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Exhibit 10.6
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[CONFORMED COPY]
CONTINGENT WARRANT AGREEMENT
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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
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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
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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
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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.
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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
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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 X. Xxxxxxx
--------------------------------
Title: Chairman & CEO
-------------------------------
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx, as voting trustee
under Voting Trust Agreement dated
October 10, 1995, as amended
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
PURCHASER:
GENERAL ELECTRIC COMPANY
By: /s/ XX Xxxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxxx
--------------------------------
Title: President and CEO, GE Lighting
------------------------------
13
14
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:___________________________________
15
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
16
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:____________________________________
17
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
18
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
19
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.
1
20
"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
2
21
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.
3
22
"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
4
23
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.
5
24
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
---------- -------------
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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25
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
7
26
EXHIBIT 2.2(c)
[First Contingent Warrant]
WARRANT
to Purchase Common Shares of
ADVANCED LIGHTING TECHNOLOGIES, INC.
27
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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29
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
30
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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34
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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35
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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36
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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37
(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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38
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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39
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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40
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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41
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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44
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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45
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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46
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.
49
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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51
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
52
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)
71
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.
72
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
73
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)
