EXHIBIT 10.4
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is made and entered
into this 8th day of September, 2003, by and among Advanced Lighting
Technologies, Inc. ("ADLT"), Venture Lighting International, Inc. ("Venture"),
Ruud Lighting, Inc. ("RLI"), and Xxxx X. Xxxx, Xxxxx Xxxx, Xxxxxxxx X. Xxxxxx,
Xxxxxxxxxxx X. Xxxx, and Xxxxxxx X. Xxxxxxx (collectively, the "Individual
Shareholders"). The above-named persons and entities are sometimes hereinafter
collectively referred to as "the Parties."
RECITALS
1. On February 5, 2003 (the "Petition Date"), ADLT and
various of its affiliates (collectively, the "Debtors") each filed a voluntary
petition for relief under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code"). The Debtors' bankruptcy cases are jointly administered in
the United States Bankruptcy Court for the Northern District of Illinois (the
"Bankruptcy Court") under Case Xx. 00 X 00000 (the "Bankruptcy Case").
2. On May 29, 2003, RLI and the Individual Shareholders
filed substantially identical Proofs of Claim against ADLT (collectively, the
"ADLT Claim"), and RLI filed a Proof of Claim against Venture (the "Venture
Claim").
3. The ADLT Claim is based in part on the Stock
Redemption and Purchase Agreement (as amended, the "Purchase Agreement") by and
among RLI, ADLT and the Individual Shareholders dated November 14, 2001.
4. In the ADLT Claim, RLI and the Individual
Shareholders assert claims against ADLT relating to the Purchase Agreement and
certain other matters in a total amount in excess of $5,881,368, including:
a. A claim for conversion, in which RLI and the
Individual Shareholders contend that ADLT received and
wrongfully retained $1,270,963 in payments that should have
been credited to RLI's accounts.
b. A claim for reimbursement of expenses
related to the lease of real property located in Elkhorn,
Wisconsin (the "Elkhorn Property"), pursuant to which RLI and
the Individual Shareholders contend that ADLT is liable to RLI
and the Individual Shareholders for an amount in excess of
$1.5 million.
c. A claim for overstated inventory and
accounts receivable, in which RLI and the Individual
Shareholders contend that ADLT breached certain
representations and warranties in the Purchase Agreement by
failing accurately to report inventory and accounts receivable
of Xxxxxx Lighting, Inc., thereby forcing RLI to write off
obsolete or otherwise unsaleable inventory and uncollectable
accounts receivable in excess of $2.3 million.
d. A claim for tax payments, pursuant to which
RLI and the Individual Shareholders contend that ADLT is
liable for $45,990 in taxes, interest and penalties resulting
from a Michigan Single Business tax audit.
e. A claim for post-closing expenses, in which
RLI and the Individual Shareholders contend that RLI has
incurred expenses that are the responsibility of ADLT under
the Purchase Agreement in the approximate amount of $714,415,
and legal and accounting fees in the approximate amount of
$50,000, for which ADLT agreed to indemnify RLI.
f. Various additional claims for breaches of
representations and warranties.
5. In the ADLT Claim, RLI and the Individual
Shareholders also assert a claim based on ADLT's possession of certain documents
and records which allegedly belong to RLI, and which ADLT has allegedly refused
to return, including various "month end binders" and computer tapes (the "Ruud
Documents").
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6. Further, in the ADLT Claim, RLI and the Individual
Shareholders assert a warranty claim (the "Warranty Claim") in which they seek a
sum potentially in excess of $50 million for the possible replacement of
allegedly defective component parts supplied to RLI by Venture and incorporated
by RLI into lighting fixtures sold to its customers. As part of the Warranty
Claim, RLI and the Individual Shareholders also assert that they may have
additional claims against ADLT and Venture relating to allegedly defective
component parts supplied by Venture, including, but not limited to, tort claims
for personal injury or property damage.
7. In the Venture Claim, RLI asserts that it is owed
$43,510.83 by Venture for an unpaid invoice, and that Venture is also liable to
RLI for losses under the Contingent Warranty Claim.
8. ADLT and Venture assert that they have claims against
RLI and the Individual Shareholders relating to the Purchase Agreement and
otherwise, including, but not limited to, the right of ADLT to receive payments
pursuant to the following promissory notes: (a) Subordinated Promissory Note,
dated December 12, 2001, in the amount of $3,000,000 (plus interest), made by
RLI payable to ADLT; (b) Callable Promissory Note, dated December 12, 2001, in
the amount of $1,503,000 (plus interest), made by Xxxx X. Xxxx payable to ADLT;
(c) Callable Promissory Note, dated December 12, 2001, in the amount of $897,000
(plus interest), made by Xxxxxxxxxxx X. Xxxx payable to ADLT; (d) Callable
Promissory Note, dated December 12, 2001, in the amount of $300,000 (plus
interest), made by Xxxxxxxx X. Xxxxxx payable to ADLT; and (e) Callable
Promissory Note, dated December 12, 2001, in the amount of $300,000 (plus
interest), made by Xxxxxxx X. Xxxxxxx payable to ADLT (collectively, the "Old
Ruud Notes").
9. On June 16, 2003, the Debtors filed their Objection
to Proofs of Claim of Ruud Lighting, Inc.
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10. On July 15, 2003, RLI filed the Response of Ruud
Lighting, Inc. to Debtors' Objection to Proofs of Claim of Ruud Lighting, Inc.
11. RLI, Venture and ADLT are parties to a Component
Purchase Agreement entered into as of December 3, 2001, as amended as of
November 18, 2002 and April 16, 2003 (the "Component Purchase Agreement").
Pursuant to paragraph 5 of the Component Purchase Agreement, RLI is entitled to
receive certain cash rebates for the purchase of products from Venture. The
amount and terms of the rebates are set forth in paragraph 5 of the Component
Purchase Agreement. The Component Purchase Agreement, unless terminated earlier
pursuant to its terms, has a term of five (5) years. The Parties desire to
continue to do business pursuant to the Component Purchase Agreement.
12. RLI and ADLT's subsidiaries, Advanced Lighting
Technologies Australia, Inc. ("ADLT Australia") and Advanced Lighting
Technologies New Zealand, Ltd. ("ADLT New Zealand") are parties to a Fixture
Purchase Agreement (the "Fixture Purchase Agreement") entered into as of
December 3, 2001. The Parties desire to continue to do business pursuant to the
Fixture Purchase Agreement.
13. The Parties have agreed, subject to Bankruptcy Court
approval, to compromise their disputes as set forth below.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the
receipt, adequacy and sufficiency of which is acknowledged, the Parties agree as
follows:
1. INCORPORATION OF RECITALS. Each of the Parties
represents and warrants that each of the above Recitals is true and correct to
the best of such Party's knowledge, information and belief, and such Recitals
are incorporated herein as part of this Agreement.
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2. BANKRUPTCY COURT APPROVAL. The Parties expressly
acknowledge that this Agreement is subject to approval by the Bankruptcy Court,
and agree to use their best efforts and good faith to obtain such approval.
Pursuant thereto, the Debtors promptly shall file a motion pursuant to
Bankruptcy Rule 9019 requesting that the Bankruptcy Court approve this Agreement
(the "Settlement Motion").
3. EFFECTIVE DATE. The "Effective Date" of this
Agreement shall be the eleventh (11th) day after the Bankruptcy Court enters a
final, non-appealable order granting the Settlement Motion and authorizing ADLT
and Venture to enter into this Agreement.
4. REPLACEMENT OF OLD RUUD NOTES. The Old Ruud Notes
shall be replaced by new promissory notes in the aggregate, principal amount of
$3 million due on December 1, 2006 (the "New Ruud Notes"). The New Ruud Notes
will be in the forms attached to this Agreement as Exhibits A-D, which are
incorporated herein by reference. Each of the New Ruud Notes will begin to
accrue interest as of the date of this Agreement. On the Effective Date, ADLT
will deliver to RLI and the Individual Shareholders the original Old Ruud Notes
stamped "cancelled," and the Individual Shareholders will deliver to ADLT the
duly executed original New Ruud Notes.
5. ACKNOWLEDGEMENT OF SUBORDINATION. The parties
acknowledge that the Old Ruud Notes are subject to certain Subordination
Agreements pursuant to which ADLT subordinated the payment of the Old Ruud Notes
to the payment of all Superior Debt (as defined in such Subordination
Agreements). The parties also agree and acknowledge that the New Ruud Notes will
be subordinate to the Superior Debt in accordance with the terms of the
Subordination Agreements.
6. APPLICATION OF REBATES TO NEW RUUD NOTES. Any rebates
creditable to RLI under paragraph 5 of the Component Purchase Agreement will be
applied to prepay amounts
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due on the New Ruud Notes, copies of which are attached hereto as Exhibits A-D,
on a pro rata basis, said rebates to be applied first to accrued interest, and
then to principal.
7. DIVISION OF SUBLEASE PROCEEDS. Fifty per cent (50%)
of all rent payments received by RLI pursuant to any sublease of the Elkhorn
Property shall be paid to ADLT. RLI shall make such sublease payments to ADLT
within three (3) days of the receipt of such payments. ADLT will not have any
obligations to RLI with respect to the Elkhorn Property and any obligations by
ADLT to RLI concerning the Elkhorn Property under the Purchase Agreement or
otherwise are waived and released in their entirety.
8. ASSUMPTION OF AGREEMENTS. Venture and ADLT shall each
assume the Component Purchase Agreement pursuant to section 365 of the
Bankruptcy Code and shall be bound by its terms and provisions, subject to and
as modified by Section 11 hereof. The Settlement Motion shall request Bankruptcy
Court Approval of such assumptions pursuant to Bankruptcy Rule 6006.
9. DELIVERY OF RUUD DOCUMENTS. ADLT shall, no later than
15 days following the Effective Date, deliver to RLI the Ruud Documents. In the
event that ADLT needs future access to the Ruud Documents, RLI will permit ADLT
to make copies of the Ruud Documents at ADLT's expense.
10. DISALLOWANCE OF PROOFS OF CLAIM. The order entered by
the Bankruptcy Court approving the Settlement Motion and this Agreement shall
disallow, with prejudice, all claims filed and asserted, or that could be filed
and asserted, by RLI or the Individual Shareholders against the Debtors'
estates, including, without limitation, those set forth in the ADLT Claim and
the Venture Claim.
11. RELEASE IN FAVOR OF ADLT AND VENTURE. Except for the
obligations of ADLT and Venture expressly set forth in this Agreement, RLI and
the Individual Shareholders,
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on behalf of themselves and their current, former or future agents, parent
companies, subsidiaries, affiliates, representatives, attorneys, financial
consultants, advisors, trustees, beneficiaries, spouses, successors,
predecessors, assigns, and any other persons acting on their behalf, release,
disclaim, and discharge ADLT and Venture, and their respective parent companies,
subsidiaries, affiliates, agents, representatives, attorneys, financial
consultants, advisors, trustees, beneficiaries, subtrusts, officers, directors,
managers, shareholders, members, employees, partners, spouses, successors,
predecessors, assigns, and any other persons acting on their behalf, from any
and all claims, demands, suits, rights or causes of action or damages, expenses,
attorneys' fees, penalties, interest, costs, injunctive relief or any other
relief available in law or equity that RLI or the Individual Shareholders have
asserted, or presently could assert, against ADLT or Venture, if any, including,
without limitation, the ADLT claim, the Venture claim, and any claim or
potential claim arising under or relating to the Purchase Agreement. Nothing
herein shall be construed as releasing ADLT and Venture from their obligations
(1) with respect to rebates for products purchased by RLI on or after March 31,
2003, pursuant to the Component Purchase Agreement, or (2) to pay for products
purchased from RLI under the Fixture Purchase Agreement prior to the Effective
Date. Nothing herein shall be construed as releasing Venture from its
obligations to honor (1) its standard warranty as provided under paragraph 9 of
the Component Purchase Agreement, as amended, for Products, as defined in the
Component Purchase Agreement, that actually fail within the warranty period, or
(2) promotional end-user warranties that have been extended to RLI's customers
for Products that actually fail within the promotional end-user warranty period;
RLI acknowledges and agrees that the foregoing shall be its sole remedy with
respect to product warranties. The parties further acknowledge and agree that
the release set forth in this paragraph does not affect the rights of the
Individual Shareholders as shareholders of ADLT.
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12. RELEASE IN FAVOR OF RLI AND THE INDIVIDUAL
SHAREHOLDERS. Except for the obligations of RLI and the Individual Shareholders
expressly set forth in this Agreement, including, without limitation,
obligations under the New Ruud Notes, ADLT and Venture, on behalf of themselves
and their current, former or future agents, parent companies, subsidiaries,
affiliates, representatives, attorneys, financial consultants, advisors,
trustees, beneficiaries, spouses, successors, predecessors, assigns, and any
other persons acting on their behalf, release, disclaim, and discharge RLI and
the Individual Shareholders and their agents, representatives, attorneys,
financial consultants, advisors, trustees, beneficiaries, employees, partners,
spouses, successors, predecessors, assigns, and any other persons acting on
their behalf, from any and all claims, demands, suits, rights or causes of
action or damages, expenses, attorneys' fees, penalties, interest, costs,
injunctive relief or any other relief available in law or equity, that they
presently could assert against RLI or the Individual Shareholders, including,
without limitation, any claim or potential claim arising under or relating to
the Purchase Agreement. Nothing herein shall be construed as releasing RLI from
its obligations under (1) the Fixture Purchase Agreement with respect to
products purchased by ADLT Australia or ADLT New Zealand on or after the
Effective Date or (2) to pay for products purchased under the Component Purchase
Agreement prior to the Effective Date.
13. NO ADMISSION OF LIABILITY. By entering into this
Agreement, each of the Parties recognizes that this Agreement is a compromise of
disputed litigation and claims and that nothing in this Agreement shall be
considered evidence or an admission with respect to liability or the truth of
any of the allegations made in the ADLT Claim or the Venture Claim, whether the
allegations be of fact or law.
14. INDEMNIFICATION. The Individual Shareholders shall be
liable to ADLT and Venture and shall indemnify them for any and all costs,
including, without limitation,
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reasonable attorneys' fees, in the event of a default as defined in paragraph 7
of the New Ruud Notes, to the extent ADLT and Venture were entitled to
indemnification pursuant to Section 9.2 of the Purchase Agreement in the event
of a default by RLI or the Individual Shareholders under the Old Ruud Notes.
15. ADDITIONAL DOCUMENTS AND ACTS. Each Party shall
execute or procure and deliver to the other Parties such additional documents
and shall perform such acts as shall reasonably be necessary to evidence or
effectuate the terms of this Agreement.
16. HEADINGS. The paragraph headings used in this
Agreement are for convenience of reference only and do not in any way limit or
amplify the terms and provisions hereof.
17. COMPLETE AGREEMENT. This Agreement and attached
exhibits constitute a single, integrated written contract that expresses the
entire agreement of the Parties with respect to the matters contained herein and
supersedes all negotiations, prior discussions and preliminary agreements,
either oral or written. Any modification of this Agreement shall be effective
only if it is in writing, is signed by the Party to be charged or otherwise
adversely affected by it, and is approved by a final, non-appealable order of
the Bankruptcy Court.
18. COUNTERPART SIGNATURES. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which, when taken together, shall constitute one and the
same instrument. This Agreement shall constitute a binding, enforceable
agreement after all Parties have signed and executed this Agreement and after
the Bankruptcy Court has entered a final, non-appealable order approving this
Agreement.
19. TIME OF ESSENCE. Time and strict and punctual
performance are of the essence with respect to each provision of this Agreement.
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20. PARTIAL INVALIDITY. Each provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law. If any
provision of this Agreement or the application of such provision to any person
or circumstance shall, to any extent, be invalid or unenforceable, the remainder
of this Agreement, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected by such invalidity or unenforceability, unless such
provision or such application of such provision is essential to this Agreement.
21. INTERPRETATION OF AGREEMENT. In interpreting this
Agreement, each of the Parties expressly agrees that the Agreement was prepared
by all of the Parties jointly, and that no ambiguity shall be resolved against
any Party on the basis that it was responsible, or primarily responsible, for
having drafted the Agreement. In addition, each of the Parties acknowledges that
it did not execute this Agreement under duress and was represented by competent
counsel in connection with this Agreement. Further, whenever the context so
requires: (a) all words used in the singular shall be construed to have been
used in the plural (and vice versa); (b) each gender shall be construed to
include any other genders; (c) the word "person" shall be construed to include a
natural person, a corporation, a firm, a joint venture, a trust, an estate, or
any other entity, and (d) the words "and" as well as "or" shall be construed
either disjunctively or conjunctively as necessary to bring within the scope of
any provision of this Agreement any person, right, obligation or concept which
might otherwise be construed to be outside the scope of such provision.
22. NO WAIVER. No delay or omission in the exercise of
any right or remedy shall impair such right or remedy or be construed as a
waiver. A consent to or approval of any act shall not be deemed to waive or
render unnecessary consent to or approval of any other or
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subsequent act. Any waiver of a default under this Agreement must be in writing
and shall not be a waiver of any other default concerning the same or any other
provision of this Agreement.
23. GOVERNING LAW. This Agreement, and all of the
documents and instruments executed and delivered in connection with this
Agreement, shall be governed by and construed under the internal laws of the
State of Ohio (without regard to conflicts of law rules), except to the extent
that a Party may have greater rights or remedies under federal law, in which
case the choice of Ohio law shall not deprive the Party of its rights and
remedies as may be available under federal law.
24. AUTHORITY TO EXECUTE AGREEMENT. Each person or entity
executing this Agreement represents that he/she/it is authorized to execute this
Agreement. Each person executing this Agreement on behalf of an entity
represents that he or she is authorized to execute this Agreement on behalf of
such entity.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Parties or their duly authorized
representatives have executed this Agreement, consisting of 12 pages (including
signature pages).
Advanced Lighting Technologies, Inc. Venture Lighting International, Inc.
By: -s- Xxxx Xxxxxxxx By: -s- Xxxx Xxxxxxxx
----------------- -----------------
Its: Chief Operating Officer Its: President
Ruud Lighting, Inc.
By: -s- Xxxx X. Xxxx -s- Xxxx X. Xxxx
---------------- ----------------
Xxxx X. Xxxx
Its: CEO / President
-s- Xxxxx Xxxx -s- Xxxxxxxxxxx X. Xxxx
-------------- -----------------------
Xxxxx Xxxx Xxxxxxxxxxx X. Xxxx
-s- Xxxxxxxx X. Xxxxxx -s- Xxxxxxx X. Xxxxxxx
---------------------- ----------------------
Xxxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxx
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PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT OR DOCUMENT
AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS
OF XXXXXXX BANK, A WISCONSIN BANKING CORPORATION (THE "LENDER"), TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 12, 2001 FROM THE
PAYEE (AS DEFINED BELOW) TO THE LENDER.
PROMISSORY NOTE
$1,503,000 September 8, 2003
1. For value received, the undersigned, XXXX X. XXXX, an
individual (the "Maker"), promises to pay to the order of ADVANCED LIGHTING
TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal sum of
$1,503,000 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 Lender, interest shall be payable semi-annually on
each June 1 and December 1, commencing December 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. The Maker shall have
the right to prepay all or any portion of the principal sum and interest without
premium or penalty. Any rebates creditable to Ruud Lighting, Inc. ("RLI"), under
paragraph 5 of the Component Purchase Agreement, dated December 3, 2001, between
the Payee, Venture Lighting International, Inc. ("Venture"), and RLI, shall be
set off and credited against the Maker's obligations under this Promissory Note
first to accrued interest and then to principal, in the manner specified by
paragraph 6 of the Settlement Agreement dated September 8, 2003, between the
Payee, Venture, RLI, Xxxxx Xxxx, Xxxxxxxx X. Xxxxxx, Xxxxxxxxxxx X. Xxxx,
Xxxxxxx X. Xxxxxxx, and the Maker.
3. The Maker hereby waives presentment, notice of
dishonor, and protest. This Promissory Note shall be binding upon the Maker and
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 Promissory Note is being made in connection with
a commercial transaction and not a consumer transaction.
6. This Promissory Note shall be deemed to have been
made at Solon, Ohio. This 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
Exhibit A
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.
7. The Maker is in default under this Promissory Note if
the Maker does not make a payment when due under this Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if the 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 the Payee believes the
default may materially affect the Maker's ability to
pay this 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 the Maker's
business or property, or makes an assignment for the
benefit of the Maker's creditors.
8. If the Maker is in default under this Promissory
Note, without notice or demand and without giving up any of his rights, the
Payee may:
A. Require immediate payment of all amounts owing under
this Promissory Note;
B. File suit and obtain judgment; or
C. Take any and all lawful actions to enforce Payee's
rights and remedies hereunder.
9. If any payment on this 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 Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this 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 Promissory Note, then the rate provided for on this Promissory Note shall
be
Exhibit A
2
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.
IN WITNESS WHEREOF, the Maker has executed this Promissory
Note.
MAKER:
Name: ___________________________________
Xxxx X. Xxxx
Exhibit A
3
PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT OR DOCUMENT
AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS
OF XXXXXXX BANK, A WISCONSIN BANKING CORPORATION (THE "LENDER"), TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 12, 2001 FROM THE
PAYEE (AS DEFINED BELOW) TO THE LENDER.
PROMISSORY NOTE
$897,000 September 8, 2003
1. For value received, the undersigned, XXXXXXXXXXX X.
XXXX, an individual (the "Maker"), promises to pay to the order of ADVANCED
LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal
sum of $897,000 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 Lender, interest shall be payable semi-annually on
each June 1 and December 1, commencing December 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. The Maker shall have
the right to prepay all or any portion of the principal sum and interest without
premium or penalty. Any rebates creditable to Ruud Lighting, Inc. ("RLI"), under
paragraph 5 of the Component Purchase Agreement, dated December 3, 2001, between
the Payee, Venture Lighting International, Inc. ("Venture"), and RLI, shall be
set off and credited against the Maker's obligations under this Promissory Note
first to accrued interest and then to principal, in the manner specified by
paragraph 5 of the Settlement Agreement dated September 8, 2003, between the
Payee, Venture, RLI, Xxxx X. Xxxx, Xxxxx Xxxx, Xxxxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxxx, and the Maker.
3. The Maker hereby waives presentment, notice of
dishonor, and protest. This Promissory Note shall be binding upon the Maker and
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 7.
5. This Promissory Note is being made in connection with
a commercial transaction and not a consumer transaction.
6. This Promissory Note shall be deemed to have been
made at Solon, Ohio. This 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
Exhibit B
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.
7. The Maker is in default under this Promissory Note if
the Maker does not make a payment when due under this Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if the 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 the Payee believes the
default may materially affect the Maker's ability to
pay this 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 the Maker's
business or property, or makes an assignment for the
benefit of the Maker's creditors.
8. If the Maker is in default under this Promissory
Note, without notice or demand and without giving up any of his rights, the
Payee may:
A. Require immediate payment of all amounts owing under
this Promissory Note;
B. File suit and obtain judgment; or
C. Take any and all lawful actions to enforce Payee's
rights and remedies hereunder.
9. If any payment on this 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 Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this 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 Promissory Note, then the rate provided for on this Promissory Note shall
be
Exhibit B
2
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.
IN WITNESS WHEREOF, the Maker has executed this Promissory
Note.
MAKER:
Name: ___________________________________
Xxxxxxxxxxx X. Xxxx
Exhibit B
3
PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT OR DOCUMENT
AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS
OF XXXXXXX BANK, A WISCONSIN BANKING CORPORATION (THE "LENDER"), TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 12, 2001 FROM THE
PAYEE (AS DEFINED BELOW) TO THE LENDER.
PROMISSORY NOTE
$300,000 September 8, 2003
1. For value received, the undersigned, XXXXXXX X.
XXXXXXX, an individual (the "Maker"), promises to pay to the order of ADVANCED
LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal
sum of $300,000 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 Lender, interest shall be payable semi-annually on
each June 1 and December 1, commencing December 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. The Maker shall have
the right to prepay all or any portion of the principal sum and interest without
premium or penalty. Any rebates creditable to Ruud Lighting, Inc. ("RLI"), under
paragraph 5 of the Component Purchase Agreement, dated December 3, 2001, between
the Payee, Venture Lighting International, Inc. ("Venture"), and RLI, shall be
set off and credited against the Maker's obligations under this Promissory Note
first to accrued interest and then to principal, in the manner specified by
paragraph 6 of the Settlement Agreement dated September 8, 2003, between the
Payee, Venture, RLI, Xxxx X. Xxxx, Xxxxx Xxxx, Xxxxxxxxxxx X. Xxxx, Xxxxxxxx X.
Xxxxxx, and the Maker.
3. The Maker hereby waives presentment, notice of
dishonor, and protest. This Promissory Note shall be binding upon the Maker and
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 Promissory Note is being made in connection with
a commercial transaction and not a consumer transaction.
6. This Promissory Note shall be deemed to have been
made at Solon, Ohio. This 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
Exhibit C
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.
7. The Maker is in default under this Promissory Note if
the Maker does not make a payment when due under this Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if the 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 the Payee believes the
default may materially affect the Maker's ability to
pay this 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 the Maker's
business or property, or makes an assignment for the
benefit of the Maker's creditors.
8. If the Maker is in default under this Promissory
Note, without notice or demand and without giving up any of his rights, the
Payee may:
A. Require immediate payment of all amounts owing under
this Promissory Note;
B. File suit and obtain judgment; or
C. Take any and all lawful actions to enforce Payee's
rights and remedies hereunder.
9. If any payment on this 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 Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this 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 Promissory Note, then the rate provided for on this Promissory Note shall
be
Exhibit C
2
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.
IN WITNESS WHEREOF, the Maker has executed this Promissory
Note.
MAKER:
Name: ___________________________________
Xxxxxxx X. Xxxxxxx
Exhibit C
3
PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT OR DOCUMENT
AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS
OF XXXXXXX BANK, A WISCONSIN BANKING CORPORATION (THE "LENDER"), TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 12, 2001 FROM THE
PAYEE (AS DEFINED BELOW) TO THE LENDER.
PROMISSORY NOTE
$300,000 September 8, 2003
1. For value received, the undersigned, XXXXXXXX X.
XXXXXX, an individual (the "Maker"), promises to pay to the order of ADVANCED
LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal
sum of $300,000 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 Lender, interest shall be payable semi-annually on
each June 1 and December 1, commencing December 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. The Maker shall have
the right to prepay all or any portion of the principal sum and interest without
premium or penalty. Any rebates creditable to Ruud Lighting, Inc. ("RLI"), under
paragraph 5 of the Component Purchase Agreement, dated December 3, 2001, between
the Payee, Venture Lighting International, Inc. ("Venture"), and RLI, shall be
set off and credited against the Maker's obligations under this Promissory Note
first to accrued interest and then to principal, in the manner specified by
paragraph 6 of the Settlement Agreement dated September 8, 2003, between the
Payee, Venture, RLI, Xxxx X. Xxxx, Xxxxx Xxxx, Xxxxxxxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxx, and the Maker.
3. The Maker hereby waives presentment, notice of
dishonor, and protest. This Promissory Note shall be binding upon the Maker and
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 Promissory Note is being made in connection with
a commercial transaction and not a consumer transaction.
6. This Promissory Note shall be deemed to have been
made at Solon, Ohio. This 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
Exhibit D
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.
7. The Maker is in default under this Promissory Note if
the Maker does not make a payment when due under this Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if the 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 the Payee believes the
default may materially affect the Maker's ability to
pay this 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 the Maker's
business or property, or makes an assignment for the
benefit of the Maker's creditors.
8. If the Maker is in default under this Promissory
Note, without notice or demand and without giving up any of his rights, the
Payee may:
A. Require immediate payment of all amounts owing under
this Promissory Note;
B. File suit and obtain judgment; or
C. Take any and all lawful actions to enforce Payee's
rights and remedies hereunder.
9. If any payment on this 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 Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this 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 Promissory Note, then the rate provided for on this Promissory Note shall
be
Exhibit D
2
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.
IN WITNESS WHEREOF, the Maker has executed this Promissory
Note.
MAKER:
Name: ___________________________________
Xxxxxxxx X. Xxxxxx
Exhibit D
3
