<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):
[X] No fee required.
[ ] 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:
[ ] 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
Advanced Lighting Logo
2307 East Aurora Road
Suite One
Twinsburg, Ohio 44087
September 30, 1997
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 12,
1997, 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 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,
Wayne R. Hellman Signature
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 12, 1997
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
12, 1997 at 10:30 a.m., Eastern Standard 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 2000 Annual Meeting and their
successors have been elected and qualified.
2. To approve the Company's 1997 Billion Dollar Market Capitalization
Incentive Award Plan.
3. To approve the Company's 1997 Employee Stock Purchase 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 22,
1997 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 vote your shares personally.
By Order of the Board of Directors,
/s/ Louis S. Fisi logo
Secretary
September 30, 1997
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 12, 1997
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 12, 1997
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 8, 1997
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 22, 1997 are
entitled to notice of, and to vote at, the Annual Meeting. At the record date,
16,446,934 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 Annual
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 directors, officers and employees, without additional compensation.
1
<PAGE> 5
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. Louis S. Fisi and Francis H. Beam are
currently directors whose terms expire at the 1997 Annual Meeting. Each has been
nominated for election at the Annual Meeting as a director for a term expiring
at the 2000 annual meeting, or until their successors are duly elected and
qualified. The persons named in the accompanying proxy will vote for Messrs.
Fisi and Beam 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.
Three vacancies exist on the Board of Directors for which there are no
nominees; one each for terms expiring in 1998, 1999 and 2000. 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, the unexpired term of 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
two nominees of the Board of Directors for election as a director for the term
expiring in 1997. Since directors serve a term of three years, these nominees,
if elected, will have terms which will expire in 2000.
<TABLE>
<CAPTION>
DIRECTORS' TERM
NAME AGE POSITION EXPIRES
- --------------------- ------ ------------------------------ ------------------
<S> <C> <C> <C>
Louis S. Fisi 62 Executive Vice President, 1997
Secretary and Director
Francis H. Beam 62 Director 1997
</TABLE>
The two persons receiving the greatest number of votes shall be elected
directors. The Board of Directors recommends a vote "FOR" the two 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 1998 and 1999 and its other executive
officer:
<TABLE>
<S> <C> <C> <C>
Wayne R. Hellman 51 President, Chief Executive 1998
Officer and Chairman of the
Board of Directors
Theodore A. Filson 62 Director 1998
Susumu Harada 46 Director 1999
A Gordon Tunstall 53 Director 1999
Nicholas R. Sucic 50 Chief Financial Officer, Vice --
President & Treasurer*
</TABLE>
- ---------------
* Executive officer only; not a director.
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
2
<PAGE> 6
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 executive vice president and a director of
the Company since 1995, served as chief financial officer of the Company from
1995 to November 1996, and chief financial officer of one or more of the
Company's predecessors from 1985 to November 1996, and 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 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.
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 Bunkogen, Iwaki Cristal and Wakoh. Mr. Harada is
also the chief executive officer of Venture Lighting Japan, Inc. ("Venture
Japan") formerly Koto Luminous Co., Ltd., which is the Japanese distribution and
manufacturing joint venture in which the Company has a 30% interest. 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.
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; and Discount Auto
Parts, Inc., a retail chain of automotive aftermarket parts stores.
Nicholas R. Sucic joined the Company in 1996 as Special Assistant to the
Chairman and was appointed Chief Financial Officer and Treasurer in November
1996 and Vice President in April 1997. He is a certified public accountant. From
1989 to 1996, he was employed by The Prudential Investment Corporation having
served as chief financial officer and comptroller for various institutional
investment units. Prior to joining The Prudential, Mr. Sucic was a partner with
Ernst & Young LLP, the Company's independent auditors, having been associated
with the firm since 1970.
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.
3
<PAGE> 7
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 four meetings during the fiscal year
ended June 30, 1997. All of the current directors attended 75% 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 1997, 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 1997, the Audit Committee, consisting of Mr. Beam, Mr.
Tunstall and Mr. Filson, held two meetings. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans and results of the
audit engagement, approves professional services provided by the independent
public accountants, reviews the independence of the independent public
accountants, considers the range of audit and nonaudit fees and reviews the
adequacy of the Company's internal accounting controls.
During fiscal year 1997, the Compensation Committee, consisting of Mr.
Beam, Mr. Harada 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 1997, the Incentive Award Plan Committee, consisting of
Messrs. Hellman, Fisi and Tunstall, held three meetings. Mr. Tunstall attended
two of the three meetings, which constitutes 100% of the meetings held after he
was appointed as a member of the Incentive Award Plan Committee. The Incentive
Award Plan Committee administers the 1995 Incentive Award Plan, will administer
the 1997 Billion Dollar Market Capitalization Incentive Award Plan (the "Billion
Dollar Market Capitalization Plan") and will make all determinations as to
grants of stock and stock options thereunder. Awards under the Billion Dollar
Market Capitalization Plan to members of the Incentive Award Plan Committee are
subject to approval by the entire Board of Directors.
During fiscal year 1997, the Company had no Nominating Committee, and the
entire Board nominated candidates for directors.
4
<PAGE> 8
CERTAIN HOLDERS OF VOTING SECURITIES
The following table sets forth information regarding the ownership of the
Company's Common Stock as of September 1, 1997, 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(2)
--------------------------
NAME AND ADDRESS(1) NUMBER PERCENT
--------------------------------------------------------- ---------- -------
<S> <C> <C>
Wayne R. Hellman(3)...................................... 4,896,545 29.8%
Louis S. Fisi(4)......................................... 496,917 3.0%
Nicholas R. Sucic........................................ 3,563 *
Francis H. Beam.......................................... 36,504 *
Theodore A. Filson....................................... 3,750 *
Susumu Harada(5)......................................... 193,168 1.2
A Gordon Tunstall........................................ 8,750 *
All Directors and Executive Officers as a Group(3)(5)
(7 persons)............................................ 5,142,280 31.3%
</TABLE>
- ---------------
(1) The business address of each of Messrs. Hellman, Fisi, Sucic and Filson is
2307 E. Aurora Road, Suite One, Twinsburg, Ohio 44087. The business
addresses of Messrs. Beam, Harada and Tunstall are respectively, Mr.
Beam--Pepper Capital Corporation, 30195 Chagrin Blvd., Suite 114N, Pepper
Pike, Ohio 44124, Mr. Harada--Koto Electric 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) Shares beneficially owned include the following shares which may be acquired
within 60 days of the date of this proxy by exercise of options granted
pursuant to the Incentive Award Plan: Mr. Beam -- 3,750 shares; Mr.
Filson -- 3,750 shares; Mr. Harada -- 2,400 shares; Mr. Tunstall -- 3,750
shares; Mr. Sucic -- 3,563 shares. Percentage ownership is calculated on the
basis of shares outstanding, plus shares which may be acquired within 60
days of the date of the proxy upon exercise of all options granted pursuant
to the Incentive Award Plan, totaling 129,565 shares.
(3) Includes 1,898,070 Shares owned by Mr. Hellman individually; 125,000 Shares
owned by a limited liability company of which Mr. Hellman is the manager and
as to which Mr. Hellman has voting and investment power; 50,000 shares owned
by a private charitable foundation established by Mr. Hellman and as to
which Mr. Hellman has voting and investment power; 1,207,259 shares
beneficially owned by certain shareholders of the Company held under a
voting trust which expires in 2005 (the "Trust") and 1,616,216 shares
formerly subject to the Trust as to which Mr. Hellman holds an irrevocable
proxy under similar terms. These shares, totaling 2,823,475, are referred to
herein as the "Trust Shares." The Trust Shares include all shares
individually owned by Messrs. Fisi, David Jennings, Robert Roller and Juris
Sulcs, Ms. Christine Hellman and Ms. Lisa Hellman, the estate of James
Sarver and trusts for the benefit of Mr. Roller's children. The Trust Shares
also include shares owned by Mr. Brian 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.
(4) All shares are Trust Shares subject to voting control by Mr. Hellman.
(5) Includes 182,268 shares owned by Venture Japan, a Japanese corporation, of
which Mr. Harada is chief executive officer. Mr. Harada disclaims beneficial
ownership of these shares.
5
<PAGE> 9
COMPENSATION
The following tables set forth certain information with respect to all
compensation paid or earned for services rendered to the Company in all
capacities for the fiscal years ending June 30, 1997, June 30, 1996 and June 30,
1995 by the Company's Executive Officers. No Executive Officer of the Company
received restricted stock awards, grants of options or long-term incentive plan
awards or payouts for the fiscal year ending June 30, 1997. The Company has not
granted any stock appreciation rights. The Company has no defined benefit
employee pension plan.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------------------
OTHER ANNUAL
SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)
- ----------------------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C> <C>
Wayne R. Hellman 1997 $195,000(1) 0 $ 33,110(2)
Chief Executive 1996 $271,177(1) 0 $ 32,780(2)
Officer 1995 $324,926(1) $136,524 (3)
Louis S. Fisi 1997 $165,000(1) 0 (3)
Executive Vice 1996 $169,224(1) 0 (3)
President/Secretary 1995 $196,156(1) $ 83,857 (3)
Nicholas R. Sucic(4) 1997 $130,000 --(5) (3)
Chief Financial Officer/Vice
President/Treasurer
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------
AWARDS PAYOUTS
---------------------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
AWARD(S) OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) (#) ($) ($)
- ------------------------------ ---- ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Wayne R. Hellman 1997 0 0 0 $ 114,897(6)
Chief Executive 1996 0 0 0 $ 109,426(6)
Officer 1995 0 0 0 $ 109,426(6)
Louis S. Fisi 1997 0 0 0 $ 168,092(6)
Executive Vice 1996 0 0 0 $ 70,961(6)
President/Secretary 1995 0 0 0 $ 70,961(6)
Nicholas R. Sucic(4) 1997 0 0 0 $ 12,700(6)
Chief Financial Officer/Vice
President/Treasurer
</TABLE>
- ---------------
(1) Mr. Hellman and Mr. Fisi are each parties to an Employment Agreement with
the Company. These Employment Agreements have an initial term 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 be entitled to
receive a bonus in amounts 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. The Compensation Committee has
determined that the base compensation for Messrs. Hellman and Fisi in fiscal
1998 will be $200,000 and $175,000, respectively. 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 Mr. Hellman included club dues ($20,785 in fiscal
1997 and $21,600 in fiscal 1996), automobile use ($9,780 in fiscal 1997 and
$9,768 in fiscal 1996), automobile insurance and health insurance.
6
<PAGE> 10
(3) Perquisites provided to these executive officers consisted primarily of
automobile use, automobile insurance, club dues and health insurance
premiums and did not exceed 10% of the person's salary and bonus.
(4) Mr. Sucic was elected to the office of Chief Financial Officer on November
13, 1996.
(5) The amount of Mr. Sucic's bonus has not yet been determined.
(6) Split dollar life insurance premiums.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND 1997 FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE (#) ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------- ----------- -------- ------------------- ------------------
<S> <C> <C> <C> <C>
Wayne R. Hellman................... 0 0 0 0
Louis S. Fisi...................... 0 0 0 0
Nicholas R. Sucic.................. 0 0 3,563/10,687 $29,395/$88,168
</TABLE>
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 addition, in the fiscal year ended June 30, 1997, the nonemployee
directors were 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. 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. Of these options 2,400 shares are currently exercisable by each of
Messrs. Beam and Filson. In January, 1996, the Company granted options to
purchase 9,600 shares of Common Stock at $10.25 per share under the Incentive
Award Plan to Mr. Harada upon appointment to the Board of Directors, options as
to 2,400 shares are currently exercisable. In June 1996, the Company granted
options to purchase 15,000 shares of Common Stock at $17.00 per share under the
Incentive Award Plan to Mr. Tunstall upon appointment to the Board of Directors.
In June 1996, all nonemployee directors other than Mr. Harada and Mr. Tunstall
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.
Accordingly, of these options, 1,350 shares are currently exercisable by Messrs.
Beam and Filson.
The Company entered into a three-year agreement with Mr. Filson for
consulting services commencing in 1994, which required payment by the Company of
$100,000 per year. This arrangement was terminated on December 31, 1996. In
calendar 1997, Mr. Filson will provide consulting services to the Company and
receive a fee of $100,000. In calendar 1998, Mr. Filson has agreed to provide
consulting services to the Company, although the amount of any fees has not yet
been determined.
EMPLOYMENT AGREEMENTS
Mr. Hellman and Mr. Fisi are each parties to an Employment Agreement with
the Company. These Employment Agreements have an initial term 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
7
<PAGE> 11
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. The
Compensation Committee has determined that the base compensation for Messrs.
Hellman and Fisi in fiscal 1998 will be $200,000 and $175,000, respectively.
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 requires a majority to
be independent directors. During fiscal 1996, this Committee consisted of Mr.
Beam, Mr. Filson and a former board member, Richard Capra. Mr. Filson is a
consultant to the Company and during fiscal year 1997 received consultant's fees
of $79,166. The Company has also established an Incentive Award Plan Committee
composed of Wayne R. Hellman and Louis S. Fisi, the Chief Executive Officer and
Executive Vice President, respectively, of the Company, and A Gordon Tunstall,
each of whom are disinterested directors since they will not participate in
awards under the 1995 Incentive Award Plan. Any future awards to any executive
officer or director under the 1995 Incentive Award Plan or the Billion Dollar
Market Capitalization Plan will be approved by the entire Board of Directors.
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE
The Compensation Committee's duty is to (i) establish a philosophy and
basic structure governing all executive compensation plans, including the
compensation of the Executive Officers of the Company and its subsidiaries, and
to make recommendations to the Board of Directors regarding such compensation,
(ii) consider and make recommendations to the Board regarding directors'
compensation and benefits, (iii) consider and make recommendations to the Board
regarding salary structure, officer gradings and salaries for other officers,
(iv) propose and review bonus and stock option guidelines for officers and key
employees, (v) make recommendations to the Board regarding grants of options and
other awards to the Chief Executive Officer under the Company's incentive
compensation plans, (vi) consider and approve perquisites and other remuneration
for officers, (vii) review major changes to the Company's retirement plans and
incentive plans to officers and hourly employees, and (viii) submit an annual
report to the Board regarding the effectiveness and appropriateness of the
Company's compensation program. The Compensation Committee's goal is to provide
the Company with an incentive-based plan to reward highly competent Executive
Officers.
Effective August 4, 1997, the Compensation Committee has adopted a charter
to compensate each Executive Officer (to be implemented in fiscal year 1998)
based on the number of stated objectives (sales, profits, return on net assets)
achieved by him within the last year. Each officer has certain stated
objectives, which combines personal, managerial and corporate aspects. At the
end of the year, each officer's stated objectives approved by the Board of
Directors, are weighed against the number that he has achieved, and then
compared to the overall financial condition of the division the officer is
responsible for and/or to the overall financial condition of the Company and its
subsidiaries. Accordingly, the number of achievements and the growth of the
division and of the Company are directly proportional to the executive officer's
earnings. This, the Compensation Committee concludes, is the best method for the
Company to attract and reward proficient executives while offering a competitive
salary.
The Compensation Committee reviews the compensation of the executive
officers: Wayne R. Hellman, who is President and Chief Executive Officer, Louis
S. Fisi, who is Executive Vice President and Secretary and Nicholas R. Sucic who
is Chief Financial Officer, Vice President and Treasurer. Mr. Hellman and Mr.
Fisi are each parties to an Employment Agreement with the Company. Each
Employment Agreement's initial term expires in October 1998. The Compensation
Committee has determined that Mr. Hellman and Mr. Fisi will receive an annual
base compensation of $200,000 and $175,000 for fiscal 1998, respectively, and
each are entitled to a bonus in an appropriate amount as determined by the
Compensation Committee. Messrs. Hellman, Fisi and Sucic participate in Company
sponsored life, health and disability insurance
8
<PAGE> 12
coverage. Additionally, 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. The Compensation Committee has determined that no bonus will be paid
to Mr. Hellman or Mr. Fisi for the fiscal year ended June 30, 1997.
COMPENSATION COMMITTEE
Francis H. Beam
Theodore A. Filson
Susumu Harada
Dated: September, 1997
9
<PAGE> 13
COMPARISON OF CUMULATIVE TOTAL RETURN*
<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
6/28/96 113 105 175
6/30/97 137 155 253
</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 corporations that were
previously under common ownership and management (the "Predecessors").
On June 28, 1995, the Company loaned to Mr. Hellman $88,000 (due in June
1997), represented by Mr. Hellman's 8% promissory note to the Company. On May
10, 1995, the Company loaned to Mr. Fisi $70,000 (due in May 1997), represented
by Mr. Fisi's 8% promissory note. These loans were repaid in full during fiscal
year 1997.
The Company has entered into a three year agreement with Mr. Filson for
consulting services commencing in 1994, which required payment by the Company of
$100,000 per year. This agreement was terminated in 1996. In calendar 1997, Mr.
Filson will provide consulting services to the Company and receive a fee of
$100,000. In 1998, Mr. Filson has agreed to be available to provide consulting
services to the Company, although the amount of any fees has not yet been
determined.
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 Venture Japan, formerly known as Koto Luminous Ltd., a
Japanese manufacturer and marketer of lighting products. Venture Japan owns
182,268 shares of the Company, which were acquired in the Combination as a
result of an investment in a Predecessor. In April 1997, the Company purchased a
30% equity interest in Venture Japan. Additionally, Mr. Harada and members of
his family control Wakoh Corporation, a Japanese corporation. The Company and
Wakoh Corporation each owns 50% of the capital stock of Pacific Lighting, Inc.,
a British Virgin Island holding company. The Company uses Pacific Lighting to
hold a number of the Company's joint venture investments. Venture Japan is the
Company's sole trading partner in Japan and, as a result, the
10
<PAGE> 14
Company supplies Venture Japan with materials and lamps. Venture Japan paid the
Company approximately $2.4 million and $3.9 million in fiscal 1996 and fiscal
1997, 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 "King Air Aircraft"), which Levetz leases from
LightAir Ltd. ("LightAir"), an Ohio limited liability company owned by Mr.
Hellman (80%) and Mr. Fisi (20%). On May 27, 1997, the Company entered into a
ten-year Aircraft Dry Lease Agreement with LightAir for the purpose of leasing a
1993 Lear Jet 60 airplane (the "Lear Aircraft"). In each case, the leased
airplanes enable the Company to have air service into locations which are not
adequately served by commercial carriers. One of the subsidiaries has committed
to a minimum of 200 King Air flight hours per year, and the other subsidiary has
committed to a minimum of 75 King Air flight hours per year. Until the minimum
number of hours is reached, the subsidiaries pay $950 per flight hour for the
King Air, and $550 per flight hour thereafter, in each case plus operating and
maintenance expenses. The Company has committed to a minimum of 260 Lear flight
hours per year. The lease rate for the Lear Aircraft is $2,500 per flight hour,
plus operating costs and maintenance expenses. Messrs. Hellman and Fisi
guaranteed the repayment of $1.7 million of indebtedness incurred to purchase
the King Air Aircraft and the repayment of $8.4 million of indebtedness incurred
to purchase the Lear Aircraft. Payments to LightAir pursuant to the King Air
Aircraft lease totaled $244,000 in fiscal 1996 and $553,808 in fiscal 1997.
Levetz has entered into a separate Aircraft Dry Lease Agreement with LightAir
for use of the Lear Aircraft when not in use by the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
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 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 1997. All of these filing
requirements were satisfied by the Company's Executive Officers and directors,
except that Messrs. Hellman and Fisi each failed to timely file Forms 4 in
August 1996 to report their sales of 310,290 and 78,091 shares, respectively, in
the Company's July 1996 Public Offering.
11
<PAGE> 15
PROPOSAL 2.
APPROVAL OF THE COMPANY'S 1997 BILLION DOLLAR MARKET CAPITALIZATION INCENTIVE
AWARD PLAN
The Advanced Lighting Technologies, Inc. 1997 Billion Dollar Market
Capitalization Incentive Award Plan (the "Billion Dollar Market Capitalization
Plan,") which was approved by the Board as of August 4, 1997, was established to
encourage selected key employees, consultants and directors of the Company to
grow the market capitalization of the Company (excluding shares issued in future
mergers and acquisitions) to $1 billion, thereby enhancing the value of the
Company for the benefit of its shareholders and to enhance the ability of the
Company to attract and retain qualified individuals. Approximately 100
employees, consultants and directors are eligible to participate in the Billion
Dollar Market Capitalization Plan. The following description of the Billion
Dollar Market Capitalization Plan is qualified in its entirety by reference to
Appendix A hereto which sets forth a complete copy of such plan.
The Billion Dollar Market Capitalization Plan is administered by the
Incentive Award Committee ("Committee"). This Committee, solely in its
discretion, selects participants and determines the amount and terms of awards
under the Billion Dollar Market Capitalization Plan.
Subject to adjustment under certain circumstances to prevent dilution or
enlargement of the benefits or potential benefits intended to be made under the
Billion Dollar Market Capitalization Plan, the number of shares of Common Stock
available for awards (whether options or restricted stock) under the Billion
Dollar Market Capitalization Plan is 800,000. These shares may be issued in
connection with grants of options for Common Stock or as grants of restricted
Common Stock. The Billion Dollar Market Capitalization Plan also provides that
no Option may be exercised prior to six months after the date of its grant. The
exercise price for all options will be the fair market value of the Common Stock
on the date of the grant. The option award provides that all options expire ten
years after the date of grant. Shares of restricted Common Stock, subject to
such restrictions and terms of forfeiture as the Committee may impose, may also
be granted under the Billion Dollar Market Capitalization Plan (the "Restricted
Stock"). No awards may be granted under the Billion Dollar Market Capitalization
Plan after July 31, 2007. The form of Option Award to be granted by the
Committee provides that no option will be exercisable until the earlier of (1)
the time at which the Company's adjusted Capitalized Value (i.e., the fair
market value of a share multiplied by the adjusted number of outstanding shares)
first exceeds $1 billion (the "Goal") or (2) the sixth anniversary of the grant.
The exercise of an option granted as an incentive stock option under Section 422
of the Internal Revenue Code is further limited to $100,000 per year. The
Billion Dollar Market Capitalization Plan provides that the number of
outstanding shares for the purpose of the calculation of the Goal shall not
include shares issued in any merger transaction or as consideration for the
acquisition of shares or assets of a third party after August 4, 1997. Other
than the employees' services, the Company will receive no additional
consideration for the grant of any award under the Plan.
The Plan further provides that to the extent required to comply with
Section 16 of the Exchange Act and the applicable rules thereunder, any equity
security issued pursuant to the Billion Dollar Market Capitalization Plan may
not be sold for at least six months after acquisition, and any derivative
security issued pursuant to the Plan will not be exercisable for six months from
its date of grant. The Billion Dollar Market Capitalization 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 Billion Dollar Market Capitalization
Plan.
The Billion Dollar Market Capitalization Plan cannot be amended without
shareholder approval to increase the cost thereof to the Company. The Committee,
however, may amend the terms of any award previously granted with the consent of
the holder, including any modification of the Goal.
FEDERAL INCOME TAX CONSEQUENCES
Under present federal income tax laws, awards under the Billion Dollar
Market Capitalization Plan will have the following consequences:
12
<PAGE> 16
(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 Billion
Dollar Market Capitalization 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 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 of the Billion Dollar
Market Capitalization Plan. The Compensation Committee and the Board of
Directors recommend the shareholders vote "FOR" this proposal.
PROPOSAL 3.
APPROVAL OF THE COMPANY'S 1997 EMPLOYEE STOCK PURCHASE PLAN
The Advanced Lighting Technologies, Inc. 1997 Employee Stock Purchase Plan
(the "Stock Purchase Plan") which was approved by the Board of Directors as of
January 27, 1997, was established to provide a method whereby employees of the
Company would have an opportunity to acquire a proprietary interest in the
growth and performance of the Company through the purchase of shares of Common
Stock. The following description of the Stock Purchase Plan is qualified in its
entirety by reference to Appendix B hereto which sets forth a complete copy of
such plan.
13
<PAGE> 17
It is the intention of the Company to have the Stock Purchase Plan qualify
as an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue
Code of 1986, as amended. All employees who shall have completed six months
employment are eligible to participate in the offerings under the Stock Purchase
Plan; provided, however, no employee shall be granted an option to participate
in such Stock Purchase Plan if, immediately after the grant, such employee would
own stock and/or hold options to purchase stock possessing 5% or more of a total
combined voting power of the Company or which permits the employee's right to
purchase stock under all employee stock purchase plans of the Company to accrue
at a rate which exceeds $25,000 in fair market value of the stock for each
calendar year. The Stock Purchase Plan provides for employees to purchase
employee stock at a 15% discount by authorizing payroll deductions. One hundred
thousand shares of Common Stock will be offered under the Stock Purchase Plan
beginning April 15, 1997, and continuing thereafter until all shares of stock
have been purchased, but in no event later than December 31, 2001. If an
employee elects to purchase Common Stock by authorizing payroll deductions, no
such authorization may exceed 10% of the employee's compensation. All payroll
deductions made for an employee shall be credited to the participant's account
under the Stock Purchase Plan. A participant may discontinue his participation
under the Stock Purchase Plan by providing notice to the Company, but no other
change can be made during any six-month offering period. The Stock Purchase Plan
will purchase that number of shares of Common Stock which the accumulated
payroll deductions in the participant's account will purchase at the end of each
month. As promptly as practicable after each purchase after the end of each
month when Common Stock will be purchased, the Company will deliver to each
participant or hold in an account for the participant's benefit, as appropriate,
the Common Stock purchased through the payroll deductions. The Company will also
deliver stock to a participant two years after the participant has ceased
contributions to the Stock Purchase Plan if no written notice to the Company
requesting distribution has been previously received.
FEDERAL INCOME TAX CONSEQUENCES
Common Stock purchased under the Stock Purchase Plan will qualify for
special tax treatment under Section 423 of the Internal Revenue Code. The
difference between the exercise price and the fair market value of the Common
Stock on the date of exercise is sometimes called the "bargain element." In the
case of the Stock Purchase Plan, the bargain element is the 15% discount
received at the time of purchase pursuant to the Stock Purchase Plan. No tax is
recognized at the time of the purchase of the Common Stock by a participant. The
bargain element will not be considered as a part of alternative minimum taxable
income in the year of purchase.
If a participant disposes of any Common Stock within two years after such
Common Stock is purchased under the Stock Purchase Plan, the participant will
recognize ordinary compensation income in the year of disposition in the amount
of the bargain element and such income will be subject to income and payroll tax
withholding. The amount of income recognized will be added to the participant's
basis in the stock (unless the disposition is due to the death of the
participant), and the participant's capital gain or loss on disposition will be
determined using this increased basis. If the participant disposes of any Common
Stock after this two year holding period, the participant will recognize
ordinary compensation income equal to the lesser of (i) the bargain element or
(ii) the excess of the fair market value at the time of disposition over the
purchase price. Again, the amount of compensation income recognized is added to
the basis. If the disposition is made before the two year holding period ends,
the Company will receive a deduction in the amount of the compensation income,
otherwise, the Company is not entitled to a deduction for the compensation
income recognized by the participant.
An affirmative vote of the majority of the shares present or represented
and voting at the Annual Meeting is required for approval and ratification of
the Stock Purchase Plan. The Board of Directors recommends the shareholders vote
"FOR" this proposal.
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<PAGE> 18
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 1998.
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 and
voting 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.
1997 ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1997
A copy (excluding exhibits) of the Company's 1997 Annual Report on Form
10-K for the fiscal year ended June 30, 1997 as filed with the Securities and
Exchange Commission may be obtained by shareholders without charge by addressing
a request to Director of Investor 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 1998 Annual Meeting must be received by
the Secretary of the Company no later than June 9, 1998, in order to be eligible
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting.
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<PAGE> 19
APPENDIX A
SEPTEMBER 25, 1997
ADVANCED LIGHTING TECHNOLOGIES, INC.
1997 BILLION DOLLAR MARKET CAPITALIZATION INCENTIVE AWARD PLAN
SECTION 1. PURPOSE.
The purpose of this 1997 Billion Dollar Market Capitalization Incentive
Award Plan (the "Plan") is to provide an incentive to selected key employees,
advisors, consultants, and directors of Advanced Lighting Technologies, Inc.
(together with any successor thereto, the "Company") and its Affiliates (as
defined below) to grow the market capitalization of the Company to $1 Billion,
thereby 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
will be submitted for approval by the shareholders of the Company within 12
months from the date of its adoption by the Board of Directors.
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) "Award" shall mean any Option or Restricted Stock granted under
the Plan.
(c) "Award Agreement" shall mean any Option Award, Restricted Stock
Award, or other written agreement, contract, or other instrument or
document evidencing any Award granted under the Plan.
(d) "Capitalized Value" shall mean the Fair Market Value of a Share
multiplied by the number of fully paid, issued and outstanding Shares,
determined as of the close of business on any date; provided, however, that
the number of fully paid, issued and outstanding Shares for the purpose of
calculating "Capitalized Value" shall not include Shares issued in any
merger transaction or as consideration for the acquisition of shares or
assets of a third party after August 4, 1997, as such number may be
adjusted pursuant to Section 4(b) of this Plan.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(f) "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 three (3) directors, except that with regard to any Award to
an executive officer or director of the Company, "Committee" shall mean the
entire Board of Directors.
(g) "Employee" shall mean any key employee of the Company or of any
Affiliate as designated by the Committee.
(h) "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.
(i) "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.
(j) "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.
(k) "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.
(l) "Option" shall mean an option granted under Section 6(a) of the
Plan.
A-1
<PAGE> 20
(m) "Participant" shall mean an Employee or Non-Employee Participant
designated to be granted an Award under the Plan.
(n) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
governmental or political subdivision thereof.
(o) "Released Securities" shall mean securities that were Restricted
Securities with respect to which all applicable restrictions have expired,
lapsed, or been waived.
(p) "Restricted Securities" shall mean Awards of Restricted Stock or
other awards under which issued and outstanding Shares are held subject to
certain restrictions.
(q) "Restricted Stock" shall mean any Share granted under Section 6(b)
of the Plan.
(r) "Section 16" shall mean Section 16 of the Securities Exchange Act
of 1934, as amended.
(s) "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. 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 800,000 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 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
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<PAGE> 21
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, consultant or director of the Company or of any Affiliate
shall be eligible to be designated a Participant.
SECTION 6. AWARDS.
(a) Options. The Committee is hereby authorized to grant Incentive Stock
Options and/or Non-Qualified Stock 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:
(i) Exercise Price for Options. The purchase price per Share
purchasable under an Option shall be the Fair Market Value per Share on the
date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee.
(iii) 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 months after its date
of grant.
(iv) 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
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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. To the extent the aggregate Fair Market Value of Shares
(determined as of the date of the Award) with respect to which Incentive
Stock Options otherwise would become exercisable for the first time by a
Participant during any calendar year under all plans of the Company and its
Affiliates, exceeds $100,000, the Options which exceed such limit shall not
become exercisable until the next succeeding calendar year in which the
$100,000 limit is not exceeded.
(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.
(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.
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(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) Section 16 Six Month Limitations. If necessary to comply with
Section 16 and the rules promulgated thereunder only, any equity security
issued pursuant to the Plan may not be sold for at least six months after
acquisition, and any derivative security issued pursuant to the Plan will
not be exercisable for six 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 Section 16 and the
rules promulgated thereunder.
(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
(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,
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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 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.
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(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 date of its approval by the Board of
Directors of the Company, but no Awards shall be exercised unless and until the
Plan has been approved by the shareholders of the Company, which approval shall
be within twelve (12) months after the date the Plan is adopted by the Board.
SECTION 10. TERM OF THE PLAN.
No Award shall be granted under the Plan after July 31, 2007. 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.
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APPENDIX B
AMENDED AND RESTATED
APRIL 1, 1997
ADVANCED LIGHTING TECHNOLOGIES, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE
The purpose of the Advanced Lighting Technologies, Inc. 1997 Employee Stock
Purchase Plan (the "Plan") is to provide a method whereby employees of Advanced
Lighting Technologies, Inc., (together with any successor thereto, the
"Company") and its Subsidiaries (as defined below) will have an opportunity to
acquire a proprietary interest in the growth and performance of the Company
through the purchase of shares of Common Stock of the Company ("Stock"). It is
the intention of the Company to have the Plan qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). The provisions of the Plan shall be construed so as to
extend and limit participation in a manner consistent with the requirements of
that section of the Code.
SECTION 2. DEFINITIONS
2.01. Committee
"Committee" shall mean the Incentive Award Committee of the Company's Board
of Directors.
2.02. Compensation
"Compensation" shall mean all wages and earnings included within the
definition of wages in Section 3401(a) of the Code.
2.03. Employee
"Employee" means any person who is customarily employed on a full-time or
part-time basis by the Company or any Subsidiary and is regularly scheduled to
work more than twenty (20) hours per week.
2.04. Participant
"Participant" means any Employee who has satisfied the eligibility
requirements and completed the authorization form in the manner provided in
Section 3.04 of this Plan.
2.05. Purchase Date
"Purchase Date" means the last business day of each calendar month.
2.06. Subsidiary
"Subsidiary" means (i) any corporation in an unbroken chain of
corporations, starting with the Company, where, at each link of the chain, the
corporation in the link above owns at least Fifty Percent (50%) of the combined
voting power of all the classes of stock in the corporation below, and (ii) is
designated as a participant in the Plan by the Committee.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.01. Initial Eligibility
Any Employee who shall have completed six (6) months employment and shall
be employed by the Company or any Subsidiary on the date such Employee's
participation for any Offering Period in the Plan is to become effective shall
be eligible to participate in offerings under the Plan which commences on or
after such six (6) month period has concluded.
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3.02. Leave of Absence
For purposes of participation in the Plan, a person on leave of absence
shall be deemed to be an Employee for the first ninety (90) days of such leave
of absence and such Employee's employment shall be deemed to have terminated at
the close of business on the ninetieth day of such leave of absence unless such
Employee shall have returned to regular full-time or part-time employment (as
the case may be) prior to the close of business on such ninetieth day.
Termination by the Company or any Subsidiary of any Employee's leave of absence,
other than termination of such leave of absence on return to full time or part
time employment, shall terminate an Employee's employment for all purposes of
the Plan and shall terminate such Employee's participation in the Plan and right
to exercise any option.
3.03. Restrictions on Participation
Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted an option to participate in the Plan:
(a) if, immediately after the grant, such Employee would own Stock,
and/or hold outstanding options to purchase Stock, possessing 5% or more of
the total combined voting power or value of all classes of Stock of the
Company (for purposes of this paragraph, the rules of Section 424(d) of the
Code shall apply in determining Stock ownership of any Employee); or
(b) which permits the Employee's rights to purchase Stock under all
employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the Stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding.
3.04. Commencement of Participation
An eligible Employee may become a Participant by completing an
authorization for a payroll deduction on the form provided by the Company and
filing it with the office of the Treasurer of the Company prior to the
Commencement Date of the next succeeding Offering Period. Payroll deductions for
a Participant shall thereafter commence on the next succeeding Commencement Date
and shall end on the Termination Date of the Offering to which such
authorization is applicable unless sooner terminated by the Participant as
provided in Section 8. Notwithstanding the forgoing, an eligible Employee may
become a Participant at any time during the Offering Period beginning on April
15, 1997 and ending on June 30, 1997 by filing the authorization for payroll
deduction form with the Treasurer of the Company. In such event, payroll
deductions for such Participant shall commence on the next pay date.
SECTION 4. OFFERING
4.01. Offering
The Plan will be implemented by an offering of 100,000 shares of Stock (the
"Offering") beginning on April 15, 1997 and continuing thereafter until all the
shares of Stock have been purchased, but terminating, in any event, on December
31, 2001. The Company may increase the Offering from time to time in accordance
with the procedures set forth in Section 424 of the Code. As used in this Plan
"Commencement Date" means the first business day of each January and July until
termination of the Plan (except that the Commencement Date of the first Offering
Period is April 15, 1997) and "Termination Date" means the last business day of
each December and June until termination of the Plan. Each period between a
Commencement Date and a Termination Date shall constitute a separate "Offering
Period."
SECTION 5. PAYROLL DEDUCTIONS
5.01. Amount of Deduction
At the time an Employee files an authorization for payroll deduction, the
Employee shall elect to have deductions made from the Employee's pay on each
payday during the time the Employee is a Participant at a rate not to exceed ten
percent (10%) of the Employee's compensation (the "Payroll Deduction").
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5.02. Participant's Account
All Payroll Deductions made for a Participant shall be credited to the
Participant's account under the Plan. A Participant may not make any separate
cash payment into such account except when on leave of absence and then only as
provided in Section 5.04 of this Plan.
5.03. Changes in Payroll Deductions
A Participant may discontinue his participation in the Plan as provided in
Section 8, but no other change can be made during an Offering Period and,
specifically, a Participant may not alter the amount of the Participant's
Payroll Deductions during an Offering Period.
5.04. Leave of Absence
If a Participant goes on a leave of absence, such Participant shall have
the right to elect: (a) to withdraw the balance in the Participant's account
pursuant to Section 7.02, (b) to discontinue contributions to the Plan but
remain a Participant in the Plan.
SECTION 6. GRANTING OF OPTION
6.01. Number of Option Shares
For each Offering Period, a Participant shall be deemed to have been
granted an option to purchase the maximum whole number of shares of Stock which
may be purchased with each Participant's Payroll Deduction on each Purchase Date
during such Offering Period, at a price equal to Eighty-Five Percent (85%) of
the market value of the Stock on such Purchase Date (the "Option Price").
6.02. Determination of Option Price
The Option Price as of each Purchase Date shall be based upon the closing
price of the Stock on each Purchase Date, or the nearest prior business day on
which trading occurred on the NASDAQ National Market System.
SECTION 7. EXERCISE OF OPTION
7.01. Automatic Exercise
Unless a Participant gives written notice to the Company as hereinafter
provided, a Participant's option for the purchase of Stock with Payroll
Deductions made during any Offering Period will be deemed to have been exercised
on each applicable Purchase Date for the purchase of the number of shares of
Stock which the accumulated Payroll Deductions in the Participant's account at
that time will purchase at the applicable Option Price.
7.02. Withdrawal of Account
By written notice to the Treasurer of the Company not less than five (5)
days prior to any Purchase Date, a Participant may elect to withdraw all the
Payroll Deductions in the Participant's account at such time and terminate the
Participant's participation in the then current Offering Period.
7.03. Transferability of Option
During a Participant's lifetime, options held by a Participant shall be
exercisable only by that Participant.
7.04. Delivery of Stock
As promptly as practicable after each Purchase Date, the Company will
deliver to each Participant (or hold in an account for the Participant's
benefit), as appropriate, the Stock purchased upon exercise of the Participant's
option. Promptly following receipt of a distribution request form by the
Treasurer of the Company, the Company will deliver to any Participant the Stock
held in an account for such Participant's
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benefit. The Company also will deliver Stock to a Participant two years after
the Participant has ceased contributions to the Plan if no written notice to the
Company requesting distribution has been previously received.
SECTION 8. WITHDRAWAL
8.01. In General
As indicated in Section 7.02, a Participant may withdraw Payroll Deductions
credited to a Participant's account under the Plan at any time by giving written
notice to the Treasurer of the Company. All of the Participant's Payroll
Deductions credited to the Participant's account, which have not previously been
used to purchase Stock, will be paid to him promptly after receipt of the
Participant's notice of withdrawal, and (a) no further Payroll Deductions will
be made during such Offering Period and (b) no further Stock shall be purchased
during such Offering Period.
8.02. Effect on Subsequent Participation
A Participant's withdrawal from any Offering Period will not have any
effect upon the Participant's eligibility to participate in any succeeding
Offering Period or in any similar plan which may hereafter be adopted by the
Company.
8.03. Leave of Absence
A Participant on leave of absence shall, subject to the election made by
such Participant pursuant to Section 5.04, continue to be a Participant in the
Plan so long as such Participant is on continuous leave of absence. A
Participant who has been on leave of absence for more than ninety days and who
therefore is not an Employee for the purpose of the Plan shall not be entitled
to purchase Stock on any Purchase Date following such ninetieth day.
Notwithstanding any other provisions of the Plan, unless a Participant on leave
of absence returns to regular full-time or part-time employment with the Company
or any Subsidiary at the earlier of: (a) the termination of such leave of
absence or (b) three months from the ninetieth day of such leave of absence,
then such Participant's participation in the Plan shall terminate on whichever
of such dates first occurs.
SECTION 9. INTEREST
9.01. Payment of Interest
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any Participant.
SECTION 10. STOCK
10.01. Maximum Shares of Stock
The maximum number of shares of Stock which shall be issued under the Plan,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 12.04, shall be 100,000 shares of Stock. If the total number of
shares of Stock for which options are exercised on any Termination Date in
accordance with Section VI exceeds the maximum number of shares of Stock for the
applicable offering, the Company shall make a pro rata allocation of the shares
available for delivery and distribution in as nearly a uniform manner as shall
be practicable and as it shall determine to be equitable, and the balance of
Payroll Deductions credited to the account of each Participant under the Plan
shall be returned to the Participant as promptly as possible.
10.02. Participant's Interest in Option Stock
The Participant will have no interest in Stock covered by an option until
such option has been exercised.
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10.03. Registration of Stock
Stock to be delivered to a Participant under the Plan will be held by the
Company in an account for the benefit of the Participant, or, if the Participant
so directs by written notice to the Treasurer of the Company prior to the
Termination Date applicable thereto, in the name of the Participant and/or one
such other person as may be designated by the Participant, as joint tenants with
rights of survivorship, to the extent permitted by applicable law.
10.04. Restrictions on Exercise
The Board of Directors may, in its discretion, require as conditions to the
exercise of any option that the shares of Stock reserved for issuance upon the
exercise of the option shall have been duly listed, upon official notice of
issuance, upon a stock exchange, and that either:
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Stock shall be effective, or
(b) the Participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is the
Participant's intention to purchase the Stock for investment and not for
resale or distribution.
SECTION 11. ADMINISTRATION
11.01. Appointment of Committee
The Plan shall be administered by the Committee. No member of the Committee
shall be eligible to purchase Stock under the Plan.
11.02. Authority of Committee
Subject to the express provisions of the Plan and applicable law, the
Committee shall have full power and authority in its discretion to interpret and
construe any and all provisions of the Plan, to adopt rules and regulations for
administering the Plan, and to make all other determinations deemed necessary or
advisable for administering the Plan. The Committee's determination on the
foregoing matters shall be conclusive.
SECTION 12. MISCELLANEOUS
12.01. Designation of Beneficiary
A Participant may file a written designation of a beneficiary who is to
receive any Stock and/or cash. Such designation of beneficiary may be changed by
the Participant any time by written notice to the Treasurer of the Company. Upon
the death of a Participant and upon receipt by the Company of proof of identity
and existence at the Participant's death of a beneficiary validly designated by
the Participant under the Plan and a written notice to the Treasurer of the
Company requesting distribution of a Participant's shares, the Company shall
deliver such Stock and/or cash to such beneficiary. In the event of the death of
a Participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Participant's death, the company shall
deliver such Stock and/or cash to the executor or administrator of the estate of
the Participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
Stock and/or cash to the spouse or to any one or more dependents of the
Participant as the Company may designate. No beneficiary shall, prior to the
death of the Participant by whom the beneficiary has been designated, acquire
any interest in the Stock or cash credited to the Participant under the Plan.
12.02. Transferability
Neither Payroll Deductions nor any rights with regard to the exercise of an
option or to receive Stock under the Plan may be assigned, transferred, pledged,
or otherwise disposed of in any way by a Participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or
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other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds in accordance with Section 7.02.
12.03. Use of Funds
All Payroll Deductions received or held by the Company under this Plan
shall be segregated in a separate account maintained by the Company.
12.04. Adjustment Upon Changes in Capitalization
(a) In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Stock, other securities, or
other property) recapitalization, Stock split, reverse Stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Stock or other securities of the Company, issuance of
warrants or other rights to purchase Stock or other securities of the Company,
or other similar corporate transaction or event affects the Stock 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, the Committee may make appropriate and
proportionate adjustments in the number and/or kind of shares which are subject
to purchase under outstanding options and on the option exercise price or prices
applicable to such outstanding options. In addition, in any such event, the
number and/or kind of shares which may be offered in the Offering may also be
proportionately adjusted.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or Stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Termination Date upon the
exercise of such option for each share of Stock as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.04 shall thereafter
be applicable, as nearly as reasonably may be determined, in relation to the
said cash, securities and/or property as to which such holder of such option
might thereafter be entitled to receive.
12.05. Amendment and Termination
The Board of Directors shall have complete power and authority to terminate
or amend the Plan; provided, however, that the Board of Directors shall not,
without the approval of the shareholders of the Company (i) increase the maximum
number of shares of Stock which may be issued; (ii) amend the requirements as to
the class of Employees eligible to purchase Stock under the Plan or permit the
members of the Committee to purchase Stock under the Plan. No termination,
modification, or amendment of the Plan may, without the consent of an Employee
then having an option under the Plan to purchase Stock, adversely affect the
rights of such Employee under such option.
12.06. Effective Date
The Plan shall become effective as of February 1, 1997, subject to approval
by the holders of the majority of the Stock present and represented at a special
or annual meeting of the shareholders held on or before December 31, 1997.
12.07. No Employment Rights
The Plan does not, directly or indirectly, create any right for the benefit
of any Employee or class of Employees to purchase any shares of Stock under the
Plan, or create in any Employee or class of Employees any right with respect to
continuation of employment by the Company or any Subsidiary, and it shall not be
B-6
<PAGE> 32
deemed to interfere in any way with the Company's or any Subsidiary's right to
terminate, or otherwise modify, an Employee's employment at any time.
12.08. Effect of Plan
The provisions of the Plan shall, in accordance with its terms, be binding
upon, and inure to the benefit of, all successors of each Employee participating
in the Plan, including, without limitation, such Employee's estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such Employee.
12.09. Governing Law
The law of the State of Ohio will govern all matters relating to this Plan
except to the extent it is superseded by the laws of the United States.
B-7
<PAGE> 33
SAMPLE CARD
<TABLE>
<S> <C>
ADVANCED LIGHTING TECHNOLOGIES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2307 East Aurora Road The undersigned hereby appoints Wayne R. Hellman and Louis S. Fisi as Proxies,
Suite One each with the power to appoint his or her substitute, and hereby authorizes
Twinsburg, Ohio 44087 them and to vote as designated below, all the shares of Common Stock to
represent Advanced Lighting Technologies, Inc. held of record by the
undersigned on September 22, 1997, at the annual meeting of shareholders to
be held on November 12, 1997, or any adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as made to the contrary below) to vote for nominees listed below
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE's NAME IN THE LIST BELOW.)
Louis S. Fisi
Francis H. Beam
2. PROPOSAL TO APPROVE THE 1997 BILLION DOLLAR MARKET
CAPITALIZATION INCENTIVE AWARD PLAN
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. PROPOSAL TO APPROVE THE 1997 EMPLOYEE STOCK PURCHASE PLAN
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP as the
independent auditors of Advanced Lighting Technologies, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before this meeting.
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.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. 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.
DATE:___________________, 1997 -----------------------------
PLEASE VOTE, SIGN, DATE, AND Signature
RETURN THE PROXY CARD USING
THE ENCLOSED ENVELOPE.
------------------------------
Signature, if held jointly
17
