engaged to, and did not, perform an examination, the objective of
which would be the expression of an opinion on the accompanying Schedule.
Accordingly, we do not express any such opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
This report is intended solely for the use of Management of Advanced Lighting
Technologies, Inc., and should not be used by those who have not agreed to the
procedures and taken responsibility for the sufficiency of the procedures for
their purposes.
(Date)
144
ADVANCED LIGHTING TECHNOLOGIES, INC.
AGREED-UPON PROCEDURES RELATED TO FINANCIAL COVENANT IN GENERAL ELECTRIC
CONTINGENT WARRANT AGREEMENT
1. We compared the consolidated net income (loss), depreciation,
amortization, provision for income taxes, interest expense and
extraordinary gains and losses in the EBITDA Coverage Ratio schedule
with the corresponding dollar amount included in the Company's
unaudited condensed consolidated financial statements included in the
Company's Quarterly Report on Form 10-Q and found the amounts to be in
agreement.
2. We compared the dollar amounts in the EBITDA Coverage Ratio schedule
not directly derived from the unaudited financial statements to the
corresponding dollar amounts derived from the Company's accounting
records and found them to be in agreement.
3. We proved the arithmetical accuracy of EBITDA, as defined, and Interest
Expense, as defined, and found the amounts to be in agreement with the
amounts in the EBITDA Coverage Ratio schedule.
4. We recalculated the EBITDA Coverage Ratio and Average EBITDA Coverage
Ratio for the respective Determination Period and found the amounts
calculated to be in agreement with the amounts in the EBITDA Coverage
Ratio schedule.
145
ADVANCED LIGHTING TECHNOLOGIES, INC.
EBITDA Coverage Ratio Schedule
Section 2.2 of Contingent Warrant Agreement dated September 30, 1999
(Dollar amounts in thousands)
Most Recent
Two Consecutive
Quarter Ended Fiscal Quarters
Sept. 30, 1999 Dec. 31, 1999 Combined
-------------- ------------- ------------------
EBITDA COVERAGE RATIO
EBITDA, as defined
Consolidated Net Income (Loss)
Plus:
Depreciation
Amortization
Interest Expense
Provision for Income Taxes ___________ ____________ ____________
Less:
Extraordinary Gains
Gains from Sale of Assets ___________ ____________ ____________
Plus:
Extraordinary Losses
Losses from Sale of Assets ___________ ____________ ____________
EBITDA, as defined
=========== ============ ============
Interest Expense, as defined
Interest Expense
Less:
Interest Income
Deferred Financing Cost (a) ___________ ____________ ____________
Interest Expense, as defined
=========== ============ ============
EBITDA Coverage Ratio
EBITDA Coverage Ratio for Determination Period
Average EBITDA Coverage Ratio for Determination Period
Required EBITDA Coverage Ratio 2:1
EBITDA Coverage Ratio Met?
(a) Not to exceed $125 per quarter
Confidential - For Internal Use Only
146
EXHIBIT 2.2(f)(ii)
SPECIAL LETTER TO GENERAL ELECTRIC COMPANY
Board of Directors
Advanced Lighting Technologies, Inc.
We have audited, in accordance with generally accepted auditing standards, the
consolidated balance sheet of Advanced Lighting Technologies, Inc. and
Subsidiaries (the "Company") as of June 30, 2000, and the related consolidated
statement of earnings, retained earnings, and cash flows for the year then
ended, and have issued our report thereon dated __________________.
In connection with our audit, nothing came to our attention that caused us to
believe that the Company had failed to comply with the terms of Section 2.2
(EBITDA Coverage Ratio) of the Contingent Warrant Agreement dated _____________.
However, it should be noted that our audit was not directed primarily toward
obtaining knowledge of such noncompliance.
This report is intended solely for the information and use by the Company and
The General Electric Company and should not be used for any other purpose.
(DATE)
