First Amendment to Loan Agreement, Secured Promissory Note, and Security Agreement between Wayne R. Hellman and Advanced Lighting Technologies, Inc.

Summary

This amendment, effective November 22, 2000, updates the original loan agreement between Wayne R. Hellman and Advanced Lighting Technologies, Inc. (ADLT). It allows ADLT to make additional advances of up to $1.9 million to Hellman, specifically to reduce margin loan deficits with Bear Stearns and Raymond James. The amendment clarifies collateral, requires Hellman to use the funds only for margin loan reduction, and mandates a stock sale plan. All other terms of the original loan documents remain in effect. The agreement is governed by Ohio law and is binding on both parties and their successors.

EX-10.1 2 l86441aex10-1.txt EXHIBIT 10.1 1 EXHIBIT 10.1 FIRST AMENDMENT TO LOAN AGREEMENT, SECURED PROMISSORY NOTE AND SECURITY AGREEMENT THIS FIRST AMENDMENT TO LOAN AGREEMENT, SECURED PROMISSORY NOTE AND SECURITY AGREEMENT ("this First Amendment"), is made and effective as of November 22, 2000 (the "Effective Date"), by WAYNE R. HELLMAN ("Hellman"), and ADVANCED LIGHTING TECHNOLOGIES, INC. ("ADLT"). BACKGROUND A. Hellman and ADLT entered into a Loan Agreement dated as of October 8, 1998 (the "Loan Agreement"), pursuant to which ADLT advanced Hellman $9,000,000 (the "Original Advance"). B. Pursuant to the Loan Agreement, the Original Advance was evidenced by a Secured Promissory Note dated October 8, 1998 (the "Note") and secured pursuant to (i) a Security Agreement dated as of October 8, 1998 (the "Security Agreement"), (ii) the Real Estate Mortgages recorded as follows: June 30, 1999 Geauga County Ohio No 1245 page 39, June 30, 1999 Portage County Ohio No. 441 Page 202 and No. 441 Page 214, and August 24, 1999 Lee 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 24 Karat Street, Inc. with delivery of the referenced note the (the "Karat Note"). C. The Loan Agreement, the Note, the Security Agreement, the Mortgages, the Assignment and the Karat Note are included in the "Loan Documents" as defined in the Loan Agreement. All initially capitalized terms that are used but not defined herein have the meaning ascribed to them in the Loan Documents. D. The Margin Loan is currently held by Bear Sterns and Raymond James, the current Margin Lenders, not Prudential Securities, and Bear Stearns has declared a current Margin Deficit of $1.4 million and Raymond James has a potential Margin Deficit of $500,000. E. Upon reports from its advisors and after discussion, ADLT's disinterested and independent directors have determined that it is in the best interest of the company and its shareholders, and believe that it will benefit the company, to make an additional advance under the Note of $1.4 million to reduce the Margin Loan with Bear Stearns (the "BS Additional Advance") and an additional advance of up to $500,000 may be made to reduce the Margin Loan with Raymond James (the "RJ Additional Advance") (collectively, the "Additional Advances"). Page 1 of 4 2 AGREEMENT NOW THEREFORE, as an inducement to and in consideration of the Additional Advances, the agreements made herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Hellman 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 Sterns and Raymond James, (ii) Bear Sterns and Raymond James are the Margin Lenders, (iii) the Margin Deficit is as declared from time to time by the Margin Lenders, (iv) the Loan Amount includes the Additional Advances, and (v) the Loan Documents include this Amendment. 2. The Additional Advances are principal under and evidenced by and Note to the same effect as if the Additional Advances were made as part of the Original Advance. The Maturity Date of the Note is as specified in EXHIBIT 2 to this Note. 3. Hellman 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 Hellman's Obligations with respect thereto secure the Additional Advances as amounts advanced to Hellman 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 Hellman is directly or indirectly the plaintiff and the proceeds from all choses in action. 4. Hellman represents and warrants to ADLT that on the date hereof (i) he is not in breach of any covenant in any Loan Document, and (ii) all representations and warranties in the Loan Documents are true and correct except as has been disclosed to ADLT in writing. 5. Hellman acknowledges and agrees that (i) he shall not directly or indirectly, in one or a series of transactions, pay the proceeds of the Additional Advances to or for the benefit of any other person or entity, all such proceeds to be paid to the Margin Lenders to reduce the Margin Deficit, and (ii) he shall put into place a programmed stock sale plan to sell Margin Shares in accordance with Rule 10b5-1 under the Security Exchange Act of 1934, in accordance with EXHIBIT 5 ATTACHED HERETO by no later than December 5, 2000. 6. Hellman acknowledges and agrees that the Additional Advances will be wired directly to the Margin Lenders on Hellman's account. The BS Advance to be wired upon execution of this Amendment and the RJ Advance to be wired upon demand for payment by RJ and further instruction by the special committee appointed by ADLT's Board of Directors to administer the Additional Advances. Page 2 of 4 3 7. Hellman 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. Hellman 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. Hellman 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 Hellman, and his estate, heirs, executors, administrators and personal representatives, successors and assigns and ADLT and its successors and assigns. Hellman may not assign or delegate this Amendment, any Loan Document or any of his rights or obligations thereunder. 12. This Amendment may be executed in any number of counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same instrument; it shall not be necessary in proving this Agreement to produce or account for more than one such counterpart. A faxed executed counterpart of this Amendment will be considered an original for evidentiary purposes. 13. This Amendment only modifies the Loan Documents to the extent provided for herein, and the Loan Documents otherwise remain in full force and effect without interruption. This Amendment may not be amended, changed, modified, altered or terminated and no performance may be waived except in writing executed by both parties. 20 This Amendment constitutes the entire agreement between the parties with respect to the Additional Advances and all prior and contemporaneous agreements or discussions, written or oral, with respect thereto have no force or effect whatsoever. Page 3 of 4 4 IN WITNESS WHEREOF, Hellman and ADLT have caused this Amendment to be duly executed and delivered as of the Effective Date. /s/ Wayne R. Hellman ------------------- WAYNE R. HELLMAN ADVANCED LIGHTING TECHNOLOGIES, INC. By: /s/ Steven C. Potts ------------------------- Its: Vice President and Chief Financial Officer ------------------------------------------ Page 4 of 4 5 EXHIBIT 2 The Loan shall be payable October 6, 2001; provided that: - $700,000 of such loan shall be paid within two business days after the first trading day on which the last sale price of the Corporation's common stock exceeds $10 per share AND the average closing price of such common stock for the 20 trading days preceding such date exceeds $10 per share; - $700,000 of such loan shall be paid within two business days after the first trading day on which the last sale price of the Corporation's common stock exceeds $11 per share AND the average closing price of such common stock for the 20 trading days preceding such date exceeds $11 per share; - The proceeds of any judgment or settlement of the litigation brought by Mr. Hellman and discussed at the meeting shall be applied to repayment of the loan; and - The Corporation reserves the right to require immediate repayment if the Company requires the payment to prevent an unacceptable strain on cash resources. 6 EXHIBIT 5 The Plan shall provide for the sale of shares of common stock of the Corporation commencing as soon as practicable after June 1, 2001, and that such plan requires sales of shares if the price of such common stock exceeds $15 per share and that the proceeds of such sale are applied to the repayment of any outstanding amounts due on loans from the Corporation to Mr. Hellman, after payment of any amounts required to reduce the balance of the margin loan to permit withdrawal of proceeds. The terms of such plan, including determination of the number shares subject to sale at any time and the method of sale, shall be approved by the special committee appointed by ADLT's Board of Directors to administer the Additional Advance.