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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1998
REGISTRATION NO. 333-58621
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ADVANCED LIGHTING TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
OHIO 34-1803229
STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
32000 AURORA ROAD
SOLON, OHIO 44139
440/519-0500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WAYNE R. HELLMAN
CHIEF EXECUTIVE OFFICER
ADVANCED LIGHTING TECHNOLOGIES, INC.
32000 AURORA ROAD
SOLON, OHIO 44139
440/519-0500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
JAMES S. HOGG JONATHAN B. MILLER
COWDEN, HUMPHREY & SARLSON CO., L.P.A. BROWN & WOOD LLP
1414 TERMINAL TOWER ONE WORLD TRADE CENTER
CLEVELAND, OHIO 44113 NEW YORK, NEW YORK 10048
216/241-2880 212/839-5300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered in
connection with the termination of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER UNIT PRICE(1)(2) REGISTRATION FEE(3)
<S> <C> <C> <C> <C>
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Debt Securities (5)...............
Common Stock, par value
$.001 per share (6)...............
Preferred Stock, par value
$.001 per share (7)............... $100,000,000 (2) $100,000,000 $29,500(4)
Depositary Shares representing
Preferred Stock (8)...............
Warrants (9)......................
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(Footnotes on following page)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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(Footnotes from previous page)
(1) In no event will the aggregate maximum initial offering price of all
securities issued pursuant to this Registration Statement exceed
$100,000,000. Any securities registered hereunder may be sold separately,
together or as units with other securities registered hereunder.
(2) The proposed maximum offering price per unit (a) has been omitted pursuant
to Instruction J. of Form S-4 and (b) will be determined, from time to
time, by the Registrant in connection with the issuance by the Registrant
of the securities registered hereunder.
(3) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
(4) Previously paid.
(5) Subject to footnote 1, there is being registered hereunder an indeterminate
principal amount of Debt Securities as may be issued, from time to time, by
the Registrant. Such amount shall be increased, if any Debt Securities are
issued at an original issue discount, by an amount such that the net
proceeds of such Debt Securities shall be equal to the above amount to be
registered.
(6) Subject to footnote 1, there is being registered hereunder an indeterminate
number of shares of Common Stock as may be issued, from time to time, by
the Registrant. There also is being registered hereunder an indeterminate
number of shares of Common Stock as may be issuable upon conversion of the
Debt Securities or the Preferred Stock or upon exercise of Warrants
registered hereby.
(7) Subject to footnote 1, there is being registered hereunder an indeterminate
number of shares of Preferred Stock as may be issued, from time to time, by
the Registrant. There also is being registered hereunder an indeterminate
number of shares of Preferred Stock as shall be issuable upon exercise of
Warrants registered hereby.
(8) Such indeterminate number of Depositary Shares to be evidenced by
Depositary Receipts, representing a fractional interest of a share of
Preferred Stock.
(9) Subject to footnote 1, there is being registered hereunder an indeterminate
number of Warrants representing rights to purchase Debt Securities, shares
of Common Stock or Preferred Stock of the Registrant registered hereby.
This Registration Statement also relates to all of the Securities registered
hereunder which may be offered for resale by certain persons who receive from
the Registrant Securities in acquisitions, as more fully described in the
Prospectus contained in this Registration Statement.
<PAGE> 3
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED AUGUST 18, 1998
PROSPECTUS
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ADVANCED LIGHTING TECHNOLOGIES, INC.
By this Prospectus, we may issue up to $100,000,000 of our:
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
on the completion of acquisitions of assets, businesses or
securities.
Advanced Lighting Technologies, Inc. is an Ohio corporation.
We intend to issue these securities to acquire assets, businesses, or other
securities. When we identify an acquisition candidate, we will negotiate the
terms of the transaction, including the type and dollar amount of securities we
will issue, with the people who own or control the acquisition candidate. We
also expect the securities to be issued at prices reasonably related to the
market price of the securities either when an agreement is entered into or when
the securities are delivered. We will not pay any underwriting discounts or
commissions, although we may pay finder's fees in connection with certain
acquisitions. Any person receiving finder's fees may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any profit on the resale of securities purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
The last reported sale price for our Common Stock on the National Market
tier of the Nasdaq Stock Market, Inc. (Symbol: ADLT) on August 17, 1998 was
$21.25 per share.
In some cases, we will allow people who receive these securities in
transactions to resell them using this Prospectus and the appropriate Prospectus
Supplement.
INVESTING IN THE SECURITIES COVERED BY THIS PROSPECTUS INVOLVES CERTAIN
RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY
STATE SECURITIES COMMISSION. NONE OF THOSE AUTHORITIES HAS DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
We will provide the specific terms of these securities as well as the terms
of transactions pursuant to which they will be issued in supplements to this
Prospectus. You should read this Prospectus and the supplements carefully before
making an investment decision.
The date of this Prospectus is , 1998.
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WHERE YOU CAN FIND MORE INFORMATION
Advanced Lighting Technologies, Inc. files annual, quarterly and current
reports, proxy and information statements and other information with the SEC.
You may read and copy any document we file at the SEC's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for more information on the public reference rooms and
their copy charges. Our SEC filings are also available to the public from the
SEC's web site at http://www.sec.gov. You may also inspect our SEC reports and
other information at the National Association of Securities Dealers, Inc.,
Reports Section, 1735 K Street N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose information to you by referring you to
those documents. Information incorporated by reference is part of this
Prospectus. Later information filed with the SEC updates and supersedes this
Prospectus.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering is completed, or subsequent
to the date of the initial Registration Statement and prior to effectiveness of
the Registration Statement:
- Annual Report on Form 10-K of the Company for the year ended June 30,
1997.
- Portions of the Proxy Statement on Schedule 14A for the Company's Annual
Meeting of Shareholders held on November 12, 1997 that have been
incorporated by reference into our 10-K.
- Quarterly Reports on Form 10-Q of the Company for the quarters ended
September 30 and December 31, 1997 and March 31, 1998.
- Current Reports on Form 8-K of the Company dated January 14, March 4, May
5, 1998 and July 7, 1998.
- The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed November 13, 1995, and any
amendments or reports filed after the date hereof for the purpose of
updating such description.
These filings include important business and financial information which we
are not delivering to you. You may request a copy of those filings, other than
exhibits, at no cost, by contacting us at:
Advanced Lighting Technologies, Inc.
32000 Aurora Road
Solon, Ohio 44139
(440) 519-0500
Attention: Corporate Secretary
IN ORDER TO GET THESE DOCUMENTS IN TIME TO MAKE YOUR INVESTMENT DECISION, YOU
SHOULD REQUEST THEM AT LEAST FIVE BUSINESS DAYS PRIOR TO THE DATE ON WHICH YOU
MUST MAKE YOUR INVESTMENT DECISION.
2
<PAGE> 5
THE COMPANY
Advanced Lighting Technologies, Inc. is an innovation-driven designer,
manufacturer and marketer of metal halide lighting products. Metal halide
lighting combines energy efficient superior illumination with long lamp (i.e.,
light bulb) life, excellent color rendition and compact lamp and system size. We
believe that we are the only designer and manufacturer in the world focused
primarily on metal halide lighting. As a result of this unique focus, we have
developed substantial expertise in all aspects of metal halide lighting. We
believe that this focus enhances our ability to respond to customer demand and
has contributed to our technologically advanced product development and
manufacturing capabilities.
We have integrated vertically to design, manufacture and market a broad
range of metal halide products and manufacturing equipment, including:
- materials used in the production of lamps;
- lamps and other components for lighting systems;
- complete metal halide lighting systems (i.e., the complete assemblies
necessary to create light when connected to electricity); and
- equipment used to produce metal halide lamps and optical coatings.
Our materials and components are used in the manufacture of our own
lighting systems for sale to end-users and are sold to third-party manufacturers
for use in the production of their metal halide products. The vertical
integration of our product approach is illustrated below:
METAL HALIDE INTEGRATION CHART
Internally
Developed Emerging
MATERIALS Metal Halide Applications
LAMPS Systems
POWER SUPPLIES Commercial/ -Fiber Optics
CONTROLS Replacement Sales Industrial -Residential
OPTICS/COATINGS Outdoor -Projection TV
EQUIPMENT Applications
Metal Halide Systems
Produced by
Third Parties
We produce over 300 ultra pure metal halide salts. We believe that we
produce 100% of the metal halide salts used in the manufacture of metal halide
lamps in the United States and over 80% of salts used worldwide. Metal halide
salts produce the light and determine the lighting characteristics of each metal
halide lamp. We currently market over 240 specialty and 40 standard metal halide
lamps, giving us the most diverse product line of any metal halide lamp
manufacturer. In addition, we offer components for metal halide and other
discharge lamp systems. We also assemble and market complete metal halide
systems, which may be installed by an end user to produce light. We also design,
manufacture and market turnkey lamp manufacturing equipment groups, which we
typically sell to international manufacturers. "Turnkey equipment groups" are
intended to be so complete that the buyer, like the buyer of a car, need only
"turn the key" to operate the system. We produce optical thin film coatings for
a variety of applications. We also produce the instruments for measuring and
testing film coatings.
3
<PAGE> 6
METAL HALIDE
Invented approximately 35 years ago, metal halide is the newest of all
major lighting technologies. It produces the closest simulation to sunlight of
any available lighting technology. Currently, metal halide lighting is used
primarily in
- commercial and industrial applications such as factories and warehouses,
- outdoor site and landscape lighting,
- sports facilities, and
- large retail spaces such as superstores.
In addition, due to metal halide's superior lighting characteristics and
efficiency, we believe many opportunities exist to "metal halidize" the lighting
market currently dominated by older incandescent and fluorescent lighting. Metal
halide lamps provide excellent color rendition, long life (10,000 to 20,000
hours) and very high efficiency (70 to 110 lumens per watt) making them the best
choice for many uses. For example, a 100 watt metal halide lamp, which is
approximately the same size as a household incandescent lamp, produces as much
light as five 100 watt incandescent lamps and as much as three 34-watt,
four-foot long fluorescent lamps. However, metal halide lamps cannot be used in
the incandescent and fluorescent lighting fixtures which are very common in
existing commercial and industrial facilities. While metal halide systems
generally offer lower costs over the life of a system, the installation of a
metal halide lighting system typically involves higher initial costs than
incandescent and fluorescent lighting systems.
We believe that the majority of the growth of metal halide lighting has
occurred in commercial and industrial applications. Recently, metal halide
systems have been introduced in fiber optic, projection television and
automotive headlamp applications. We believe that additional opportunities for
metal halide lighting exist in other applications where energy efficiency and
light quality are important. As a result of our dominant position in metal
halide materials and lamp production equipment, we expect to benefit from
continued growth in metal halide markets. In addition, we expect to be a leader
in metal halide's continued market expansion by providing innovative metal
halide system components and integrated systems.
Our principal place of business is located at 32000 Aurora Road, Solon,
Ohio 44139 and our telephone number is 440/519-0500. References in this
Prospectus to "the Company" are to our company, Advanced Lighting Technologies,
Inc., and, usually, to its operating units.
4
<PAGE> 7
RISK FACTORS
You should consider carefully the following factors, as well as the other
information that we include or incorporate by reference in this Prospectus or in
a supplement to this Prospectus, in evaluating an investment in the securities
that we are offering.
DEPENDENCE ON METAL HALIDE
We derive almost all of our net sales and income from selling metal halide
materials, systems, and components and production equipment. Our current
operations and growth strategy are focused on the metal halide lighting
industry. Metal halide is the newest of all commercial lighting technologies.
Metal halide lamp sales represented approximately 7% of domestic lamp sales in
1997 compared to fluorescent and incandescent lamps which represented
approximately 87% of the same market. We attribute our success to the increased
usage of metal halide lighting in commercial and industrial uses. Our future
results are dependent upon continued growth of metal halide lighting for these
and other uses. However, metal halide lamps are not compatible with the
substantial installed base of incandescent and fluorescent lighting fixtures,
and the installation of a metal halide lighting system typically involves higher
initial costs than incandescent and fluorescent lighting systems. Metal halide
products may not continue to gain market share within the overall lighting
market or better lighting technologies may be introduced, displacing metal
halide lighting in the market, which could have a material adverse effect on our
business and our results of operations.
LEVERAGE
At March 31, 1998, we had approximately $154.5 million of total
indebtedness outstanding and $148.8 million of shareholders' equity. At March
31, 1998, we also had $85.0 million available (subject to financial ratio
compliance and other limitations) to be drawn under our $85.0 million revolving
credit facility that we entered into on January 2, 1998 (the "Credit Facility").
The indentures under which we will issue our Debt Securities permit us and
our subsidiaries to incur substantial amounts of additional indebtedness in the
future. The degree to which we are leveraged could have important consequences
to holders of our securities, including the following:
- our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other purposes may be
limited; and
- our flexibility in planning for or reacting to changes in market
conditions may be limited, causing us to be more vulnerable in the
event of a downturn in our business.
ABILITY TO DEVELOP AND BROADEN PRODUCT CATEGORIES
We have recently broadened our systems and components product line. We also
have recently introduced a limited range of products for residential use and
expect to develop additional types of metal halide lighting systems. The
marketing efforts and strategies for such product extensions are quite different
from those we have used for our historical operations. We may not be successful
in adding new products to our current product categories or in developing new
categories of products. If we are unable to successfully add new products or
develop new product categories, this could adversely affect our financial
results.
DEPENDENCE UPON NEW PRODUCT INTRODUCTIONS
We attribute our historical success, in large part, to the introduction of
new products in each of our product lines to meet the requirements of our
customers. Our future success will depend upon our continued ability to develop
and introduce innovative products, and we may not be able to do so. Even if a
new product is developed for a particular type of lighting fixture or use, the
product may not be commercially successful in the lighting market. In addition,
competitors occasionally have followed our introduction of successful products
with similar product offerings. As a result of these and other factors, we may
not continue to be successful in introducing new products. If we are unable to
successfully introduce new products, this could adversely affect our financial
results.
5
<PAGE> 8
RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH
We have experienced significant growth in recent years. This has placed a
strain on our management, employees, finances and operations. We have set
aggressive growth objectives for our net sales and net income, which would
continue to strain our resources. These objectives may be increasingly difficult
to achieve. To achieve these objectives, we will seek to develop new products
and new uses for our products, seek to expand our distribution capabilities. We
will also seek to acquire and/or invest in related businesses inside and outside
the United States. Any of our efforts in pursuit of these objectives may expose
us to risks that could adversely affect our results of operations and financial
condition. To manage growth effectively, we must continue to implement changes
in many aspects of our business, expand our information systems, increase the
capacity and productivity of our materials, systems and components and
production equipment operations, develop our metal halide systems capability and
hire, develop, train and manage an increasing number of managerial, production
and other employees. We have made and will continue to make certain of our
product line extensions through acquisitions. The success of these acquisitions
will depend on the integration of the acquired operations with our existing
operations. If we are unable to anticipate or manage growth effectively, our
operating results could be adversely affected. Likewise, if we are unable to
successfully integrate acquired operations and manage expenses and risks
associated with integrating the administration and information systems of
acquired companies, our operating results could be adversely affected.
RISKS ASSOCIATED WITH ACQUISITION AND INVESTMENT STRATEGY
In order to implement our business strategy, we will from time-to-time
consider expansion of our products and services through joint ventures,
strategic partnerships and acquisitions of, and/or investments in, other
business entities. We have no agreement or understanding with any prospective
acquisition or investment candidate in respect of a specific transaction, but we
are engaged in preliminary discussions with certain candidates at the date of
this Prospectus. We cannot be certain that any agreement will result from such
discussions or that we will be able to identify, acquire or manage future
acquisition candidates profitably. In addition, we cannot be certain as to the
timing or amount of any return or anticipated benefits that we might realize on
any acquisition or investment.
Acquisitions or investments could require us to commit funds, which could
reduce our future liquidity. Possible future acquisitions or investments by us
could result in our incurring additional debt, contingent liabilities and
amortization expenses related to goodwill and other intangible assets, as well
as writeoffs of unsuccessful acquisitions, any or all of which could materially
adversely affect our financial condition, results of operations, and, therefore,
holders of our securities. We have made several acquisitions since January 1997,
including our largest acquisition to date, Ruud Lighting, Inc. ("Ruud
Lighting"), the effect of which has been to almost double our revenues on a pro
forma basis. There can be no assurance that we will be able to integrate these
acquisitions or to manage our expanded operations effectively. In addition,
since that date we have made substantial investments in entities that we do not
and will not be able to control. We may find it difficult or impossible to
realize cash flows from such investments, or to liquidate such investments,
which could adversely affect the holders of our securities.
RISKS ASSOCIATED WITH INTERNATIONAL BUSINESS; FOREIGN CURRENCIES
We have, and expect to derive in the future, a substantial portion of our
net sales from our international business. Revenues from customers outside of
the United States represent approximately 53% of our net sales for the nine
months ended March 31, 1998. Our international joint ventures and operations and
our export sales are subject to the risks inherent in doing business abroad,
including delays in shipments, adverse fluctuations in currency exchange rates,
increases in import duties and tariffs and changes in foreign regulations and
political climate. We have granted and will grant our joint ventures and
operations in foreign countries rights to use our technology. While we will
attempt to protect our intellectual property rights in these foreign joint
ventures and operations, the laws of many foreign countries do not protect
intellectual property rights to the same extent as the laws of the United
States.
6
<PAGE> 9
Approximately 17% of our net sales in fiscal 1997, on a pro forma basis for
the acquisition of Ruud Lighting, were denominated in currencies other than U.S.
dollars, principally Pounds Sterling, Australian dollars and Canadian dollars. A
weakening of such currencies versus the U.S. dollar could have a material
adverse effect on our business and results of operations and, therefore, holders
of our securities. We currently do not hedge our foreign currency exposure.
PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
We rely primarily on trade secret, trademark and patent laws to protect our
rights to certain aspects of our products, including proprietary manufacturing
processes and technologies, product research, concepts and trademarks. These
rights are important to the success of our products and our competitive
position. The actions that we take to protect our proprietary rights may not be
adequate to prevent imitation of our products, processes or technology. Our
proprietary information may become known to competitors; we may not be able to
effectively protect our rights to unpatented proprietary information; and others
may independently develop substantially equivalent or better products that do
not infringe on our intellectual property rights. Other parties may assert
rights in, and ownership of, our patents and other proprietary rights.
In recent years, we have successfully taken legal action to enjoin
misappropriation of trade secrets by other parties. Any increase in the level of
activities involving misappropriation of our trade secrets or other intellectual
property rights could require us to increase significantly the resources devoted
to such efforts. In addition, an adverse determination in litigation, and
specifically in potential patent litigation with respect to Deposition Sciences,
Inc. (one of our subsidiaries), could subject us to the loss of our rights to a
particular trade secret, trademark or patent, could require us to grant licenses
to third parties, could prevent us from manufacturing, selling or using certain
aspects of our products or could subject us to substantial liability. Any of
these occurrences could have a material adverse effect on our results of
operations.
DEPENDENCE ON KEY PERSONNEL
We are highly dependent on the continued services of Wayne R. Hellman, our
founder, President, Chief Executive Officer and principal shareholder. We and
Mr. Hellman have entered into an employment agreement providing for a term
ending December 31, 1998. We are also highly dependent on the services of Alan
J. Ruud, our Vice Chairman and a principal shareholder. We and Mr. Ruud have
entered into an employment agreement providing for a term ending January 1,
2001. The loss of the services of Mr. Hellman or Mr. Ruud for any reason could
have a material adverse effect on our business and, in turn, to investors in our
securities. We maintain "key man" life insurance with respect to Mr. Hellman, in
the amount of $13 million, and Mr. Ruud, in the amount of $2 million, and in
varying amounts on certain other key members of senior management.
CONTROL BY PRINCIPAL SHAREHOLDERS
Mr. Hellman individually owns approximately 9.4% of the outstanding shares
of our common stock (the "Common Stock") and, individually and in other
capacities, has the power to vote a total of 23.2% of the outstanding shares of
Common Stock. Mr. Ruud individually owns approximately 7.5% of the outstanding
shares of Common Stock and, individually and as a voting trustee, has the power
to vote a total of approximately 14.9% of the outstanding shares of Common
Stock. As a result, although Mr. Hellman and Mr. Ruud have no arrangement or
understanding of any kind with each other as to the voting of their shares,
either Mr. Hellman or Mr. Ruud, or the two of them together, may be able to
significantly influence, and may be able effectively to control, all matters
requiring shareholder approval, including the election of directors (and thereby
the affairs and management of the Company), amendments to our Articles of
Incorporation, mergers, share exchanges, the sale of all or substantially all of
our assets, going-private transactions and other fundamental transactions. The
interests of our stockholders may differ significantly from those of the holders
of our debt securities. In particular, stockholders may be less risk averse than
holders of debt securities in pursuit of growth.
7
<PAGE> 10
ENVIRONMENTAL REGULATION
Our operations are subject to federal, state, local and foreign laws and
regulations governing, among other things, emissions to air, discharge to waters
and the generation, handling, storage, transportation, treatment and disposal of
waste and other materials. We believe that our business, operations and
facilities are being operated in compliance in all material respects with
applicable environmental, health and safety laws and regulations, many of which
provide for substantial fines and criminal sanctions for violations. However,
the operations of manufacturing plants entail risks in these areas, and we could
incur material costs or liabilities. In addition, we could be required to make
potentially significant expenditures to comply with evolving environmental,
health and safety laws, regulations or requirements that may be adopted or
imposed in the future. The imposition of significant environmental liabilities
on us could have a material adverse effect on our business and financial
results.
COMPETITION
We compete with respect to our major products with numerous
well-established producers of materials, components, systems and equipment, many
of which possess greater financial, manufacturing, marketing and distribution
resources than we do. In addition, many of these competitors' products utilize
technology that has been broadly accepted in the marketplace (i.e., incandescent
and fluorescent lighting) and is better known to consumers than is our metal
halide technology. We compete with General Electric Company and its subsidiaries
("General Electric" or "GE"), Philips Electronics N.V. ("Philips") and Siemens
A.G.'s 0SRAM/Sylvania, Inc. subsidiary ("Sylvania") in the sale of metal halide
lamps. We estimate, based on published industry data for 1997, that these three
companies had a combined domestic market share of approximately 85% for metal
halide lamps based on units sold and approximately 95% of the total domestic
lamp market. Accordingly, these companies dominate the lamp industry and exert
significant influence over the channels through which all lamp products,
including ours, are distributed and sold. Our component products and systems
also face strong competition, particularly in the power supply market, in which
our two largest competitors each have a larger market share than we do. Our
competitors may increase their focus on metal halide materials, systems and
components, and expand their product lines to compete with our products. Any
such increase or expansion could have a material adverse effect on our business
and financial results.
RELATIONSHIPS WITH GENERAL ELECTRIC AND OTHER MAJOR LAMP MANUFACTURERS
Notwithstanding the fact that we compete with GE, Philips and Sylvania in
the sale of certain of our products, we purchase a significant quantity of raw
materials and private label lamps from these three companies (aggregating $8.4
million in fiscal 1997, of which $4.0 million was from GE; and $13.0 million in
the nine months ended March 31, 1998, of which $7.2 million was from GE) and
derive significant revenue from sales of our materials, components and systems
to each of these three companies (aggregating $9.3 million in fiscal 1997, of
which $5.1 million was to GE, and $9.6 million in the nine months ended March
31, 1998, of which $4.1 million was to GE). Any significant change in our
relationships with these companies, or in the manner in which these companies
participate in the manufacturing, distribution and sale of metal halide lighting
products, could have a material adverse effect on our business and financial
results and, in turn, holders of our securities.
RESTRICTIONS IMPOSED BY THE CREDIT FACILITY AND THE 8% NOTES INDENTURE
The Credit Facility and the indenture relating to our 8% Senior Notes Due
2008 contain certain restrictive covenants, including, among others:
- covenants limiting our and certain of our subsidiaries' ability to
incur additional indebtedness, pay dividends, make certain
investments, consummate certain asset sales, enter into transactions
with affiliates and incur liens; and
- covenants imposing restrictions on the ability of certain
subsidiaries to pay dividends or make certain payments to us, merge
or consolidate with any other person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of
our assets.
8
<PAGE> 11
Although the covenants are subject to various exceptions which are designed
to allow us and our subsidiaries to operate without undue restraint, such
restrictions could adversely affect our ability to finance our future operations
or capital needs or engage in other business activities which may be in our
interest. In addition, we are required under the Credit Facility to maintain
specified financial ratios. Our growth will depend in part upon our ability to
fund acquisitions and investments, any of which may make it more difficult to
maintain financial ratios. Our ability to comply with such provisions may be
affected by events beyond our control. A breach of any of these covenants or the
inability to comply with the required financial ratios could result in a default
under the Credit Facility that would entitle the lenders to accelerate payment
of the entire debt. Such an event would adversely affect us and holders of our
securities. As a growth company, we may need to amend or replace the Credit
Facility prior to its maturity on December 31, 2000.
YEAR 2000 COMPLIANCE
We use and depend on data processing systems and software to conduct our
business. The data processing systems and software include those developed and
maintained by us as well as purchased software which is run on in-house computer
networks. We have initiated a review and assessment of all hardware and software
to determine whether it will function properly in the year 2000. To date, those
vendors which have been contacted have indicated that their hardware or software
is or will be year 2000 compliant in time frames that meet our requirements. We
presently believe that costs associated with the compliance efforts will not
have a significant impact on our ongoing results of operations although there
can be no assurance in this regard. We also have initiated communications with
our significant suppliers regarding the year 2000 issue. However, there can be
no assurance that the systems of such suppliers, or of customers, will be year
2000 compliant. The failure of suppliers and customers to timely modify their
systems to be year 2000 compliant could have a significant impact on our results
of operations.
9
<PAGE> 12
SELECTED FINANCIAL DATA
The following table contains certain selected consolidated and combined
financial data and is qualified by the more detailed Consolidated Financial
Statements and Notes thereto of the Company incorporated by reference in this
Prospectus. The balance sheet data as of June 30, 1997 and 1996 and the income
statement data for each of the fiscal years ended June 30, 1997, 1996 and 1995
are derived from the audited Consolidated Financial Statements of the Company
incorporated by reference in this Prospectus. The balance sheet data as of June
30, 1995, 1994 and 1993 and the operating statement data for the fiscal years
ended June 30, 1994 and 1993 are derived from the audited Combined Financial
Statements of the predecessor business entities of the Company. The balance
sheet data as of March 31, 1998 and the operating statement data for the nine
months ended March 31, 1998 and 1997 have been derived from the Unaudited
Consolidated Financial Statements of the Company, which have been prepared by
management on the same basis as the audited Consolidated Financial Statements of
the Company and, in the opinion of management, include all adjustments
(consisting of normal recurring accruals) which the Company considers necessary
for a fair presentation of the results for such periods. The selected financial
data should be read in conjunction with the Consolidated Financial Statements
and Notes thereto and Management's Discussion and Analysis of Financial
Condition and Results of Operations incorporated by reference in this
Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
MARCH 31, YEAR ENDED JUNE 30,
-------------------- --------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Net sales............................ $110,891 $ 60,291 $ 85,645 $ 54,636 $ 40,767 $ 30,938 $ 25,455
Costs and expenses:
Cost of sales...................... 66,241 32,299 45,703 29,164 21,899 17,253 17,033
Marketing and selling.............. 16,854 10,299 15,165 8,656 6,381 4,472 2,648
Research and development........... 6,069 3,851 5,097 2,894 1,673 1,006 1,166
General and administrative......... 7,307 5,378 7,133 6,152 5,452 3,928 2,852
Settlement of claims............... -- 771(1) 771(1) 2,732(2) -- -- --
Fiber optic joint venture
formation costs.................. 212 -- 286 -- -- -- --
Purchased in-process research
and development(3)............... 18,220 -- -- -- -- -- --
Special charges(3)................. 15,700 -- -- -- -- -- --
Amortization of intangible
assets........................... 930 195 397 90 55 55 55
Restructuring...................... -- -- -- -- (121) 852 7,152
-------- -------- -------- -------- -------- -------- --------
Income (loss) from operations........ (20,642) 7,498 11,093 4,948 5,428 3,372 (5,451)
Other income (expense):
Interest expense................. (1,649) (749) (1,513) (1,548) (2,107) (2,113) (901)
Interest income.................. 1,079 610 845 232 33 18 18
Loss from equity investment...... (2) -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before income taxes and
extraordinary items................ (21,214) 7,359 10,425 3,632 3,354 1,277 (6,334)
Income taxes......................... 918 2,616 2,869 965 212 71 48
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before extraordinary
items.............................. (22,132) 4,743 7,556 2,667 3,142 1,206 (6,382)
Loss from discontinued operations,
net of income tax benefits......... (7,292) (241) (452) (150) -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before extraordinary
items.............................. (29,424) 4,502 7,104 2,517 3,142 1,206 (6,382)
Extraordinary items, net of
applicable income tax.............. (604)(4) -- -- (135)(5) (253)(6) -- 11,368(7)
-------- -------- -------- -------- -------- -------- --------
Net income (loss).................... $(30,028) $ 4,502 $ 7,104 $ 2,382 $ 2,889 $ 1,206 $ 4,986
======== ======== ======== ======== ======== ======== ========
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
MARCH 31, YEAR ENDED JUNE 30,
-------------------- --------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) per share -- Basic:
Income from continuing
operations..................... $ (1.26) $ .36 $ .57 $ .14 $ .11 $ .14 $ (1.03)
Loss from discontinued
operations..................... (.42) (.02) (.03) (.02) -- -- --
Extraordinary items.............. (.03) -- -- (.01) (.04) -- 1.56
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss) per
share -- Basic................. $ (1.71) $ .34 $ .54 $ .11 $ .07 $ .14 $ .53
======== ======== ======== ======== ======== ======== ========
Shares used for computing
per share amounts -- Basic....... 17,540 13,205 13,269 9,207 7,282 7,282 7,282
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per share -- Diluted:
Income from continuing
operations..................... $ (1.26) $ .35 $ .55 $ .14 $ .10 $ .13 $ (.96)
Loss from discontinued
operations..................... (.42) (.02) (.03) (.02) -- -- --
Extraordinary items.............. (.03) -- -- (.01) (.03) -- 1.45
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss) per share --
Diluted........................ (1.71) .33 $ .52 .11 .07 .13 .49
======== ======== ======== ======== ======== ======== ========
Shares used for computing
per share amounts -- Diluted..... 17,540 13,503 13,558 9,479 7,818 7,818 7,818
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF JUNE 30,
MARCH 31, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
------------ ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments... $ 34,696 $ 8,273 $ 1,682 $ 1,030 $ 663 $ 1,095
Working capital (deficit)........................... 87,646 42,380 17,341 (870) (25) 853
Total assets........................................ 308,699 134,838 56,297 29,402 23,454 23,001
Total long-term debt................................ 117,520 35,908 11,034 8,853 7,821 10,246
Total shareholders' equity (deficit)................ 148,778 66,032 26,594 (1,035) 1,165 (320)
</TABLE>
- ---------------
(1) On March 1, 1996, a former shareholder of Venture Lighting International,
Inc. ("Venture"), asserted a claim against certain officers and directors of
the Company, and subsequently against the Company, seeking $3,600 in damages
relating to the redemption of his Venture shares prior to the Company's
acquisition of its predecessor companies in connection with its formation
(the "Combination"). On August 23, 1996, another former Venture shareholder
filed a similar claim against the Company and such officers and directors
seeking damages of $1,600. On November 29, 1996, the Company and such
officers and directors entered into a settlement of both claims for an
aggregate amount of $475. The pretax charge of $771 in fiscal 1997
represents the $475 settlement plus legal and other directly-related costs,
net of insurance recoveries.
(2) On October 27, 1995, several former Venture shareholders, whose shares were
redeemed in August 1995 (prior to the Combination), asserted a claim against
certain officers of the Company. On November 15, 1995, such officers entered
into a settlement agreement. Since the settlement resulted in a transfer of
personal shares held by such officers, there was no dilution of the
ownership interests of other shareholders of the Company. The settlement was
recorded as a noncash expense and an increase in paid-in capital of the
Company in December 1995.
(3) The nine months ended March 31, 1998, include special charges related to the
purchase price allocation for Deposition Sciences Inc. ("DSI") of $18,220
for purchased in-process research and development. The special charges also
include $18,500 principally relating to the rationalization of the Company's
global power supply operations (a) the discontinuance of certain power
supply products at the Company's power supply facilities, (b) the write-down
of certain intangible and fixed assets and (c) charges related to the
consolidation and rationalization cost of distribution activities and of new
information systems and a reassessment of investments The amounts are
classified in the March 31, 1998 statement of operations as: cost of
sales -- $2,000; purchased in-process research and development -- $18,220;
and, special charges -- $15,700.
(4) In the nine months ended March 31, 1998, the Company incurred an
extraordinary loss on the early extinguishment of debt of $604.
(5) In fiscal 1996, the Company incurred an extraordinary loss on the early
extinguishment of debt of $135.
(6) In fiscal 1995, the Company incurred an extraordinary loss on the early
extinguishment of debt of $253.
(7) Upon emergence of Venture from Chapter 11 reorganization, the Company
recognized an extraordinary gain in fiscal 1993 from the early
extinguishment of certain indebtedness.
11
<PAGE> 14
RATIO OF EARNINGS TO TOTAL FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
MARCH 31, YEAR ENDED JUNE 30,
----------- --------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)................ -- 6.3x 5.1x 2.1x 1.7x 1.5x --
Ratio of earnings to fixed charges and preferred
stock dividends(1)................................. -- 6.3x 5.1x 2.1x 1.7x 1.5x --
</TABLE>
- ---------------
(1) For purposes of calculating the unaudited ratio of earnings to fixed charges
and preferred stock dividends, earnings consist of income (loss) from
continuing operations before income taxes and fixed charges. Fixed charges
consist of interest charges and amortization of debt issuance costs, whether
expensed or capitalized, and that portion of rental expense that is
representative of interest. For the nine months ended March 31, 1998,
earnings were inadequate to cover fixed charge requirements by $21,894,000.
For fiscal 1993, earnings were inadequate to cover fixed charge requirements
by $6,346,000.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus and any supplements, including information incorporated by
reference, discuss future expectations, contain projections of our future
operating results or financial condition or state other forward-looking
information relating to, among other things:
- our potential acquisitions or joint ventures;
- our financing plans;
- trends affecting our financial condition or operating results;
- continued growth of the metal halide lighting market;
- our operating and growth strategies; and
- lawsuits and claims that may affect us.
Known and unknown risks, uncertainties and other factors could cause the actual
results to differ materially from those contemplated by these projections. We
based this forward-looking information on various factors and derived it using
numerous assumptions.
Important factors that may cause actual results to differ include, among
other things, the results of our efforts to implement our business strategy, the
effect of general economic conditions, actions of our competitors and our
ability to respond to those actions, the cost of our capital, which may depend
in part on our portfolio quality, debt ratings, prospects and outlook, changes
in governmental regulation, tax rates and similar matters, the results of
lawsuits, the ability to attract and retain quality employees and other risks
detailed in our other filings with the SEC. We do not promise to update
forward-looking information to reflect actual results or changes in assumptions
or other factors that could affect those statements.
ACQUISITION TERMS
This Prospectus covers securities that we may issue from time to time in
the future on the completion of acquisitions of assets, businesses or
securities.
We intend to issue these securities to acquire assets, businesses, or other
securities. When we identify an acquisition candidate, we will negotiate the
terms of the transaction, including the type and dollar amount of securities we
will issue, with the people who own or control the acquisition candidate. We
also expect the securities to be issued at prices reasonably related to the
market price of the securities either at the time an agreement is entered into
or at or about the time the securities are delivered. We will not pay any
underwriting discounts or commissions, although we may pay finder's fees in
connection with certain acquisitions. Any person
12
<PAGE> 15
receiving such fees may be deemed to be an "underwriter" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"), and any profit on
the resale of securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
SELLING SECURITY HOLDERS
We have prepared this Prospectus for use also by persons who may receive
securities from us covered by the Registration Statement in acquisition
transactions and who may be entitled to offer such securities under
circumstances requiring the use of a prospectus (such persons being referred to
as "Selling Security Holders"). However, no Selling Security Holder will be
authorized to use this Prospectus or the applicable supplement hereto for an
offer of securities without first obtaining our consent. We may consent to the
use of this Prospectus and the applicable supplement by Selling Security Holders
for a limited period of time and subject to limitations and conditions, which
may be varied by agreement between us and the Selling Security Holders. We will
include, in a supplement to this Prospectus, information identifying any such
Selling Security Holder and disclosing such information concerning the Selling
Security Holder and the securities to be sold as may then be required by the
Securities Act and the rules of the SEC.
DESCRIPTION OF DEBT SECURITIES
The Company may issue Debt Securities either separately, or together with,
or upon the conversion of or in exchange for, other Securities. The Debt
Securities are to be either senior unsecured obligations (the "Senior Debt
Securities") or subordinated unsecured obligations of the Company (the
"Subordinated Debt Securities") issued in one or more series under an Indenture
(as supplemented from time to time, the "Indenture") to be entered into between
the Company and one or more U.S. banking institutions (each, a "Trustee") whose
name will be set forth in the applicable Prospectus Supplement. The Indenture
may, but need not, have separate Trustees for Senior and Subordinated Debt
Securities. The form of the Indenture has been filed as an exhibit to the
Registration Statement. The terms of any series of Debt Securities will be those
set forth in the Indenture and such Debt Securities and those made part of the
Indenture by the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The summary of certain provisions of the Indenture and the Debt
Securities set forth below and the summary of certain terms of a particular
series of Debt Securities set forth in the applicable Prospectus Supplement do
not purport to be complete and are subject to and are qualified in their
entirety by reference to all of the provisions of the Indenture, which
provisions of the Indenture (including defined terms) are incorporated by
reference in this Prospectus. As used in this "Description of Debt Securities,"
all references to the "Company" shall mean Advanced Lighting Technologies, Inc.,
excluding, unless the context shall otherwise require, its subsidiaries.
The following description of Debt Securities sets forth certain general
terms and provisions of the series of Debt Securities to which any Prospectus
Supplement may relate. Certain other specific terms of any particular series of
Debt Securities will be described in the applicable Prospectus Supplement. To
the extent that any particular terms of the Debt Securities described in a
Prospectus Supplement differ from any of the terms described herein, then such
terms described herein shall be deemed to have been superseded by such
Prospectus Supplement.
In addition, this Prospectus relates to up to $50,000,000 aggregate
principal amount of the Company's 8% Senior Notes Due 2008 (the "8% Notes")
which may be issued by the Company and is in addition to $100,000,000 aggregate
principal amount of 8% Notes outstanding as of the date hereof. The 8% Notes are
issuable under an indenture dated as of March 18, 1998 between the Company and
The Bank of New York. See "8% Senior Notes Due 2008" below.
GENERAL TERMS OF THE DEBT SECURITIES WHICH WILL BE DESCRIBED IN THE APPLICABLE
PROSPECTUS SUPPLEMENT
The Debt Securities may be issued from time to time in one or more series
of Senior Debt Securities and/or one or more series of Subordinated Debt
Securities. The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that Debt Securities of
any series may be issued
13
<PAGE> 16
thereunder up to an aggregate principal amount which may be authorized from time
to time by the Company. Reference is made to the applicable Prospectus
Supplement relating to the series of Debt Securities offered thereby for
specific terms, including (where applicable):
(1) the title or designation of such Debt Securities;
(2) any limit on the aggregate principal amount of such Debt Securities;
(3) the price or prices (expressed as a percentage of the principal amount
thereof) at which such Debt Securities will be issued;
(4) the date or dates on which the principal of and premium, if any, on
such Debt Securities will be payable, or the method or methods, if
any, by which such date or dates will be determined;
(5) the rate or rates at which such Debt Securities will bear interest, if
any, or the method or methods, if any, by which such rate or rates are
to be determined, the date or dates, if any, from which such interest
will accrue, or the method or methods, if any, by which such date or
dates are to be determined, and whether and under what circumstances
Additional Amounts (as defined below) on such Debt Securities will be
payable, and the basis upon which interest will be calculated if other
than that of a 360-day year of twelve 30-day months;
(6) the dates on which such interest, if any, will be payable and the
record dates, if any, therefor;
(7) the place or places where the principal of, premium, if any, and
interest, if any, or any Additional Amounts on such Debt Securities
will be payable and the place or places where such Debt Securities may
be surrendered for registration of transfer and exchange, if in
addition to or other than The City of New York;
(8) if applicable, the date or dates on which, the period or periods
within which, the price or prices at which and the other terms and
conditions upon which such Debt Securities may be redeemed at the
option of the Company or are subject to repurchase at the option of
the holders;
(9) the terms of any sinking fund or analogous provision;
(10) any addition to, or modification or deletion of, any covenant or Event
of Default with respect to such Debt Securities;
(11) whether any such Debt Securities are to be issuable in registered
("Registered Securities") or bearer ("Bearer Securities") form or both
and, if in bearer form, the terms and conditions relating thereto and
any limitations on issuance of such Bearer Securities (including in
exchange for Registered Securities of the same series);
(12) whether any such Debt Securities will be issued in temporary or
permanent global form and, if so, the identity of the depositary for
such global Debt Security;
(13) whether and under what circumstances the Company will pay Additional
Amounts (as contemplated by the Indenture) on such Debt Securities to
any holder who is a United States Alien (i.e., as such definition may
be modified, any person who, for United States Federal income tax
purposes, is a foreign corporation, a non-resident alien individual, a
non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United
States Federal income tax purposes, a foreign corporation, a
non-resident alien individual or a non-resident alien fiduciary of a
foreign estate or trust) in respect of any tax, assessment or other
governmental charge and, if so, whether the Company will have the
option to redeem such Debt Securities rather than pay such Additional
Amounts;
(14) the person to whom any interest on any Registered Securities of the
series shall be payable, if other than the person in whose name the
Registered Security (or one or more Predecessor Securities (i.e.,
every previous Debt Security evidencing all or a portion of the same
Indebtedness as that evidenced by such particular Debt Security)) is
registered at the close of business on the Regular Record Date for
such interest, the manner in which, or the person to whom, any
interest on any Bearer Security of the
14
<PAGE> 17
series shall be payable, if other than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on a
temporary global Debt Security will be paid if other than in the
manner provided in the Indenture;
(15) the portion of the principal amount of such Debt Securities which
shall be payable upon acceleration thereof if other than the full
principal amount thereof;
(16) the authorized denominations in which such Debt Securities will be
issuable, if other than denominations of $1,000 and any integral
multiple thereof (in the case of Registered Securities) or $5,000 (in
the case of Bearer Securities);
(17) the terms, if any, upon which such Debt Securities may be convertible
into or exchangeable for other Securities;
(18) whether such Debt Securities will be Senior Debt Securities or
Subordinated Debt Securities, and the terms of subordination, if
applicable;
(19) whether the amount of payments of principal of, premium, if any, and
interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method or methods (any such
Debt Securities being hereinafter called "Indexed Securities") and the
manner in which such amounts will be determined; and
(20) any other terms of such Debt Securities.
As used in this Prospectus and any Prospectus Supplement relating to the
offering of any Debt Securities, references to the principal of and premium, if
any, and interest, if any, on such Debt Securities will be deemed to include
mention of the payment of Additional Amounts, if any, required by the terms of
such Debt Securities in such context. "Additional Amounts" means any additional
amounts which are required by the Indenture or by the terms of any Debt
Security, under circumstances specified therein, to be paid by the Company in
respect of certain taxes, assessments or other governmental charges imposed on
the holders of such Debt Security and which are owing to such holders.
Debt Securities may be issued as Original Issue Discount Securities (i.e.,
Debt Securities which provide for declarations of amounts less than the
principal face amount thereof to be due and payable upon acceleration pursuant
to the Indenture) to be sold at a substantial discount below their principal
amount. In the event of an acceleration of the maturity of any Original Issue
Discount Security, the amount payable to the holder thereof upon such
acceleration will be determined in the manner described in the applicable
Prospectus Supplement. Material Federal income tax and other considerations
applicable to Original Issue Discount Securities will be described in the
applicable Prospectus Supplement.
Under the Indenture, the terms of the Debt Securities of any series may
differ and the Company, without the consent of the holders of the Debt
Securities of any series, may reopen a previous series of Debt Securities and
issue additional Debt Securities of such series or establish additional terms of
such series.
REGISTRATION, TRANSFER, PAYMENT AND PAYING AGENT
Unless otherwise indicated in the applicable Prospectus Supplement, each
series of Debt Securities will be issued in registered form only, without
coupons. The Indenture, however, provides that the Company may also issue Debt
Securities in bearer form only, or in both registered and bearer form. Bearer
Securities shall not be offered, sold, resold or delivered in connection with
their original issuance in the United States or to any United States person (as
defined below) other than offices located outside the United States of certain
United States financial institutions. As used herein, "United States person"
means any citizen or resident of the United States, any corporation, partnership
or other entity created or organized in or under the laws of the United States,
any estate the income of which is subject to United States Federal income
taxation regardless of its source, or any trust whose administration is subject
to the primary supervision of a United States court and which has one or more
United States fiduciaries who have the authority to control all substantial
decisions of the trust, and "United States" means, except as may be set forth in
the Prospectus Supplement, the United States of America (including the states
thereof and the District of Columbia), its territories, its possessions and
other areas subject to its
15
<PAGE> 18
jurisdiction. Purchasers of Bearer Securities will be subject to certification
procedures and may be affected by certain limitations under United States tax
laws. Such procedures and limitations will be described in the Prospectus
Supplement relating to the offering of the Bearer Securities.
Unless otherwise indicated in the applicable Prospectus Supplement,
Registered Securities will be issued in denominations of $1,000 or any integral
multiple thereof, and Bearer Securities will be issued in denominations of
$5,000.
Unless otherwise indicated in the applicable Prospectus Supplement, the
principal, premium, if any, and interest, if any, of or on the Debt Securities
will be payable, and Debt Securities may be surrendered for registration of
transfer or exchange, at an office or agency to be maintained by the Company in
the Borough of Manhattan, The City of New York, provided that payments of
interest with respect to any Registered Security may be made at the option of
the Company by check mailed to the address of the person entitled thereto or by
transfer to an account maintained by the payee with a bank located in the United
States. No service charge shall be made for any registration of transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge and any other expenses
that may be imposed in connection therewith.
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on Bearer Securities
will be made, subject to any applicable laws and regulations, at such office or
agency outside the United States as specified in the Prospectus Supplement and
as the Company may designate from time to time. Unless otherwise indicated in
the applicable Prospectus Supplement, payment of interest due on Bearer
Securities on any Interest Payment Date will be made only against surrender of
the coupon relating to such Interest Payment Date.
Unless otherwise indicated in the applicable Prospectus Supplement, no
payment of principal, premium or interest with respect to any Bearer Security
will be made at any office or agency in the United States or by check mailed to
any address in the United States or by transfer to an account maintained with a
bank located in the United States; provided, however, that if amounts owing with
respect to any Bearer Securities shall be payable in U.S. dollars, payment with
respect to any such Bearer Securities may be made at the Corporate Trust Office
of the Trustee or at any office or agency designated by the Company in the
Borough of Manhattan, The City of New York, if (but only if) payment of the full
amount of such principal, premium or interest at all offices outside of the
United States maintained for such purpose by the Company is illegal or
effectively precluded by exchange controls or similar restrictions.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company will not be required to do the following:
(1) issue, register the transfer of or exchange Debt Securities of any
series during a period beginning at the opening of business 15 days
before any selection of Debt Securities of that series of like tenor to
be redeemed and ending at the close of business on the day of that
selection;
(2) register the transfer of or exchange any Registered Security, or
portion thereof, called for redemption, except the unredeemed portion
of any Registered Security being redeemed in part;
(3) exchange any Bearer Security called for redemption, except to exchange
such Bearer Security for a Registered Security of that series and like
tenor that is simultaneously surrendered for redemption; or
(4) issue, register the transfer of or exchange any Debt Security which has
been surrendered for repayment at the option of the holder, except the
portion, if any, of such Debt Security not to be so repaid.
RANKING OF DEBT SECURITIES AND HOLDING COMPANY STRUCTURE
The Senior Debt Securities will be unsecured unsubordinated obligations of
the Company and will rank on a parity in right of payment with all other
unsecured and unsubordinated indebtedness of the Company, including the 8%
Notes. At March 31, 1998, the Company had approximately $119.8 million of total
indebtedness outstanding.
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Although the Senior Debt Securities and the 8% Notes will rank equally
("pari passu") in right of payment with indebtedness outstanding under the
Company's $85.0 million revolving credit facility entered into on January 2,
1998 (as amended, the "Credit Facility"), such indebtedness is secured by
substantially all of the personal property of the Company and each of its North
American subsidiaries and a pledge of stock of each of the Company's principal
subsidiaries. The Senior Debt Securities and the 8% Notes are unsecured and
therefore do not have the benefit of such collateral. If an event of default
occurs under the Credit Facility, the banks party thereto will have preferential
claims to those assets and may foreclose upon such collateral to the exclusion
of the holders of the Senior Debt Securities and the 8% Notes, notwithstanding
the existence of an event of default with respect to the Senior Debt Securities
and the 8% Notes, respectively. Accordingly, in such an event, the Company's
assets would first be used to repay in full amounts outstanding under the Credit
Facility, resulting in virtually all of the Company's assets being unavailable
to satisfy the claims of holders of the Senior Debt Securities and the 8% Notes
until the indebtedness under the Credit Facility is repaid in full. Any
remaining unpaid claims of creditors under the Credit Facility will rank equally
("pari passu") with the Senior Debt Securities and the 8% Notes and will be
entitled to share in any of the Company's remaining assets.
The Company conducts substantially all of its operations through
subsidiaries and substantially all of its assets consist of the capital stock of
its subsidiaries. Accordingly, the Senior Debt Securities and the 8% Notes will
be effectively subordinated to liabilities of the Company's subsidiaries,
including trade payables. At March 31, 1998, the total liabilities of the
Company's subsidiaries, excluding intercompany debt but including trade
payables, were approximately $40.8 million. At March 31, 1998, the Company and
its subsidiaries would also have had $77.7 million available (subject to
financial ratio compliance and other limitations) to be drawn under the Credit
Facility, which is secured as described above.
The Company's rights and the rights of its creditors, including holders of
the Senior Debt Securities and the 8% Notes, to participate in the assets of any
subsidiary upon such subsidiary's liquidation or recapitalization will be
subject, in the case of any subsidiary, to the prior claims of such subsidiary's
creditors, except to the extent that the Company itself may be a creditor with
recognized claims against the subsidiary, in which case the claims of the
Company would still be effectively subordinated to any mortgage or other liens
on the assets of such subsidiary and would be subordinate to any indebtedness of
such subsidiary senior to that held by the Company. Accordingly, there can be no
assurance that, after providing for all prior claims and all equal ("pari
passu") claims, there would be sufficient assets available to satisfy the
obligations of the Company under the Senior Debt Securities and the 8% Notes.
Because the Company conducts substantially all of its operations through
its subsidiaries, the Company is and will be dependent upon the distribution of
the earnings of its subsidiaries to service its debt obligations, including the
Senior Debt Securities and the 8% Notes. The Company's subsidiaries are separate
and distinct legal entities and have no obligation, contingent or otherwise, to
pay any amounts due on the Senior Debt Securities and the 8% Notes or to make
any funds available therefor. There are currently no material restrictions on
the ability of subsidiaries to transfer funds to the Company in the form of
dividends, loans, or advances.
The Subordinated Debt Securities will be unsecured obligations of the
Company and will be subordinated in right of payment to all existing and future
Senior Indebtedness (as defined in the applicable Prospectus Supplement) of the
Company. See "--Subordination of Subordinated Debt Securities" immediately
following this paragraph.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The applicable Prospectus Supplement will set forth the extent to which
Subordinated Debt Securities of or within a particular series are subordinated
to other indebtedness.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Debt Securities may be issued in either
registered or bearer form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for individual
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certificates evidencing Debt Securities in definitive form represented thereby,
a global Debt Security may not be transferred except as a whole by the
Depositary for such global Debt Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a
Global Debt Security, that entity will be the sole holder of the Debt Securities
represented by the Global Debt Security. The Trustee and the Company are only
required to treat the Depositary or its nominee as the legal owner of those Debt
Securities for all purposes under the Indenture. Each beneficial owner of Debt
Securities represented by a Global Debt Security will not be entitled to receive
physical delivery of certificated securities, will not be considered the holder
of those securities for any purpose under the Indenture, and will not be able to
transfer or exchange the Global Debt Securities, except in the limited
circumstances as may be described in this Prospectus or the supplement. As a
result, each beneficial owner may have to rely on the procedures of the
Depositary to exercise any rights of a holder under the Indenture, including
rights upon an Event of Default. In addition, if the beneficial owner is not a
direct or indirect participant in the Depositary (each a "participant"), the
beneficial owner must rely on the procedures of the participant through which it
owns its beneficial interest in the Global Debt Security.
The specific terms of the depositary arrangement with respect to a series
of global Debt Securities and certain limitations and restrictions relating to a
series of global Bearer Securities will be described in the Prospectus
Supplement relating to such series.
OUTSTANDING DEBT SECURITIES
In determining whether the holders of the requisite principal amount of
outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent or waiver under the Indenture:
(1) the portion of the principal amount of an Original Issue Discount
Security that shall be deemed to be outstanding for such purposes shall
be that portion of the principal amount thereof that could be declared
to be due and payable upon a declaration of acceleration thereof
pursuant to the terms of such Original Issue Discount Security as of
the date of such determination,
(2) the principal amount of any Indexed Security that shall be deemed to be
outstanding for such purpose shall be the principal face amount of such
Indexed Security determined on the date of its original issuance and
(3) any Debt Security owned by the Company or any obligor on such Debt
Security or any Affiliate of the Company or such other obligor shall be
deemed not to be outstanding.
REDEMPTION AND REPURCHASE
The Debt Securities of any series may be redeemable at the option of the
Company, may be subject to mandatory redemption pursuant to a sinking fund or
otherwise, or may be subject to repurchase by the Company at the option of the
holders, in each case upon the terms, at the times and at the prices set forth
in the applicable Prospectus Supplement.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are convertible
into or exchangeable for Common Stock, Preferred Stock, Depositary Shares or
other Debt Securities will be set forth in the applicable Prospectus Supplement.
Such terms may include provisions for conversion or exchange, either mandatory,
at the option of the holders or at the option of the Company.
COVENANTS OF THE COMPANY
Reference is made to the applicable Prospectus Supplement for information
with respect to covenants specific to a particular series of Debt Securities. If
any such covenants are described, the Prospectus Supplement will also state
whether the "covenant defeasance" provisions described below also apply.
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EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, an
Event of Default with respect to the Debt Securities of any series is defined in
the Indenture as being:
(1) default for 30 days in payment of any interest with respect to any Debt
Security of such series;
(2) default in payment of principal or any premium with respect to any Debt
Security of such series when due upon maturity, redemption or
otherwise;
(3) default in making any sinking fund payment or payment under any
analogous provision when due with respect to any Debt Security of such
series;
(4) default by the Company in the performance, or breach, of any other
covenant or warranty in the Indenture (other than a covenant or
warranty included therein solely for the benefit of one or more series
of Debt Securities other than that series) or any Debt Security of such
series which shall not have been remedied for a period of 90 days after
notice to the Company by the Trustee or the holders of not less than
25% in aggregate principal amount of the Debt Securities of such series
then outstanding;
(5) acceleration of the maturity of any single outstanding issue of
Indebtedness of the Company with an outstanding aggregate principal
amount in excess of $10,000,000 (including an acceleration under the
Indenture with respect to Debt Securities of any other series), as a
result of an event of default thereunder, which acceleration is not
annulled or which Indebtedness is not discharged within 30 days
thereafter;
(6) the Company shall fail within 30 days to pay, bond or otherwise
discharge any uninsured judgement or court order for the payment of
money in excess of $10,000,000, which is not stayed on appeal or is not
otherwise being appropriately contested in good faith;
(7) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(8) any other Event of Default established for the Debt Securities of such
series. No Event of Default with respect to any particular series of
Debt Securities necessarily constitutes an Event of Default with
respect to any other series of Debt Securities.
The Indenture provides that the Trustee thereunder may withhold notice to the
holders of the Debt Securities of any series of the occurrence of a default with
respect to the Debt Securities of such series (except a default in payment of
principal, premium, if any, interest, if any, or sinking fund payments, if any)
if the Trustee considers it in the interest of the holders to do so.
The Indenture provides that if an Event of Default with respect to any
series of Debt Securities issued thereunder shall have occurred and be
continuing, either the Trustee or the holders of at least 25% in principal
amount of the Debt Securities of such series then outstanding may declare the
principal amount (or if any Debt Securities of such series are Original Issue
Discount Securities, such lesser amount as may be specified in the terms
thereof) of all the Debt Securities of such series to be due and payable
immediately, but upon certain conditions such declaration and its consequences
may be rescinded and annulled by the holders of a majority in principal amount
of the Debt Securities of such series then outstanding.
Subject to the provisions of the Trust Indenture Act requiring the Trustee,
during an Event of Default under the Indenture, to act with the requisite
standard of care, a Trustee is under no obligation to exercise any of its rights
or powers under the Indenture at the request or direction of any of the holders
of Debt Securities of any series unless such holders have offered the Trustee
reasonable indemnity. Subject to the foregoing, holders of a majority in
principal amount of the then outstanding Debt Securities of any series issued
under the Indenture shall have the right, subject to certain limitations, to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee under the Indenture with respect to such series. The
Indenture requires the annual filing by the Company with the Trustee of a
certificate as to whether or not the Company is in default under the terms of
the Indenture.
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Notwithstanding any other provision of the Indenture, the holder of any
Debt Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, and interest, if any,
on such Debt Security on the respective due dates therefor (as the same may be
extended in accordance with the terms of such Debt Security) and to institute
suit for enforcement of any such payment, and such right shall not be impaired
without the consent of such holder.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Upon the direction of the Company, the Indenture shall cease to be of
further effect with respect to any series of Debt Securities issued thereunder
specified by the Company (subject to the survival of certain provisions thereof,
including the obligation to pay Additional Amounts to the extent described
below) when (i) either (A) all outstanding Debt Securities of such series and,
in the case of Bearer Securities, all coupons appertaining thereto, have been
delivered to the Trustee for cancellation (subject to certain exceptions) or (B)
all Debt Securities of such series and, if applicable, any coupons appertaining
thereto, have become due and payable or will become due and payable at their
stated maturity within one year or are to be called for redemption within one
year and the Company has deposited with the Trustee, in trust, funds in U.S.
dollars in an amount sufficient to pay the entire indebtedness on such Debt
Securities in respect of principal (and premium, if any) and interest to the
date of such deposit (if such Debt Securities have become due and payable) or to
the Maturity thereof, as the case may be, (ii) the Company has paid all other
sums payable under the Indenture with respect to the Debt Securities of such
series, and (iii) certain other conditions are met. If the Debt Securities of
any such series provide for the payment of Additional Amounts, the Company will
remain obligated, following such deposit, to pay Additional Amounts on such Debt
Securities to the extent that the amount thereof exceeds the amount deposited in
respect of such Additional Amounts as aforesaid.
If provided in the applicable Prospectus Supplement, the Company may elect
with respect to any series of Debt Securities either to defease and be
discharged from (a) any and all obligations with respect to such Debt Securities
(except for, among other things, the obligation to pay Additional Amounts, if
any, upon the occurrence of certain events of taxation, assessment or
governmental charge with respect to payments on such Debt Securities to the
extent that the amount thereof exceeds the amount deposited in respect of such
Additional Amounts as provided below, and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities, to hold moneys for payment in trust, and, if
applicable, to exchange or convert such Debt Securities into other securities in
accordance with their terms) ("defeasance"), or (b) certain restrictive
covenants, if any, in the Indenture and, if indicated in the applicable
Prospectus Supplement, its obligations with respect to any other covenant
applicable to the Debt Securities of such series, and any omission to comply
with such obligations shall not constitute a default or an Event of Default with
respect to the Debt Securities of such series ("covenant defeasance"), in either
case upon the irrevocable deposit with the Trustee (or other qualifying
trustee), in trust for such purpose, of an amount, in U.S. dollars at Stated
Maturity, and/or Government Obligations (as defined in the Indenture) which
through the payment of principal and interest in accordance with their terms
will provide money, in an amount sufficient to pay the principal of and any
premium and any interest on (and, to the extent that (x) the Debt Securities of
such series provide for the payment of Additional Amounts and (y) the amount of
any such Additional Amounts is at the time of deposit reasonably determinable by
the Company (in the exercise of its sole discretion), any such Additional
Amounts with respect to) such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor or the
applicable redemption date, as the case may be.
Such a trust may only be established if, among other things, (i) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the Indenture or any other material
agreement or instrument to which the Company is a party to or by which it is
bound, (ii) no Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to the Debt Securities to be
defeased shall have occurred and be continuing on the date of establishment of
such a trust and, with respect to defeasance only, at any time during the period
ending on the 123rd day after such date and (iii) the Company has delivered to
the Trustee an Opinion of Counsel (as specified in the Indenture) to the effect
that the holders of such Debt Securities will not recognize income, gain or loss
for U.S. federal income tax
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purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a letter ruling of the Internal
Revenue Service received by the Company, a Revenue Ruling published by the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture.
In the event the Company effects covenant defeasance with respect to any
Debt Securities, and such Debt Securities are declared due and payable because
of the occurrence of any Event of Default or with respect to any other covenant
as to which there has been covenant defeasance, the amount of monies and/or
Government Obligations deposited with the Trustee to effect such covenant
defeasance may not be sufficient to pay amounts due on such Debt Securities at
the time of any acceleration resulting from such Event of Default. However, the
Company would remain liable to make payment of such amounts due at the time of
acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting or restricting such defeasance or covenant defeasance with
respect to the Debt Securities of a particular series.
MODIFICATION, WAIVERS AND MEETINGS
The Indenture contains provisions permitting the Company and the Trustee
thereunder, with the consent of the holders of a majority in principal amount of
the outstanding Debt Securities of each series issued under the Indenture and
affected by a modification or amendment, to modify or amend any of the
provisions of the Indenture or of the Debt Securities of such series or the
rights of the holders of the Debt Securities of such series under the Indenture,
provided that no such modification or amendment shall, among other things, (i)
change the stated maturity of the principal of, or premium, if any, or any
installment of interest, if any, on any Debt Securities issued under the
Indenture or reduce the principal amount thereof or any redemption premium
thereon, or reduce the rate of interest thereon, or reduce the amount of
principal of any Original Issue Discount Securities that would be due and
payable upon an acceleration of the maturity thereof, or adversely affect any
right of repayment at the option of any holder, or change any place where, or
the Currency in which, any Debt Securities issued under the Indenture are
payable, or impair the holder's right to institute suit to enforce the payment
of any such Debt Securities on or after the stated maturity thereof, or make any
change that materially adversely affects the right, if any, to convert or
exchange such Debt Securities for other securities in accordance with their
terms, or (ii) reduce the aforesaid percentage of Debt Securities of any series
issued under the Indenture, the consent of the holders of which is required for
any such modification or amendment or the consent of whose holders is required
for any waiver (of compliance with certain provisions of the Indenture or
certain defaults thereunder and their consequences) or reduce the requirements
for a quorum or voting at a meeting of holders of such Debt Securities or (iii)
solely in the case of any Subordinated Debt Securities, modify any of the
provisions relating to subordination of such Subordinated Debt Securities or the
definition of Senior Indebtedness in a manner adverse to the holders of the
Subordinated Debt Securities, without in each such case obtaining the consent of
the holder of each outstanding Debt Security issued under the Indenture so
affected.
The Indenture also contains provisions permitting the Company and the
Trustee, without the consent of the holders of any Debt Securities issued
thereunder, to modify or amend the Indenture in order, among other things, (a)
to add to the Events of Default or the covenants of the Company for the benefit
of the holders of all or any series of Debt Securities issued under the
Indenture; (b) to add or change any provisions of the Indenture to facilitate
the issuance of Bearer Securities; (c) to establish the form or terms of Debt
Securities of any series and any related coupons; (d) to cure any ambiguity or
correct or supplement any provision therein which may be inconsistent with other
provisions therein, or to make any other provisions with respect to matters or
questions arising under the Indenture which shall not materially and adversely
affect the interests of the holders of any series of Debt Securities issued
thereunder in any material respect; (e) to amend or supplement any provision
contained in the Indenture, provided that such amendment or supplement does not
apply to any outstanding Debt Securities issued prior to the date of such
amendment or supplement and entitled to the benefits of such provision; or (f)
to amend or supplement any provision therein or in any supplemental indenture,
provided that no such amendment or supplement shall materially and adversely
affect the interests of the holders of any Debt Securities then outstanding.
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The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of any series may waive compliance by the Company with certain
restrictive provisions of the Indenture to the extent described in the
Prospectus Supplement. The holders of a majority in aggregate principal amount
of the outstanding Debt Securities of any series may, on behalf of all holders
of Debt Securities of that series, waive any past default under the Indenture
with respect to Debt Securities of that series and its consequences, except a
default in the payment of the principal of, or premium, if any, or interest, if
any, on any Debt Securities of such series or in respect of a covenant or
provision which cannot be modified or amended without the consent of each holder
of the outstanding Debt Securities of such series so affected.
The Indenture contains provisions for convening meetings of the holders of
Debt Securities of a series issued thereunder. A meeting may be called at any
time by the Trustee, and also, upon request, by the Company or the holders of at
least 10% in principal amount of the outstanding Debt Securities of such series,
in any such case upon notice given in accordance with the provisions of the
Indenture. Except for any consent which must be given by the holder of each
outstanding Debt Security affected thereby, as described above, any resolution
presented at a meeting or adjourned meeting duly reconvened at which a quorum
(as described below) is present may be adopted by the affirmative vote of the
holders of a majority in principal amount of the outstanding Debt Securities of
that series. However, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the holders of a specified percentage, which is less
than a majority in principal amount of the outstanding Debt Securities of a
series, may be adopted at a meeting or adjourned meeting duly reconvened at
which a quorum is present by the affirmative vote of the holders of such
specified percentage in principal amount of the outstanding Debt Securities of
that series. Any resolution passed or decision taken at any meeting of holders
of Debt Securities of any series duly held in accordance with the Indenture will
be binding on all holders of Debt Securities of that series and the related
coupons. The quorum at any meeting called to adopt a resolution, and at any
reconvened meeting, will be persons holding or representing a majority in
principal amount of the outstanding Debt Securities of a series, subject to
certain exceptions.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Trust Indenture Act contains limitations on the rights of a trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claims, as security or otherwise. The Trustee is permitted to engage in
other transactions with the Company and its subsidiaries from time to time,
provided that if the Trustee acquires any conflicting interest it must eliminate
such conflict upon the occurrence of an Event of Default under the Indenture, or
else resign.
8% SENIOR NOTES DUE 2008
General. The Company may issue up to an additional $50,000,000 aggregate
principal amount of its 8% Senior Notes Due 2008 as of the date hereof. The
additional 8% Notes are issuable under an indenture dated as of March 18, 1998
(the "8% Notes Indenture") between the Company and The Bank of New York (the "8%
Notes Trustee"). The 8% Notes Indenture has been incorporated by reference as an
exhibit to the Registration Statement.
Interest on the 8% Notes will be payable semiannually in cash on March 15
and September 15 of each year.
The 8% Notes will not be subject to any sinking fund.
Ranking. The additional 8% Notes, if issued, will be unsecured senior
indebtedness and will rank equally ("pari passu") with existing and future
unsubordinated unsecured indebtedness, including the Senior Debt Securities and
outstanding 8% Notes, and senior in right of payment to all subordinated
indebtedness of the Company. The 8% Notes will be effectively subordinated to
all secured indebtedness of the Company and its
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subsidiaries with respect to the collateral securing such indebtedness, and the
8% Notes will be effectively subordinated to all liabilities of the Company's
subsidiaries, including trade payables. See "Ranking of Debt Securities and
Holding Company Structure" above.
Certain Covenants. The 8% Notes Indenture contains certain covenants that,
among other things, limit the ability of the Company and certain of its
subsidiaries to incur indebtedness, pay dividends, prepay subordinated
indebtedness, repurchase capital stock, make investments, create liens, engage
in transactions with stockholders and affiliates, sell assets and, with respect
to the Company, engage in mergers and consolidations. However, these limitations
are subject to a number of important qualifications and exceptions as set forth
in the 8% Notes Indenture.
Optional Redemption. The 8% Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after March 15, 2003 at an
initial redemption price of 104% of their principal amount. This redemption
price will decline ratably on each subsequent annual anniversary such that any
8% Notes redeemed on or after March 15, 2006 will be redeemed at 100% of their
principal amount.
In addition, at any time and from time to time prior to March 15, 2001, the
Company may redeem up to 35% of the aggregate principal amount of the 8% Notes
at a redemption price of 108% of their principal amount. Any such redemption
prior to March 15, 2001 will be subject to the following conditions:
- the redemption must be accomplished with the proceeds of one or more
offerings by the Company of its common stock which has been registered
under the Securities Act;
- at least 65% of the aggregate principal amount of the 8% Notes must
remain outstanding after the redemption; and
- notice of any such redemption must be mailed within 60 days of the
offering by the Company of its common stock.
Change of Control. Upon the occurrence of certain events deemed to
constitute a change of control of the Company, the Company will be required to
make an offer to purchase the 8% Notes at a purchase price equal to 101% of
their principal amount, plus accrued interest. There can be no assurance that
the Company will have sufficient funds available at such time to fulfill this
obligation.
Events of Default. The following are Events of Default with respect to the
8% Notes:
(1) principal not paid when due;
(2) failure to pay interest for 30 days;
(3) default in the performance of certain covenants relating to mergers,
consolidations and transfers of assets, or the failure to make or
consummate an offer to repurchase the 8% Notes in accordance with the
covenant limiting asset sales or the covenant requiring the Company to
offer to repurchase the 8% Notes in the event of a change of control;
(4) default in the performance or breach of any other covenants for a
period of 30 days;
(5) acceleration of in excess of $10 million in principal amount of other
debt not rescinded within 30 days after notice or the failure to make a
principal payment at maturity of any such debt, not made, waived or
extended within such 30 day period;
(6) failure by the Company or certain of its subsidiaries to pay within 30
days any uninsured judgement or court order for the payment of money in
excess of $10 million; and
(7) certain events in bankruptcy, insolvency or reorganization of the
Company or certain of its subsidiaries.
The 8% Notes Indenture requires the Company to provide periodic and other
reports containing evidence of the Company's compliance with the terms of the 8%
Notes Indenture.
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Remedies. The 8% Notes Trustee or holders of 25% of the principal amount of
the 8% Notes outstanding may declare principal immediately payable, subject to
rescission by a majority in principal amount of the holders, except that upon
the occurrence of certain events in bankruptcy, insolvency or reorganization as
described above, principal shall become immediately due and payable without any
act by the 8% Notes Trustee or any holder.
If an event of default occurs and is continuing, the 8% Notes Trustee may
reimburse itself for its reasonable compensation and expenses incurred out of
any sums held or received by it before making any payments to the holders of the
8% Notes.
The right of any holders of the 8% Notes to commence an action for any
remedy is subject to certain conditions, including the requirement that the
holders of at least 25% of the 8% Notes request that the 8% Notes Trustee take
such action, and offer reasonable indemnity to the 8% Notes Trustee against its
liabilities incurred in doing so.
Modification and Waiver. Modifications and amendments of the 8% Notes
Indenture may be made by the Company and the 8% Notes Trustee with the consent
of the holders of not less than a majority in aggregate principal amount of the
outstanding 8% Notes; provided, however, that no such modification or amendment
may, without the consent of each holder affected thereby:
(1) change the maturity of the principal of, or any installment of interest
on, any 8% Note,
(2) reduce the principal amount of, or premium, if any, or interest on, any
8% Note,
(3) change the place or currency of payment of principal of, or premium, if
any, or interest on, any 8% Note,
(4) impair the right to institute suit for the enforcement of any payment
on or after the maturity date of the 8% Notes (or, in the case of a
redemption, on or after the redemption date) of any 8% Note,
(5) reduce the above-stated percentage of outstanding 8% Notes the consent
of whose holders is necessary to modify or amend the 8% Notes
Indenture,
(6) waive a default in the payment of principal of, premium, if any, or
interest on the 8% Notes or
(7) reduce the percentage or aggregate principal amount of outstanding 8%
Notes the consent of whose holders is necessary for waiver of
compliance with certain provisions of the 8% Notes Indenture or for
waiver of certain defaults.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK AND AMOUNT OUTSTANDING
The Company's authorized capital stock consists of 80.0 million shares of
Common Stock having a par value of $.001 per share and 1.0 million shares of
Preferred Stock having a par value of $.001 per share. As of May 6, 1998,
20,121,153 shares of Common Stock and no shares of Preferred Stock were issued
and outstanding.
COMMON STOCK
Reference is made to the applicable Prospectus Supplement relating to
Common Stock offered thereby for the terms relevant thereto, including the
number of shares offered and the initial public offering price.
Each holder of Common Stock is entitled to one vote for each share held.
Shareholders do not have the right to cumulate their votes in elections of
directors. Accordingly, holders of a majority of the issued and outstanding
Common Stock will have the right to elect the Company's directors and otherwise
control the affairs of the Company.
Holders of Common Stock are entitled to dividends on a pro rata basis upon
declaration of dividends by the Board of Directors. Dividends are payable only
out of unreserved and unrestricted surplus that is legally available for the
payment of dividends. The Board of Directors is not required to declare
dividends, and it currently expects
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to retain any funds generated from operations to finance the development of the
Company's business. The payment of dividends in the future will depend upon
earnings, capital needs, and other factors.
Upon a liquidation of the Company, holders of Common Stock will be entitled
to a pro rata distribution of the assets of the Company, after payment of all
amounts owed to the Company's creditors, and subject to any preferential amount
payable to holders of Preferred Stock of the Company, if any.
PREFERRED STOCK
The Company's Articles of Incorporation permit the Company's Board of
Directors to issue shares of Preferred Stock in one or more series, and to fix
the relative rights, preferences, and limitations of each series. Among such
rights, preferences, and limitations are dividend rights and rates, provisions
for redemption, rights upon liquidation, conversion privileges, and certain
voting powers.
The purpose for authorizing the Board of Directors to issue and to
designate the features of Preferred Stock is, in part, to eliminate delays
associated with a shareholder vote to authorize the issuance of Preferred Stock.
The issuance of Preferred Stock, for example in connection with a shareholder
rights plan, could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring, a majority of the
outstanding capital stock of the Company.
The terms of any particular series of Preferred Stock, including Preferred
Stock represented by Depositary Shares, will be described in the applicable
Prospectus Supplement.
CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION
The Company's Articles of Incorporation provide for a classified Board of
Directors. The directors are divided into three classes. The directors are
elected for three-year terms, which are staggered so that the terms of one-third
of the directors expire each year. The Articles of Incorporation permit
shareholders to remove directors only for cause at a meeting by the affirmative
vote of at least a majority of the outstanding shares of Common Stock. Directors
of the Company may remove directors with or without cause.
The above-described provisions of the Company's Articles of Incorporation
may have certain anti-takeover effects. Such provisions, in addition to the
provisions described below and the possible issuance of preferred stock
discussed above, may make it more difficult for other persons, without the
approval of the Company's Board of Directors, to make a tender offer or
acquisitions of substantial amounts of the Common Stock or to launch other
takeover attempts that a shareholder might consider to be in such shareholder's
best interests.
CERTAIN PROVISIONS OF OHIO LAW
The Company is subject to several anti-takeover provisions under Ohio law
that apply to Ohio public corporations, unless the Company elects to opt out of
these provisions in its Articles of Incorporation or Regulations (by-laws). The
Company has not opted out of these takeover provisions.
Under Ohio's Control Share Acquisition Act (the "Acquisition Act"), any
"control share acquisition" of an Ohio public corporation shall be made only
with the prior authorization of the shareholders of the corporation in
accordance with the provisions of the Acquisition Act. A "control share
acquisition" is defined under the Acquisition Act to mean the acquisition,
directly or indirectly, by any person of shares of a public corporation that,
when added to all other shares of the corporation such person owns, would
entitle such person, directly or indirectly, to exercise voting power in the
election of directors within the following ranges: more than 20%, more than 33%
and a majority.
The Acquisition Act also requires that the acquiring person deliver an
"acquiring person's statement" to the Ohio public corporation. The Ohio public
corporation must then convene a special meeting of its shareholders to vote upon
the proposed acquisition within 50 days after receipt of such acquiring person's
statement, unless the acquiring person agrees to a later date.
The Acquisition Act further specifies that the shareholders of the
corporation must approve the proposed control share acquisition by certain
percentages at a special meeting of shareholders at which a quorum is present.
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In order to comply with the Acquisition Act, the acquiring person may only
acquire the stock of the Ohio public corporation upon the affirmative vote of:
(i) a majority of the voting power of the corporation that is represented in
person or by proxy at the special meeting and (ii) a majority of the voting
power of the corporation that is represented in person or by proxy at the
special meeting, excluding those shares of the corporation deemed to be
"interested shares" for purposes of the Act.
"Interested shares" are defined under the Act to mean shares in respect of
which the voting power is controlled by any of the following persons: (i) an
acquiring person; (ii) any officer of the Ohio public corporation; and (iii) any
employee who is also a director of the corporation. "Interested shares" also
include shares of the corporation that are acquired by any person after the date
of the first public disclosure of the proposed acquisition and the date of the
special meeting, if either (x) the aggregate consideration paid by such person,
and any person acting in concert with him, for such shares of the Ohio public
corporation exceeds $250,000 or (y) the number of shares acquired by such
person, and any person acting in concert with him, exceeds one-half of one
percent of the outstanding shares of the corporation.
Section 1701.13 of the Ohio Revised Code, inter alia, empowers an Ohio
corporation to indemnify any director, officer, employee or agent of the
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Similar indemnity is authorized for such person against expenses (including
attorneys' fees) actually and reasonably incurred in connection therewith.
In addition, Section 1701.59 eliminates the personal liability in damages
of a director for violations of the director's fiduciary duty, except if it is
proved by clear and convincing evidence that his action or failure to act
involved acts or omissions undertaken with deliberate intent to cause injury to
the corporation or with reckless disregard for the best interests of the
corporation. The Company has not opted out of Section 1701.59 of the Ohio
Revised Code. This statute does not affect the liability of directors pursuant
to Section 1701.95 of the Ohio Revised Code (providing for liability of
directors for unlawful payment of dividends or unlawful distribution of assets)
nor does it affect the liability of the directors under Federal securities laws.
The Company is also subject to Ohio's Merger Moratorium Act. The Merger
Moratorium Act generally prohibits a wide range of business combinations and
other transactions (including mergers, consolidations, asset sales, loans,
disproportionate distributions of property and disproportionate issuances or
transfers of shares or rights to acquire shares) between an Ohio corporation and
a person that owns, alone or with other related parties, shares representing at
least 10% of the voting power of the corporation (an "Interested Shareholder")
for a period of three years after such person becomes an Interested Shareholder,
unless, prior to the date that the Interested Shareholder became such, the
directors approve either the transaction or the acquisition of the corporation's
shares that resulted in the person becoming an Interested Shareholder. Following
the three-year moratorium period, the corporation may engage in covered
transactions with an Interested Shareholder only if, among other things, (i) the
transaction receives the approval of the holders of two-thirds of all the voting
shares and the approval of the holders of a majority of the voting shares held
by persons other than an Interested Shareholder or (ii) the remaining
shareholders receive an amount for their shares equal to the higher of the
highest amount paid in the past by the Interested Shareholder for the
corporation's shares or the amount that would be due the shareholders if the
corporation were to dissolve.
Contemporaneous with the adoption of Ohio's Merger Moratorium Act, Ohio
enacted a so-called "green mailer disgorgement" statute which provides that a
person who announces a control bid must disgorge profits realized by that person
upon the sale of any equity securities within 18 months of the announcement of
the control bid.
The Company is also subject to Ohio's Control Bid Statute. Ohio's Control
Bid Statute provides that no offeror may make a "control bid" pursuant to a
tender offer or a request or invitation for tenders unless, on the day the
offeror commences a control bid, it files with the Ohio Division of Securities
(the "Securities Division") and the target company certain information in
respect of the offeror, his ownership of the corporation's shares and his plans
for the corporation (including, among other things, plans to terminate employee
benefit plans, close any
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plant or facility or reduce the work force). If the Securities Division
determines that the offeror's disclosures are inadequate, it must act within
three calendar days from the date of the offeror's filing to issue a suspension
order. If a bid is suspended, a hearing must be held within 10 calendar days
from the date of the Securities Division's suspension order. The hearing
procedure must be completed no later than 16 calendar days after the date on
which the suspension was imposed.
A "control bid" under Ohio's Control Bid Statute is defined as the purchase
of or an offer to purchase any equity security of an issuer with certain
connections to Ohio from a resident of Ohio if (i) after the purchase of such
security, the offeror would directly or indirectly be the beneficial owner of
more than 10% of any class of the issued and outstanding equity securities of
the issuer or (ii) the offeror is the issuer, there is a pending control bid by
a person other than the issuer and the number of issued and outstanding shares
of the corporation will be reduced by more than 10%.
Finally, Ohio law provides for the right of the Board of Directors to
consider the interests of various constituencies, including employees,
customers, suppliers and creditors of the Company, as well as the communities in
which the Company is located, in addition to the interest of the Company and its
shareholders, in discharging their duties in determining what is in the
Company's best interests.
The above-described provisions of Ohio law may have certain anti-takeover
effects. Those provisions make it more difficult for other persons, without the
approval of the Company's Board of Directors, to make a tender offer or
acquisitions of substantial amounts of the Common Stock or to launch other
takeover attempts that a shareholder might consider in such shareholder's best
interests.
TRANSFER AGENT
American Stock Transfer & Trust Company, New York, New York, acts as
transfer agent for the Company's Common Stock.
The transfer agent for any series of Preferred Stock will be named in the
applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
The Company may offer Depositary Shares (either separately or together with
other Securities) representing fractional interests in shares of Preferred Stock
of any series. In connection with the issuance of any Depositary Shares, the
Company will enter into a deposit agreement (a "Deposit Agreement") with a bank
or trust company, as depositary (the "Preferred Stock Depositary"), which will
be named in the applicable Prospectus Supplement. Depositary Shares will be
evidenced by depositary receipts (the "Depositary Receipts") issued pursuant to
the related Deposit Agreement. The summary of certain provisions of the
Depositary Shares and the Deposit Agreement set forth below and the summary of
certain terms of a particular issue of Depositary Shares and the related Deposit
Agreement set forth in the applicable Prospectus Supplement do not purport to be
complete and are subject to and qualified in their entirety by reference to all
the provisions of the form of Deposit Agreement, together with the form of
related Depositary Receipt which will be filed as an exhibit to or incorporated
by reference in the Registration Statement, all of which are incorporated herein
by reference.
The following description of Depositary Shares sets forth certain general
terms and provisions of the Depositary Shares and the related Deposit Agreement
to which any Prospectus Supplement may relate. Certain other terms of any such
Depositary Shares and the related Deposit Agreement will be described in the
applicable Prospectus Supplement. To the extent that any particular terms of the
Depositary Shares or the related Deposit Agreement described in a Prospectus
Supplement differ from any of the terms described herein, then such terms
described herein shall be deemed to have been superseded by such Prospectus
Supplement.
INFORMATION TO BE PROVIDED IN THE APPLICABLE PROSPECTUS SUPPLEMENT
The Company may provide for the issuance by the Preferred Stock Depositary
of Depositary Receipts evidencing the related Depositary Shares, each of which
Depositary Shares in turn will represent a fractional interest (which will be
specified in the applicable Prospectus Supplement) in one share of a series of
Preferred
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Stock. Shares of Preferred Stock of any series represented by Depositary Shares
will be deposited under a separate Deposit Agreement. Subject to the terms of
the Deposit Agreement, each owner of a Depositary Receipt will be entitled, in
proportion to the fraction of a share of Preferred Stock represented by the
related Depositary Share, to all the rights, preferences and privileges of, and
will be subject to all of the limitations and restrictions on, the Preferred
Stock represented thereby (including, if applicable and subject to certain
matters discussed below, dividend, voting, conversion, exchange, redemption and
liquidation rights).
Depositary Shares may be issued in respect of shares of the Preferred Stock
of any series. Immediately following the issuance of any such shares of
Preferred Stock by the Company, the Company will deposit such shares of
Preferred Stock with the relevant Preferred Stock Depositary and will cause the
Preferred Stock Depositary to issue, on behalf of the Company, the related
Depositary Receipts.
Reference is made to the applicable Prospectus Supplement relating to the
Depositary Shares offered thereby for specific terms, including (where
applicable): (i) the terms of the series of Preferred Stock deposited by the
Company under the related Deposit Agreement; (ii) the number of such Depositary
Shares and the fraction of one share of such Preferred Stock represented by one
such Depositary Share; (iii) whether such Depositary Shares will be listed on
any securities exchange; (iv) whether such Depositary Shares will be sold with
any other Securities and, if so, the amount and terms thereof; and (v) any other
specific terms of such Depositary Shares and the related Deposit Agreement.
Depositary Receipts may be surrendered for transfer or exchange for new
Depositary Receipts of different authorized denominations at any office or
agency of the relevant Preferred Stock Depositary maintained for such purpose,
subject to the terms of the related Deposit Agreement. Unless otherwise
specified in the applicable Prospectus Supplement, Depositary Receipts will be
issued in denominations evidencing any whole number of Depositary Shares. No
service charge will be made for any permitted transfer or exchange of Depositary
Receipts, but the Company or the Preferred Stock Depositary may require payment
of any tax or other governmental charge payable in connection therewith.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the related Preferred Stock to the
record holders of Depositary Receipts in proportion, insofar as possible, to the
number of Depositary Receipts owned by such holders on the relevant record date.
The Preferred Stock Depositary will distribute only such amount, however, as can
be distributed without attributing to any holder of Depositary Receipts a
fraction of one cent, and any balance not so distributed will be added to and
treated as part of the next sum, if any, received by the Preferred Stock
Depositary for distribution to the record holders of Depositary Receipts.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto in proportion, insofar as possible, to the
number of Depositary Receipts owned by such holders on the relevant record date,
unless the Preferred Stock Depositary determines that it is not feasible to make
such distribution, in which case the Preferred Stock Depositary may, with the
approval of the Company, adopt such method as it deems equitable and practicable
for the purpose of effecting such distribution, including sale (public or
private) of such property and distribution of the net proceeds from such sale to
such holders.
The Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Company to holders of
the related series of Preferred Stock will be made available to holders of
Depositary Receipts.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Preferred Stock Depositary
on the account of taxes.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of the Depositary Receipts at an office or agency of the
Preferred Stock Depositary maintained for such purpose (unless the related
shares of Preferred Stock have previously been called for
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redemption), the holder thereof will be entitled to delivery, at such office or
agency, to or upon such holder's order, of the number of whole shares of the
related series of Preferred Stock and any money or other property represented by
such Depositary Receipts. Shares of Preferred Stock so withdrawn, however, may
not be redeposited. If the Depositary Receipts delivered by the holder evidence
a number of Depositary Shares in excess of the number of whole shares of
Preferred Stock to be withdrawn, the Preferred Stock Depositary will deliver to
such holder at the same time a new Depositary Receipt evidencing such excess
number of Depositary Shares.
REDEMPTION AND REPURCHASE OF PREFERRED STOCK
If a series of Preferred Stock represented by Depositary Shares is subject
to redemption at the option of the Company, then, whenever the Company redeems
shares of Preferred Stock of such series held by the Preferred Stock Depositary,
the Preferred Stock Depositary will redeem as of the same redemption date the
number of Depositary Shares representing the shares of the Preferred Stock so
redeemed, provided the Company shall have paid in full to the Preferred Stock
Depositary the redemption price of the Preferred Stock to be redeemed plus any
other amounts or property payable with respect to the Preferred Stock to be
redeemed. The redemption price per Depositary Share will be equal to the
redemption price and any other amounts or property per share payable with
respect to the Preferred Stock multiplied by the fraction of a share of
Preferred Stock represented by one such Depositary Share. If less than all of
the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed
will be selected by the Preferred Stock Depositary by lot or pro rata or other
equitable method, in each case as may be determined by the Company. If the
Depositary Shares evidenced by a Depositary Receipt are to be redeemed in part
only, one or more new Depositary Receipts will be issued for any Depositary
Shares not so redeemed.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Receipts evidencing the Depositary Shares so called
for redemption will cease, except the right to receive any monies payable upon
such redemption and any money or other property to which the holders of such
Depositary Receipts were entitled upon such redemption upon surrender of such
Depositary Receipts to the Preferred Stock Depositary.
Depositary Shares, as such, are not subject to repurchase by the Company at
the option of the holders. Nevertheless, if the Preferred Stock represented by
Depositary Shares is subject to repurchase of the option of the holders, the
related Depositary Receipts may be surrendered by the holders thereof to the
Preferred Stock Depositary with written instructions to the Preferred Stock
Depositary to instruct the Company to repurchase the Preferred Stock represented
by the Depositary Shares evidenced by such Depositary Receipts at the applicable
repurchase price specified in the related Prospectus Supplement. The Company,
upon receipt of such instructions and subject to the Company having funds
legally available therefor, will repurchase the requisite whole number of shares
of such Preferred Stock from the Preferred Stock Depositary, who in turn will
repurchase such Depositary Receipts. Notwithstanding the foregoing, holders
shall only be entitled to request the repurchase of Depositary Shares
representing one or more whole shares of the related Preferred Stock. The
repurchase price per Depositary Share will be equal to the repurchase price and
any other amounts per share payable with respect to the Preferred Stock
multiplied by the fraction of a share of Preferred Stock represented by one
Depositary Share. If the Depositary Shares evidenced by a Depositary Receipt are
to be repurchased in part only, one or more new Depositary Receipts will be
issued for any Depositary Shares not to be repurchased.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock of any series represented by Depositary Shares are entitled to vote, the
relevant Preferred Stock Depositary will mail the information contained in such
notice of meeting to the record holders of the related Depositary Receipts. Each
record holder of Depositary Receipts evidencing Depositary Shares on the record
date (which will be the same date as the record date for the Preferred Stock)
will be entitled to instruct the Preferred Stock Depositary as to the exercise
of the voting rights pertaining to the amount of Preferred Stock represented by
such holder's Depositary Shares. The Preferred Stock Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Company will agree to take all reasonable action which may be deemed
necessary by the Preferred Stock Depositary in order to enable the
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Preferred Stock Depositary to do so. The Preferred Stock Depositary will abstain
from voting shares of Preferred Stock to the extent it does not receive specific
instructions from the holders of Depositary Receipts evidencing the Depositary
Shares representing such Preferred Stock.
CONVERSION AND EXCHANGE OF PREFERRED STOCK
If the Preferred Stock represented by Depositary Shares is exchangeable at
the option of the Company for other Securities, then, whenever the Company
exercises its option to exchange all or a portion of such shares of Preferred
Stock held by the Preferred Stock Depositary, the Preferred Stock Depositary
will exchange as of the same exchange date a number of such Depositary Shares
representing the shares of the Preferred Stock so exchanged, provided the
Company shall have issued and deposited with the Preferred Stock Depositary the
Securities for which such shares of Preferred Stock are to be exchanged. The
exchange rate per Depositary Share shall be equal to the exchange rate per share
of Preferred Stock multiplied by the fraction of a share of Preferred Stock
represented by one Depositary Share. If less than all of the Depositary Shares
are to be exchanged, the Depositary Shares to be exchanged will be selected by
the Preferred Stock Depositary by lot or pro rata or other equitable method, in
each case as may be determined by the Company. Unless otherwise stated in the
applicable Prospectus Supplement, fractional share interests resulting from any
conversion or exchange will be redeemed by the Company for cash. If the
Depositary Shares evidenced by a Depositary Receipt are to be exchanged in part
only, a new Depositary Receipt or Receipts will be issued for any Depositary
Shares not to be exchanged.
Depositary Shares, as such, are not convertible or exchangeable at the
option of the holders into other Securities or property. Nevertheless, if the
Preferred Stock represented by Depositary Shares is convertible into or
exchangeable for other Securities at the option of the holders, the related
Depositary Receipts may be surrendered by holders thereof to the Preferred Stock
Depositary with written instructions to the Preferred Stock Depositary to
instruct the Company to cause conversion or exchange, as the case may be, of the
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into a whole number of shares of Common Stock or Preferred
Stock, a whole number of Common Stock Warrants, or Debt Securities in authorized
denominations, as specified in the related Prospectus Supplement. The Company,
upon receipt of such instructions and any amounts payable in respect thereof,
will cause the conversion or exchange, as the case may be, and will deliver to
the holders such number of whole shares of Common Stock or Preferred Stock, a
whole number of Common Stock Warrants, or a principal amount of Debt Securities
in authorized denominations (and cash in lieu of any fractional Security). The
exchange or conversion rate per Depositary Share shall be equal to the exchange
or conversion rate per share of Preferred Stock multiplied by the fraction of a
share of Preferred Stock represented by one Depositary Share. If the Depositary
Shares evidenced by a Depositary Receipt are to be converted or exchanged in
part only, a new Depositary Receipt or Receipts will be issued for any
Depositary Shares not to be converted or exchanged.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The Depositary Receipts evidencing Depositary Shares and any provision of
the related Deposit Agreement may at any time be amended by agreement between
the Company and the Preferred Stock Depositary. However, any amendment that
materially and adversely alters the rights of the holders of Depositary Receipts
issued under any Deposit Agreement will not be effective unless such amendment
has been approved by the holders of at least a majority of such Depositary
Receipts then outstanding (or such greater proportion as may be required by the
rules of any securities exchange on which the related Depositary Shares may be
listed). In no event may any such amendment impair the right of any holder of
Depositary Receipts, subject to the conditions specified in the Deposit
Agreement, to receive the related Preferred Stock upon surrender of such
Depositary Receipts as described above under "--Withdrawal of Preferred Stock."
The Deposit Agreement may be terminated by the Company upon not less than
60 days' notice to the Preferred Stock Depositary. In any such case, the
Preferred Stock Depositary shall deliver or make available to each holder of the
related Depositary Receipts, upon surrender of such Depositary Receipts, such
number of whole shares of the related series of Preferred Stock represented by
the Depositary Shares evidenced by such Depositary Receipts, together with cash
in lieu of any fractional shares (to the extent the Company has deposited such
cash with the Preferred Stock Depositary). If the Company does not deposit cash
adequate to pay amounts
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with respect to any fractional shares, the Company will remain obligated to pay
such amounts, but the Preferred Stock Depositary will not be required to advance
any amounts on behalf of the Company. The Deposit Agreement will automatically
terminate if all of the shares of Preferred Stock deposited thereunder shall
have been withdrawn, redeemed, converted or exchanged or if there shall have
been a final distribution in respect of such Preferred Stock in connection with
any liquidation, dissolution or winding up of the Company.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay the fees and expenses of the Preferred Stock
Depositary in connection with the performance of its duties under the Deposit
Agreement, and will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. Holders of
Depositary Receipts will be required to pay all other transfer and other taxes
and governmental charges (including taxes and other governmental charges in
connection with the transfer, exchange, surrender or conversion of Depositary
Receipts) and such other charges as are expressly provided in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary.
MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Stock Depositary with respect to the related Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if
either is prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performing their duties thereunder without gross negligence or
willful misconduct, and the Company and the Preferred Stock Depositary will not
be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or any related shares of Preferred Stock or Depositary
Receipts unless satisfactory indemnity is furnished. The Company and the
Preferred Stock Depositary may rely on advice of counsel, accountants or other
advisors, and information provided by persons presenting shares of Preferred
Stock for deposit, holders of Depositary Receipts or other persons believed to
be authorized or competent and on documents believed to be genuine.
In the event that the Preferred Stock Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on the
one hand, and the Company, on the other hand, the Preferred Stock Depositary
shall be entitled to act on such claims, requests or instructions received from
the Company.
DESCRIPTION OF WARRANTS
The Company has no Warrants outstanding (other than options issued under
the Company's stock option plans). The Company may issue Warrants for the
purchase of Debt Securities, Common Stock or Preferred Stock registered hereby.
Warrants may be issued independently or together with any other securities
offered by any Prospectus Supplement and may be attached to or separate from
such securities. Each series of Warrants will be issued under a separate warrant
agreement (each, a "Warrant Agreement") to be entered into between the Company
and a warrant agent specified in the applicable Prospectus Supplement (the
"Warrant Agent"). The Warrant Agent will act solely as an agent of the Company
in connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any provisions of the
Warrants offered hereby. Further terms of the Warrants and the applicable
Warrant Agreements will be set forth in the applicable Prospectus Supplement.
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The applicable Prospectus Supplement will describe the terms of the
Warrants in respect of which this Prospectus is being delivered, including,
where applicable, the following: (i) the title of such Warrants; (ii) the
aggregate number of such Warrants; (iii) the price or prices at which such
Warrants will be issued; (iv) the designation, terms and number of securities
purchasable upon exercise of such Warrants; (v) the designation and terms of the
securities, if any, with which such Warrants are issued and the number of such
Warrants issued with each such security; (vi) the date, if any, on and after
which such Warrants and the related securities will be separately transferable;
(vii) the price at which each security purchasable upon exercise of such
Warrants may be purchased; (viii) the date on which the right to exercise such
Warrants shall commence and the date on which such right shall expire; (ix) the
minimum or maximum amount of such Warrants which may be exercised at any one
time; (x) information with respect to book-entry procedures, if any; and (xi)
any other terms of such Warrants, including terms, procedures and limitations
relating to the exchange and exercise of such Warrants.
PLAN OF DISTRIBUTION BY SELLING SECURITY HOLDERS
Resales of securities may be made on Nasdaq or such other national
securities exchange or quotation service on which the securities may be listed
or quoted at the time of sale, in the over-the-counter market, in private
transactions or pursuant to underwriting agreements. Such resales may be
effected in one or more of the following methods: (i) ordinary brokers'
transactions, which may include long or short sales; (ii) transactions involving
cross or block trades or otherwise on Nasdaq; (iii) purchases by brokers,
dealers or underwriters as principal and resale for their own accounts pursuant
to this Prospectus and the applicable supplement; (iv) "at the market" to or
through market makers or into an existing market for the securities; (v) in
other ways not involving market makers or established trading markets, including
direct sales to purchasers or sales effected through agents; (vi) through
transactions in options, swaps or other derivatives (whether exchange-listed or
otherwise); or (vii) any combination of the foregoing, or by any other legally
available means.
Agreements with Selling Security Holders permitting use of this Prospectus
and the applicable supplement may provide that any such offering be effected in
an orderly manner through securities dealers, acting as broker or dealer,
selected by the Company; that Selling Security Holders enter into custody
agreements with one or more banks with respect to the securities offered; and
that sales be made only by one or more of the methods described in this
Prospectus, as appropriately supplemented or amended when required. The Selling
Security Holders may be deemed to be underwriters within the meaning of the
Securities Act.
Brokers, dealers, underwriters or agents participating in the sale of the
securities as principals or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Security Holders and/or
purchasers of the securities for whom such broker-dealers may act as agent, or
to whom they may sell as principal, or both (which compensation as to a
particular broker-dealer may be less than or in excess of customary
commissions). Sales of securities by such broker, dealer, underwriter or agent
may be made on the Nasdaq or other exchange from time to time at prices related
to prices then prevailing, at prices related to such prevailing prices, at
negotiated prices or at fixed prices, which may be changed. Any such sales may
be by block trade. Any such broker/dealer or agent may be deemed to be an
underwriter within the meaning of the Securities Act, and any commissions earned
by such member firm may be deemed to be underwriting discounts and commissions
under the Securities Act.
Upon the Company being notified by a Selling Security Holder that it
proposed to make a block trade, a Prospectus Supplement, if required, will be
filed pursuant to Rule 424 under the Securities Act, disclosing the name of the
broker or dealer, the number of units of securities involved, the price at which
such securities are being sold by such Selling Security Holder, and the
commissions to be paid by such Selling Security Holder to such broker or dealer.
To comply with the securities laws of certain jurisdictions, if applicable,
the securities will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain
jurisdictions, such securities may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or any exemption from
registration or qualification is available and is complied with.
32
<PAGE> 35
LEGAL MATTERS
Certain legal matters in connection with the validity of the securities
offered hereby will be passed upon for the Company by Cowden, Humphrey & Sarlson
Co., L.P.A., counsel to the Company, and Brown & Wood LLP, New York, New York,
special counsel to the Company as to matters of New York law. Cowden, Humphrey &
Sarlson Co., L.P.A. will rely as to certain matters of New York law upon the
opinion of Brown & Wood LLP, and Brown & Wood LLP will rely as to certain
matters of Ohio law upon the opinion of Cowden, Humphrey & Sarlson Co., L.P.A.
EXPERTS
The consolidated financial statements of Advanced Lighting Technologies,
Inc. and subsidiaries as of June 30, 1997 and 1996 and for each of the three
years in the period ended June 30, 1997 incorporated by reference in this
Prospectus and Registration Statement and the financial statements of Ruud
Lighting, Inc. as of November 30, 1997 and 1996 and for each of the three years
in the period ended November 30, 1997 incorporated by reference in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors as set forth in their reports thereon and are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
33
<PAGE> 36
- ------------------------------------------------------
- ------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY SUPPLEMENT HERETO. WE HAVE AUTHORIZED NO ONE
TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY LOCATION WHERE THE OFFER
IS NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS, INCLUDING
INFORMATION INCORPORATED BY REFERENCE, IS ACCURATE AS OF ANY DATE OTHER THAN THE
DATE ON THE FRONT OF THE PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information... 2
The Company........................... 3
Risk Factors.......................... 5
Selected Financial Data............... 10
Ratio of Earnings to Total Fixed
Charges and Preferred Stock
Dividends........................... 12
Special Note Regarding Forward-Looking
Statements.......................... 12
Acquisition Terms..................... 12
Selling Security Holders.............. 13
Description Of Debt Securities........ 13
Description Of Capital Stock.......... 24
Description Of Depositary Shares...... 27
Description of Warrants............... 31
Plan Of Distribution by Selling
Security Holders.................... 32
Legal Matters......................... 33
Experts............................... 33
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$100,000,000
ADVANCED LIGHTING
TECHNOLOGIES, INC.
DEBT SECURITIES, COMMON STOCK,
PREFERRED STOCK, DEPOSITARY SHARES
AND WARRANTS
------------------------
PROSPECTUS
------------------------
, 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 1701.59 of the Ohio Revised Code, which
eliminates the personal liability in damages of a director for violations of the
director's fiduciary duty, except if it is proved by clear and convincing
evidence that his action or failure to act involved acts or omissions undertaken
with deliberate intent to cause injury to the corporation or with reckless
disregard for the best interests of the corporation. This statute does not
affect the liability of directors pursuant to Section 1701.95 of the Ohio
Revised Code (providing for liability of directors for unlawful payment of
dividends or unlawful distribution of assets).
Reference is made to section 1701.13 of the Ohio Revised Code, which
provides that a corporation may indemnify directors and officers as well as
other employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative other than an action by or in the name of the corporation (a
"derivative action") if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. A similar standard is applicable in the case
of derivative actions, except that indemnification only extends to expenses
(including attorneys' fees) incurred in connection with defense or settlement of
such action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's articles of
incorporation, code of regulations, disinterested director vote, shareholder
vote, agreement or otherwise.
Reference is made to Article Seven of the Code of Regulations (by-laws) of
the Company contained in Exhibit 3.2 hereto which provides for the
indemnification of directors and officers to the fullest extent permitted by
Ohio law.
ITEM 21. EXHIBITS
<TABLE>
<C> <S>
3.1 Amended and Restated Articles of Incorporation of Advanced
Lighting Technologies, Inc. (incorporated by reference to
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
for the Quarterly Period ended December 31, 1996)
3.2 Code of Regulations of Advanced Lighting Technologies, Inc.
(incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, Registration No.
33-97902, effective December 11, 1995)
4.1 Form of Indenture**
4.2 Indenture, dated as of March 18, 1998, between The Company
and the Bank of New York (incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
for the Quarterly Period ended March 31, 1998)
4.3 Form of Senior Debt Security*
4.4 Form of Subordinated Debt Security*
4.5 Form of Convertible Debt Security*
4.6 Form of Preferred Stock Certificate of Designation*
4.7 Form of Warrant*
4.8 Form of Warrant Agreement*
4.9 Form of Deposit Agreement*
4.10 Form of 8% Senior Note due 2008**
5.1 Opinion of Cowden, Humphrey & Sarlson Co., L.P.A. as to the
legality of the securities to be issued
5.2 Opinion of Brown & Wood LLP regarding certain matters
relating to New York law
12.1 Statement of Computation of Ratios of Advanced Lighting
Technologies, Inc.**
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cowden, Humphrey & Sarlson Co., L.P.A. (included
in Exhibit 5.1)
</TABLE>
II-1
<PAGE> 38
<TABLE>
<C> <S>
23.3 Consent of Brown & Wood LLP (included in Exhibit 5.2)
24.1 Powers of Attorney**
25.1 Form T-1 Statement of Eligibility with respect to the Debt
Securities*
25.2 Form T-1 Statement of Eligibility with respect to the Debt
Securities issuable under the Indenture dated as of March
18, 1998, between the Company and The Bank of New York**
</TABLE>
- ---------------
* To be filed with a Current Report on Form 8-K or a Post-Effective Amendment
to Registration Statement
** Previously filed.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrants pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect
II-2
<PAGE> 39
to reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(d) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(h) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-3
<PAGE> 40
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT (FORM S-4,
NO. 333-58621) TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CLEVELAND, STATE OF OHIO, ON AUGUST 18, 1998.
ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ Wayne R. Hellman
------------------------------------
Wayne R. Hellman,
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Wayne R. Hellman Chief Executive Officer and Director August 18, 1998
- ------------------------------------------------
Wayne R. Hellman
/s/ Nicholas R. Sucic Chief Financial Officer, Vice President August 18, 1998
- ------------------------------------------------ and Treasurer (Chief Accounting Officer)
Nicholas R. Sucic
/s/ Alan J. Ruud Director August 18, 1998
- ------------------------------------------------
Alan J. Ruud*
/s/ Louis S. Fisi Director August 18, 1998
- ------------------------------------------------
Louis S. Fisi
/s/ Theodore A. Filson Director August 18, 1998
- ------------------------------------------------
Theodore A. Filson*
/s/ Francis H. Beam Director August 18, 1998
- ------------------------------------------------
Francis H. Beam*
/s/ Susuma Harada Director August 18, 1998
- ------------------------------------------------
Susuma Harada*
/s/ A Gordon Tunstall Director August 18, 1998
- ------------------------------------------------
A Gordon Tunstall*
/s/ John R. Buerkle Director August 18, 1998
- ------------------------------------------------
John R. Buerkle*
</TABLE>
* The undersigned, by signing his name hereto, does hereby execute this
Amendment No. 1 to the Registration Statement on behalf of the above indicated
officers and directors of Advanced Lighting Technologies, Inc. pursuant to the
Powers of Attorney executed by each such officer and director appointing the
undersigned as attorney-in-fact and filed with the Securities and Exchange
Commission.
By: /s/ WAYNE R. HELLMAN
------------------------------------
Wayne R. Hellman
Attorney-in-Fact
II-4
<PAGE> 41
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of Advanced
Lighting Technologies, Inc. (incorporated by reference to
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
for the Quarterly Period ended December 31, 1996)
3.2 Code of Regulations of Advanced Lighting Technologies, Inc.
(incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, Registration No.
33-97902, effective December 11, 1995)
4.1 Form of Indenture**
4.2 Indenture, dated as of March 18, 1998, between The Company
and the Bank of New York (incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
for the Quarterly Period ended March 31, 1998)
4.3 Form of Senior Debt Security*
4.4 Form of Subordinated Debt Security*
4.5 Form of Convertible Debt Security*
4.6 Form of Preferred Stock Certificate of Designation*
4.7 Form of Warrant*
4.8 Form of Warrant Agreement*
4.9 Form of Deposit Agreement*
4.10 Form of 8% Senior Note due 2008**
5.1 Opinion of Cowden, Humphrey & Sarlson Co., L.P.A. as to the
legality of the securities to be issued
5.2 Opinion of Brown & Wood LLP regarding certain matters
relating to New York law
12.1 Statement of Computation of Ratios of Advanced Lighting
Technologies, Inc.**
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cowden, Humphrey & Sarlson Co., L.P.A. (included
in Exhibit 5.1)
23.3 Consent of Brown & Wood LLP (included in Exhibit 5.2)
24.1 Powers of Attorney**
25.1 Form T-1 Statement of Eligibility with respect to the Debt
Securities*
25.2 Form T-1 Statement of Eligibility with respect to the Debt
Securities issuable under the Indenture dated as of March
18, 1998, between the Company and The Bank of New York**
</TABLE>
- ---------------
* To be filed with a Current Report on Form 8-K or a Post-Effective Amendment
to Registration Statement
** Previously filed.
<PAGE> 1
Exhibit 5.1
[COWDEN, HUMPHREY & SARLSON CO., L.P.A. LETTERHEAD]
August 18, 1998
Advanced Lighting Technologies, Inc
32000 Aurora Road
Solon, OH 44139
Ladies and Gentlemen:
We have acted as counsel to Advanced Lighting Technologies, Inc., an
Ohio corporation (the "Company"), in connection with the proposed issuance and
sale by the Company of up to $100,000,000 aggregate initial public offering
price of its (i) senior debt securities (the "Senior Debt Securities"), (ii)
subordinated debt securities (the "Subordinated Debt Securities", and together
with the Senior Debt Securities, the "Debt Securities"), (iii) the 8% Senior
Notes due 2008 in a maximum aggregate principal amount of $50,000,000 (the "8%
Notes"), (iv) shares of common stock, par value $.001 per share (the "Common
Stock"), (v) shares of preferred stock, par value $.001 per share (the
"Preferred Stock"), (vi) depositary shares (the "Depositary Shares")
representing shares of Preferred Stock, which Depositary Shares will be
evidenced by depositary receipts (the "Depositary Receipts") and (vii) warrants
to purchase Debt Securities, Common Stock or Preferred Stock (the "Warrants").
The Debt Securities, the 8% Notes, the Common Stock, the Preferred Stock, the
Depositary Shares and the Warrants are hereinafter collectively referred to as
the "Securities." The Debt Securities will be issuable under an indenture (the
"Indenture") to be entered into between the Company and one or more trustees to
be named therein (the "Trustee"). The 8% Notes are issuable under an Indenture
(the "8% Note Indenture") dated as of March 18, 1998 between the Company and The
Bank of New York (the "8% Note Trustee").
As counsel to the Company, we have examined and relied upon originals
or copies, certified or otherwise identified to our satisfaction, of such
documents, certificates, corporate records and other instruments as we have
deemed necessary or advisable for the purpose of this opinion. In our
examination, we have assumed the authenticity of all documents submitted to us
as originals, the genuineness of all signatures thereon, the legal capacity of
natural persons executing such documents and the conformity to original
documents of all documents submitted to us as certified or photostatic copies.
Based upon the foregoing, and subject to the assumptions and
limitations set forth herein, we are of the opinion that:
<PAGE> 2
(i) When (a) appropriate corporate action has been taken by the Company
to authorize the form, terms, execution and delivery of the Indenture, any
applicable supplemental indenture thereto and the Debt Securities, (b) the
Indenture and any such supplemental indenture have been duly executed and
delivered by the Company and the Trustee, (c) appropriate action has been taken
by the Company to authorize the issuance and establish, in accordance with the
Indenture, the form and terms of the Debt Securities and (d) Debt Securities
with such terms are duly executed, attested, issued and delivered by duly
authorized officers of the Company against receipt of the consideration therefor
and authenticated by the Trustee, all in the manner provided for in the
Indenture, any such supplemental indenture and such action, in connection with
an authorized acquisition by the Company, such Debt Securities will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms.
(ii) When (a) appropriate corporate action has been taken by the
Company to authorize the issuance, execution and delivery of the 8% Notes and
(b) the 8% Notes are duly executed, issued and delivered by duly authorized
officers of the Company against receipt of the consideration therefor and
authenticated by the 8% Note Trustee, all in the manner provided for in the 8%
Note Indenture and such action, in connection with an authorized acquisition by
the Company, such 8% Notes will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.
(iii) When appropriate corporate action has been taken by the Company
to authorize the issuance of shares of Common Stock, and when such shares of
Common Stock shall have been duly issued and delivered by the Company against
receipt of the consideration therefor and in accordance with such corporate
action, in connection with an authorized acquisition by the Company, such Common
Stock will be validly issued, fully paid and non-assessable.
(iv) When (a) appropriate corporate action has been taken by the
Company to authorize the issuance of a series of Preferred Stock, to fix the
terms thereof and to authorize the execution and filing of an amendment to the
Company's articles of incorporation relating thereto with the Secretary of State
of the State of Ohio, (b) such certificate of designations shall have been
executed by duly authorized officers of the Company and so filed by the Company,
all in accordance with the laws of the State of Ohio, and (c) Preferred Stock
with terms so fixed shall have been duly issued and delivered by the Company
against receipt of the consideration therefor or for Depositary Shares
representing interests therein in accordance with such corporate action, in
connection with an authorized acquisition by the Company, such Preferred Stock
will be validly issued, fully paid and nonassessable.
(v) When (a) appropriate corporate action has been taken by the Company
to authorize the form, terms, execution and delivery of a deposit agreement
(including a form of Depositary Receipt) (a "Deposit Agreement") with respect to
Depositary Shares to be entered into between the Company and a depositary (the
"Depositary") and to authorize the issuance of Depositary Shares thereunder, (b)
such Deposit Agreement has been duly executed and delivered by the Company and
the Depositary, (c) appropriate corporate action has been taken by the Company
to authorize the issuance of Preferred Stock and the deposit thereof with the
Depositary pursuant to the Deposit Agreement and the issuance of the Depositary
Shares representing interests therein, and (d) duly authorized and validly
issued, fully paid and non-assessable shares of such Preferred Stock shall have
been deposited with the Depositary in accordance with the Deposit Agreement and
such corporate action and the Depositary shall have duly executed, issued and
delivered Depositary Receipts with such terms evidencing such Depositary Shares
against receipt of the consideration therefor, all in the manner provided for in
such Deposit Agreement and such corporate action, in connection with an
authorized acquisition by the Company, such Depositary Shares will entitle the
holders thereof to the benefits provided therein and in the applicable Deposit
Agreement.
2
<PAGE> 3
(vi) When (a) appropriate corporate action has been taken by the
Company to authorize the form, terms, execution and delivery of a warrant
agreement (including a form of certificate evidencing the Warrants) (a "Warrant
Agreement") to be entered into between the Company and a warrant agent (the
"Warrant Agent") and to authorize the issuance of Warrants thereunder, (b) such
Warrant Agreement has been duly executed and delivered by the Company and the
Warrant Agent and (c) Warrants with such terms are duly executed, attested,
issued and delivered by duly authorized officers of the Company against receipt
of the consideration therefor and authenticated by the Warrant Agent, all in the
manner provided for in the Warrant Agreement and such corporate action, in
connection with an authorized acquisition by the Company, such Warrants will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms.
With respect to enforcement, the above opinions are qualified to the
extent that such enforcement may be subject to or limited by bankruptcy,
insolvency, fraudulent transfer, fraudulent conveyance, reorganization,
moratorium, arrangement or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles. We have further
assumed with respect to enforcement that, when fixed, the terms of the
Securities will comply with all applicable "bucket shop" or similar state laws,
or have the availability of federal preemption therefrom.
In rendering the opinions expressed above, we have assumed that (i)
certificates representing shares of Common Stock and Preferred Stock will be in
due and proper form, will comply with applicable law and will have been duly
executed by duly authorized officers of the Company in accordance with
applicable law and (ii) the Securities and all other instruments and agreements
referred to in the foregoing opinions, and the execution, delivery and
performance thereof by the Company comply and will comply with applicable law
and do not and will not constitute a breach or violation of the charter or
by-laws of the Company or any other instrument or agreement to which the Company
is or becomes a party or by which the Company or its properties is or may be
bound.
3
<PAGE> 4
We are members of the bar of the State of Ohio and the foregoing
opinion is limited to matters arising under the laws of the State of Ohio and
the federal laws of the United States of America and we express no opinion with
respect to matters arising under the laws of any other jurisdiction. In giving
this opinion, we have, with your permission, relied as to matters of New York
law upon the opinion of Brown & Wood LLP, special counsel to the Company.
We consent to the filing of this opinion as an exhibit to the Company's
Registration Statement on Form S-4 and to the use of our name wherever appearing
in such Registration Statement and any amendment thereto; we consent also to the
reliance by Brown & Wood LLP upon this opinion as to matters of Ohio law in
rendering their opinion of even date herewith filed as an exhibit to the
Registration Statement. In giving the foregoing consent, however, we do not
admit that we come within the category of person whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Cowden, Humphrey & Sarlson Co., L.P.A.
4
<PAGE> 1
Exhibit 5.2
[LETTERHEAD OF BROWN & WOOD LLP]
August 18, 1998
Advanced Lighting Technologies, Inc.
32000 Aurora Road
Solon, Ohio 44139
Ladies and Gentlemen:
We have acted as special counsel to Advanced Lighting Technologies,
Inc., an Ohio corporation (the "Company"), as to the laws of the State of New
York in connection with the proposed issuance and sale by the Company of up to
$100,000,000 aggregate initial public offering price of its (i) senior debt
securities (the "Senior Debt Securities"), (ii) subordinated debt securities
(the "Subordinated Debt Securities", and together with the Senior Debt
Securities, the "Debt Securities"), (iii) 8% Senior Notes Due 2008 (the "8%
Notes"; provided, that the aggregate principal amount issuable is limited to up
to $50,000,000), (iv) shares of common stock, par value $.001 per share (the
"Common Stock"), (v) shares of preferred stock, par value $.001 per share (the
"Preferred Stock"), (vi) depositary shares (the "Depositary Shares")
representing shares of Preferred Stock, which Depositary Shares will be
evidenced by depositary receipts (the "Depositary Receipts"), and (vii) warrants
to purchase Debt Securities, Common Stock or Preferred Stock (the "Warrants. The
Debt Securities, the 8% Notes, Debt Securities, the Common Stock, the Preferred
Stock, the Depositary Shares and the Warrants are hereinafter collectively
referred to as the "Securities." The Senior Debt Securities and Subordinated
Debt Securities will be issuable under an indenture (the "Indenture") to be
entered into between the Company and one or more trustees to be named therein
(the "Trustee"). The 8% Notes are issuable under an Indenture, dated as of March
18, 1998 (the "8% Notes Indenture"), between the Company and The Bank of New
York, as trustee (the "8% Notes Trustee").
As special counsel to the Company, we have examined and relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, certificates, corporate records and other instruments as we have
deemed necessary or advisable for the purpose of this opinion. In our
examination, we have assumed the authenticity of all documents submitted to us
as originals, the genuineness of all signatures thereon, the legal capacity of
natural persons executing such documents and the conformity to original
documents of all documents submitted to us as certified or photostatic copies.
<PAGE> 2
Based upon the foregoing, and subject to the assumptions and
limitations set forth herein, we are of the opinion that:
(i) When (a) appropriate corporate action has been taken by the Company
to authorize the form, terms, execution and delivery of the Indenture, any
applicable supplemental indenture thereto and the Debt Securities, (b) the
Indenture and any such supplemental indenture have been duly executed and
delivered by the Company and the Trustee, (c) appropriate action has been taken
by the Company to authorize the issuance and establish, in accordance with the
Indenture, the form and terms of the Debt Securities and (d) Debt Securities
with such terms are duly executed, issued and delivered by duly authorized
officers of the Company against payment of the consideration therefor and
authenticated by the Trustee, all in the manner provided for in the Indenture,
any such supplemental indenture and such action, in connection with an
authorized acquisition by the Company, such Debt Securities will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms.
(ii) When (a) appropriate corporate action has been taken by the
Company to authorize the execution and delivery of the 8% Notes and (b) 8% Notes
are duly executed, issued and delivered by duly authorized officers of the
Company against payment of the consideration therefor and authenticated by the
8% Notes Trustee, all in the manner provided for in the 8% Notes Indenture and
such action, in connection with an authorized acquisition by the Company, such
8% Notes will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
(iii) When (a) appropriate corporate action has been taken by the
Company to authorize the form, terms, execution and delivery of a deposit
agreement (including a form of Depositary Receipt) (a "Deposit Agreement")
with respect to Depositary Shares to be entered into between the Company and a
depositary (the "Depositary") and to authorize the issuance of Depositary
Shares thereunder, (b) such Deposit Agreement has been duly executed and
delivered by the Company and the Depositary, (c) appropriate corporate action
has been taken by the Company to authorize the issuance of Preferred Stock and
the deposit thereof with the Depositary pursuant to the Deposit Agreement and
the issuance of the Depositary Shares representing interests therein and (d)
duly authorized and validly issued, fully paid and non-assessable shares of
such Preferred Stock shall have been deposited with the Depositary in
accordance with the Deposit Agreement and such corporate action and the
Depositary shall have duly executed, issued and delivered Depositary Receipts
with such terms evidencing such Depositary Shares against payment of the
consideration therefor, all in the manner provided for in such Deposit
Agreement and such corporate action, in connection with an authorized
acquisition by the Company, such Depositary Shares will entitle the holders
thereof to the benefits provided therein and in the applicable Deposit
Agreement.
(iv) When (a) appropriate corporate action has been taken by the
Company to authorize the form, terms, execution and delivery of a warrant
agreement (including a form of certificate evidencing the Warrants) (a
"Warrant Agreement") to be entered into between the Company and a warrant
agent (the "Warrant Agent") and to authorize the issuance of Warrants
thereunder, (b) such Warrant Agreement has been duly executed and delivered by
the Company and the Warrant Agent and (c) Warrants with such terms are duly
executed, issued and delivered by duly authorized officers of the Company
against payment of the consideration therefor and authenticated by the Warrant
Agent, all in the manner provided for in the Warrant Agreement and such
corporate action, in connection with an authorized acquisition by the Company,
such Warrants will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
2
<PAGE> 3
With respect to enforcement, the above opinions are qualified to the
extent that such enforcement may be subject to or limited by bankruptcy,
insolvency, fraudulent transfer, fraudulent conveyance, reorganization,
moratorium, arrangement or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles. We have
further assumed with respect to enforcement that, when fixed, the terms of the
Securities will comply with all applicable "bucket shop" or similar state
laws, or have the availability of federal preemption therefrom.
In rendering the opinions expressed above, we have assumed that (i)
certificates representing shares of Preferred Stock will be in due and proper
form, will comply with applicable law and will have been duly executed by duly
authorized officers of the Company in accordance with applicable law; and (ii)
the Securities and all other instruments and agreements referred to in the
foregoing opinions, and the execution, delivery and performance thereof by the
Company, comply and will comply with applicable law and do not and will not
constitute a breach or violation of the charter or by-laws of the Company or
any other instrument or agreement to which the Company is or becomes a party
or by which it or any of its properties is or may be bound.
We are members of the bar of the State of New York and the foregoing
opinion is limited to matters arising under the laws of the State of New York
and the federal laws of the United States of America and we express no opinion
with respect to matters arising under the laws of any other jurisdiction. In
giving this opinion, we have, with your permission, relied as to matters of
Ohio law upon the opinion of Cowden, Humphrey & Sarlson Co., L.P.A., counsel
to the Company.
3
<PAGE> 4
We consent to the filing of this opinion as an exhibit to the Company's
Registration Statement on Form S-4 and to the use of our name wherever
appearing in such Registration Statement and any amendment thereto; we consent
also to the reliance by Cowden, Humphrey & Sarlson Co., L.P.A. upon this
opinion as to matters of New York law in rendering their opinion of even date
herewith filed as an exhibit to the Registration Statement. In giving the
foregoing consent, however, we do not admit that we come within the category
of person whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/ Brown & Wood LLP
4
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-4, No, 333-58621) and related
Prospectus of Advanced Lighting Technologies, Inc. for the registration of
$100,000,000 of securities and to the incorporation by reference therein of our
report dated September 25, 1997, (except earnings per share amounts and Notes J,
O and U, as to which the date is March 30, 1998), with respect to the
consolidated financial statements of Advanced Lighting Technologies, Inc. for
the year ended June 30, 1997 included in its Current Report on Form 8-K dated
July 7, 1998, and to the incorporation by reference therein of our report dated
December 19, 1997 with respect to the financial statements of Ruud Lighting,
Inc. for the year ended November 30, 1997 included in the Current Report on Form
8-K of Advanced Lighting Technologies, Inc. dated January 14, 1998, both as
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Cleveland, Ohio
August 17, 1998
