1
EXHIBIT 10.1
FIRST AMENDMENT TO
LOAN AGREEMENT,
SECURED PROMISSORY NOTE
AND
SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT, SECURED PROMISSORY NOTE AND
SECURITY AGREEMENT ("this First Amendment"), is made and effective as of
November 22, 2000 (the "Effective Date"), by XXXXX X. XXXXXXX ("Xxxxxxx"), and
ADVANCED LIGHTING TECHNOLOGIES, INC. ("ADLT").
BACKGROUND
X. Xxxxxxx and ADLT entered into a Loan Agreement dated as of October 8,
1998 (the "Loan Agreement"), pursuant to which ADLT advanced Xxxxxxx $9,000,000
(the "Original Advance").
B. Pursuant to the Loan Agreement, the Original Advance was evidenced by
a Secured Promissory Note dated October 8, 1998 (the "Note") and secured
pursuant to (i) a Security Agreement dated as of October 8, 1998 (the "Security
Agreement"), (ii) the Real Estate Mortgages recorded as follows: June 30, 1999
Geauga County Ohio No 1245 page 39, June 30, 1999 Portage County Ohio No. 441
Page 202 and No. 441 Page 214, and August 24, 1999 Xxx County Florida Book 3160
Page 1096 (the "Mortgages"), (iii) the Collateral Assignment of Contract dated
as of October 8, 1998 (the "Assignment"), and (iv) Allonge No. 2 to Promissory
Note From 00 Xxxxx Xxxxxx, Inc. with delivery of the referenced note the (the
"Karat Note").
C. The Loan Agreement, the Note, the Security Agreement, the Mortgages,
the Assignment and the Karat Note are included in the "Loan Documents" as
defined in the Loan Agreement. All initially capitalized terms that are used but
not defined herein have the meaning ascribed to them in the Loan Documents.
D. The Margin Loan is currently held by Bear Xxxxxx and Xxxxxxx Xxxxx,
the current Margin Lenders, not Prudential Securities, and Bear Xxxxxxx has
declared a current Margin Deficit of $1.4 million and Xxxxxxx Xxxxx has a
potential Margin Deficit of $500,000.
E. Upon reports from its advisors and after discussion, ADLT's
disinterested and independent directors have determined that it is in the best
interest of the company and its shareholders, and believe that it will benefit
the company, to make an additional advance under the Note of $1.4 million to
reduce the Margin Loan with Bear Xxxxxxx (the "BS Additional Advance") and an
additional advance of up to $500,000 may be made to reduce the Margin Loan with
Xxxxxxx Xxxxx (the "RJ Additional Advance") (collectively, the "Additional
Advances").
Page 1 of 4
2
AGREEMENT
NOW THEREFORE, as an inducement to and in consideration of the Additional
Advances, the agreements made herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Xxxxxxx and ADLT agree as follows:
1. The Loan Agreement is hereby amended to provide that (i) the Margin
Shares are pledged as collateral to Bear Xxxxxx and Xxxxxxx Xxxxx, (ii) Bear
Xxxxxx and Xxxxxxx Xxxxx are the Margin Lenders, (iii) the Margin Deficit is as
declared from time to time by the Margin Lenders, (iv) the Loan Amount includes
the Additional Advances, and (v) the Loan Documents include this Amendment.
2. The Additional Advances are principal under and evidenced by and Note
to the same effect as if the Additional Advances were made as part of the
Original Advance. The Maturity Date of the Note is as specified in EXHIBIT 2 to
this Note.
3. Xxxxxxx acknowledges and agrees that (i) the Security Interest granted
in the Security Agreement, (ii) the liens granted in the Mortgages, (iii) the
rights of ADLT under the Assignment and Karat Note, (iv) all other rights and
instruments that now or hereafter secure the Loan and Xxxxxxx'x Obligations with
respect thereto secure the Additional Advances as amounts advanced to Xxxxxxx
under the Loan Documents and (v) without limiting the description of the
Collateral in any way, the Collateral includes all choses in action in which
Xxxxxxx is directly or indirectly the plaintiff and the proceeds from all choses
in action.
4. Xxxxxxx represents and warrants to ADLT that on the date hereof (i) he
is not in breach of any covenant in any Loan Document, and (ii) all
representations and warranties in the Loan Documents are true and correct except
as has been disclosed to ADLT in writing.
5. Xxxxxxx acknowledges and agrees that (i) he shall not directly or
indirectly, in one or a series of transactions, pay the proceeds of the
Additional Advances to or for the benefit of any other person or entity, all
such proceeds to be paid to the Margin Lenders to reduce the Margin Deficit, and
(ii) he shall put into place a programmed stock sale plan to sell Margin Shares
in accordance with Rule 10b5-1 under the Security Exchange Act of 1934, in
accordance with EXHIBIT 5 ATTACHED HERETO by no later than December 5, 2000.
6. Xxxxxxx acknowledges and agrees that the Additional Advances will be
wired directly to the Margin Lenders on Xxxxxxx'x account. The BS Advance to be
wired upon execution of this Amendment and the RJ Advance to be wired upon
demand for payment by RJ and further instruction by the special committee
appointed by ADLT's Board of Directors to administer the Additional Advances.
Page 2 of 4
3
7. Xxxxxxx acknowledges and agrees that the Additional Advances are
included in the Loan Amount and covered by the Loan Documents as if the
Additional Advances were made as part of the Original Advance.
8. Xxxxxxx acknowledges and agrees that, without limiting in any way the
collateral included in the Collateral, stock, bonds, options and other
securities now or hereafter held by him in any subsidiary of ADLT, now or
hereafter formed, including any interest in securities of Deposition Sciences,
Inc., are not excluded from the Collateral.
9. Xxxxxxx will take all actions and execute all instruments as requested
by ADLT , in order to perfect, and keep perfected, all liens in any of the
Collateral granted to ADLT, including in any after acquired Collateral and to
perfect rights with respect to the Additional Advances.
10. This Amendment shall be governed by and construed in accordance with
the laws of Ohio without regard to conflict of laws principles (except to the
extent the Collateral is situated in a state other than Ohio and in that case
any laws of such state which are required to control mortgages granted on such
property shall apply).
11. This Amendment inures to the benefit of and is binding upon Xxxxxxx,
and his estate, heirs, executors, administrators and personal representatives,
successors and assigns and ADLT and its successors and assigns. Xxxxxxx may not
assign or delegate this Amendment, any Loan Document or any of his rights or
obligations thereunder.
12. This Amendment may be executed in any number of counterparts, each of
which shall be regarded as an original and all of which shall constitute but one
and the same instrument; it shall not be necessary in proving this Agreement to
produce or account for more than one such counterpart. A faxed executed
counterpart of this Amendment will be considered an original for evidentiary
purposes.
13. This Amendment only modifies the Loan Documents to the extent
provided for herein, and the Loan Documents otherwise remain in full force and
effect without interruption. This Amendment may not be amended, changed,
modified, altered or terminated and no performance may be waived except in
writing executed by both parties.
20 This Amendment constitutes the entire agreement between the parties
with respect to the Additional Advances and all prior and contemporaneous
agreements or discussions, written or oral, with respect thereto have no force
or effect whatsoever.
Page 3 of 4
4
IN WITNESS WHEREOF, Xxxxxxx and ADLT have caused this Amendment to be
duly executed and delivered as of the Effective Date.
/s/ Xxxxx X. Xxxxxxx
-------------------
XXXXX X. XXXXXXX
ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Its: Vice President and Chief Financial Officer
------------------------------------------
Page 4 of 4
5
EXHIBIT 2
The Loan shall be payable October 6, 2001; provided that:
- $700,000 of such loan shall be paid within two business days after
the first trading day on which the last sale price of the
Corporation's common stock exceeds $10 per share AND the average
closing price of such common stock for the 20 trading days
preceding such date exceeds $10 per share;
- $700,000 of such loan shall be paid within two business days after
the first trading day on which the last sale price of the
Corporation's common stock exceeds $11 per share AND the average
closing price of such common stock for the 20 trading days
preceding such date exceeds $11 per share;
- The proceeds of any judgment or settlement of the litigation
brought by Xx. Xxxxxxx and discussed at the meeting shall be
applied to repayment of the loan; and
- The Corporation reserves the right to require immediate repayment
if the Company requires the payment to prevent an unacceptable
strain on cash resources.
6
EXHIBIT 5
The Plan shall provide for the sale of shares of common stock of the Corporation
commencing as soon as practicable after June 1, 2001, and that such plan
requires sales of shares if the price of such common stock exceeds $15 per share
and that the proceeds of such sale are applied to the repayment of any
outstanding amounts due on loans from the Corporation to Xx. Xxxxxxx, after
payment of any amounts required to reduce the balance of the margin loan to
permit withdrawal of proceeds. The terms of such plan, including determination
of the number shares subject to sale at any time and the method of sale, shall
be approved by the special committee appointed by ADLT's Board of Directors to
administer the Additional Advance.