<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 2000
REGISTRATION NO. 333-58613
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 7
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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<S> <C>
ADVANCED LIGHTING TECHNOLOGIES, INC. ADLT TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
</TABLE>
<TABLE>
<S> <C> <C> <C>
OHIO 34-1803229 DELAWARE APPLIED FOR
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR IDENTIFICATION NUMBER) OF INCORPORATION OR IDENTIFICATION NUMBER)
ORGANIZATION) ORGANIZATION)
</TABLE>
32000 AURORA ROAD
SOLON, OHIO 44139
440/519-0500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WAYNE R. HELLMAN
CHIEF EXECUTIVE OFFICER
ADVANCED LIGHTING TECHNOLOGIES, INC.
32000 AURORA ROAD
SOLON, OHIO 44139
440/519-0500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
JAMES S. HOGG JONATHAN B. MILLER
COWDEN, HUMPHREY & SARLSON CO., LPA BROWN & WOOD LLP
1414 TERMINAL TOWER ONE WORLD TRADE CENTER
CLEVELAND, OHIO 44113 NEW YORK, NEW YORK 10048
216/241-2880 212/839-5300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
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(c)
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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER UNIT PRICE(1)(2) REGISTRATION FEE(3)
<S> <C> <C> <C> <C>
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Debt Securities of Advanced Lighting
Technologies, Inc. ("ADLT")(5).......
Common Stock, par value $.001 per
share, of ADLT(6)....................
Preferred Stock, par value $.001 per
share, of ADLT(7).................... $300,000,000 (2) $300,000,000 $88,500(4)
Depositary Shares representing
Preferred Stock, of ADLT(8)..........
Warrants of ADLT(9)..................
Preferred Securities of ADLT Trust I
(the "Trust")(10)....................
Guarantee of Preferred Securities of
the Trust(11)........................
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(Footnotes on following page)
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS 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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<PAGE> 2
(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
$300,000,000. 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 II.D of Form S-3 and (b) will be determined, from time to
time, by the applicable Registrant in connection with the issuance by such
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 sold, from time to time, by
ADLT. Such amount shall be increased, if any Debt Securities are issued at
an original issue discount, by an amount such that the net proceeds to be
received by ADLT shall be equal to the above amount to be registered. Also,
in addition to any Debt Securities that may be issued directly under this
Registration Statement, there is being registered hereunder such
indeterminate amount of Debt Securities as may be issued upon conversion or
exchange of other Debt Securities, Preferred Stock or Depositary Shares of
ADLT, for which no consideration will be received by ADLT, and such
aggregate principal amount of Debt Securities as may be issued and sold to
the Trust in connection with the issuance by the Trust of Preferred
Securities. Any Debt Securities sold to the Trust as aforesaid may be
distributed to the holders of Preferred Securities for no additional
consideration.
(6) Subject to footnote 1, there is being registered hereunder an indeterminate
number of shares of Common Stock as may be sold, from time to time, by
ADLT. 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. The aggregate amount of Common Stock registered hereunder is
limited, solely for purposes of any at the market offerings, to that which
is permissible under Rule 415(a)(4) of the Securities Act of 1933, as
amended.
(7) Subject to footnote 1, there is being registered hereunder an indeterminate
number of shares of Preferred Stock as may be sold, from time to time, by
ADLT. There also is being registered hereunder an indeterminate number of
shares of Preferred Stock as shall be issuable upon exercise of Warrants
registered hereby. There is being registered hereunder such indeterminate
number of shares of Preferred Stock, for which no consideration will be
received by ADLT, 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. In addition, there is being registered hereunder such
indeterminate amount of Debt Securities, for which no consideration will be
received by ADLT, as may be issued upon conversion or exchange of
Depositary Receipts.
(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 ADLT registered hereby.
(10) Subject to footnote 1, there is being registered hereunder an indeterminate
number of Preferred Securities as may be sold by the Trust.
(11) No separate consideration will be received for the Guarantee of the
Preferred Securities of the Trust.
<PAGE> 3
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JULY 11, 2000
PROSPECTUS
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ADVANCED LIGHTING TECHNOLOGIES, INC.
ADLT TRUST I
By this prospectus, we may offer up to $300,000,000 of our:
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS
PREFERRED SECURITIES OF ADLT TRUST I.
INVESTING IN THE SECURITIES COVERED BY THIS PROSPECTUS INVOLVES RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE 6.
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.
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and the supplements carefully
before you invest.
We may offer the securities directly or through underwriters, agents or
dealers. The supplement will describe the terms of that plan of distribution.
"Plan of Distribution" below also provides more information on this topic.
The date of this prospectus is , 2000.
<PAGE> 4
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that ADLT and the Trust
filed with the SEC utilizing a "shelf" registration process. Under this shelf
process, ADLT and/or the Trust may sell any combination of the securities
described in this prospectus in one or more offerings up to a total offering
price of $300,000,000. This prospectus provides you with a general description
of the securities ADLT and the Trust may offer. Each time ADLT and/or the Trust
offers to sell securities, ADLT and/or the Trust 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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PAGE
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Advanced Lighting Technologies, Inc......................... 3
The Trust................................................... 4
Risk Factors................................................ 6
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends................................................. 12
Special Note Regarding Forward-Looking Statements........... 12
Use Of Proceeds............................................. 13
Description Of Debt Securities.............................. 13
Description Of Capital Stock................................ 24
Description Of Depositary Shares............................ 28
Description of Warrants..................................... 32
Description of Trust Preferred Securities................... 33
Plan Of Distribution........................................ 37
Legal Matters............................................... 38
Experts..................................................... 38
Where You Can Find More Information......................... 38
</TABLE>
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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.
2
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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 colors as they appear in natural sunlight, unlike lighting systems
using other technologies. Another advantage of metal halide 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 thin film coatings which
are used to coat objects to change the performance of the object without
disturbing images, for example, anti-reflective coatings on eyeglasses.
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:
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METAL HALIDE PRODUCTS
Vertical Integration from Materials through Systems
Innovative Products
Products for Manufacturers Products for End Users for End Users
Metal Halide
MATERIALS Systems
Produced by New
LAMPS ADLT Applications
Commercial/
POWER SUPPLIES Industrial/ -Fiber Optics
Outdoor -Residential
CONTROLS Replacement Parts Applications -Headlights
Sold to End Users -Projection TV
OPTICS/COATINGS
Metal Halide Systems
Produced by
Third Parties
</TABLE>
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 thin film
coatings for applications such as components in telecommunications systems using
fiber optic cables, metal halide lamps, and aerospace and defense projects. 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 there are many opportunities to "metal halidize" lighting markets
currently dominated by older incandescent and fluorescent lighting. Metal halide
lamps provide very high efficiency (70 to 110 lumens per watt), without
distorting colors. Metal halide lamps are compact in size and have long lamp
life (10,000 to 20,000 hours).All of these things make them the best choice for
many uses. For example, a 100 watt metal halide lamp is approximately the same
size as a household incandescent lamp, but produces as much light as five 100
watt incandescent lamps. It also produces as much light as three 34-watt,
four-foot long fluorescent lamps. Metal halide systems generally offer lower
costs over the life of a system, but the installation of a metal halide lighting
system typically involves higher initial costs than incandescent and fluorescent
lighting systems. Further, metal halide lamps cannot be used in the incandescent
and fluorescent lighting fixtures which are very common in existing commercial
and industrial facilities.
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 innovative 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.
THE TRUST
We formed ADLT Trust I as a statutory business trust under Delaware law.
The Trust is governed by
- a declaration of trust (which may be changed, and which we refer to in
this prospectus as the "declaration"); and
- a certificate of trust filed with the Delaware Secretary of State on June
1, 1998.
We formed the Trust so that it may engage in the following limited
activities:
- issuing the trust preferred securities and common securities representing
undivided beneficial interests in the assets of the Trust,
- investing the gross proceeds of the trust securities in a specific series
of debt securities issued by us, and
- engaging in only those other activities necessary or incidental to these
purposes.
We will own all of the trust common securities. The trust common securities
will rank equally (pari passu), and payments will be made on trust common
securities pro rata, with the trust preferred securities. Upon an event of
default under the declaration, our rights as holder of the trust common
securities to payment of distributions and payments upon liquidation,
redemption, and otherwise will be subordinated to the rights of the holders of
the trust preferred securities. Prior to making an offering of trust preferred
securities, we will, directly or indirectly, acquire trust common securities in
an aggregate liquidation amount equal to approximately 3% of the total capital
of the Trust. The Trust's business and affairs will be conducted
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<PAGE> 7
by the trustees who we will appoint. Except in limited circumstances, we will be
entitled to appoint, remove, or replace any of the ADLT trustees. We will be
able to change the number of ADLT trustees. The declaration sets out the duties
and obligations of the ADLT trustees. A majority of the ADLT trustees will be
persons who we employ or who are our officers or affiliates. One ADLT trustee
will be a financial institution which will not be affiliated with us and which
shall act as property trustee and indenture trustee under the Trust Indenture
Act of 1939. In addition, unless the property trustee maintains a principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law, one ADLT trustee must have its principal place of business in
or reside in the State of Delaware.
We will pay all fees and expenses related to the Trust and the offering of
trust securities. We will pay distributions with respect to the trust preferred
securities from time to time out of money legally available to the Trust. We
will guarantee payment on liquidation, redemption or otherwise with respect to
the trust preferred securities, described in this prospectus. See "Description
of Trust Preferred Securities -- Trust Preferred Securities Guarantee." Unless
otherwise specified in the applicable prospectus supplement, our obligations
under the trust preferred securities guarantee will be subordinate and junior in
right of payment to all of our other liabilities. These obligations will rank
equally (pari passu) in right of payment with the most senior preferred stock,
if any, that we may issue from time to time.
The Trust's principal place of business will be c/o Advanced Lighting
Technologies, Inc., 32000 Aurora Road, Solon, Ohio 44139 (telephone
440/519-0500).
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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.
IF METAL HALIDE LAMPS, OUR PRIMARY PRODUCT, DO NOT GAIN WIDER MARKET ACCEPTANCE,
OUR BUSINESS AND FINANCIAL PERFORMANCE MAY SUFFER
We derive a substantial portion of our net sales and income from selling
metal halide materials, systems and components, and production equipment.
Revenues from metal halide products represented between approximately 74% of net
sales in fiscal 1999 and 73% of net sales in fiscal 1998. 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. As a growth company, either of these occurrences could
have a material adverse effect on our business and our results of operations and
the value of our securities.
GENERAL ELECTRIC COMPANY'S RELATIONSHIP WITH US COULD LIMIT OUR ABILITY TO GROW
On October 6, 1999, GE made an investment of $20.6 million for 761,250
shares of our convertible preferred stock and a warrant for 1,000,000 shares of
our common stock. Pursuant to the terms of the GE investment agreement, GE has
the right, by converting its preferred shares and exercising warrants, to
acquire approximately 4,000,000 of our common shares. GE may get additional
rights in the future if we are unable to maintain a 2 to 1 ratio of earnings
before interest and taxes to interest charges for a six-month measurement
period. Measurement periods are the six months ending on the last day of each
fiscal quarter until September 30, 2010. We did not maintain this ratio for the
six months ended December 31, 1999, but we did for the six months ended March
31, 2000. If we fail to maintain the ratio in future measurement periods, GE
would obtain the right to purchase and vote additional shares of our stock and
acquire voting control of our company. On the first future failure, if it
happens, GE would obtain rights to purchase and/or vote a number of shares
determined by a formula at the time of the failure. The number of shares owned
or available to GE at that time would be less than a majority of our stock. At
the time of the second future failure, if it happens, GE would own or have the
right to purchase and/or vote the number of shares which would be a majority of
our stock. 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 sales of our common stock.
GENERAL ELECTRIC COMPANY'S RIGHTS COULD STRAIN OUR FINANCIAL RESOURCES
In October 2004, GE has a one-time right to make us redeem their preferred
stock, although we have up to one year to arrange financing. GE also has the
right to make us redeem their preferred stock if GE does not get the necessary
governmental approvals of their rights to acquire more of our shares in the
future, if we issue additional common shares, or if we borrow more than a total
of $210 million. The existence of these limits may reduce our ability to obtain
financing in the future. If we have to redeem the preferred stock, our financial
resources will be reduced, and could cause us to default under the indenture
governing our 8% Senior Notes Due 2008. We are required to redeem shares of this
preferred stock which have not been converted to common stock by October 2010.
Although GE cannot make us redeem their preferred stock if a
6
<PAGE> 9
default results, the failure to redeem GE's preferred stock after GE makes a
request for redemption could adversely affect our relationship with GE.
GENERAL ELECTRIC COMPANY'S RELATIONSHIP WITH US COULD HARM OUR RELATIONSHIP WITH
OTHER LIGHTING COMPANIES
GE's investment is expected to increase our operating flexibility. In
addition, we anticipate that this will strengthen our supplier-customer
relationship with GE. However, some of our significant suppliers and customers
are also lighting companies. We have not experienced any adverse impact from
these other companies since the March 1999 public announcement of the agreement
in principle regarding the investment. 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.
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 LIMIT 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 IMPAIR 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.
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IF WE ARE UNABLE TO DEVELOP AND BROADEN OUR PRODUCT LINES OUR BUSINESS MAY
SUFFER
We have recently broadened our systems and components product line. The
marketing efforts and strategies for these product extensions are quite
different from those we have used for our historical operations. These
differences are based on the need to focus efforts on sales to the user of the
products rather than lighting fixture original equipment manufacturers. 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
future growth and financial results.
OUR BUSINESS SUCCESS HAS BEEN BASED ON NEW PRODUCTS, AND IF WE DO NOT INTRODUCE
NEW PRODUCTS OUR BUSINESS MAY SUFFER
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 products in the future. Even if a new product
is developed for a particular use, the product may not be commercially
successful. 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.
Since we are viewed as a growth company, if we are unable to successfully
introduce new products, this inability could adversely affect our financial
results and the value of our securities.
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. Also, we have made and may continue to extend our product
lines 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 BE UNABLE 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, at the date of this prospectus, we are engaged in preliminary
discussions with potential candidates. We cannot be certain that any agreement
will result from these 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.
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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 double our revenues. 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 these
investments, or to liquidate these 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 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 these 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.
IF WE ARE UNABLE TO PROTECT OUR IMPORTANT PATENTS AND TRADE SECRETS OR IF OTHERS
ENFORCE RIGHTS AGAINST US, OUR BUSINESS MAY SUFFER
We rely primarily on trade secret, trademark and patent laws to protect
some of our rights to our products, like 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. Any of these
developments could adversely affect the way we currently conduct our business.
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 these 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 related aspects of our products, or could
subject us to substantial liability. Because we are a company which relies on
advanced technology and innovation, 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
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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, WHICH COULD ADVERSELY AFFECT INTERESTS OF
OTHER HOLDERS OF OUR SECURITIES
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 19.2% of the outstanding shares of common stock (or
approximately 16.7% 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 2.1% of our common stock. This gives GE approximately 14.8% 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, in the future, GE may 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 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 (which could control 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. Accordingly, the decisions of our principal
shareholders could have a material adverse effect on the market price of our
common stock or the value of our other securities.
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, 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, AND THIS WIDE VARIATION MAY MAKE IT DIFFICULT
FOR US TO SELL OUR STOCK AND STRAIN OUR FINANCIAL RESOURCES
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. This 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
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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.
BECAUSE OUR PRIMARY COMPETITORS ARE MORE ESTABLISHED AND HAVE MORE RESOURCES
THAN WE DO, WE MAY LACK THE RESOURCES TO CAPTURE INCREASED MARKET SHARE
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, Advance Transformer Co. (a division of Philips) and
Magnetek, Inc., 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. This type of increase
or expansion could make it more difficult for us to maintain sales or grow.
WE SELL PRODUCTS TO OUR COMPETITORS AND PURCHASE COMPONENTS FROM OUR
COMPETITORS, AND THESE RELATIONSHIPS COULD CHANGE BASED ON OUR COMPETITORS'
INTERESTS. THIS CREATES A RISK OF POTENTIAL DECLINES IN SALES AND REDUCED ACCESS
TO COMPONENTS.
Notwithstanding the fact that we compete with GE, Philips and Sylvania in
the sale 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, 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 restrictive
covenants, including
- covenants limiting our ability and our subsidiaries' ability to incur
additional indebtedness, pay dividends, make investments, consummate
asset sales, enter into transactions with affiliates and incur liens, and
- covenants imposing restrictions on the ability of our subsidiaries to pay
dividends or make 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 exceptions designed to allow us and
our subsidiaries to operate without undue restraint, these covenants 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 financial ratios.
Our growth will depend in part upon our ability to fund
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acquisitions and investments, any of which may make it more difficult to
maintain financial ratios. Our ability to comply with these 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. This 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. These amendments were necessary to allow us to borrow cash necessary
to maintain our operations and to finance purchases of machinery and equipment
to improve our operations. As a growth company, we may need to amend or replace
our bank credit facility prior to its maturity on May 21, 2002.
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
income taxes and fixed charges. Fixed charges consist of interest charges
and amortization of debt issuance costs, whether expensed or capitalized,
and that portion of rental expense that is representative of interest. For
the nine months ended March 31, 1999, earnings were inadequate to cover
fixed charge requirements by $45,902,000. For fiscal 1999, earnings were
inadequate to cover fixed charge requirements by $80,103,000. For fiscal
1998, earnings were inadequate to cover fixed charge requirements by
$26,437,000.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and any supplements, including information incorporated by
reference, discuss future expectations, contain projections of our future
operating results or financial condition or state other forward-looking
information relating to, among other things:
- our potential acquisitions or joint ventures,
- our financing plans,
- trends affecting our financial condition or operating results,
- continued growth of the metal halide lighting market,
- our operating and growth strategies, and
- lawsuits and claims that may affect us.
Known and unknown risks, uncertainties and other factors could cause the actual
results to differ materially from those contemplated by those statements. The
forward-looking information is based on factors we believe affect our business
and was derived using assumptions we believe to be reasonable.
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.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities for
general corporate purposes. Those purposes include the repayment or refinancing
of debt, acquisitions in the ordinary course of business, working capital,
investment in operations and capital expenditures. We will describe in the
prospectus supplement any proposed use of proceeds other than for general
corporate purposes.
The Trust will use all proceeds from the sale of the trust securities to
purchase debt securities of ADLT.
DESCRIPTION OF DEBT SECURITIES
ADLT may issue debt securities separately or together with other
securities. We may issue debt securities in exchange for other securities. We
may issue debt securities on conversion of our convertible securities. The debt
securities are to be either senior debt securities or subordinated debt
securities. We may issue them in one or more series under an indenture which we
will enter into with one or more U.S. banking institutions, as trustee. The
indenture may, but does not have to, have separate trustees for senior and
subordinated debt securities. The terms of any series of debt securities will be
set forth in the indenture and the debt securities. Some terms will be made part
of the indenture by the Trust Indenture Act. The summary of the indenture
provisions and the debt securities set forth below and the summary of terms of a
particular series of debt securities set forth in the applicable prospectus
supplement do not purport to be complete. The indenture and the debt securities
contain additional important terms and provisions. The indenture is filed as an
exhibit to the registration statement that includes this prospectus. The form of
debt securities of any series will be filed with the SEC as an exhibit before
they are issued. All references to ADLT in this summary shall mean Advanced
Lighting Technologies, Inc., excluding, unless the context shall otherwise
require, its subsidiaries.
The following description of debt securities sets forth general terms and
provisions of debt securities to which any prospectus supplement may relate.
Specific terms of any particular series of debt securities will be described in
the applicable prospectus supplement. If any particular terms of the debt
securities described in a prospectus supplement differ from any of the terms
described below, you should rely on the prospectus supplement description.
In addition, this prospectus relates to up to $50,000,000 aggregate
principal amount of our 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. The indenture also provides that debt securities
of a series may be issued up to an aggregate principal amount which we may set
from time to time. The prospectus supplement for any debt securities which we
offer pursuant to this prospectus will describe specific terms of the debt
securities. These terms may include:
- the title or designation of the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the price or prices (expressed as a percentage of the principal amount)
at which the debt securities will be issued;
- the date or dates on which the principal and any premium on the debt
securities will be payable, or the method or methods by which the date or
dates will be determined;
- the rate or rates at which the debt securities will bear interest (which
may be 0%), or how the rate or rates are to be determined, the date or
dates from which interest will accrue, or how the date or dates
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are to be determined, and whether and under what circumstances Additional
Amounts (as contemplated in the indenture) will be payable -- these
amounts may be paid for a series of debt securities to United States
aliens, as defined by the IRS and in the indenture, in respect of taxes,
assessments and governmental charges;
- the dates on which any interest will be payable and any record dates
which will be used to determine who receives interest payments;
- the place or places where the principal, any premium and any interest or
any Additional Amounts on the debt securities will be payable and the
place or places where the debt securities may be surrendered for
registration of transfer and exchange, if in addition to or other than
The City of New York;
- any terms and conditions upon which the debt securities may be redeemed
at ADLT's option or are subject to repurchase at the holder's option,
including dates, eligibility periods and prices;
- the terms of any sinking fund or similar provision;
- covenants or events of default added, modified or deleted with respect to
the debt securities;
- whether any debt securities are to be issuable as registered securities
or bearer securities or a combination of the two;
- whether any debt securities will be issued in the form of one or more
global securities, and whether the global form will be temporary;
- whether any person who is not the registered owner of a registered
security on the applicable record date will be entitled to receive
interest payments and how that person will be determined;
- whether interest may be paid on bearer securities without presenting
interest coupons for payment and how that payment would be made;
- whether interest on a global security in temporary form will be paid in a
manner which is different from the method in the indenture;
- the portion of the principal amount of the debt securities which shall be
payable upon acceleration if the amount is not the full principal amount
thereof;
- the authorized denominations in which the debt securities will be
issuable, if the amount is not $1,000 and any integral multiple of $1,000
(in the case of registered securities) or $5,000 (in the case of bearer
securities);
- any terms governing the conversion or exchange of the debt securities for
other securities;
- whether the debt securities will be senior debt securities or
subordinated debt securities, and the terms of any subordination;
- whether the amount of payments of principal, any premium and any interest
on the debt securities will be determined with reference to an index,
formula or other method or methods and how the amounts will be
determined; and
- any other terms of the debt securities.
Unless we specify otherwise, interest on debt securities will be calculated
on the basis of a 360 day year of twelve 30 day months. When we use the terms
"principal," "premium" or "interest" we will also be including any Additional
Amounts when debt securities are eligible for payment of Additional Amounts.
Debt securities may be issued as original issue discount securities.
Original issue discount securities are debt securities sold at a substantial
discount below their stated principal amount. If they are paid prior to
maturity, the principal amount payable to holders will generally be less than
their stated principal amount. In the event of an acceleration of the maturity
of any original issue discount security, the amount payable to the holder will
be determined as described in the applicable prospectus supplement. Also,
material Federal income tax and other considerations applicable to original
issue discount securities will be described in the applicable prospectus
supplement.
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Under the indenture, the terms of the debt securities of any series may
differ. ADLT may reopen a previous series of debt securities and issue
additional debt securities of the series or establish additional terms of the
series, without consent of the holders of the debt securities of any 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
Each series of debt securities will be issued in registered form only,
without coupons, unless the related prospectus supplement indicates otherwise.
The indenture provides that ADLT may also issue debt securities in bearer form
only, or in both registered and bearer form. Bearer securities may not be
offered, sold, resold or delivered in connection with any offering in the United
States or to any United States person other than offices located outside the
United States of United States financial institutions permitted by the IRS.
Purchasers of bearer securities will be subject to certification procedures and
may be affected by limitations under United States tax laws. These procedures
and limitations will be described in the prospectus supplement relating to the
offering of the bearer securities.
Registered securities will be issued in denominations of $1,000 or any
integral multiple of $1,000, and bearer securities will be issued in
denominations of $5,000, unless the related prospectus supplement indicates
otherwise.
The principal, any premium and any interest on the debt securities will be
payable at an office or agency to be maintained by ADLT in the Borough of
Manhattan, The City of New York, unless the related prospectus supplement
indicates otherwise. Debt securities may also be surrendered for transfer or
exchange at that office or agency. 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 to payment or by wire transfer to an account
maintained by the person entitled to payment with a bank located in the United
States. ADLT will not impose any service charge for any registration of transfer
or exchange of debt securities. However, ADLT may require payment of a sum
sufficient to cover any tax or other governmental charge and any other expenses
related to the transfer or exchange.
Payment of principal, any premium and any interest on bearer securities
will be made, subject to any applicable laws and regulations, at the office or
agency outside the United States as specified in the prospectus supplement. ADLT
may also designate other offices for payment. Payment of interest due on bearer
securities on any interest payment date will be made only against surrender of
the coupon relating to the interest payment date, unless the related prospectus
supplement indicates otherwise.
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, unless the related
prospectus supplement indicates otherwise. However, if we owe amounts payable in
U.S. dollars with respect to any bearer securities, payment on the 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 payment of the full amount of the principal, premium or interest at all
offices outside of the United States maintained for this purpose by ADLT is
illegal or effectively precluded by exchange controls or similar restrictions.
In the event of a redemption, ADLT will not be required to do the
following:
- 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 to be redeemed and ending at
the close of business on the day of that selection;
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- register the transfer of or exchange any registered security, or any
portion of a registered security, called for redemption, except the
unredeemed portion of any registered security being redeemed in part;
- exchange any bearer security called for redemption, except to exchange
the bearer security for a registered security of that series that is
simultaneously surrendered for redemption; or
- 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 the 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 equally 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.
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). However, the
indebtedness under the credit facility 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.
Since the senior debt securities and the 8% Notes are unsecured, they do not
have the benefit of collateral. If an event of default occurs under the credit
facility, the lending banks will have preferential claims to those assets and
may foreclose upon the collateral without benefit for the holders of the senior
debt securities and the 8% Notes, even if there is an event of default with
respect to the senior debt securities and the 8% Notes. As a result, ADLT's
assets would first be used to repay in full amounts outstanding under the credit
facility. This means virtually all of ADLT's assets would be unavailable to
satisfy the claims of holders of the senior debt securities and the 8% Notes
until the credit facility is repaid in full. Any remaining unpaid claims of
lending banks 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. As a result, 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 also 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.
ADLT's rights and the rights of its creditors, including holders of the
senior debt securities and the 8% Notes, to the assets of any subsidiary upon
the subsidiary's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors. If ADLT itself is a creditor with
recognized claims against the subsidiary, its claims would be subordinated only
to any mortgage or other liens on the assets of the subsidiary and any
indebtedness of the subsidiary senior to that held by ADLT. As a result, after
providing for all prior claims and all equal (pari passu) claims, there may not
be sufficient assets available to satisfy the obligations of ADLT under the
senior debt securities and the 8% Notes.
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 provide money to ADLT to
pay these amounts. There are currently no significant restrictions on the
ability of the 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 of ADLT.
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SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The applicable prospectus supplement will set forth the extent to which
subordinated debt securities of 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. Global debt securities
may be issued in either registered or bearer form and in either temporary or
permanent form. Unless it is exchanged in whole or in part for individual
certificates representing the debt securities in definitive form, a global debt
security may not be transferred except as a whole by the depositary to a nominee
or 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. Beneficial owners 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 limited
circumstances. 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, 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 limitations and restrictions relating to a series
of global bearer securities will be described in the prospectus supplement.
OUTSTANDING DEBT SECURITIES
In determining whether the holders of the required principal amount of
outstanding debt securities have exercised any right or vote under the
indenture:
- the portion of the principal amount of an original issue discount
security that shall be deemed to be outstanding shall be that portion of
the principal amount that could be declared to be due upon a declaration
of acceleration under the terms of the original issue discount security
as of the date of the determination;
- the principal amount of any indexed security that shall be deemed to be
outstanding shall be the principal face amount of the indexed security
determined on the date of its original issuance; and
- any debt security owned by ADLT or any obligor on the debt security or
any affiliate of ADLT or 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,
- subject to mandatory redemption pursuant to a sinking fund or otherwise,
or
- subject to repurchase by ADLT at the option of the holders.
In each case, the redemption would be upon the terms, at the times and at the
prices set forth in the applicable prospectus supplement.
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CONVERSION AND EXCHANGE
Debt securities of any series may be convertible into or exchangeable for
common stock, preferred stock, depositary shares or other debt securities. The
terms of conversion or exchange will be set forth in the applicable prospectus
supplement. These terms may be mandatory, at the option of the holders or at the
option of ADLT.
COVENANTS OF ADLT
Covenants specific to a particular series of debt securities will be
described in the applicable prospectus supplement. If any of the covenants are
described, the prospectus supplement will also state whether the "covenant
defeasance" provisions described below also apply.
EVENTS OF DEFAULT
Unless we specify otherwise in the applicable prospectus supplement, an
event of default will occur with respect to the debt securities of any series
if:
- ADLT fails to pay interest with respect to any debt security of the
series, and the failure continues for a period of 30 days;
- ADLT fails to pay principal or any premium with respect to any debt
security of the series when due, whether it is due because debt
securities mature, are called for redemption or otherwise;
- ADLT fails to make any sinking fund payment or similar payment under any
analogous provision when due with respect to any debt security of the
series;
- ADLT fails to perform or breaches any other covenants or warranties in
the indenture or any debt securities of the series - other than a
covenant or warranty included in the indenture only for the benefit of
other series of debt securities - and that breach or failure continues
for a period of 90 days after notice to ADLT as provided in the
indenture;
- the holders or trustee of any single issue of our indebtedness with an
outstanding principal amount exceeding $10,000,000 accelerate the
indebtedness because of a default, unless the acceleration is annulled or
the indebtedness is discharged within 30 days;
- ADLT is ordered by a court to pay an uninsured amount in excess of
$10,000,000 and the amount is not paid or otherwise discharged within 30
days, unless we are appealing the order in good faith;
- events of bankruptcy, insolvency or reorganization of ADLT described in
the indenture occur; or
- any other event of default provided for the debt securities of the series
occurs.
An event of default with respect to one series of debt securities will not
necessarily be an event of default with respect to any other series of debt
securities. The indenture permits the trustee to 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 the series if the trustee considers it to be in the
interest of the holders. However, the trustee must give notice of our failure to
pay principal, any premium or any interest or to make any sinking fund payment.
The indenture provides that if an event of default with respect to any
series of debt securities occurs and is continuing, either the trustee or the
holders of at least 25% in principal amount of the outstanding debt securities
of the series may declare the principal amount (or if any debt securities of the
series are original issue discount securities, the lesser amount which is
specified) of all the debt securities of the series to be due and payable
immediately. However, under some circumstances, this declaration and its
consequences may be rescinded and annulled by the holders of a majority in
principal amount of the debt securities of the series then outstanding.
The Trust Indenture Act requires the trustee to act with the requisite
standard of care during an event of default. Otherwise, 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
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offered the trustee reasonable indemnity. Subject to the foregoing, holders of a
majority in principal amount of the outstanding debt securities of any series
issued under the indenture have the right, subject to limitations, to direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee under the indenture. Under the indenture, ADLT is required to
furnish to the trustee annually a statement as to our performance of some of our
obligations under the indenture and as to any default in such performance. ADLT
is also required to deliver to the trustee, within five days after occurrence,
written notice of any event which after notice or lapse of time or both would
constitute an event of default.
The holder of any debt security has the right, which is absolute and
unconditional, to receive payment of the principal, any premium and any interest
on the debt security when they are due -- subject to any extension right in the
debt security -- and to sue ADLT for any payment, and that right shall not be
impaired without the consent of the holder.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
ADLT may discharge its obligations with respect to any series of debt
securities that have not already been delivered to the trustee for cancellation
and that:
- have become due and payable;
- will become due and payable within one year; or
- are scheduled for redemption within one year.
To discharge the obligations with respect to a series of debt securities, ADLT
must deposit with the trustee, in trust, an amount of funds in U.S. dollars
sufficient to pay the entire amount of principal of, and any premium or interest
on, those debt securities to the date of the deposit if those debt securities
have become due and payable or to the maturity of the debt securities, as the
case may be.
Unless we specify otherwise in the applicable prospectus supplement, ADLT
may elect:
- to defease and be discharged from any and all obligations with respect to
those debt securities, which we refer to as "legal defeasance"; or
- with respect to any debt securities, to be released from our covenant
obligations, which we refer to as "covenant defeasance."
In the case of legal defeasance, ADLT will still retain some obligations in
respect of the debt securities, including our obligations:
- to pay Additional Amounts, if any, upon the occurrence of applicable
events of taxation, assessment or governmental charge with respect to
payments on the debt securities;
- to register the transfer or exchange of the debt securities;
- to replace temporary or mutilated, destroyed, lost or stolen debt
securities; and
- to maintain an office or agency with respect to the debt securities and
to hold monies for payment in trust.
After a covenant defeasance, any omission to comply with the obligations or
covenants that have been defeased shall not constitute a default or an event of
default with respect to the debt securities.
To elect either legal defeasance or covenant defeasance, ADLT must deposit
with the trustee, in trust, an amount, in U.S. dollars or in government
obligations, as defined below, or both, applicable to such debt securities which
through the scheduled payment of principal and interest in accordance with their
terms will provide money in an amount sufficient to pay the principal, any
premium and any interest on those debt securities on their scheduled due dates.
If ADLT knows that Additional Amounts will be payable and can determine the
amount which will be payable, those amounts must also be deposited in trust.
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In addition, ADLT can only elect legal defeasance or covenant defeasance
if, among other things:
- the applicable defeasance does not result in a breach or violation of, or
constitute a default under, the applicable indenture or any other
material agreement or instrument to which ADLT is a party or by which
ADLT is bound;
- no default or event of default with respect to the debt securities to be
defeased shall have occurred and be continuing on the date of the
establishment of the trust and, with respect to legal defeasance only, at
any time during the period ending on the 123rd day after the date of the
establishment of the trust; and
- ADLT has delivered to the trustee an opinion of counsel to the effect
that the holders of the debt securities will not recognize income, gain
or loss for U.S. federal income tax purposes as a result of the
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 the defeasance had not occurred, and the opinion of counsel, in
the case of legal defeasance, must refer to and be based upon a letter
ruling of the IRS received by us, a Revenue Ruling published by the IRS
or a change in applicable U.S. federal income tax law occurring after the
date of the applicable indenture.
If ADLT effects a covenant defeasance with respect to any debt securities,
and the debt securities are declared due and payable because of the occurrence
of any event of default other than an event of default with respect to which
there has been covenant defeasance, the government obligations on deposit with
the trustee will be sufficient to pay amounts due on the debt securities at the
time of the stated maturity, but may not be sufficient to pay amounts due on the
debt securities at the time of the acceleration resulting from the event of
default. However, ADLT would remain liable for payment of the amounts due at the
time of acceleration.
The applicable prospectus supplement may further describe the provisions,
if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the debt
securities of or within a particular series.
MODIFICATION, WAIVERS AND MEETINGS
ADLT and the trustee may modify or amend any of the provisions of the
indenture or of any debt securities or the rights of the holders of the debt
securities of any series under the indenture, if they get the consent of holders
of a majority in principal amount of the outstanding debt securities of each
series affected by the modification or amendment. However, unless ADLT gets the
consent of the holder of each outstanding debt security affected -- except as
otherwise provided in the indenture -- no modification or amendment may
- change the stated maturity of the principal, any premium or any
installment of interest on any debt securities,
- reduce the principal amount of or any redemption premium on, or reduce
the rate of interest on, debt securities,
- reduce the amount of principal of any original issue discount securities
that would be due and payable upon an acceleration of maturity,
- adversely affect any right of repayment at the option of any holder,
- change any place where, or the currency in which, any debt securities are
payable,
- limit the holder's right to institute suit to enforce the payment of any
debt securities on or after the stated maturity,
- make any change that materially adversely affects the right, if any, to
convert or exchange any debt securities for other securities in
accordance with the terms of the debt securities,
- reduce the percentage of debt securities of any series required for any
modification, amendment or waiver,
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- reduce the requirements for a quorum or voting at a meeting of holders of
the debt securities, or
- in the case of any subordinated debt securities, modify any of the
provisions relating to subordination of the subordinated debt securities
or the definition of senior indebtedness in a manner adverse to the
holders of the subordinated debt securities.
ADLT and the trustee, without the consent of the holders of any debt
securities issued thereunder, may modify or amend the indenture 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,
- add or change any provisions of the indenture to facilitate the issuance
of bearer securities,
- establish the form or terms of debt securities of any series and any
related coupons,
- eliminate any ambiguity or correct or supplement any provision which may
be inconsistent with other provisions, or to make any provisions with
respect to matters or questions arising under the indenture which do not
materially and adversely affect the interests of the holders of any
series of debt securities,
- amend or supplement any provision contained in the indenture, provided
that the amendment or supplement does not apply to any outstanding debt
securities issued before the amendment or supplement -- if those debt
securities are entitled to the benefits of such provision, or
- amend or supplement any provision if the amendment or supplement does not
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 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, on behalf of all holders of debt
securities of that series, may generally waive any past default under the
indenture with respect to debt securities of that series and its consequences.
However, a default in the payment of the principal, any premium or any interest
on debt securities of the 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 the series so affected cannot be waived by the
majority of holders.
The indenture sets rules for meetings of the holders of debt securities of
a series issued thereunder. A meeting may be called at any time by the trustee.
A meeting may also be called by request of ADLT or the holders of at least 10%
in principal amount of the outstanding debt securities of the series. The
trustee must give notice to holders in accordance with the provisions of the
indenture. Any resolution presented at a meeting 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, if the indenture requires the consent of each holder of outstanding
debt securities of any series, a resolution cannot become effective without
consent of all holders of debt securities of the series. Matters which may be
approved by less than a majority in principal amount of holders of outstanding
debt securities of any series may be adopted at a meeting at which a quorum is
present by their affirmative vote. 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 will usually be persons holding or representing a majority in
principal amount of the outstanding debt securities of a series.
GOVERNING LAW
The indenture and the debt securities will be governed by, and interpreted
in accordance with, the laws of the State of New York.
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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 or to realize
on property received by it in respect of any 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 the conflict upon the occurrence of an
event of default under the indenture, or else resign.
8% SENIOR NOTES DUE 2008
General. ADLT may issue additional 8% Notes -- up to $50,000,000 in
aggregate principal amount -- as of the date of this prospectus. The additional
8% Notes are issuable under an indenture dated as of March 18, 1998 between ADLT
and The Bank of New York, as trustee. The 8% Notes Indenture has been filed with
the SEC and is an exhibit to the registration statement.
Interest on the 8% Notes is payable on March 15 and September 15 of each
year.
The 8% Notes do not have 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. This includes the senior debt securities
and outstanding 8% Notes. The additional 8% Notes will be 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 the secured indebtedness.
The 8% Notes will be effectively subordinated to all liabilities of ADLT's
subsidiaries, including trade payables. We have included a more complete
discussion of these matters above under the heading "Ranking of Debt Securities
and Holding Company Structure."
Important Covenants. The 8% Notes Indenture contains covenants that, among
other things, limit the ability of ADLT and of its subsidiaries to
- incur indebtedness,
- pay dividends,
- prepay subordinated indebtedness,
- repurchase capital stock,
- make investments,
- create liens,
- engage in transactions with stockholders and affiliates,
- sell assets, and
- with respect to 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 in equal amounts on each subsequent annual anniversary to 100% for 8%
Notes redeemed on or after March 15, 2006.
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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 redemption prior to
March 15, 2001 will be subject to the following conditions
- the redemption must be made using 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 redemption must be mailed within 60 days of the offering by
ADLT of its common stock.
Change of Control. Upon the occurrence of 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 the time to fulfill this obligation.
Events of Default. An event of default will occur with respect to the 8%
Note if:
- ADLT fails to pay principal when due;
- ADLT fails to pay interest for 30 days;
- ADLT or any subsidiary fails to perform or breaches any covenants
relating to mergers, consolidations and transfers of assets, or ADLT
fails to complete 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;
- ADLT or any subsidiary fails to perform or breaches any other covenants
for a period of 30 days after notice from the trustee or the holders of
25% of outstanding 8% Notes;
- More than $10 million in principal amount of other debt of ADLT is
accelerated -- unless the acceleration is rescinded within 30 days -- or
ADLT fails to make a principal payment at maturity of any debt of more
than $10 million -- unless the payment is made, waived or extended within
30 days;
- ADLT or its subsidiaries is ordered by a court to pay an uninsured amount
in excess of $10 million and the amount is not paid or discharged within
30 days unless we are appealing the order in good faith; or
- events in bankruptcy, insolvency or reorganization of ADLT or its
subsidiaries described in the 8% Notes Indenture occur.
The 8% Notes Indenture requires ADLT to provide reports containing evidence
of ADLT's compliance with the terms of the 8% Notes Indenture. The 8% Notes
Indenture permits ADLT to designate subsidiaries (which are small at the time of
designation, and which do not violate investment restrictions) as exempt from
the default provisions.
Remedies. If there is an event of default, the 8% Notes trustee or holders
of 25% of the principal amount of the 8% Notes outstanding may declare principal
immediately payable. This acceleration may be rescinded by a majority in
principal amount of the holders. However, if the event of default occurs due to
events in bankruptcy, insolvency or reorganization as described above, principal
will be 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 conditions. An important condition is the requirement that
the holders of at least 25% of the 8% Notes
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request that the 8% Notes trustee take 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 principal amount of the
outstanding 8% Notes. However, unless ADLT gets the consent of the holder of
each 8% Note affected, no modification or amendment may:
- change the maturity of the principal or any installment of interest on
any 8% Note;
- reduce the principal amount, any premium or any interest on any 8% Note;
- change the place or currency of payment of principal, any premium or any
interest on any 8% Note;
- limit the right to sue for 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;
- waive a default in the payment of principal, any premium or interest on
the 8% Notes; or
- reduce the percentage of 8% Notes required for modifications, amendments
or waivers.
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 were issued and outstanding.
COMMON STOCK
The applicable prospectus supplement relating to a common stock offering
will describe relevant terms of the offering. These terms will include 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 these rights, preferences,
and limitations are dividend rights and rates, provisions for redemption, rights
upon liquidation, conversion privileges, and 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 preference
upon liquidation. This Liquidation Preference Amount is $27 per share, plus an
amount equal to 8% per annum compounded annually from the date of issuance to
the date of payment.
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.
Until Series A Stock is converted, 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 vote, the holders of Series A Stock are entitled to four
votes. When issued, each share of Series A Stock was convertible into four
shares of common stock.
ADLT is required to redeem any shares of Series A Stock which have not been
converted or retired on September 30, 2010. Any 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 notice is given, ADLT will be required to
make the 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 Triggering Events
- an action by ADLT to give effect to major corporate actions to merge,
sell all or a substantial portion of its assets (other than in the
ordinary course of business),
- issue capital stock, or
- 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 notice is given, ADLT will be
required to make the redemption within one year following the notice. Any
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 which to do not apply to stock redemption) cannot
exceed
- one-half of the total of consolidated net earnings of ADLT (excluding
consideration of unusual items to the extent required by the 8% Notes
Indenture) 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 which do not apply 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, 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. This adjustment to the
conversion rate will not happen if the redemption is deferred because it would
cause an event of default on ADLT debt. 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 other special exceptions, if ADLT issues
any shares of common stock at a price below $6.75 per share, or, if higher,
below the then current market price, there will be an adjustment of the
conversion ratio. Any adjustment in the conversion ratio would not affect the
voting power of shares of Series A Stock before conversion.
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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 this 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.
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.
ANTI-TAKEOVER 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.
These provisions of ADLT's articles of incorporation may have anti-takeover
effects. Taken together
- the staggered board terms,
- the ability to issue preferred stock, and
- provisions of Ohio law described below
may make it more difficult for other persons to make a tender offer or acquire
substantial amounts of the common stock or to launch other takeover attempts
without ADLT board approval. A shareholder might consider these actions to be in
the shareholder's best interests.
ANTI-TAKEOVER PROVISIONS OF OHIO LAW
ADLT is subject to anti-takeover provisions under Ohio law applicable to
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 allows an Ohio corporation, like
ADLT, to indemnify any director, officer, employee or agent of the corporation
against all expenses, liabilities and fines reasonably incurred in connection
with any action, suit or proceeding. This indemnity is available 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. In addition, in a criminal
action or proceeding, this indemnity is available only if he or she had no
reasonable cause to believe his or her conduct was unlawful.
In addition, Section 1701.59 requires that any liability of a director for
breach of fiduciary duty be proved by clear and convincing evidence that his
action or failure to act involved acts or omissions made 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.
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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 an Interested Shareholder for a period of three years after the person
becomes an Interested Shareholder. The Merger Moratorium Act does not prohibit
these transactions if the directors approve either the transaction or the
acquisition of the corporation's shares that resulted in the person becoming an
Interested Shareholder before the person becomes an Interested Shareholder. An
Interested Shareholder is a person that owns, alone or with other related
parties, shares representing at least 10% of the voting power of the
corporation. Following the three-year moratorium period, the corporation may
engage in covered transactions with an Interested Shareholder only if, among
other things, (i) the transaction receives the approval of the holders of
two-thirds of all the voting shares and the approval of the holders of a
majority of the voting shares held by persons other than an Interested
Shareholder or (ii) the remaining shareholders receive an amount for their
shares equal to the higher of the highest amount paid in the past by the
Interested Shareholder for the corporation's shares or the amount that would be
due the shareholders if the corporation were to dissolve.
Contemporaneous with the adoption of Ohio's Merger Moratorium Act, Ohio
enacted a so-called "green mailer disgorgement" statute which provides that a
person who announces a control bid must disgorge profits realized by that person
upon the sale of any equity securities within 18 months of the announcement of
the control bid.
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 makes a filing with the Ohio Division of Securities
and the target company. The filing must contain information about the offeror,
his ownership of the corporation's shares and his plans for the corporation. 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 the purchase of or an
offer to purchase any equity security of an issuer with connections to Ohio from
a resident of Ohio
- if after the purchase, the offeror would be the beneficial owner of more
than 10% of any class of the issued and outstanding equity securities of
the issuer or
- if there is a pending control bid by a person other than the issuer and
the issuer making an offer which would reduce the number of issued and
outstanding shares of the corporation by more than 10%.
Finally, Ohio law provides for the right of the board of directors to
consider the interests of 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.
These provisions of Ohio law may have anti-takeover effects. The provisions
make it more difficult for other persons to make a tender offer or acquire
substantial amounts of the common stock or to launch other takeover attempts
without ADLT board approval. A shareholder might consider these actions to be in
the shareholder's best interests.
TRANSFER AGENT
American Stock Transfer & Trust Company, New York, New York, acts as
transfer agent for ADLT's common stock.
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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 representing fractional interests in
shares of preferred stock of any series. Depositary shares may be offered
separately or together with other securities. 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 the provisions of the depositary shares and the deposit agreement set
forth below and the summary of the 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. The deposit agreement and the terms of
the depositary shares and depositary receipts will contain additional important
terms and provisions. The deposit agreement and the forms of the depositary
shares and the depositary receipts relating to any series will be filed with the
SEC and incorporated by reference as a exhibit to the registration statement
that includes this prospectus.
The following description of depositary shares sets forth general terms and
provisions of the depositary shares and the related deposit agreement to which
any prospectus supplement may relate. Specific terms of any 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 the 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 the
depositary shares in turn will represent a fractional interest 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 to a proportionate share of all the rights, preferences
and privileges of the related preferred stock. These rights may include voting
rights, rights to dividends, rights of conversion or exchange, terms of any
redemption and rights on liquidation. Owners of depositary receipts will also be
subject to any limitations and restrictions on the related preferred stock.
Depositary shares may be issued in respect of shares of the preferred stock
of any series. Immediately following the issuance of shares of preferred stock
by ADLT, ADLT will deposit the shares of preferred stock with the relevant
preferred stock depositary. The preferred stock depositary will issue, on behalf
of ADLT, the related depositary receipts.
The applicable prospectus supplement relating to the depositary shares
offered will describe specific terms of the shares. These terms may include
- the terms of the series of preferred stock deposited by ADLT under the
related deposit agreement,
- the number of depositary shares and the fraction of one share of
preferred stock represented by one depositary share,
- whether the depositary shares will be listed on any securities exchange,
- whether the depositary shares will be sold with any other securities and,
if so, the amount and terms of the other securities, and
- any other specific terms of the 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 this purpose,
subject to the terms of the related deposit agreement. Unless we specify
otherwise in the
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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 the holders on the relevant record date.
If a distribution would include a fraction of a cent to any holder, the amount
will be added to the next sum received by the preferred stock depositary for
distribution to the record holders of depositary receipts.
If there is a distribution which is not in cash, the preferred stock
depositary will distribute property received by it to the record holders of
depositary receipts in proportion to the number of depositary receipts owned by
the holders on the relevant record date. If the preferred stock depositary
determines that it is not feasible to make the distribution, the preferred stock
depositary may, with the approval of ADLT, adopt the method as it deems fair to
make the distribution. For example, the preferred stock depositary may hold a
public or private sale of the property and distribute the net proceeds from the
sale to the 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
A holder of depositary receipts will be entitled to delivery of the number
of whole shares of the related series of preferred stock and any money or other
property represented by the depositary receipts unless the preferred stock has
been called for redemption. Shares of preferred stock which are withdrawn may
not be redeposited. If the depositary receipts delivered by the holder evidence
more depositary shares than the number of whole shares of preferred stock
withdrawn, the preferred stock depositary will deliver to the holder at the same
time a new depositary receipt evidencing the excess number of depositary shares.
REDEMPTION AND REPURCHASE OF PREFERRED STOCK
If ADLT may, at its option redeem a series of preferred stock represented
by depositary shares and ADLT redeems shares of preferred stock of the series
held by the preferred stock depositary, the preferred stock depositary will
redeem on the same date the number of depositary shares representing the shares
of the preferred stock redeemed. The preferred stock depositary will only redeem
depositary shares if ADLT pays 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 depositary share. If only some of
the depositary shares are to be redeemed, the depositary shares to be redeemed
will be selected by the preferred stock depositary by an equitable method
determined by ADLT. If only some of the depositary shares evidenced by a
depositary receipt are to be redeemed, one or more new depositary receipts will
be issued for any depositary shares not redeemed.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding. After that date holders
of depositary receipts called for redemption will only have the right to
proportional payment of the redemption price and any other property distributed.
The holders will have no other rights.
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Holders cannot make ADLT repurchase their depositary shares. However, if
holders of the preferred stock represented by depositary shares can make ADLT
purchase their shares at their option, the holders may surrender their
depositary receipts together with written instructions to the preferred stock
depositary to instruct ADLT to repurchase the preferred stock represented by the
related depositary shares. The repurchase would be made at the applicable
repurchase price specified in the related prospectus supplement. When ADLT
receives the instructions, it will repurchase the requisite whole number of
shares of the preferred stock from the preferred stock depositary, who in turn
will repurchase the depositary receipts. The ability of ADLT to purchase its
preferred stock may be limited by Ohio law. 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 only some of the
depositary shares evidenced by a depositary receipt are to be repurchased, one
or more new depositary receipts will be issued for any depositary shares not to
be repurchased.
VOTING THE PREFERRED STOCK
If the preferred stock depositary receives notice of a shareholders meeting
and the related preferred shares are entitled to vote, the preferred stock
depositary will mail the information contained in the notice of meeting to the
record holders of the related depositary receipts. Each record holder of
depositary receipts on the record date will be entitled to instruct the
preferred stock depositary as to the exercise of the voting rights equal to the
amount of preferred stock represented by the holder's depositary shares. The
preferred stock depositary will attempt to vote the number of shares of
preferred stock represented by the depositary shares in accordance with the
instructions. 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 vote the preferred shares in accordance with the
instructions. The preferred stock depositary will not vote shares of preferred
stock if it does not receive specific instructions from the holders of
depositary receipts evidencing the depositary shares representing the preferred
stock.
CONVERSION AND EXCHANGE OF PREFERRED STOCK
If ADLT may, at its option, exchange the preferred stock represented by
depositary shares for other securities and ADLT exercises this option to
exchange some or all of the shares of preferred stock held by the preferred
stock depositary, the preferred stock depositary will exchange on the same date
the number of depositary shares representing the shares of the preferred stock
exchanged. The preferred stock depositary will only exchange depositary shares
if ADLT issues and deposits with the preferred stock depositary the securities
for which the 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 only some of the depositary shares are to be exchanged,
the depositary shares to be exchanged will be selected by the preferred stock
depositary by equitable method determined by ADLT. Unless we specify otherwise
in the applicable prospectus supplement, fractional share interests resulting
from any conversion or exchange will be redeemed by ADLT for cash. If only some
of the depositary shares evidenced by a depositary receipt are to be exchanged,
a new depositary receipt or receipts will be issued for any depositary shares
not exchanged.
Holders cannot make ADLT convert or exchange depositary shares into other
securities or property. However, if the holders of the preferred stock
represented by depositary shares can require ADLT to convert or exchange their
preferred stock at their option for other securities, the holders may surrender
their depositary receipts together with any required payment and written
instructions to the preferred stock depositary to instruct ADLT to cause
conversion or exchange of the preferred stock represented by the related
depositary shares. The conversion or exchange must involve 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. When ADLT receives the instructions and any
required payment, it will make the conversion or exchange, and will deliver to
the holders the number of whole shares
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of common stock or preferred stock, a whole number of common stock warrants, or
a principal amount of debt securities in authorized denominations. If the
conversion would require ADLT to issue fractional securities, ADLT may pay cash
instead. 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
only some of the depositary shares evidenced by a depositary receipt are to be
converted or exchanged, 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 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 final unless the amendment has been approved by the
holders of at least a majority of the depositary receipts then outstanding. If
the depositary shares are listed on a securities exchange, a greater proportion
may be required for approval. In no event may any amendment limit the right of
any holder of depositary receipts to receive the related preferred stock upon
surrender of the depositary receipts according to the deposit agreement as
described above under "--Withdrawal of Preferred Stock."
The deposit agreement may be terminated by ADLT by giving at least 60 days'
notice to the preferred stock depositary. If the deposit agreement is
terminated, the preferred stock depositary shall deliver or make available to
each holder of the related depositary receipts the number of whole shares of the
related series of preferred stock represented by the related depositary shares.
If a holder is entitled to cash in lieu of fractional shares, the preferred
stock depositary will pay the holders amounts which it receives from ADLT for
fractional shares. Otherwise, ADLT will remain obligated to pay these amounts.
In order to receive shares and cash for any fractional shares from the preferred
stock depositary, a holder must surrender his depositary receipts. The deposit
agreement will automatically terminate if all of the shares of preferred stock
deposited thereunder have been withdrawn, redeemed, converted or exchanged. The
agreement will also terminate if there has been a final distribution in respect
of the 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 the 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 notice
to ADLT. ADLT may remove the preferred stock depositary at any time. The
resignation or removal will be effective at the time of 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. ADLT and the preferred
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stock depositary will not be obligated to prosecute or defend any legal
proceeding relating to depositary shares or any related shares of preferred
stock or depositary receipts without satisfactory indemnity. ADLT and the
preferred stock depositary may rely on advice of counsel, accountants or other
advisors. ADLT and the preferred stock depositary may also rely on information
provided by persons presenting shares of preferred stock for deposit, holders of
depositary receipts or other persons believed to be authorized or competent and
on documents believed to be genuine.
If the preferred stock depositary receives conflicting claims, requests or
instructions from any holders of depositary receipts and ADLT, the preferred
stock depositary will be entitled to act on the 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. Except for issuance of shares under
existing employee benefit plans, and other special exceptions, if ADLT issues
common stock priced below $6.75 per share (or, if higher, below the then current
market price) the number of shares subject to the GE warrant will increase. ADLT
issued to GE this warrant at the time of 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. The warrants may be attached to
or separate from the other securities. Each series of warrants will be issued
under a separate warrant agreement between ADLT and a warrant agent. 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. These terms may include:
- the title of the warrants,
- the aggregate number of the warrants,
- the price or prices at which the warrants will be issued,
- the designation, terms and number of securities purchasable upon exercise
of the warrants,
- the designation and terms of the securities, if any, issued with the
warrants and the number of warrants issued with each such security,
- whether and when the warrants and the securities issued with the warrants
will be separately transferable,
- the price at which each security which may be purchased on exercise of
the warrants may be purchased,
- when the warrant may be exercised and when it expires,
- the minimum or maximum amount of the warrants which may be exercised at
any one time,
- information with respect to book-entry procedures, and
- any other terms of the warrants, such as terms, procedures and
limitations relating to the exchange and exercise of the warrants.
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DESCRIPTION OF TRUST PREFERRED SECURITIES
The Trust may issue only one series of trust preferred securities. The
terms of the trust preferred securities will be described in the related
prospectus supplement. The declaration will authorize the regular trustees to
issue the trust preferred securities on behalf of the Trust. The declaration
will be qualified as an indenture under the Trust Indenture Act. The form of
declaration has been filed as an exhibit to the registration statement that
includes this prospectus. The terms of the declaration will be set forth in the
declaration. Some terms will be made part of the declaration by the Trust
Indenture Act. The summary of provisions of the trust preferred securities and
the declaration set forth below and in any prospectus supplement do not purport
to be complete. The declaration and the trust preferred securities contain
additional important terms and provisions. The form of any trust preferred
securities will be filed with the SEC and incorporated by reference before any
trust preferred securities are issued.
The following description of the trust preferred securities and the
declaration sets forth general terms and provisions of the trust preferred
securities and the declaration. Specific terms of the trust preferred securities
and the declaration will be described in the applicable prospectus supplement.
To the extent that any particular terms of any trust preferred securities or the
declaration described in a prospectus supplement differ from any of the terms
described in this prospectus, you should rely on the description in the
prospectus supplement.
The trust preferred securities will have terms set forth in the declaration
or made part of the declaration by the Trust Indenture Act. These terms will
generally mirror the terms of the debt securities held by the Trust and
described in the applicable prospectus supplement. The prospectus supplement
relating to the trust preferred securities will describe specific terms of the
trust preferred securities. These terms may include:
- the designation of the trust preferred securities;
- the number of trust preferred securities;
- the annual distribution rate (or method of determining the rate) for the
trust preferred securities and the date or dates upon which the
distributions shall be payable;
- whether distributions on the trust preferred securities will be
cumulative, and, in the case of trust preferred securities having
cumulative distribution rights, the date or dates (or method of
determining the date or dates) used to calculate cumulative distributions
on the trust preferred securities;
- the amount or amounts to be paid from the Trust to the holders of the
trust preferred securities upon voluntary or involuntary dissolution,
winding-up or termination of the Trust;
- the right or obligation, if any, of the Trust to purchase or redeem the
trust preferred securities and the terms and conditions governing
purchase or redemption, in whole or in part, pursuant to such obligation,
including the applicable price and the periods when the purchase or
redemption could occur;
- the voting rights, if any, of the trust preferred securities in addition
to those required by law, including the number of votes for each trust
preferred security and any requirement for the approval by the holders of
the trust preferred securities as a condition to specified action or
amendments to the declaration;
- any terms and conditions which would permit the trust preferred
securities to be converted into or exchanged for shares of common stock
or other securities, including the conversion price per share or
conversion rate and any circumstances under which any conversion right
will expire;
- any terms and conditions upon which the related debt securities may be
distributed to holders of the trust preferred securities;
- any securities exchange upon which the trust preferred securities shall
be listed; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of the trust preferred securities.
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All trust preferred securities offered hereby will be guaranteed by ADLT to
the extent set forth below under "Trust Preferred Securities Guarantee."
Important United States Federal income tax considerations applicable to any
offering of trust preferred securities will be described in the prospectus
supplement relating to the offering.
In connection with the issuance of trust preferred securities, the Trust
will issue one series of trust common securities. The declaration will authorize
the regular trustees to issue on behalf of the Trust one series of trust common
securities having terms including distributions, redemption, voting and
liquidation rights or restrictions. The terms of the trust common securities
will be substantially identical to the terms of the trust preferred securities.
The trust common securities will rank equally (pari passu), and payments will be
made pro rata, with the trust preferred securities. However, if an event of
default occurs under the declaration, the rights of the holders of the trust
common securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the trust preferred securities. Except in limited circumstances, the
trust common securities will also carry the right to vote to appoint, remove or
replace any of the trustees. All of the trust common securities will be directly
or indirectly owned by ADLT.
ENFORCEMENT OF RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an event of default under the declaration occurs and is continuing, then
the holders of the trust preferred securities would rely on the enforcement by
the property trustee of its rights as a holder of the debt securities against
ADLT. In addition, the holders of a majority in liquidation amount of the trust
preferred securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the property trustee.
These holders may also direct the exercise of any trust or power of the property
trustee under the declaration. These rights include the right to direct the
property trustee to exercise the remedies available to it as a holder of the
debt securities. If the property trustee fails to enforce its rights under the
debt securities, a holder of the trust preferred securities, to the fullest
extent permitted by law, may institute a legal proceeding directly against ADLT
to enforce the property trustee's rights under the debt securities without first
instituting any legal proceeding against the property trustee or anyone else. If
an event of default under the declaration has occurred and is continuing and the
event is due to the failure of ADLT to pay the principal, any premium or any
interest on the related debt securities on the date such principal, premium or
interest is payable (or in the case of redemption, on the redemption date), then
a holder of the trust preferred securities may directly institute a proceeding
for enforcement of payment to the holder. The holder may seek payment of the
principal, premium or interest on the debt securities having a principal amount
equal to the aggregate liquidation amount of the trust preferred securities of
such holder on or after the respective due date specified in the debt
securities.
TRUST PREFERRED SECURITIES GUARANTEE
Below is a summary of information concerning the trust preferred securities
guarantee which will be executed and delivered by ADLT for the benefit of the
holders from time to time of trust preferred securities. The trust preferred
securities guarantee will be qualified as an indenture under the Trust Indenture
Act. A trustee whose name will be set forth in the applicable prospectus
supplement will act as the trustee under the trust preferred securities
guarantee for purposes of the Trust Indenture Act. The form of trust preferred
securities guarantee has been filed as an exhibit to the registration statement.
The terms of the trust preferred securities guarantee will be set forth in the
trust preferred securities guarantee. Some terms of the trust preferred
securities guarantee will be made part of the trust preferred securities
guarantee by the Trust Indenture Act. The summary of the provisions of the trust
preferred securities guarantee set forth below and in any prospectus supplement
does not purport to be complete. The trust preferred securities guarantee
contains other important terms and provisions. The trust preferred securities
guarantee will be held by the preferred guarantee trustee for the benefit of the
holders of the trust preferred securities.
The following description of the trust preferred securities guarantee sets
forth the general terms and provisions of the trust preferred securities
guarantee to which a prospectus supplement may relate. Specific terms of the
trust preferred securities guarantee will be described in the applicable
prospectus supplement. To
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the extent that any particular terms of the trust preferred securities guarantee
described in a prospectus supplement differ from any of the terms described in
this prospectus, you should rely on the description in the prospectus
supplement.
Terms of the Trust Preferred Securities Guarantee
In the trust preferred securities guarantee, ADLT will agree to pay in full
to the holders of the trust preferred securities, the guarantee payments (as
defined herein). The guarantee payments will be reduced by amounts paid by the
Trust. ADLT will make the guarantee payments as and when due, regardless of any
defense, right of setoff or counterclaim which the Trust may have. The following
guarantee payments with respect to the trust preferred securities to the extent
not paid by the Trust, will be subject to the trust preferred securities
guarantee:
- any accrued and unpaid distributions which are required to be paid on the
trust preferred securities, to the extent the Trust has funds available;
- the redemption price (if any) set forth in the applicable prospectus
supplement, and all accrued and unpaid distributions, to the extent the
Trust has funds available, with respect to any trust preferred securities
called for redemption by the Trust; and
- upon a voluntary or involuntary dissolution, winding-up or termination of
the Trust (other than in connection with the distribution of subordinated
debt securities to the holders of trust preferred securities or the
conversion or redemption of all of the trust preferred securities), the
lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on the trust preferred securities to the date of
payment, to the extent the Trust has funds available therefor, and (b)
the amount of assets of the Trust remaining available for distribution to
holders of the trust preferred securities in liquidation of the Trust.
ADLT's obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by ADLT to the holders of trust preferred
securities or by causing the Trust to pay the amounts to the holders.
The trust preferred securities guarantee will not apply to any payment of
distributions on the trust preferred securities except to the extent the Trust
shall have funds available therefor. If ADLT does not make interest payments on
the debt securities purchased by the Trust, the Trust will not pay distributions
on the trust preferred securities issued by the Trust and will not have funds
available for payment. The trust preferred securities guarantee, together with
ADLT's obligations under the debt securities, the indenture and the declaration,
including all of its obligations to pay costs, expenses, debts and liabilities
of the Trust (other than with respect to the trust securities), will provide a
full and unconditional guarantee by ADLT of payments due on the trust preferred
securities.
ADLT has also agreed separately to guarantee the obligations of the Trust
with respect to the trust common securities to the same extent as the trust
preferred securities guarantee, except that upon an event of default under the
indenture, holders of trust preferred securities shall have priority over
holders of trust common securities with respect to distributions and payments on
liquidation, redemption or otherwise.
Specific covenants of ADLT to be set forth in the trust preferred
securities guarantee will be described in the applicable prospectus supplement.
Modification of the Trust Preferred Securities Guarantee; Assignment
ADLT and the preferred guarantee trustee may make any changes to the trust
preferred securities guarantee which do not materially adversely affect the
rights of holders of trust preferred securities. Otherwise, the trust preferred
securities guarantee may be amended only with the prior approval of the holders
of not less than a majority in liquidation amount of the outstanding trust
preferred securities. The manner of obtaining the approval of holders of the
trust preferred securities will be described in the applicable prospectus
supplement. All guarantees and agreements contained in the trust preferred
securities
35
<PAGE> 38
guarantee shall bind the successors, assigns, receivers, trustees and
representatives of ADLT and shall be for the benefit of the holders of the trust
preferred securities then outstanding.
Termination
The trust preferred securities guarantee will terminate
- in connection with a redemption of the trust preferred securities, upon
full payment of the redemption price of all trust preferred securities,
- upon distribution of the debt securities held by the Trust to the holders
of the trust preferred securities or any conversion or redemption of all
of the trust preferred securities or
- upon full payment of the amounts payable in accordance with the
declaration upon liquidation of the Trust.
The trust preferred securities guarantee will continue to be effective or will
be reinstated if any holder of trust preferred securities must repay any amounts
paid under the trust preferred securities or the trust preferred securities
guarantee.
Events of Default
An event of default under the trust preferred securities guarantee will
occur when
- ADLT fails to perform any of its payment or other obligations under the
guarantee or
- ADLT fails to deliver common stock or other securities upon valid
election by the holder or holders of trust preferred securities to
convert the trust preferred securities into shares of common stock or
other securities.
The holders of a majority in liquidation amount of the trust preferred
securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the preferred guarantee trustee in
respect of the trust preferred securities guarantee. The holders also have the
right to direct the exercise of any trust or power conferred upon the preferred
guarantee trustee under the trust preferred securities. If the preferred
guarantee trustee fails to enforce such trust preferred securities guarantee,
any holder of trust preferred securities may institute a legal proceeding
directly against ADLT to enforce the preferred guarantee trustee's rights under
the trust preferred securities guarantee, without first instituting a legal
proceeding against the Trust, the preferred guarantee trustee or anyone else.
ADLT will waive any right or remedy to require that any action be brought first
against the Trust or any other person or entity before proceeding directly
against ADLT.
Status of the Trust Preferred Securities Guarantee
Unless we specify otherwise in the applicable prospectus supplement, the
trust preferred securities guarantee will constitute an unsecured obligation of
ADLT and will rank
- subordinate and junior in right of payment to all other liabilities of
ADLT,
- equally (pari passu) in right of payment with the most senior preferred
or preference stock of ADLT, and with any guarantee now or hereafter
entered into by ADLT in respect of any preferred or preference stock of
any affiliate of ADLT and
- senior to common stock.
The terms of the trust preferred securities provide that each holder of trust
preferred securities agrees to the subordination provisions, if any, and the
other terms of the trust preferred securities guarantee.
The trust preferred securities guarantee will constitute a guarantee of
payment and not of collection. That means the guaranteed party may institute a
legal proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against anyone else.
36
<PAGE> 39
Information Concerning the Preferred Guarantee Trustee
The preferred guarantee trustee, prior to the occurrence of a default with
respect to the trust preferred securities guarantee, undertakes to perform only
the duties as are specifically set forth in the trust preferred securities
guarantee. After default, the preferred guarantee trustee shall exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to these provisions, the preferred guarantee trustee
is not obligated to use its powers under the trust preferred securities
guarantee at the request of any holder of the trust preferred securities, unless
offered reasonable indemnity against the costs, expenses and liabilities which
might be incurred.
PLAN OF DISTRIBUTION
ADLT or the Trust may offer securities directly or through underwriters,
dealers or agents. The prospectus supplement will identify those underwriters,
dealers or agents and will describe the plan of distribution. If we do not name
a firm in the prospectus supplement, that firm may not directly or indirectly
participate in any underwriting of those securities, although it may participate
in the distribution of securities under circumstances entitling it to a dealer's
allowance or agent's commission.
Any underwriting agreement probably will entitle the underwriters to
indemnity against civil liabilities under the Federal securities laws and other
laws. The underwriters' obligations to purchase securities will be subject to
conditions and generally will require them to purchase all of the securities if
any are purchased.
Unless otherwise noted in the prospectus supplement, the securities will be
offered by the underwriters, if any, when, as and if issued by ADLT or the
Trust, delivered to and accepted by the underwriters and subject to their right
to reject orders in whole or in part.
ADLT and the Trust may sell securities to dealers, as principals. Those
dealers then may resell the securities to the public at varying prices set by
those dealers from time to time.
ADLT and the Trust also may offer securities through agents. Agents
generally act on a "best efforts" basis during their appointment, meaning they
are not obligated to purchase securities.
Dealers and agents may be entitled to indemnification as underwriters by us
against liabilities under the Federal securities laws and other laws.
ADLT or the Trust or the underwriters or agents may solicit offers by
institutions approved by us to purchase securities under contracts providing for
future payment. Permitted institutions include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others. Some conditions apply to those purchases.
Until a distribution of securities is completed, SEC rules may limit
underwriters from bidding for and purchasing the securities. However, any
underwriter may engage in over-allotment, stabilizing transactions, short
covering transactions and penalty bids in accordance with Regulation M under the
Securities Exchange Act of 1934. Over-allotment involves sales in excess of the
offering size, which creates a short position. Stabilizing transactions permit
bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum. Short covering transactions involve purchases of the
securities in the open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a selling concession
from a dealer when the securities originally sold by the dealer are purchased in
a covering transaction to cover short positions. Those activities may cause the
price of the securities to be higher than it would otherwise be. If commenced,
the underwriters may discontinue those activities at any time.
The supplement will set forth the anticipated delivery date of the
securities being sold at that time.
37
<PAGE> 40
LEGAL MATTERS
Unless otherwise noted in a prospectus supplement, Cowden, Humphrey &
Sarlson Co., L.P.A., Cleveland, Ohio, will pass on the legality of the
securities offered through this prospectus and any prospectus supplement. Brown
& Wood LLP, New York, New York will act as counsel for any underwriters or
agents, unless otherwise noted in a supplement. Cowden, Humphrey & Sarlson Co.,
L.P.A. will rely as to matters of New York law upon the opinion of Brown & Wood
LLP, and Brown & Wood LLP will rely as to 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.
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 Forms 10-K, 10-K/A No. 1, 10-K/A No. 2 and 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 March 31,
2000, December 31, 1999 and September 30, 1999, as well as the Quarterly
Reports on Form 10-Q/A of ADLT for the quarters ended September 30, 1999
and March 31, 2000.
- Current Reports on Form 8-K of ADLT dated June 1, 2000 and June 6, 2000.
- 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 this
description.
38
<PAGE> 41
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.
39
<PAGE> 42
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$300,000,000
ADVANCED LIGHTING
TECHNOLOGIES, INC.
ADLT TRUST I
DEBT SECURITIES, COMMON STOCK,
PREFERRED STOCK, DEPOSITARY SHARES
AND WARRANTS OF
ADVANCED LIGHTING TECHNOLOGIES, INC.
TRUST PREFERRED SECURITIES OF
ADLT TRUST I
------------------------
PROSPECTUS
------------------------
, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 43
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated amounts of the expenses of and related to the offering are as
follows:
<TABLE>
<S> <C>
Registration fee............................................ $ 88,500
Rating agency fees*......................................... 25,000
Printing fees*.............................................. 150,000
NASD fee.................................................... 30,500
Legal fees and expenses*.................................... 240,000
Accounting fees and expenses*............................... 180,000
NASDAQ National Market listing fees*........................ 35,000
Trustee fees and expenses*.................................. 4,500
Miscellaneous expenses*..................................... 46,500
--------
Total*................................................. $800,000
</TABLE>
------------------
* Estimated
ITEM 15. 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
ADLT contained in Exhibit 3.2 hereto which provides for the indemnification of
directors and officers to the fullest extent permitted by Ohio law.
Reference is also made to the Underwriting Agreement to be filed or
incorporated by reference as Exhibit 1.1 hereto, which will provide for
indemnification of controlling persons, directors and certain officers of ADLT
against certain liabilities.
II-1
<PAGE> 44
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Second 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 (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 Declaration of Trust of ADLT Trust I**
4.11 Form of Amended and Restated Declaration of Trust, including
form of Preferred Security of the Trust**
4.12 Form of Guarantee Agreement with respect to the Preferred
Securities of the Trust**
4.13 Form of 8% Senior Note Due 2008**
4.14 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 other than the
Preferred Securities of the Trust**
5.2 Opinion of Brown & Wood LLP regarding certain matters
relating to New York law**
5.3 Opinion of Potter Anderson & Corroon LLP as to the validity
of the Preferred Securities of the Trust**
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 Potter Anderson & Corroon LLP (included in
Exhibit 5.3)**
23.5 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>
II-2
<PAGE> 45
<TABLE>
<C> <S>
25.3 Form T-1 Statement of Eligibility with respect to the
Amended and Restated Declaration of Trust*
25.4 Form T-1 Statement of Eligibility with respect to the
Preferred Securities Guarantee*
</TABLE>
---------------
* To be filed with a Current Report on Form 8-K or a Post-Effective Amendment
to Registration Statement
** Previously filed
ITEM 17. UNDERTAKINGS
(a) Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrants pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' 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) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have 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
II-3
<PAGE> 46
the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants 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 registrants 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.
(d) The undersigned registrants hereby undertake 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-4
<PAGE> 47
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 7 TO
THE REGISTRATION STATEMENT (FORM S-3, NO. 333-58613) TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CLEVELAND, STATE
OF OHIO, ON JULY 11, 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
--------- ----- ----
<C> <S> <C>
/s/ WAYNE R. HELLMAN Chief Executive Officer and Director July 11, 2000
------------------------------------------------
Wayne R. Hellman
/s/ NICHOLAS R. SUCIC Chief Financial Officer, Vice July 11, 2000
------------------------------------------------ President and Treasurer (Chief
Nicholas R. Sucic Accounting Officer)
/s/ FRANCIS H. BEAM Director July 11, 2000
------------------------------------------------
Francis H. Beam*
/s/ JOHN E. BREEN Director July 11, 2000
------------------------------------------------
John E. Breen*
/s/ JOHN R. BUERKLE Director July 11, 2000
------------------------------------------------
John R. Buerkle*
/s/ THEODORE A. FILSON Director July 11, 2000
------------------------------------------------
Theodore A. Filson*
/s/ LOUIS S. FISI Director July 11, 2000
------------------------------------------------
Louis S. Fisi*
/s/ SUSUMA HARADA Director July 11, 2000
------------------------------------------------
Susuma Harada*
/s/ THOMAS K. LIME Director July 11, 2000
------------------------------------------------
Thomas K. Lime*
/s/ ALAN J. RUUD Director July 11, 2000
------------------------------------------------
Alan J. Ruud*
/s/ A GORDON TUNSTALL Director July 11, 2000
------------------------------------------------
A Gordon Tunstall*
* The undersigned, by signing his name hereto, does hereby execute this Amendment No. 7 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-5
<PAGE> 48
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 7 TO
THE REGISTRATION STATEMENT (FORM S-3, NO. 333-58613) TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CLEVELAND, STATE
OF OHIO, ON JULY 11, 2000.
ADLT TRUST I
By: Advanced Lighting Technologies,
Inc.,
As Sponsor
By: /s/ Alan J. Ruud
------------------------------------
Alan J. Ruud, President
II-6
<PAGE> 49
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
1.1 Form of Underwriting Agreement*
3.1 Second 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 (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 Declaration of Trust of ADLT Trust I**
4.11 Form of Amended and Restated Declaration of Trust, including
form of Preferred Security of the Trust**
4.12 Form of Guarantee Agreement with respect to the Preferred
Securities of the Trust**
4.13 Form of 8% Senior Note Due 2008**
4.14 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 other than the
Preferred Securities of the Trust**
5.2 Opinion of Brown & Wood LLP regarding certain matters
relating to New York law**
5.3 Opinion of Potter Anderson & Corroon LLP as to the validity
of the Preferred Securities of the Trust**
12.1 Statement of Computation of Ratios of Advanced Lighting
Technologies, Inc.**
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cowden, Humphrey & Sarlson Co., L.P.A. (included
in Exhibit 5.1)
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
23.3 Consent of Brown & Wood LLP (included in Exhibit 5.2)
23.4 Consent of Potter Anderson & Corroon LLP (included in
Exhibit 5.3)**
23.5 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**
25.3 Form T-1 Statement of Eligibility with respect to the
Amended and Restated Declaration of Trust*
25.4 Form T-1 Statement of Eligibility with respect to the
Preferred Securities Guarantee*
</TABLE>
---------------
* To be filed with a Current Report on Form 8-K or a Post-Effective Amendment
to Registration Statement
** Previously filed
