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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 8, 2000
REGISTRATION NO. 333-58621
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 3
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)
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OHIO 3641 34-1803229
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE) IDENTIFICATION NUMBER)
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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:
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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
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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 formation 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 OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER UNIT PRICE(1)(2) REGISTRATION FEE(3)
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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. In addition, there is being registered
hereunder such indeterminate number of shares of Preferred Stock, for which
no consideration will be received by the Registrant, as may be issuable
upon conversion or exchange of Debt Securities.
(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.
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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 MAY 8, 2000
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.
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 to issue the securities at prices reasonably related to the market
price of the securities either when we enter into an agreement or when we
deliver the securities. 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 considered underwriting commissions or discounts under the Securities
Act.
The last reported sale price for our common stock on the Nasdaq National
Market (Symbol: ADLT) on May 5, 2000 was $13.875 per share.
INVESTING IN THE SECURITIES COVERED BY THIS PROSPECTUS INVOLVES CERTAIN
RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Supplements to this prospectus will provide the specific terms of these
securities and the terms of transactions in which we will issue the securities.
You should read this prospectus and the supplements carefully before making an
investment decision.
The date of this prospectus is , 2000.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that ADLT filed with
the Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, ADLT may sell any combination of the securities
described in this prospectus in one or more offerings up to a total offering
price of $100,000,000. This prospectus provides you with a general description
of the securities ADLT may offer. Each time ADLT offers to sell securities, ADLT
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read this
prospectus, the applicable prospectus supplement and the additional information
described below under the heading "Where You Can Find More Information."
TABLE OF CONTENTS
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Advanced Lighting Technologies, Inc......................... 3
Risk Factors................................................ 5
Selected Financial Data..................................... 11
Ratio of Earnings to Total Fixed Charges and Preferred Stock
Dividends................................................. 13
Special Note Regarding Forward-Looking Statements........... 14
Acquisition Terms........................................... 14
Description Of Debt Securities.............................. 14
Description Of Capital Stock................................ 26
Description Of Depositary Shares............................ 29
Description of Warrants..................................... 34
Legal Matters............................................... 34
Experts..................................................... 34
Where You Can Find More Information......................... 35
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ADVANCED LIGHTING TECHNOLOGIES, INC.
Advanced Lighting Technologies, Inc. is an innovation-driven designer,
manufacturer and marketer of metal halide lighting products. Metal halide
lighting combines energy efficient light with long lamp life. It also allows
users to see true-to-life colors. Another advantage of metal halide lighting
systems is their relatively compact 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 expanded our business to design, manufacture and market a broad
range of metal halide products, from basic materials to finished products, and
manufacturing equipment, including:
- materials used to make lamps (the industry term for light bulbs);
- 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.
We use some of our materials and components in the manufacture of our own
lighting systems for sale to end-users. We also sell materials and components to
third-party manufacturers for use in the production of their metal halide
products. The integration of our product approach is illustrated below:
METAL HALIDE INTEGRATION CHART
Vertical Integration from Materials through Systems
Products for Manufacturers Products for End Users Innovative Products
MATERIALS Metal Halide
Systems
LAMPS Produced by the New
Company Applications
POWER SUPPLIES Commercial/
Industrial/ -Fiber Optics
CONTROLS Outdoor -Residential
Replacement Parts Applications -Headlights
OPTICS/COATINGS Sold to End Users -Projection TV
Metal Halide Systems
Produced by
Third Parties
We produce over 300 ultra-pure metal halide salts, which are the primary
ingredients in our lamps that give the lamps their superior lighting quality and
true-to-life color. 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. We currently market over 460 types of metal halide
lamps (76 specialty, 258 "second generation" Uni-Form(R) pulse start and 132
standard-type), 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 an end user may install to produce light. We produce optical thin
film coatings for a variety of applications. We also produce the instruments for
measuring and testing film coatings.
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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.
Due to metal halide's superior lighting characteristics and efficiency, we
believe many opportunities exist to "metal halidize" lighting markets currently
dominated by older incandescent and fluorescent lighting. Metal halide lamps
cannot be used in the incandescent and fluorescent lighting fixtures which are
very common in existing commercial and industrial facilities. 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. 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. The lighting industry has
introduced metal halide systems 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, 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 new and technically superior metal halide system
components and complete 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 "ADLT" are to our company, Advanced Lighting Technologies, Inc.,
and, usually, to its operating units.
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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.
METAL HALIDE LAMPS, OUR PRIMARY PRODUCT, MUST GAIN WIDER MARKET ACCEPTANCE
We derive a substantial portion 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 10% of domestic lamp sales in
1999 compared to fluorescent and incandescent lamps which represented
approximately 85% of the same market. We attribute our success to the increased
acceptance 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 competitors may introduce better lighting technologies, displacing
metal halide lighting in the market. Either of these occurrences could have a
material adverse effect on our business and our results of operations.
GENERAL ELECTRIC COMPANY'S RELATIONSHIP WITH US COULD AFFECT OUR RELATIONSHIP
WITH OTHER LIGHTING COMPANIES AND LIMIT OUR ABILITY TO GROW
General Electric Company made an investment that improved our balance
sheet. This investment is expected to increase our operating flexibility. In
addition, we anticipate that this will strengthen our supplier-customer
relationship with GE. However, we do not yet know if this increased investment
will have an adverse affect on our relationship with other major companies in
the lighting business. ADLT has not experienced any adverse impact from these
other companies since the March 1999 public announcement of the agreement in
principle regarding the investment. Pursuant to the terms of the GE investment
agreement, GE has the right, by converting its preferred shares and exercising
warrants, to acquire approximately 4 million of our common shares. If ADLT fails
to maintain the required ratio of earnings before interest and taxes to interest
charges for a six-month measurement period, GE would obtain the right to
purchase and vote additional shares of our stock and, upon failure for a second
measurement period, to acquire voting control of ADLT. The existence of a large
block of shares which could effectively control our shareholder votes, or which
could be sold in public or private sales, may limit our ability to obtain
financing in the future from other sources, including public offerings or
private sale of our common stock.
GENERAL ELECTRIC COMPANY'S RIGHTS COULD LIMIT OUR FINANCIAL ALTERNATIVES
GE has the right to make us redeem their preferred stock after five years.
GE also has the right to make us redeem their preferred stock if the necessary
governmental approvals are not granted in connection with GE's rights to acquire
more of our shares in the future or if we take certain actions, including
issuing additional common shares and borrowing more than a total of $210
million. The existence of these limits may reduce the ability of ADLT to obtain
financing in the future. If we have to redeem the preferred stock, our financial
resources will be reduced. Under certain circumstances, redeeming the preferred
stock would cause a default under the indenture governing our 8% Senior Notes
Due 2008, which we refer to in this prospectus as the 8% Notes indenture.
Although GE cannot make us redeem their preferred stock if such a default would
result, the failure to redeem GE's preferred stock after GE makes a request for
redemption could adversely affect our relationship with GE.
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OUR DEGREE OF INDEBTEDNESS COULD LIMIT OUR ABILITY TO GROW AND REACT TO CHANGES
IN MARKET CONDITIONS
At March 31, 2000, we had approximately $164.2 million of total
indebtedness outstanding and $100.1 million of preferred and common
shareholders' equity. At March 31, 2000, we also had $20.2 million available
(subject to borrowing base compliance and other limitations) to be drawn under
our bank credit facility.
The indentures under which we have issued and may 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.
OPERATING WITHOUT ADDITIONAL CASH RESOURCES COULD AFFECT OUR OPERATIONS AND
GROWTH
In the last half of fiscal 1999, we instituted cost reduction measures
intended to allow our operations to produce more cash revenues than we spend on
operations. We have spent more money on our operations than the revenues our
operations have generated in each of our last three fiscal years and the first
nine months of fiscal year 2000, and have spent more money on operations and
investing in our business than our operations have generated in each of our last
four fiscal years and in the first nine months of fiscal year 2000. While we
believe we will generate more cash in our operations than we are spending on
operations, we can't assure investors that the cost-saving measures will
generate positive cash flow from our operations in the future. In addition, we
are not currently generating sufficient cash in our business to make the
investments in our future growth which we would like. Our ability to borrow
additional money under our $60 million bank credit facility which we entered
into on May 21, 1999 is limited. In order to have enough cash for future
operations and growth, we must generate greater net cash flow and/or demonstrate
our ability to achieve acceptable financial results in order to increase our
access to additional cash resources from lenders and investors.
OUR LOAN TO MR. HELLMAN MAY AFFECT OUR CAPITAL RESOURCES
On October 8, 1998, we made a $9 million loan to Wayne R. Hellman, our
Chairman and CEO. The loan was due on October 6, 1999. Mr. Hellman has paid
interest accrued on the loan through October 6, 1999. The term of the loan has
been extended. If Mr. Hellman doesn't repay the loan in accordance with the
current understanding, it could materially and adversely affect our ability to
obtain money from lenders and investors. If we take action to make Mr. Hellman
pay the loan, it may hurt Mr. Hellman's performance, which could hurt our
operations.
OUR ABILITY TO DEVELOP AND BROADEN PRODUCT LINES IS IMPORTANT FOR OUR BUSINESS
We have recently broadened our systems and components product line. 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.
OUR BUSINESS SUCCESS HAS BEEN BASED ON NEW PRODUCTS, AND NEW PRODUCTS ARE
DIFFICULT TO INTRODUCE SUCCESSFULLY
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. Even though we spent significant amounts on
research and development in fiscal 1999 and in prior years, we may not be able
to develop or introduce innovative
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products in the future. 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
inability could adversely affect our financial results.
OUR SIGNIFICANT PAST GROWTH AND FUTURE GROWTH OBJECTIVES STRAIN OUR RESOURCES
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 may 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 and seek to expand our distribution capabilities. We
may also seek to acquire and/or invest in related businesses inside and outside
of 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, components, systems 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 may 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.
WE MAY NOT BE ABLE TO REALIZE BENEFITS FROM ACQUISITIONS AND INVESTMENTS
In order to implement our business strategy, we may 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 significant
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. Our possible future acquisitions or investments
could result in additional debt, contingent liabilities and amortization
expenses related to goodwill and other intangible assets, as well as write-offs
of unsuccessful acquisitions, any or all of which could materially adversely
affect our performance, and, therefore, holders of our securities. We have made
several acquisitions since 1997, including our largest acquisition to date, Ruud
Lighting, Inc., 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.
THE EXTENT OF OUR INTERNATIONAL BUSINESS OPERATIONS COULD HURT OUR PERFORMANCE
We have derived, 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 represented approximately 33% of our net sales for
fiscal 1999. 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
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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.
Approximately 25% of our net sales in fiscal 1999 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.
WE MAY NOT BE ABLE TO PROTECT OUR IMPORTANT PATENTS AND TRADE SECRETS AND OTHERS
MAY ENFORCE RIGHTS AGAINST US
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 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.
IF WE LOSE OUR KEY PERSONNEL, IT WOULD ADVERSELY AFFECT OUR BUSINESS
We are highly dependent on the continued services of Wayne R. Hellman, our
founder, Chairman, Chief Executive Officer, and principal shareholder. We and
Mr. Hellman have entered into an employment agreement providing for a term
ending December 31, 2003. 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 are the beneficiary of life insurance which we maintain with
respect to Mr. Hellman, in the amount of $8 million, and Mr. Ruud, in the amount
of $2 million.
CONTROL OF OUR STOCK BY PRINCIPAL SHAREHOLDERS MAY ALLOW THEM TO INFLUENCE
SIGNIFICANTLY SHAREHOLDER DECISIONS
Mr. Hellman individually owns approximately 9.4% of the outstanding shares
of our common stock and, individually and in other capacities, has the power to
vote a total of 19.4% of the outstanding shares of common stock (or
approximately 16.9% of the shareholder voting power). Mr. Ruud individually owns
approximately 10.5% of the outstanding shares of common stock and, individually
and as a voting trustee, has the power to vote a total of approximately 17.8% of
the outstanding shares of common stock (or approximately 15.5% of the
shareholder voting power). GE owns shares of our preferred stock with voting
power equivalent to approximately 13.0% of our common stock and GE owns
approximately 2.6% of our common stock. This gives GE approximately 15.2% of
total shareholder voting power, subject to increase upon exercise of its warrant
to purchase one million shares of our common stock. In addition to GE's
ownership, under certain circumstances GE may in the future gain the right to
vote shares owned or voted by Mr. Hellman and Mr. Ruud. As a result, although
GE, Mr. Hellman and Mr. Ruud have no arrangement or
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understanding of any kind with each other as to the current voting of their
shares, either GE, Mr. Hellman or Mr. Ruud, or any combination of them, 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 our affairs and our management), 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.
IF GE OR ANOTHER INVESTOR CAN VOTE MORE THAN 35% OF OUR STOCK, WE MAY HAVE TO
REPAY LOANS
If GE, or any investor or group of investors, other than Mr. Hellman or his
family, get the right to vote more than 35% of our stock, our credit facility
banks will have the right to demand payment under our revolving and term loans
and we will have to offer to repurchase our 8% Notes at a purchase price of 101%
of the face amount thereof, together with unpaid interest. These provisions may
make it more difficult for someone to take us over. We can't be sure that we
will have adequate resources to meet our obligations relating to these loans and
our 8% Notes if an investor gains a 35% voting interest. Even if we can meet
these obligations, if we have to repay the credit facility banks and repurchase
our 8% Notes, it could hurt our ability to finance operations and future growth.
OUR STOCK PRICE HAS VARIED WIDELY
Our common stock first became publicly traded in December 1995. After the
initial public offering, the stock price rose substantially from the initial
public offering price of $10 per share. The price of our common stock has varied
widely. In October 1998, the closing price of our stock reached as low as
$4.875. Such wide variation and the possibility of wide variation in the future
may make it difficult for us to sell additional shares of stock at prices which
we believe reflect the value of our stock or make it difficult to sell stock at
all. If we can't sell stock to obtain the money we need, it may be difficult to
operate and grow.
ENVIRONMENTAL REGULATIONS COULD STRAIN OUR RESOURCES
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.
OUR PRIMARY COMPETITORS ARE MORE ESTABLISHED AND HAVE MORE RESOURCES
We compete with respect to our major products with numerous
well-established producers of materials, components, and 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 GE, Philips Electronics
N.V. and Siemens A.G.'s OSRAM/Sylvania, Inc. subsidiary in the sale of metal
halide lamps. We estimate, based on published industry data, 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.
9
<PAGE> 12
WE SELL PRODUCTS TO OUR COMPETITORS AND PURCHASE COMPONENTS FROM OUR COMPETITORS
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 $18.5
million in fiscal 1999, of which $13.5 million was from GE and $13.2 million in
the first nine months of fiscal 2000, of which $10.8 million was from GE) and
derive significant revenue from sales of our materials, components, and systems
to each of these three companies (aggregating $18.8 million in fiscal 1999, of
which $4.6 million was to GE and $18.6 million in the first nine months of
fiscal 2000, of which $5.5 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.
OUR AGREEMENTS WITH CREDITORS IMPOSE RESTRICTIONS THAT COULD IMPEDE OUR GROWTH
Our bank credit facility and the 8% Notes indenture contain certain
restrictive covenants, including, among others:
covenants limiting our ability 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.
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, our bank credit facility requires that we 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 our bank 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. We replaced our earlier credit facility in 1999 and we have
amended our bank credit facility since it was put into place, in part to amend
these covenants. As a growth company, we may need to amend or replace our bank
credit facility prior to its maturity on May 21, 2002.
10
<PAGE> 13
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 ADLT incorporated by reference into this
prospectus. The balance sheet data as of June 30, 1999, 1998, 1997 and 1996 and
the operating statement data for each of the fiscal years ended June 30, 1999,
1998, 1997, 1996 and 1995 are derived from the audited Consolidated Financial
Statements of ADLT. The balance sheet data as of June 30, 1995 are derived from
the audited Combined Financial Statements of ADLT's predecessor companies. The
balance sheet data as of March 31, 2000 and the operating statement data for the
nine months ended March 31, 2000 and 1999 have been derived from the Unaudited
Consolidated Financial Statements of ADLT, which have been prepared by
management on the same basis as the audited Consolidated Financial Statements of
ADLT and, in the opinion of management, include all adjustments (consisting of
normal recurring accruals) which ADLT 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 into this prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30,
-------------------- -----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Net sales............................ $171,010 $142,349 $193,203 $168,349 $86,490 $54,636 $40,767
Costs and expenses:
Cost of sales...................... 103,966 96,633 135,773 101,697 45,738 29,164 21,899
Marketing and selling.............. 31,159 32,828 45,035 29,990 15,832 8,755 6,381
Research and development........... 10,643 13,757 17,680 10,843 5,804 3,000 1,673
General and administrative......... 11,790 14,308 21,192 12,208 7,184 6,152 5,452
Settlement of claims (1) (2)....... -- -- -- -- 771 2,732 --
Fiber optic joint venture formation
costs............................ -- -- -- 212 286 -- --
Purchased research and development
(3).............................. -- -- -- 18,220 -- -- --
Special charges (3)................ (234) 18,564 31,107 15,918 -- -- --
Amortization of intangible
assets........................... 2,053 2,057 2,789 1,691 406 90 55
Restructuring (4).................. -- -- -- -- -- -- (121)
-------- -------- -------- -------- ------- ------- -------
Income (loss) from operations.......... 11,633 (35,798) (60,373) (22,430) 10,469 4,743 5,428
Interest income (expense), net......... (10,017) (9,114) (12,767) (2,388) (668) (1,316) (2,074)
Income (loss) from equity investment
(5).................................. 189 (442) (6,318) (501) -- -- --
Income (loss) from continuing
operations before income taxes,
minority interest, extraordinary
charge and accounting change......... 1,805 (45,354) (79,458) (25,319) 9,801 3,427 3,354
Income taxes (benefit)................. 549 3,181 2,281 (1,311) 2,697 910 212
-------- -------- -------- -------- ------- ------- -------
Income (loss) from continuing
operations before minority interest,
extraordinary charge and accounting
change............................... 1,256 (48,535) (81,739) (24,008) 7,104 2,517 3,142
Minority interest in income of
consolidated subsidiary.............. (13) -- -- -- -- -- --
Recontinuance of previously
discontinued operations (6).......... -- 1,023 1,331 (1,331) -- -- --
-------- -------- -------- -------- ------- ------- -------
Income (loss) before extraordinary
charge and accounting change......... 1,243 (47,512) (80,408) (25,339) 7,104 2,517 3,142
Extraordinary charge, net of applicable
income tax benefits (7).............. -- -- (902) (604) -- (135) (253)
Cumulative effect for change in
accounting (8)....................... -- (2,443) (2,443) -- -- -- --
-------- -------- -------- -------- ------- ------- -------
Net income (loss)...................... $ 1,243 $(49,955) $(83,753) $(25,943) $ 7,104 $ 2,382 $ 2,889
======== ======== ======== ======== ======= ======= =======
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30,
-------------------- -----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) per share -- diluted
(9):
Income (loss) from continuing
operations....................... $ .00 $ (2.40) $ (4.04) $ (1.32) $ .52 $ .12 $ .10
Recontinuance of previously
discontinued operations.......... -- .05 .07 (.07) -- -- --
Extraordinary charge............... -- -- (.05) (.04) -- (.01) (.03)
Cumulative effect for change in
accounting....................... -- (.12) (.12) -- -- -- --
-------- -------- -------- -------- ------- ------- -------
Net earnings (loss) per
share -- diluted................... $ .00 $ (2.47) $ (4.14) $ (1.43) $ .52 $ .11 $ .07
======== ======== ======== ======== ======= ======= =======
Shares used for computing per share
amounts -- diluted................. 21,086 20,222 20,232 18,195 13,558 9,479 7,818
======== ======== ======== ======== ======= ======= =======
OTHER FINANCIAL DATA:
Depreciation and amortization.......... $ 7,514 $ 6,934 $ 9,176 $ 5,314 $ 2,579 $ 1,638 $ 1,399
EBITDA (10)............................ 19,336 (29,306) (57,515) (17,617) 13,048 6,381 6,827
Ratio of EBITDA to interest expense
(10)................................. 1.8 -- -- -- 8.6 4.1 3.2
Capital expenditures................... $ 4,357 $ 20,781 $ 22,130 $ 32,579 $18,095 $ 5,050 $ 1,530
Cash flow from (used in) operations.... (12,658) (19,724) (19,312) (13,528) (4,183) 1,326 4,464
Cash flow from (used in) investing
activities........................... (8,134) (29,049) (28,914) (92,117) (44,058) (8,125) (1,530)
Cash flow from (used in) financing
activities........................... 20,706 38,765 29,889 123,614 50,757 7,451 (2,567)
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF JUNE 30,
MARCH 31, ------------------------------------------------------
2000 1999 1998 1997 1996 1995
----------- -------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 3,744 $ 3,830 $ 21,917 $ 4,198 $ 1,682 $ 1,030
Working capital (deficit)..................... 40,100 18,629 79,852 42,380 17,341 (870)
Total assets.................................. 306,137 284,506 329,434 134,838 56,297 29,402
Total long-term debt.......................... 157,770 152,496 117,756 35,908 11,034 8,853
Preferred stock (Redemption
value -- $21,356)........................... 16,411 -- -- -- -- --
Total common shareholders' equity (deficit)... 83,674 77,441 170,837 66,032 26,594 (1,035)
</TABLE>
- ---------------
(1) On March 1, 1996, a former shareholder of Venture Lighting International,
Inc ("Venture"), asserted a claim against certain officers and directors of
ADLT, and subsequently against ADLT, seeking $3,600 in damages relating to
the redemption of his Venture shares prior to ADLT'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 ADLT and such officers and directors seeking damages of
$1,600. On November 29, 1996, ADLT 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 ADLT. 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 ADLT. The settlement was
recorded as a noncash expense and an increase in paid-in capital of ADLT in
December 1995.
(3) Fiscal 1999 results include special charges related to ADLT's plans to
accelerate its focus on metal halide products, insulate it from
deteriorating economic conditions in the Pacific Rim, exit its noncore
products, integrate fully its core and acquired U.S. operations to produce
profitable growth and reduce its use of cash. Specific initiatives by ADLT
included principally: (a) limiting further Pacific Rim expansion, (b)
changing global lamp manufacturing strategy, (c) restructuring marketing
operations in North America and Europe, (d) accelerating exit from noncore
product lines, (e) consolidating equipment manufacturing operations, (f)
reducing corporate and administrative overhead, and (g) evaluating
long-lived assets. Also included in special charges are amounts related to
the wind-down of portable fixture manufacturing operations. The amounts are
classified in the fiscal 1999 statement of operations as: cost of
sales -- $3,956 and, special charges -- $31,107. ADLT recorded $19,372 of
these special charges in the first nine months of fiscal 1999, which were
classified in the statement of operations as: cost of sales -- $808 and,
special charges -- $18,564.
Fiscal 1998 results 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
$17,984 principally relating to the
12
<PAGE> 15
rationalization of ADLT's global power supply operations, principally: (a) the
discontinuance of certain power supply products at ADLT'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 fiscal 1998 statement of operations as:
cost of sales -- $2,066; purchased in-process research and
development -- $18,220; and, special charges -- $15,918.
(4) In fiscal 1994, ADLT recorded a provision of $852 for the costs,
principally inventory and equipment write-downs, in connection with exiting
a product line unrelated to lighting. In fiscal 1995, the disposition plan
was revised, resulting in a reduction of the original estimate by $121.
(5) In fiscal 1999, the loss from equity investments includes a pretax noncash
write-down of $5,883 related to ADLT's investment in the Unison joint
venture.
(6) Microsun Technologies, Inc. ("Microsun") was identified in March 1998 for
disposition through a plan to distribute to ADLT's shareholders all of the
ownership of Microsun in a tax-free spin-off transaction estimated to be
completed by December 1998. Because of the deterioration of the capital
markets and the inability to raise capital necessary to spin-off the
Microsun business, ADLT concluded that it would wind-down the operations,
close the manufacturing facilities and liquidate the assets of Microsun. In
October 1999, management decided, with the approval of the board of
directors to retain the Microsun business -- the portable lighting fixture
products business that uses metal halide lighting technology -- as part of
ADLT's continuing operation. In accordance with the accounting requirements
for recontinuance, the financial statements have been reclassified to
present Microsun within continuing operations.
(7) In fiscal 1999, ADLT incurred an extraordinary loss on the early
extinguishment of debt of $902. In fiscal 1998, ADLT incurred an
extraordinary loss on the early extinguishment of debt of $604. In fiscal
1996, ADLT incurred an extraordinary loss on the early extinguishment of
debt of $135. In fiscal 1995, ADLT incurred an extraordinary loss on the
early extinguishment of debt of $253.
(8) In fiscal 1999, ADLT recorded $2,443 as a cumulative change in accounting
principle relating to the write-off of start-up costs in accordance with
the American Institute of Certified Public Accountants' Statement of
Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities." SOP
98-5 provides authoritative guidance on accounting for and financial
reporting of start-up costs and organization costs, and required that ADLT
expense all previously capitalized start-up costs and organization costs as
a cumulative effect of a change in accounting principle.
(9) Net earnings per share is based upon the income attributable to holders of
common stock. Such income has been decreased by preferred share accretion
of $1,208 ($.06 per share) in the nine months ended March 31, 2000, and by
preferred stock dividends and increases in the value of warrants
aggregating $1,350 ($.14 per share) in fiscal 1996 and $2,360 ($.30 per
share) in fiscal 1995.
(10) EBITDA is provided because it is a measure commonly used to evaluate a
company's ability to service its indebtedness. EBITDA is presented to
enhance the understanding of ADLT's operating results and is not intended
to represent cash flows or results of operations in accordance with GAAP
for the periods indicated. EBITDA is not a measurement under GAAP and is
not necessarily comparable with similarly titled measures of other
companies. Net cash flows from operating, investing and financing
activities as determined using GAAP are also presented in Other Financial
Data. In the nine months ended March 31, 1999, EBITDA was inadequate to
cover interest expense by $39,315. In fiscal 1999, EBITDA was inadequate to
cover interest expense by $71,404. In fiscal 1998, EBITDA was inadequate to
cover interest expense by $21,435.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
MARCH 31, YEAR ENDED JUNE 30,
----------- --------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (1)............... 1.0x -- -- -- 4.8x 2.0x 1.7x
Ratio of earnings to fixed charges and preferred
stock dividends (1)................................ 1.0x -- -- -- 4.8x 2.0x 1.7x
</TABLE>
- ---------------
(1) For purposes of calculating the unaudited ratio of earnings to fixed
charges, earnings consist of income (loss) from continuing operations before
provision for income taxes plus fixed charges. Fixed charges consist of
interest charges and amortization of debt issuance cost, whether expensed or
capitalized, and that portion of rental expense that is representative of
interest. In the nine months ended March 31, 1999, earnings were inadequate
to cover fixed charge requirements by $45,902,000. In fiscal 1999, earnings
were inadequate to cover fixed charge requirements by $80,103,000. In fiscal
1998, earnings were inadequate to cover fixed charge requirements by
$26,437,000.
13
<PAGE> 16
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 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.
DESCRIPTION OF DEBT SECURITIES
ADLT 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 debt securities or subordinated debt securities of ADLT
issued in one or more series under an indenture, as supplemented or amended from
time to time, to be entered into between ADLT and one or more U.S. banking
institutions, as 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. 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
14
<PAGE> 17
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 ADLT 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 our 8% Senior Notes Due 2008, which we refer to as the 8%
Notes, which we may issue 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 the 8% Notes indenture. 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 thereunder up to an aggregate principal amount which we
may authorize from time to time. 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 ADLT's
option or are subject to repurchase at the holder's option;
(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;
15
<PAGE> 18
(11) whether any such debt securities are to be issuable as registered
securities or bearer securities 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 ADLT 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 defined in the
indenture, 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 ADLT 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 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 ADLT 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
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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 ADLT, 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.
Unless we specify otherwise in the applicable prospectus supplement, the
covenants contained in the indenture and the debt securities will not provide
special protection to holders of debt securities if we enter into a highly
leveraged transaction, recapitalization or restructuring. In addition, unless we
specify otherwise in the applicable prospectus supplement, nothing in the
indenture or the debt securities will in any way limit the amount of
indebtedness or securities that we or our subsidiaries, may incur or issue.
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 ADLT 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 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 ADLT 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 ADLT 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 ADLT 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 ADLT 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.
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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 ADLT 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 ADLT is illegal or effectively precluded by
exchange controls or similar restrictions.
Unless otherwise indicated in the applicable prospectus supplement, ADLT
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
ADLT and will rank on a parity in right of payment with all other unsecured and
unsubordinated indebtedness of ADLT, including the 8% Notes. At March 31, 2000,
ADLT had approximately $164.2 million of total indebtedness outstanding.
Although the senior debt securities and the 8% Notes will rank equally
("pari passu") in right of payment with indebtedness outstanding under ADLT's
$60.0 million bank credit facility entered into on May 21, 1999 (as amended, the
"credit facility"), such indebtedness is secured by substantially all of the
personal property of ADLT and each of its North American and United Kingdom
subsidiaries and a pledge of stock of each of ADLT'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, ADLT's assets would first be used
to repay in full amounts outstanding under the credit facility, resulting in
virtually all of ADLT'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
ADLT's remaining assets.
ADLT 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 ADLT's subsidiaries, including trade
payables. At March 31, 2000, the total liabilities of ADLT's subsidiaries,
excluding intercompany debt but including trade payables, were approximately
$64.6 million. At March 31, 2000, ADLT and its subsidiaries would also have had
$20.2 million available (subject to borrowing base compliance and other
limitations) to be drawn under the credit facility, which is secured as
described above.
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ADLT'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 ADLT itself may be a creditor with
recognized claims against the subsidiary, in which case the claims of ADLT 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 ADLT. 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 ADLT
under the senior debt securities and the 8% Notes.
Because ADLT conducts substantially all of its operations through its
subsidiaries, ADLT 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. ADLT'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 ADLT in the form of dividends,
loans, or advances.
The subordinated debt securities will be unsecured obligations of ADLT and
will be subordinated in right of payment to all existing and future senior
indebtedness (as defined in the applicable prospectus supplement) of ADLT. 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 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 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 ADLT 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 prospectus
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.
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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 ADLT or any obligor on such debt security or
any affiliate of ADLT 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 ADLT,
may be subject to mandatory redemption pursuant to a sinking fund or otherwise,
or may be subject to repurchase by ADLT 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 ADLT.
COVENANTS OF ADLT
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.
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 ADLT 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 ADLT 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 ADLT 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
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thereunder, which acceleration is not annulled or which indebtedness is
not discharged within 30 days thereafter;
(6) ADLT 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 ADLT; 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 ADLT with the trustee of a certificate
as to whether or not ADLT is in default under the terms of the indenture.
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 ADLT, the indenture shall cease to be of further
effect with respect to any series of debt securities issued thereunder specified
by ADLT (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
ADLT 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) ADLT 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, ADLT will remain obligated, following such
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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, ADLT 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 ADLT (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 ADLT 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) ADLT 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 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 ADLT, 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 ADLT 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, ADLT 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 ADLT 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
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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 ADLT 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 ADLT 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.
The holders of a majority in aggregate principal amount of the outstanding
debt securities of any series may waive compliance by ADLT 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 ADLT 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
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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 ADLT, 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 ADLT 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. ADLT 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, as
supplemented (the "8% Notes Indenture") between ADLT 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 ADLT. The 8% Notes will be effectively subordinated to all
secured indebtedness of ADLT and its subsidiaries with respect to the collateral
securing such indebtedness, and the 8% Notes will be effectively subordinated to
all liabilities of ADLT'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 ADLT and certain of its subsidiaries
(as defined in the 8% Notes Indenture) 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 ADLT, 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 ADLT, 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.
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In addition, at any time and from time to time prior to March 15, 2001,
ADLT 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 ADLT 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 ADLT of its common stock.
Change of Control. Upon the occurrence of certain events deemed to
constitute a change of control of ADLT, ADLT 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 ADLT 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 ADLT 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 ADLT 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 ADLT or
certain of its subsidiaries.
The 8% Notes Indenture requires ADLT to provide periodic and other reports
containing evidence of ADLT's compliance with the terms of the 8% Notes
Indenture.
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 ADLT and the 8% Notes Trustee with the consent of the
holders of not less than a majority in aggregate
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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
ADLT'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 April 30, 2000, 20,449,898
shares of common stock and 761,250 shares of Series A Convertible Preferred
Stock (the "Series A 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 voting power of the issued
and outstanding common stock and preferred stock will have the right to elect
ADLT's directors and otherwise control the affairs of ADLT.
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 to retain any funds generated from
operations to finance the development of ADLT's business. The payment of
dividends in the future will depend upon earnings, capital needs, and other
factors.
Upon a liquidation of ADLT, holders of common stock will be entitled to a
pro rata distribution of the assets of ADLT, after payment of all amounts owed
to ADLT's creditors, and subject to any preferential amount payable to holders
of preferred stock of ADLT, if any.
PREFERRED STOCK
General
ADLT's articles of incorporation permit ADLT'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.
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Terms of the Series A Stock
The Series A Stock is a newly authorized series of preferred stock of ADLT
created for issuance to General Electric Company. 761,250 shares of Series A
Stock have been authorized and issued to GE. The Series A Stock has a
liquidation preference of $27 per share, plus an amount equal to 8% per annum
compounded annually from the date of issuance to the date of payment
("Liquidation Preference Amount").
Each outstanding share of Series A Stock is convertible at any time into
four shares (subject to adjustment as described below) of common stock of ADLT.
Prior to conversion, holders of Series A Stock are entitled to vote in all
shareholder matters together with the holders of common stock as a single class.
In any such vote, the holders of Series A Stock are entitled to four votes
(equal to the number of shares of common stock into which the Series A Stock
held may initially be converted).
ADLT is required to redeem any shares of Series A Stock which have not been
converted or retired on September 30, 2010. Any such redemption would be made at
the Liquidation Preference Amount. In addition, holders of the Series A Stock
may require ADLT to redeem their shares of Series A Stock by giving notice to
ADLT on or before September 30, 2004. If such notice is given, ADLT will be
required to make such redemption on or prior to September 30, 2005. In addition,
holders of Series A Stock will be entitled to require ADLT to redeem the Series
A Stock following the occurrence of any of the following events (each a
"Triggering Event"): any action by ADLT to give effect to certain major
corporate actions, including actions to merge, sell all or a substantial portion
of its assets (other than in the ordinary course of business), issue capital
stock, incur or have outstanding indebtedness for borrowed money in excess of
$210 million. Upon the occurrence of a Triggering Event, the holders of the
Series A Stock may require ADLT to redeem their shares of Series A Stock by
giving notice to ADLT within 90 days following the Triggering Event. If such
notice is given, ADLT will be required to make such redemption within one year
following such notice. Any such redemption would be made at the Liquidation
Preference Amount. Under the terms of ADLT's bank credit facility and the 8%
Notes Indenture, the redemption of the Series A Stock would currently constitute
an event of default, permitting acceleration of the related indebtedness. If
prior consent of the banks is obtained, the redemption is permitted under the
bank credit facility. Payments for the redemption of equity securities are
"Restricted Payments" under the 8% Notes Indenture. The total of all "Restricted
Payments" under the 8% Notes Indenture (with exceptions not applicable to stock
redemption) cannot exceed one-half of the total of consolidated net earnings of
ADLT (excluding consideration of certain unusual items) from April 1, 1998
(taken as a single period) plus the amount of proceeds received from sales of
non-redeemable stock. As of March 31, 2000, ADLT had a net loss, excluding
extraordinary items, of $79.7 million for the period. Until this deficit has
been cured, and sufficient proceeds are received and/or earnings are achieved,
ADLT cannot redeem the Series A Stock without causing an event of default with
respect to the 8% Notes. In addition, the 8% Notes Indenture prohibits
Restricted Payments (with exceptions not applicable to stock redemptions) at any
time where the ratio of EBITDA to Interest Expense for the preceding four fiscal
quarters does not exceed 2.5 to 1.
If ADLT fails to make any redemption as required (subject to permitted
deferrals in the event that such redemption would cause an event of default with
respect to certain indebtedness of ADLT), the conversion ratio of the Series A
Stock would be increased from four shares of common stock to eight shares of
common stock per share of Series A Stock. In addition, the conversion ratio is
subject to adjustment to prevent dilution of the interest of GE by the issuance
of common stock after October 6, 1999. Except for issuance of shares under
existing employee benefit plans, and certain other enumerated exceptions, any
shares of common stock issued at a price below $6.75 per share, or, if higher,
below the then current market price, would result in adjustment of the
conversion ratio. Any adjustment in the conversion ratio would not affect the
voting power represented by shares of Series A Stock prior to conversion.
Upon liquidation, each share of Series A Stock will be entitled to be paid
the Liquidation Preference Amount prior to any payment or distribution to the
holders of common stock. Following such payment, holders of Series A Stock will
be entitled to a proportional share of any distribution to holders of common
stock based on the number of shares of common stock into which the Series A
Stock could have been converted at the time of the liquidation.
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Additional Series of Preferred Stock
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 ADLT.
The terms of any additional series of preferred stock, including preferred
stock represented by depositary shares, will be described in the applicable
prospectus supplement.
CERTAIN PROVISIONS OF ADLT'S ARTICLES OF INCORPORATION
ADLT'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 ADLT may remove directors with or without cause.
The above-described provisions of ADLT'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 ADLT'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
ADLT is subject to anti-takeover provisions under certain Ohio laws that
apply to Ohio public corporations, unless ADLT elects to opt out of these
provisions in its articles of incorporation or regulations (by-laws). ADLT has
opted out of the Ohio Control Share Acquisition Act.
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. ADLT 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.
ADLT 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
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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.
ADLT 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 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 ADLT, as well as the communities in which
ADLT is located, in addition to the interest of ADLT and its shareholders, in
discharging their duties in determining what is in ADLT'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 ADLT'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 ADLT's common stock.
The transfer agent for any series of preferred stock will be named in the
applicable prospectus supplement.
DESCRIPTION OF DEPOSITARY SHARES
ADLT 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, ADLT will
enter into a deposit agreement with a bank or trust company, as preferred stock
depositary, which will be named in the applicable prospectus supplement.
Depositary shares will be evidenced by 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
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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
ADLT 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 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 ADLT, ADLT 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 ADLT, 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 ADLT
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 ADLT 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.
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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 ADLT, 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 ADLT 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 ADLT 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 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 ADLT, then, whenever ADLT 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 ADLT 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 ADLT. 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 ADLT 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 ADLT 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. ADLT, upon
receipt of such instructions and subject to ADLT having funds legally available
therefor, will repurchase the requisite whole number of shares
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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
ADLT will agree to take all reasonable action which may be deemed necessary by
the preferred stock depositary in order to enable the 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 ADLT for other securities, then, whenever ADLT 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 ADLT 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 ADLT. Unless otherwise stated in the applicable prospectus
supplement, fractional share interests resulting from any conversion or exchange
will be redeemed by ADLT 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 ADLT 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. ADLT, 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
32
<PAGE> 35
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
ADLT 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 ADLT 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 ADLT has deposited such cash with
the preferred stock depositary). If ADLT does not deposit cash adequate to pay
amounts with respect to any fractional shares, ADLT will remain obligated to pay
such amounts, but the preferred stock depositary will not be required to advance
any amounts on behalf of ADLT. 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 ADLT.
CHARGES OF PREFERRED STOCK DEPOSITARY
ADLT 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 ADLT
notice of its election to do so, and ADLT 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 ADLT which are received by the
preferred stock depositary with respect to the related preferred stock.
Neither the preferred stock depositary nor ADLT 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 ADLT
and the preferred stock depositary under the deposit agreement will be limited
to performing their duties thereunder without gross negligence or willful
misconduct, and ADLT 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. ADLT 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
33
<PAGE> 36
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 ADLT, on the other hand, the preferred stock depositary shall be
entitled to act on such claims, requests or instructions received from ADLT.
DESCRIPTION OF WARRANTS
ADLT may issue warrants for the purchase of registered debt securities,
common stock or preferred stock. ADLT has one warrant (besides options issued
under stock option plans) issued to GE for the immediate exercise and purchase
of 1,000,000 shares of common stock, subject to adjustment if, prior to GE's
exercise, ADLT issues common stock priced below $6.75 per share (or, if higher,
below the then current market price). ADLT issued to GE this warrant
concurrently with GE's investment in ADLT's Series A Stock. ADLT may issue
warrants independently or together with any other securities offered by any
prospectus supplement, and such warrants may be attached to or separate from the
other securities. Each series of warrants will be issued under a separate
warrant agreement into which ADLT and a warrant agent will enter, as specified
in the applicable prospectus supplement. The warrant agent will act solely as
ADLT's agent in issuing the warrant(s); the warrant agent will not assume any
obligation or agency or trust relationship.
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.
LEGAL MATTERS
Certain legal matters in connection with the validity of the securities
offered hereby will be passed upon for ADLT by Cowden, Humphrey & Sarlson Co.,
L.P.A., counsel to ADLT, and Brown & Wood LLP, New York, New York, special
counsel to ADLT 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, 1999, and for the year ended June 30, 1999
included in its Annual Report (Form 10-K/A No. 3) for the year ended June 30,
1999, have been audited by Grant Thornton LLP, independent auditors as set forth
in their report thereon, included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing. The consolidated financial statements of Advanced Lighting
Technologies, Inc. at June 30, 1998 and for each of the two years in the period
ended June 30, 1998 included in Advanced Lighting Technologies, Inc.'s Annual
Report (Form 10-K/A No. 3) for the year ended June 30, 1999, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon, included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
34
<PAGE> 37
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
at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-
SEC-0330 for more information on the operation of the public reference room. The
SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers, like us, that file
electronically 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/A No. 3 of ADLT for the year ended June 30,
1999.
- Quarterly Reports on Form 10-Q of ADLT for the quarters ended December
31, 1999 and March 31, 2000 and Quarterly Report on Form 10-Q/A of ADLT
for the quarter ended September 30, 1999.
- The description of the common stock contained in ADLT'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. We will provide you with copies of these filings, at
no cost to you, if you make a written or oral request 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.
35
<PAGE> 38
- ------------------------------------------------------
- ------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY SUPPLEMENT. NO ONE IS AUTHORIZED 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.
------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$100,000,000
ADVANCED LIGHTING
TECHNOLOGIES, INC.
DEBT SECURITIES, COMMON STOCK,
PREFERRED STOCK, DEPOSITARY SHARES
AND WARRANTS
------------------------
PROSPECTUS
------------------------
, 2000
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 39
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)
3.3 Certificate of Adoption of Amended and Restated Articles of
Incorporation of the Company filed October 6, 1999 with the
Secretary of State of Ohio (incorporated by reference to
Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q
for the Quarterly Period ended December 31, 1999)
3.4 Certificate of Adoption of Fourth Amendment to Second
Amended and Restated Articles of Incorporation of the
Company filed March 16, 2000 with the Secretary of State of
Ohio (incorporated by reference to Exhibit 3.3 to the
Company's Quarterly Report on Form 10-Q for the Quarterly
Period ended March 31, 2000)
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*
</TABLE>
II-1
<PAGE> 40
<TABLE>
<C> <S>
4.8 Form of Warrant Agreement*
4.9 Form of Deposit Agreement*
4.10 Form of 8% Senior Note due 2008**
4.11 First Supplemental Indenture dated September 25, 1998
between Advanced Lighting Technologies, Inc. and the Bank of
New York amending the Indenture dated March 18, 1998
(Incorporated by reference to Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q/A for the Quarterly Period
ended December 31, 1998)
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)
23.4 Consent of Grant Thornton LLP, Independent Auditors
24.1 Powers of Attorney**
24.2 Powers of Attorney of Messrs. Breen and Lime
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
II-2
<PAGE> 41
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 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> 42
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 3 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 MAY 8, 2000.
ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/Alan J. Ruud
----------------------------------------
Alan J. Ruud, President
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 May 8, 2000
- ------------------------------------------------
Wayne R. Hellman
/s/ Nicholas R. Sucic Chief Financial Officer, Vice May 8, 2000
- ------------------------------------------------ President and Treasurer (Chief
Nicholas R. Sucic Accounting Officer)
/s/ Francis H. Beam Director May 8, 2000
- ------------------------------------------------
Francis H. Beam*
/s/ John E. Breen Director May 8, 2000
- ------------------------------------------------
John E. Breen*
/s/ John R. Buerkle Director May 8, 2000
- ------------------------------------------------
John R. Buerkle*
/s/ Theodore A. Filson Director May 8, 2000
- ------------------------------------------------
Theodore A. Filson*
/s/ Louis S. Fisi Director May 8, 2000
- ------------------------------------------------
Louis S. Fisi*
/s/ Susuma Harada Director May 8, 2000
- ------------------------------------------------
Susuma Harada*
/s/ Thomas K. Lime Director May 8, 2000
- ------------------------------------------------
Thomas K. Lime*
/s/ Alan J. Ruud Director May 8, 2000
- ------------------------------------------------
Alan J. Ruud*
/s/ A Gordon Tunstall Director May 8, 2000
- ------------------------------------------------
A Gordon Tunstall*
* The undersigned, by signing his name hereto, does hereby execute this Amendment No. 3 to the
Registration Statement on behalf of the above indicated officers and directors of Advanced Lighting
Technologies, Inc., pursuant to 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.
</TABLE>
By: /s/WAYNE R. HELLMAN
--------------------------------------
Wayne R. Hellman,
Attorney-in-Fact
II-4
<PAGE> 43
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <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)
3.3 Certificate of Adoption of Amended and Restated Articles of
Incorporation of the Company filed October 6, 1999 with the
Secretary of State of Ohio (incorporated by reference to
Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q
for the Quarterly Period ended December 31, 1999)
3.4 Certificate of Adoption of Fourth Amendment to Second
Amended and Restated Articles of Incorporation of the
Company filed March 16, 2000 with the Secretary of State of
Ohio (incorporated by reference to Exhibit 3.3 to the
Company's Quarterly Report on Form 10-Q for the Quarterly
Period ended March 31, 2000)
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**
4.11 First Supplemental Indenture dated September 25, 1998
between Advanced Lighting Technologies, Inc. and the Bank of
New York amending the Indenture dated March 18, 1998
(Incorporated by reference to Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q/A for the Quarterly Period
ended December 31, 1998)
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)
23.4 Consent of Grant Thornton LLP, Independent Auditors
24.1 Powers of Attorney**
24.2 Powers of Attorney of Messrs. Breen and Lime
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
ADVANCED LIGHTING TECHNOLOGIES, INC.
EXHIBIT 12 -- STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------- -----------------
2000 1999 2000 1999
---- ---- ---- ----
Consolidated pretax income
from continuing operations $ 1,268 $ (9,344) $ 1,805 $(45,354)
Interest expense 3,580 3,809 10,693 9,990
Interest portion of rent expense 126 126 405 429
-------- --------- -------- ---------
EARNINGS $ 4,974 $ (5,409) $ 12,903 $(34,935)
======== ========= ======== =========
Interest expense $ 3,580 $ 3,809 $ 10,693 $ 9,990
Interest capitalized 94 90 290 548
Interest portion of rent expense 126 126 405 429
Preferred shares accretion 605 -- 1,208 --
-------- --------- -------- ---------
FIXED CHARGES $ 4,405 $ 4,025 $ 12,596 $ 10,967
======== ========= ======== =========
RATIO OF EARNINGS TO FIXED CHARGES 1.1 -- 1.0 --
======== ========= ======== =========
For purposes of calculating the unaudited ratio of earnings to fixed charges,
earnings consist of income (loss) from continuing operations before provision
for income taxes plus fixed charges. Fixed charges consist of interest charges
and amortization of debt issuance costs, whether expensed or capitalized, that
portion of rental expense that is representative of interest, and preferred
shares accretion. In the three months ended March 31, 1999, earnings were
inadequate to cover fixed charge requirements by $9,434. In the nine months
ended March 31, 1999, earnings were inadequate to cover fixed charge
requirements by $45,902.
<PAGE> 2
Exhibit 12
Page 2
ADVANCED LIGHTING TECHNOLOGIES, INC.
EXHIBIT 12 -- STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Consolidated pretax income (loss)
from continuing operations $ (79,458) $ (25,319) $ 9,801 $ 3,427 $ 3,354
Interest 13,889 3,818 1,513 1,548 2,107
Increase in value of warrants - - - 1,350 2,302
Interest portion of rent expense 626 498 492 297 204
Preferred stock dividend requirements
of majority-owned subsidiaries - - - - 62
------------- ------------ ------------ ------------- ------------
EARNINGS (LOSS) $ (64,943) $ (21,003) $ 11,806 $ 6,622 $ 8,029
============= ============ ============ ============= ============
Interest $ 13,889 $ 3,818 $ 1,513 $ 1,548 $ 2,107
Increase in value of warrants - - - 1,350 2,302
Interest capitalized 645 1,118 455 98 9
Interest portion of rent expense 626 498 492 297 204
Preferred stock dividend requirements
of majority-owned subsidiaries - - - - 62
------------- ------------ ------------ ------------- ------------
FIXED CHARGES $ 15,160 $ 5,434 $ 2,460 $ 3,293 $ 4,684
============= ============ ============ ============= ============
RATIO OF EARNINGS TO FIXED CHARGES - - 4.8 2.0 1.7
============= ============ ============ ============= ============
</TABLE>
For purposes of calculating the unaudited ratio of earnings to fixed charges,
earnings consists of income (loss) from continuing operations before provision
for income taxes plus fixed charges. Fixed charges consist of interest charges
and amortization of debt issuance cost, whether expensed or capitalized, and
that portion of rental expense that is representative of interest. Earnings were
inadequate to cover fixed charge requirements by $80,103 in fiscal 1999 and by
$26,437 in fiscal 1998.
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 3 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 28, 1998 (except for the sixth paragraph of Note C, as to
which the date is March 15, 1999 and except for the information related to the
year ended June 30, 1998 included in Note L, as to which the date is April 24,
2000), with respect to the consolidated financial statements of Advanced
Lighting Technologies, Inc. at June 30, 1998 and for each of the two years in
the period ended June 30, 1998, included in its Annual Report (Form 10-K/A
No. 3) for the year ended June 30, 1999, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Cleveland, Ohio
May 8, 2000
<PAGE> 1
Exhibit 23.4
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 3 to the Registration Statement (Form S-4, No. 333-58621) and the
related Prospectus of Advanced Lighting Technologies, Inc. pertaining to the
registration of $100,000,000 of securities, and to the incorporation by
reference therein of our report dated September 24, 1999, except for Note U, as
to which the date is September 28, 1999 and Note L, as to which the date is
October 11, 1999, with respect to the consolidated financial statements of
Advanced Lighting Technologies, Inc. as of June 30, 1999 and for the year then
ended included in its Annual Report (Form 10-K/A No. 3) for the year ended June
30, 1999, filed with the Securities and Exchange Commission.
/s/ Grant Thornton LLP
Cleveland, Ohio
May 8, 2000
<PAGE> 1
Exhibit 24.2
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Wayne R. Hellman and/or Louis S. Fisi his attorney-in-fact, with the power of
substitution, for him in any and all capacities, to sign the Form S-4
Registration Statement (No. 333-58621), any amendments thereto or any new
registration statement filed pursuant to Rule 464 and any amendments
thereto, and to file the same with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact or his substitute or
substitutes may do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ John E. Breen Director April 27, 2000
- --------------------
John E. Breen
/s/ Thomas K. Lime Director April 27, 2000
- --------------------
Thomas K. Lime
