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Exhibit 10.1
SECOND AMENDMENT TO
LOAN AGREEMENT,
SECURED PROMISSORY NOTE
AND
SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT, SECURED PROMISSORY NOTE AND
SECURITY AGREEMENT ("this Second Amendment"), is made and effective as of March
15, 2001 (the "Effective Date"), by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), and ADVANCED
LIGHTING TECHNOLOGIES, INC. ("ADLT").
BACKGROUND
▇. ▇▇▇▇▇▇▇ and ADLT entered into a Loan Agreement dated as of October
8, 1998 (the "Original Loan Agreement"), pursuant to which ADLT advanced ▇▇▇▇▇▇▇
$9,000,000 (the "Original Advance").
B. Pursuant to the Original Loan Agreement, the Original Advance was
evidenced by a Secured Promissory Note dated October 8, 1998 (the "Original
Note") and secured pursuant to (i) a Security Agreement dated as of October 8,
1998 (the "Original Security Agreement"), (ii) the Real Estate Mortgages
recorded as follows: June 30, 1999 Geauga County Ohio No 1245 page 39, June 30,
1999 Portage County Ohio No. 441 Page 202 and No. 441 Page 214, and August 24,
1999 ▇▇▇ County Florida Book 3160 Page 1096 (the "Mortgages"), (iii) the
Collateral Assignment of Contract dated as of October 8, 1998 (the
"Assignment"), and (iv) Allonge No. 2 to Promissory Note From ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
Inc. with delivery of the referenced note the (the "Karat Note").
C. Effective November 22, 2000, the Loan, the Note and the Security
Agreement were amended pursuant to the First Amendment to Loan Agreement,
Secured Promissory Note and Security Agreement ("First Amendment") to provide
for additional loans, up to a maximum additional principal amount of $1,900,000,
for the purpose of reducing the Margin Loans held by Bear ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇, the current Margin Lenders, in satisfaction of then-existing margin
calls. The Original Loan Agreement, the Original Note and the Original Security
Agreement, each as amended by the First Amendment, are referred to herein as the
Loan Agreement, the Note and the Security Agreement, respectively.
D. The Loan Agreement, the Note, the Security Agreement, the Mortgages,
the Assignment and the Karat Note are included in the "Loan Documents" as
defined in the Loan Agreement. All initially capitalized terms that are used but
not defined herein have the meaning ascribed to them in the Loan Documents.
E. On March 13, 2001, ▇▇▇▇▇▇▇ discussed the status of the Margin Loan
with the Board of Directors in light of the current price of ADLT's common
stock, and advised the Board that he might have to request additional loans.
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F. On March 15, upon reports from its advisors and after discussion,
ADLT's disinterested and independent directors have determined that it is in the
best interest of ADLT and its shareholders, and believe that it will benefit
ADLT, to make an additional advance or advances under the Note to reduce the
Margin Loan with Bear ▇▇▇▇▇▇▇ (the "BS Additional Advance") and an additional
advance or advances to reduce the Margin Loan with ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "RJ
Additional Advance") (collectively, the "Additional Advances"). The amount of
such advances will be limited to the amount necessary to meet actual margin
calls on the Margin Loans and will be further limited by the maximum amount
permitted under the terms of the Credit Agreement, dated as of May 21, 1999, as
amended (the "Credit Agreement"), between ADLT and certain of its subsidiaries,
various financial institutions and PNC Bank, National Association, as Agent.
AGREEMENT
NOW THEREFORE, as an inducement to and in consideration of the
Additional Advances, the agreements made herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
▇▇▇▇▇▇▇ and ADLT agree as follows:
1. The Loan Agreement is hereby amended to provide that (i) the Margin
Shares are pledged as collateral to Bear ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇, (ii) Bear
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ are the Margin Lenders, (iii) the Margin Deficit is as
declared from time to time by the Margin Lenders, (iv) the Loan Amount includes
the Additional Advances, and (v) the Loan Documents include this Second
Amendment.
2. The Additional Advances are principal under and evidenced by the
Note to the same effect as if the Additional Advances were made as part of the
Original Advance. The Maturity Date of the Note is as specified in EXHIBIT 2 to
this Second Amendment.
3. ▇▇▇▇▇▇▇ acknowledges and agrees that (i) the Security Interest
granted in the Security Agreement, (ii) the liens granted in the Mortgages,
(iii) the rights of ADLT under the Assignment and Karat Note, (iv) all other
rights and instruments that now or hereafter secure the Loan and ▇▇▇▇▇▇▇'▇
Obligations with respect thereto secure the Additional Advances as amounts
advanced to ▇▇▇▇▇▇▇ under the Loan Documents and (v) without limiting the
description of the Collateral in any way, the Collateral includes all choses in
action in which ▇▇▇▇▇▇▇ is directly or indirectly the plaintiff and the proceeds
from all choses in action.
4. ▇▇▇▇▇▇▇ represents and warrants to ADLT that on the date hereof (i)
he is not in breach of any covenant in any Loan Document, (ii) all
representations and warranties in the Loan Documents are true and correct except
as has been disclosed to ADLT in writing and (ii) he has put into place a
programmed stock sale plan to sell Margin Shares in accordance with Rule 10b5-1
under the Security Exchange Act of 1934, in accordance with EXHIBIT 5 ATTACHED
HERETO.
5. ▇▇▇▇▇▇▇ acknowledges and agrees that he shall not directly or
indirectly,
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in one or a series of transactions, pay the proceeds of the Additional Advances
to or for the benefit of any other person or entity, all such proceeds to be
paid to the Margin Lenders to reduce the Margin Deficit.
6. ▇▇▇▇▇▇▇ acknowledges and agrees that the Additional Advances will be
wired directly to the Margin Lenders on ▇▇▇▇▇▇▇'▇ account. The initial BS
Advance and the initial RJ Advance to be wired upon execution of this Amendment
and any additional BS Advance or RJ Advance to be wired upon demand for payment
by BS or RJ, as the case may be, and further instruction by the special
committee appointed by ADLT's Board of Directors to administer the Additional
Advances.
7. ▇▇▇▇▇▇▇ acknowledges and agrees that the Additional Advances are
included in the Loan Amount and covered by the Loan Documents as if the
Additional Advances were made as part of the Original Advance.
8. ▇▇▇▇▇▇▇ acknowledges and agrees that, without limiting in any way
the collateral included in the Collateral, stock, bonds, options and other
securities now or hereafter held by him in any subsidiary of ADLT, now or
hereafter formed, including any interest in securities of Deposition Sciences,
Inc., are not excluded from the Collateral.
9. ▇▇▇▇▇▇▇ will take all actions and execute all instruments as
requested by ADLT , in order to perfect, and keep perfected, all liens in any of
the Collateral granted to ADLT, including in any after acquired Collateral and
to perfect rights with respect to the Additional Advances.
10. This Amendment shall be governed by and construed in accordance
with the laws of Ohio without regard to conflict of laws principles (except to
the extent the Collateral is situated in a state other than Ohio and in that
case any laws of such state which are required to control mortgages granted on
such property shall apply).
11. This Amendment inures to the benefit of and is binding upon
▇▇▇▇▇▇▇, and his estate, heirs, executors, administrators and personal
representatives, successors and assigns and ADLT and its successors and assigns.
▇▇▇▇▇▇▇ may not assign or delegate this Amendment, any Loan Document or any of
his rights or obligations thereunder.
12. This Amendment may be executed in any number of counterparts, each
of which shall be regarded as an original and all of which shall constitute but
one and the same instrument; it shall not be necessary in proving this Agreement
to produce or account for more than one such counterpart. A faxed executed
counterpart of this Amendment will be considered an original for evidentiary
purposes.
13. This Amendment only modifies the Loan Documents to the extent
provided for herein, and the Loan Documents otherwise remain in full force and
effect without interruption. This Amendment may not be amended, changed,
modified, altered or terminated and no performance may be waived except in
writing executed by both parties.
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20 This Amendment constitutes the entire agreement between the parties
with respect to the Additional Advances and all prior and contemporaneous
agreements or discussions, written or oral, with respect thereto have no force
or effect whatsoever.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇ and ADLT have caused this Amendment to be
duly executed and delivered as of the Effective Date.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Its : President
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EXHIBIT 2
The Loan shall be payable October 6, 2001; provided that:
- $700,000 of such loan, plus an amount equal to the total of
all Additional Advances made pursuant to the Second Amendment,
shall be paid within two business days after the first trading
day on which the last sale price of the Corporation's common
stock exceeds $10 per share AND the average closing price of
such common stock for the 20 trading days preceding such date
exceeds $10 per share;
- $700,000 of such loan shall be paid within two business days
after the first trading day on which the last sale price of
the Corporation's common stock exceeds $11 per share AND the
average closing price of such common stock for the 20 trading
days preceding such date exceeds $11 per share;
- The proceeds of any judgment or settlement of the litigation
brought by ▇▇. ▇▇▇▇▇▇▇ and discussed at the meeting shall be
applied to repayment of the loan; and
- The Corporation reserves the right to require immediate
repayment if the Company requires the payment to prevent an
unacceptable strain on cash resources.
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EXHIBIT 5
The Plan provides for the sale of shares of common stock of the Corporation
commencing as soon as practicable after June 1, 2001. The Plan requires sales of
shares if the price of such common stock exceeds $15 per share and that the
proceeds of such sale are applied to the repayment of any outstanding amounts
due on loans from the Corporation to ▇▇. ▇▇▇▇▇▇▇, after payment of any amounts
required to reduce the balance of the margin loan to permit withdrawal of
proceeds. The terms of such plan, including determination of the number shares
subject to sale at any time and the method of sale, has been approved by the
special committee appointed by ADLT's Board of Directors to administer the
Additional Advance made pursuant to the First Amendment.
