<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
ADVANCED LIGHTING TECHNOLOGIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NOT APPLICABLE
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
LOGO
2307 East Aurora Road
Suite One
Twinsburg, Ohio 44087
October 17, 1996
To Our Shareholders:
On behalf of the Board of Directors and management, I cordially invite you
to attend the Annual Shareholders Meeting to be held on Wednesday, November 13,
1996, at 10:30 a.m., at KSK Color Lab (Conference Room), 32300 Aurora Road,
Solon, Ohio 44139.
The notice of meeting and proxy statement accompanying this letter describe
the specific business to be acted upon.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the shareholders.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend in person, you are requested to vote, sign, date and
promptly return the enclosed proxy in the envelope provided.
Sincerely yours,
/s/ Wayne R. Hellman
Wayne R. Hellman
Chairman of the Board
<PAGE> 3
ADVANCED LIGHTING TECHNOLOGIES, INC.
2307 East Aurora Road
Suite One
Twinsburg, Ohio 44087
NOTICE OF ANNUAL SHAREHOLDERS MEETING
TO BE HELD NOVEMBER 13, 1996
To the Shareholders of ADVANCED LIGHTING TECHNOLOGIES, INC.:
Notice is hereby given that the Annual Shareholders Meeting of ADVANCED
LIGHTING TECHNOLOGIES, INC. (the "Company") will be held on Wednesday, November
13, 1996 at 10:30 a.m., local time at KSK Color Lab (Conference Room), 32300
Aurora Road, Solon, Ohio 44139, for the following purposes:
1. To elect directors, the names of whom are set forth in the accompanying
proxy statement, to serve until the 1999 Annual Meeting and their
successors have been elected and qualified.
2. To consider and act upon a proposal to amend the Company's Articles of
Incorporation to increase the number of authorized common shares from
22,000,000 shares to 80,000,000 shares.
3. To ratify and approve the Company's 1995 Incentive Award Plan.
4. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company.
5. To transact such other business as may properly be brought before the
meeting.
The Board of Directors has fixed the close of business on September 18,
1996 as the record date for the determination of the shareholders entitled to
notice of and to vote at the Annual Meeting, and only shareholders of record at
the close of business on that date will be entitled to vote at the Annual
Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. WHETHER OR NOT YOU EXPECT TO BE PRESENT, YOU ARE REQUESTED TO VOTE,
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE PREPAID ENVELOPE
PROVIDED. If you are present at the Annual Meeting and desire to vote in person,
your proxy will not be used if you revoke your appointment of proxy so that you
may to vote your shares personally.
By Order of the Board of Directors,
/s/ Louis S. Fisi
Louis S. Fisi
Secretary/Treasurer
October 17, 1996
NOTICE
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED SO THAT THE PRESENCE OF A QUORUM
MAY BE ASSURED. EACH SHAREHOLDER IS REQUESTED TO EXECUTE AND PROMPTLY RETURN THE
ENCLOSED PROXY.
<PAGE> 4
ADVANCED LIGHTING TECHNOLOGIES, INC.
2307 EAST AURORA ROAD
SUITE ONE
TWINSBURG, OHIO 44087
PROXY STATEMENT
ANNUAL SHAREHOLDERS MEETING
TO BE HELD NOVEMBER 13, 1996
The enclosed Proxy is solicited on behalf of the Board of Directors of
Advanced Lighting Technologies, Inc. (the "Company") for use at the Annual
Shareholders Meeting ("Annual Meeting") to be held Wednesday, November 13, 1996
at 10:30 a.m., local time, or at any adjournment or postponement thereof, for
the purposes set forth herein and in the accompanying Notice of Annual
Shareholders Meeting. The Annual Meeting will be held at KSK Color Lab
(Conference Room), 32300 Aurora Road, Solon, Ohio 44139.
These proxy solicitation materials were mailed on or about October 17, 1996
to all shareholders entitled to vote at the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on September 18, 1996 are
entitled to notice of, and to vote at, the Annual Meeting. At the record date,
13,296,709 shares of the Company's Common Stock, par value $.001 per share (the
"Common Stock") were issued and outstanding and entitled to vote at the meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting in person.
VOTING AND SOLICITATION
Every shareholder voting for the election of directors is entitled to one
vote for each share of Common Stock held. Shareholders do not have the right to
cumulate their votes in the election of directors. On all other matters each
share is likewise entitled to one vote on each proposal or item that comes
before the Annual Meeting.
The Company intends to include abstentions and broker nonvotes as present
or represented for purposes of establishing a quorum for the transaction of
business, but to exclude abstentions and broker nonvotes from the calculation of
votes cast with respect to any proposal for which authorization to vote was
withheld.
The cost of this solicitation will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies also may be solicited by certain
Company's directors, officers and employees, without additional compensation.
PROPOSAL 1.
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at nine, the
smallest number of Board positions currently permitted for an Ohio corporation
with three classes of directors. Messrs. Harada, Tunstall and
1
<PAGE> 5
Capra are currently directors whose terms expire at the 1996 Annual Meeting.
Each has been nominated for election at the Annual Meeting as a director for a
term expiring at the 1999 annual meeting, or until their successors are duly
elected and qualified. The persons named in the accompanying proxy will vote for
Messrs. Harada, Tunstall and Capra to serve as directors for such term. Although
it is not presently contemplated that any nominee will decline or be unable to
serve as a director, in either such event, the proxies will be voted by the
proxy holders for such other persons as may be designated by the present Board
of Directors.
Two vacancies exist on the Board of Directors for which there are no
nominees: one for a term expiring in 1997 and one for a term expiring in 1998.
The Board of Directors has begun the process of identifying individuals who may
or may not be affiliated with the Company and who have skills and experience
complementary to the current directors to further enhance the Board's
contribution to the Company. As suitable candidates are identified, these
vacancies will be filled by a majority vote of the Board of Directors as
required by the Company's Code of Regulations (by-laws).
NOMINEES
The following table sets forth certain information regarding each of the
three nominees of the Board of Directors for election as a director for the term
expiring in 1996. Since directors serve a term of three years, these nominees,
if elected, will have terms which will expire in 1999.
<TABLE>
<CAPTION>
DIRECTORS' TERM
NAME AGE POSITION EXPIRES
- --------------------- ------ ------------------------------ ------------------
<S> <C> <C> <C>
Susumu Harada 45 Director 1996
A Gordon Tunstall 52 Director 1996
Richard D. Capra 64 Director 1996
</TABLE>
The three persons receiving the greatest number of votes shall be elected
directors. The Board of Directors recommends a vote "FOR" the three nominees as
directors of the Company.
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding each of the
four directors whose terms expire in 1997 and 1998
<TABLE>
<S> <C> <C> <C>
Wayne R. Hellman 50 President, Chief Executive 1998
Officer and Chairman of the
Board of Directors
Louis S. Fisi 61 Executive Vice President, 1997
Chief Financial Officer,
Secretary, Treasurer and
Director
Francis H. Beam 60 Director 1997
Theodore A. Filson 61 Director 1998
</TABLE>
Wayne R. Hellman has served as the chief executive officer and a director
of the Company since 1995, and as chief executive or other senior officer of
each of the Company's predecessors since 1983. From 1968 to 1983 he was employed
by the lighting division of General Electric Company. While at General Electric,
Mr. Hellman served as Manager of Strategy Analysis for the Lighting Business
Group; Manager of Engineering for the Photo Lamp Department; Halarc Project
Venture Capital Manager; Manager of Quartz Halogen Engineering and Manager of
Metal Halide Engineering. As the Halarc Project Venture Capital Manager, he was
given the responsibility of developing metal halide technology.
Louis S. Fisi has served as the chief financial officer, executive vice
president, secretary, treasurer and a director of the Company since 1995 and as
chief financial officer of one or more of the Company's predecessors since 1985.
He also assisted Mr. Hellman in the founding of the predecessors. Mr. Fisi is a
certified public accountant and from 1976 to 1985, was employed in executive and
financial capacities by the Smithers Company, an international industrial
company, and from 1967 to 1976 was employed by an
2
<PAGE> 6
international accounting and consulting firm currently known as Ernst & Young
LLP, the Company's independent auditors.
Francis H. Beam has served as a director of the Company since 1995. Mr.
Beam has served as President of Pepper Capital Corp., a venture capital firm
which he formed, since 1988. Mr. Beam is also a director of The Lamson &
Sessions Co., a manufacturer of thermoplastic conduit and pipe, enclosures,
wiring devices and accessories. From 1959 to 1988 he was employed by an
international accounting and consulting firm currently known as Ernst & Young
LLP, the Company's independent auditors. Beginning in 1967 he held various
partnership positions with that firm until his retirement in 1988 as Vice
Chairman and Regional Managing Partner.
Richard D. Capra has served as a director of the Company since 1995. Mr.
Capra has been an independent consultant to and director or officer of a number
of lighting companies since 1991. In addition, Mr. Capra served as president and
chief executive officer of Aerovox/Aero M Group from December 1994 to August
1996, and as president and chief operating officer of Crescent Electric Supply
Company from December 1993 to December 1994. Mr. Capra is also a director, chief
executive officer and president of ILC Technology, Inc., a manufacturer of high
intensity lamps for specialized applications. From 1987 to 1991 he was employed
by Philips Lighting Company as its president and chief executive officer, prior
to which he served as president of the lighting ballast manufacturing subsidiary
of that company from 1983 to 1987. From 1970 to 1983 Mr. Capra was employed as
president and chief executive officer of the electrical products group of Gould,
Inc. and of I.T.E. Imperial Corp.
Theodore A. Filson has been a director of the Company since 1995. Mr.
Filson has served as an independent consultant to the lighting industry since
1994. From 1986 to 1994 he was employed as president and chief executive officer
of Advance Transformer, Inc., the largest manufacturer of lighting system
ballasts in the world.
Susumu Harada has served as a director of the Company since January 1996.
Mr. Harada is the chief executive officer of the following Japanese companies:
Koto Electric Co. Ltd., Koto Luminous Co. Ltd., Koto Cristal and Wakoh. The
product lines of these companies include specialty lamps, hermetic seals for
quartz crystal and optical semiconductors and digital display lamps. In 1981,
Mr. Harada joined Koto as the Overseas and Domestic Sales and Planning Manager.
He held a number of positions with Koto before he assumed his current position
as chief executive officer in 1992. Koto Luminous is the Company's sole agent in
Japan.
A Gordon Tunstall has served as a director of the Company since June 1996.
He is the founder of, and for more than 13 years has served as president of,
Tunstall Consulting, Inc., a provider of strategic consulting and financial
planning services. Mr. Tunstall is also currently a director of Romac
International, Inc., a professional and technical placement firm; Orthodontic
Centers of America, Inc., a manager of orthodontic practices; Discount Auto
Parts, Inc., a retail chain of automotive aftermarket parts stores; and L.A. T
Sportswear, Inc., a sports apparel company.
COMPOSITION OF THE BOARD OF DIRECTORS
Pursuant to the terms of the Company's Articles of Incorporation and Code
of Regulations (by-laws), the Board of Directors has the power to change the
number of directors by resolution. The number of directors is currently set at
nine members. The directors are divided into three classes. Each director in a
particular class is elected to serve a three-year term or until his or her
successor is duly elected and qualified. The classes are staggered so that their
terms expire in successive years resulting in the election of only one class of
directors each year.
BOARD MEETINGS AND COMMITTEES
Mr. Hellman serves as Chairman of the Board of Directors of the Company.
The Board of Directors held a total of three meetings during the fiscal year
ended June 30, 1996. All of the current directors attended 75%
3
<PAGE> 7
or more of the meetings of the Board of Directors and committees of the Board,
if any, upon which such directors served.
During fiscal year 1996, the Executive Committee consisted of Mr. Hellman,
Mr. Fisi and Mr. Filson. The Executive Committee is authorized to exercise all
of the powers of the Board of Directors except the powers to declare dividends
and issue shares of Common Stock or rights to acquire such Common Stock. The
Executive Committee is empowered to act during the interim periods between
meetings of the Board of Directors, where circumstances require immediate Board
of Directors' action and where time and other constraints preclude a prompt
special meeting of the entire Board of Directors.
During fiscal year 1996, the Audit Committee, consisting of Mr. Beam, Mr.
Capra and Mr. Filson, held one meeting. The Audit Committee makes
recommendations concerning the engagement of independent auditors, reviews with
the independent auditors the plans and results of the audit engagement, approves
professional services provided by the independent auditors, reviews the
independence of the independent auditors, considers the range of audit and
nonaudit fees and reviews the adequacy of the Company's internal accounting
controls.
During fiscal year 1996, the Compensation Committee, consisting of Mr.
Beam, Mr. Capra and Mr. Filson, held one telephonic meeting. The Compensation
Committee determines the compensation of the Company's executive officers. Its
report is included below at "COMPENSATION--Report on Executive Compensation by
the Compensation Committee."
During fiscal year 1996, the Incentive Award Plan Committee, consisting of
Mr. Hellman and Mr. Fisi, held two meetings. The members of this Committee are
ineligible to receive discretionary grants of stock or stock options under any
plan of the Company during the time they serve on the Committee or for the
one-year period prior to such service. The Incentive Award Plan Committee
administers the Incentive Award Plan and will make all determinations as to
grants of stock and stock options thereunder.
The Company currently has no Nominating Committee. The entire Board of
Directors nominates candidates for directors.
CERTAIN HOLDERS OF VOTING SECURITIES
THE FOLLOWING TABLE SETS FORTH INFORMATION REGARDING THE OWNERSHIP OF THE
COMPANY'S COMMON STOCK AS OF SEPTEMBER 18, 1996, BY EACH OF THE DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY, BY EACH PERSON OR GROUP KNOWN BY THE COMPANY
TO BE THE BENEFICIAL OWNER OF MORE THAN FIVE PERCENT OF THE COMPANY'S
OUTSTANDING COMMON STOCK, AND BY ALL DIRECTORS AND EXECUTIVE OFFICERS OF THE
COMPANY AS A GROUP.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
--------------------------
NAME AND ADDRESS(1) NUMBER PERCENT
--------------------------------------------------------- ---------- -------
<S> <C> <C>
Wayne R. Hellman(2)...................................... 5,387,425 40.5%
Louis S. Fisi(3)......................................... 544,667 4.1
Francis H. Beam(4)....................................... 37,885 *
Richard D. Capra(4)...................................... 37,085 *
Theodore A. Filson(4).................................... 17,421 *
Susumu Harada(5)......................................... 190,768 1.4
A Gordon Tunstall........................................ 5,000 *
David L. Jennings(3)..................................... 715,558 5.4
All Directors and Executive Officers as a Group(2)(4)(5)
(7 persons)............................................ 5,675,584 42.7
</TABLE>
* Less than 1%.
- ---------------
(1) The business address of each of Messrs. Hellman, Fisi, Jennings, and Filson
is 2307 E. Aurora Road, Suite One, Twinsburg, Ohio 44087. The business
addresses of Messrs. Beam, Capra, Harada and Tunstall are respectively, Mr.
Beam -- Pepper Capital Corporation, 3550 Lander Rd. #301, Pepper Pike, Ohio
44124, Mr. Capra -- 5764 Diamond Point Circle, El Paso, Texas 79912, Mr.
Harada -- Koto Electric
4
<PAGE> 8
Co., Ltd., Bunmeido Bldg., 7th Floor, 3-16-5, Taito, Taito-Ku, Tokyo 110,
Japan and Mr. Tunstall -- Tunstall Consulting, 13153 North Dale Mabry,
Tampa, Florida, 33618.
(2) Includes 2,289,211 shares owned by Mr. Hellman individually, 125,000 shares
which are owned by a limited liability company of which Mr. Hellman is the
manager; Mr. Hellman has voting and investment power as to all such shares,
1,491,278 shares beneficially owned by certain shareholders of the Company
held under a voting trust which expires in 2005 (the "Trust") and 1,606,936
shares formerly owned by the Trust as to which Mr. Hellman holds an
irrevocable proxy under similar terms. These shares, totaling 3,098,214
shares are referred to herein as the "Trust Shares." The Trust Shares
include all shares owned by Messrs. Fisi, Jennings, Roller, Sarver, Sulcs
and Brian A. Hellman and Ms. Christine Hellman and Ms. Lisa Hellman.
Pursuant to the terms of the Trust and the irrevocable proxies, Mr. Hellman
is empowered to vote the Trust Shares for all purposes at his sole
discretion, but is not provided with investment power with respect to the
Trust Shares. Beneficial owners of the Trust Shares may remove the shares
from the Trust or release the shares from the irrevocable proxy, as the case
may be, to effect a bona fide sale free of the restrictions of the Trust.
All share distributions on account of the Trust Shares become subject to the
Trust and all cash and other nonshare distributions on account of the Trust
Shares are to be paid over to the grantors of the Trust. The expiration of
the Trust may be accelerated under certain circumstances. Mr. Hellman does
not receive any compensation for serving as voting trustee of the Trust.
(3) All shares are Trust Shares subject to voting control by Mr. Hellman.
(4) Includes, with respect to each of Messrs. Beam, Capra and Filson, 2,400
shares of Common Stock which are subject to options granted under the 1995
Incentive Award Plan and which become exercisable on December 12, 1996.
(5) Includes 182,268 shares owned by Koto Luminous Co. Ltd., a Japanese
corporation, of which Mr. Harada is chief executive officer. Mr. Harada
disclaims beneficial ownership of these shares.
COMPENSATION
The following table sets forth certain information with respect to all
compensation paid or earned for services rendered to the Company in all
capacities for the fiscal year ending June 30, 1996 by the Company's Executive
Officers. No Executive Officer of the Company received restricted stock awards,
grants of options or stock appreciation rights or long-term incentive plan
awards or payouts for the fiscal year ending June 30, 1996. The Company has no
defined benefit plan.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------------
PAYOUTS
ANNUAL COMPENSATION AWARDS -----------
------------------------------------------ ----------------------------- LONG TERM
OTHER ANNUAL RESTRICTED SECURITIES INCENTIVE
NAME AND SALARY BONUS COMPENSATION STOCK AWARDS UNDERLYING PAYOUTS
PRINCIPAL POSITION YEAR ($) (1) ($) ($) (2) ($) OPTIONS/SARS ($)
- ------------------------- ---- -------- -------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Wayne R. Hellman 1996 $271,177 $ 0 $ -- $ 0 0 $ 0
Chief Executive Officer 1995 $324,926 $136,524 $ -- $ 0 0 $ 0
Louis S. Fisi 1996 $169,224 $ 0 $ -- $ 0 0 $ 0
Chief Financial Officer 1995 $196,156 $ 83,857 $ -- $ 0 0 $ 0
<CAPTION>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($) (3)
- ------------------------- ------------
<S> <C<C>
Wayne R. Hellman $109,426
Chief Executive Officer $109,426
Louis S. Fisi $ 70,961
Chief Financial Officer $ 70,961
</TABLE>
- ---------------
(1) Mr. Hellman and Mr. Fisi are each parties to an Employment Agreement with
the Company. These Employment Agreements have an initial term commencing
January 1996 and expiring October 1998. Through these Employment Agreements,
Mr. Hellman and Mr. Fisi will receive an annual base compensation of
$195,000 and $165,000 per year, respectively. In addition, Mr. Hellman and
Mr. Fisi will each receive bonuses, if any, as determined by the
Compensation Committee. These Employment Agreements provide for annual
increases in annual base compensation in amounts determined by the
Compensation Committee during the term of these Employment Agreements. Under
these Employment Agreements, Mr. Hellman and Mr. Fisi participate in Company
sponsored life, health and disability insurance coverage. Also includes
compensation deferred pursuant to the Company's 401(k) deferred compensation
plan and Company matching contributions relating thereto.
(2) Perquisites provided to the executive officers consisted primarily of
automobile use, automobile insurance, club dues and health insurance
premiums and did not exceed 10% of the person's salary and bonus.
(3) Split-dollar life insurance premiums.
5
<PAGE> 9
COMPENSATION OF DIRECTORS
All directors of the Company receive reimbursement for reasonable
out-of-pocket expenses incurred in connection with meetings of the board of
directors. In December 1995, the Company granted options to purchase 9,600
shares of Common Stock under the Incentive Award Plan to its nonemployee
directors. These options were granted at an exercise price of $10.00 per share,
none of which are currently exercisable. In January and June 1996, the Company
granted options to purchase 9,600 shares of Common Stock under the Incentive
Award Plan to its nonemployee directors that were appointed to the board of
directors during the months in which the grants were made. The January grant was
at $10.25 and the June grant was at $17.00. In June 1996, Messrs. Beam, Capra,
Filson and Tumstall were granted options to purchase an additional 5,400 shares
at an exercise price of $17.00 per share. Each grant was made at the market
price of the Company's Common Stock on the date of grant. Each option will vest
25% in the first year, 35% in the second year and 40% in the third year, from
the date of grant. In addition, commencing in fiscal 1997, the nonemployee
directors are to be compensated $2,500 for each meeting of the full board
attended. Such directors will be entitled to a minimum of $10,000 if they attend
75% or more meetings of the board and committees to which they belong. No
director who is an employee of the Company will receive separate compensation
for services rendered as a director.
The Company has also undertaken to pay Mr. Filson fees in the annual amount
of $100,000 per annum for a three-year period beginning in 1994 for consulting
services to be rendered. This arrangement will terminate on December 31, 1996.
EMPLOYMENT AND CONSULTING AGREEMENTS
Mr. Hellman and Mr. Fisi are each parties to an Employment Agreement with
the Company. These Employment Agreements have an initial term commencing January
1996 and expiring October 1998. Through these Employment Agreements, Mr. Hellman
and Mr. Fisi, will receive an annual base compensation of $195,000 and $165,000
per year, respectively. In addition, Mr. Hellman and Mr. Fisi will be entitled
to receive a bonus in amounts determined by the Compensation Committee. These
Employment Agreements provide for annual increases in the annual base
compensation as determined by the Compensation Committee during the term of
these Employment Agreements. Under these Employment Agreements, Mr. Hellman and
Mr. Fisi participate in Company sponsored life, health and disability insurance
coverage. In addition, Mr. Hellman and Mr. Fisi have entered into agreements not
to compete with the Company for a period of three years after termination of
employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors, all of whom are
neither employees nor officers of the Company, consists of Messrs. Beam, Capra
and Filson. The Company has undertaken to pay Mr. Filson fees in the annual
amount of $100,000 per annum for a three-year period beginning in 1994 for
consulting services to be rendered. This arrangement will terminate on December
31, 1996.
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE
The Compensation Committee's duty is (i) to review the compensation of the
Executive Officers of the Company, (ii) to make recommendations to the Board of
Directors regarding such compensation, and (iii) to set a Company policy for a
plan of compensation for the Executive Officers. The Compensation Committee's
goal is to provide the Company with an performance-based plan to reward highly
competent Executive Officers.
In light of its duties, the Compensation Committee has been considering
various compensation policies to reward each Executive Officer. The Compensation
Committee, however, has not yet finally determined which compensation strategy
and resulting policy would be appropriate for recommendation to the Board of
Directors. It intends to determine a strategy for fiscal 1997. The Compensation
Committee has reviewed the
6
<PAGE> 10
compensation of the Executive Officers: Wayne R. Hellman, who is President and
Chief Executive Officer, and Louis S. Fisi, who is Executive Vice President,
Chief Financial Officer, Secretary and Treasurer. Mr. Hellman and Mr. Fisi are
each parties to an Employment Agreement with the Company. Each Employment
Agreement's initial term commenced in January 1996 and expires in October 1998.
Accordingly, Mr. Hellman and Mr. Fisi will receive an annual base compensation
of $195,000 and $165,000 per year, respectively, and a bonus, if any, as
determined by the Compensation Committee. The Compensation Committee has
determined that no bonus will be paid to Mr. Hellman and Mr. Fisi for the fiscal
year ended June 30, 1996.
COMPENSATION COMMITTEE
Francis H. Beam
Richard D. Capra
Theodore A. Filson
Dated: September 30, 1996
7
<PAGE> 11
COMPARISON OF CUMULATIVE TOTAL RETURN*
Comparison of Shareholder Returns
[Graphical presentation of information provided below.]
<TABLE>
<CAPTION>
NASDAQ NON-
MEASUREMENT PERIOD NASDAQ STOCK FINANCIAL
(FISCAL YEAR COVERED) MARKET STOCKS ADLT
<S> <C> <C> <C>
12/12/95 $100 $100 $100
3/29/96 $103 $103 $139
6/28/96 $111 $113 $175
</TABLE>
* Five-year performance is not provided since the Company's Common Stock first
became publicly-traded on December 12, 1995.
OTHER TRANSACTIONS WITH DIRECTORS AND OFFICERS
The Company was formed on May 19, 1995, and acquired ownership, primarily
by merger (the "Combination") of 17 affiliated operating corporation that were
previously under common ownership and management (the "Predecessors"). During
fiscal 1995, the Company paid $831,000 to H&F Management, Inc., a company
formerly owned solely by Mr. Hellman, Mr. Fisi and Mr. Brian A. Hellman. H&F
Management, Inc. prior to the Combination, provided management services to
certain Predecessors.
On June 28, 1995, the Company loaned to Mr. Hellman $88,000 (due in June
1997), represented by Mr. Hellman's promissory note to the Company. The amount
of such indebtedness is currently $88,000, and carries an interest rate of 8.0%.
On May 10, 1995, the Company loaned to Mr. Fisi $70,000 (due in May 1997),
represented by Mr. Fisi's promissory note. The amount of such indebtedness is
currently $70,000, and carries an interest rate of 8.0%.
On August 10, 1995, a Predecessor redeemed from Mr. Hellman 193,000 shares
of such Predecessor's common stock at a total price of $146,250.
On September 15, 1995, a Predecessor transferred its nonlamp assets to H&F
Five, Inc., a company owned by Messrs. Hellman, Fisi and certain other employees
of the Company, for a demand promissory note from H&F Five, Inc. in the amount
of $200,000 bearing interest at 8.5% per annum.
In July 1994, Mr. Beam, Mr. Capra and Mr. Filson were each granted the
right to purchase 48,750 shares of common stock of a Predecessor at $1.00 per
share. Such grant further provided that if all shares were purchased pursuant to
such rights the related rightholder would be entitled to receive an additional
9,750 shares of common stock of the Predecessor. On various dates in 1994 and
1995, Mr. Beam and Mr. Capra, either directly or through trusts or partnerships
which they controlled or in which they had beneficial interests, exercised all
of such rights and received such additional shares. In addition, as to the
Filson interest, the shares were acquired by a trust for the benefit of a family
member. In addition, in April 1995, Mr. Filson received an aggregate of 6,500
shares of common stock of the Predecessor for services rendered. Further, such
directors received 15,000 shares of common stock of the Predecessor in July 1993
upon its emergence from Chapter 11
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<PAGE> 12
reorganization for services rendered. No compensation expense for such shares
was recorded in any period because the amount of such expense in each period was
deemed insignificant. As a result of all of the foregoing, Mr. Beam, Mr. Capra
and Mr. Filson received 34,685 shares, 34,685 shares and 15,021 shares of Common
Stock, respectively, in the Combination.
The Company has undertaken to pay Mr. Filson, a director of the Company,
fees in the annual amount of $100,000 per annum for a three-year period
beginning in 1994 for consulting services to be rendered. This arrangement will
terminate on December 31, 1996.
During fiscal 1996, the Company paid Tunstall Consulting, Inc., consulting
fees in the amount of $214,884 for consulting services rendered in connection
with financings. A Gordon Tunstall, a director of the Company, is president of
Tunstall Consulting, Inc.
The Company does not intend in the future to enter into any material
transaction with officers or directors, or their family members, without the
approval of a majority of the nonemployee directors.
Mr. Harada, a director of the Company, is an executive officer, director
and a shareholder of Koto Luminous Co. Ltd., a Japanese manufacturer and
marketer of lighting products. Koto Luminous owns 182,268 shares of the Company,
which were acquired in the Combination as a result of an investment in a
Predecessor. Koto Luminous and the Company are each 50% joint venture partners
in Pacific Lighting, Inc., a British Virgin Island holding company. The Company
uses Pacific Lighting to own and hold a number of the Company's joint venture's
investments. In addition, Koto Luminous is the Company's sole trading partner in
Japan and, as a result, the Company supplies Koto Luminous with components and
lamps. Koto Luminous paid the Company approximately $650,000 and $2.4 million,
in fiscal 1995 and in fiscal 1996, respectively.
On January 22, 1996 two subsidiaries of the Company each entered into a
six-year Aircraft Operating Agreement with Levetz Investments, Inc. ("Levetz"),
an unrelated Ohio corporation, for the purpose of chartering a 1986 Beechcraft
King Air 300 airplane (the "Aircraft") to enable the Company to have air service
into locations which are not adequately served by commercial carriers. The rent
is $950 per flight hour. One of the subsidiaries has committed to a minimum of
200 flight hours per year, and the other subsidiary has committed to a minimum
of 75 flight hours per year. Levetz leases the Aircraft from LightAir Ltd., an
Ohio limited liability company owned by Mr. Hellman (80%) and Mr. Fisi (20%).
Messrs. Hellman and Fisi guaranteed the repayment of $1.7 million of
indebtedness incurred to purchase the Aircraft.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership with the Securities and Exchange Commission (SEC) and the NASDAQ Stock
Exchange. Specific due dates for these reports have been established, and the
Company is required to report in this Proxy Statement any failure to file by
these dates during fiscal 1996. All of these filing requirements were satisfied
by the Company's Executive Officers and directors except a director, Francis H.
Beam, failed to file a Form 5 (year-end report) with respect to a single
purchase by him of 800 shares of Common Stock.
PROPOSAL 2.
INCREASE AUTHORIZED COMMON SHARES
The Company's authorized capital stock consists of 22.0 million shares of
Common Stock having a par value of $.001 per share and 1.0 million shares of
preferred stock having a par value of $.001 per share. As of September 18, 1996,
13,296,709 shares of Common Stock and no shares of preferred stock were issued
and outstanding. The Company is seeking shareholder approval for an amendment to
the Company's Articles of Incorporation to authorize an additional 58.0 million
shares of Common Stock. If such shareholder approval is obtained, the authorized
capital stock would total 80.0 million shares of Common Stock.
The Company wishes to increase its authorized Common Stock so that
additional shares may be issued in connection with any proper corporate purpose,
including future acquisitions, public or private offerings of
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<PAGE> 13
Common Stock, stock splits, stock dividends, reservation of Common Stock for
issuance upon conversion of any convertible security issued by the Company, and
employee benefit plans. Having such additional authorized shares available will
give the Company greater flexibility by permitting such shares to be issued
without the expense and delay of a special meeting of shareholders. Such a delay
might deprive the Company of the flexibility the Board views as important in
facilitating the effective use of the Company's shares. Under Ohio law, the
Company would be required to seek additional authorization from its shareholders
in connection with an acquisition pursuant to which shares of Common Stock
totaling one-sixth or more of the voting power of the Company would be issued.
No such shareholder authorization will be sought in connection with any other
issuance of authorized Common Stock.
The additional shares of Common Stock would become part of the existing
class of Common Stock. Each holder of Common Stock is entitled to one vote for
each share held. Shareholders do not have the right to cumulate their votes in
elections of directors. Accordingly, holders of a majority of the issued and
outstanding Common Stock will have the right to elect the Company's directors
and otherwise control the affairs of the Company. Existing shareholders of
Common Stock do not have any preemptive rights to subscribe to such shares, if
and when they are issued.
Upon a liquidation of the Company, holders of Common Stock will be entitled
to a pro rata distribution of the assets of the Company, after payment of all
amounts owed to the Company's creditors, and subject to any preferential amount
payable to holders of preferred stock of the Company, if any.
An affirmative vote of a majority of the outstanding shares of Common Stock
of the Company is required for the approval of the proposal to amend the
Company's Articles. The Board of Directors recommends the shareholders vote
"FOR" this proposal.
PROPOSAL 3.
APPROVAL AND RATIFICATION OF THE COMPANY'S 1995 INCENTIVE AWARD PLAN
The Advanced Lighting Technologies, Inc. 1995 Incentive Award Plan (the
"Incentive Award Plan"), which became effective as of August 21, 1995, was
established to encourage selected employees, advisors, consultants and directors
of the Company to acquire an equity interest in the Company, to create an
increased incentive for those persons to contribute to the Company's future
success and to enhance the ability of the Company to attract and retain
qualified individuals. Approximately 468 employees, three advisers and
consultants and five directors are eligible to participate in the Incentive
Award Plan. The following description of the Incentive Award Plan is qualified
in its entirety by reference to Appendix A hereto which sets forth a complete
copy of such Plan.
The Incentive Award Plan is administered by the Incentive Award Plan
Committee, each member of which is a "disinterested" person within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. This
Committee, solely in its discretion, selects participants and determines the
amount of awards under the Incentive Award Plan.
Subject to adjustment under certain circumstances to prevent dilution or
enlargement of the benefits or potential benefits intended to be made under the
Incentive Award Plan, the number of shares of Common Stock available for awards
under the Incentive Award Plan is 1,000,000. These shares may be issued in
connection with the grant by the Incentive Award Plan Committee as "A" Incentive
Options and/or "B" Incentive Options, as the case may be (collectively called
the "Options"). The Incentive Award Plan also provides that no "A" or "B"
Incentive Option may be exercised prior to six months after the date of its
grant. Shares of restricted Common Stock, subject to such restrictions and terms
of forfeiture as the Incentive Award Committee may impose, may also be granted
under the Incentive Award Plan (the "Restricted Stock"). No awards may be
granted under the Incentive Award Plan after July 31, 2005.
The Company has granted Incentive Options to purchase the Common Stock of
the Company. 217,500 outstanding "A" Incentive Options have been granted at an
exercise price of $10 (equal to the initial public offering price of the Common
Stock) and will become vested based on operating performance or at the end of
five years from the date of grant. 279,300 outstanding "B" Incentive Options
were granted on December 12,
10
<PAGE> 14
1995, which was the effective date of the Company's initial public offering at
an exercise price equal to the initial public offering price ($10). The "B"
Incentive Options will vest as follows: 25% in year one, 35% in year two and 40%
in year three, from the date of grant. An aggregate of 302,450 additional
outstanding "B" Incentive Options have been granted since December 12, 1995, at
market value exercise prices of $10.25 per share to $17.00 per share. Stock
Options granted under the Incentive Award Plan are required to comply in all
respects with the provisions of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor provisions thereto and any
regulations promulgated thereunder. Accordingly, the Incentive Award Plan
provides that Incentive Stock Options will only be issued to an employee of the
Company or a subsidiary, that they will not be granted to an owner of ten
percent or more of the combined voting power of the Company and that the
aggregate fair market value determined as of the date of award of shares subject
to an Incentive Stock Option granted pursuant to the Incentive Award Plan to an
employee in any calendar year shall not exceed $100,000. As of September 27,
1996, the price per share of Common Stock was $19.75.
The Incentive Award Plan further provides that to the extent required to
comply with Rule 16b-3, any equity security issued pursuant to the Incentive
Award Plan may not be sold for at least six months after acquisition, except in
the case of death or disability. The Incentive Award Plan may be amended,
altered, suspended, discontinued or terminated by the Company's Board of
Directors except to the extent prohibited by applicable law and as expressly
provided in an award agreement or in the Incentive Award Plan.
The following table sets forth the dollar value and number of options that
have been granted to the Chief Executive Officer and each other Executive
Officer, all directors who are not Executive Officers, and all employees who are
not Executive Officers, as a group. No determination has been made with respect
to the allocation of the remaining 200,750 shares available for Awards.
NEW PLAN BENEFITS
1995 INCENTIVE AWARD PLAN
<TABLE>
<CAPTION>
NO. OF B
NAME AND POSITION $ VALUE* NO. OF A OPTIONS OPTIONS
- ----------------------------------------------------- ---------- ---------------- ---------------
<S> <C> <C> <C>
Wayne R. Hellman..................................... $ 0 0 0
Louis S. Fisi........................................ $ 0 0 0
Susumu Harada........................................ $ 98,400 0 9,600
A Gordon Tunstall.................................... $ 255,000 0 15,000
Richard D. Capra..................................... $ 187,800 0 15,000
All Executive Officers as a Group.................... $ 0 0 0
All Nonexecutive Directors as a Group................ $ 916,800 0 69,600
All Nonexecutive Officers/Employees as a Group....... $8,949,150 217,500 512,150
</TABLE>
- ---------------
* The stated value of the Options is the total exercise price(s) of all Options.
The Incentive Award Plan cannot be amended to increase the cost thereof to
the Company without shareholder approval.
FEDERAL INCOME TAX CONSEQUENCES
Under present federal income tax laws, awards under the Incentive Award
Plan will have the following consequences:
(1) The grant of an award, by itself, will generally neither result in
the recognition of taxable income to the participant nor entitle the
Company to a deduction at the time of such grant.
(2) In order to qualify as an "Incentive Stock Option" within the
meaning of Section 422 of the Code, a stock option awarded under the
Incentive Award Plan must meet the conditions contained in Section 422 of
the Code, including the requirement that the shares acquired upon the
exercise of the stock option be held for one year after the date of
exercise and two years after the grant of the option. The exercise of an
Incentive Stock Option will generally not, by itself, result in the
recognition of taxable
11
<PAGE> 15
income to the participant nor entitle the Company to a deduction at the
time of such exercise. However, the difference between the exercise price
and the fair market value of the option shares on the date of exercise is
an item of tax preference which may, in certain situations, trigger the
alternative minimum tax. The alternative minimum tax is incurred only when
it exceeds the regular income tax. The alternative minimum tax will be
payable at the rate of 26% on the first $75,000 of "alternative minimum
taxable income" above the exemption amount ($33,750 single person or
$45,000 married person filing jointly). This tax applies at a flat rate of
28% on alternative minimum taxable income more than $175,000 above the
applicable exemption amounts. If a taxpayer has alternative minimum taxable
income in excess of $150,000 (married persons filing jointly) or $112,500
(single person), the $45,000 or $33,750 exemptions are reduced by an amount
equal to 25% of the amount by which the alternative minimum taxable income
of the taxpayer exceeds $150,000 or $112,500, respectively. Provided the
applicable holding periods described above are satisfied, the participant
will recognize long term capital gain or loss upon the resale of the shares
received upon such exercise.
(3) The exercise of a stock option which is not an Incentive Stock
Option will result in the recognition of ordinary income by the participant
on the date of exercise in an amount equal to the difference between the
exercise price and the fair market value on the date of exercise of the
shares acquired pursuant to the stock option.
(4) Holders of Restricted Stock will recognize ordinary income on the
date that the Restricted Stock is no longer subject to a substantial risk
of forfeiture, in an amount equal to the fair market value of the shares on
that date. In certain circumstances, a holder may elect to recognize
ordinary income and determine such fair market value on the date of the
grant of the Restricted Stock. Holders of Restricted Stock will also
recognize ordinary income equal to their dividend or dividend equivalent
payments when such payments are received. Generally, the amount of income
recognized by participants will be a deductible expense for tax purposes
for the Company.
(5) The Company will be allowed a deduction at the time, and in the
amount of, any ordinary income recognized by the participant under the
various circumstances described above, provided that the Company meets its
federal withholding tax obligations.
An affirmative vote of a majority of the shares present or represented and
voting at the Annual Meeting is required for approval and ratification of the
Incentive Award Plan. The Compensation Committee and the Board of Directors
recommend the shareholders vote "FOR" this proposal.
PROPOSAL 4.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to shareholder approval, the Board of Directors, acting on the
recommendation of its Audit Committee, has appointed Ernst & Young LLP, a firm
of independent public accountants, as auditors, to audit the consolidated
financial statements of the Company and its subsidiaries for fiscal year 1997.
Representatives of Ernst & Young LLP will be present at the Annual Meeting and
will be given the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
An affirmative vote of a majority of the shares present or represented at
the Annual Meeting is required for ratification of Ernst & Young LLP as the
Company's auditors. The Audit Committee and the Board of Directors recommend the
shareholders vote "FOR" such ratification.
ANNUAL REPORT TO SHAREHOLDERS
The Company's 1996 Annual Report to Shareholders accompanies this Proxy
Statement. Information contained under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Financial
Statements and Supplementary Data" included in such Annual Report are
incorporated herein by reference. No other portion of such Annual Report is
incorporated herein.
12
<PAGE> 16
1996 ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1996
A copy (excluding exhibits) of the Company's 1996 Annual Report on Form
10-K for the fiscal year ended June 30, 1996 as filed with the Securities and
Exchange Commission may be obtained by shareholders without charge by addressing
a request to Coordinator of Shareholder Relations, Advanced Lighting
Technologies, Inc., 1893 East Aurora Road, Twinsburg, Ohio 44087. A charge equal
to the reproduction cost will be made if the exhibits are requested.
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 1997 Annual Meeting must be received by
the Secretary of the Company no later than June 18, 1997, in order to be
eligible for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
13
<PAGE> 17
APPENDIX A
RESTATED 10/6/95
AMENDED AND RESTATED
ADVANCED LIGHTING TECHNOLOGIES, INC.
1995 INCENTIVE AWARD PLAN
SECTION 1. PURPOSE.
The purposes of this Amended and Restated Advanced Lighting Technologies,
Inc. 1995 Incentive Award Plan (the "Plan") are to encourage selected employees,
advisors, consultants, and directors of Advanced Lighting Technologies, Inc.
(together with any successor thereto, the "Company") and its Affiliates (as
defined below) to acquire a proprietary interest in the growth and performance
of the Company, to generate an increased incentive to contribute to the
Company's future success and prosperity, thus enhancing the value of the Company
for the benefit of its shareholders, and to enhance the ability of the Company
and its Affiliates to attract and retain exceptionally qualified individuals
upon whom, in large measure, the sustained progress, growth and profitability of
the Company depend. The Plan initially was approved by the shareholders of the
Company on August 29, 1995 and amended on September 8, 1995, September 15, 1995
and October 5, 1995. This amendment and restatement incorporates those
amendments herein and restates the Plan in its entirety.
SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or through
one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, as
determined by the Committee.
(b) "'A' Option" shall mean an "A" Option granted under Section 6(a)
of the Plan.
(c) "Award" shall mean any "A" Option, "B" Option or Restricted Stock
granted under the Plan.
(d) "Award Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Award granted under the Plan.
(e) "'B' Option" shall mean a "B" Option granted under Section 6(a) of
the Plan.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" shall mean a committee of the Board of Directors of
the Company designated by such Board to administer the Plan and composed of
not less than two (2) directors, each of whom is a "disinterested person"
within the meaning of Rule 16b-3.
(h) "Employee" shall mean any employee of the Company or of any
Affiliate.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code, or any successor provision thereto.
(k) "Non-Employee Participant" shall mean any advisor, consultant or
director of the Company or any Affiliate designated to be granted an Award
(other than an Incentive Stock Option) under the Plan.
(l) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.
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<PAGE> 18
(m) "Option" shall mean an "A" Option or a "B" Option.
(n) "Participant" shall mean Employee or Non-Employee Participant
designated to be granted an Award under the Plan.
(o) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
governmental or political subdivision thereof.
(p) "Released Securities" shall mean securities that were Restricted
Securities with respect to which all applicable restrictions have expired,
lapsed, or been waived.
(q) "Restricted Securities" shall mean Awards of Restricted Stock or
other awards under which issued and outstanding Shares are held subject to
certain restrictions.
(r) "Restricted Stock" shall mean any Share granted under Section 6(b)
of the Plan.
(s) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission.
(t) "Shares" shall mean the shares of common stock of the Company,
$.001 par value, and such other securities or property as may become the
subject of Awards, or become subject to Awards, pursuant to an adjustment
made under Section 4(b) of the Plan.
SECTION 3. ADMINISTRATION.
The Plan shall be administered solely by the Committee. During the one year
period prior to the commencement of service on the Committee, the Committee
member cannot have participated in, and while serving on the Committee, such
members cannot participate in the Plan or any other plan of the Company or its
Affiliates. Subject to the terms of the Plan and applicable law, the Committee
shall have full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to each Participant under
the Plan; (iii) determine the number of Shares to be covered by Awards; (iv)
determine the terms and conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled or exercised in cash,
Shares, other securities, other Awards, or other property, or cancelled,
forfeited or suspended, and the method or methods by which Awards may be
settled, exercised, cancelled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an Award
under the Plan shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and administer the Plan and
any instrument or agreement relating to, or Award made under, the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee, may
be made at any time, and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, any shareholders, and any employee of the Company or
of any Affiliate.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Calculation of Number of Shares Available. The number of
Shares available for granting Awards under the Plan shall be 1,000,000
Shares, subject to adjustment as provided in Section 4(b). Further, if,
after the effective date of the Plan, any Shares covered by an Award
granted under the Plan, or to which such an Award relates, are
forfeited, or if an Award otherwise terminates without the delivery of
Shares or of other consideration, then the Shares covered by such Award,
or to which such Award relates, or the number of Shares otherwise
counted against the aggregate number of
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<PAGE> 19
Shares available under the Plan with respect to such Award, to the
extent of any such forfeiture or termination, shall again be, or shall
become, available for granting Awards under the Plan.
(ii) Accounting for Awards. For purposes of this Section 4, the
number of Shares covered by an Award shall be counted on the date of
grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan; provided, however, that Awards that
operate in tandem with (whether granted simultaneously with or at a
different time from), or that are substituted for, other Awards may be
counted or not counted under procedures adopted by the Committee in
order to avoid double counting. Any Shares that are delivered by the
Company, and any Awards that are granted by, or become obligations of,
the Company, through the assumption by the Company or any Affiliate of,
or in substitution for, outstanding awards previously granted by an
acquired company shall not, except in the case of Awards granted to
Participants who are officers or directors of the Company for purposes
of Section 16 of the Securities Exchange Act of 1934, as amended, be
counted against the Shares available for granting Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized and unissued Shares or of Treasury Shares.
(b) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property) recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and type of Shares (or other securities
or property) which thereafter may be made the subject of Awards, (ii) the
number and type of Shares (or other securities or property) subject to
outstanding award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, in each
case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would
cause the Plan to violate Section 422 of the Code or any successor
provision thereto; and provided further, however, that the number of Shares
subject to any Award denominated in Shares shall always be a whole number.
SECTION 5. ELIGIBILITY.
Any Employee, advisor, consultant or director of the Company or of any
Affiliate, who is not a member of the Committee shall be eligible to be
designated a Participant.
SECTION 6. AWARDS.
(a) Options. The Committee is hereby authorized to grant "A" Options
and "B" Options to Participants with the following terms and conditions and
with such additional terms and conditions, in either case not inconsistent
with the provisions of the Plan, as the Committee shall determine;
provided, however, that "A" Options shall be the initial options granted
under the Plan and thereafter only "B" Options shall be issued under the
Plan:
(i) Exercise Price for "A" Options. The purchase price per Share
purchasable under an "A" Option shall be the Fair Market Value per Share
on the date of grant of such "A" Options.
(ii) Exercise Price for "B" Options. The purchase price per Share
purchasable under a "B" Option shall be determined by the Committee;
provided, however, that such purchase price shall not be less than the
Fair Market Value of a Share on the date of grant of such "B" Option
(or, if the Committee so determines, in the case of any "B" Option
retroactively granted in tandem with or in substitution for another
Award, on the date of grant of such Award).
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<PAGE> 20
(iii) Option Term. The term of each Option shall be fixed by the
Committee.
(iv) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in
part, and the method or methods by which, and the form or forms,
including, without limitation, cash, Shares, other Awards, or other
property, or any combination thereof, having a Fair Market Value on the
exercise date equal to the relevant exercise price, in which, payment of
the exercise price with respect thereto may be made or deemed to have
been made; provided, however, that no Option may be exercised prior to
six (6) month after its date of grant.
(v) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provisions
thereto, and any regulations promulgated thereunder. An Incentive Stock
Option may be granted only to an Employee and no Incentive Stock Option
may be granted to any owner of ten percent or more of the total combined
voting power of the Company and its Affiliates. The aggregate Fair
Market Value determined as of the date of the Award, of Shares subject
to an Incentive Stock Option granted to an Employee in any calendar year
shall not exceed $100,000.
(b) Restricted Stock.
(i) Issuance. The Committee is hereby authorized to grant Awards
of Restricted Stock to Participants.
(ii) Restrictions. Shares of Restricted Stock shall be subject to
such restrictions as the Committee may impose (including, without
limitation, any limitation on the right to vote a Share of Restricted
Stock or the right to receive any dividend or other right or property),
which restrictions may lapse separately or in combination at such time
or times, in such installments or otherwise, as the Committee may deem
appropriate.
(iii) Registration. Any Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a
stock certificate or certificates. In the event any stock certificate is
issued in respect of Shares of Restricted Stock granted under the Plan,
such certificate shall be registered in the name of the Participant and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock.
(iv) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment (as determined under criteria established
by the Committee) for any reason during such restriction period as may
be set forth in the Award, all Shares of Restricted Stock held by an
Employee shall be forfeited and reacquired by the Company; provided,
however, that the Committee may, when it finds that a waiver would be in
the best interests of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock.
Unrestricted Shares, evidenced in such manner as the Committee shall
deem appropriate, shall be delivered to the holder of Restricted Stock
promptly after such Restricted Stock shall become Released Securities.
(c) General.
(i) Consideration for Awards. Awards may be granted for no cash
consideration or such cash consideration as may be required by
applicable law. Awards also may be granted for cash or such other
consideration as the Committee may deem appropriate.
(ii) Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution for any other Award or any award
granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards may be granted
either at the same time as or at a different time from the grant of such
other Awards.
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<PAGE> 21
(iii) Forms of Payment under Awards. Subject to the terms of the
Plan and any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise, or payment
of an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination thereof,
and may be made in a single payment or transfer, in installments, or on
a deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments.
(iv) Limits on Transfer of Awards. No Award (other than Released
Securities), and no right under any such Award, shall be assignable,
alienable, saleable, or transferable by a Participant otherwise than by
will or by the laws of descent and distribution (or, in the case of an
Award of Restricted Securities, only to the Company); provided, however,
that, if so determined by the Committee, a Participant may, in the
manner established by the Committee, designate a beneficiary or
beneficiaries to exercise the rights of the Participant, and to receive
any property distributable, with respect to any Award upon the death of
the Participant. Each Award, and each right under any Award, shall be
exercisable, during the Participant's lifetime, only by the Participant
or, if permissible under applicable law, by the Participant's guardian
or legal representative. No Award (other than Released Securities), and
no right under any such Award, may be pledged, alienated, attached, or
otherwise encumbered, and any purported pledge, alienation, attachment,
or encumbrance thereof shall be void and unenforceable against the
Company or any Affiliate.
(v) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee; provided, however, that in no
event shall the term of any Incentive Stock Option exceed a period of
ten years from the date of its grant.
(vi) Rule 16b-3 Six Month Limitations. To the extent required in
order to comply with Rule 16b-3 only, any equity security issued
pursuant to the Plan may not be sold for at least six (6) months after
acquisition, except in the case of death or disability. Any derivative
security issued pursuant to the Plan will not be disposable for six (6)
months, from its date of grant. Terms used in the preceding sentence
shall, for the purposes of such sentence only, have the meanings, if
any, assigned or attributed to them under Rule 16b-3.
(vii) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan, or the
rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange or over the counter market upon
which such Shares or other securities are then listed or traded, and any
applicable federal or state securities laws, and the Committee may cause
a legend or legends to be put on any certificates to make appropriate
reference to such restrictions.
SECTION 7. AMENDMENT AND TERMINATION.
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue, or terminate the Plan, including,
without limitation, any amendment, alteration, suspension, discontinuation,
or termination that would impair the rights of any Participant, or any
other holder or beneficiary of any Award theretofore granted, without the
consent of any shareholders, Participant, other holder or beneficiary of an
Award, or other person; provided, however, that, notwithstanding any other
provision of the Plan or any Award Agreement, without the approval of the
shareholders of the Company no such amendment, alteration, suspension,
discontinuation, or termination shall be made that would:
(i) increase the total number of Shares available for Awards under
the Plan, except as provided in Section 4 hereof; or
A-5
<PAGE> 22
(ii) permit Options or Restricted Stock to be granted with per
Share grant, purchase, or exercise prices of less than the Fair Market
Value of a Share on the date of grant thereof, except to the extent
permitted under Section 6(a) hereof.
(b) Amendments to Awards. Unless otherwise provided in the Award
Agreement, the Committee may waive any conditions or rights under, amend
any terms of, or amend, alter, suspend, discontinue, or terminate, any
Award theretofore granted, prospectively or retroactively, without the
consent of any relevant Participant or holder or beneficiary of an Award.
(c) Adjustments of Awards upon Certain Acquisitions. In the event the
Company or any Affiliate shall assume outstanding employee awards or the
right or obligation to make future such awards in connection with the
acquisition of another business or another corporation or business entity,
the Committee may make such adjustments, not inconsistent with the terms of
the Plan, in the terms of Awards as it shall deem appropriate in order to
achieve reasonable comparability or other equitable relationship between
the assumed awards and the Awards granted under the Plan as so adjusted.
(d) Adjustments of Awards upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments
in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4(b) hereof) affecting the
Company, any Affiliate, or the financial statements of the Company or any
Affiliate, or the changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits to be made available under the Plan.
(e) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry the Plan into effect.
SECTION 8. GENERAL PROVISIONS.
(a) No Rights to Awards. No Employee, Non-Employee Participant or
other Person shall have any claim to be granted any Award under the Plan,
and there is no obligation for uniformity of treatment of Employees,
Non-Employee Participants, or holders or beneficiaries of Awards under the
Plan. The terms and conditions of Awards need not be the same with respect
to each recipient.
(b) Delegation. The Committee may delegate to one or more officers or
managers of the Company or any Affiliate, or a committee of such officers
or managers, the authority, subject to such terms and limitations as the
Committee shall determine, to grant Awards to, or to cancel, modify, waive
rights with respect to, alter, discontinue, suspend, or terminate Awards
held by, Salaried Employees who are not officers or directors of the
Company, for purposes of Section 16 of the Securities Exchange Act of 1934,
as amended.
(c) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under
any Award or under the Plan the amount (in cash, Shares, other securities,
other Awards, or other property) of withholding taxes due in respect of an
Award, its exercise, or any payment or transfer under such Award or under
the Plan and to take such other action as may be necessary in the opinion
of the Company or Affiliate to satisfy all obligations for the payment of
such taxes.
(d) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and
such arrangements may be either generally applicable or applicable only in
specific cases.
(e) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of
the Company or any Affiliate. Further, the Company or an
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<PAGE> 23
Affiliate may at any time dismiss a Participant from employment, free from
any liability, or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement.
(f) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Ohio and applicable federal law.
(g) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, or as to any Person or Award, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws, or if
it cannot be so construed or deemed amended without, in the determination
of the Committee, materially altering the intent of the Plan or the Award,
such provisions shall be stricken as to such jurisdiction, Person, or
Award, and the remainder of the Plan and any such Award shall remain in
full force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a
Participant or any other Person. To the extent that any Person acquires a
right to receive payments from the Company or any Affiliate pursuant to an
Award, such right shall be no greater than the right of an unsecured
general creditor of the Company or any Affiliate.
(i) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid
or transferred in lieu of any fractional Shares, or whether such fractional
Shares or any rights thereto shall be cancelled, terminated, or otherwise
eliminated.
(j) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 9. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective as of the later of the date of its approval by
the shareholders of the Company or the date on which the Company or its
Affiliates shall first have Employees.
SECTION 10. TERM OF THE PLAN.
No Award shall be granted under the Plan after July 31, 2005. However,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award theretofore granted may extend beyond such date, and the
authority of the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award, or to waive any conditions or rights under any such
Award, and the authority of the Board of Directors of the Company to amend the
Plan, shall extend beyond such date.
A-7
<PAGE> 24
ADVANCED LIGHTING TECHNOLOGIES, INC.
2307 East Aurora Road
Suite One
Twinsburg, Ohio 44087
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Wayne R. Hellman and Louis S.
Fisi as Proxies, each with the power to appoint his or her
substitute, and hereby authorizes them and to vote as designated
below, all the shares of Common Stock of Advanced Lighting
Technologies, Inc. held of record by the undersigned on September
18, 1996, at the Annual Meeting of Shareholders to be held on
November 13, 1996, or any adjournment thereof.
PLEASE VOTE, SIGN, DATE AND RETURN THE PROXY CARD USING THE
ENCLOSED ENVELOPE.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR AND FOR
PROPOSALS 2, 3 AND 4.
(TO BE SIGNED ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE> 25
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
ALL FROM ALL NOMINEES: SUSUMU HARADA
NOMINEES NOMINEES A GORDON TUNSTALL
1. PROPOSAL 1: [ ] [ ] RICHARD D. CAPRA 2. PROPOSAL 2: [ ] [ ] [ ]
Election of Proposal to
Directors increase
authorized
Common Shares
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
3. PROPOSAL 3: [ ] [ ] [ ]
________________________________________________________ Proposal to
ratify and
improve the
1995 incentive
Award Plan
4. PROPOSAL 4: [ ] [ ] [ ]
Proposal to
ratify the
appointment of
Ernst & Young LLP
as independent
Auditors
5. In their [ ] [ ] [ ]
discretion, the
Proxies are
authorized to
vote upon such
other business
as may properly
come before
this meeting.
</TABLE>
SIGNATURE DATE _____________________________________________DATE______________
SIGNATURE DATE _____________________________________________DATE______________
NOTE: Please sign exactly as your name(s) appear hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
