Exhibit 2.1
STOCK REDEMPTION AND PURCHASE AGREEMENT
AMONG
ADVANCED LIGHTING TECHNOLOGIES, INC.,
RUUD LIGHTING, INC.
AND
XXXX X. XXXX,
XXXXX XXXX,
XXXXXXXX X. XXXXXX,
XXXXXXXXXXX X. XXXX
and
XXXXXXX X. XXXXXXX
November 14, 2001
TABLE OF CONTENTS
PAGE
1 THE TRANSACTION.............................................................1
1.1 Redemption of Redeemed Shares........................................1
1.2 Purchase and Sale of Purchased Shares................................2
1.3 Purchase Price, Payment for Purchased Shares and Redeemed Shares.....2
1.4 Adjustment to Redemption Price.......................................2
1.5 Closing..............................................................4
1.6 Deliveries and Proceedings at Closing................................5
2 REPRESENTATIONS AND WARRANTIES OF ADLT......................................7
2.1 Title to RLI Shares..................................................7
2.2 Organization and Qualification.......................................8
2.3 Authorization and Enforceability.....................................8
2.4 No Violation of Laws or Agreements...................................9
2.5 Finder's Fees........................................................9
3 REPRESENTATION AND WARRANTIES OF ADLT
CONCERNING RLI, XXXXXX LIGHTING AND RUUD ITALY.......................9
3.1 Organization and Qualification......................................10
3.2 Authorization and Enforceability....................................10
3.3 No Violation of Laws or Agreements..................................10
3.4 Shares; Capitalization..............................................11
3.5 No Subsidiaries.....................................................11
3.6 Financial Statements................................................12
3.7 Undisclosed Liabilities.............................................12
3.8 No Changes..........................................................12
3.9 Tax Matters.........................................................13
3.10 Business; Assets....................................................15
3.11 Litigation..........................................................15
3.12 Contracts; Compliance...............................................16
3.13 Permits ............................................................16
3.14 Compliance With Laws................................................16
3.15 Transactions with Related Parties...................................16
3.16 Real Property.......................................................16
3.17 Insurance...........................................................16
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3.18 Patents and Intellectual Property Rights............................17
3.19 Benefit Plans.......................................................18
3.20 Compliance with Environmental Laws..................................20
3.21 Environmental Liabilities...........................................20
3.22 Xxxxxx Lighting, Inc................................................21
3.23 Ruud Lighting Italy.................................................25
3.24 Finder's Fees.......................................................27
3.25 Disclosure..........................................................27
4 REPRESENTATIONS AND WARRANTIES OF BUYERS...................................27
4.1 Authorization and Enforceability....................................27
4.2 No Violation of Laws or Agreements..................................28
4.3 Investment..........................................................28
4.4 Finder's Fees.......................................................29
4.5 ADLT Share Ownership................................................29
5 COVENANTS..................................................................29
5.1 Conduct of RLI Business Pending Closing.............................29
5.2 Access, Information and Documents...................................31
5.3 Preserve Accuracy of Representations and Warranties.................31
5.4 Notice of Changes...................................................31
5.5 ADLT Operations.....................................................31
5.6 No Negotiations.....................................................32
5.7 Other Covenants and Agreements......................................32
6 CONDITIONS TO CLOSING......................................................33
6.1 Mutual Conditions Precedent.........................................33
6.2 Conditions Precedent to Obligations of ADLT.........................34
6.3 Conditions Precedent to the Obligations of the Buyers...............35
7 TAX MATTERS................................................................36
7.1 Federal, State and Local Income Taxes...............................36
7.2 Certain Content Rights..............................................36
7.3 Termination of Prior Tax Sharing Agreements.........................36
7.4 Cooperation.........................................................36
7.5 Access to Records Following Closing.................................37
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8 TERMINATION................................................................37
8.1 Termination........................................................37
8.2 Effect of Termination..............................................38
9 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION...............................38
9.1 Survival of Representations........................................38
9.2 Indemnification by the Buyers......................................38
9.3 Indemnification by ADLT............................................39
9.4 Minimum and Maximum Indemnification Claim..........................41
9.5 Notice of Claims...................................................41
9.6 Third Party Claims.................................................41
9.7 Limitation on Damages; Insurance; Etc.; Effect of Knowledge........42
9.8 Good Faith Effort to Settle Disputes...............................43
9.9 Exclusivity........................................................43
10 MISCELLANEOUS.............................................................43
10.1 Construction.......................................................43
10.2 Notices............................................................44
10.3 Successors and Assigns.............................................45
10.4 Governing Law .....................................................45
10.5 No Assignment .....................................................45
10.6 Approvals and Actions by the Buyers................................45
10.7 Amendment and Waiver; Cumulative Effect............................46
10.8 Entire Agreement...................................................46
10.9 Severability.......................................................46
10.10 No Third Party Beneficiaries.......................................47
10.11 Post Closing Services..............................................47
10.12 Xxxxxx Lighting Facility...........................................47
10.13 Counterparts.......................................................47
iii
EXHIBITS
Exhibit A Purchase Price and Share Allocation
Exhibit B Form of Redemption Note
Exhibit C Form of Purchase Note
Exhibit D Form of License
Exhibit E Supply Agreement
iv
SCHEDULES
Schedule 1.4 Balance Sheet
Schedule 2.1 Title to RLI Shares
Schedule 2.4 No Violation of Laws or Agreements; ADLT Consents
Schedule 3.1 Foreign Qualifications of RLI
Schedule 3.3 No Violation of Laws or Agreements of RLI,
RLI Consents
Schedule 3.4 Securities Rights
Schedule 3.5 Subsidiaries
Schedule 3.7 Other Liabilities
Schedule 3.8 Material Transactions
Schedule 3.9 Tax Matters
Schedule 3.10 Permitted Encumbrances
Schedule 3.11 Litigation
Schedule 3.12 Contracts
Schedule 3.15 Related Party Transactions
Schedule 3.16 Real Property
Schedule 3.17 Insurance
Schedule 3.18 Intellectual Property
Schedule 3.19 Benefit Plans
Schedule 3.20 Environmental Matters
Schedule 3.22(b) Xxxxxx Lighting - No Violation of Laws or Agreements
Schedule 3.22(c) Xxxxxx Lighting - Shares; Capitalization
Schedule 3.22(d) Xxxxxx Lighting - No Subsidiaries
Schedule 3.22(e) Xxxxxx Lighting - Tax Matters
Schedule 3.22(f) Xxxxxx Lighting - Receivables
Schedule 3.22(h) Xxxxxx Lighting - Litigation
Schedule 3.22(i) Xxxxxx Lighting - Contracts
Schedule 3.23(b) Ruud Italy - No Violation of Laws or Agreements
Schedule 3.23(c) Ruud Italy - Shares; Capitalization
Schedule 3.23(d) Ruud Italy - No Subsidiaries
Schedule 5.7(a) Microsun, Elkhorn and Metal Halide Assets to be Transferred
Schedule 9.1 Special Indemnity Survival Period
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STOCK REDEMPTION AND PURCHASE AGREEMENT
THIS STOCK REDEMPTION AND PURCHASE AGREEMENT (together with the attached
Schedules and Exhibits, the "Agreement") is entered into as of the 14th day of
November, 2001 and is by and among Advanced Lighting Technologies, Inc., an Ohio
corporation ("ADLT"), Ruud Lighting, Inc., a Wisconsin corporation ("RLI"), Xxxx
X. and Xxxxx Xxxx (the "Ruuds"), Xxxxxxxx X. Xxxxxx ("Sokoly"), Xxxxxxxxxxx X.
Xxxx and Xxxxxxx X. Xxxxxxx (the Ruuds, Xxxxxx, Xxxxxxxxxxx X. Xxxx and Xxxxxxx
X. Xxxxxxx are sometimes referred to herein individually as a "Buyer" and
collectively as the "Buyers");
RECITALS
A. ADLT is the record and beneficial owner of 10,500 shares of common
stock, par value $1.00 per share (the "RLI Shares"), which RLI Shares represent
100% of the issued and outstanding shares of the capital stock of RLI (the "RLI
Capital Stock").
B. RLI desires to redeem from ADLT, and ADLT desires to sell to RLI, the
number of RLI Shares set forth opposite RLI's name on attached Exhibit A
(collectively, the "Redeemed Shares") pursuant to the terms and conditions of
this Agreement.
C. Each of the Buyers desire to purchase from ADLT and ADLT desires to
sell to such Buyer, the number of RLI Shares set forth opposite such Buyer's
name on attached Exhibit A (the "Purchased Shares") pursuant to the terms and
conditions of this Agreement.
AGREEMENT
In consideration of the recitals and the mutual agreements set forth
below, the parties agree as follows:
1. THE TRANSACTION.
1.1 REDEMPTION OF REDEEMED SHARES. At the Closing provided for in
section 1.5, and on the terms and conditions set forth in this Agreement, ADLT
shall sell, assign, transfer and deliver all Redeemed Shares to RLI and RLI
shall purchase the Redeemed Shares from ADLT for the consideration specified in
section 1.3(a) below.
1.2 PURCHASE AND SALE OF PURCHASED SHARES. At the Closing provided for
in section 1.5, and on the terms and conditions set forth in this Agreement,
ADLT shall sell, assign, transfer and deliver to each Buyer that number of
Purchased Shares set forth opposite such Buyer's name on attached Exhibit A and
each such Buyer shall purchase from ADLT the Purchased Shares for the
consideration specified on attached Exhibit A and as set forth in section 1.3
below.
1.3 PURCHASE PRICE, PAYMENT FOR PURCHASED SHARES AND REDEEMED SHARES.
(a) PURCHASE PRICE OF PURCHASE SHARES AND REDEEMED SHARES. The
purchase price for the Redeemed Shares shall be $28,000,000 (the "Redemption
Price"). The aggregate purchase price for the Purchased Shares shall be
$6,000,000 (the "Purchased Shares Price"). Accordingly, the aggregate purchase
price for the Purchased Shares and the Redeemed Shares shall be $34,000,000
subject to adjustment as set forth in section 1.4 below (as adjusted, the
"Purchase Price").
(b) PAYMENT OF PURCHASE PRICE. The Redemption Price shall be paid
by RLI to ADLT at Closing as follows: (a) $25,000,000 in immediately available
funds by wire transfer and (b) through the delivery of a promissory note in the
principal amount of $3,000,000 in substantially the same form as attached
Exhibit B (the "Redemption Note"). The Purchased Shares Price shall be paid at
Closing as follows: (a) $3,000,000 in immediately available funds by wire
transfer and (b) through the delivery by each of the Buyers of a promissory note
payable to ADLT in substantially the same form as attached Exhibit C (each a
"Purchase Note" and collectively, the "Purchase Notes"). The cash payment amount
for each Buyer and original principal amount of each Buyer's Note shall be in
the amount set forth on attached Exhibit A.
1.4 ADJUSTMENT TO REDEMPTION PRICE.
(a) As promptly as practicable after the Closing Date, but in any
case, prior to January 15, 2002 RLI, with the assistance of Xxxxxxx Xxxxxxxxx,
LLP, shall prepare and deliver to ADLT a closing balance sheet prepared as of
the Closing (the "Closing Balance Sheet") and computed as if the transfers
contemplated by sections 5.7(a) and (b) have been made (assuming for balance
sheet purposes that one U.S. dollar = 2,000 Lire) and after eliminating the
September 2, 2001 intercompany accounts, as contemplated by section 5.7(d).
The Closing Balance Sheet shall be prepared in a manner consistent with past
practice and the consolidated balance sheet of RLI (which includes Xxxxxx
Lighting and Ruud Italy as defined in Section 5.7(b)) dated as of September 2,
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2001 which is attached as Schedule 1.4 (the "Balance Sheet"). The Closing
Balance Sheet shall contain a calculation of the "Consolidated Adjusted Closing
Net Working Capital" and the "Consolidated Closing Funded Debt" as of the
Closing Date prepared in a manner consistent with the calculation set forth on
the Balance Sheet. For purposes hereof, the "Consolidated Adjusted Closing Net
Working Capital" means consolidated current assets less consolidated current
liabilities of RLI, Xxxxxx Lighting and Ruud Italy, except that (i) no
adjustment regarding reserves with respect to inventory or doubtful accounts
from trade receivables in the Interim Balance Sheet shall be made; (ii) no
amounts included in the Third Party Payments Amount (as defined below) shall be
included in consolidated current liabilities; (iii) for purposes of calculating
consolidated current liabilities, Consolidated Closing Funded Debt shall be
excluded, but consolidated current liabilities shall include an amount equal to
all Taxes (as defined in section 3.9 below) attributable to income earned or
sales through the Closing Date (as defined in section 1.5 below) payable by RLI,
Xxxxxx Lighting or Ruud Italy. For purposes hereof, the "Consolidated Closing
Funded Debt" means the consolidated funded debt and accrued interest (including
any current portions thereof) of RLI, Xxxxxx Lighting and Ruud Italy as of the
Closing Date, excluding any funded debt incurred in whole or in part for payment
of the Redemption Price or the Third Party Payments Amount.
As used herein, "Third Party Payments Amount" means the amount of
any RLI transaction expenses, including, without limitation, the fees and
expenses of its legal counsel, accountants and other agents or representatives.
Based on the foregoing calculation of Consolidated Adjusted
Closing Net Working Capital, (i) if the Consolidated Adjusted Closing Net
Working Capital exceeds the Target Net Working Capital, RLI shall pay to ADLT
the difference and (ii) if the Consolidated Adjusted Closing Net Working Capital
is less than the Target Net Working Capital, ADLT shall pay RLI the difference.
As used herein, the "Target Net Working Capital" shall equal $17,493,362. Based
on the foregoing calculation of Consolidated Closing Funded Debt, (i) if the
Consolidated Closing Funded Debt exceeds the Target Funded Debt, ADLT shall pay
RLI the difference and (ii) if the Consolidated Closing Funded Debt is less than
the Target Funded Debt, RLI shall pay ADLT the difference. As used herein, the
"Target Funded Debt" shall equal $9,188,130. In either case, the amount of such
net payment to be made by ADLT or RLI, as the case may be, plus interest on such
difference from the Closing Date to the date of payment at the prime rate of
interest publicly announced by The Wall Street Journal, Midwest Edition on the
Closing Date shall be referred to hereinafter as the "Adjustment to Redemption
Price" and shall be payable by wire transfer of immediately available funds.
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(b) If ADLT disputes the accuracy of the Consolidated Adjusted
Closing Net Working Capital or Consolidated Closing Funded Debt in any respect,
it shall so notify RLI and the Buyers within 30 days of receipt of the Closing
Balance Sheet of its disagreement, indicating the items which are being disputed
(the "Disputed Items") and the reasons for such dispute. If ADLT fails to timely
notify RLI and the Buyers as provided in the preceding sentence, payment of the
Adjustment to Redemption Price shall be due and payable not later than 35 days
after receipt by ADLT of the Closing Balance Sheet. ADLT and the Buyers shall
make a good faith effort to resolve any Disputed Items, but if they are unable
to do so, the remaining Disputed Items shall be presented to the Milwaukee,
Wisconsin office of Xxxxxx Xxxxxxxx LLP or another firm of independent public
accountants mutually acceptable to ADLT and the Buyers (the "Accountants"), to
make a final written determination with respect to the correctness of each
remaining Disputed Item (the "Final Determination"). The Accountants shall only
consider the Disputed Items and in resolving any Disputed Item, the Accountants
may not assign a value to any Disputed Item greater than the greatest value for
such Disputed Item claimed by either party or less than the smallest value for
such Disputed Item claimed by either party. The Accountants' Final Determination
shall be based solely on presentations by ADLT and the Buyers (I.E., not an
independent review) and on the definitions of Consolidated Adjusted Closing Net
Working Capital and Consolidated Closing Funded Debt included herein. The
Accountants shall make such determination within 30 days after the dispute is
submitted to them, and their determination shall be final and binding upon the
parties and entitled to be enforced to the fullest extent permitted by law and
entered into any court of competent jurisdiction. The party that is required to
pay the Adjustment to Redemption Price shall pay the other party such amount not
later than 5 days after receipt of the Final Determination. One-half the fees
and expenses of the Accountants in rendering the Final Determination opinion
shall be payable by ADLT and one-half shall be payable by RLI.
(c) At least 24 hours before Closing, RLI shall prepare and
deliver a draft Closing Balance Sheet as of the effective date of Closing that
sets forth an estimate of the Consolidated Adjusted Closing Net Working Capital
and Consolidated Closing Funded Debt. Following receipt of any input from ADLT,
the parties shall use the estimates to make a preliminary adjustment to the
Redemption Price in accordance with the procedures set forth above. Upon
delivery of the Closing Balance Sheet and the completion of the adjustment
procedures set forth above, the parties will true up the preliminary adjustment
and will promptly pay or return such amounts as is necessary to effect the
economics of the adjustment to the Redemption Price contemplated by this section
1.4.
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1.5 CLOSING. The closing hereunder (the "Closing") shall take place at
the offices of Xxxxxxxx Xxxxxxx Van Deuren s.c., or such other place as shall be
agreed by the Buyers and ADLT, on December 7, 2001, effective at 12:01 a.m. on
December 3, 2001, except that if all of the conditions to closing under section
6 shall not have been satisfied on or before December 7, 2001, then closing
shall take place within six business days after all of the conditions to Closing
under section 6 shall have been satisfied or waived in writing, at 10 a.m. local
time or at such other time, date or place as the parties hereto agree (the date
of the Closing is sometimes referred to herein as the "Closing Date").
1.6 DELIVERIES AND PROCEEDINGS AT CLOSING.
(a) DELIVERIES BY ADLT. ADLT shall deliver or cause to be
delivered to the Buyers or RLI as applicable, at the Closing and shall cause RLI
to deliver the documents required in section 1.6(b) below:
(i) Certificates representing the RLI Shares (with
certificates representing the Redeemed Shares going to RLI and certificates
representing the Purchased Shares going to the Buyers), duly endorsed or with
stock powers duly executed in blank with all transfer taxes, if any, paid in
full;
(ii) Good Standing certificates of ADLT and Xxxxxx Lighting
issued within ten days prior to Closing certified by the Secretary of State of
the State of Ohio and the Secretary of States of the Commonwealth of
Massachusetts and Rhode Island, as applicable, in form reasonably satisfactory
to RLI;
(iii) Incumbency and specimen signature certificates signed by
the officers of ADLT and Xxxxxx Lighting and certified by the Secretary or
Assistant Secretary of ADLT and Xxxxxx Lighting;
(iv) True and correct copies of the charter documents (and all
amendments thereto) of ADLT and Xxxxxx Lighting in effect as of the Closing Date
certified by the Secretary of State of the State of Ohio and the Secretary of
State of the Commonwealth of Massachusetts, as applicable, and the Code of
Regulations of ADLT (together with all amendments thereto) and the By-Laws of
Xxxxxx Lighting (together with all amendments thereto) certified by the
Secretary or Assistant Secretary of ADLT and Xxxxxx Lighting;
(v) Resolutions of the Board of Directors of ADLT authorizing
the execution and delivery of this Agreement and each Other Agreement to which
it is a party and the performance of the transactions
5
contemplated hereby and thereby, certified by the Secretary or Assistant
Secretary of ADLT;
(vi) A certificate dated the Closing Date of an officer of
ADLT certifying to the fulfillment of the conditions set forth in section 6.2;
(vii) The opinion of Xxxxxx, Xxxxxxxx & Sarlson Co., L.P.A. in
form reasonably satisfactory to Buyers' counsel;
(viii) The License, as defined in section 5.7(c) below, duly
executed by ADLT;
(ix) The Supply Agreements, as defined in section 5.7(e)
below, duly executed by ADLT; and
(x) Such other documents and agreements as the Buyers and
their counsel may reasonably request.
(b) DELIVERIES BY RLI. RLI shall deliver or cause to be delivered
to Buyers at the Closing:
(i) Certificate of status of RLI, issued by the Wisconsin
Department of Financial Institutions within ten days prior to Closing, in form
reasonably satisfactory to the Buyers;
(ii) An incumbency and specimen signature certificate signed
by the officers of RLI and certified by the Secretary or Assistant Secretary of
RLI;
(iii) A true and correct copy of the Articles of Incorporation
(and all amendments thereto) of RLI in effect as of the Closing Date certified
by the Wisconsin Department of Financial Institutions and the By-Laws of RLI
(together with all amendments thereto) certified by the Secretary or Assistant
Secretary of RLI;
(iv) Resolutions of the Board of Directors of RLI authorizing
the execution and delivery of this Agreement and each Other Agreement to which
it is a party and the performance by RLI of the transactions contemplated hereby
and thereby, certified by the Secretary or Assistant Secretary of RLI;
6
(v) A certificate dated the Closing Date certifying to the
fulfillment of the conditions set forth in section 6.3 hereof;
(vi) The minute books, stock ledgers and corporate seal of RLI
and each subsidiary (including Xxxxxx Lighting and Ruud Italy) and all share
certificates of each subsidiary representing shares of capital stock of such
subsidiary owned by RLI;
(vii) The License, duly executed by RLI;
(viii) The Supply Agreements, duly executed by RLI; and
(ix) Such other agreements and documents as ADLT and its
counsel may reasonably request.
(c) DELIVERIES BY BUYERS. The Buyers shall deliver or cause to be
delivered to ADLT at the Closing:
(i) From each Buyer a confirmation of a wire transfer made in
accordance with written instructions provided by ADLT from such Buyer and a duly
executed Purchase Note representing such Buyer's proportionate share of the
Purchased Shares Price as set forth on Exhibit A; provided however, that if such
instructions are not provided three (3) business days prior to the Closing, each
Buyer may deliver a certified or bank check, payable to ADLT, in the amount of
the required wire transfer;
(ii) Confirmation of a wire transfer from RLI in the amount of
$25,000,000 made in accordance with written instructions provided by ADLT and a
duly executed Redemption Note in the amount of $3,000,000, provided however,
that if such instructions are not provided three business days prior to the
Closing, RLI may deliver a certified or bank check, payable to the order of ADLT
in the amount of $25,000,000;
(iii) The opinion of Xxxxxxxx Xxxxxxx Van Deuren s.c in form
reasonably satisfactory to ADLT's Counsel;
(iv) Evidence reasonably satisfactory to ADLT of each Buyer's
ability to deliver one share of ADLT common stock for each $2 in principal
amount of such Buyer's Purchase Note; and
(v) Duly executed copies of such other documents and
agreements provided for herein.
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2. REPRESENTATIONS AND WARRANTIES OF ADLT. ADLT represents and warrants
to the Buyers that each of the following statements are true, complete and
correct as of the date hereof and as of the Closing Date:
2.1 TITLE TO RLI SHARES. ADLT is the record holder of the RLI Shares
and except as set forth on Schedule 2.1, ADLT has legal, valid, beneficial and
exclusive title to the RLI Shares, free of all Encumbrances (as defined below),
and upon delivery of the RLI Shares at Closing against receipt of the Purchase
Price to be delivered to ADLT, RLI and the Buyers, as applicable, shall acquire
legal, valid and beneficial title to such RLI Shares, free of all Encumbrances.
ADLT exclusively holds all rights and powers to vote the RLI Shares. The RLI
Shares constitute all of the issued and outstanding shares of capital stock of
RLI. "Encumbrance" or "Encumbrances" means any security interest, pledge,
mortgage, lien (including, without limitation, environmental and Tax liens),
charge, encumbrance, adverse claim, preferential arrangement purchase right,
option, put, call or other restriction of any kind, including, without
limitation, any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership.
2.2 ORGANIZATION AND QUALIFICATION. ADLT has been duly incorporated,
and is validly existing as a corporation in good standing under the laws of the
State of Ohio, has the requisite corporate power and authority to own or lease
its property as it is now owned or leased and as it is now conducted. As used
herein, "Material Adverse Effect" means, with respect to ADLT, RLI, Xxxxxx
Lighting or Ruud Italy, a Material Adverse Effect on the business, assets,
financial condition, results of operations or prospects of ADLT, RLI, Xxxxxx
Lighting or Ruud Italy, as applicable, taken as a whole and on a consolidated
basis (with respect to ADLT and RLI only). As used herein, the term "Person"
means any person, corporation, association, partnership, limited liability
company, trust, business trust, joint venture, unincorporated organization or
any other legal entity and the term "Other Agreement" with respect to any party
shall mean the other agreements and documents contemplated hereby to be executed
and delivered by such party or any Affiliate thereof on or before the Closing.
As used herein, "Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person. As used herein, the
"knowledge of ADLT" or "ADLT's knowledge") means the actual knowledge of the
executive officers of ADLT (other than Xxxx X. Xxxx), Xxx Xxxx and Xxxx Xxxxxxx.
2.3 AUTHORIZATION AND ENFORCEABILITY. The execution, delivery and
performance by ADLT of this Agreement have been duly authorized by all necessary
corporate action on its part. This Agreement has been duly executed
8
and delivered by ADLT and constitutes, and each Other Agreement which is to be
executed and delivered by ADLT when executed and delivered by ADLT shall
constitute, the legal, valid and binding obligation of ADLT enforceable against
ADLT in accordance with its terms, except to the extent that enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws relating to or affecting the rights and
remedies of creditors generally and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance, injunctive
relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law.
2.4 NO VIOLATION OF LAWS OR AGREEMENTS. Except as set forth on
Schedule 2.4, none of the execution and delivery of this Agreement or any Other
Agreement, the consummation of the transactions contemplated hereby or thereby,
or the compliance with or fulfillment of the terms, conditions and provisions
hereof or thereof by ADLT will: (a) contravene any provision of the Amended and
Restated Articles of Incorporation or Code of Regulations of ADLT; (b) conflict
with, result in a breach of or constitute a default or an event of default (or
an event which would, with the passage of time or the giving of notice or both,
constitute a default) under any term, condition or provision of, or result in
the termination or loss of any right (or give others the right to cause such a
termination or loss) under, any material license or franchise, or any other
Contract (as such term is defined in section 3.13), to which ADLT is a party or
by which ADLT's assets may be bound or affected; (c) violate any Law (as defined
in section 3.15) or violate any judgment or order of any court, government,
department, commission, board, bureau, agency, official or other regulatory,
administrative or governmental authority or instrumentality, whether federal,
state, local or foreign ("Governmental Body") to which ADLT or any of its
subsidiaries is subject; (d) result in the creation or imposition of any
Encumbrance upon any assets of ADLT or give to others any interests or rights
therein; or (e) result in the maturation or acceleration of any indebtedness of
ADLT or its Affiliates for borrowed money (or give others the right to cause
such a maturation or acceleration). Except as set forth on Schedule 2.4
(collectively, the "Consents"), no material consent, approval, declaration or
authorization of, or registration or filing with, any Person (including any
Governmental Body) is required in connection with the execution and delivery by
ADLT of this Agreement or the Other Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby by ADLT.
2.5 FINDER'S FEES. Neither ADLT nor any of ADLT's officers, directors
or employees has employed any broker or finder or incurred any Liability (as
defined in section 3.7 below) for any brokerage fees, commissions or finder's
9
fees in connection with the transactions contemplated herein. Neither ADLT nor
any of ADLT's officers, directors or employees has made any agreement or taken
any other action which might cause anyone to become entitled to a broker's fee
or commission as a result of the transactions contemplated hereunder.
3. REPRESENTATION AND WARRANTIES OF ADLT CONCERNING RLI, XXXXXX LIGHTING
AND RUUD ITALY. ADLT represents and warrants to Buyers that each of the
following statements are true, complete and correct as of the date hereof and as
of the Closing Date:
3.1 ORGANIZATION AND QUALIFICATION. RLI has been duly incorporated,
and is in active status under the laws of the State of Wisconsin, has the
requisite corporate power and corporate authority to own or lease its property
as it is now owned or leased and as it is now conducted. Except as set forth in
Schedule 3.1, RLI is duly qualified to transact business and is in good standing
as a foreign corporation in those jurisdictions set forth on Schedule 3.1, which
are the only jurisdictions wherein the conduct of its business or leasing of
property requires such qualification, except to the extent that failure to be so
qualified or be in good standing would not have a Material Adverse Effect on
RLI.
3.2 AUTHORIZATION AND ENFORCEABILITY. The execution, delivery and
performance by RLI of this Agreement have been duly authorized by all necessary
corporate action on its part. This Agreement has been duly executed and
delivered by RLI and constitutes, and each Other Agreement which is to be
executed and delivered by RLI when executed and delivered by RLI shall
constitute, the legal, valid and binding obligation of RLI enforceable against
RLI in accordance with its terms, except to the extent that enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws relating to or affecting the rights and
remedies of creditors generally and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance, injunctive
relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law.
3.3 NO VIOLATION OF LAWS OR AGREEMENTS. Except as set forth on
Schedule 3.3, none of the execution and delivery of this Agreement or any Other
Agreement, the consummation of the transactions contemplated hereby or thereby,
or the compliance with or fulfillment of the terms, conditions and provisions
hereof or thereof by RLI will: (a) contravene any provision of the Articles of
Incorporation or By-Laws of RLI, (b) to the knowledge of ADLT, conflict with,
result in a breach of or constitute a default or an event of default (or an
event which would, with the passage of time or the giving of notice or both,
constitute a
10
default) under any term, condition or provision of, or result in the termination
or loss of any right (or give others the right to cause such a termination or
loss) under, any material license or franchise, or any other Contract, to which
RLI is a party or by which RLI's assets may be bound or affected; (c) to the
knowledge of ADLT, violate any Law or violate any judgment or order of any
Governmental Body to which RLI or any of its subsidiaries is subject; (d) result
in the creation or imposition of any Encumbrance upon any assets of RLI or give
to others any interests or rights therein; or (e) result in the maturation or
acceleration of any indebtedness of RLI or its Affiliates for borrowed money (or
give others the right to cause such a maturation or acceleration). Except as set
forth on Schedule 3.3, to the knowledge of ADLT, no Consent of any Person
(including any Governmental Body) is required in connection with the execution
and delivery by RLI of this Agreement or the Other Agreements to which it is a
party and the consummation of the transactions contemplated hereby and thereby
by RLI. For the purposes of this Agreement, the term "Contract" shall mean any
contract or agreement which could reasonably be expected to involve the payment
or receipt of amounts in excess of $200,000.
3.4 SHARES; CAPITALIZATION. The authorized capital stock of RLI
consists solely of 56,000 shares of common stock, $1.00 par value per share, of
which 10,500 shares are issued and outstanding. Except as set forth on Schedule
3.4, there are no Securities Rights with respect to any RLI Shares nor are there
any securities convertible into or exchangeable for any RLI Capital Stock or any
other Security Rights with respect to any unissued RLI Capital Stock.
"Securities Right" means any option, warrant, other right, proxy, put, call,
demand, plan, commitment, agreement, understanding or arrangement of any kind
relating to any RLI Shares, Xxxxxx Lighting Shares or Ruud Italy Shares.
"Security Right" means any right relating to issuance, sale, assignment,
transfer, purchase, redemption, conversion, exchange, registration or voting
rights with respect to any capital stock of the issuer, whether issued or
unissued, or any other security convertible into or exchangeable for capital
stock of the issuer conferred by statute, by the issuer's governing documents or
by agreement, including any subscription right, option, preemptive purchase
right or registration right. All of the RLI Shares are (a) validly issued, fully
paid and nonassessable, except as set forth in Wisconsin statutes section
180.0622(2)(b), as judicially interpreted and (b) were not issued in violation
of the terms of any agreement or other understanding of RLI.
3.5 NO SUBSIDIARIES. Except for Ruud Italy and Xxxxxx Lighting, RLI
has no direct or indirect subsidiaries. Except as set forth on Schedule 3.5, to
the knowledge of ADLT, RLI does not own, directly or indirectly, any
partnership, equity, profit, participation or similar ownership interest in any
corporations, partnerships, joint ventures, trusts, unincorporated
organizations, associations or
11
similar entities. The term "subsidiary" (or its plural) as used in this
Agreement with respect to RLI, ADLT or any other Person shall mean any
corporation, partnership, joint venture or other legal entity of which RLI, ADLT
or such other Person, as the case may be (either alone or through or together
with any other subsidiary), owns, directly or indirectly, greater than 50% of
the stock or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
3.6 FINANCIAL STATEMENTS. ADLT has previously delivered to Buyers (a)
the consolidated, audited balance sheets, income statements and retained
earnings and statements of cash flows for ADLT and its subsidiaries, together
with the accompanying footnotes, for the twelve month periods ("Audited Annual
Statement") ended June 30, 2001 and 2000 and (b) consolidated, unaudited balance
sheets, income statements and retained earnings and statements of cash flows for
RLI, Xxxxxx Lighting and Ruud Italy for the two-month period ending September 2,
2001 (the "Interim Financial Statements" and the consolidated RLI balance sheet
as of September 2, 2001 is sometimes referred to herein as the "Interim Balance
Sheet"). The Audited Annual Statement has been prepared in accordance with GAAP
on a consistent basis throughout the indicated periods (except for changes
required as a result of changes in GAAP) and fairly present in all material
respects the financial condition, assets and liabilities and results of
operations and cash flows of ADLT, in accordance with GAAP at the dates and for
the periods indicated. The Interim Financial Statements have been prepared on a
basis consistent with the financial statements of RLI, Xxxxxx Lighting and Ruud
Italy used in the preparation of the Audited Annual Statement (excluding notes
and normal year-end adjustments).
3.7 UNDISCLOSED LIABILITIES. Except as disclosed in the Interim
Balance Sheet and as otherwise disclosed in Schedule 3.7 hereto, to the
knowledge of ADLT, neither RLI nor Xxxxxx Lighting have any Liabilities, other
than Liabilities incurred in the ordinary course of business since the date of
the Interim Balance Sheet. For purposes hereof, "Liabilities" means material
liabilities of any nature whatsoever (whether absolute, fixed, contingent or
otherwise), whether due or to become due, whether incurred directly to or by any
predecessor, and whether arising out of any act, omission, transaction,
circumstance, sale of goods or services, state of facts or other condition.
3.8 NO CHANGES. Except as set forth in Schedule 3.8 and except for
payment of the Redemption Price, since September 2, 2001, there has not been any
declaration or payment of any dividend or other distribution on or with respect
to, or redemption or purchase by RLI, of any shares of RLI Capital Stock,
including any of the RLI Shares. Since September 2, 2001, there has been no:
12
(a) to the knowledge of ADLT, material adverse change in the financial
condition, assets, Liabilities, net worth, business or prospects of RLI or
Xxxxxx Lighting; (b) damage or destruction to any material asset of RLI or
Xxxxxx Lighting, not covered by insurance; (c) to the knowledge of ADLT, asset
acquisition or expenditure, including capital expenditure, in excess of $25,000
in the aggregate which is not reflected on the Interim Balance Sheet; (d) to the
knowledge of ADLT, amendment to any RLI Plan (as defined in section 3.19) which
would be reasonably expected to increase the annual expense of RLI in respect of
such RLI Plan by an amount in excess of $100,000; (e) to the knowledge of ADLT,
disposition of any assets of RLI or Xxxxxx Lighting (other than the Elkhorn
assets and Microsun inventory as described in section 5.7(b) the transfer of the
Xxxxxx Lighting Property as described in sections 5.7(a), and the disposition of
inventory in the ordinary course of business) with an aggregate value in excess
of $25,000; (f) borrowing of any amount or incurrence of any material
Liabilities, except (i) amounts borrowed or Liabilities incurred in the ordinary
course of business or under contracts entered into in the ordinary course of
business which are reflected in the books and records of RLI and will be
reflected in the Interim Financial Statements; and (ii) any debt incurred in
whole or in part for payment of the Redemption Price or the Third Party Payments
amount; (g) imposition of any material Encumbrance, on any portion of RLI's or
Xxxxxx Lighting's assets, except for Permitted Encumbrances; (h) failure by RLI
or Xxxxxx Lighting to pay its debts and Liabilities, including Taxes, fees,
levies and assessments, in the ordinary course of business as they have matured;
(i) material change in any method of accounting or accounting practice; (j) any
action in anticipation of the consummation of the transactions contemplated by
this Agreement which could materially impair the business or assets of RLI or
Xxxxxx Lighting after the Closing Date; or (k) agreement or commitment to do any
of the foregoing.
3.9 TAX MATTERS. Unless the context otherwise requires, for purposes
of this section 3.9, references to RLI shall include a reference to (a) the
subsidiaries of RLI as of the Closing Date (and the combined or consolidated
group including RLI) or RLI as of the Closing Date and (b) any other current or
former subsidiary, Affiliate, predecessor entity or joint venture with respect
to which (i) RLI or the subsidiaries are liable for Taxes attributable to such
entity, (ii) taxes of such entity or the failure to file Tax Returns by such
entity could cause an encumbrance on the assets of the RLI or the subsidiaries
or (iii) the tax positions of such entity which are binding upon the RLI.
As used herein, "Tax" or "Taxes" mean (a) all federal, state,
local, foreign and other net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, capital, profits, license, single business,
lease, service, service use, withholding, payroll, employment, excise,
severance, staff, occupation, premium, property, windfall profits, customs,
duties or other Taxes of
13
any kind whatsoever, together with interest and any penalties, additions to Tax
or additional amounts with respect thereto, (b) any Liability for payment of
amounts described in clause (a) whether as a result of transferee (where such
transferee status arose prior to the Closing Date), being a member of an
affiliated, consolidated, combined or unitary group for any period beginning
prior to the Closing Date, and (c) any Liability for the payment of amounts
described in clauses (a) or (b) as a result of any tax sharing, tax indemnity or
tax allocation agreement entered into prior to the Closing Date (excluding for
this purpose any Liability under a lease that passes through expenses including
Taxes).
(a) RLI has filed all foreign, federal, state and local tax
returns ("Tax Returns") that are required to be filed by it or has requested
extensions thereof (except in any case in which failure to do so would not have
a Material Adverse Effect on RLI) and has paid all Taxes (whether or not shown
on any Tax Return) required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty which is reflected as a
Liability on the Closing Balance Sheet. All such Tax Returns were correct and
complete in all respects. No director or officer of ADLT (or employee
responsible for Tax matters) expects any authority to assess any additional
Taxes for any period for which Tax Returns have been filed on RLI. RLI has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owning to any employee, independent contractor,
creditor, shareholder, or other third party.
(b) To the knowledge of ADLT, RLI has not received from the
Internal Revenue Service or from any other taxing authority from any state,
foreign, county, local or other jurisdiction a notice of underpayment of Taxes,
a proposed assessment of Tax, a proposed adjustment to any Tax Return filed or
other deficiency that is pending or has not be paid or resolved. To the
knowledge of ADLT, no claim has ever been made by an authority in a jurisdiction
where RLI does not file Tax Returns to the effect that it is or may be subject
to taxation by that jurisdiction.
(c) Except as set forth on Schedule 3.9, neither RLI nor any
Affiliate of RLI has waived restrictions on assessment or collection of Taxes or
executed a waiver or consented to the extension of any statute of limitations
for federal income or other Tax Liability that remains outstanding. Except as
set forth on Schedule 3.9, neither RLI nor any RLI Affiliate in respect of RLI
has made any payments, is obligated to make any payments, or is a party to any
agreement that under any circumstances could obligate it to make any payments
that will not be deductible under section 280G or 162(m) of the Internal Revenue
Code of 1986, as
14
amended (the "Code"). There are no Encumbrances on any of the assets of RLI that
arose in connection with any failure (or alleged failure) to pay any Tax.
(d) There are no tax sharing agreements, tax allocation
agreements, tax indemnification or other similar agreements entered into by RLI.
RLI will not and is not responsible for material Taxes of any other person (i)
under Treasury Regulations section 1.1502-6 (or any similar provision of state,
local or foreign law), (ii) as transferee or (iii) by contract.
(e) RLI will not be required to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior to the Closing Date
under Code section 481(c) (or any corresponding or similar provision of state,
local of foreign income Tax law); (ii) "Closing Agreement" as described in Code
section 7121 (or any corresponding or similar provision of state, local or
foreign income Tax law); (iii) deferred intercompany gain or any excess loss
account described in Treasury Regulations under Code section 1502 (or any
corresponding or similar provision of state, local or foreign income Tax law);
(iv) installment sale or open transaction disposition made on or prior to the
Closing Date; or (v) prepaid amount received on or prior to the Closing Date.
(f) The tax basis as of September 2, 2001 of the RLI Shares
and the outstanding capital stock of Xxxxxx Lighting and Ruud Italy are as set
forth on Schedule 3.9 and since that date other than as contemplated by this
Agreement, there have been no material acquisitions or dispositions of assets
outside of RLI's ordinary course of business.
3.10 BUSINESS; ASSETS. RLI is engaged in the business of manufacturing
lighting systems and direct marketing lighting systems and lighting system
components to commercial, industrial and retail users (collectively, the
"Business"). RLI has good and marketable title to all of its personal property
and valid leasehold interests in all of its leased personal property and none of
such personal property is subject to any Encumbrance except Permitted
Encumbrances. As used in this Agreement, the term "Permitted Encumbrances"
means: (a) liens for governmental charges that are not yet due and payable; (b)
Encumbrances identified in Schedule 3.10; and (c) Encumbrances which do not
materially and adversely affect the value of such property (and are reflected on
the Interim Balance Sheet) and do not interfere materially with the use made of
such property by RLI or Xxxxxx Lighting, as applicable.
3.11 LITIGATION. Except as set forth on Schedule 3.11, to the
knowledge of ADLT, there are no actions, suits, investigations, claims or
15
proceedings of any nature or kind whatsoever ("Litigation") pending, to which
RLI is a party or to which the RLI Shares or any of RLI's assets are subject,
or, to the knowledge of ADLT, threatened against RLI or its assets, which could
reasonably be expected to (a) result in a liability, or the impairment of any
asset, in excess of $100,000, in any individual instance or in excess of
$250,000, in the aggregate, or (b) materially and adversely affect the Business
or the operations of RLI or the transactions contemplated by this Agreement or
any Other Agreement. There are no outstanding judgments, decrees or orders of
any Governmental Body against or affecting RLI, the RLI Shares, the Business or
RLI's assets. RLI has not commenced and does not have pending any material
action, suit or proceeding against any third party.
3.12 CONTRACTS; COMPLIANCE. Except as disclosed on Schedule 3.12, to
ADLT's knowledge, RLI and each other party to each Contract has performed all
obligations required to be performed by it thereunder and is not in breach or
default, and is not alleged to be in breach or default, in any respect
thereunder, and, to the knowledge of ADLT, no event has occurred and no
condition or state of facts exists (or would exist upon the giving of notice or
the lapse of time or both) that would become or cause a breach, default or event
of default thereunder, would give to any Person the right to cause such a
termination or would cause an acceleration of any obligation thereunder.
3.13 PERMITS. To ADLT's knowledge, RLI holds and is in compliance in
all material respects with all permits, certificates, licenses, franchises,
privileges, approvals, registrations and authorizations required under all Laws,
in connection with the operation of RLI's assets and the Business (collectively,
the "Permits") and each of such Permits is in full force and effect, except for
any failure to comply which would not have a Material Adverse Effect on RLI. To
the knowledge of ADLT, no notice of (a) cancellation of or default, dispute or
complaint concerning any Permit or (b) any event, condition or state of facts
described in the preceding sentence, has been received by RLI, in either case,
which would reasonably be expected to have a Material Adverse Effect on RLI.
3.14 COMPLIANCE WITH LAWS. To ADLT's knowledge, RLI has received no
notice that it is and, to the knowledge of ADLT, RLI is not, in violation in any
material respect of any applicable foreign, federal, state and local statutes,
laws, ordinances, rules or regulations (collectively, "Laws"), and, to the
knowledge of ADLT, no event has occurred or condition or state of facts exists
that could give rise to any such violation.
3.15 TRANSACTIONS WITH RELATED PARTIES. Except as disclosed on
Schedule 3.15 or as specifically contemplated hereunder, at Closing neither ADLT
16
nor any of its affiliates will owe any amounts to or have any outstanding
contracts or commitments with RLI, Xxxxxx Lighting or Ruud Italy.
3.16 REAL PROPERTY. For purposes of this Agreement, "Owned Real
Property" means the RLI facility at Racine, WI. For purposes of this Agreement,
"Leased Real Property" means the RLI Facility in Elkhorn and the Xxxxxx Lighting
facility in Fall River, MA ("Leased Real Property," collectively with the Owned
Real Property, the "Real Property"). Except as set forth in Schedule 3.16, RLI
has good and marketable title in fee simple to all Owned Real Property and valid
leasehold interests in all Leased Real Property. Except as described in Schedule
3.16, to the knowledge of ADLT, there are no leases, subleases, tenancies or
other rights of occupancy affecting all or any part of the Owned Real Property,
and, to the knowledge of ADLT, RLI has not granted any options to purchase or
otherwise acquire, and there are no outstanding offers to purchase, all or any
part of the Owned Real Property. To the knowledge of ADLT, RLI has not received
any written or oral notice of assessments for public improvements or
condemnation against any Real Property.
3.17 INSURANCE. Schedule 3.17 sets forth a complete list of all
policies of insurance (collectively, the "Insurance Policies") of which RLI is
the owner, insured or beneficiary or programs of self insurance and identifies
whether such policies are claims made or occurrence policies. All premiums under
the Insurance Policies have been paid in accordance with the terms of the
policies and there are no deposits or other amounts for the benefit of RLI held
by any third party relating to any insurance or self insurance program of RLI.
There have been no defaults with respect to any provision contained in any such
Insurance Policies, nor has there been any failure to give any notice or present
any unresolved claim under any such policies in a timely fashion or in the
manner or detail required by the Insurance Policies. Since January 1, 2001, no
notice of cancellation or non-renewal with respect to, or disallowance of any
unresolved claim under, or material increase of the premium for any such
insurance policy has been received by RLI except in the ordinary course of
business. Schedule 3.17 describes any program of self-insurance maintained by
RLI or by any Affiliate of RLI for or on behalf of RLI.
3.18 PATENTS AND INTELLECTUAL PROPERTY RIGHTS.
(a) To the knowledge of ADLT, Schedule 3.18 contains a complete
list of all trademark rights, trademark applications, trademark registrations,
service marks, trade names and brand names, copyright registrations and
copyright applications, letters, domain names, patent, patent applications,
logos and licenses (except for licenses not material to the Business) used in
17
the Business including the expiration dates, if any, of each such intellectual
property right.
(b) To the knowledge of ADLT, RLI owns or possesses, or can
acquire on reasonable terms, the right to use, in the manner and geographic area
currently used, (i) the intellectual property rights identified pursuant to
subparagraph (a) above and (ii) any other processes, know-how and related
know-how, formulae, trade secrets, inventions, discoveries, improvements,
blueprints, specifications, drawings, designs, shop and royalty rights and other
similar types of proprietary intellectual property, and all research and
development related to the Business (collectively, "Intellectual Property
Rights") currently used in the Business and RLI has not received any notice of,
nor does it have any reasonable belief that its use constitutes, a material
infringement of or conflict with asserted rights of any third party with respect
to any of the foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition, financial or otherwise, or Business of RLI. The parties
acknowledge that RLI owns all design and other Intellectual Property Rights
attributable to any services performed for RLI by ADLT or its Affiliates on
optical systems, including the "world streetlight optics."
3.19 BENEFIT PLANS.
(a) BENEFIT PLANS; RLI PLANS. To the knowledge of ADLT, Schedule
3.19 discloses all written "employee benefit plans" within the meaning of
section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as
amended, and the applicable rulings and regulations thereunder ("ERISA"), and
any other written profit sharing, pension, savings, deferred compensation,
fringe benefit, insurance, medical, medical reimbursement, life, disability,
accident, post-retirement health or welfare benefit, stock option, stock
purchase, sick pay, vacation, employment, severance, termination or other plan,
agreement, contract, policy, trust fund or arrangement (each, whether or not so
disclosed, a "Benefit Plan"), whether or not funded, (i) currently maintained or
sponsored by RLI or Xxxxxx Lighting, (ii) with respect to which RLI or Xxxxxx
Lighting (or the Buyers with respect to RLI) has or may have Liability or is
obligated to contribute, [a] that otherwise covers any of the current or former
employees of RLI or its Affiliates, including Xxxxxx Lighting, or [b] as to
which any such current or former employees or their beneficiaries participated
or were entitled to participate or accrue or have accrued any rights thereunder
(each, a "RLI Plan").
(b) RLI GROUP MATTERS; FUNDING. Since January 1, 1998, neither RLI
nor any corporation that may be aggregated with RLI under Code sections 414(b),
(c), (m) or (o) (the "RLI Group") has had or will have any
18
obligation to contribute to or any direct or indirect Liability under or with
respect to any Benefit Plan of the type described in Code section 413(c) except
in connection with the transaction contemplated by this Agreement. Since January
1, 1998, RLI has not had any Liability, and after the Closing RLI will not have
any Liability, with respect to any Benefit Plan of any other member of the RLI
Group, whether as a result of delinquent contributions, distress terminations,
fraudulent transfers, failure to pay premiums to the Pension Benefit Guaranty
Corporation (the "PBGC"), withdrawal Liability or otherwise which Liability is
material to RLI, except in connection with the transactions contemplated by this
Agreement. Since January 1, 1998, no accumulated funding deficiency (as defined
in ERISA section 302 and Code section 412) has existed nor has any funding
waiver from the IRS been received or requested with respect to any RLI Plan or
any Benefit Plan of any member of the RLI Group and no excise or other Tax is
due or owing because of any failure to comply with the minimum funding standards
of the Code or ERISA with respect to any of such plans and which would have a
Material Adverse Effect on RLI.
(c) COMPLIANCE. To the knowledge of ADLT and except as such
non-compliance would not have a Material Adverse Effect on RLI, since January 1,
1998 each of the RLI Plans and all related trusts, insurance contracts and funds
have been created, maintained, funded and administered in all respects in
compliance with all applicable Laws and in compliance with the plan document,
trust agreement, insurance policy or other writing creating the same or
applicable thereto. To the knowledge of ADLT, since January 1, 1998 no RLI Plan
is or is proposed to be under audit or investigation, and no completed audit of
any RLI Plan has resulted in the imposition of any Tax, fine or penalty.
(d) QUALIFIED PLANS. To the knowledge of ADLT, Schedule 3.19
discloses each RLI Plan that purports to be a qualified plan under Code section
401(a) and exempt from United States federal income Tax under Code section
501(a) (whether or not so disclosed, a "Qualified Plan"). With respect to each
Qualified Plan, ADLT had filed, or will file no later than December 31, 2001,
for a determination letter from the Internal Revenue Service that the Qualified
Plan is qualified under Code section 401(a) and the trust for the Qualified Plan
is exempt from tax under Code section 501(a). ADLT represents that it will take
any action necessary to amend or change the Qualified Plan as may be requested
by the Internal Revenue Service as a condition of providing a favorable
determination letter, that ADLT will take all actions necessary to retain the
qualified status of the Qualified Plan until RLI transfers Qualified Plan assets
attributable to employees of RLI and Xxxxxx Lighting to a new retirement plan
established by RLI and that ADLT will comply with the new requirements of Code
section 414(l) and will take any action necessary to facilitate the transfer of
assets from the Qualified Plan to the retirement plan established by RLI. To the
19
knowledge of ADLT, no member of RLI Group, nor any fiduciary of any Qualified
Plan, nor any agent of any of the foregoing, has, since January 1, 1998, done
anything that would adversely affect the qualified status of a Qualified Plan or
the qualified status of any related trust.
(e) NO DEFINED BENEFIT PLANS. No RLI Plan is a defined benefit
plan within the meaning of ERISA section 3(35) (a "Defined Benefit Plan"). No
Defined Benefit Plan sponsored or maintained by any member of RLI Group has been
terminated or partially terminated since January 1, 1998. Since January 1, 1998,
no member of RLI Group has transferred a Defined Benefit Plan to a corporation
that was not, at the time of transfer, related to the transferor in any manner
described in Code sections 414(b), (c), (m) or (o).
(f) MULTIEMPLOYER PLANS. Since January 1, 1998, to the best
knowledge of ADLT, except for amendments to RLI Plans in connection with the
transactions contemplated by this Agreement, no RLI Plan has constituted a
multiemployer plan within the meaning of ERISA section 3(37) or section
4001(a)(3) (a "Multiemployer Plan"). Since January 1, 1998, to the best
knowledge of ADLT, except for amendments to RLI Plans in connection with the
transactions contemplated by this Agreement, no member of RLI Group has
withdrawn from any Multiemployer Plan or incurred any withdrawal Liability to or
under any Multiemployer Plan. Since January 1, 1998, no RLI Plan has covered any
employees of any member of RLI Group in any foreign country or territory.
(g) PROHIBITED TRANSACTIONS; FIDUCIARY DUTIES; POST-RETIREMENT
BENEFITS. Since January 1, 1998, no prohibited transaction (within the meaning
of ERISA section 406 and Code section 4975) with respect to any RLI Plan has
existed or has occurred that could subject RLI to any Liability or Tax under
Part 5 of Title I of ERISA or Code section 4975, except in connection with the
transactions contemplated by this Agreement. Since January 1, 1998, neither RLI
nor, to the knowledge of ADLT, any administrator or fiduciary of any RLI Plan,
nor any agent of any of the foregoing, has engaged in any transaction or acted
or failed to act in a manner that will subject RLI to any Liability for a breach
of fiduciary or other duty under ERISA or any other applicable Law, except in
connection with the transactions contemplated by this Agreement. Since January
1, 1998, except as required under Code section 4809B and except as disclosed on
Schedule 3.19, since January 1, 1998 no post-retirement benefits are provided
under any RLI Plan that is a welfare benefit plan as described in ERISA section
3(1).
3.20 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as described on
Schedule 3.20, since January 1, 1998 RLI (a) is in compliance with any
20
applicable Law relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants, including common law nuisance, property damage and similar common
law theories ("Environmental Law"), (b) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its Business and (c) is in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a Material Adverse Effect
on RLI.
3.21 ENVIRONMENTAL LIABILITIES. To the knowledge of ADLT, since
January 1, 1998, there are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with any
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a Material Adverse Effect on RLI.
3.22 XXXXXX LIGHTING.
(a) ORGANIZATION AND QUALIFICATION. Xxxxxx Lighting has been duly
incorporated, and is validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, has the requisite corporate power and corporate
authority to own or lease its property as it is now owned or leased and as it is
now conducted. Xxxxxx Lighting is duly qualified to transact business and is in
good standing as a foreign corporation in the State of Rhode Island.
(b) NO VIOLATION OF LAWS OR AGREEMENTS. Except as set forth on
Schedule 3.22(b), none of the execution and delivery of this Agreement or any
Other Agreement, the consummation of the transactions contemplated hereby or
thereby, or the compliance with or fulfillment of the terms, conditions and
provisions hereof or thereof by Xxxxxx Lighting will: (a) contravene any
provision of the Articles of Incorporation or By-Laws of Xxxxxx Lighting, (b) to
the knowledge of ADLT, conflict with, result in a breach of or constitute a
default or an event of default (or an event which would, with the passage of
time or the giving of notice or both, constitute a default) under any term,
condition or provision of, or result in the termination or loss of any right (or
give others the right to cause such a termination or loss) under, any material
license or franchise, or any other Xxxxxx Lighting Contract, to which Xxxxxx
Lighting is a party or by which Xxxxxx Lighting's assets may be bound or
affected; (c) to the knowledge of ADLT, violate any Law or violate any judgment
or order of any Governmental
21
Body to which Xxxxxx Lighting is subject; (d) result in the creation or
imposition of any Encumbrance upon any assets of Xxxxxx Lighting or give to
others any interests or rights therein; or (e) result in the maturation or
acceleration of any indebtedness of Xxxxxx Lighting or its Affiliates for
borrowed money (or give others the right to cause such a maturation or
acceleration).
(c) SHARES; CAPITALIZATION. The authorized capital stock of Xxxxxx
Lighting consists solely of 200,000 shares of common stock, no par value per
share, of which 1,000 shares are issued and outstanding (the "Xxxxxx Lighting
Shares"). Except as set forth on Schedule 3.22(c), there are no Securities
Rights with respect to any Xxxxxx Lighting Shares nor are there any securities
convertible into or exchangeable for any Xxxxxx Lighting capital stock or any
other Security Rights with respect to any unissued Xxxxxx Lighting capital
stock. All of the Xxxxxx Lighting Shares are (i) validly issued, fully paid and
nonassessable and (ii) were not issued in violation of the terms of any
agreement or other understanding of Xxxxxx Lighting.
(d) NO SUBSIDIARIES. Xxxxxx Lighting has no direct or indirect
subsidiaries. Except as set forth on Schedule 3.22(d), to the knowledge of ADLT,
Xxxxxx Lighting does not own, directly or indirectly, any partnership, equity,
profit, participation or similar ownership interest in any corporations,
partnerships, joint ventures, trusts, unincorporated organizations, associations
or similar entities.
(e) TAX MATTERS.
(i) Xxxxxx Lighting has filed all Tax Returns that are
required to be filed by it or has requested extensions thereof (except in any
case in which failure to do so would not have a Material Adverse Effect on
Xxxxxx Lighting) and has paid all Taxes (whether or not shown on any Tax Return)
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty which is reflected as a Liability on
the Closing Balance Sheet. All such Tax Returns were correct and complete in all
respects. No director or officer of Xxxxxx Lighting (or employee responsible for
Tax matters) expects any authority to assess any additional Taxes for any period
for which Tax Returns have been filed on Xxxxxx Lighting. Xxxxxx Lighting has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owning to any employee, independent contractor,
creditor, shareholder, or other third party.
(ii) Except as set forth on Schedule 3.9, Xxxxxx Lighting has
not received from the Internal Revenue Service or from any other
22
taxing authority from any state, foreign, county, local or other jurisdiction a
notice of underpayment of Taxes, a proposed assessment of Tax, a proposed
adjustment to any Tax Return filed or other deficiency that is pending or has
not be paid or resolved. No claim has ever been made by an authority in a
jurisdiction where Xxxxxx Lighting does not file Tax Returns to the effect that
it is or may be subject to taxation by that jurisdiction.
(iii) Except as set forth on Schedule 3.9, neither Xxxxxx
Lighting nor any Affiliate of Xxxxxx Lighting has waived restrictions on
assessment or collection of Taxes or executed a waiver or consented to the
extension of any statute of limitations for federal income or other Tax
Liability that remains outstanding. Except as set forth on Schedule 3.9, neither
Xxxxxx Lighting nor any Xxxxxx Lighting Affiliate in respect of Xxxxxx Lighting
has made any payments, is obligated to make any payments, or is a party to any
agreement that under any circumstances could obligate it to make any payments
that will not be deductible under section 280G or 162(m) of the Code. There are
no Encumbrances on any of the assets of Xxxxxx Lighting that arose in connection
with any failure (or alleged failure) to pay any Tax.
(iv) There are no tax sharing agreements, tax allocation
agreements, tax indemnification or other similar agreements entered into by
Xxxxxx Lighting. Xxxxxx Lighting will not and is not responsible for material
Taxes of any other person (A) under Treasury Regulations section 1.1502-6 (or
any similar provision of state, local or foreign law), (B) as transferee or (C)
by contract.
(v) Xxxxxx Lighting will not be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any (i) change in method of accounting for a taxable period ending on or prior
to the Closing Date under Code section 481(c) (or any corresponding or similar
provision of state, local of foreign income Tax law); (ii) "Closing Agreement"
as described in Code section 7121 (or any corresponding or similar provision of
state, local or foreign income Tax law); (iii) deferred intercompany gain or any
excess loss account described in Treasury Regulations under Code section 1502
(or any corresponding or similar provision of state, local or foreign income Tax
law); (iv) installment sale or open transaction disposition made on or prior to
the Closing Date; or (v) prepaid amount received on or prior to the Closing
Date.
(f) RECEIVABLES. To the knowledge of ADLT, all Xxxxxx Lighting
trade and other accounts receivable, whether included in the Financial
Statements or created after June 30, 2001, arose from bona fide sale
transactions of Xxxxxx Lighting, and, except as disclosed on Schedule 3.22(f),
to the
23
knowledge of ADLT, no portion of any such receivable is subject to counterclaim,
defense or set off or is otherwise in dispute.
(g) ASSETS. Xxxxxx Lighting has good and marketable title to all
of its personal property and valid leasehold interests in all of its leased
personal property and none of such personal property is subject to any
Encumbrance except Permitted Encumbrances.
(h) LITIGATION. Except as set forth on Schedule 3.22(h), to the
knowledge of ADLT, there is no Litigation pending, to which Xxxxxx Lighting is a
party or to which the Xxxxxx Lighting Shares or any of Xxxxxx Lighting's assets
are subject, or threatened against Xxxxxx Lighting or its assets, which could
reasonably be expected to (a) result in a liability, or the impairment of any
asset, in excess of $100,000, in any individual instance or in excess of
$250,000, in the aggregate, or (b) materially and adversely affect the business
or the operations of Xxxxxx Lighting or the transactions contemplated by this
Agreement or any Other Agreement. To the knowledge of ADLT, there are no
outstanding judgments, decrees or orders of any Governmental Body against or
affecting Xxxxxx Lighting, the Xxxxxx Lighting Shares, the business of Xxxxxx
Lighting or Xxxxxx Lighting's assets. To the knowledge of ADLT, Xxxxxx Lighting
has not commenced and does not have pending any material action, suit or
proceeding against any third party.
(i) CONTRACTS; COMPLIANCE. To the knowledge of ADLT, each Xxxxxx
Lighting Contract is a legal, valid and binding obligation of Xxxxxx Lighting
and is in full force and effect. Except as disclosed on Schedule 3.22(i), to
ADLT's knowledge, Xxxxxx Lighting and each other party to each Xxxxxx Lighting
Contract has performed all obligations required to be performed by it thereunder
and is not in breach or default, and is not alleged to be in breach or default,
in any respect thereunder, and, to the knowledge of ADLT, no event has occurred
and no condition or state of facts exists (or would exist upon the giving of
notice or the lapse of time or both) that would become or cause a breach,
default or event of default thereunder, would give to any Person the right to
cause such a termination or would cause an acceleration of any obligation
thereunder.
(j) PERMITS. To the knowledge of ADLT, Xxxxxx Lighting holds and
is in compliance in all material respects with all permits, certificates,
licenses, franchises, privileges, approvals, registrations and authorizations
required under all Laws, in connection with the operation of Xxxxxx Lighting's
assets and its business (collectively, the "Xxxxxx Lighting Permits") and each
of such Xxxxxx Lighting Permits is in full force and effect, except for any
failure to comply which would not have a Material Adverse Effect on Xxxxxx
Lighting. To the knowledge of ADLT, no notice of (a) cancellation of
24
or default, dispute or complaint concerning any Xxxxxx Lighting Permit or (b)
any event, condition or state of facts described in the preceding sentence, has
been received by Xxxxxx Lighting, in either case, which would reasonably be
expected to have a Material Adverse Effect on Xxxxxx Lighting.
(k) COMPLIANCE WITH LAWS. To the knowledge of ADLT, Xxxxxx
Lighting has received no notice that it is and, to the knowledge of ADLT, Xxxxxx
Lighting is not, in violation in any material respect of any Laws, and, to the
knowledge of ADLT, no event has occurred or condition or state of facts exists
that could give rise to any such violation.
(l) ENVIRONMENTAL LAWS. Xxxxxx Lighting is in compliance with all
applicable Environmental Laws, and, to ADLT's knowledge, has received and is in
compliance with all permits, licenses or other approvals required under
applicable Environmental Laws except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a Material Adverse Effect
on RLI. There are not costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with any Environmental Laws or
any permit, license or approval, any related constraints on operating activities
and any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect on RLI.
3.23 RUUD ITALY.
(a) ORGANIZATION AND QUALIFICATION. Each of Xxxxxxx S.r.l. and
Ruud Lighting Europe S.r.l. is a limited liability company duly organized,
validly existing and in good standing under the laws of Italy and has the
requisite power and authority to own or lease its properties and conduct its
business as they are now owned or leased and as it is now conducted.
(b) NO VIOLATION OF LAWS OR AGREEMENTS. To the knowledge of
ADLT, except as set forth on Schedule 3.23(b), none of the execution and
delivery of this Agreement or any Other Agreement, the consummation of the
transactions contemplated hereby or thereby, or the compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof by Ruud
Italy will: (a) contravene any provision of the charter documents of Ruud Italy,
(b) conflict with, result in a breach of or constitute a default or an event of
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under any term, condition or provision of,
or result in the termination or loss of any right (or give others the right to
cause such
25
a termination or loss) under, any material license or franchise, or any other
material agreement, to which Ruud Italy is a party or by which Ruud Italy's
assets may be bound or affected; (c) violate any Law or violate any judgment or
order of any Governmental Body to which Ruud Italy or any of its subsidiaries is
subject; (d) result in the creation or imposition of any Encumbrance upon any
assets of Ruud Italy or give to others any interests or rights therein; or (e)
result in the maturation or acceleration of any indebtedness of Ruud Italy or
its Affiliates for borrowed money (or give others the right to cause such a
maturation or acceleration).
(c) SHARES; CAPITALIZATION. The authorized capital of Xxxxxxx
S.r.l. consists solely of share capital of 20,000,000 lire all of which
sharecapital is issued and outstanding and the authorized capital of Ruud
Lighting Europe S.r.l. consists solely of share capital of 199,000,000 lire all
of which capital is issued and outstanding (collectively, the "Ruud Italy
Shares"). To the knowledge of ADLT, except as set forth on Schedule 3.23(c),
there are no Securities Rights with respect to any Ruud Italy Shares nor are
there any securities convertible into or exchangeable for any Ruud Italy capital
stock or any other Security Rights with respect to any unissued Ruud Italy
capital stock.
(d) NO SUBSIDIARIES. Xxxxxxx S.r.l. has no direct or indirect
subsidiaries other than Ruud Lighting Europe S.r.l. Except as set forth on
Schedule 3.23(d), to the knowledge of ADLT, Ruud Italy does not own, directly or
indirectly, any partnership, equity, profit, participation or similar ownership
interest in any corporations, partnerships, joint ventures, trusts,
unincorporated organizations, associations or similar entities.
(e) TAX MATTERS.
(i) Ruud Italy has filed all Tax Returns that are required
to be filed by it or has requested extensions thereof (except in any case in
which failure to do so would not have a Material Adverse Effect on Ruud Italy)
and has paid all Taxes (whether or not shown on any Tax Return) required to be
paid by it and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty which is reflected as a Liability on the Closing
Balance Sheet. All such Tax Returns were correct and complete in all respects.
No director or officer of Ruud Italy (or employee responsible for Tax matters)
expects any authority to assess any additional Taxes for any period for which
Tax Returns have been filed on Ruud Italy. Ruud Italy has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owning to any employee, independent contractor, creditor, shareholder, or other
third party.
26
(ii) Ruud Italy has not received from the Internal Revenue
Service or from any other taxing authority from any state, foreign, county,
local or other jurisdiction a notice of underpayment of Taxes, a proposed
assessment of Tax, a proposed adjustment to any Tax Return filed or other
deficiency that is pending or has not be paid or resolved. No claim has ever
been made by an authority in a jurisdiction where Ruud Italy does not file Tax
Returns to the effect that it is or may be subject to taxation by that
jurisdiction.
(iii) Except as set forth on Schedule 3.9, neither Ruud
Italy nor any Affiliate of Ruud Italy has waived restrictions on assessment or
collection of Taxes or executed a waiver or consented to the extension of any
statute of limitations for federal income or other Tax Liability that remains
outstanding. Except as set forth on Schedule 3.9, neither Ruud Italy nor any
Ruud Italy Affiliate in respect of Ruud Italy has made any payments, is
obligated to make any payments, or is a party to any agreement that under any
circumstances could obligate it to make any payments that will not be deductible
under section 280G or 162(m) of the Code. There are no Encumbrances on any of
the assets of Ruud Italy that arose in connection with any failure (or alleged
failure) to pay any Tax.
(iv) There are no tax sharing agreements, tax allocation
agreements, tax indemnification or other similar agreements entered into by Ruud
Italy. Ruud Italy will not and is not responsible for material Taxes of any
other person (A) under Treasury Regulations section 1.1502-6 (or any similar
provision of state, local or foreign law), (B) as transferee or (C) by contract.
(v) Ruud Italy will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any (i)
change in method of accounting for a taxable period ending on or prior to the
Closing Date under Code section 481(c) (or any corresponding or similar
provision of state, local of foreign income Tax law); (ii) "Closing Agreement"
as described in Code section 7121 (or any corresponding or similar provision of
state, local or foreign income Tax law); (iii) deferred intercompany gain or any
excess loss account described in Treasury Regulations under Code section 1502
(or any corresponding or similar provision of state, local or foreign income Tax
law); (iv) installment sale or open transaction disposition made on or prior to
the Closing Date; or (v) prepaid amount received on or prior to the Closing
Date.
3.24 FINDER'S FEES. To the knowledge of ADLT, neither RLI nor any of
RLI's officers, directors or employees has employed any broker or finder or
incurred any Liability for any brokerage fees, commissions or finder's fees in
27
connection with the transactions contemplated herein. To the knowledge of ADLT,
neither RLI nor any of RLI's officers, directors or employees has made any
agreement or taken any other action which might cause anyone to become entitled
to a broker's fee or commission as a result of the transactions contemplated
hereunder.
3.25 DISCLOSURE. None of the representations or warranties of the ADLT
contained herein and none of the information contained in the Schedules referred
to in section 3 is false or misleading in any material respect or omits to state
a fact herein or therein necessary to make the statements herein or therein not
misleading in any material respect.
4. REPRESENTATIONS AND WARRANTIES OF BUYERS. Each Buyer, severally and
not jointly, represents and warrants to ADLT, with respect to the RLI Shares
being purchased by such Buyer, as follows:
4.1 AUTHORIZATION AND ENFORCEABILITY. This Agreement has been duly
executed and delivered by such Buyer and constitutes, and each Other Agreement
which is to be executed and delivered by such Buyer, when executed and delivered
by such Buyer, shall constitute the legal, valid and binding agreement of the
Buyer, enforceable against such Buyer in accordance with its terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
relating to or affecting the rights and remedies of creditors generally and by
general principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other equitable,
remedies, regardless of whether enforceability is considered in a proceeding in
equity or at law.
4.2 NO VIOLATION OF LAWS OR AGREEMENTS. None of the execution and
delivery of this Agreement or any Other Agreement, the consummation of the
transactions contemplated hereby or thereby or the compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof by such
Buyer will: (a) conflict with, result in a breach of or constitute a default or
an event of default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under any term, condition or
provision of, or result in the termination or loss of any right (or give others
the right to cause such a termination or loss) under any license, franchise,
mortgage or other contract, agreement or instrument to which such Buyer is a
party or by which such Buyer's assets may be bound or affected, or (b) result in
the creation, maturation or acceleration of any Liability or obligation of such
Buyer. Except for the Consents, no consent, approval, declaration or
authorization of, or registration or filing with,
28
any Person (including any Governmental Body) is required in connection with the
execution and delivery by such Buyer of this Agreement or the Other Agreements
to which it is a party and the consummation of the transactions contemplated
hereby and thereby by such Buyer.
4.3 INVESTMENT. Each Buyer is purchasing the Purchased Shares for his
or her own account with the present intention of holding the Purchased Shares
for investment purposes and not with the view to or for sale in connection with
any public distribution of the Purchased Shares in violation of any federal or
state securities laws. Each Buyer has such knowledge and experience in financial
and business matters that he or she is capable of evaluating the merits and
risks of an investment in the Purchased Shares and has had an opportunity to ask
questions of and receive answers from RLI regarding RLI and its business. Each
Buyer believes he or she has received all the information he or she considers
necessary or appropriate for deciding whether to acquire the Purchased Shares.
Each Buyer acknowledges that the Purchased Shares have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or any state or
foreign securities laws and that the Purchased Shares may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
unless such transfer, sale, assignment, pledge, hypothecation or other
disposition is pursuant to the terms of an effective registration statement
under the Securities Act and is registered under any applicable state or foreign
securities laws or pursuant to an exemption from registration under the
Securities Act and any applicable state and foreign securities laws. Each Buyer
is an "accredited investor" within the meaning of Regulation D under Rule 501 of
the Securities Act.
4.4 FINDER'S FEES. None of the Buyers nor of Buyer's officers,
directors or employees, if any, has employed any broker or finder or incurred
any Liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated herein. None of the Buyers nor any of Buyer's
officers, directors or employees, if any, has made any agreement or taken any
other action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereunder.
4.5 ADLT SHARE OWNERSHIP. Each Buyer owns and has the right to
transfer to ADLT, free and clear of all Encumbrances, the number of shares of
ADLT common stock, $.001 par value, equal to the principal amount of such
Buyer's Purchase Note divided by $2.
5. COVENANTS. For purposes of this section 5, the parties acknowledge and
agree that Xxxxxx Lighting and Ruud Italy are (or will be as of the Closing)
wholly-owned subsidiaries of RLI, and thus, any and all covenants in this
section which mention only RLI shall equally apply to Xxxxxx Lighting and Ruud
Italy.
29
5.1 CONDUCT OF RLI BUSINESS PENDING CLOSING. During the period commencing
on the date of this Agreement and ending on the earlier to occur of (a) the
Closing or (b) the termination of this Agreement (the "Interim Period"), and
unless the Buyers shall otherwise consent or agree in writing and without
limiting any other provision herein, ADLT shall cause RLI to conduct its affairs
as follows:
(a) ORDINARY COURSE; COMPLIANCE. The Business shall be conducted in
the ordinary course and substantially consistent with past practice. RLI shall
use commercially reasonable efforts to maintain its property, equipment and
other assets consistent with past practice and shall comply timely in all
material respects with the provisions of all its leases, agreements, contracts
and commitments in connection with the Business or its assets.
(b) PRESERVATION OF BUSINESS. During the Interim Period, RLI shall use
commercially reasonable efforts to preserve its business organization intact,
keep available the services of its employees and preserve the goodwill of its
suppliers, customers and others having business relations with it.
(c) PROHIBITED TRANSACTIONS. During the Interim Period, RLI shall not,
nor shall ADLT cause or permit RLI to:
(i) Amend its Articles of Incorporation or By-Laws;
(ii) Enter into any contract or commitment which is made other
than in the ordinary course of business, the terms of which are consistent with
past practice;
(iii) Form any subsidiary;
(iv) Enter into any employment contract that is not terminable at
will, without penalty or obligation continuing after the Closing Date;
(v) Make, change or revoke any Tax election or make any agreement
or settlement with any taxing authority that relates to the period after
Closing;
(vi) Create any Encumbrance, other than Permitted Encumbrances, on
any assets, tangible or intangible;
(vii) Declare, set aside or pay any dividend or other distribution
other than payment of the Redemption Price (whether in cash, stock,
30
property or any combination thereof), in respect of RLI Capital Stock, Xxxxxx
Lighting Shares or Ruud Italy Shares or directly or indirectly issue, sell,
redeem, purchase or otherwise acquire or dispose of, or create any Securities
Rights with respect to, RLI Capital Stock, Xxxxxx Lighting Shares or Ruud Italy
Shares or any rights to purchase RLI Capital Stock, Xxxxxx Lighting Shares or
Ruud Italy Shares or securities convertible into or exchangeable for RLI Capital
Stock, Xxxxxx Lighting Shares or Ruud Italy Shares;
(viii) Make or authorize any single capital expenditure or series
of related capital expenditures in excess of $25,000 or acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof, or make any investment either
by purchase of stock or securities, contribute capital, make any loan or advance
of funds to any Person or, except in the ordinary course of business, purchase
any property or assets;
(ix) Sell, transfer or otherwise dispose of any assets, except
sales of assets in the ordinary course of business; or
(x) Make any payment, loan or advance of any amount to or in
respect of, or any sale, transfer or lease of any properties or assets (whether
real, personal or mixed, tangible or intangible) to, or consummate any
transaction or create any agreement or arrangement with, any Related Party,
except for [a] compensation to the officers and employees at rates not exceeding
the rates of compensation existing on the date hereof (or reflecting increases
in compensation consistent with past practice), and [b] otherwise as
contemplated by this Agreement.
5.2 ACCESS, INFORMATION AND DOCUMENTS. During the Interim Period, ADLT
shall give to the Buyers and their representatives (including independent public
accountants, attorneys, environmental consultants and engineers) access during
normal business hours to all of the properties, books, Tax Returns, contracts,
commitments, records, officers, personnel and accountants (including independent
public accountants) of RLI and shall furnish to the Buyers all such documents
and copies of documents and all information with respect to the affairs of RLI
as the Buyers and their counsel may reasonably request.
5.3 PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. ADLT shall
use its reasonable best efforts to ensure that RLI conducts, and RLI shall use
its reasonable best efforts to conduct, the Business in such a manner that, at
the Closing, the representations and warranties of ADLT contained in this
Agreement shall be true and correct in all material respects (except those
representations and warranties, which are qualified by materiality, which shall
be
31
true and correct in all respects) as though such representations and warranties
were made on, as of, and with reference to such date. ADLT shall promptly notify
the Buyers of any lawsuit, claim, proceeding or investigation that may be
threatened, brought, asserted or commenced after the date hereof against RLI.
ADLT shall notify the Buyer of any facts or circumstances as to which it obtains
knowledge that cause any representation and warranty contained in sections 2 or
3 of this Agreement or relating to any matters required to be set forth in the
related Schedules hereto to be untrue.
5.4 NOTICE OF CHANGES. During the Interim Period, ADLT shall give to
the Buyers prompt written notice of any material change or inaccuracies in any
data previously given or made available to the Buyer pursuant to this Agreement.
5.5 ADLT OPERATIONS. During the Interim Period, ADLT shall (a) not,
without the prior written consent of the Buyers, sell, transfer or convey or
enter into an agreement to sell, transfer or convey, any assets of ADLT or of
any Affiliate which alone, or together with the transactions contemplated
hereby, would require shareholders or noteholders' consent; or take any action
which would cause a material breach of any representation or warranty of ADLT in
this Agreement and (b) make available to RLI, Xxxxxx Lighting and Ruud Italy for
their working capital purposes all funds collected by RLI, Xxxxxx Lighting and
Ruud Italy through Closing and other funds reasonably necessary for day-to-day
operations through Closing and maintain in effect at the current salaries the
current officers, directors and employees of RLI and of ADLT to the extent such
individuals will become RLI employees as of Closing.
5.6 NO NEGOTIATIONS. Until the earlier of the termination of this
Agreement or the Closing Date, neither ADLT, RLI nor any of their respective
Affiliates or representatives, nor Buyers, shall directly or indirectly, submit,
solicit or initiate any proposal or offer, enter into any agreement, or accept
any offer, relating to any merger or sale of all or substantially all of the
assets of RLI or ADLT, their respective capital stock or business.
5.7 OTHER COVENANTS AND AGREEMENTS. At or before Closing, the
respective party agrees to take the following actions:
(a) TRANSFER OF MICROSUN, ELKHORN, XXXXXX LIGHTING REAL ESTATE.
RLI shall transfer to ADLT all of its right, title and interest in and to the
assets related to ADLT's Elkhorn operations and its Microsun product line and
inventory, all of which such assets are specifically identified on Schedule
5.7(a). RLI will continue, through January of 2002, to sell and market the
Microsun product line and maintain its web site with RLI responsible for the
costs of direct labor and
32
overhead with respect to such activities, ADLT responsible for the costs of
product and materials, ADLT and RLI equally responsible for the cost of
effecting a mutually agreed upon marketing program for the Microsun line and the
parties splitting the revenues (net of sales taxes, freight out and freight
collected) attributable to the sale of Microsun products on a 50%/50% basis.
Xxxxxx Lighting shall transfer to ADLT, or its nominee, all of its right, title
and interest in and to the land and building in Middletown, RI owned and
operated by Xxxxxx Lighting (the "Xxxxxx Lighting Property").
(b) TRANSFER OF XXXXXX LIGHTING AND RUUD ITALY. ADLT shall
transfer to RLI all of the outstanding shares of capital stock of Xxxxxx
Lighting, Inc. ("Xxxxxx Lighting") and Xxxxxxx S.r.l. and Advanced Lighting
Technology S.r.1. (collectively, "Ruud Italy").
(c) GRANT OF LICENSE. RLI shall grant to ADLT Australia and New
Zealand a revocable, nonexclusive, nontransferable license to use the "Ruud"
name in Australia and New Zealand for so long as products offered for sale by
such entities which bear the Ruud name have been purchased from RLI. Such
license shall be in substantially the same form as attached Exhibit D (the
"License").
(d) INTERCOMPANY ACCOUNTS. All intercompany receivables, payables,
expenses and similar charges by and among RLI, Xxxxxx Lighting and Ruud Italy,
on the one hand, and ADLT and its other Affiliates on the other hand
(collectively, the "Intercompany Accounts") which existed as of September 2,
2001 will be cancelled and forgiven as of the Closing Date. The parties agree
that any Taxes that arise from or are attributable to the
cancellation/forgiveness of the Intercompany Accounts, any deferred intercompany
transactions and deferred income and gain will be paid by and the sole
responsibility of ADLT and ADLT agrees to defend, indemnify and hold harmless
RLI from all such liabilities.
(e) RECIPROCAL SUPPLY AGREEMENTS. ADLT and RLI will continue to
sell product to each other pursuant to the terms and conditions of the Supply
Agreements attached hereto as Exhibit E (the "Supply Agreements").
(f) SEVERANCE/TERMINATION FEES PAYABLE TO XXXXXXX XXXXXXX. ADLT
shall be responsible for and pay any and all severance/termination fees payable
to Xxxxxxx Xxxxxxx after September 2, 2001.
(g) MUTUAL COOPERATION. ADLT and RLI agree to cooperate with each
other to effect the transactions set forth above and agree not to take actions
or positions inconsistent with the foregoing.
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6. CONDITIONS TO CLOSING.
6.1 MUTUAL CONDITIONS PRECEDENT. The obligations of ADLT and the
Buyers to proceed with the Closing under this Agreement are subject to the
fulfillment prior to the Closing of the following conditions:
(a) LITIGATION. No injunction, order or decree of any Governmental
Body shall be in effect which enjoins, restrains, prohibits or materially
conditions the transactions contemplated hereby or that would limit or adversely
affect the Buyer's ownership of the RLI Shares, and there shall not have been
threatened, nor shall there be pending, any action or proceeding by or before
any Governmental Body challenging any of the transactions contemplated by this
Agreement or the Other Agreements or seeking monetary relief by reason of the
consummation of such transactions.
(b) FILINGS. The filing and waiting period requirements of any
applicable federal or state law or Governmental Body relating to the
consummation of the transactions contemplated by this Agreement and the Other
Agreements shall have been complied with.
(c) FAIRNESS OPINION. The receipt by the Board of Directors of
ADLT by November 15, 2001 of a mutually acceptable (to Buyers and the Board of
Directors of ADLT) fairness opinion opining as to the fairness of the
transactions contemplated hereby. ADLT shall use its reasonable efforts to
obtain such opinion.
(d) APPROVAL BY ADLT BOARD OF DIRECTORS. The Board of Directors of
ADLT shall have approved this Agreement, the Other Agreements and the
consummation of the transactions contemplated hereby and thereby and, within 30
days of the date of this Agreement, ADLT shall have obtained any consents of
ADLT's existing lenders which are required to consummate the transactions
described herein. Xx. Xxxxx Xxxxxxx agrees to use his best efforts to obtain
such approval promptly after the signing of this Agreement.
(e) FINANCING. The receipt, by November 30, 2001, by the Buyers of
financing or a written, binding commitment therefor on terms reasonably
acceptable to the Buyers and sufficient to cover the Purchase Price and working
capital needs of RLI.
(f) RELEASE OF LIENS. The release of all Encumbrances other than
Permitted Encumbrances affecting RLI, Xxxxxx Lighting, Ruud Italy and the Owned
Real Property; provided, however, that for purposes of this
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section 6.1(f), Permitted Encumbrances shall exclude Encumbrances listed on
Schedule 2.1 or Encumbrances listed as items 1or 2 on Schedule 3.10.
6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ADLT. The obligation of
ADLT to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions (any one or more
of which may be waived in whole or in part by ADLT at ADLT's option):
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Buyers contained in section 4 of this
Agreement, shall be true and correct in all material respects (except for those
representations and warranties which are qualified by materiality, which shall
be true and correct in all respects) on and as of the Closing Date, with the
same force and effect as though such representations and warranties had been
made on, as of and with reference to such date.
(b) PERFORMANCE AND COMPLIANCE. The Buyers and RLI shall have
performed in all material respects all of the covenants and complied in all
material respects with all of the provisions required by this Agreement to be
performed or complied with by them on or before the Closing.
(c) NO MATERIAL ADVERSE CHANGE. Between September 2, 2001 and the
Closing Date, there shall have been no material adverse change in the financial
condition, assets, Liabilities, net worth, Business or prospects of RLI or any
subsidiary, and no event or condition shall have occurred or exist that might be
expected to cause such a change in the future.
(d) CLOSING DOCUMENTS. Receipt of the deliveries referred to in
section 1.6.
(e) CONSENTS. Receipt of evidence reasonably satisfactory to ADLT
that the consents set forth in Schedule 2.4 have been obtained.
(f) GUARANTY RELEASE. Release of the guaranty(ies) by ADLT of any
funded debt of RLI, Xxxxxx Lighting or Ruud Italy.
6.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYERS. The
obligation of the Buyers to proceed with the Closing hereunder is subject to the
fulfillment prior to or at Closing of the following conditions (any one or more
of which may be waived in whole or in part by the Buyers at the Buyers' option):
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of ADLT contained in sections 2 and 3 of this
35
Agreement shall be true and correct in all material respects (except for those
representations and warranties which are qualified by materiality, which shall
be true and correct in all respects) on, as of, and with reference to the
Closing Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such date.
(b) PERFORMANCE AND COMPLIANCE. ADLT, RLI, Xxxxxx Lighting and
Ruud Italy shall each have performed in all material respects all of the
covenants and complied in all material respects with all of the provisions
required by this Agreement to be performed or complied with by it on or before
the Closing. ADLT, RLI, Xxxxxx Lighting and Ruud Italy shall each have performed
in all material respects all of the covenants and complied in all material
respects with all of the provisions required by the Other Agreements to which it
is a party to be performed or complied with by it on or before Closing.
(c) NO MATERIAL ADVERSE CHANGE. Between June 30, 2001 and the
Closing Date, there shall have been no material adverse change in the financial
condition, assets, liabilities, net worth, business or prospects of RLI and its
subsidiaries taken as a whole, and no event or condition shall have occurred or
exist that might be expected to cause such a change in the future.
(d) CLOSING DOCUMENTS. The Buyers shall have received the
deliveries referred to in section 1.6.
(e) CONSENTS. Evidence reasonably satisfactory to the Buyers and
their counsel of RLI's receipt of all material consents and approvals to the
transaction required under any Contracts and Xxxxxx Lighting Contracts.
7. TAX MATTERS.
7.1 FEDERAL, STATE AND LOCAL INCOME TAXES. The applicable income,
deductions and credits with respect to RLI for the period beginning on July 1,
2001 and ending on the Closing Date (the "Short Period") will be included in the
consolidated federal income Tax Return of the affiliated group having ADLT as
its common parent and will be included in the applicable combined or unitary
state or local income Tax Return of ADLT or, where permitted under state or
local law, will be included in separate state or local income Tax Returns to be
filed for such period on behalf of RLI by ADLT. ADLT shall pay the income Taxes
of RLI as shown on any such separate state or local return. In any case where
applicable state or local law does not permit RLI to treat the Short Period as a
taxable year, then ADLT shall pay to RLI a portion of the state or local income
Tax paid by such Company for the taxable year which includes the Short Period
equal to the Tax that would have been due if the Short Period were treated as a
36
taxable year. ADLT shall be solely responsible for and shall indemnify and hold
harmless Buyer with respect to all federal, state or local income sales and
other Taxes, and any interest, penalty or additional amounts, with respect to
any taxable periods of RLI ending on or before the Closing Date. RLI shall be
responsible for, and shall indemnify and hold harmless ADLT with respect to, all
such income and other Taxes for periods commencing after the Closing Date.
7.2 CERTAIN CONTEST RIGHTS. The Buyers will promptly inform ADLT as to
the commencement of any audit or proceeding with respect to the federal, state
or local income Tax Liability of RLI for periods ending on or prior to the
Closing Date. Similarly, ADLT will promptly inform Buyers of any such
proceedings which are reasonably likely to have an effect on the income Tax
Liability of RLI for periods commencing on or after the Closing Date. The
parties will reasonably cooperate with each other with respect to such
proceedings, taking into account, among other things, the relevant provisions of
this section 7.
7.3 TERMINATION OF PRIOR TAX SHARING AGREEMENTS. Effective as of the
Closing Date, all Tax sharing agreements, whether or not written, to which RLI,
Xxxxxx Lighting and/or Ruud Italy is a party shall be terminated and the
provisions of this section 7 shall thereafter govern the obligations of RLI and
ADLT with respect to Tax matters.
7.4 COOPERATION. RLI shall deliver to ADLT, in a timely manner, such
information and data as ADLT shall reasonably request, including such
information required by ADLT customary Tax and accounting questionnaires, in
order to enable ADLT to fulfill its obligations under this section 7.
7.5 ACCESS TO RECORDS FOLLOWING CLOSING. The Buyers and ADLT agree
that so long as any books, records and files retained by ADLT relating to the
Business of RLI, or the books, records and files delivered to the control of the
Buyers pursuant to this Agreement to the extent they relate to the operations of
RLI prior to the Closing Date, remain in existence and available, each party (at
its expense) shall have the right upon prior written notice to inspect and to
make copies of the same at any time during normal business hours and for any
proper purpose. The Buyers and ADLT shall use reasonable best efforts not to
destroy or allow the destruction of any such books, records and files without
first offering in writing to deliver them to the other party.
8. TERMINATION.
8.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing by: (a) mutual written consent of ADLT, Buyers who will hold a majority
of the RLI Shares after the Closing (in accordance with Exhibit A) and
37
RLI; (b) ADLT, if (i) any of the conditions specified in Sections 6.1 or 6.2
hereof shall not have been fulfilled by December 2, 2001 and shall not have been
waived by ADLT, but only if ADLT has not caused the condition giving rise to
termination not to be satisfied through its own action or inaction, (ii) the
Buyers if any of the conditions specified in Sections 6.1 or 6.3 hereof shall
not have been fulfilled by the earlier of the date specified therein or December
2, 2001 and shall not have been waived by the Buyers, but only if the Buyers
have not caused the condition giving rise to termination not to be satisfied
through their own action or inaction; or (iii) by ADLT if ADLT's Board of
Directors, in exercise of its judgment as to fiduciary duties to ADLT's
shareholders after consultation with counsel, determines that such termination
is required by reason of any "takeover proposal" as defined below. For purposes
of this section 8.1, "takeover proposal" means any proposal for the merger or
other business combination involving RLI or its subsidiaries or for the
acquisition of a substantial equity interest in RLI or its subsidiaries or a
substantial portion of the assets of RLI or its subsidiaries other than one
contemplated by this Agreement. Nothing in this section 8.1 shall be construed
as excusing the breach of any obligation under this Agreement or as limiting the
remedies which may be available to any non-breaching party in respect of such
breach.
8.2 EFFECT OF TERMINATION. Notwithstanding the foregoing, in the event
that this Agreement is terminated by one party hereto pursuant to sections
8.1(b)(i) or (b)(ii) solely as a result of a breach by another party hereto of a
representation or warranty of such other party as of a date after the date of
this Agreement, which breach could not have been reasonably anticipated by such
other party and was beyond the reasonable control of such other party, then
neither party shall have any liability to the other hereunder. If this Agreement
is terminated pursuant to section 8.1(b)(iii), ADLT shall immediately pay to the
Buyers their legal fees and expenses incurred in pursuing the transactions
contemplated herein, including, without limitation, fees and expenses of their
legal counsel, accountants, attorneys and other agents or representatives. Any
dispute arising under this section 8 shall be resolved by arbitration in
accordance with the rules of the American Arbitration Association in the City of
Racine, Wisconsin using three arbitrators, one being chosen by the Ruuds, one
being chosen by ADLT and the third being chosen by the other two arbitrators
(collectively, the "Arbitrators").
9. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
9.1 SURVIVAL OF REPRESENTATIONS. All representations, warranties,
covenants and agreements made by any party in this Agreement or pursuant hereto
shall survive the Closing, but no claim may be made with respect to any breach
of any representation or warranty hereunder after November 30, 2002; provided,
38
however, that claims for breach of the representations and warranties contained
in the sections listed in Schedule 9.1 may be made at any time prior to the
applicable date set forth on Schedule 9.1. The Buyers acknowledge with respect
to ADLT, and ADLT acknowledges with respect to Buyers and RLI, that they have
performed comprehensive due diligence investigations and that they have no
knowledge of any facts and circumstances which would result in the inaccuracy of
any representation or warranty of ADLT, RLI and/or the Buyers, as applicable.
9.2 INDEMNIFICATION BY THE BUYERS. Subject to the limitations set
forth in this section 9 and the Closing of the transactions contemplated by this
Agreement, the Buyers, severally but not jointly, shall indemnify, defend, save
and hold ADLT and its officers, directors, employees, Affiliates and agents
(excluding, after Closing, RLI and its officers, directors, employees,
Arbitrators and agents) (collectively, "ADLT Indemnitees") harmless from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, deficiencies, Liabilities, costs and expenses, including reasonable
attorneys' fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing (collectively,
"Losses") asserted against, imposed upon, resulting to or incurred by any of the
ADLT Indemnitees, directly or indirectly, in connection with, or arising out of,
or resulting from (a) a breach of any of the representations and warranties made
by the Buyers in section 4 of this Agreement, except that each Buyer will be
severally responsible only for his or her own such representations and
warranties, (b) a breach of any of the covenants or agreements made by the
Buyers, or a breach of any of the covenants or agreements of Buyers to be
completed before the Closing, in or pursuant to this Agreement and in any Other
Agreement to which the Buyers are a party, and (c) nonpayment of any Liability
of RLI, Xxxxxx Lighting or Ruud Italy which Liability is reflected in the
Financial Statements (the "Covered Liabilities"), except that, with respect to
Buyer covenants and agreements, each Buyer will be severally responsible only
for his or her own covenants or agreements. The waiver by ADLT of any condition
to Closing set forth in section 6.2 shall be deemed to be a waiver by ADLT of
its rights of indemnification hereunder. All claims made by virtue of such
representations and warranties shall be made under, and subject to, the
limitations set forth in this section 9. The liability of each Buyer with
respect to any claim for indemnity shall be equal to the Buyer's Pro Rata Share;
provided, however, that each Buyer shall be entirely responsible for any
violation of his or her own representations contained in section 4. For purposes
of this Agreement, "Pro Rata Share" means the amount of such Losses multiplied
by a fraction, the numerator of which is the Purchased Shares owned by such
Buyer, and the denominator of which is all Purchased Shares, as set forth on
Exhibit A hereto.
9.3 INDEMNIFICATION BY ADLT.
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(a) Subject to the limitations set forth in this section 9 and
the Closing of the transactions contemplated by this Agreement, ADLT shall
indemnify, defend, save and hold the Buyers and their Affiliates and agents
(including, after closing, RLI and its officers, directors, employees,
Affiliates and Agents) (collectively, "Buyers' Indemnitees") harmless from and
against any and all Losses against, imposed upon, resulting to or incurred by
any of the Buyers' Indemnitees, directly or indirectly, in connection with, or
arising out of, or resulting from (i) a breach of any of the representations and
warranties made by ADLT in sections 2 and 3 of this Agreement or (ii) a breach
of any of the covenants or agreements made by ADLT in or pursuant to this
Agreement and in any Other Agreement to which ADLT is a party. The waiver by the
Buyers of any condition to Closing set forth in section 6.3 shall be deemed a
waiver by the Buyers of their rights to indemnification hereunder. All claims
made by virtue of such representations and warranties shall be made under, and
subject to, the limitations set forth in this section 9.
(b) Without regard to section 9.4 below, ADLT shall indemnify,
defend, save and hold RLI, Xxxxxx Lighting, Ruud Italy and the Buyers harmless
from and against any and all costs and expenses, including reasonable attorneys'
fees, interest, penalties (but not the additional Taxes) and all reasonable
amounts paid in investigation, defense or settlement of any of the foregoing
(collectively, "Tax Damages") incurred by any of the Buyers or RLI or Xxxxxx
Lighting directly or indirectly, in connection with or arising out of, or
resulting from, any proceeding by the Internal Revenue Service, Wisconsin
Department of Revenue or other taxing authority resulting from a claim that the
Tax Liability of RLI, Xxxxxx Lighting and/or their Affiliates includes an amount
attributable to income earned, sales made or other activities which occurred
prior to Closing.
(c) Without regard to section 9.4 below, ADLT shall indemnify,
defend, save and hold RLI, Xxxxxx Lighting, Ruud Italy and the Buyers harmless
from and against any and all costs and expenses, including reasonable attorneys'
fees, interest, penalties and all reasonable amounts paid in investigation,
defense or settlement of any of the foregoing incurred by any of the Buyers,
RLI, Xxxxxx Lighting or Ruud Italy, directly or indirectly, in connection with
or arising out of or resulting from any claim or allegation that the Buyers or
RLI, as applicable, do not hold legal and beneficial title to the Purchased
Shares, the Xxxxxx Lighting Shares or the Ruud Italy Shares free and clear of
any and all Encumbrances ("Title Damages").
(d) Without regard to section 9.4 below, the Buyers shall
indemnify, defend, save and hold ADLT harmless from and against any and all
costs and expenses, including reasonable attorneys' fees, interest, penalties
and all
40
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing incurred by ADLT, directly or indirectly, resulting from claims for
Covered Liabilities ("Covered Liability Damages").
(e) Without regard to section 9.4 below, ADLT shall indemnify,
defend, save and hold RLI, Xxxxxx Lighting, Ruud Italy and the Buyers harmless
from and against any and all costs and expenses, including reasonable attorneys'
fees, interest, penalties and all reasonable amounts paid in investigation,
defense or settlement of any of the foregoing incurred by any of the Buyers,
RLI, Xxxxxx Lighting or Ruud Italy, directly or indirectly, in connection with
or arising out of or resulting from any claim (including claims relating to
Environmental Laws) or for unpaid Liabilities with respect to (i) that certain
Real Estate Lease dated _____________ covering located in Elkhorn, Wisconsin
("Elkhorn Lease Damages"), and (ii) the Xxxxxx Lighting property (collectively,
the "Real Estate Damages").
9.4 MINIMUM AND MAXIMUM INDEMNIFICATION CLAIM. Except for claims for
(a) Losses which are made in the case of fraud and intentional
misrepresentations, (b) Tax Damages, (c) Title Damages, (d) Covered Liability
Damages or (e) Real Estate Damages, the provision for indemnity for Losses shall
only be effective and no Buyer shall be required to provide such indemnity to
the ADLT Indemnitees, and ADLT shall not be required to provide such indemnity
to the Buyers' Indemnitees, hereunder unless the claim(s) of indemnification of
the ADLT Indemnitees, or Buyers' Indemnitees, as the case may be, shall exceed
in the aggregate $1,000,000 (the "Basket"). Except for claims (a) for Losses
which are made in the case of fraud and intentional misrepresentations, (b) Tax
Damages, (c) Title Damages, (d) Covered Liability Damages or (e) Real Estate
Damages, in the event the ADLT Indemnitees' claims, or the Buyers' Indemnitees'
claims, as the case may be, shall exceed the Basket, then the ADLT Indemnitees
shall have the right to be indemnified for Losses, or the Buyers' Indemnitees
shall have the right to be indemnified for Losses, as the case may be, but only
for amounts in excess of the Basket and, in all cases, subject to the further
limitation that the Buyers shall in no event be liable for Losses in excess of
$5,000,000 (the "Cap"). Except for claims for (a) Losses which are made in the
case of fraud and intentional misrepresentations, (b) Tax Damages, (c) Title
Damages, (d) Covered Liability Damages or (e) Real Estate Damages, none of the
ADLT Indemnitees, or the RLI Indemnitees, as the case may be, shall have any
claim against any Buyers, or ADLT, as the case may be, for any Losses up to the
amount of the Basket and the Buyers shall have no liabilities to the ADLT
Indemnitees for Losses in excess of the Cap.
9.5 NOTICE OF CLAIMS. If any ADLT Indemnitee or Buyer Indemnity (an
"Indemnified Party") believes that it has suffered or incurred or will
41
suffer or incur any Losses or Tax Damages (collectively, "Damages") for which it
is entitled to indemnification under this section 9, or if any legal,
governmental or administrative proceeding which may result in such Damages is
threatened or asserted (including any written notice from any taxing authority),
such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this section 9.5 shall not affect any of such party's rights under
this section 9 except to the extent such failure is actually prejudicial to the
rights or obligations of the Indemnifying Party.
9.6 THIRD PARTY CLAIMS. In case any legal, governmental or
administrative proceeding which may result in such Damages is instituted,
threatened or asserted (including any written notice from any taxing authority)
by or against a third party with respect to which an Indemnified Party intends
to claim any Damages and the Indemnified Party notifies the Indemnifying Party
of such proceeding as provided in section 9.5, the Indemnifying Party shall be
entitled to participate therein and, to the extent that it may wish, jointly
with any other Indemnifying Party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party (who
shall not, except with the consent of the Indemnified Party, be counsel to the
Indemnifying Party), and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party will not be liable to such Indemnified Party under this
section 9 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened action in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party unless such settlement includes an unconditional release of such
Indemnified Party from all Liability on any claims that are the subject matter
of such proceeding.
9.7 LIMITATION ON DAMAGES; INSURANCE; ETC.; EFFECT OF KNOWLEDGE.
(a) In determining Damages hereunder, (a) each Indemnified Party
shall be required to pursue all valid claims against any insurance carrier
providing coverage with respect to the matter giving rise to such Damages and
(b) if such Damages arise out of matters concerning any customers of RLI, ADLT
or their respective Affiliates, RLI or ADLT, as the case may be,
42
shall use its best efforts to pursue its rights and remedies against such
customers (without litigation or arbitration); provided, however, that no such
requirement shall delay the Buyers' obligations to indemnify ADLT or RLI
hereunder (except that the indemnification obligation hereunder shall be delayed
if and to the extent that the applicable insurance company under clause (a)
above assumes the defense or acknowledges liability).
(b) In the event that the transactions contemplated herein are
consummated, no party shall be entitled to any indemnification under this
Agreement with respect to any fact or circumstance which was known to the
executive officers of ADLT (other than Xxxx X. Xxxx) in case of indemnification
of ADLT Indemnitees or known to any Buyer in the case of Buyer's Indemnitees,
and any claims for indemnification any party may have hereunder with respect to
any breach of any representation, warranty, agreement or covenant arising from
such facts or circumstances shall be deemed to be waived. Notwithstanding the
foregoing, the foregoing limitation on liability and the obligation to indemnify
will not apply with respect to Tax Damages, Title Damages, Real Estate Damages
and any presently outstanding litigation other than the matters set forth on
Schedules 3.11 and 3.22(h).
9.8 GOOD FAITH EFFORT TO SETTLE DISPUTES. The parties agree that,
prior to commencing any litigation against the other concerning any matter with
respect to which such party intends to claim a right of indemnification in such
proceeding, Xxxx X. Xxxx (on behalf of the Buyers) and the Chief Financial
Officer or the Chief Executive Officer of ADLT shall meet in a timely manner and
attempt in good faith to negotiate a settlement of such dispute during which
time such individuals shall disclose to the others all relevant information
relating to such dispute.
9.9 EXCLUSIVITY. It is understood and agreed that, except in the case
of fraud or intentional representation or as otherwise expressly provided in
this section 9, after Closing, no Buyer will have any obligation or liability to
the ADLT Indemnitees with respect to any Losses, and ADLT will not have any
obligation or liability to the Buyers' Indemnitees with respect to any Losses,
it being understood and agreed that the remedies provided for in this section 9
shall be the sole and exclusive remedies for any such claim by the ADLT
Indemnitees or Buyers' Indemnitees, as the case may be, for any such matters,
whether such claims are framed in contract, tort or otherwise.
10. MISCELLANEOUS.
10.1 CONSTRUCTION. As used herein, unless the context otherwise
requires: (a) the terms defined herein shall have the meaning set forth herein
for all
43
purposes; (b) references to "Article" or "Section" are to an article or section
hereof; (c) all "Exhibits" and "Schedules" referred to herein are to Exhibits
and Schedules attached hereto and are incorporated herein by reference and made
a part hereof; (d) "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; (e) "writing," "written" and comparable
terms refer to printing, typing, lithography and other means of reproducing
words in a visible form; (f) "hereof," "herein," "hereunder" and comparable
terms refer to the entirety of this Agreement and not to any particular article,
section or other subdivision hereof or attachment hereto; (g) references to any
gender include references to all genders, and references to the singular include
references to the plural and vice versa; (h) references to an agreement or other
instrument or law, statute or regulation are referred to as amended and
supplemented from time to time (and, in the case of a statute or regulation, to
any successor provision) and all regulations, rulings and interpretations
promulgated pursuant thereto; (i) the preliminary statements made on page 1
hereof are incorporated herein and made a part hereof; (j) the headings of the
various articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof; (k) the deadline for all deliveries and notices hereunder
shall be determined by reference to the local time of the place such delivery or
notice is properly made; and (l) all currency references herein are to U.S.
dollars.
10.2 NOTICES. All notices, and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made (a) the second day after mailing, if sent by registered or
certified mail, return receipt requested, (b) upon delivery, if sent by hand
delivery, (c) when received, if sent by prepaid overnight carrier, with a record
of receipt, or (d) the first day after dispatch, if sent by cable, telegram,
facsimile or telecopy (with a copy simultaneously sent by registered or
certified mail, return receipt requested), to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
(a) if to ADLT, to:
Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, XX 00000
with a copy to:
Xxxxxx, Xxxxxxxx & Sarlson Co., L.P.A.
00 Xxxxxx Xxxxxx, Xxxxx 0000
00
Xxxxxxxxx, XX 00000
(b) if to the Buyers, to:
Xxxx X. Xxxx
Xxxxx Xxxx
Xxxxxxxx X. Xxxxxx
Xxxxxxxxxxx X. Xxxx
Xxxxxxx X. Xxxxxxx
At the addresses set forth on Exhibit A
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx Xxxxxxx Van Deuren s.c
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
X.X. Xxx 00000
Xxxxxxxxx, XX 00000-0000
(c) if to RLI, to:
Ruud Lighting, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxx X. Xxxx, President and
Chief Executive Officer
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx Xxxxxxx Van Deuren s.c.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
X.X. Xxx 00000
Xxxxxxxxx, XX 00000-0000
10.3 SUCCESSORS AND ASSIGNMENT. This Agreement and all the rights and
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
10.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Wisconsin without regard to its
conflict of law doctrines.
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10.5 NO ASSIGNMENT. This Agreement and the rights, interests and
obligations hereunder may not be assigned by any party hereto without the prior
written consent of the other parties hereto, except that Buyers may assign their
rights hereunder to any entity for and by them for purposes of acquiring the
Purchased Shares so long as Buyers remain fully liable hereunder.
10.6 APPROVALS AND ACTIONS BY THE BUYERS. Whenever any approval or
action by the Buyers is required or permitted pursuant to this Agreement, or any
Other Agreement, including any consent, waiver or amendment, such approval or
action shall be sufficient if it is made by Buyers holding (or who held
immediately after the Closing) a majority of the Purchased Shares as set forth
on Exhibit A, and such approval or action shall be binding on all Buyers.
10.7 AMENDMENT AND WAIVER; CUMULATIVE EFFECT. The parties may by
mutual agreement amend this Agreement in any respect, and any party, as to such
party, may (a) extend the time for the performance of any of the obligations of
any other party, waive any inaccuracies in representations by any other party,
(b) waive compliance by any other party with any of the agreements contained
herein and performance of any obligations by such other party, and (c) waive the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.
Neither the failure of any party hereto to exercise any right, power or remedy
provided under this Agreement where otherwise available in respect hereof at law
or in equity, or to insist upon compliance by any other party with its
obligations hereunder, nor any custom or practice of the parties at variance
with the terms hereof, shall constitute a waiver by such party of its right to
exercise any such right, power or remedy or to demand such compliance. The
rights and remedies of the parties hereto are cumulative and not exclusive of
the rights and remedies that they otherwise might have now or hereafter, at law,
in equity, by statute or otherwise.
10.8 ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits
set forth all of the promises, covenants, agreements, conditions and
undertakings between the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written.
46
10.9 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
10.10 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder, except the provisions of section 9.2 and section 9.3 relating to
Buyers' Indemnitees and section 9.2 relating to ADLT Indemnitees, which are
intended to benefit such indemnitees.
10.11 POST CLOSING SERVICES. Each of ADLT and RLI will provide, at its
cost, all administrative and support services currently provided to the other
for a period of up to six (6) months following the Closing Date. In addition,
each of ADLT and RLI will cooperate with all reasonable requests to facilitate
the transfer of such administrative and support services as promptly as
practicable following the Closing Date.
10.12 XXXXXX LIGHTING FACILITY. After the Closing Date, Xxxxxx
Lighting may continue to occupy the Xxxxxx Lighting Facility, rent free, for a
period of up to ninety days. Buyers and RLI agree that they will take all
actions necessary to vacate the Xxxxxx Lighting Facility within such 90 day
period. RLI shall indemnify ADLT against and reimburse ADLT for all taxes,
utilities, and insurance accrued at the facility during the period Xxxxxx
Lighting occupies the Xxxxxx Lighting Facility following the Closing. ADLT shall
endeavor to sell the Xxxxxx Lighting Facility promptly after Closing. After any
such sale, ADLT shall promptly pay to RLI the lesser of $500,000 or one-third of
the net proceeds of the sale of the Xxxxxx Lighting Facility. For the purposes
of this paragraph, net proceeds of the sale of the Xxxxxx Lighting Facility
shall mean the total of all consideration received by ADLT, less taxes,
commissions and expenses incurred by ADLT; provided, however, that ADLT agrees
to use reasonable efforts to minimize such costs and utilize any credits, net
operating loss carryforwards or tax assets available to it.
10.13 COUNTERPARTS. This Agreement may be executed by facsimile and in
two or more counterparts, each of which shall be deemed to be an original but
all of which together shall be deemed to be one and the same instrument.
47
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ADVANCED LIGHTING TECHNOLOGIES, INC.
BY /s/ XXXXX X. XXXXXXX
------------------------------------------------
Xxxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
RUUD LIGHTING, INC.
BY /s/ XXXX X. XXXX
---------------------------------------------
Xxxx X. Xxxx, President and
Chief Executive Officer
BUYERS:
/s/ XXXX X. XXXX
------------------------------------------------
Xxxx X. Xxxx
/s/ XXXXX X. XXXX
------------------------------------------------
Xxxxx Xxxx
/s/ XXXXXXXX X. XXXXXX
------------------------------------------------
Xxxxxxxx X. Xxxxxx
/s/ XXXXXXXXXXX X. XXXX
------------------------------------------------
Xxxxxxxxxxx X. Xxxx
/s/ XXXXXXX X. XXXXXXX
------------------------------------------------
Xxxxxxx X. Xxxxxxx
SIGNATURE PAGE TO STOCK REDEMPTION
AND PURCHASE AGREEMENT
EXHIBIT A
PRINCIPAL PERCENT
BUYER CASH PAYMENT AMOUNT OF NOTE OWNERSHIP
----- ------------ -------------- ---------
Xxxx Xxxx $1,503,000 $1,503,000 50.1%
Xxxxxxxxxxx Xxxx $ 897,000 $ 897,000 29.9%
Xxx Xxxxxx $ 300,000 $ 300,000 10%
Xxxxxxx Xxxx $ 300,000 $ 300,000 10%
EXHIBIT B
PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT AND THE RIGHTS
OF THE HOLDERS HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS OF
_____________, _____________ AND _____________ (THE "LENDERS") TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 3, 2001 FROM THE
PAYEE TO THE LENDER.
SUBORDINATED PROMISSORY NOTE
December 3, 2001
1. For value received, the undersigned, RUUD LIGHTING, INC., a
Wisconsin corporation (the "Maker"), promises to pay to the order of ADVANCED
LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal
sum of $3,000,000.00 and interest payable at the rate of 8% per annum,
compounded semi-annually. Principal shall be payable in full on December 1,
2006. Interest in arrears shall be payable in full on December 1, 2006,
provided, however, that upon written consent of the Lenders, interest shall be
payable semi-annually on each June 1 and December 1, commencing June 1, 2002 or
on the first June 1 or December 1 following such consent.
2. The principal sum and interest shall be payable in lawful money of
the United States to the Payee at 00000 Xxxxxx Xxxx, Xxxxx, Xxxx 00000, or
another place the Payee may designate, in writing. Subject to the subordination
provisions set forth herein, Maker shall have the right to prepay all or any
portion of the principal sum and interest without premium or penalty.
3. The Maker hereby waives presentment, notice of dishonor, and
protest. This Subordinated Promissory Note shall be binding upon the Maker, the
Maker's successors and assigns.
4. No delay on the part of any holder hereof in exercising any power
or rights hereunder shall operate as a waiver of any power or rights. Any demand
or notice hereunder to the Maker may be made in person or by regular mail at the
address set out in paragraph 6.
5. This Subordinated Promissory Note is being made in connection with
a commercial transaction.
6. This Subordinated Promissory Note shall be deemed to have been made
at Solon, Ohio. This Subordinated Promissory Note shall be interpreted, and the
rights and liabilities of the parties hereto determined, in accordance with the
laws of the State of Ohio. The Maker hereby consents to the jurisdiction of any
state or federal court located within the State of Ohio and consents that all
such service of process be made by registered or certified mail directed to the
Maker at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000, and service so made shall be
deemed to be completed upon actual receipt thereof. The Maker waives any
objection to jurisdiction and venue of any action instituted hereunder and
agrees not to assert any defense based on lack of jurisdiction or venue. Nothing
contained herein shall affect the right of the Payee to serve legal process in
any other manner permitted by law or affect the right of the Payee to bring any
action or proceeding against the Maker or its property in the courts of any
other jurisdiction.
7. Maker is in default under this Subordinated Promissory Note if
Maker does not make a payment when due under this Subordinated Promissory Note
and such failure continues for a period of 10 days following written notice of
such default, or if Maker
A. Defaults on any indebtedness to any Lender and such default
continues for a period of 30 days;
B. Defaults on any other indebtedness for borrowed money in excess of
$100,000 if Payee believes the default may materially affect
Maker's ability to pay this Subordinated Promissory Note; or
C. Becomes the subject of a proceeding under any bankruptcy or
insolvency law, has a receiver or liquidator appointed for any part
of its business or property, or makes an assignment for the benefit
of its creditors.
8. If Maker is in default under this Subordinated Promissory Note,
without notice or demand and without giving up any of his rights, Payee may:
A. Require immediate payment of all amounts owing under this
Subordinated Promissory Note; and/or
B. File suit and obtain judgment.
9. If any payment on this Subordinated Promissory Note becomes due and
payable on a Saturday, Sunday or legal holiday for commercial banks under
applicable banking laws, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest hereon shall be computed on the
basis of a 360-day year, and assessed for the actual number of days elapsed.
10. The rate of interest payable on this Subordinated Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this Subordinated Promissory Note is
ever reduced as a result of the preceding sentence and at any time thereafter
the maximum rate permitted by applicable law shall exceed the rate of interest
provided for on this Subordinated Promissory Note, then the rate provided for on
this Subordinated Promissory Note shall be increased to the maximum rate
permitted by applicable law for such period as is required so that the total
amount of interest received by the Payee is that which would have been received
by the Payee but for the operation of the preceding sentence.
MAKER:
RUUD LIGHTING, INC.
By:
----------------------------------
Name: Xxxx X. Xxxx
Its: Chief Executive Officer
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EXHIBIT C
PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT AND THE RIGHTS
OF THE HOLDERS HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS OF
_____________, _____________ AND _____________ (THE "LENDERS") TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 3, 2001 FROM THE
PAYEE TO THE LENDER.
CALLABLE PROMISSORY NOTE
December 3, 2001
1. For value received, the undersigned, ____________________., an
individual (the "Maker"), promises to pay to the order of ADVANCED LIGHTING
TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal sum of
$_____________ and interest payable at the rate of 8% per annum, compounded
semi-annually. Subject to paragraph 6, principal shall be payable in full on
December 1, 2006. Subject to paragraph 6, interest in arrears shall be payable
in full on December 1, 2006; provided, however, that upon written consent of the
Lenders, interest shall be payable semi-annually on each June 1 and December 1,
commencing June 1, 2003 or, if later, on the first June 1 or December 1
following such consent.
2. The principal sum and interest shall be payable in lawful money of
the United States to the Payee at 00000 Xxxxxx Xxxx, Xxxxx, Xxxx 00000, or
another place the Payee may designate, in writing. Maker shall have the right to
prepay all or any portion of the principal sum and interest without premium or
penalty at any time on or after December 5, 2002, provided that the Maker is not
in default of the Maker's obligations pursuant to paragraph 6.
3. The Maker hereby waives presentment, notice of dishonor, and
protest. This Callable Promissory Note shall be binding upon the Maker, the
Maker's successors and assigns.
4. No delay on the part of any holder hereof in exercising any power
or rights hereunder shall operate as a waiver of any power or rights. Any demand
or notice hereunder to the Maker may be made in person or by regular mail at the
address set out in paragraph 9.
5. This Callable Promissory Note is being made in connection with a
commercial transaction and not a consumer transaction.
6. At any time on or prior to November 30, 2002, the Payee may deliver
a notice requiring that the Maker deliver, as payment in full for the principal
and interest on this Note, the number of shares of common stock, par value
$.001, of Advanced Lighting Technologies, Inc. ("ADLT Common Shares") which is
equal to the principal amount of this Note, as set forth above, divided by $2.
Within three business days following the delivery of such notice, the Maker
shall deliver to the Payee a certificate or certificates representing such ADLT
Common Shares, duly endorsed in blank, free and clear of all encumbrances, in
full payment of this Note. The Payee may require that the Maker deliver such
ADLT Common Shares if, and only if, the acquisition of ADLT Common Shares by
Payee is the subject of a valid waiver under or amendment or supplement to that
certain Indenture, dated as of March 18, 1998, as supplemented (the
"Indenture"), between Advanced Lighting Technologies, Inc. and The Bank of New
York, Trustee, necessary to permit Advanced Lighting Technologies, Inc. to
acquire such shares without violating the terms of the Indenture.
7. The Maker hereby represents and warrants to the Payee that the
Maker now has, and covenants that the Maker will at all times prior to December
5, 2002 have, ownership of an adequate number of ADLT Common Shares to satisfy
Maker's obligations pursuant to paragraph 6.
The Maker further represents and warrants that the Maker has not, and covenants
that it will not prior to December 5, 2002, (a) entered into any agreement
containing any provision which would be violated or breached by the performance
of the Maker's obligations pursuant to paragraph 6 or (b) pledged, assigned,
transferred, hypothecated or in any manner encumbered such ADLT Common Shares,
other than any encumbrance arising out of the Contingent Warrant Agreement,
dated September 30, 1999, as amended, among General Electric Company, Advanced
Lighting Technologies, Inc. et al. or out of the transactions contemplated
thereby.
8. The Maker hereby agrees and understands that the remedy at law for
any breach by me of the Maker's obligations pursuant to paragraph 6 or 7 will be
inadequate and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, it is acknowledged
that upon any violation by the Maker of any provision of paragraph 6 or 7 of
this Agreement, the Payee shall be entitled to immediate injunctive relief and
may obtain a temporary order restraining any threatened or further breach.
Nothing in this paragraph shall be deemed to limit the Payee's remedies at law
or in equity for any breach of such provisions of this Agreement.
9. This Callable Promissory Note shall be deemed to have been made at
Solon, Ohio. This Callable Promissory Note shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with the laws of
the State of Ohio. The Maker hereby consents to the jurisdiction of any state or
federal court located within the State of Ohio and consents that all such
service of process be made by registered or certified mail directed to the Maker
at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000, and service so made shall be deemed
to be completed upon actual receipt thereof. The Maker waives any objection to
jurisdiction and venue of any action instituted hereunder and agrees not to
assert any defense based on lack of jurisdiction or venue. Nothing contained
herein shall affect the right of the Payee to serve legal process in any other
manner permitted by law or affect the right of the Payee to bring any action or
proceeding against the Maker or Maker's property in the courts of any other
jurisdiction.
10. Maker is in default under this Callable Promissory Note if Maker
does not make a payment when due under this Callable Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if Maker
A. Defaults on any indebtedness to any Lender and such default
continues for a period of 30 days;
B. Defaults on any other indebtedness for borrowed money in excess of
$100,000 if Payee believes the default may materially affect
Maker's ability to pay this Callable Promissory Note; or
C. Becomes the subject of a proceeding under any bankruptcy or
insolvency law, has a receiver or liquidator appointed for any part
of Maker's business or property, or makes an assignment for the
benefit of Maker's creditors.
11. If Maker is in default under this Callable Promissory Note,
without notice or demand and without giving up any of its rights, Payee may:
A. Require immediate payment of all amounts owing under this Callable
Promissory Note; and/or
B. File suit and obtain judgment.
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12. If any payment on this Callable Promissory Note becomes due and
payable on a Saturday, Sunday or legal holiday for commercial banks under
applicable banking laws, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest hereon shall be computed on the
basis of a 360-day year, and assessed for the actual number of days elapsed.
13. The rate of interest payable on this Callable Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this Callable Promissory Note is ever
reduced as a result of the preceding sentence and at any time thereafter the
maximum rate permitted by applicable law shall exceed the rate of interest
provided for on this Callable Promissory Note, then the rate provided for on
this Callable Promissory Note shall be increased to the maximum rate permitted
by applicable law for such period as is required so that the total amount of
interest received by the Payee is that which would have been received by the
Payee but for the operation of the preceding sentence.
MAKER:
Name:
-------------------------------------------
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EXHIBIT D
The Supply Agreement attached as Exhibit E(2) and titled the Fixture
Purchase Agreement will be amended to grant Purchaser (as defined in such
Agreement) a fully paid up, nonexclusive, nontransferrable license to use the
Ruud trade name within the territory of New Zealand and Australia for so long as
all products offered for sale by Purchaser which bear the Ruud name are
purchased directly from Seller (as defined in the Fixture Purchase Agreement)
EXHIBIT E(1)
COMPONENT PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the 3rd day of December 2001, by and
between RUUD LIGHTING, INC., a Wisconsin corporation, having offices at 0000
Xxxxxxxxxx Xxx., Xxxxxx, XX 00000 ("Purchaser"), VENTURE LIGHTING INTERNATIONAL,
INC., an Ohio corporation having offices at 00000 Xxxxxx Xxxx, Xxxxx, Xxxx 00000
("Seller") and ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio corporation having
offices at 00000 Xxxxxx Xxxx, Xxxxx, Xxxx 00000 ("ADLT").
WITNESSETH:
WHEREAS, Purchaser was formerly a wholly-owned subsidiary of ADLT and has
purchased certain high intensity discharge ("HID") fixture components from
Seller and other subsidiaries of ADLT in the past for use in its business; and
WHEREAS, Purchaser and Seller have agreed to set forth the terms of
future sales of HID components by Seller to Purchaser in this Component Purchase
Agreement,
NOW THEREFORE, in consideration of the foregoing, and the mutual promises
hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
"Consignment Agreement" shall mean the Consignment Agreement relating to
power supply Products and certain lamp Products between Purchaser and Seller,
substantially in the form of EXHIBIT "B" hereto.
"Products" shall mean HID lamps and power supplies that are used as part
of the HID lighting fixtures for general lighting purposes manufactured by
Purchaser, and such other materials and products that are listed on EXHIBIT "A",
as such exhibit may be updated from time to time by mutual agreement of the
parties.
2. SCOPE. All purchases of Products by Purchaser shall be subject to
the terms and conditions of this Agreement and all purchases of power supply
Products and purchase of certain lamp Products shall also be governed by the
Consignment Agreement. In the event of any inconsistency between any provisions
of Purchaser's purchase orders or releases (except provisions specifying the
types and quantities ordered, delivery dates and the method of shipment), or any
provisions of any Seller's quotation, proposal, acknowledgment, acceptance,
invoice, or any other writing issued in connection herewith and this Agreement
and the Consignment Agreement, this Agreement and the Consignment Agreement
shall prevail.
3. SALE AND PURCHASE OBLIGATIONS. During the term of this Agreement,
Seller agrees to sell to Purchaser up to one hundred percent (100%) of
Purchaser's requirements for Products.
4. SPECIFICATIONS. All Products supplied by Seller shall be in the form
of, and must strictly conform to, the specifications for such Products supplied
by Seller either in the Seller's most recent catalog or otherwise
("Specifications").
5. PRICES. (a) The price, excluding all state, federal and local taxes,
for all Products during the term of this Agreement shall be as detailed in
EXHIBIT "A", as the same may be changed from time to time in accordance with (b)
below. In any calendar year in which the aggregate purchase price for Products
purchased equals or exceeds $6,000,000, Seller shall credit Purchaser's account
within 30 days of the end of such calendar year in the following amounts of the
aggregate purchase price paid for Products ("Earned Rebate") during such
calendar year:
PERCENTAGE REBATE APPLIED TO ALL
AGGREGATE PRODUCT PURCHASES PRODUCTS PURCHASED IN CALENDAR YEAR
--------------------------- -----------------------------------
Up to $5,999,000 0%
(greater than or equal to) $6,000,000 but
(less than or equal to) $6,999,999 10%
(greater than or equal to) $7,000,000 but
(less than or equal to) $7,999,999 11%
(greater than or equal to) $8,000,000 but
(less than or equal to) $8,999,999 12%
(greater than or equal to) $9,000,000 but
(less than or equal to) $9,999,999 13%
(greater than or equal to) $10,000,000 or more 14%
provided, however, that such account shall not be so credited unless and until
all payments have been made necessary to bring Purchaser's accounts current in
accordance with their terms. All purchases in December 2001 shall be used in the
calculating of the Earned Rebate for calendar year 2002. Prices are FOB
Purchaser's dock, with the terms of payment being 60 days net for lamp Products
not subject to the Consignment Agreement and the terms referred to in paragraph
4.03 of the Consignment Agreement (being 55 days net).
(b) Seller represents the price as set forth on Exhibit A for each
Product, assuming the Purchaser qualifies for the Earned Rebate, is not greater
than the lowest pricing given by Seller to any customer other than General
Electric, OSRAM/Sylvania or Xxxxxxxx (the "Lamp Companies"). With respect to the
price for any Product added to Exhibit A, the price shall be set at an amount
which, assuming the Purchaser qualifies for the Earned Rebate, is not greater
than the lowest pricing given to any customer other than the Lamp Companies. Not
less than thirty (30) days prior to the end of each calendar year, if the Seller
has raised or lowered prices for any Product during such calendar year, the
Seller may raise, and shall lower, the price for such Product to the Purchaser
for the following calendar year, provided that the price for such Product after
such change, assuming the Purchaser qualifies for the Earned Rebate, shall not
be greater than the lowest pricing given to any customer other than the Lamp
Companies for such Product.
6. TERM. This Agreement shall become effective on the date first above
written and shall, unless terminated earlier pursuant to the terms of this
Agreement, have a term of five (5) years.
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7. TERMINATION.
(a) Purchaser may terminate this Agreement if Seller fails to deliver to
Purchaser, within sixty (60) days of the date specified in any purchase order of
Purchaser (which specified date shall not be prior to the date such purchase
order is received by Seller) qualified, existing Products complying with the
specifications applicable to such order; PROVIDED, HOWEVER, if failure of
delivery is caused by an event beyond the reasonable control of Seller and
without the gross negligence of Seller, then the sixty (60) day period shall be
extended to one hundred eighty (180) days.
(b) Seller may terminate this Agreement at any time following a change of
control of Purchaser. For purpose of this provision, "change of control" shall
mean that the shareholders named in Schedule 1.4 to the Stock Redemption and
Purchase Agreement dated November 8, 2001 between Purchaser, ADLT, et al., and
their linear descendants, shall cease to maintain beneficial ownership of at
least 50% of the voting power of Purchaser.
(c) Either party may terminate this Agreement upon prior written notice
to the other party in the event of the occurrence of a material breach by the
other party of any of the terms and conditions of this Agreement, which breach
has continued unremedied for thirty (30) days after receipt of notice thereof
(which notice shall specify the material breach) or upon termination of the
Consignment Agreement.
8. PROPRIETARY INFORMATION.
(a) For purposes of this Agreement, the term "Proprietary Information" is
understood to mean technical information and data made available by one party to
the other in written, machine recognizable, graphic or sample form including,
without limitation, drawings, photographs, sketches, models, mockups, and design
or performance specifications, provided such information is clearly and
conspicuously labeled with "Proprietary Information" or other equivalent legend.
Proprietary Information is also understood to include such information and data
disclosed orally or visually, provided that it is identified at the time of
disclosure as proprietary and, provided further, that within thirty (30) days
thereafter, a written summary of such oral or visual disclosure bearing the
aforesaid type of label or legend, is provided to the receiving party.
(b) Proprietary Information furnished hereunder shall be:
(1) used by the receiving party solely for the purpose of this
Agreement; and
(2) held in confidence for the term of this Agreement and two (2)
years after its termination.
Such Information shall not, without prior written consent of the disclosing
party, be used in connection with the manufacture or purchase of metal halide
lamp or power products for or from any third party or for any other purpose
unrelated to this Agreement. Moreover, within the receiving party, dissemination
of Proprietary Information will be restricted to those employees who have been
informed of the terms and conditions hereof.
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(c) Notwithstanding the above stated obligations of restricted use and
confidentiality, the receiving party will not be liable for disclosure or use of
such party of the information which it can establish by tangible evidence:
(1) was rightfully in its possession or known to it prior to receipt
from the disclosing party;
(2) is or becomes known to the public (without breach of the
receiving party's obligations hereunder);
(3) was rightfully acquired by the receiving party from a third
party, which generated such information independently of
Proprietary Information;
(4) was necessarily disclosed by its use or embodiment in a product
that has been placed in commerce by the disclosing party; or
(5) was independently developed by the receiving party provided that
the person or persons developing the same have not had access to
Proprietary Information.
(d) All Proprietary Information shall remain the property of the
disclosing party. Upon demand, all Proprietary Information and any copies shall
be immediately returned, including any written notes which may have been made
regarding same, to the disclosing party.
(e) No rights or obligations other than those expressly recited herein
are to be implied. No license is hereby granted or implied, by estoppel or
otherwise, under any patents (existing or future) or for any use of Proprietary
Information except such use as is expressly contemplated by this Agreement and
the License Agreement.
9. WARRANTY. Seller will provide its standard warranty with respect to
any Products sold hereunder. This warranty does not apply to defects caused by
abuse, misuse, neglect, improper application, or alteration. This warranty shall
apply to Products, which are first claimed to be defective within one year after
their date of delivery to Purchaser. Purchaser's customers will be offered
promotional end-user warranties extended to customers of Seller's other
customers.
SELLER MAKES NO OTHER WARRANTIES OTHER THAN THOSE SET FORTH HEREIN AND THESE
WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES WHETHER EXPRESSED OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE.
Seller's obligation under this warranty is expressly limited to
replacement of Products involved, or if Seller is unable to replace such
Products, to refund the then current market sales price for the Products
involved. The alternative remedies granted herein shall be Purchaser's, and
anyone claiming under or through Purchaser, exclusive remedies. Seller will not
be liable in any case for any loss of use, revenue, or profit, or any
consequential damages arising out of, in connection with, or resulting from, the
Products or any defects therein, even if Seller has been advised of the
possibility of such potential damages.
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10. INSPECTION. All Products shall be subject to inspection. If any of
the Products are not in conformity with the Specifications, Purchaser in
addition to any other rights it may have, may (a) reject the Products and return
them or (b) re-inspect the Products at Seller's expense. If Purchaser does not
inspect the Products or give notice of their rejection within thirty (30) days
after their receipt, such Products shall be considered accepted. Purchaser's
failure to inspect or reject any products shall not relieve Seller from its
obligations under this Agreement.
11. GENERAL.
(a) The failure of each party to enforce at any time, or for any period
of time, any of the provisions of this Agreement shall not be construed as a
waiver of such provision or of the right of the party thereafter to enforce each
and every such provision. Any waiver must be in writing, signed by the party to
be bound thereby. Any waiver of any term or condition of this Agreement shall
not be construed to be a waiver of any other term or condition or a waiver of
the same term and condition subsequently to be kept and performed.
(b) Neither this Agreement nor any rights or obligations hereunder may be
assigned or otherwise transferred by any party without the prior written consent
of each other party; PROVIDED, HOWEVER, that Seller may assign its rights and
obligations in whole or in part to an entity acquiring the metal halide lamp
manufacturing business of Seller or the power supply manufacturing business of
the subsidiaries of ADLT, as applicable, without prior written consent of
Purchaser, if the proposed assignee accepts in writing the provisions of this
Agreement and becomes, in all respects, bound thereby in the place and stead of
Seller with respect to the business so acquired.
(c) Except with regard to the provisions of the Consignment Agreement as
to power supply Products, this Agreement embodies the entire agreement of the
parties with respect to the subject matter hereof and supersedes and cancels any
and all prior understandings and/or agreements.
(d) This Agreement may not be modified except in writing signed by an
authorized representative of each party hereto.
(e) The headings of the various Articles of this Agreement are inserted
only for the convenience of the parties in locating a particular provision and
shall not limit or be utilized in construing the meaning of any Article.
(f) The law of the State of Ohio shall govern the interpretation and
application of this Agreement without regard to its conflicts of law provisions.
(g) All notice under this Agreement shall be in writing and directed to
the parties hereto at the address below:
For Purchaser:
Ruud Lighting, Inc.
0000 Xxxxxxxxxx Xxx.
Xxxxxx, XX 00000
Attention: _________________
5
For Seller:
Advanced Lighting Technologies, Inc.
00000 Xxxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, CFO
or at such other address which the parties may hereafter specify by written
notice.
(h) Sections 8 and 9 shall survive any termination of this Agreement.
12. ENTIRE AGREEMENT. This Agreement, the Consignment Agreement and the
Exhibits attached hereto and thereto contain the entire and only agreement
between the parties with regarding to the subject matter hereof, there being
merged herein all prior and collateral representations, promises and conditions
in connection with said matter and any representation, promise or condition not,
incorporated herein or made a part hereof shall not be binding upon any party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized representatives.
RUUD LIGHTING, INC. VENTURE LIGHTING INTERNATIONAL, INC.
By: By:
----------------------------------- ----------------------------------
Title: Title:
-------------------------------- -------------------------------
ADVANCED LIGHTING TECHNOLOGIES, INC.
By:
-----------------------------------
Title:
--------------------------------
6
Exhibit A Omitted
Exhibit A contains a price list by SKU. Copies of Exhibit A will be provided to
the Securities and Exchange Commission upon request.
EXHIBIT "B" TO
COMPONENT PURCHASE
AGREEMENT
CONSIGNMENT AGREEMENT
THIS CONSIGNMENT AGREEMENT is made this 3rd day of December, 2001
between VENTURE LIGHTING INTERNATIONAL, INC., an Ohio corporation having its
principal business at 00000 Xxxxxx Xxxx, Xxxxx, Xxxx 00000, hereinafter referred
to as the "Consignor," and RUUD LIGHTING, INC., a Wisconsin corporation, having
its principal place of business at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000,
hereinafter referred to as the "Consignee."
IN CONSIDERATION of the Consignor agreeing to deliver, and the
Consignee agreeing to receive, on consignment certain goods more particularly
described in Schedule "A" as inventory for the purposes of manufacturing
finished goods, the parties agree as follows:
ARTICLE ONE - INTERPRETATION
1.01 In this Agreement:
(a) "Component Purchase Agreement" means the Component Purchase Agreement
of even date herewith by and among Consignee, Consignor and Advanced
Lighting Technologies, Inc., as it may be amended from time to time;
(b) "Consignment Price" means the price of each Good consigned under this
Agreement at the time sold in accordance with this Agreement and
charged to the Consignee in accordance with the terms of the Component
Purchase Agreement;
(c) Any reference to "Funds" herein shall be deemed to be a reference to
United States Dollars;
(d) "Goods" means goods of a type or kind described in Schedule "A", or as
may be agreed, to by the parties in writing from time to time,
(including replacement parts in respect of any such Good) that may be
ordered from time to time by the Consignee from the Consignor by
purchase order issued under and in accordance with the terms of this
Agreement; provided, however, with respect to lamps covered by the
Component Purchase Agreement, Goods shall include lamps which the
Consignor cannot maintain 90% on-time delivery performance for next
business day delivery for orders placed in the morning of any business
day.
(e) "Net Invoice Price" shall mean the total price at which an order is
invoiced to the Consignee, including any increase or decrease in the
total amount of the order, but excluding shipping and mailing costs,
taxes and insurance;
(f) "Sale" shall, for the purposes of invoicing, be deemed to have occurred
at such time as the Goods are incorporated into the manufactured or
assembled subassemblies or finished products of the Consignee; and
(g) All accounting terms have the same meaning as are applied to those
terms in accordance with generally accepted accounting principals.
ARTICLE TWO - CONSIGNMENT AND DELAY
2.01 From time to time, the Consignor shall consign to the Consignee
such Goods as may be ordered by the Consignee, and all such deliveries of Goods
shall be received and held in trust in the custody of the Consignee on
consignment as the bailee for the Consignor in accordance with the terms and
conditions of this Agreement.
2.02 Until sold in accordance with this Agreement and incorporated into
the product of the Consignee, the title in any Good delivered to the Consignee
shall remain vested in the Consignor.
2.03 To conform with Uniform Commercial Code requirements, the
Consignor shall file a UCC Financing Statement against the Consignee listing the
Goods shown in Schedule "A" attached hereto. In addition, the Consignor shall
provide written notice to all of the Consignee's creditors, which hold a
perfected security interest in the Consignee's inventory. A complete list of
such creditors has been supplied by the Consignee and is attached hereto as
Schedule "B" and incorporated herein by this reference.
2.04 Delivery of the Goods shall be made by the Consignor at the place
of business of the Consignee first set forth above, or such other place of
business that may be agreed between the parties at the time of ordering the
Goods.
2.05 Goods shipped on orders of 1,320 ballasts shall be F.O.B. the
Consignee's place of business. For orders consisting of less than 1,320 ballasts
shall be F.O.B. Consignor's place of manufacture. Lamps shall be F.O.B.
Consignee's place of business.
ARTICLE THREE - CARE OF GOODS
3.01 The risk of any theft, loss, damage or destruction of the Goods
while they are in the custody of the Consignee shall be on the Consignee, who
indemnifies and shall save the Consignor harmless from any loss or damage
arising therefrom, and where any Goods are lost, damaged, stolen or destroyed,
the parties agree that the liquidated damages to which the Consignor shall be
entitled by reason thereof shall be equal in all cases to the Consignment Price
of the Goods.
3.02 The Consignee shall insure and keep insured, under an insurance
policy issued by a licensed insurance company reasonably acceptable to the
Consignor, all of the Goods for the Consignment Price against loss or damage by
theft, fire and such other perils as the Consignor may require and deliver to
the Consignor a Certification of Insurance showing the Consignor as an
2
additional named insured for the Consignment Price of the Goods that are in the
custody of the Consignee and which acknowledges the Consignor's first ranking
security over the Goods.
3.03 The Consignee shall exercise the same degree of care in storing
and caring for the Goods as a reasonable and prudent person would exercise in
storing and caring for his own goods, and in respect thereto the Consignee shall
provide proper storage facilities which are secure, clean and dry for all Goods
that are in its custody, which facilities shall meet or exceed any storage
requirements or standards specified by the Consignor from time to time and
Consignee shall use it best efforts to rotate all Goods on a first-in first-out
basis.
ARTICLE FOUR - PURCHASE ORDERS AND INVOICING
4.01 Annually the Consignee shall issue a utilization estimate of Goods
listing its annual requirements for the next 12 months and the utilization
schedule for same. The Consignor agrees to deliver sufficient Goods to the
Consignee to maintain approximately two month's requirements of consigned Goods
of the Consignee as set out in the estimate. The Consignee shall provide
quarterly updates to the estimate.
4.02 The Consignee shall complete and forward monthly, not later than
the third business day of each month to the Consignor a consignment inventory
report listing the total consumption of consigned Goods by the Consignee for the
previous calendar month.
4.03 The Consignor shall invoice the Consignee monthly on the basis of
the Goods, which have been used by the Consignee as reported in the consignment
report. Payment terms are net 55 days from the last day of the calendar month of
the Sale.
4.04 The Consignor and Consignee agree that an inventory count of the
Goods shall be made not less than once a year. The parties shall make a year-end
adjustment to the consignment inventory reports if required based on the result
of the inventory count or audit, when one has been conducted. The Consignee
grants the Consignor, the right to conduct an annual audit at Consignor's
expense at Consignee's facility to verify the consignment inventory report.
4.05 Consignee agrees to pay all the taxes, if any, levied or based
upon the delivery and sale of the Goods to the Consignee, including any sales or
use tax, except for any tax levied levied or based upon the income of the
Consignor. Consignee hereby certifies that it holds a valid processing exemption
certificate issued by the State of Wisconsin which is required as a condition
for the avoidance of Wisconsin sales tax in connection with the sale of the
Goods to the Consignee under this Agreement. The Consignee will provide the
Consignor with a blanket exemption certificate entitling the Consignee to be
treated by the Consignor as exempt from collection of such sales tax on the sale
of the Goods to the Consignee.
ARTICLE FIVE - RIGHT TO POSSESSION
5.01 All Goods in the custody of the Consignee shall be stored so as to
keep them identifiable at all times and not intermingled with the Consignee's
other goods.
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5.02 Upon default of the terms of the Agreement or its termination, the
Consignee shall return all of the Goods then in the custody of the Consignee.
Should the Consignee fail to return the (Goods within fifteen (15) days of such
request, the Consignor may enter into any place where the Goods are stored and
may take possession of and remove all or any of the Goods.
5.03 Where any Goods are returned under subsection 5.02:
(a) the cost of shipment and the risk of any theft, loss,
damage, or destruction of the Goods while they are in
transit shall be borne by the Consignee; and
(b) the Goods shall be returned to the Consignor's
nearest place of business.
ARTICLE SIX - COVENANTS BY CONSIGNEE
6.01 The Consignee covenants that, as long as this Agreement is
outstanding, it shall:
(a) remit punctually to the Consignor all amounts held in trust by
the Consignee with respect to any Goods in accordance with the
invoicing terms set out in Article Four;
(b) offload any Goods received from the Consignor within 24 hours
after receipt of shipment and hold and care for the Goods in
accordance with this Agreement and any specific instructions given
by the Consignor from time to time, but all such instructions
shall be consistent with this Agreement;
(c) observe all laws and conform to all valid requirements of any
governmental authority with respect to all or any part of the
storage, display, sale or any other matter concerning the Goods;
(d) defend the Goods against the claims and demands of all other
parties claiming to have an interest therein;
(e) not assert against the Consignor or any person claiming under
the Consignor any claim to or right of ownership or lien in or
upon the Goods, or create or purport to create any mortgage,
charge, lien, security interest or other encumbrance upon the
Goods or any part thereof in favour of any other person;
(f) from time to time upon reasonable request by the Consignor do,
execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, all and every such further acts,
deeds, financing statements, transfers and assurances in law as
the Consignor shall require:
(i) to perfect the rights of the Consignor in or on
all or part of the Goods;
(ii) to give public notice of the Consignor's
retention of title to the Goods delivered to the
Consignee by the Consignor hereunder; or
4
(iii) to carry into effect the intentions of the
parties as set out in this Agreement;
(g) refrain from and prevent waste from being committed on or
against the Goods (reasonable wear and tear excepted), and
maintain the Goods in good order and repair to the reasonable
satisfaction of the Consignor;
(h) forthwith on the happening of any theft, loss, damage or
destruction of the Goods furnish at is own expense all
necessary proofs and do all necessary acts to enable the
Consignor to obtain payment of the insurance money;
(i) keep accurate records of account with respect to its own
business and maintain those records in accordance with
generally accepted accounting principles, and in particular:
(i) to, on a prearranged day of each month, make and
deliver to the Consignor a report in the form
prescribed by the Consignor detailing all sales of
Goods to the Consignee during the month and reporting
on the number of Goods remaining and held on
consignment,
(ii) to maintain a daily perpetual consignment
inventory, and
(iii) take a physical inventory count of the
Consignor's products when requested, not to exceed
twice per calendar year; and
(j) permit the Consignor, by its officers or agents, to enter
the premises of the Consignee and to:
(i) inspect the records of the Consignee relating to
the Goods and to make extracts therefrom;
(ii) inspect the Goods that are at any particular
time in its custody and the manner of their storage
end display;
(iii) conduct an inventory count of the Goods held by
the Consignee at least once a year; and
(iv) permit the Consignor to conduct an audit of the
records of the Consignee relative to the Goods.
6.02 The Consignee covenants to notify the Consignor promptly of:
(a) any change in:
(i) the general nature of its business; or
5
(ii) the location or condition of the Goods;
(b) the details of any claims or litigation which may have a
material affect on the Consignee;
(c) any damage to the whole or a material part of the Goods;
or
(d) any material adverse change in the financial or other
condition of the Consignee or of the Consignee and its
subsidiaries taken as a whole since the date of this Agreement
which affects or is likely to affect the ability of the
Consignee to perform its obligations under this Agreement.
ARTICLE SEVEN - MANNER OF GIVING NOTICE
7.01 Any notice, instruction or document required or permitted to be
given or served by this Agreement or by law may be given personally or by telex
or fax (where the intended recipient is equipped to receive such a form of
telecommunication) or by prepaid courier or regular mail to the intended
recipient at the addresses as stated below and either party may by notice given
in accordance with this subsection change its address for the purposes of this
subsection.
7.02 Any notice shall be deemed (in the absence of evidence of prior
receipt) to have been received by the intended recipient the same day if
personally served, the next business day if sent by telex or fax, and on the
fifth (5th) business day next following when sent by mail or courier.
7.03 To the Consignor:
Venture Lighting International, Inc.
00000 Xxxxxx Xxxx
Xxxxx, XX 00000
Attn: ___________________________
Fax: 440-________________________
If to the Consignee:
Ruud Lighting, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn:______________________________
Fax:_______________________________
ARTICLE EIGHT - GENERAL
8.01 This Agreement shall not be deemed to be or construed as having
been amended as a result of any oral communication between the parties or as a
result of any practice of the parties, but all amendments to this Agreement
shall be in writing and shall be signed by both parties, but all
6
amendments to this Agreement shall be in writing and shall be
signed by both parties, provided that any such amendment may be executed in
counterpart form.
8.02 This Agreement shall continue until either party agrees to
terminate this Agreement as provided for herein.
8.03 Except as provided in Section 8.04, this Agreement shall be in
force so long as the Component Purchase Agreement has not been terminated.
8.04 Either party may terminate this Agreement upon the occurrence and
continuance of any material default by the other party, which default continues
45 days after written notice of such default.
8.05 The rights of the Consignee under this Agreement are personal to
the Consignee and neither the benefits nor the obligations of the Consignee
under this Agreement may be assigned.
8.06 All rights of the Consignor under this Agreement shall enure to
the benefit of its successors or assigns.
8.07 This Agreement shall be governed by the laws of the State of Ohio
applicable therein and the parties hereto agree to the jurisdiction of the State
of Ohio.
8.08 The Consignee acknowledges the receipt of a true copy of this
Agreement signed by the Consignor.
IN WITNESS WHEREOF the parties hereto have set their hands and affixed
their seals on the day and year first above written.
VENTURE LIGHTING INTERNATIONAL, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
RUUD LIGHTING, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
7
EXHIBIT E(2)
FIXTURE PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the __ day of December 2001, by
and between RUUD LIGHTING AUSTRALIA, [INSERT INFO], and RUUD LIGHTING NEW
ZEALAND, [INSERT INFO] (Collectively, "Purchaser"), and RUUD LIGHTING, INC., a
Wisconsin corporation, having offices at 0000 Xxxxxxxxxx Xxx., Xxxxxx, XX 00000
("Seller").
WITNESSETH:
WHEREAS, each Purchaser is a wholly-owned subsidiary of ADVANCED
LIGHTING TECHNOLOGIES, INC., an Ohio corporation ("ADLT"), and has purchased
certain lighting fixtures from Seller, which is a former subsidiary of ADLT, in
the past for use in its business; and
WHEREAS, Purchaser and Seller have agreed to set forth the terms of
future sales of lighting fixtures by Seller to Purchaser in this Fixture
Purchase Agreement,
NOW THEREFORE, in consideration of the foregoing, and the mutual
promises hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
"Products" shall mean lighting fixtures that are purchased for resale
by Purchaser, and such other products that are listed on EXHIBIT "A", as such
exhibit may be updated from time to time by mutual agreement of the parties.
2. SCOPE. All purchases of Products by Purchaser shall be subject to
the terms and conditions of this Agreement. In the event of any inconsistency
between any provisions of Purchaser's purchase orders or releases (except
provisions specifying the types and quantities ordered, delivery dates and the
method of shipment), or any provisions of any Seller's quotation, proposal,
acknowledgment, acceptance, invoice, or any other writing issued in connection
herewith and this Agreement shall prevail.
3. SALE AND PURCHASE OBLIGATIONS. During the term of this Agreement,
Seller agrees to sell to Purchaser up to one hundred percent (100%) of
Purchaser's requirements for Products. Seller shall cooperate with Venture
Lighting International, Inc. ("VLI") in combining shipments of Products and
products of VLI to enhance the frequency of full containers to Purchaser.
4. SPECIFICATIONS. All Products supplied by Seller shall be in the form
of, and must strictly conform to, the specifications for such Products supplied
by Seller either in the Seller's most recent catalog or otherwise
("Specifications").
5. PRICES. The price, excluding all state, federal and local taxes, for
all Products during the term of this Agreement shall be Seller's standard cost,
used in preparation of its financial statements in accordance with generally
accepted accounting principles, as the same may be changed from time to time,
plus 20%. Prices are FOB Seller's's dock, with the terms of payment being ninety
(90) days net from the date of shipment; provided, however, that no shipments
will be made at less 1 than full-container surface shipment rates without prior
consent of Purchaser.
6. TERM. This Agreement shall become effective on the date first above
written and shall, unless terminated earlier pursuant to the terms of this
Agreement, have a term of five (5) years.
7. TERMINATION.
(a) Purchaser may terminate this Agreement if Seller fails to deliver
to Purchaser, within one hundred twenty (120) days of the date specified in any
purchase order of Purchaser (which specified date shall not be prior to the date
such purchase order is received by Seller qualified, existing Products complying
with the specifications applicable to such order; PROVIDED, HOWEVER, if failure
of delivery is caused by an event beyond the reasonable control of Seller and
without the gross negligence of Seller, then the one hundred twenty (120) day
period shall be extended to one hundred eighty (180) days.
(b) Either party may terminate this Agreement upon prior written notice
to the other party in the event of the occurrence of a material breach by the
other party of any of the terms and conditions of this Agreement, which breach
has continued unremedied for thirty (30) days after receipt of notice thereof
(which notice shall specify the material breach).
8. PROPRIETARY INFORMATION.
(a) For purposes of this Agreement, the term "Proprietary Information"
is understood to mean technical information and data made available by one party
to the other in written, machine recognizable, graphic or sample form including,
without limitation, drawings, photographs, sketches, models, mockups, and design
or performance specifications, provided such information is clearly and
conspicuously labeled with "Proprietary Information" or other equivalent legend.
Proprietary Information is also understood to include such information and data
disclosed orally or visually, provided that it is identified at the time of
disclosure as proprietary and, provided further, that within thirty (30) days
thereafter, a written summary of such oral or visual disclosure bearing the
aforesaid type of label or legend, is provided to the receiving party.
(b) Proprietary Information furnished hereunder shall be:
(1) used by the receiving party solely for the purpose of this Agreement;
and
(2) held in confidence for the term of this Agreement and two (2) years
after its termination.
Such Information shall not, without prior written consent of the disclosing
party, be used in connection with the manufacture or purchase of lighting
fixtures for or from any third party or for any other purpose unrelated to this
Agreement. Moreover, within the receiving party, dissemination of Proprietary
Information will be restricted to those employees involved in performance of
this Agreement and who have been informed of the terms and conditions hereof.
(c) Notwithstanding the above stated obligations of restricted use and
confidentiality, the receiving party will not be liable for disclosure or use of
such party of the information which it can establish by tangible evidence:
(1) was rightfully in its possession or known to it prior to
receipt from the disclosing party;
(2) is or becomes known to the public (without breach of the
receiving party's obligations hereunder);
(3) was rightfully acquired by the receiving party from a
third party, which generated such information independently of
Proprietary Information;
(4) was necessarily disclosed by its use or embodiment in a
product that has been placed in commerce by the disclosing
party; or
(5) was independently developed by the receiving party
provided that the person or persons developing the same have
not had access to Proprietary Information.
(d) All Proprietary Information shall remain the property of the
disclosing party. Upon demand, all Proprietary Information and any copies shall
be immediately returned, including any written notes which may have been made
regarding same, to the disclosing party.
(e) No rights or obligations other than those expressly recited herein
are to be implied. No license is hereby granted or implied, by estoppel or
otherwise, under any patents (existing or future) or for any use of Proprietary
Information except such use as is expressly contemplated by this Agreement and
the License Agreement.
9. WARRANTY. Seller will provide its standard
warranty with respect to any Products sold hereunder. This
warranty does not apply to defects caused by abuse, misuse,
neglect, improper application, or alteration. Seller may
require the return of Products claimed to be defective for
examination. This warranty shall apply to Products, which are
first claimed to be defective within one year after their date
of delivery to Purchaser.
SELLER MAKES NO OTHER WARRANTIES OTHER THAN THOSE SET FORTH HEREIN AND THESE
WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES WHETHER EXPRESSED OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE.
Seller's obligation under this warranty is expressly limited to
replacement of Products
involved, or if Seller is unable to replace such Products, to refund the then
current market sales price for the Products involved. The alternative remedies
granted herein shall be Purchaser's, and anyone claiming under or through
Purchaser, exclusive remedies. Seller will not be liable in any case for any
loss of use, revenue, or profit, or any consequential damages arising out of, in
connection with, or resulting from, the Products or any defects therein, even if
Seller has been advised of the possibility of such potential damages.
10. INSPECTION. All Products shall be subject to inspection. If any of
the Products are not in conformity with the Specifications, Purchaser in
addition to any other rights it may have, may (a) reject the Products and return
them or (b) re-inspect the Products at Seller's expense. If Purchaser does not
inspect the Products or give notice of their rejection within thirty (30) days
after their receipt, such Products shall be considered accepted. Purchaser's
failure to inspect or reject any products shall not relieve Seller from its
obligations under this Agreement.
11. GENERAL.
(a) The failure of each party to enforce at any time, or for any period
of time, any of the provisions of this Agreement shall not be construed as a
waiver of such provision or of the right of the party thereafter to enforce each
and every such provision. Any waiver must be in writing, signed by the party to
be bound thereby. Any waiver of any term or condition of this Agreement shall
not be construed to be a waiver of any other term or condition or a waiver of
the same term and condition subsequently to be kept and performed.
(b) Neither this Agreement nor any rights or obligations hereunder may
be assigned or otherwise transferred by any party without the prior written
consent of each other party; PROVIDED, HOWEVER, that Seller may assign its
rights and obligations in whole or in part to an entity acquiring the lighting
fixture business of Seller, without prior written consent of Purchaser, if the
proposed assignee accepts in writing the provisions of this Agreement and
becomes, in all respects, bound thereby in the place and stead of Seller with
respect to the business so acquired.
(c) This Agreement embodies the entire agreement of the parties with
respect to the subject matter hereof and supersedes and cancels any and all
prior understandings and/or agreements.
(d) This Agreement may not be modified except in writing signed by an
authorized representative of each party hereto.
(e) The headings of the various Articles of this Agreement are inserted
only for the convenience of the parties in locating a particular provision and
shall not limit or be utilized in construing the meaning of any Article.
(f) The law of the State of Ohio shall govern the interpretation and
application of this Agreement without regard to its conflicts of law provisions.
(g) All notice under this Agreement shall be in writing and directed to
the parties hereto at the address below:
For Purchaser:
ADD CONTACT INFO
For Seller:
Ruud Lighting, Inc.
0000 Xxxxxxxxxx Xxx.
Xxxxxx, XX 00000
Attention: _________________
or at such other address which the parties may hereafter specify by written
notice.
(h) Sections 8 and 9 shall survive any termination of this Agreement.
12. ENTIRE AGREEMENT. This Agreement and the Exhibits attached hereto
and thereto contain the entire and only agreement between the parties with
regarding to the subject matter hereof, there being merged herein all prior and
collateral representations, promises and conditions in connection with said
matter and any representation, promise or condition not, incorporated herein or
made a part hereof shall not be binding upon any party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized representatives.
RUUD LIGHTING AUSTRALIA, INC. RUUD LIGHTING, INC.
By: By:
------------------------- -----------------------
Title: Title:
------------------------- -------------------------
RUUD LIGHTING NEW ZEALAND, INC.
By:
------------------------
Title:
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Schedules 2.1-5.7 Omitted
These Schedules contain more detailed information regarding the matters
described in the corresponding sections. Copies of these schedules will be
provided to the Securities and Exchange Commission on request.
SCHEDULE 9.1
SPECIAL INDEMNITY SURVIVAL PERIOD
Section Heading Survival
------- ------- --------
Section 3.2 Authorization and Enforceability Three years
Section 3.4 Shares; Capitalization Three years but portion of
representation that affects
Buyers' title to all of the
outstanding capital stock of RLI
survives indefinitely
Section 3.9 Tax Matters Statute of Limitations, plus
90 days
Section 3.10 Business; Assets Title representation survives to
Statute of Limitations, plus
90 days
Section 3.20 Compliance with Environmental Laws Five years
Section 3.21 Environmental Liabilities Five years
Section 3.22(c) Shares; Capitalization Three years but portion of
representation that affects
Buyers' title to all of the
outstanding capital stock of
Xxxxxx Lighting survives
indefinitely
Section 3.22(e) Tax Matters Statute of Limitations, plus
90 days
Section 3.22(g) Assets Title representation survives to
Statute of Limitations, plus 90
days
Section 3.22(l) Environmental Laws Survives to statute of
limitations, plus 90 days
Section 3.23(c) Shares; Capitalization Three years but portion of
representation that affects
Buyers' title to all of the
outstanding capital stock of Ruud
Italy survives indefinitely
Section 3.23(e) Tax Matters Statute of Limitations, plus
90 days
