<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN THE STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)(1)
FIBERSTARS, INC.
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(Name of Issuer)
COMMON STOCK, NO PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
315662 10 6
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(CUSIP Number)
Gerald W. Cowden, Esq.
Cowden, Humphrey & Sarlson Co., L.P.A.
50 Public Square
1414 Terminal Tower
Cleveland, Ohio 44113
(216) 241-2880
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 1, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box. [ ]
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See
Rule 13d-1(a) for other parties to whom copies are to be sent.
(Continued on the following pages)
(Page 1 of 7 Pages)
- ---------------
(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
AMENDMENT NO. 1 TO SCHEDULE 13D/A
- -----------------------
CUSIP NO. 325662 10 6 | PAGE 1 OF 7 PAGES
- -----------------------
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1 NAMES OF REPORTING PERSONS
I.R.S IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Advanced Lighting Technologies, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2 (e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 1,468,011*
SHARES -----------------------------------
BENEFICIALLY OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON -----------------------------------
WITH 9 SOLE DISPOSITIVE POWER
1,468,011*
-----------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,468,011*
* Includes 445,000 shares ADLT may acquire within 60 days through
the exercise of four warrants.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.1%
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14 TYPE OF REPORTING PERSON
CO
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<PAGE> 3
PAGE 3 OF 7 PAGES
SCHEDULE 13D/A
(AMENDMENT NO. 3)
ITEM 1. SECURITY AND ISSUER
No change is being reported.
ITEM 2. IDENTITY AND BACKGROUND
No change is being reported.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
In July 1997, Advanced Lighting Technologies, Inc. ("ADLT") used a
portion of the net proceeds of the public offering (during the same month) of
its common stock for the $2,835,000 purchase price of 669,411 shares of
Fiberstars, Inc. ("Fiberstars") common stock.
In February 1998, ADLT used another portion of the net proceeds of the
July 1997 public offering of its common stock for the $1,945,000 purchase price
of 353,600 shares more of Fiberstars common stock.
In February 2000, ADLT, through Unison Fiber Optic Lighting Systems,
LLC ("Unison") (on or about January 14, 2000 Unison became a wholly-owned
subsidiary of ADLT), received four warrants from Fiberstars in exchange for
certain assets, and upon assumption of certain liabilities, of the fiber optic
portion of Unison's business. See Items 4 and 5(c) for more information about
the warrants.
ITEM 4. PURPOSE OF TRANSACTION
ADLT's purpose in acquiring the shares of common stock was to make an
investment in, and to obtain one representative on the board of directors of,
Fiberstars. ADLT's purpose in receiving four warrants from Fiberstars in
exchange for certain assets, and upon assumption of certain liabilities, of the
fiber optic portion of Unison's business was to best commercialize Unison's
technology.
In July 1997, ADLT acquired shares of common stock that then amounted
to a 19% equity interest in Fiberstars. ADLT obtained one representative on the
board of directors of Fiberstars. At that time, ADLT entered into the Investor
Agreement pursuant to which ADLT agreed to beneficially own no more than 30% of
the voting power of Fiberstars without the consent of the disinterested
directors of the board of directors. ADLT also agreed that disposition of
beneficial ownership or voting control of the shares would be subject to certain
conditions.
In February 1998, ADLT acquired more shares of common stock that then
amounted to a 29% equity interest in Fiberstars. Also, ADLT entered into the
Letter Agreement dated February 10, 1998 that granted Rohm and Haas Company, as
a member of Unison, the right to request ADLT to divest its interest in the
shares of Fiberstars common stock and cause its representative to resign from
the Fiberstars board of directors.
In October 1999, Fiberstars entered into the Letter of Intent with
Unison (then a joint venture of ADLT and Rohm and Haas Company, but ADLT was in
the process of negotiating the acquisition of Rohm and Haas Company's membership
interest) that outlined the terms and conditions of Fiberstars's acquisition of
certain assets, and assumption of certain liabilities, of Unison in exchange for
<PAGE> 4
PAGE 4 OF 7 PAGES
warrants to purchase a number of shares of Fiberstars common stock. The letter
of intent also provided for development, cross-licensing and mutual supply
agreements.
In January 2000, Fiberstars and Unison (now a wholly-owned subsidiary
upon ADLT's acquisition of Rohm and Haas Company's membership interest) entered
into the Purchase Agreement pursuant to which Fiberstars acquired certain assets
necessary and material to the fiber optic lighting portion of Unison's business
(and assumed certain liabilities). In exchange, in February, ADLT, through
Unison, received four warrants to purchase up to an aggregate of 1,000,000
shares ($.01 par value per share) of Fiberstars common stock (or 250,000 shares
per warrant). The warrants will expire on January 31, 2007. None of the warrants
will be exercisable until Fiberstars's achievement of recorded sales (in
accordance with generally accepted accounting principles) to third party
customers of at least 1,000 compound parabolic collector (CPC) units. The
exercisability of each warrant is further contingent on the average closing
price of Fiberstars common stock (over any 30 calendar day period) and
Fiberstars's achievement of recorded sales (in accordance with generally
accepted accounting principles) to third party customers of a minimum quantity
of solid core fiber cable: Warrant No. 1 - $6 and 1,000 feet; Warrant No. 2 - $8
and 10,000 feet; Warrant No. 3 - $10 and 50,000 feet; and Warrant No. 4 - $12
and 100,000 feet. In the alternative, ADLT may elect at any time to cancel and
exchange any or all of the outstanding warrants for a fixed number of shares of
Fiberstars common stock (even if the warrant is not yet exercisable): Warrant
No. 1 - 151,250 shares; Warrant No. 2 - 119,375 shares; Warrant No. 3 - 95,625
shares; and Warrant No. 4 - 78,750 shares. In the event of a change of control
of Fiberstars (as defined in the Purchase Agreement), any outstanding warrants
will be immediately exercisable. Also in January 2000, ADLT and Fiberstars
entered into the Restated Investor Agreement pursuant to which ADLT, among other
things, agreed to beneficially own no more than 40% of the voting power of
Fiberstars without the consent of the disinterested directors of the board of
directors. See Item 6 for more information about the Restated Investor
Agreement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) ADLT owns 1,023,011 shares or 25.7% of the issued and
outstanding Fiberstars common stock; however, as the holder of
four warrants, ADLT has the right to acquire within 60 days
445,000 shares, which brings ADLT's beneficial ownership to
1,468,011 shares or 33.1% of the then issued and outstanding
Fiberstars common stock.
(b) ADLT has the sole power to vote and dispose of 1,023,011
shares of issued and outstanding Fiberstars common stock. ADLT
will have the sole power to vote and dispose of 1,468,011
shares of the then issued and outstanding Fiberstars common
stock in the event ADLT decides to exercise its present right
to acquire 445,000 shares. However, pursuant to the Restated
Investor Agreement, ADLT will vote the shares of Fiberstars
common stock with management on all matters (other than the
election of directors) only in the same proportion as the vote
of the remaining shareholders. Also, ADLT's power to dispose
of the shares of Fiberstars common stock is restricted
pursuant to the Restated Investor Agreement.
(c) Fiberstars and Unison entered into the Purchase Agreement
dated January 14, 2000 pursuant to which Fiberstars acquired
certain assets necessary and material to the fiber optic
lighting portion of Unison's business (and assumed certain
liabilities). In exchange, ADLT, through Unison, in February,
received four warrants to purchase up to an aggregate of
1,000,000 shares ($.01 par value per share) of Fiberstars
common stock (or 250,000 shares per warrant). The warrants
will expire on January 31, 2007. None of the warrants will be
exercisable until Fiberstars's achievement of recorded sales
(in accordance with generally accepted accounting principles)
to third party customers of at
<PAGE> 5
PAGE 5 OF 7 PAGES
least 1,000 compound parabolic collector (CPC) units. The
exercisability of each warrant is further contingent on the
average closing price of Fiberstars common stock (over any 30
calendar day period) and Fiberstars's achievement of recorded
sales (in accordance with generally accepted accounting
principles) to third party customers of a minimum quantity of
solid core fiber cable: Warrant No. 1 - $6 and 1,000 feet;
Warrant No. 2 - $8 and 10,000 feet; Warrant No. 3 - $10 and
50,000 feet; and Warrant No. 4 - $12 and 100,000 feet. In the
alternative, ADLT may elect at any time to cancel and exchange
any or all of the outstanding warrants for a fixed number of
shares of Fiberstars common stock (even if the warrant is not
yet exercisable): Warrant No. 1 - 151,250 shares; Warrant No.
2 - 119,375 shares; Warrant No. 3 - 95,625 shares; and Warrant
No. 4 - 78,750 shares. In the event of a change of control of
Fiberstars (as defined in the Purchase Agreement), any
outstanding warrants will be immediately exercisable. ADLT and
Fiberstars also entered into the Restated Investor Agreement
dated January 31, 2000 pursuant to which ADLT, among other
things, agreed to beneficially own no more than 40% of the
voting power of Fiberstars without the consent of the
disinterested directors of the board of directors.
(d) No change is being reported.
(e) No change is being reported.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
ADLT and Fiberstars entered into the Investor Agreement dated July 30,
1997, and ADLT and Fiberstars entered into the Restated Investor Agreement dated
January 31, 2000 which, among other things, provided that: i) ADLT own no more
than 40% of the voting power of Fiberstars without the consent of the
disinterested directors of the board of directors; ii) ADLT will not solicit
proxies for the election or removal of any director; iii) ADLT will not deposit
shares of Fiberstars common stock into a voting trust or join a group (or
otherwise act in concert with a third person) to acquire, hold, vote of dispose
of shares of Fiberstars common stock; iv) ADLT will provide Fiberstars with
notice prior to the acquisition or disposition of shares of Fiberstars common
stock; v) ADLT will vote with management on all matters (other than the election
of directors) only in the same proportion as the vote of the remaining
shareholders; and vi) ADLT will be entitled to appoint one representative to the
Fiberstars board of directors.
ADLT entered into a Letter Agreement dated February 10, 1998 relating
to Fiberstars common stock under the agreement with Rohm and Haas Company
regarding Unison. The Letter Agreement ceased to have any effect following
ADLT's acquisition of Rohm and Haas Company's interest in Unison.
<PAGE> 6
PAGE 6 OF 7 PAGES
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
(a) Investor Agreement dated as of July 30, 1997 is hereby
incorporated by reference from Schedule 13D filed by ADLT via
EDGAR on July 31, 1997.
(b) Amended and Restated Letter of Intent dated October 14, 1999
is hereby incorporated by reference from Amendment No. 2 to
Schedule 13D/A filed by ADLT via EDGAR on October 14, 1999.
(c) The Asset Purchase Agreement dated January 14, 2000.
(d) Restated Investor Agreement dated January 31, 2000.
<PAGE> 7
PAGE 7 OF 7 PAGES
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
ADVANCED LIGHTING
TECHNOLOGIES, INC.
March 9, 2000 By: /s/ Nicholas R. Sucic
- ----------------- ----------------------
(Date) (Signature)
Nicholas R. Sucic
Chief Financial Officer
<PAGE> 8
EXHIBIT 7(c)
================================================================================
ASSET PURCHASE AGREEMENT
Among
FIBERSTARS, INC.
AND
UNISON FIBER OPTIC LIGHTING SYSTEMS, LLC
Dated as of January 14, 2000
================================================================================
<PAGE> 9
TABLE OF CONTENTS
Page
----
ARTICLE I TRANSFER OF ASSETS, PURCHASE PRICE, CLOSING, ETC....................1
SECTION 1.01 Transfer of Assets......................................1
SECTION 1.02 Instruments of Conveyance and Transfer..................3
SECTION 1.03 Nonassignable Contracts.................................3
SECTION 1.04 Purchase Price..........................................3
SECTION 1.05 Closing.................................................5
SECTION 1.06 Payments to Seller on the Closing Date..................5
SECTION 1.07 Assumption of Liabilities...............................5
SECTION 1.08 Non-Assumption of Certain Liabilities...................5
ARTICLE II REPRESENTATIONS AND WARRANTIES.....................................6
SECTION 2.01 Representations and Warranties of Seller................6
SECTION 2.02 Representations and Warranties by Buyer................11
ARTICLE III ADDITIONAL COVENANTS AND AGREEMENTS..............................13
SECTION 3.01 Conduct of Business....................................13
SECTION 3.02 Access to Information by Buyer.........................13
SECTION 3.03 Confidentiality........................................13
SECTION 3.04 Consents and Authorizations............................14
SECTION 3.05 Non-Assignable Licenses, Leases and Contracts..........14
SECTION 3.06 Non-Competition........................................14
SECTION 3.07 Non-Solicitation.......................................14
SECTION 3.08 Exclusivity............................................15
SECTION 3.09 Injunctive Relief......................................15
SECTION 3.10 Optiflex Manufacturing Line............................15
ARTICLE IV CONDITIONS PRECEDENT..............................................16
SECTION 4.01 Conditions Precedent to the Obligations of Buyer.......16
SECTION 4.02 Conditions Precedent to the Obligations of Seller......17
ARTICLE V SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.......................18
SECTION 5.01 Survival...............................................18
SECTION 5.02 Indemnity..............................................18
SECTION 5.03 Third Party Claims.....................................19
SECTION 5.04 Limitation on Indemnities..............................20
ARTICLE VI FURTHER ASSURANCES................................................20
SECTION 6.01 Further Assurances.....................................20
SECTION 6.02 Books and Records......................................20
SECTION 6.03 Cooperation on Taxes...................................21
ARTICLE VII MISCELLANEOUS....................................................21
SECTION 7.01 Termination............................................21
SECTION 7.02 Effect of Termination..................................21
SECTION 7.03 Expenses, etc..........................................21
<PAGE> 10
TABLE OF CONTENTS
(continued)
Page
----
SECTION 7.04 Execution in Counterparts..............................22
SECTION 7.05 Notices................................................22
SECTION 7.06 Waivers................................................22
SECTION 7.07 Amendments, Supplements, etc...........................22
SECTION 7.08 Entire Agreement.......................................23
SECTION 7.09 Applicable Law.........................................23
SECTION 7.10 Binding Effect, Benefits...............................23
SECTION 7.11 Assignability..........................................23
SECTION 7.12 Public Announcements...................................23
SECTION 7.13 Invalid Provisions.....................................23
SECTION 7.14 Commercially Reasonable................................24
<PAGE> 11
INDEX TO EXHIBITS
Exhibit Description
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A List of Assets
A-1 Purchased Intellectual Property
B Bill of Sale and Assignment Agreement
C Warrants
D Assumption Agreement
E Ancillary Agreements, consisting of:
E-1 Development Agreement
E-2 Supply Agreement
E-3 Cross-License Agreement
E-4 Parent Agreement
<PAGE> 12
INDEX OF DEFINITIONS
ADLT............................................................Recital C
Adverse Effect........................................Section 2.01(f)(xi)
Affiliate....................................................Section 3.06
Ancillary Agreements...........................Section 4.01(h), Exhibit E
Assets....................................................Section 1.01(a)
Business........................................................Recital B
Buyer........................................................Introduction
Closing......................................................Section 1.05
Closing Date.................................................Section 1.05
CPC.......................................................Section 1.04(a)
Disclosure Schedule..........................................Section 2.01
Employment Agreement...........................Section 4.01(i), Exhibit F
Encumbrances..............................................Section 2.01(g)
Environmental Permits................................Section 2.01(r)(iii)
Fiber Optic Lighting Applications............................Section 3.06
Financial Statements......................................Section 2.01(e)
GAAP......................................................Section 1.04(a)
Hazardous Material.....................................Section 2.01(r)(i)
Hazardous Materials Activities........................Section 2.01(r)(ii)
Material Adverse Effect......................................Section 2.01
Permitted Exceptions..................................Section 2.01(f)(xi)
Purchase Price...............................................Section 1.04
Purchased Intellectual Property..........Section 1.01(a)(ii), Exhibit A-1
Seller.......................................................Introduction
Solid Core Fiber Cable....................................Section 1.04(a)
Warrants..........................................Section 1.04, Exhibit C
<PAGE> 13
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of January 14, 2000, is between
FIBERSTARS, INC. ("Buyer"), and UNISON FIBER OPTIC LIGHTING SYSTEMS, LLC
("Seller").
RECITALS
A. Seller is engaged in the business of developing manufacturing,
marketing and selling lighting products and components, including fiber optic
lighting; and
B. Buyer desires to purchase and acquire from Seller, and Seller
desires to sell, assign and transfer to Buyer, certain assets and properties
held in connection with, necessary for, or material to the Seller's fiber optic
lighting portion of its business (the "Business"); and Buyer has agreed to
assume certain liabilities of Seller, all for the Purchase Price (as defined in
Section 1.04 below) and on the terms and subject to the conditions of this
Agreement.
C. A member of Seller is Venture Lighting International, Inc.
("Venture"); and Venture is a wholly owned subsidiary of Advanced Lighting
Technologies, Inc. ("ADLT").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
ARTICLE I
TRANSFER OF ASSETS, PURCHASE PRICE, CLOSING, ETC.
SECTION 1.01 Transfer of Assets.
(a) The assets, properties and business of Seller to be sold, conveyed,
transferred and delivered by Seller to Buyer pursuant to this Section 1.01(a)
are referred to in this Agreement as the "Assets". On the terms and subject to
the conditions hereinafter set forth, on the Closing Date (as hereinafter
defined), Seller will sell, convey, transfer and deliver to Buyer, and Buyer
will purchase from Seller, for the purchase price provided in Section 1.04
hereof, all the following assets and properties of Seller as the same shall
exist on the Closing Date, except those assets excluded pursuant to paragraph
(b) below:
(i) all tangible property (real, personal or mixed), computer
systems, work in process, supplies, leaseholds, leasehold improvements, tools,
fixtures, machinery and equipment of Seller existing on the Closing Date and
either (x) attributable to the Business or (y) otherwise set forth in the List
of Assets attached hereto as Exhibit A hereto, including, without limitation,
equipment for research and developing work and pilot manufacturing for Optiflex
fiber processing and manufacturing equipment for Advance CableLite fiber and
certain research and development equipment;
(ii) all of the intellectual property rights owned by Seller
or licensed to Seller and used in connection with the Business or the Assets,
including, without limitation, all of Seller's (a) rights in any trademarks,
service marks, trade names, corporate names, copyrights, patents, patent
applications, design rights, inventions and trade secrets; and (b) computer
software programs and systems, know-how, formulae and designs, and documentation
relating to the foregoing (the "Purchased Intellectual Property"). The Purchased
Intellectual Property is further described on Exhibit A-1.
(iii) all drawings, blueprints, specifications, designs and
data relating to the Business, including, without limitation, specific
development plans with milestone dates acceptable to
<PAGE> 14
Buyer for ADLT to develop in cooperation with the Buyer (a) dual CPC lamp/optics
technology and (b) single CPC lamp/optics technology;
(iv) all catalogues, brochures, sales literature, advertising,
promotional material and other selling material relating to the Business;
(v) all books and records and all files, documents, papers,
agreements, books of account and other records pertaining to the Assets or to
the Business which are located at the offices or used in connection with the
Assets or the Business, subject to Seller obtaining any necessary consents with
respect to personal information concerning its employees;
(vi) any other assets or rights of every kind and nature, real
or personal, tangible or intangible, which are owned or used by Seller or useful
in connection with the Business.
Without limiting the generality of the foregoing, the Assets shall,
except as set forth in paragraph (b) below, include all assets set
forth in a detailed list to be prepared from the accounting records of
Seller and furnished by Seller to Buyer at or prior to the Closing
Date, and all such assets as may have been acquired by Seller and
reasonably necessary to, or for use primarily in connection with, the
Business since the date of such list and which would be included on a
list prepared in like manner from such accounting records as of the
Closing Date, except any such assets which may have been disposed of
since said date in the ordinary course of business and consistent with
past practice.
(b) Anything herein contained to the contrary notwithstanding, the
following assets and properties of Seller are specifically excluded from the
Assets and shall be retained by Seller:
(i) all cash on hand, including bank accounts and temporary
cash investments (except for petty cash funds maintained at offices of the
Business), accounts receivable, notes receivable, inventories, prepayments, and
deferred items of the Business, outstanding on the Closing Date;
(ii) claims for refunds of Taxes (as hereinafter defined) and
other governmental charges for periods ending on or prior to the Closing Date;
(iii) claims or rights against third parties relating to
liabilities or obligations which are not assumed by Buyer hereunder; (iii)
claims or rights against third parties relating to liabilities or obligations
which are not assumed by Buyer hereunder;
(iv) rights under insurance policies, including rights to any
cancellation value on the Closing Date; and
(v) the manufacturing line equipment located at Bristol,
Pennsylvania; and
(vi) patents and other intellectual property rights which are
only licensed to Buyer, as distinguished from being assigned to Buyer, as
further described on Exhibit A-1 attached hereto.
SECTION 1.02 Instruments of Conveyance and Transfer. Subject to Section
1.03 below, on the Closing Date Seller shall execute and deliver to Buyer (i) a
bill of sale in the form included in the Bill of Sale and Assignment Agreement
annexed hereto as Exhibit B, transferring to Buyer the properties and assets to
be acquired by Buyer under the terms of this Agreement, (ii) assignments of all
patents, patent applications and computer software and of all contracts,
licenses, leases and similar agreements to be assigned to Buyer pursuant to this
Agreement, and (iii) such other bills of sale, instruments of assignment and
other appropriate documents as may be reasonably requested by Buyer, as the case
may be, in order to carry out the intentions and purposes of this Agreement. To
the extent that any property or asset which is to be assigned and conveyed to
Buyer requires a prior consent from a third party, and such consent has not been
obtained by the time of the
<PAGE> 15
Closing Date, then Seller hereby grants to Buyer the exclusive license right to
use said property or asset, on a royalty-free basis, until such required consent
is obtained. Seller agrees to pursue diligent efforts to obtain such consent as
soon as feasible and to assign and convey to Buyer said property or asset as
soon as the consent is so obtained.
SECTION 1.03 Nonassignable Contracts. Nothing in this Agreement shall
be construed as an attempt or agreement to assign (i) any contract which is
nonassignable without the consent of the other party or parties thereto unless
such consent shall have been given or (ii) any contract or claim as to which all
the remedies for the enforcement thereof enjoyed by Seller would not pass to
Buyer as an incident of the assignments provided for by this Agreement. In
order, however, that the full value of every contract and claim of the character
described in clauses (i) and (ii) above and all claims and demands on such
contracts may be realized, Seller will use its commercially reasonable efforts
to obtain approval to assignment, and failing that, Seller will by itself or by
its agents, at the request and under the direction of Buyer, as the case may be,
in the name of Seller or otherwise as Buyer, as the case may be, shall specify
and as shall be permitted by law, take all such action and do or cause to be
done all such things as shall in the reasonable opinion of Buyer be necessary or
proper (x) in order that the rights and obligations of Seller under such
contracts shall be preserved (provided Buyer assumes all such obligations) and
(y) for, and to facilitate, the collection of the moneys due and payable, and to
become due and payable, to Seller in and under every such contract and claim and
in respect of every such claim and demand, and Seller shall hold the same for
the benefit of and shall pay the same over promptly to Buyer.
SECTION 1.04 Purchase Price.
(a) The aggregate purchase price for the Assets (the "Purchase Price")
shall be warrants to purchase up to one million (1,000,000) shares of Buyer's
common stock at an exercise price of $0.01 per share in the form attached hereto
as Exhibit C (the "Warrants"). There shall be four separate Warrants, each for
250,000 shares. Each Warrant shall have an expiration date as of the seventh
anniversary of the Closing Date. None of the Warrants shall be exercisable until
the Buyer has recorded sales, in accordance with generally accepted accounting
principles ("GAAP"), to third party customers, of at least 1,000 "CPC" units
(i.e., a lamp/optics combination using a "compound parabolic collector" in a
fiber optic illuminator). In addition, the Warrants shall become exercisable
only upon the achievement of certain share prices of Buyer's common stock
averaged over a thirty (30) calendar day period as quoted on the Nasdaq national
market (or any other national public market system on which Buyer's common stock
regularly trades). A Warrant shall become exercisable when the average closing
price of Buyer's common stock over any thirty (30) calendar day period is equal
to or greater than the value set forth below, provided that Buyer also has met
the additional sales requirement set forth below:
Warrant Minimum Average Additional Sales
Number Warrant Share Price Requirement
- ------ ------- ----------- -----------
1 250,000 shares $6 per share Sales of 1,000 ft of Solid
Core Fiber Cable
2 250,000 shares $8 per share Sales of 10,000 ft of Solid
Core Fiber Cable
3 250,000 shares $10 per share Sales of 50,000 ft of Solid
Core Fiber Cable
4 250,000 shares $12 per share Sales of 100,000 ft of Solid
Core Fiber Cable
As used above, the term "Solid Core Fiber Cable" means extruded solid core
"Optiflex" fiber cable, advanced Cast Fiber, advanced Cable-Lite, or similar
successor solid core fiber cable products developed from the Purchased
Intellectual Property. The above additional sales requirement means a
<PAGE> 16
sale by Buyer to a third party customer, in accordance with GAAP, of Solid Core
Fiber Cable. Buyer shall use its commercially reasonable efforts to develop and
sell Solid Core Fiber Cable and CPC units, as described above.
(b) As an alternative to exercising one or more of the foregoing
Warrants, Seller may elect at any time while a Warrant remains outstanding, even
if the Warrant is not yet exercisable, to cancel a particular numbered Warrant
in exchange for Buyer issuing to Seller a number of shares of Buyer's common
stock, as follows:
Cancelled Shares to
Warrant Number Be Issued
-------------- ---------
1 151,250
2 119,375
3 95,625
4 78,750
Said election shall be by a written notice delivered to Buyer, together with the
Warrant to be cancelled.
(c) All of the share certificates issued pursuant to an exercise or
cancellation of a Warrant shall be endorsed with a customary legend restricting
transfers of shares in accordance with applicable securities laws.
SECTION 1.05 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Buyer, once
the conditions precedent set forth in Sections 4.01 and 4.02 have been
satisfied or waived, targeted to occur on January 21, 2000 at 10 A.M., local
time, or at such other place or at such other date or time as Seller and Buyer
may mutually agree (such date and time of Closing is herein called the "Closing
Date"); it being understood and agreed that for all purposes relating to Taxes
the Closing shall be effective as of the close of business on the Closing
Date.
SECTION 1.06 Payments to Seller on the Closing Date. On the Closing
Date, in full consideration for the sale, conveyance, transfer and delivery to
Buyer of the Assets hereinafter, subject to the assumption of liabilities
provided for herein, Buyer shall issue the Warrants to the Seller.
SECTION 1.07 Assumption of Liabilities. On the Closing Date, Buyer
shall execute and deliver to Seller an assumption agreement, in the form of the
Assumption Agreement annexed hereto as Exhibit D, pursuant to which, subject to
Section 1.08 below, Buyer shall assume and agree to pay, perform and discharge
when due those certain liabilities and obligations of Seller with respect to the
Business as identified on Exhibit D.
SECTION 1.08 Non-Assumption of Certain Liabilities. Buyer is not
assuming, and shall not be deemed to have assumed, any liabilities or
obligations of Seller of any kind or nature whatsoever, except as expressly
provided above in Section 1.07 hereof. In no event shall Buyer be deemed to have
assumed or taken subject to any liabilities arising on or prior to the Closing
Date. Anything in Section 1.07 or elsewhere in this Agreement to the contrary
notwithstanding, and without limiting the generality of the foregoing, it is
hereby agreed that Buyer is not assuming any liability and shall have no
obligation for or with respect to any liability or obligation of Seller (i) for
any taxes of Seller, its subsidiaries or affiliates or for which Seller or any
of its subsidiaries or affiliates is or may be liable, without regard to when
such tax is due or payable or (ii) arising out of any action, suit or proceeding
based upon an event occurring or a claim arising (x) on or prior to the Closing
Date or (y) after the Closing Date in the case of claims in respect of services
delivered by Seller on or prior to the Closing Date and attributable to acts
performed or omitted by Seller on or prior to the Closing Date.
<PAGE> 17
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Representations and Warranties of Seller. Except as
otherwise set forth in the Disclosure Schedule (the "Disclosure Schedule"),
which has been delivered to Buyer as of the date hereof, Seller represents and
warrants to, and agrees with, Buyer as follows:
(a) Organization and Qualification, etc. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, has power and authority to own all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
qualified to do business and is in good standing in each jurisdiction as set
forth in the Disclosure Schedule where, to the reasonable belief of Seller, such
qualification is appropriate to the Business and the failure to so qualify would
have a Material Adverse Effect (as hereinafter defined).
"Material Adverse Effect" means any change in, or effect on,
the Business as currently conducted by the Seller that is materially
adverse to the results of operations or financial condition of the
Business, taken as a whole.
(b) Authority Relative to Agreement. Seller has the power and authority
to execute and deliver this Agreement, and to consummate the transactions
contemplated on the part of Seller hereby. No other proceedings on the part of
Seller are necessary to authorize the execution and delivery of this Agreement
by Seller or the consummation by Seller of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Seller and, assuming the
due authorization, execution and delivery of this Agreement by Buyer, is a valid
and binding agreement of Seller, enforceable against Seller in accordance with
its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditor's rights and by rules of law governing
specific performance, injunctive relief or other equitable remedies.
(c) Non-Contravention. The execution and delivery of this Agreement by
Seller does not and the consummation by Seller of the transactions contemplated
hereby will not (i) violate any provision of the organizational documents
(including the Operating Agreement) of Seller, or (ii) violate, or result with
the giving of notice or the lapse of time or both in a violation of, any
provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon any of the property of
Seller pursuant to any provision of, any mortgage, lien, lease, agreement,
license, instrument, law, ordinance, regulation, order, arbitration award,
judgment or decree to which Seller is a party or by which any of its assets is
bound and do not and will not violate or conflict with any other restriction of
any kind or character to which Seller is subject or by which any of its assets
may be bound, and the same does not and will not constitute an event permitting
termination of any mortgage, lien, lease, agreement, license or instrument to
which Seller is a party.
(d) Government Approvals. No consent, authorization, order or approval
of, or filing or registration with, any governmental commission, board or other
regulatory body is required for the execution and delivery of this Agreement and
the consummation by the Seller of the transactions contemplated hereby, except
(i) where the failure to obtain such consents, authorizations or approvals or to
make such filings or registrations would not prevent the consummation of the
transactions contemplated hereby and (ii) as may be necessary as a result of any
facts or circumstances relating solely to Buyer, as the case may be.
(e) Financial Statements. Seller has furnished Buyer its balance sheet
and related statements of income as of and for the period ending September 30,
1999 ("Financial Statements"). All such balance sheets and accounts are in
accordance with the books and records of Seller and fairly and
<PAGE> 18
accurately present in all material respects the financial position and results
of operations of Seller as of the date and for the period indicated, in each
case consistently applied, subject to normal year-end adjustments and the
absence of notes.
(f) Absence of Certain Changes or Events. Since September 30, 1999,
with respect to the Business, Seller has not:
(i) incurred any obligation or liability (fixed or
contingent), except normal trade or business obligations incurred in the
ordinary course of business and consistent with past practice;
(ii) discharged or satisfied any lien, security interest or
encumbrance or paid any obligation or liability (fixed or contingent), other
than in the ordinary course of business and consistent with past practice;
(iii) mortgaged, pledged or subjected to any lien, security
interest or other encumbrance any of its assets or properties (other than
Permitted Exceptions (as hereinafter defined));
(iv) transferred, leased or otherwise disposed of any of its
assets or properties or acquired any assets or properties, except in any case in
the ordinary course of business and consistent with past practice;
(v) canceled or compromised any debt or claim, except in the
ordinary course of business and consistent with past practice;
(vi) waived or released, under any contract, rights of Seller
having value to the Business, except in any case in the ordinary course of
business and consistent with past practice;
(vii) transferred or granted any rights under any concessions,
leases, licenses, agreements, patents, inventions, trademarks, trade names,
service marks or copyrights or with respect to any know-how, except in the
ordinary course of business and consistent with past practice;
(viii) entered into any transaction, contract or commitment,
except those listed, or which pursuant to the terms hereof are not required to
be listed, on the Disclosure Schedule, this Agreement and the transactions
contemplated hereby, and those entered into in the ordinary course of business
and consistent with past practice;
(ix) paid or made provisions for any payment to Seller or any
affiliate of Seller, except in the ordinary course of business and consistent
with past practice;
(x) suffered any casualty loss or damage (whether or not such
loss or damage shall have been covered by insurance) which affects in any
material respect its ability to conduct its business; or
(xi) suffered any Material Adverse Effect.
"Permitted Exceptions" shall mean (i) mechanic's,
materialman's, warehouseman's and carrier's liens and purchase money
security interests arising in the ordinary course of business; (ii)
liens for taxes and assessments not yet payable; (iii) liens for taxes,
assessments and charges and other claims, the validity of which Seller
is contesting in good faith; and (iv) imperfections of title, liens,
security interests, claims and other charges and encumbrances the
existence of which would not have in the aggregate an Adverse Effect.
"Adverse Effect" means any change in, or effect on, the
Business or its Subsidiaries as currently conducted by Seller that
would result in the incurrence of damages or liabilities of the sum of
$25,000 or more.
<PAGE> 19
(g) Title to Properties; Absence of Liens and Encumbrances, etc. Seller
has good and marketable title to all of the real, tangible personal and mixed
properties and assets owned by it and used in the Business free and clear of any
liens, charges, pledges, security interests or other encumbrances (collectively,
"Encumbrances") (other than Permitted Exceptions), except as reflected in the
Financial Statements. The intangible properties and assets owned by Seller and
used in the Business are free and clear of any Encumbrances (other than
Permitted Exceptions), except as reflected in the Financial Statements.
(h) Purchased Intellectual Property. The Purchased Intellectual
Property (identified on Exhibit A-1) is owned by Seller free and clear of any
Encumbrances, or Seller has a valid license to use the same, which such licenses
may be freely transferred to Buyer. Except as set forth on Disclosure Schedule,
Seller has not received any notice or claim disputing the right of Seller to own
or use any of the Purchased Intellectual Property or alleging that such use
infringes upon the intellectual property rights of such person. The Purchased
Intellectual Property constitutes all of the proprietary rights necessary and
sufficient for the operation of the Assets and the Business as currently
conducted. The Assets and the operation of the Business are not infringing upon
or otherwise acting adversely to any intellectual property owned by any other
person. Seller is not in default, and to the best of Seller's knowledge no third
party is in default, under any license, sublicense or agreement by which Seller
hold or has given to others the right to use any Purchased Intellectual
Property. No claim has been made challenging the validity of, or any of Seller's
rights under, the Purchased Intellectual Property. Seller has at all times used
legally sufficient and commercially reasonable efforts to protect its trade
secrets and has not disclosed or otherwise dealt with such items in such a
manner as to cause the loss of such trade secrets by release thereof into the
public domain. Seller has at all times used commercially reasonable efforts to
protect the confidentiality of all of its other confidential and proprietary
information and that of third parties which is subject to confidentiality and
non-disclosure obligations which is or has been in its possession. Each person
currently or formerly employed by Seller (including independent contractors, if
any) that has or had access to confidential information of Seller relating to
the Business or the Assets has executed a confidentiality and non-disclosure
agreement in the form previously provided to Buyer and each current and former
employee has executed a proprietary rights and inventions assignment agreement
in the form previously provided to Buyer. Neither the execution or delivery of
such agreements, nor the carrying on of the Business as employees by such
persons, will conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under any contract, covenant or instrument
under which any of such persons is obligated.
(i) List of Properties, Contracts and Other Data. Exhibits A and A-1
attached hereto contain a list describing and setting forth with respect to the
Business as of the date hereof all of the assets, leases, licenses, intellectual
property, permits, contracts, data and other rights used for the operation of
the Business, other than the excluded assets and property described in Section
1.01(b). Seller has delivered to Buyer true and complete copies of all documents
constituting the items referenced in Exhibits A and A-1.
(j) Performance. Except to the extent described in the Disclosure
Schedule, Seller has performed all of the obligations required to be performed
by it to date and is not in default under any of the agreements, contracts,
instruments or documents listed or described in Exhibits A and A-1, nor, to
Seller's knowledge, is any other party to such agreements, contracts,
instruments or documents in default thereunder.
(k) Consents. Seller has obtained, or prior to the Closing Date will
obtain, all consents and approvals, including approvals of government agencies,
required for the execution and delivery of this Agreement by Seller and the
consummation of the transactions contemplated by this Agreement.
(l) Litigation. There are no actions, suits or proceedings with respect
to the Business pending against Seller at law or in equity, or before or by any
federal, state, municipal, foreign or other governmental department, commission,
board, bureau, agency or instrumentality, nor,
<PAGE> 20
to the knowledge of Seller, are there any such actions, suits or proceedings
with respect to the Business threatened against Seller.
(m) Compliance with Law. Seller is not in default with respect to any
order of any court, governmental authority or arbitration board or tribunal to
which it is a party or, to the knowledge of Seller, to which it is subject and
which applies to the Business and, has not been notified that it is in violation
of any laws, ordinances, governmental rules or regulations to which it is
subject or has failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of the Assets or to the
conduct of the Business.
(n) Assets. The Assets being sold, conveyed, transferred and delivered
or licensed by Seller to Buyer pursuant to this Agreement constitute all
Seller's assets and properties of every kind and description (wherever located)
reasonably necessary to, or used primarily in connection with, the Business
including without limitation list of all customers, suppliers and other business
contacts used by Seller in the Business.
(o) Taxes. Seller has filed all federal, state, local and other tax
returns and reports, if any, required to be filed by it and such returns are
true and correct. Seller has paid all taxes, if any, shown to be due and payable
on said returns and reports and has withheld with respect to employees all
federal and state income taxes, FICA, FUTA and other taxes and charges required
to be withheld. There are no outstanding tax audits or notices of tax audits or
liabilities to pay any additional taxes, and there have been no tax audits for
the last five (5) fiscal years.
(p) Condition of Properties. All of the tangible personal properties of
Seller included in the Assets are in good operating condition and repair,
subject only to ordinary wear and tear which is not such as to render the
properties less than substantially fit for the purposes for which they are being
used. None of said tangible personal properties of Seller are subject to any
deferred maintenance obligations.
(q) Absence of Undisclosed Liabilities. Seller has no liabilities of
any nature, fixed or contingent, which are not reflected in the Financial
Statements other than those liabilities based upon circumstances of which Seller
neither knows nor should reasonably know.
(r) Compliance with Environmental Requirements.
(i) As of the date hereof, to the knowledge of Seller, no
underground storage tanks are present under any property that Seller or any of
its subsidiaries has at any time owned, operated, occupied or leased. As of the
date hereof, no amount of any substance that has been designated by any
governmental entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws (a "Hazardous Material"), are present as a
result of the actions of Seller, or, to Seller's knowledge, any actions of any
third party, in, on or under any property, including the land and the
improvements, ground water and surface water, that Seller has at any time owned,
operated, occupied or leased.
(ii) At no time has Seller transported, stored, used,
manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the Closing
Date, nor has Seller disposed of, transported, sold, or manufactured any product
containing a Hazardous Material (collectively, "Hazardous Materials Activities")
in violation of any rule, regulation, treaty or statute promulgated by any
governmental entity to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
<PAGE> 21
(iii) Seller currently holds all environmental approvals,
permits, licenses, clearances and consents (the "Environmental Permits")
necessary for the conduct of its businesses as such activities and businesses
(including any Hazardous Materials Activity) are currently being conducted, the
absence of which would be reasonably likely to result in fines to Seller in
excess of Ten Thousand Dollars ($10,000).
(iv) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending or, to the knowledge of Seller,
threatened concerning any Environmental Permit or any Hazardous Materials
Activity of Seller. Seller is not aware of any fact or circumstance which would
be reasonably likely to involve Seller in any environmental litigation or impose
upon Seller any environmental liability which would be reasonably likely to
exceed Ten Thousand Dollars ($10,000).
(s) Employees. Buyer has already employed several of Seller's former
employees. Buyer is not obligated to employ any other existing or former
employees of Seller. Buyer shall not have any responsibility for any obligations
of Seller with respect to any existing or former employees of Seller.
(t) Business Relations. Seller has not received from any customer or
supplier of Seller notice that such customer or supplier intends to change its
business relationship with Seller after consummation of the transactions
contemplated by this Agreement.
(u) Full Disclosure. All documents and papers delivered by or on behalf
of Seller in connection with this Agreement or any of the transactions
contemplated hereby were prepared and delivered by Seller and are complete and
authentic in all respects. Seller has complied with all requests of Buyer and
its representatives for documents, papers and information relating to Seller in
connection with the transactions contemplated hereby, and have not failed to
deliver any document, paper or other information requested by Buyer or its
representatives in connection therewith. No representation or warranty by Seller
contained in this Agreement or any agreement or instrument contemplated hereby,
or in any document, written information, statement, financial statement,
certificate or exhibit prepared or furnished or to be prepared and furnished by
Seller or its representatives to Buyer or its representatives pursuant hereto or
in connection with the transactions contemplated hereby, contains any untrue
statement of a fact or omits to state a fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which it was made, not false or misleading. Notwithstanding
the foregoing, while all projections, provided to Buyer were prepared by the
management of Seller in a good faith effort to describe Seller's proposed
business and products and the markets therefor, and the assumptions applied in
preparing these projections appeared reasonable to management as of the date
thereof, there can be no assurance that the results set forth in such
projections will actually be achieved. To Seller's knowledge, there are no facts
which (individually or in the aggregate) materially and adversely affect the
business, assets, liabilities, financial condition, prospects or operations of
Seller that have not been set forth in the Agreement, the exhibits hereto or in
other documents delivered to Buyer.
(v) Investment Intent. Seller is acquiring the Warrants for investment
for Seller's own account and not with the view to the public resale or
distribution thereof within the meaning of the Securities Act of 1993, as
amended, and the regulations thereunder (the "Securities Act"), and Seller has
no present intention of selling, granting any participation in, or otherwise
distributing the Warrants. No other person has a direct or indirect beneficial
interest, in whole or in part, in the Warrants. Purchaser understands that the
Warrants have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act, which
exemption depends upon, among other things, the bona fide nature of Seller's
investment intent as expressed herein. As a condition to Seller exercising each
of the Warrants, Seller understands that Seller will need to make the investment
representations as stated in Attachment 2 to the Warrants; and Seller hereby
makes the same representations at this time in connection with Seller's
acquisition of the Warrants. Seller is an accredited investor as defined in Rule
501(a) of Regulation D promulgated under the Securities Act.
<PAGE> 22
Seller is experienced in evaluating and investing in high-risk technology
companies such as Buyer, and by reason of Seller's business and financial
experience has the capacity to protect Seller's own interests in connection with
the acquisition of the Warrants and the underlying shares of Buyer and has the
ability to bear the economic risk of investment. Seller is aware that the
Warrants and the underlying shares of Buyer are highly speculative and that
there can be no assurance as to what return, if any, there may be.
SECTION 2.02 Representations and Warranties by Buyer. Buyer represents
and warrants to, and agrees with, Seller as follows:
(a) Organization and Qualification, etc. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted.
(b) Authority Relative to Agreement. Buyer has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the buyer's Board of Directors. No other corporate proceedings on
the part of Buyer, are necessary to authorize the execution and delivery of this
Agreement and any ancillary agreements to which it is a party or the
consummation of the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by Buyer and, assuming the due
authorization, execution and delivery of this Agreement by Seller, is a valid
and binding agreement of Buyer, enforceable against Buyer in accordance with its
terms, except as limited by applicable bankruptcy, reorganization, moratorium or
other laws of general application relating to or affecting enforcement of
creditors' rights and by rules of law governing specific performance, injunctive
relief or other equitable remedies.
(c) Non-Contravention. The execution and delivery of this Agreement
does not and the consummation of the transactions contemplated hereby will not
(i) violate any provision of the Articles of Incorporation or By-Laws of Buyer,
as the case may be, or (ii) violate, or result with the giving of notice or the
lapse of time or both in a violation of, any provision of, or result in the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in the creation
or imposition of any lien, charge, pledge, security interest or other
encumbrance upon any of the property of Buyer pursuant to any provision of, any
mortgage, lien, lease, agreement, license, instrument, law, ordinance,
regulation, order, arbitration award, judgment or decree to which Buyer is a
party or by which any of its assets is bound and do not and will not violate or
conflict with any other restriction of any kind or character to which Buyer is
subject or by which any of its assets may be bound, and the same does not and
will not constitute an event permitting termination of any mortgage, lien,
lease, agreement, license or instrument to which Buyer is a party, except for
any such violation, acceleration, creation, imposition, conflict or termination
which would not prevent the consummation of the transactions contemplated hereby
by Buyer.
(d) Government Approvals. No consent, authorization, order or approval
of, or filing or registration with, any governmental commission, board or other
regulatory body is required for or in connection with the execution and delivery
of this Agreement and the consummation by Buyer of the transactions contemplated
hereby, except (i) where the failure to obtain such consents, authorizations or
approvals or to make such filings or registrations would not prevent the
consummation of the transactions contemplated hereby or thereby and (ii) as may
be necessary as a result of any facts or circumstances relating solely to
Seller.
(e) Litigation. There are no actions, claims, proceedings or
governmental investigations pending against Buyer or any of their assets or
properties at law or in equity, before or by any federal, state, or municipal
court, agency or other governmental entity, or by any other person, which,
individually or in the aggregate, could reasonably be expected (i) to have a
material adverse
<PAGE> 23
effect on the financial condition or results of operations of Buyer or (ii) to
prevent the consummation of the transactions contemplated hereby.
(f) Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Buyer directly with
Seller, without the intervention of any person on behalf of Buyer in such manner
as to give rise to any valid claim by any person against Buyer for a finder's
fee, brokerage commission, or similar payment.
ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 3.01 Conduct of Business. During the period from the date
hereof through and including the Closing Date, except as otherwise contemplated
by this Agreement, Seller shall use its commercially reasonable efforts to
conduct the Business according to its ordinary and usual course of business and
consistent with past practice and use its commercially reasonable efforts,
subject to the foregoing, to preserve substantially intact the business
organization of the Business, keep available the services of its officers and
employees, and maintain its present relationships with licensors, suppliers,
distributors, customers and others having significant business relationships
with it. Representatives of Seller will confer with representatives of Buyer to
keep them informed with respect to the general status of the on-going operations
of the Business.
SECTION 3.02 Access to Information by Buyer. Buyer may prior to the
Closing Date have access to the business and properties of the Business and
information concerning its financial and legal condition as Buyer deem necessary
or advisable in connection with the consummation of the transactions
contemplated hereby, provided that such access shall not interfere with normal
operations of the Business. Seller agrees to permit Buyer and its authorized
representatives, or cause them to be permitted to have, after the date hereof
and until the Closing Date, full access to the premises, books and records of
Seller relating to the Business during normal business hours, and the officers
of Seller will furnish Buyer with such financial and operating data and other
information with respect to the business and properties of the Business as Buyer
shall from time to time reasonably request. No investigation by Buyer heretofore
or hereafter made shall affect the representations and warranties of Seller, and
each such representation and warranty shall survive any such investigation,
provided, however, that in the event that as a result of any such investigation
the senior executive officers of Buyer or such attorneys and accountants as the
senior executive officers of Buyer shall designate to conduct such
investigation, shall receive notice of material facts which, based on
information actually known to them, they shall reasonably determine would be, or
reasonably might be, required to be disclosed in the Disclosure Schedule and are
not so disclosed will use reasonable efforts to inform Seller of such material
facts and no such material facts shall form the basis for indemnification
hereunder, and provided, further, however, that neither Buyer nor any such
officers, attorneys or accountants shall have any obligation to make any inquiry
in respect of the foregoing.
SECTION 3.03 Confidentiality. Each of Buyer, on the one hand, and
Seller, on the other hand, covenants and agrees for itself, its subsidiaries,
its affiliates and its officers and directors that, for a period of three years
following the Closing, it will hold all information concerning the Business and
all information concerning Buyer or Seller, as the case may be, received by
Buyer or Seller, as the case may be, in connection herewith (other than any
information which (i) becomes generally available to the public, (ii) was
available to Buyer, or Seller, as the case may be, on a non-confidential basis
prior to its disclosure by, Buyer or Seller, or (iii) becomes available to Buyer
or Seller, as the case may be, on a non-confidential basis from a source other
than, Buyer or Seller, that is not prohibited from disclosing such information
to Buyer or Seller, by a contractual, legal or fiduciary obligation) on a
confidential basis, not use itself or voluntarily disclose to others any such
information, promptly return every document furnished by Buyer or Seller in
connection herewith and any copies thereof it may have made and to destroy any
summaries, compilations or similar documents
<PAGE> 24
it may have made or derived from such material, and have its representatives
promptly return such documents and copies and destroy such summaries,
compilations or similar documents. Each of Buyer and Seller further covenants
and agrees for itself, its subsidiaries, its affiliates and its officers and
directors that it will keep confidential and not use trade secrets of the
business of Buyer, on the one hand, or Seller, on the other hand, as the
business appears immediately following the Closing Date.
SECTION 3.04 Consents and Authorizations. As soon as practicable, each
of the parties hereto will commence to take all reasonable action to obtain all
authorizations, consents, orders and approvals of all third parties and of all
federal, state and local regulatory bodies and officials which may be or become
necessary for its execution and delivery of, and the performance of its
obligations pursuant to, this Agreement and will cooperate fully with the other
parties in promptly seeking to obtain all such authorizations, consents, orders
and approvals.
SECTION 3.05 Non-Assignable Licenses, Leases and Contracts. Seller
shall use its commercially reasonable efforts to obtain and deliver to Buyer at
or prior to the Closing such consents or waivers as are required in order that
any contract listed on Exhibits A or A-1 or the Disclosure Schedule which would
be breached or violated, or would give any other party the right to cancel the
same, as a result of the occurrence of the Closing hereunder, shall not be so
breached or violated or result in such right of cancellation.
SECTION 3.06 Non-Competition. During the period commencing on the
Closing Date and ending on the tenth anniversary of the Closing Date, Seller
shall not be engaged in any material respect in the business of providing to
third parties any products or services for "Fiber Optic Lighting Applications,"
defined to mean any lighting applications involving remote source lighting and
either (i) fiber optics, or (ii) light pipes, or (ii) other light guides.
Further, Seller shall obtain a similar non-competition covenant signed by ADLT
to bind ADLT and all of its affiliates, in the form of the Parent Agreement
attached hereto as Exhibit E-4. As used in this Section 3.06 and in Section
3.07, the term "affiliate" of ADLT shall mean any business entity in which ADLT,
directly or indirectly, owns or controls at least fifty percent (50%) of the
equity, profit interests or voting power. The foregoing non-competition covenant
shall not apply to any activities of Seller pursuant to any specific agreement
between Buyer and Seller (such as their Supply Agreement or their Development
Agreement).
SECTION 3.07 Non-Solicitation.
(a) During the period commencing on the Closing Date and ending on the
first anniversary of the Closing Date, neither Seller nor any of its affiliates
nor any executive officers thereof will directly or indirectly actively solicit
for employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of Buyer; provided, however, that nothing
in this Section 3.07 shall prohibit Seller or any of its affiliates from
employing any person who contacts them on his or her own initiative or in
response to a general solicitation of employees through a newspaper
advertisement or similar means. Further, Seller shall obtain a similar
non-solicitation covenant signed by ADLT to bind ADLT and all of its affiliates,
in the form of the Parent Agreement attached hereto as Exhibit 4.
(b) Each of the Seller and the Shareholders agrees that the limitations
set forth in these Sections 3.06 and 3.07 (including, without limitation, any
time or territorial limitations) are reasonable and properly required for the
adequate protection of the business of Buyer. In the event that any such
territorial or time limitation is deemed to be unreasonable by a court of
competent jurisdiction, Seller agrees to the reduction of the territorial or
time limitation to the area or period which such court shall have deemed
reasonable.
SECTION 3.08 Exclusivity. Until the earlier of the Closing Date or
termination of this Agreement in accordance with its terms, Seller agrees that
it will not (and that it will use its best efforts to assure that its employees,
agents and affiliates do not on its behalf) take any action to solicit,
initiate, seek, encourage or support any inquiry, proposal or offer from,
furnish any information to, or
<PAGE> 25
participate in any negotiations with, any corporation, partnership, person or
other entity or group concerning the sale or acquisition of Seller, its stock
(including) by means of a public offering thereof, but excluding issuance of
stock and options to employees in the ordinary course of business consistent
with past practices) or a substantial part of its assets with any parties other
than Buyer, and that any such discussions presently in progress will be
terminated or suspended during that period. Seller represents and warrants that
it has the legal right to terminate or suspend any such pending negotiations and
agrees to indemnify Buyer, its representatives and agents from and against any
claims by any party to such negotiations based upon or arising out of the
discussion or any consummation of this Agreement.
SECTION 3.09 Injunctive Relief. Seller acknowledges that its expertise
in the Business and the Assets is of a special, unique, unusual, extraordinary
and intellectual character, which gives such expertise a peculiar value, and
that a breach by it of the covenants contained in Section 3 cannot be reasonably
or adequately compensated in damages in an action of law and that such breach
will cause Buyer irreparable injury and damage. Seller further acknowledges that
it possesses unique skills, knowledge and ability and that competition in
violation of this Section 3 would be extremely detrimental to Buyer. By reason
thereof, Seller agrees that Seller shall be entitled, in addition to any other
remedies it may have under this Agreement or otherwise, to temporary,
preliminary and/or permanent injunctive and other equitable relief to prevent or
curtail any breach of this Section 3, without proof of actual damages that have
been or may be caused to Buyer by such breach or threatened breach.
SECTION 3.10 Optiflex Manufacturing Line. Seller hereby grants to Buyer
the option to purchase the Optiflex manufacturing line equipment located in
Bristol, Pennsylvania at a commercially reasonable purchase price, not to exceed
one million dollars ($1,000,000). Said option shall be exercised, if at all, not
later than the earlier to occur of (i) 50 days following Buyer's receipt of a
written notice that the owner of the Bristol facility has required that the
equipment be removed from the Bristol facility, which 50 day notice period shall
not end prior to 12 months after the Closing Date, or (ii) 18 months after the
Closing Date. Any such purchase shall be on commercially reasonable terms.
Seller hereby agrees to retain and maintain said equipment in good condition
pending any such purchase.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01 Conditions Precedent to the Obligations of Buyer. The
obligations of Buyer under this Agreement are subject to the satisfaction in all
material respects or waiver by Buyer prior to or on the Closing Date of each of
the following conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement, in the Disclosure Schedule or
in any closing certificate or document delivered to Buyer pursuant hereto shall
be true and correct at and as of the Closing Date as though made at and as of
that time other than such representations and warranties as are specifically
made as of another date.
(b) Compliance with Covenants. Seller shall have performed and complied
with all covenants of this Agreement to be performed or complied with by it at
or prior to the Closing Date.
(c) All Proceedings to be Satisfactory. Buyer shall have received
certified or other copies of all documents relating to Seller incident to the
transactions contemplated hereby as Buyer or its counsel may reasonably request
and such documents shall be reasonably satisfactory in form and substance to
Buyer and its counsel.
<PAGE> 26
(d) Legal Actions or Proceedings. No legal action or proceeding shall
have been instituted after the date hereof against Seller arising by reason of
the acquisition of the Assets pursuant to this Agreement, which is reasonably
likely (i) to restrain, prohibit or invalidate the consummation of the
transactions contemplated by this Agreement or (ii) to have a Material Adverse
Effect.
(e) Assignments of Contracts. Seller shall have obtained all
authorizations, consents, waivers and approvals as may be required in connection
with the assignment of those contracts, agreements, licenses, leases and other
commitments to be assigned to Buyer pursuant to this Agreement.
(f) Bill of Sale. Seller shall have executed and delivered to Buyer the
Bill of Sale and Assignment Agreement in substantially the form of Exhibit B
hereto.
(g) Delivery of Assets. Seller shall have delivered all of the Assets
to Buyer's address set forth in Section 7.05 below.
(h) Ancillary Agreements. Seller shall have executed and delivered to
Buyer the (1) Development Agreement, (2) Supply Agreement, (3) Cross-Licensing
Agreement, and (4) Parent Agreement in substantially the forms attached hereto
as Exhibit E (the "Ancillary Agreements").
(i) Compliance Certificate. Seller shall deliver to Buyer a certificate
executed by its President in form satisfactory to Buyer and dated as of the
Closing Date, certifying to the fulfillment of the conditions described in
Sections 4.01(a), (b), (c), (d), (e), (f), (g), (h) and (i).
(j) Legal Opinion. Buyer shall have received a legal opinion in form
and substance reasonably satisfactory to Buyer from counsel to Seller dated as
of the Closing Date.
(k) Completion of Due Diligence Investigation. Buyer shall have
completed to its satisfaction its due diligence review of the Business and the
Assets.
(l) Shareholder Approval. The Buyer's shareholders shall have approved
the transactions contemplated by this Agreement.
(m) Prior Agreements.
(i) Upon the Closing, that certain Professional Services
Agreement between Buyer and Seller, dated as of October 1, 1999, shall terminate
automatically, excepting however that those provisions which logically survive
termination shall remain applicable, as appropriate, particularly including
Sections 3 (Rights to Work Product), 4 (Limited Warranty: Limitations of
Liability), 5 (Confidentiality and NonDisclosure), and 8 General.
(ii) Upon the Closing, that certain Agency Agreement between
Buyer and Seller, dated as of November 1, 1999, shall terminate automatically,
excepting however that those provisions which logically survive termination
shall remain applicable, as appropriate, particularly including Sections 2
(Payment to Fiberstars; Review of Records), 6 (Indemnification and Limitation of
Liability), 7 (Limitation of Liability), 8 (Exclusion of Consequential Damages),
and 9 (General).
(iii) Upon the Closing, that certain Distribution Agreement
between Buyer and Seller, dated as of November 1, 1999, shall remain in full
force and effect for the purpose of Buyer continuing to sell the Seller's
remaining inventory of "products" (as defined in said agreement) which are
retained by Seller after the Closing.
SECTION 4.02 Conditions Precedent to the Obligations of Seller. The
obligations of Seller under this Agreement are subject to the satisfaction in
all material respects or waiver by Seller prior to or on the Closing Date of
each of the following conditions:
<PAGE> 27
(a) Accuracy of Representations and Warranties. The representations and
warranties of each of Buyer contained in this Agreement or in any closing
certificate or document delivered to Seller pursuant hereto shall be true and
correct on and as of the Closing Date as though made at and as of that date
other than such representations and warranties as are specifically made as of
another date.
(b) Compliance with Covenants. Buyer shall have performed and complied
with all covenants of this Agreement to be performed or complied with by, at or
prior to the Closing Date.
(c) All Proceedings to be Satisfactory. Seller shall have received
certified or other copies of all documents relating to Buyer incident to the
transactions contemplated hereby as Seller or its counsel may reasonably request
and such documents shall be reasonably satisfactory in form and substance to
Seller and its counsel.
(d) Legal Actions or Proceedings. No legal action or proceeding shall
have been instituted that is reasonably likely to restrain, prohibit, violate or
otherwise affect the consummation of the transactions contemplated hereby.
(e) Assumption Agreement. Buyer shall have executed and delivered to
Seller the Assumption Agreement in substantially the form of Exhibit D hereto.
(f) Ancillary Agreements. Buyer shall have executed and delivered the
Ancillary Agreements to Seller.
(g) Legal Opinion. Seller shall have received a legal opinion in form
and substance reasonably satisfactory to Seller from counsel to Buyer dated as
of the Closing Date.
(h) Prior Agreements. The prior agreements specified in Section 4.01(m)
hereof shall terminate as specified in Section 4.01(m) hereof.
ARTICLE V
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
SECTION 5.01 Survival. Subject to the limitations and other provisions
of this Agreement, the representations and warranties of the parties hereto
contained herein shall survive the Closing and shall remain in full force and
effect, regardless of any investigation made by or on behalf of Buyer or Seller
until the second anniversary of the Closing Date.
SECTION 5.02 Indemnity.
(a) Subject to the terms and conditions of this Article V, Seller
hereby agrees to indemnify and hold Buyer harmless from and against all damages
to and liabilities of Buyer resulting from or relating to demands, claims,
actions or causes of action, assessments or other losses, costs and expenses
relating thereto, including reasonable out-of-pocket attorneys' fees and
expenses by reason of or resulting from (i) a breach of any representation or
warranty of Seller contained in or made pursuant to this Agreement , (ii) the
failure of Seller to perform or observe any term, provision or covenant or
agreement to be performed or observed by it pursuant to this Agreement, (iii)
any actions, suits or proceedings (actual or threatened and relating to
activities of Seller on or prior to the Closing Date) listed in the Disclosure
Schedule or any actions, suits or proceedings relating to circumstances arising
prior to or relating to the conduct of the Business on or prior to the Closing
Date or (iv) any liability or obligation of Seller of any kind or nature not
expressly assumed by Buyer pursuant to Section 1.07 hereof.
(b) Subject to the terms and conditions of this Article V, Buyer hereby
agrees to indemnify, defend and hold Seller harmless from and against all
damages to and liabilities of Seller
<PAGE> 28
resulting from or relating to demands, claims, actions or causes of action,
assessments or other losses, costs and expenses relating thereto, including
reasonable out-of-pocket attorneys' fees and expenses, by reason of or resulting
from (i) a breach of any representation or warranty of Buyer contained in or
made pursuant to this Agreement, (ii) any failure of Buyer to perform or observe
any term, provision, covenant or agreement to be performed or observed by it
pursuant to this Agreement or (iii) the conduct of Business by Buyer subsequent
to the Closing Date.
(c) The parties hereto hereby acknowledge and agree that their sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement (other than a claim for fraud or for specific
performance of the terms of this Agreement) shall be pursuant to the
indemnification provisions set forth in this Article V.
(d) Except for actions required to be taken by Buyer pursuant to this
Agreement, Seller shall have no liability under any provision of this Agreement
for any liabilities and damages to the extent that such liabilities and damages
relate to actions taken or not taken by Buyer or their affiliates after the
Closing Date. The parties hereto shall take all reasonable steps to mitigate all
liabilities and damages upon and after becoming aware of any event which could
reasonably be expected to give rise to such liabilities and damages. In no event
shall any party hereto be liable for consequential damages.
SECTION 5.03 Third Party Claims. If any claim, assertion or proceeding
by or in respect of a third party is made against an indemnified party or any
event in respect of a third party occurs, and if the indemnified party intends
to seek indemnity with respect thereto under this Article V or to apply any
damage or liability arising therefrom to the $50,000 amount referred to in
Section 5.04, the indemnified party shall promptly notify the indemnifying party
of such claim in writing. The indemnifying party shall have 30 days after
receipt of such notice to undertake, conduct and control, through counsel of its
own choosing and at its expense, the settlement or defense thereof, and the
indemnified party shall cooperate with it in connection therewith; provided,
that, (a) the indemnifying party shall permit the indemnified party to
participate in such settlement or defense through counsel chosen by the
indemnified party, provided that the fees and expenses of such counsel shall be
borne by the indemnified party, (b) the indemnifying party shall promptly
reimburse the indemnified party for the full amount of any liability resulting
from such claim and all related and reasonable expenses (other than the fees and
expenses of counsel as aforesaid) incurred by the indemnified party within the
limits of this Article V and subject to the $50,000 amount referred to in
Section 5.04, (c) the indemnified party shall not, without the prior written
consent of the indemnifying party, settle or compromise any claim or consent to
the entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the indemnified party a
release from all liability in respect of such claim and (d) nothing herein shall
require any indemnified party to consent to the entry of any order, injunction
or consent decree affecting its ability to conduct its business operations after
the date thereof. So long as the indemnifying party is reasonably contesting any
such claim in good faith (and shall have provided security, if requested, to the
indemnitee in a mutually agreed upon amount), the indemnified party shall not
pay or settle any such claim. Notwithstanding the foregoing, the indemnified
party shall have the right to pay or settle any such claim, provided that in
such event it shall waive any right to indemnity therefor by the indemnifying
party. If the indemnifying party does not notify the indemnified party within 30
days after the receipt of the indemnified party's written notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
indemnified party shall have the right to contest, settle or compromise the
claim in the exercise of its reasonable judgment at the expense of the
indemnifying party.
SECTION 5.04 Limitation on Indemnities. No claim for indemnification
will be made by Buyer, on the one hand, or by Seller, on the other hand, under
Section 5.02(a)(i) or (b)(i) hereof, respectively, with respect to any
individual item of liability or damage unless and to the extent that the
aggregate of all such claims by Buyer or by Seller, as the case may be, shall be
in excess of $50,000. For avoidance of doubt, said $50,000 amount is a
forgiveness level, and any indemnity claim shall be for only the amounts in
excess of said forgiveness level. Payments by an indemnifying party pursuant
<PAGE> 29
to Section 5.02 shall be limited to the amount of any liability or damage that
remains after deducting therefrom any insurance proceeds and any indemnity,
contribution or other similar payment reasonably recoverable by the indemnified
party from any third party with respect thereto. Notwithstanding anything to the
contrary contained in this Agreement, no claim by any party hereto may be
asserted, nor may any action be commenced against any party hereto, for breach
of any representation, warranty, covenant or agreement unless notice thereof is
received in writing describing in reasonable detail the facts or circumstances
with respect to the subject matter of such claim on or before the date on which
the representation, warranty, covenant or agreement on which such claim or
action is based ceases to survive as set forth in Section 5.01, irrespective of
whether the subject matter of such claim or action shall have occurred before,
on or after such date, except that any claim by Buyer under Section 5.02(a)(iv)
shall survive indefinitely. Any payment made by Seller to Buyer, as the case may
be, under Article V shall constitute a reduction of the Purchase Price for all
purposes, including Federal, state and local tax as well as financial accounting
purposes.
ARTICLE VI
FURTHER ASSURANCES
SECTION 6.01 Further Assurances. At any time and from time to time on
and after the Closing Date (i) at the request of Buyer Seller shall deliver to
Buyer any records, documents and data possessed by Seller and not previously
delivered to Buyer to which Buyer is entitled and execute and deliver or cause
to be executed and delivered all such deeds, assignments, consents, documents
and further instruments of transfer and conveyance, and take or cause to be
taken all such other actions, as Buyer may reasonably deem necessary or
desirable in order to fully and effectively vest in Buyer, or to confirm its
title to and possession of, the Assets or to assist Buyer in exercising rights
with respect thereto which Buyer is entitled to exercise pursuant to the terms
of this Agreement; and (ii) Buyer shall execute and deliver or cause to be
executed and delivered such further instruments and take or cause to be taken
such further actions as Seller may reasonably deem necessary or desirable to
carry out the terms and provisions of this Agreement.
SECTION 6.02 Books and Records. Buyer agrees that it shall preserve and
keep all books and records relating to the Business and the Assets in Buyer's
possession until six months following the expiration of the statute of
limitations (including extensions thereof) applicable to the tax returns filed
by or with respect to the Business for taxable periods ending prior to or on the
Closing Date to which such books or records may be relevant. After such time,
Seller, upon at least 90 calendar days' prior written notice to Buyer, at its
sole cost and expense, may remove all or any part of such books and records as
Seller may select, and Seller may retain copies thereof. Duly authorized
representatives of Seller shall, upon reasonable notice, have access to such
books and records during normal business hours to examine, inspect and copy such
books and records.
SECTION 6.03 Cooperation on Taxes. Seller and Buyer agree to cooperate
with each other in order to make proper tax filings by executing or causing to
be executed any required documents and by making available to the other, all
books and records relating to the Assets or the Business (including work papers,
records and notes of any kind) at all reasonable times, for the purpose of
allowing the appropriate party to complete any tax RETURN, respond to any
audits, make any determination required under this Agreement (including, but not
limited to, determinations as to which period any asserted tax liability is
attributable), verify any issue and negotiate any settlement with tax authority
or defend or prosecute any tax claim.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
<PAGE> 30
(a) by the mutual written consent of Seller and Buyer;
(b) by Buyer, if the Closing shall not have occurred by March 1, 2000;
(c) by either Seller or Buyer if there is an order or decree
restraining, enjoining, prohibiting, invalidating or otherwise preventing to a
material degree the consummation of the transactions contemplated by this
Agreement; or
SECTION 7.02 Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto, except
that Sections 3.03, 7.02, and 7.03 hereof shall survive such termination.
SECTION 7.03 Expenses, etc. Whether or not the transactions
contemplated by this Agreement are consummated, none of the parties hereto shall
have any obligation to pay any of the fees and expenses of the other parties
incident to the negotiation, preparation and execution of this Agreement,
including the fees and expenses of counsel, accountants and other expert. Each
of Seller, on the one hand, and Buyer, on the other hand, will indemnify the
other party, and hold it harmless from and against any claims for finders' fees
or brokerage commissions in relation to or in connection with such transactions
as a result of any agreement or understanding between such indemnifying party
and any third party. Seller shall pay and be responsible for any transfer taxes
arising from the sale of the Assets hereunder and in that connection shall
timely file all required tax returns related thereto and shall indemnify Buyer
with respect thereto, give Buyer a copy of such tax returns together with proof
of payment of the tax.
SECTION 7.04 Execution in Counterparts. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Signatures may be transmitted by facsimile.
SECTION 7.05 Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered or mailed by
registered or certified mail postage prepaid, or sent by telecopier, facsimile
transmission (followed by mailing of original notice) or nationally recognized
overnight courier service as follows:
If to Seller, to: Fiberstars, Inc.
44259 Nobel Drive
Fremont, CA 94538
Attn: President
If to Buyer to: Unison Fiber Optic Lighting Systems, LLC
32000 Aurora Road
Solon, Ohio 44139
Attn: President
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto. Any notice or other communication
pursuant to this Agreement shall be deemed to have been duly given or made and
to have become effective when delivered in hand to the party to which directed
or if sent by first-class mail postage prepaid or by telecopier, facsimile
transmission or nationally recognized overnight courier service and properly
addressed as set forth above at the earlier of (i) the time when received by the
addressee or (ii) the third business day following the dispatch thereof.
<PAGE> 31
SECTION 7.06 Waivers. Any party hereto (as to itself, but not as to
other parties without their consent) may, by written notice to the other parties
hereto, (a) extend the time for the performance of any of the obligations or
other actions of the other parties under this Agreement; (b) waive any
inaccuracies in the representations or warranties of another party contained in
this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions or covenants of another party
contained in this Agreement; or (d) waive performance of any of the obligations
of another party under this Agreement. Except as otherwise provided in the
preceding sentence hereof, no action taken pursuant to this Agreement, including
without limitation any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained in this Agreement.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed a waiver of any subsequent breach.
SECTION 7.07 Amendments, Supplements, etc. At any time this Agreement
may be amended or supplemented by such additional agreements, articles or
certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of the Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate any governmental approval or
acceptance of this Agreement or to effect or facilitate the filing or recording
of this Agreement or the consummation of any of the transactions contemplated
hereby. Any such instrument must be in writing and signed by all parties.
SECTION 7.08 Entire Agreement. This Agreement, its Exhibits and
Schedules, and the documents executed on the Closing Date in connection
herewith, constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof. No representation, warranty, promise, inducement or
statement of intention has been made by any party hereto which is not embodied
in this Agreement or such other documents, and no party hereto shall be bound
by, or be liable for, any alleged representation, warranty, promise, inducement
or statement of intention not embodied herein or therein.
SECTION 7.09 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 7.10 Binding Effect, Benefits. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
SECTION 7.11 Assignability. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto, except that Buyer may assign
its rights hereunder to a direct or indirect wholly-owned subsidiary of Buyer,
in which case such assignee shall succeed to all the rights of Buyer hereunder
and shall assume all of Buyer's obligations and liabilities hereunder.
SECTION 7.12 Public Announcements. Buyer and Seller will consult with
each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated herein and shall not
issue any such press release or make any such public statement without the
approval of the other, unless counsel has advised such party that such release
or other public statement must be issued immediately and the issuing party has
not been able, despite its good faith efforts, to secure the prior approval of
the other party.
SECTION 7.13 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
rule or regulation, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or
<PAGE> 32
unenforceable provision had never comprised a part hereof. The remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
SECTION 7.14 Commercially Reasonable. For purposes of this Agreement,
"commercially reasonable" shall mean that a party shall act as a similarly
situated prudent business entity in the same or similar type of business would
act under similar circumstances, but not as though such entity were selling the
Assets.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
FIBERSTARS, INC.
By: /s/ David N. Ruckert
-----------------------------------------
Name: David N. Ruckert
---------------------------------------
Title: President, CEO
--------------------------------------
UNISON FIBER OPTIC LIGHTING SYSTEMS, LLC
By: /s/ Wayne R. Hellman
-----------------------------------------
Name: Wayne R. Hellman
---------------------------------------
Title: Member
--------------------------------------
<PAGE> 33
EXHIBIT A
LIST OF ASSETS
<PAGE> 34
EXHIBIT A-1
PURCHASED INTELLECTUAL PROPERTY
<PAGE> 35
EXHIBIT B
BILL OF SALE AND ASSIGNMENT AGREEMENT
<PAGE> 36
EXHIBIT C
WARRANTS
<PAGE> 37
EXHIBIT D
ASSUMPTION AGREEMENT
<PAGE> 38
EXHIBIT E
ANCILLARY AGREEMENTS
<PAGE> 39
EXHIBIT E-1
DEVELOPMENT AGREEMENT
<PAGE> 40
EXHIBIT E-2
SUPPLY AGREEMENT
<PAGE> 41
EXHIBIT E-3
CROSS-LICENSE AGREEMENT
<PAGE> 42
EXHIBIT E-4
PARENT AGREEMENT
<PAGE> 43
EXHIBIT 7(d)
RESTATED INVESTOR AGREEMENT
This Restated Investor Agreement ("Agreement") is made as of this 31st
day of January, 2000 by and between Fiberstars, Inc., a California corporation
(the "Company"), Advanced Lighting Technologies, Inc., an Ohio corporation
("ADLT"), and Unison Fiber Optic Lighting Systems, LLC., a Delaware limited
liability company ("Unison").
RECITALS
WHEREAS, on July 30, 1997 the Company and ADLT entered into an Investor
Agreement (the "Original Agreement");
WHEREAS, ADLT was on or about the time of execution of the Original
Agreement, purchasing an aggregate of 630,111 shares of Common Stock of the
Company from Belfield Services, Inc. ("Belfield");
WHEREAS, in connection with the foregoing transaction, ADLT was
desirous of obtaining a seat on the Company's Board of Directors (the "ADLT
Board Seat");
WHEREAS, the Company had a single vacancy on its Board of Directors and
was desirous of adding a representative of ADLT on its Board of Directors and
was desirous of adding a representative of ADLT to the Board effective as of the
date of the Original Agreement;
WHEREAS, the parties hereto wish to set forth their agreements relative
to transactions in the Company's securities by ADLT, among other things;
WHEREAS, Unison is a wholly owned subsidiary of ADLT;
WHEREAS, on even date herewith the Company, ADLT and Unison have
entered into an Asset Purchase Agreement which provides in part for the transfer
by Unison of certain of its assets to the Company. As partial consideration for
the transfer, the Company shall issue to Unison warrants to acquire one million
(1,000,000) shares of the Company's common stock (the "Warrants");
WHEREAS, the parties wish to amend and restate the Original Agreement
to permit the purchase of the Warrants and to extend the provisions relative to
ownership and control to include the Warrants and shares of common stock
issuable pursuant thereto.
<PAGE> 44
NOW, THEREFORE, in consideration of the mutual provisions of this
Amendment and the Original Agreement as amended hereby, the Company, ADLT and
Unison agree as follows:
Ownership and Control Restrictions
1. Definitions. As used herein, the term:
a. "affiliates" or "affiliated entities" shall include Unison.
b. "Change in Control" shall mean the occurrence of, any of
the following:
i. any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act), other than ADLT or its
affiliate(s) (as defined in Rule 12b-2 under the Exchange Act), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities;
ii. the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the Voting Securities
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the
Voting Securities of such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the Company's
then outstanding securities shall not constitute a Change in Control of
the Company; or
iii. the stockholders of the Company approve a plan
of complete liquidation of the company or an agreement for the sale or
disposition by the Company of, or the Company sells or disposes of, all
or substantially all of the Company's assets.
c. "Proposed Change of Control" shall mean the receipt by the
Company's Board of Directors or management of a bona fide proposal by a
third party setting forth a plan of action pursuant to which Voting
Securities representing Voting power of the Company in excess of forty
percent (40%) of the Company would be beneficially held, directly or
indirectly, by such third party (by merger, purchase of assets or
purchase of stock) upon consummation of the Plan.
2. Standstill Agreement. Notwithstanding any other provisions of this
Agreement, without the written consent of the Company and the majority of the
Company's Directors not nominated by ADLT or its affiliates, successors in
interest, nominees or assignees, neither ADLT nor its affiliated entities will
acquire beneficial ownership (which term shall include for purposes of this
Agreement, without limitation, direct or indirect ability to influence voting)
of any securities of the Company entitled to vote with respect to the election
of any directors of the Company ("Voting Securities"), and security convertible
into, exchangeable for exercisable for or that may become any
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<PAGE> 45
Voting Securities or any other right to acquire Voting Securities, if after such
acquisition the Voting Securities then beneficially owned by ADLT and/or its
affiliated entities, together with the Voting Securities with respect to which
ADLT and/or such entities have the right or future right to acquire such
beneficial ownership, represent (or will represent when outstanding) voting
power greater than Forty Percent (40%) of the voting power of all then
outstanding Voting Securities (as determined if all outstanding Voting
Securities were voting together).
a. Voting Trust, etc. Neither ADLT nor any affiliated entity
shall deposit any Voting Securities in a voting trust, or, except as
otherwise provided herein, subject any Voting Securities to any
arrangement or agreement with respect to the voting of such Voting
Securities.
b. Solicitation of Proxies. Without the Company's prior
written consent, neither ADLT nor any affiliated entity shall solicit
proxies with respect to any Voting Securities, nor shall any of them
become, with respect to the election or removal of any of the Company's
directors, a "participant" within the meaning of Rule 14a-11 of
Regulation 14 A under the Exchange Act; provided however, that ADLT
shall not be deemed to be a "participant" under such role by reason of
the membership of its designee on the Company's Board of Directors.
c. Acts in Concert with Others. Neither ADLT nor any
affiliated entity shall join a partnership, limited partnership,
syndicate or other group, or otherwise act in concert with any third
person, for the purpose of acquiring, holding, voting or disposing of
Voting Securities. The foregoing prohibition shall not prevent ADLT
from joining a partnership, limited partnership, syndicate or other
group not formed or perpetuated for any such purpose which acquires,
holds or disposes of Voting Securities, provided that neither ADLT nor
any affiliated entity is able, either directly or indirectly, to vote
such Voting Securities.
3. Notice of Voting Securities Purchases and Sales. ADLT shall advise
the management of the Company as to its and its affiliated entities' plans to
acquire or dispose of beneficial ownership of any Voting Securities, or rights
thereto, reasonably in advance of any such action. All purchases of Voting
Securities of the Company by ADLT and its affiliated entities shall be made in
compliance with applicable laws and regulations.
4. Voting; Appointment of Director. Unless the Company otherwise
consents in writing, ADLT shall take such action as may be required so that all
such Voting Securities are voted with management on all matters, other than the
election of directors, to be voted on by holders of Voting Securities in not
less than the same proportion as the votes cast by the other holders of Voting
Securities with respect to such matters. ADLT and its affiliated entities, as
holders of shares of Voting Securities, shall be present, in person or by proxy,
at all meetings of stockholders of the Company so that all shares of Voting
Securities beneficially owned by ADLT and/or its affiliated entities may be
counted for the purposes of determining the presence of a quorum at such
meetings.
Effective upon the closing of the transactions described in that
certain Stock Purchase Agreement among the Company, ADLT and Belfield Services,
Inc., the Company agrees to appoint a nominee of ADLT (the "ADLT Nominee")
reasonably acceptable to the Company's Board of Directors, to hold office until
the next annual meeting of the Company's shareholders and until his
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<PAGE> 46
successor is duly elected and qualified. The Company agrees to take such action
as is reasonably necessary to cause the election of the ADLT Nominee to the
Company's Board of Directors. Once elected, the ADLT Nominee may not be removed
from the Board other than for cause. Any vacancy created on the Board as a
result of the resignation, death, disability or removal of the ADLT Nominee
shall be filled by the nomination of a replacement director by ADLT reasonably
acceptable to the Company and the prompt appointment of such nominee by the
remaining directors to fill such vacancy. Notwithstanding the foregoing, the
Company's obligations under this Section 4 shall terminate if the percentage of
Voting Securities of the Company owned beneficially and of record by ADLT
becomes less than Fifteen Percent (15%).
5. Restrictions on Transfer of Voting Securities. Neither ADLT nor any
affiliated entity shall dispose of beneficial ownership or voting control of
Voting Securities or any right thereto except (i) to the Company or any person
or group approved by the Company; (ii) to a corporation or other entity of which
ADLT owns not less than 50% of the voting power entitled to be cast in the
election of directors or managers, as the case may be (a "Controlled
Enterprise"), so long as such Controlled Enterprise agrees to hold such Voting
Stock subject to all the provisions of this Agreement, including this Section 5,
and agrees to transfer such Voting Securities to ADLT or another Controlled
Enterprise of ADLT if it ceases to be a Controlled Enterprise of ADLT; (iii)
pursuant to a bona fide public offering registered under the Securities Act of
either Voting Securities or securities exchangeable or exercisable for
Securities (in which ADLT obtains more than 10% of the offering and ADLT does
not have the ability to select the purchasers); (iv) pursuant to Rule 144 under
the Securities Act (provided that if Rule 144(k) is available, such transfer
nevertheless is within the volume limits and manner of sale requirements
applicable to non-144(k) transfers under Rule 144); (v) in transaction not
described in (i), (ii), (iii), (iv), (vi) or (vii) hereof so long as such
transactions do not, directly or indirectly, result in any person or group
owning or having the right to acquire or intent to acquire beneficial ownership
of Voting Securities with aggregate voting power of five percent (5%) or more of
the aggregate voting power of all outstanding Voting Securities (as determined
if all Voting Securities were voting together); (vi) the transfer of any warrant
for Voting Securities issued by the Company to a person or persons approved in
advance by the Company to the extent that the exercise or conversion of such
warrant by ADLT or Unison would violate the Hart Scott Rodino Act or, in the
opinion of counsel, would otherwise be a potential violation of antitrust law,
or (vii) in response to an offer to purchase or exchange for cash or other
consideration any Voting Securities that (a) is made by or on behalf of the
Company, or (b) is made by another person or group and is not opposed by the
Board of Directors of the Company within the time such Board is required,
pursuant to regulations under the Exchange Act, to advise Company stockholders
of such Board's position on such offer. ADLT's obligations pursuant to this
Section 5 shall terminate effective upon termination of the Company's
obligations pursuant to Section 4 hereof.
6. Right to Maintain. If the percentage interest of the Purchaser in
the Total Voting Power (as defined below) of the Company is reduced as a result
of an issuance by the Company of Common Stock or of any other voting security of
the Company (including any issuance following conversion of any security
convertible into or exchangeable for Common Stock or any other voting security
of the Company or upon exercise of any option, warrant or other right to acquire
any Common Stock or any other voting security of the Company), the Company shall
so notify the Purchaser by written dated notice within 10 calendar days after
such issuance and shall offer to sell
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<PAGE> 47
to the Purchaser, and if such offer is accepted within 10 calendar days of
receipt of such offer, shall sell to the Purchaser, at a purchase price per
share equal to the Average Market Price per share on the date of the Company's
notice given pursuant to this Section 6, that number of shares of Common Stock
which, if purchased by the Purchaser, would result in the Purchaser's retaining
the percentage interest in the Total Voting Power of the Company in effect prior
to such reduction of its interest, up to a percentage interest of forty percent
(40%). For purposes of this Agreement, the Average Market Price of any security
at any date shall be the average of the closing prices for a share of such
security on the 10 consecutive trading days ending on the trading date last
preceding the date of determination of such price, as reported on the Nasdaq
National Market System ("NMS") or, if such closing prices shall not be reported
on the NMS, the average of the mean between the closing bid and asked prices of
a share of such security on such 10 consecutive trading days as so reported or,
if such prices shall not be so reported, as the same shall be reported by the
Nasdaq Over-the-Counter Market or, in all other cases, the value set in good
faith by the Company's Board of Directors. The purchase and sale of any shares
of Common Stock pursuant to any offer made under this Section 6 that is accepted
by the Purchaser shall take place at 10:00 a.m. on the business day following
the expiration or early termination of all waiting periods imposed on such
purchase and sale by the Hart-Scott-Rodino Antitrust Improvements Act ("HSR
Act") or, if no waiting period is imposed on such purchase and sale by the HSR
Act, on the business day following the Purchaser's acceptance of such offer at
the offices of the Company, or at such other time and place as the Company and
the Purchase may agree. The Company and the Purchaser will use their best
efforts to comply with all federal and state laws and regulations and stock
exchange listing requirements applicable to any purchase and sale of shares of
Common Stock under this Section 6. The issuance of such shares shall be subject
to compliance with applicable stock exchange or Nasdaq requirements and there
shall not then be in effect any order enjoining or restraining such exercise on
issuance.
Notwithstanding the foregoing, if any issuance of securities or rights
to acquire securities requiring the Company to make an offer under this Section
6 shall be for a number of securities representing less than 3% of the Total
Voting Power of this Company in effect immediately following such issuance, the
Company shall have the right to delay giving the notice otherwise required by
this Section 6 until the earlier of (i) the next issuance which, together with
all issuances after which notice was delayed pursuant to this sentence, shall
represent an aggregate of 3% or more of the Total Voting Power of the Company
then in effect or (ii) the 45th calendar day next preceding the last day of the
Company's then fiscal year for accounting purpose and, thereupon, the Company
shall give such notice with respect to all shares of Common Stock which it shall
be obligated to offer to sell to the Purchaser and which shall not have been the
subject of a previous notice pursuant to this Section 6. The right of delay set
forth in this paragraph shall not apply to any issuance of securities by the
Company that results in the percentage of the Total Voting Power of the Company
held by ADLT or its affiliates declining below thirty-seven percent (37%).
As used in this Agreement, the term "Total Voting Power of the Company"
means the total number of votes which may be cast in the election of directors
of the Company at any meeting of shareholders of the Company if all securities
entitled to vote in the election of directors of the Company were present and
voted at such meeting, other than votes that may be cast only upon the happening
of a contingency.
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<PAGE> 48
7. Governing Law. This Agreement shall be governed by the laws of the
State of California as such laws are applied to agreements between California
residents centered into and to be performed entirely within California.
8. Amendment of Registration Rights; Consent to Assignment. The Company
hereby consents to the assignment to ADLT of all of the rights, preferences and
privileges afforded Belfield Services, Inc. and its predecessor in interest,
Pacific Technology Fund ("PTF"), pursuant to that certain Registration Rights
Agreement among the Company and the Holders (as defined therein) dated June 27,
1990, as amended through and including Amendment No. 3 thereto dated as of
August, 1994 (the "RRA").
The Company represents and warrants that (i) as of the date of the
Original Agreement there has been no exercise of any demand registration right
pursuant to Section 2.1 of the RRA; and (ii) upon due execution of Amendment No.
4 to the RRA of even date herewith by the Company and Belfield (the successor in
interest to PTF) the rights and preferences of Belfield under the RRA may be
validly assigned to ADLT.
9. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
10. Termination. Upon a Change in Control, the obligations and rights
of the parties contained in Paragraph 2 entitled "Standstill Agreement,"
Paragraph 3 entitled "Notice of Voting Securities Purchase and Sale" and
Paragraph 5 "Restrictions on Transfer of Voting Securities," shall immediately
terminate and the conduct of the parties shall no longer be restricted or bound
thereby.
11. Suspension. Upon the occurrence of a Proposed Change of Control for
the Company, the provisions in Paragraph 2 entitled "Standstill Agreement" shall
not preclude ADLT or its affiliates from making a bid or proposal to acquire the
Company. Upon any termination of the Proposed Change of Control, the provisions
in Paragraph 2 shall again be in full force and effect.
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<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have executed this Restated
Investor Agreement effective as of the date and year first above written.
FIBERSTARS, INC. ADVANCED LIGHTING
TECHNOLOGIES, INC.
By: /s/ David N. Ruckert By: /s/ Wayne R. Hellman
------------------------ ------------------------
Name: David N. Ruckert Name: Wayne R. Hellman
---------------------- ----------------------
Title: President, CEO Title: Chairman and CEO
--------------------- ---------------------
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