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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 6, 2000
REGISTRATION NO. 333-58613
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 5
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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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>
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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)
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32000 AURORA ROAD
SOLON, OHIO 44139
440/519-0500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WAYNE R. HELLMAN
CHIEF EXECUTIVE OFFICER
ADVANCED LIGHTING TECHNOLOGIES, INC.
32000 AURORA ROAD
SOLON, OHIO 44139
440/519-0500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
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JAMES S. HOGG JONATHAN B. MILLER
COWDEN, HUMPHREY & SARLSON CO., 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
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If 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)
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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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(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, under certain circumstances, 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.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 6, 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 CERTAIN
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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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............................................. 12
Description Of Debt Securities.............................. 13
Description Of Capital Stock................................ 25
Description Of Depositary Shares............................ 28
Description of Warrants..................................... 33
Description of Trust Preferred Securities................... 33
Plan Of Distribution........................................ 38
Legal Matters............................................... 38
Experts..................................................... 39
Where You Can Find More Information......................... 39
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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:
METAL HALIDE INTEGRATION CHART
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") signed by us, as sponsor for the
trust, and certain of the ADLT trustees (as defined herein) for the
trust, 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
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equal to approximately 3% of the total capital of the Trust. The Trust's
business and affairs will be conducted 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
Pursuant to the terms of the GE investment agreement, GE has the right, by
converting its preferred shares and exercising warrants, to acquire
approximately 4 million of our common shares. GE will get additional rights in
the future, if we fail to maintain a 2 to 1 ratio of earnings before interest
and taxes to interest charges for a six-month measurement period. 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, upon failure for a second measurement period, to
acquire voting control of our company. The existence of a large block of shares
which could effectively control our shareholder votes, or which could be sold in
public or private sales, may limit our ability to obtain financing in the future
from other sources, including public offerings or private sale of our common
stock.
GENERAL ELECTRIC COMPANY'S RIGHTS COULD STRAIN OUR FINANCIAL RESOURCES
GE has the right to make us redeem their preferred stock after five years.
GE also has the right to make us redeem their preferred stock if 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. Although GE cannot
make us redeem their preferred stock if a 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
General Electric Company made an investment that improved our balance
sheet. This investment is expected to increase our operating flexibility. In
addition, we anticipate that this will strengthen our supplier-customer
relationship with GE. We have not experienced any adverse impact from these
other companies
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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.
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.
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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.
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.
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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 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 19.4% of the outstanding shares of common stock (or
approximately 16.9% of the shareholder voting power). Mr. Ruud individually owns
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approximately 10.5% of the outstanding shares of common stock and, individually
and as a voting trustee, has the power to vote a total of approximately 17.8% of
the outstanding shares of common stock (or approximately 15.5% of the
shareholder voting power). GE owns shares of our preferred stock with voting
power equivalent to approximately 13.0% of our common stock and GE owns
approximately 2.6% of our common stock. This gives GE approximately 15.2% of
total shareholder voting power, subject to increase upon exercise of its warrant
to purchase one million shares of our common stock. In addition to GE's
ownership, 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 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
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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 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.
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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.
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.
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DESCRIPTION OF DEBT SECURITIES
ADLT may issue debt securities either separately, or together with, or upon
the conversion of or in exchange for, other securities. The debt securities are
to be either senior debt securities or subordinated debt securities of ADLT
issued in one or more series under an indenture, as supplemented or amended from
time to time to be entered into between ADLT and one or more U.S. banking
institutions, as trustee, whose name will be set forth in the applicable
prospectus supplement. The indenture may, but need not, have separate trustees
for senior and subordinated debt securities. The form of the indenture has been
filed as an exhibit to the registration statement. The terms of any series of
debt securities will be those set forth in the indenture and such debt
securities and those made part of the indenture by the Trust Indenture Act. The
summary of 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 summaries
are subject to and are qualified in their entirety by reference to all of the
provisions of the indenture, which provisions of the indenture (including
defined terms) are incorporated herein by reference. As used in this
"Description of Debt Securities," all references to ADLT shall mean Advanced
Lighting Technologies, Inc., excluding, unless the context shall otherwise
require, its subsidiaries.
In the event debt securities are issued to the Trust or a trustee of the
Trust in connection with the issuance of trust securities, these debt securities
will be issued pursuant to the indenture and subsequently may be distributed pro
rata to the holders of the trust securities in connection with the dissolution
of the Trust upon the occurrence of the events described in the prospectus
supplement relating to the trust securities or upon a redemption of the trust
securities. Only one series of debt securities will be issued to the Trust or a
trustee of the Trust in connection with the issuance of the trust securities by
the Trust.
The following description of debt securities sets forth general terms and
provisions of the series 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, then these terms will be superseded by the prospectus
supplement.
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 an indenture dated as of March 18, 1998
between ADLT and The Bank of New York. See "8% Senior Notes Due 2008" below.
GENERAL TERMS OF THE DEBT SECURITIES WHICH WILL BE DESCRIBED IN THE APPLICABLE
PROSPECTUS SUPPLEMENT
The debt securities may be issued from time to time in one or more series
of senior debt securities and/or one or more series of subordinated debt
securities. The indenture does not limit the aggregate principal amount of debt
securities which may be issued thereunder and provides that debt securities of
any series may be issued thereunder up to an aggregate principal amount which we
may authorize from time to time. Reference is made to the applicable prospectus
supplement relating to the series of debt securities offered thereby for
specific terms, including (where applicable):
(1) the title or designation of the debt securities;
(2) any limit on the aggregate principal amount of the debt securities;
(3) the price or prices (expressed as a percentage of the principal
amount) at which the debt securities will be issued;
(4) the date or dates on which the principal of and premium, if any, on
the debt securities will be payable, or the method or methods, if any,
by which the date or dates will be determined;
(5) the rate or rates at which the debt securities will bear interest, if
any, or the method or methods, if any, by which the rate or rates are
to be determined, the date or dates, if any, from which interest will
accrue, or the method or methods, if any, by which the date or dates
are to be determined, and
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whether and under what circumstances Additional Amounts (as defined
below) on the debt securities will be payable, and the basis upon
which interest will be calculated if other than that of a 360-day year
of twelve 30-day months;
(6) the dates on which interest, if any, will be payable and the record
dates, if any;
(7) the place or places where the principal of, premium, if any, and
interest, if any, 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;
(8) if applicable, the date or dates on which, the period or periods
within which, the price or prices at which and the other terms and
conditions upon which the debt securities may be redeemed at ADLT's
option or are subject to repurchase at the holder's option;
(9) the terms of any sinking fund or analogous provision;
(10) any addition to, or modification or deletion of, any covenant or Event
of Default with respect to the debt securities;
(11) whether any debt securities are to be issuable as registered
securities or bearer securities or both and, if in bearer form, the
terms and conditions relating thereto and any limitations on issuance
of bearer securities (including in exchange for registered securities
of the same series);
(12) whether any debt securities will be issued in temporary or permanent
global form and, if so, the identity of the depositary for the global
debt security;
(13) whether and under what circumstances ADLT will pay Additional Amounts
(as contemplated by the indenture) on the debt securities to any
holder who is a United States Alien (i.e., as defined in the
indenture, as the definition may be modified, any person who, for
United States Federal income tax purposes, is a foreign corporation, a
non-resident alien individual, a non-resident alien fiduciary of a
foreign estate or trust, or a foreign partnership one or more of the
members of which is, for United States Federal income tax purposes, a
foreign corporation, a non-resident alien individual or a non-resident
alien fiduciary of a foreign estate or trust) in respect of any tax,
assessment or other governmental charge and, if so, whether ADLT will
have the option to redeem the debt securities rather than pay
Additional Amounts;
(14) the person to whom any interest on any registered securities of the
series shall be payable, if other than the person in whose name the
registered security (or one or more predecessor securities (i.e.,
every previous debt security evidencing all or a portion of the same
indebtedness as evidenced by that debt security)) is registered at the
close of business on the regular record date for the interest, the
manner in which, or the person to whom, any interest on any bearer
security of the series shall be payable, if other than upon
presentation and surrender of the coupons appertaining thereto as they
severally mature, and the extent to which, or the manner in which, any
interest payable on a temporary global debt security will be paid if
other than in the manner provided in the indenture;
(15) the portion of the principal amount of the debt securities which shall
be payable upon acceleration thereof if other than the full principal
amount thereof;
(16) the authorized denominations in which the debt securities will be
issuable, if other than denominations of $1,000 and any integral
multiple of $1,000 (in the case of registered securities) or $5,000
(in the case of bearer securities);
(17) the terms, if any, upon which the debt securities may be convertible
into or exchangeable for other securities;
(18) whether the debt securities will be senior debt securities or
subordinated debt securities, and the terms of subordination, if
applicable;
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(19) whether the amount of payments of principal of, and premium, if any,
and interest, if any, on, the debt securities may be determined with
reference to an index, formula or other method or methods and the
manner in which the amounts will be determined; and
(20) any other terms of the debt securities.
As used in this prospectus and any prospectus supplement relating to the
offering of any debt securities, references to the principal of and premium, if
any, and interest, if any, on the debt securities will be deemed to include
mention of the payment of Additional Amounts, if any, required by the terms of
the debt securities in that context. "Additional Amounts" means any additional
amounts which are required by the indenture or by the terms of any debt security
to be paid by ADLT in respect of taxes, assessments or other governmental
charges imposed on the holders of the debt security and which are owing to those
holders.
Debt securities may be issued as original issue discount securities (i.e.,
debt securities which provide for declarations of amounts less than the
principal face amount thereof to be due and payable upon acceleration pursuant
to the indenture) to be sold at a substantial discount below their principal
amount. In the event of an acceleration of the maturity of any original issue
discount security, the amount payable to the holder thereof upon acceleration
will be determined in the manner described in the applicable prospectus
supplement. Material Federal income tax and other considerations applicable to
original issue discount securities will be described in the applicable
prospectus supplement.
Under the indenture, the terms of the debt securities of any series may
differ and ADLT, without the consent of the holders of the debt securities of
any series, may reopen a previous series of debt securities and issue additional
debt securities of the series or establish additional terms of the series.
Unless we specify otherwise in the applicable prospectus supplement, the
covenants contained in the indenture and the debt securities will not provide
special protection to holders of debt securities if we enter into a highly
leveraged transaction, recapitalization or restructuring. In addition, unless we
specify otherwise in the applicable prospectus supplement, nothing in the
indenture or the debt securities will in any way limit the amount of
indebtedness or securities that we or our subsidiaries may incur or issue.
REGISTRATION, TRANSFER, PAYMENT AND PAYING AGENT
Unless otherwise indicated in the applicable prospectus supplement, each
series of debt securities will be issued in registered form only, without
coupons. The indenture, however, provides that ADLT may also issue debt
securities in bearer form only, or in both registered and bearer form. Bearer
securities shall not be offered, sold, resold or delivered in connection with
any offering in the United States or to any United States person (as defined
below) other than offices located outside the United States of United States
financial institutions permitted by the IRS. As used herein, "United States
person" means any citizen or resident of the United States, any corporation,
partnership or other entity created or organized in or under the laws of the
United States, any estate the income of which is subject to United States
Federal income taxation regardless of its source, or any trust whose
administration is subject to the primary supervision of a United States court
and which has one or more United States fiduciaries who have the authority to
control all substantial decisions of the trust, and "United States" means,
except as may be set forth in the prospectus supplement, the United States of
America (including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction.
Purchasers of bearer securities will be subject to certification procedures and
may be affected by 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.
Unless otherwise indicated in the applicable prospectus supplement,
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 otherwise indicated in the applicable prospectus supplement, the
principal, premium, if any, and interest, if any, of or on the debt securities
will be payable, and debt securities may be surrendered for registration of
transfer or exchange, at an office or agency to be maintained by ADLT in the
Borough of Manhattan, The City of New York, provided that payments of interest
with respect to any registered security
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may be made at the option of ADLT by check mailed to the address of the person
entitled thereto or by transfer to an account maintained by the payee with a
bank located in the United States. ADLT will not impose any service charge shall
be made for any registration of transfer or exchange of debt securities, but
ADLT may require payment of a sum sufficient to cover any tax or other
governmental charge and any other expenses that may be imposed in connection
therewith.
Unless otherwise indicated in the applicable prospectus supplement, payment
of principal of, premium, if any, and interest, if any, on bearer securities
will be made, subject to any applicable laws and regulations, at the office or
agency outside the United States as specified in the prospectus supplement and
as ADLT may designate from time to time. Unless otherwise indicated in the
applicable prospectus supplement, payment of interest due on bearer securities
on any interest payment date will be made only against surrender of the coupon
relating to the interest payment date.
Unless otherwise indicated in the applicable prospectus supplement, no
payment of principal, premium or interest with respect to any bearer security
will be made at any office or agency in the United States or by check mailed to
any address in the United States or by transfer to an account maintained with a
bank located in the United States; provided, however, that if amounts owing with
respect to any bearer securities shall be payable in U.S. dollars, payment
relating to bearer securities may be made at the corporate trust office of the
trustee or at any office or agency designated by ADLT in the Borough of
Manhattan, The City of New York, if (but only if) payment of the full amount of
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.
Unless otherwise indicated in the applicable prospectus supplement, ADLT
will not be required to do the following:
(1) issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before any selection of debt securities of that series of like tenor to
be redeemed and ending at the close of business on the day of that
selection;
(2) register the transfer of or exchange any registered security, or
portion thereof, called for redemption, except the unredeemed portion
of any registered security being redeemed in part;
(3) exchange any bearer security called for redemption, except to exchange
the bearer security for a registered security of that series and like
tenor that is simultaneously surrendered for redemption; or
(4) issue, register the transfer of or exchange any debt security which has
been surrendered for repayment at the option of the holder, except the
portion, if any, of 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 on a parity in right of payment with all other unsecured and
unsubordinated indebtedness of ADLT, including the 8% Notes. At March 31, 2000,
ADLT had approximately $164.2 million of total indebtedness outstanding.
Although the senior debt securities and the 8% Notes will rank equally
(pari passu) in right of payment with indebtedness outstanding under ADLT's
$60.0 million bank credit facility entered into on May 21, 1999 (as amended),
the 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. The
senior debt securities and the 8% Notes, however, are unsecured and therefore do
not have the benefit of collateral. If an event of default occurs under the
credit facility, the banks that are parties thereto will have preferential
claims to those assets and may foreclose upon the collateral to the exclusion of
the holders of the senior debt securities and the 8% Notes, notwithstanding the
existence of an event of default with respect to the senior debt securities and
the 8% Notes, respectively. Accordingly, ADLT's assets would first be used to
repay in full amounts outstanding under the credit facility, resulting in
virtually all of ADLT's assets being unavailable to satisfy the claims of
holders of the senior debt securities and the 8% Notes until the indebtedness
under the credit facility is repaid in full. Any remaining unpaid
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claims of creditors under the credit facility will rank equally (pari passu)
with the senior debt securities and the 8% Notes and will be entitled to share
in any of ADLT's remaining assets.
ADLT conducts substantially all of its operations through subsidiaries and
substantially all of its assets consist of the capital stock of its
subsidiaries. Accordingly, the senior debt securities and the 8% Notes will be
effectively subordinated to liabilities of ADLT's subsidiaries, including trade
payables. At March 31, 2000, the total liabilities of ADLT's subsidiaries,
excluding intercompany debt but including trade payables, were approximately
$64.6 million. At March 31, 2000, ADLT and its subsidiaries would also have had
$20.2 million available (subject to borrowing base compliance and other
limitations) to be drawn under the credit facility, which is secured as
described above.
ADLT's rights and the rights of its creditors, including holders of the
senior debt securities and the 8% Notes, to participate in the assets of any
subsidiary upon the subsidiary's liquidation or recapitalization will be
subject, in the case of any subsidiary, to the prior claims of the subsidiary's
creditors, except to the extent that ADLT may be a creditor with recognized
claims against the subsidiary, in which case the claims of ADLT would still be
effectively subordinated to any mortgage or other liens on the assets of the
subsidiary and would be subordinate to any indebtedness of the subsidiary senior
to that held by ADLT. Accordingly, there can be no assurance that, after
providing for all prior claims and all equal (pari passu) claims, there would be
sufficient assets available to satisfy the obligations of ADLT under the senior
debt securities and the 8% Notes.
Because ADLT conducts substantially all of its operations through its
subsidiaries, ADLT is and will be dependent upon the distribution of the
earnings of its subsidiaries to service its debt obligations, including the
senior debt securities and the 8% Notes. ADLT's subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts due on the senior debt securities and the 8% Notes or to make any
funds available therefor. There are currently no material restrictions on the
ability of 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 (as defined in the applicable prospectus supplement) of ADLT. See
"--Subordination of Subordinated Debt Securities" immediately following this
paragraph.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The applicable prospectus supplement will set forth the extent to which
subordinated debt securities of or within a particular series are subordinated
to other indebtedness.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depositary identified in the prospectus supplement. Global debt securities
may be issued in either registered or bearer form and in either temporary or
permanent form. Unless and until it is exchanged in whole or in part for
individual certificates evidencing debt securities in definitive form
represented thereby, a global debt security may not be transferred except as a
whole by the depositary to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or by the
depositary or any nominee to a successor of the depositary or a nominee of the
successor.
So long as the depositary or its nominee is the registered owner of a
global debt security, that entity will be the sole holder of the debt securities
represented by the global debt security. The trustee and ADLT are only required
to treat the depositary or its nominee as the legal owner of those debt
securities for all purposes under the indenture. Each beneficial owner of debt
securities represented by a global debt security will not be entitled to receive
physical delivery of certificated securities, will not be considered the holder
of those securities for any purpose under the indenture, and will not be able to
transfer or exchange the global debt securities, except in the limited
circumstances as may be described in this prospectus or the prospectus
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supplement. As a result, each beneficial owner may have to rely on the
procedures of the depositary to exercise any rights of a holder under the
indenture, including rights upon an Event of Default. In addition, if the
beneficial owner is not a direct or indirect participant in the depositary 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 requisite principal amount of
outstanding debt securities have given any request, demand, authorization,
direction, notice, consent or waiver under the indenture,
(1) the portion of the principal amount of an original issue discount
security that shall be deemed to be outstanding for these purposes
shall be that portion of the principal amount thereof that could
be declared to be due and payable upon a declaration of
acceleration thereof pursuant to the terms of the original issue
discount security as of the date of the determination;
(2) the principal amount of any indexed security that shall be deemed
to be outstanding for this purpose shall be the principal face
amount of the indexed security determined on the date of its
original issuance; and
(3) 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,
may be subject to mandatory redemption pursuant to a sinking fund or otherwise,
or may be subject to repurchase by ADLT at the option of the holders, in each
case upon the terms, at the times and at the prices set forth in the applicable
prospectus supplement.
CONVERSION AND EXCHANGE
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for common stock, preferred stock, depositary shares or
other debt securities will be set forth in the applicable prospectus supplement.
These terms may include provisions for conversion or exchange, either mandatory,
at the option of the holders or at the option of ADLT.
COVENANTS OF ADLT
Reference is made to the applicable prospectus supplement for information
with respect to covenants specific to a particular series of debt securities. If
any of the covenants are described, the prospectus supplement will also state
whether the "covenant defeasance" provisions described below also apply.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable prospectus supplement, an
Event of Default with respect to the debt securities of any series is defined in
the indenture as being:
(1) default for 30 days in payment of any interest with respect to any debt
security of the series;
(2) default in payment of principal or any premium with respect to any debt
security of the series when due upon maturity, redemption or otherwise;
(3) default in making any sinking fund payment or payment under any
analogous provision when due with respect to any debt security of the
series;
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(4) default by ADLT in the performance, or breach, of any other covenant or
warranty in the indenture (other than a covenant or warranty included
therein solely for the benefit of one or more series of debt securities
other than that series) or any debt security of the series which shall
not have been remedied for a period of 90 days after notice to ADLT by
the trustee or the holders of not less than 25% in aggregate principal
amount of the debt securities of the series then outstanding;
(5) acceleration of the maturity of any single outstanding issue of
indebtedness of ADLT with an outstanding aggregate principal amount in
excess of $10,000,000 (including an acceleration under the indenture
with respect to debt securities of any other series), as a result of an
event of default thereunder, which acceleration is not annulled or
which indebtedness is not discharged within 30 days thereafter;
(6) ADLT shall fail within 30 days to pay, bond or otherwise discharge any
uninsured judgement or court order for the payment of money in excess
of $10,000,000, which is not stayed on appeal or is not otherwise being
appropriately contested in good faith;
(7) certain events of bankruptcy, insolvency or reorganization of ADLT; or
(8) any other Event of Default established for the debt securities of the
series.
No Event of Default with respect to any particular series of debt securities
necessarily constitutes an Event of Default with respect to any other series of
debt securities. The indenture provides that the trustee thereunder may withhold
notice to the holders of the debt securities of any series of the occurrence of
a default with respect to the debt securities of the series (except a default in
payment of principal, premium, if any, interest, if any, or sinking fund
payments, if any) if the trustee considers it in the interest of the holders to
do so.
The indenture provides that if an Event of Default with respect to any
series of debt securities issued thereunder shall have occurred and be
continuing, either the trustee or the holders of at least 25% in principal
amount of the debt securities of any series then outstanding may declare the
principal amount (or if any debt securities of the series are original issue
discount securities, the lesser amount as may be specified in the terms thereof)
of all the debt securities of the series to be due and payable immediately, but
in some circumstances described in the indenture, 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.
Subject to the provisions of the Trust Indenture Act requiring the trustee,
during an Event of Default under the indenture, to act with the requisite
standard of care, a trustee is under no obligation to exercise any of its rights
or powers under the indenture at the request or direction of any of the holders
of debt securities of any series unless such holders have offered the trustee
reasonable indemnity. Subject to the foregoing, holders of a majority in
principal amount of the then outstanding debt securities of any series issued
under the indenture shall have the right, subject to certain limitations, to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee under the indenture. The indenture requires the annual
filing by ADLT with the trustee of a certificate as to whether or not ADLT is in
default under the terms of the indenture.
Notwithstanding any other provision of the indenture, the holder of any
debt security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, and interest, if any,
on the debt security on the respective due dates therefor (as the same may be
extended in accordance with the terms of the debt security) and to institute
suit for enforcement of any payment, and this right shall not be impaired
without the consent of the holder. In addition, in the case of a debt security
issued to the Trust or a trustee of the Trust, if an Event of Default has
occurred and is continuing and the Event of Default is attributable to the
failure by ADLT to pay the principal of or premium, if any, or interest, if any,
on the debt security, then a holder of trust preferred securities may directly
institute a proceeding against ADLT for payment.
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
ADLT, may discharge its obligations with respect to any series of debt
securities (subject to the survival of certain provisions of the indenture,
including the obligation to pay Additional Amounts to the extent described
below).
When either
- all outstanding debt securities of the series and, in the case of bearer
securities, all coupons appertaining thereto, have been delivered to the
trustee for cancelation (subject to certain exceptions) or all debt
securities of the series and, if applicable, any coupons appertaining
thereto, have become due and payable or will become due and payable at
their stated maturity within one year or are to be called for redemption
within one year and ADLT has deposited with the trustee, in trust, funds
in U.S. dollars in an amount sufficient to pay the entire indebtedness on
the debt securities in respect of principal (and premium, if any) and
interest to the date of the deposit (if the debt securities have become
due and payable) or to the maturity thereof, as the case may be,
- ADLT has paid all other sums payable under the indenture with respect to
the debt securities of the series, or
- certain other conditions are met.
If the debt securities of any series provide for the payment of Additional
Amounts, ADLT will remain obligated, following the deposit, to pay Additional
Amounts on the debt securities to the extent that the amount thereof exceeds the
amount deposited in respect of the Additional Amounts.
If provided in the applicable prospectus supplement, ADLT may elect with
respect to any series of debt securities either to defease and be discharged
from
- any and all obligations with respect to the debt securities (except for,
among other things, the obligation to pay Additional Amounts, to the
extent that the amount thereof exceeds the amount deposited in respect of
the Additional Amounts as provided below, and the obligations to register
the transfer or exchange of the debt securities, to replace temporary or
mutilated, destroyed, lost or stolen debt securities, to maintain an
office or agency in respect of the debt securities, to hold moneys for
payment in trust, and, if applicable, to exchange or convert the debt
securities into other securities in accordance with their terms)
(defeasance), or
- the restrictive covenants, if any, indicated in the applicable prospectus
supplement, and any omission to comply with these obligations shall not
constitute a default or an Event of Default with respect to the debt
securities of the series (covenant defeasance).
Defeasance or covenant defeasance, as the case may be, are conditioned upon the
irrevocable deposit with the trustee (or other qualifying trustee), in trust for
this purpose, of an amount, in U.S. dollars at stated maturity, and/or
government obligations (as defined in the indenture) which through the payment
of principal and interest in accordance with their terms will provide money, in
an amount sufficient to pay the principal of and any premium and any interest on
(and, to the extent that (x) the debt securities of the series provide for the
payment of Additional Amounts and (y) the amount of any Additional Amounts is at
the time of deposit reasonably determinable by ADLT (in the exercise of its sole
discretion), any Additional Amounts with respect to) the debt securities, and
any mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor or the applicable redemption date, as the case may be.
This trust may only be established if, among other things,
- the applicable defeasance or covenant defeasance does not result in a
breach or violation of, or constitute a default under, the indenture or
any other material agreement or instrument to which ADLT is a party or by
which it is bound,
- no Event of Default or event which with notice or lapse of time or both
would become an Event of Default with respect to the debt securities to
be defeased shall have occurred and be continuing on the
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date of establishment of the trust and, with respect to defeasance only, at any
time during the period ending on the 123rd day after this date, 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 or covenant defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if the defeasance or covenant defeasance had
not occurred, and the opinion of counsel, in the case of defeasance, must
refer to and be based upon a letter ruling of the Internal Revenue
Service received by ADLT, a Revenue Ruling published by the Internal
Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the indenture.
In the event ADLT effects covenant defeasance, and the debt securities are
declared due and payable because of the occurrence of any Event of Default or
with respect to any other covenant as to which there has been covenant
defeasance, the amount of monies and/or government obligations deposited with
the trustee to effect the covenant defeasance may not be sufficient to pay
amounts due on the debt securities at the time of any acceleration resulting
from the Event of Default. However, ADLT would remain liable to make payment of
the amounts due at the time of acceleration.
The applicable prospectus supplement may further describe the provisions,
if any, permitting or restricting the defeasance or covenant defeasance with
respect to the debt securities of a particular series.
MODIFICATION, WAIVERS AND MEETINGS
The indenture contains provisions permitting ADLT and the trustee
thereunder, with the consent of the holders of a majority in principal amount of
the outstanding debt securities of each series issued under the indenture and
affected by a modification or amendment, to modify or amend any of the
provisions of the indenture or of the debt securities of the series or the
rights of the holders of the debt securities of the series under the indenture.
However, except as otherwise provided in the indenture, no modification or
amendment may, without the consent of the holder of each outstanding debt
security affected,
- change the stated maturity of the principal of, or premium, if any, or
any installment of interest, if any, on any debt securities issued under
the indenture,
- 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 the maturity
thereof,
- adversely affect any right of repayment at the option of any holder,
- change any place where, or the currency in which, any debt securities
issued under the indenture are payable,
- impair 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 the debt securities for other securities in
accordance with their terms,
- reduce the percentage of debt securities of any series, the consent of
the holders of which is required for any modification or amendment or the
consent of whose holders is required for any waiver (of compliance with
certain provisions or defaults of the indenture and their consequences)
- reduce the requirements for a quorum or voting at a meeting of holders of
the debt securities, or
- solely 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.
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If the Trust or the property trustee holds a series of debt securities, no
such amendment, modification or waiver which requires approval of holders of a
percentage in principal amount of the outstanding debt securities of series
shall be effective as to series of debt securities, without the approval of the
holders of at least the same percentage of aggregate liquidation amount of
outstanding trust securities.
The indenture also contains provisions permitting ADLT and the trustee,
without the consent of the holders of any debt securities issued thereunder, to
modify or amend the indenture in order, among other things,
- to add to the Events of Default or the covenants of ADLT for the benefit
of the holders of all or any series of debt securities issued under the
indenture,
- to add or change any provisions of the indenture to facilitate the
issuance of bearer securities,
- to establish the form or terms of debt securities of any series and any
related coupons,
- to cure any ambiguity or correct or supplement any provision therein
which may be inconsistent with other provisions therein, or to make any
other provisions with respect to matters or questions arising under the
indenture which shall not materially and adversely affect the interests
of the holders of any series of debt securities issued thereunder in any
material respect,
- to amend or supplement any provision contained in the indenture, provided
that this amendment or supplement does not apply to any outstanding debt
securities issued prior to the date of the amendment or supplement and
entitled to the benefits of such provision, or
- to amend or supplement any provision therein or in any supplemental
indenture, provided that no amendment or supplement shall materially and
adversely affect the interests of the holders of any debt securities then
outstanding.
The holders of a majority in aggregate principal amount of the outstanding
debt securities of any series may waive compliance by ADLT with certain
restrictive provisions of the indenture to the extent described in the
prospectus supplement. The holders of a majority in aggregate principal amount
of the outstanding debt securities of any series may, on behalf of all holders
of debt securities of that series, waive any past default under the indenture
with respect to debt securities of that series and its consequences, except a
default in the payment of the principal of, or premium, if any, or interest, if
any, on, any debt securities of 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.
The indenture contains provisions for convening meetings of the holders of
debt securities of a series issued thereunder. A meeting may be called at any
time by the trustee, and also, upon request, by ADLT or the holders of at least
10% in principal amount of the outstanding debt securities of the series, in any
case upon notice given in accordance with the provisions of the indenture.
Except for any consent which must be given by the holder of each outstanding
debt security affected thereby, as described above, any resolution presented at
a meeting or adjourned meeting duly reconvened at which a quorum (as described
below) is present may be adopted by the affirmative vote of the holders of a
majority in principal amount of the outstanding debt securities of that series.
However, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which may be made, given or
taken by the holders of a percentage that is less than a majority in principal
amount of the outstanding debt securities of a series, may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is present by
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, and
at any reconvened meeting, will be persons holding or representing a majority in
principal amount of the outstanding debt securities of a series, subject to
certain exceptions.
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GOVERNING LAW
The indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Trust Indenture Act contains limitations on the rights of a trustee,
should it become a creditor of ADLT, to obtain payment of claims 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 conflict upon the occurrence of an Event
of Default under the indenture, or else resign.
8% SENIOR NOTES DUE 2008
General. ADLT may issue up to an additional $50,000,000 aggregate principal
amount of its 8% Notes at the date of this prospectus. The additional 8% Notes
are issuable under an indenture dated as of March 18, 1998, as supplemented,
between ADLT and The Bank of New York, as trustee. The 8% Notes Indenture has
been incorporated by reference as an exhibit to the registration statement.
Interest on the 8% Notes will be payable semiannually in cash on March 15
and September 15 of each year.
The 8% Notes will not be subject to any sinking fund.
Ranking. The additional 8% Notes, if issued, will be unsecured senior
indebtedness and will rank equally (pari passu) with existing and future
unsubordinated unsecured indebtedness, including the senior debt securities and
outstanding 8% Notes, and senior in right of payment to all subordinated
indebtedness of ADLT. The 8% Notes will be effectively subordinated to all
secured indebtedness of ADLT and its subsidiaries with respect to the collateral
securing such indebtedness, and the 8% Notes will be effectively subordinated to
all liabilities of ADLT's subsidiaries, including trade payables. See "Ranking
of Debt Securities and Holding Company Structure" above.
Certain Covenants. The 8% Notes Indenture contains 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 ratably on each subsequent annual anniversary such that any 8% Notes
redeemed on or after March 15, 2006 will be redeemed at 100% of their principal
amount.
In addition, at any time and from time to time prior to March 15, 2001,
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 accomplished with the proceeds of one or more
offerings by ADLT of its common stock which has been registered under the
Securities Act,
- at least 65% of the aggregate principal amount of the 8% Notes must
remain outstanding after the redemption, and
- notice of any redemption must be mailed within 60 days of the offering by
ADLT of its common stock.
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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. The following are events of default with respect to the
8% Notes:
(1) principal not paid when due;
(2) failure to pay interest for 30 days;
(3) default in the performance of the covenants relating to mergers,
consolidations and transfers of assets, or the failure to make or
consummate an offer to repurchase the 8% Notes in accordance with the
covenant limiting asset sales or the covenant requiring ADLT to offer
to repurchase the 8% Notes in the event of a change of control;
(4) default in the performance or breach of any other covenants for a
period of 30 days;
(5) acceleration of in excess of $10 million in principal amount of other
debt not rescinded within 30 days after notice or the failure to make a
principal payment at maturity of any debt, not made, waived or extended
within the 30 day period;
(6) failure by ADLT or its subsidiaries to pay within 30 days any uninsured
judgement or court order for the payment of money in excess of $10
million; and
(7) certain events in bankruptcy, insolvency or reorganization of ADLT or
its subsidiaries.
The 8% Notes Indenture requires ADLT to provide periodic and other reports
containing evidence of ADLT's compliance with the terms of the 8% Notes
Indenture. 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. The 8% Notes trustee or holders of 25% of the principal amount of
the 8% Notes outstanding may declare principal immediately payable, subject to
rescission by a majority in principal amount of the holders, except that upon
the occurrence of certain events in bankruptcy, insolvency or reorganization as
described above, principal shall become immediately due and payable without any
act by the 8% Notes trustee or any holder.
If an event of default occurs and is continuing, the 8% Notes trustee may
reimburse itself for its reasonable compensation and expenses incurred out of
any sums held or received by it before making any payments to the holders of the
8% Notes.
The right of any holders of the 8% Notes to commence an action for any
remedy is subject to certain conditions, including the requirement that the
holders of at least 25% of the 8% Notes request that the 8% Notes trustee take
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; provided, however, that no modification or amendment may,
without the consent of each holder affected thereby
(1) change the maturity of the principal of, or any installment of interest
on, any 8% Note;
(2) reduce the principal amount of, or premium, if any, or interest on, any
8% Note;
(3) change the place or currency of payment of principal of, or premium, if
any, or interest on, any 8% Note;
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(4) impair the right to institute suit for the enforcement of any payment
on or after the maturity date of the 8% Notes (or, in the case of a
redemption, on or after the redemption date) of any 8% Note;
(5) reduce the above-stated percentage of outstanding 8% Notes the consent
of whose holders is necessary to modify or amend the 8% Notes
Indenture;
(6) waive a default in the payment of principal of, premium, if any, or
interest on the 8% Notes; or
(7) reduce the percentage or aggregate principal amount of outstanding 8%
Notes the consent of whose holders is necessary for waiver of
compliance with provisions of the 8% Notes Indenture or for waiver of
defaults.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK AND AMOUNT OUTSTANDING
ADLT's authorized capital stock consists of 80.0 million shares of common
stock having a par value of $.001 per share and 1.0 million shares of preferred
stock having a par value of $.001 per share. As of April 30, 2000, 20,449,898
shares of common stock and 761,250 shares of Series A Convertible Preferred
Stock were issued and outstanding.
COMMON STOCK
Reference is made to the applicable prospectus supplement relating to
common stock offered thereby for the terms relevant thereto, including the
number of shares offered and the initial public offering price.
Each holder of common stock is entitled to one vote for each share held.
Shareholders do not have the right to cumulate their votes in elections of
directors. Accordingly, holders of a majority of the voting power represented by
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.
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.
Prior to conversion, holders of Series A Stock
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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 (equal to the number of shares of common stock into which
the Series A Stock held may initially be converted).
ADLT is required to redeem any shares of Series A Stock which have not been
converted or retired on September 30, 2010. Any 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 not applicable to stock redemption) cannot exceed
one-half of the total of consolidated net earnings of ADLT (excluding
consideration of certain unusual items) from April 1, 1998 (taken as a single
period) plus the amount of proceeds received from sales of non-redeemable stock.
As of March 31, 2000, ADLT had a net loss, excluding extraordinary items, of
$79.7 million for the period. Until this deficit has been cured, and sufficient
proceeds are received and/or earnings are achieved, ADLT cannot redeem the
Series A Stock without causing an event of default with respect to the 8% Notes.
In addition, the 8% Notes Indenture prohibits Restricted Payments (with
exceptions not applicable to stock redemptions) at any time where the ratio of
EBITDA to Interest Expense for the preceding four fiscal quarters does not
exceed 2.5 to 1.
If ADLT fails to make any redemption as required (subject to permitted
deferrals in the event that the redemption would cause an event of default with
respect to certain indebtedness of ADLT), the conversion ratio of the Series A
Stock would be increased from four shares of common stock to eight shares of
common stock per share of Series A Stock. In addition, the conversion ratio is
subject to adjustment to prevent dilution of the interest of GE by the issuance
of common stock after October 6, 1999. Except for issuance of shares under
existing employee benefit plans, and other enumerated exceptions, any shares of
common stock issued at a price below $6.75 per share, or, if higher, below the
then current market price, would result in adjustment of the conversion ratio.
Any adjustment in the conversion ratio would not affect the voting power
represented by shares of Series A Stock prior to conversion.
Upon liquidation, each share of Series A Stock will be entitled to be paid
the Liquidation Preference Amount prior to any payment or distribution to the
holders of common stock. Following 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
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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 particular 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.
The above-described provisions of ADLT's articles of incorporation may have
anti-takeover effects. These provisions, in addition to the provisions described
below and the possible issuance of preferred stock discussed above, may make it
more difficult for other persons, without the approval of ADLT's board of
directors, to make a tender offer or acquisitions of substantial amounts of the
common stock or to launch other takeover attempts that a shareholder might
consider to be in 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, inter alia, empowers an Ohio
corporation to indemnify any director, officer, employee or agent of the
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with the action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Similar indemnity is authorized for the person against expenses (including
attorneys' fees) actually and reasonably incurred in connection therewith.
In addition, Section 1701.59 eliminates the personal liability in damages
of a director for violations of the director's fiduciary duty, except if it is
proved by clear and convincing evidence that his action or failure to act
involved acts or omissions undertaken with deliberate intent to cause injury to
the corporation or with reckless disregard for the best interests of the
corporation. ADLT has not opted out of Section 1701.59 of the Ohio Revised Code.
This statute does not affect the liability of directors pursuant to Section
1701.95 of the Ohio Revised Code (providing for liability of directors for
unlawful payment of dividends or unlawful distribution of assets) nor does it
affect the liability of the directors under Federal securities laws.
ADLT is also subject to Ohio's Merger Moratorium Act. The Merger Moratorium
Act generally prohibits a wide range of business combinations and other
transactions (including mergers, consolidations, asset sales, loans,
disproportionate distributions of property and disproportionate issuances or
transfers of shares or rights to acquire shares) between an Ohio corporation and
an Interested Shareholder for a period of three years after the person becomes
an Interested Shareholder, unless, prior to the date on which the person became
an Interested Shareholder, the directors approve either the transaction or the
acquisition of the corporation's shares that resulted in the person becoming 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
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Shareholder for the corporation's shares or the amount that would be due the
shareholders if the corporation were to dissolve.
Contemporaneous with the adoption of Ohio's Merger Moratorium Act, Ohio
enacted a so-called "green mailer disgorgement" statute which provides that a
person who announces a control bid must disgorge profits realized by that person
upon the sale of any equity securities within 18 months of the announcement of
the control bid.
ADLT is also subject to Ohio's Control Bid Statute. Ohio's Control Bid
Statute provides that no offeror may make a "control bid" pursuant to a tender
offer or a request or invitation for tenders unless, on the day the offeror
commences a control bid, it files with the Ohio Division of Securities and the
target company information in respect of the offeror, his ownership of the
corporation's shares and his plans for the corporation (including, among other
things, plans to terminate employee benefit plans, close any plant or facility
or reduce the work force). If the Securities Division determines that the
offeror's disclosures are inadequate, it must act within three calendar days
from the date of the offeror's filing to issue a suspension order. If a bid is
suspended, a hearing must be held within 10 calendar days from the date of the
Securities Division's suspension order. The hearing procedure must be completed
no later than 16 calendar days after the date on which the suspension was
imposed.
A "control bid" under Ohio's Control Bid Statute is defined as the purchase
of or an offer to purchase any equity security of an issuer with connections to
Ohio from a resident of Ohio if (i) after the purchase of the security, the
offeror would directly or indirectly be the beneficial owner of more than 10% of
any class of the issued and outstanding equity securities of the issuer; or (ii)
the offeror is the issuer, there is a pending control bid by a person other than
the issuer and the number of issued and outstanding shares of the corporation
will be reduced by more than 10%.
Finally, Ohio law provides for the right of the board of directors to
consider the interests of employees, customers, suppliers and creditors of ADLT,
as well as the communities in which ADLT is located, in addition to the interest
of ADLT and its shareholders, in discharging their duties in determining what is
in ADLT's best interests.
The above-described provisions of Ohio law may have antitakeover effects,
including making it more difficult for other persons, without the approval of
ADLT's board of directors, to make a tender offer or acquisitions of substantial
amounts of the common stock or to launch other takeover attempts that a
shareholder might consider in 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.
The transfer agent for any series of preferred stock will be named in the
applicable prospectus supplement.
DESCRIPTION OF DEPOSITARY SHARES
ADLT may offer depositary shares (either separately or together with other
securities) representing fractional interests in shares of preferred stock of
any series. In connection with the issuance of any depositary shares, ADLT will
enter into a deposit agreement with a bank or trust company, as preferred stock
depositary, which will be named in the applicable prospectus supplement.
Depositary shares will be evidenced by depositary receipts issued pursuant to
the related deposit agreement. The summary of 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 and
are subject to and qualified in their entirety by reference to all the
provisions of the form of deposit agreement, together with the form of related
depositary receipt which will
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be filed as an exhibit to or incorporated by reference in the registration
statement, all of which are incorporated herein by reference.
The following description of depositary shares sets forth 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 which
depositary shares in turn will represent a fractional interest (which will be
specified in the applicable prospectus supplement) in one share of a series of
preferred stock. Shares of preferred stock of any series represented by
depositary shares will be deposited under a separate deposit agreement. Subject
to the terms of the deposit agreement, each owner of a depositary receipt will
be entitled, in proportion to the fraction of a share of preferred stock
represented by the related depositary share, to all the rights, preferences and
privileges of, and will be subject to all of the limitations and restrictions
on, the preferred stock represented thereby (including, if applicable and
subject to the matters discussed below, dividend, voting, conversion, exchange,
redemption and liquidation rights).
Depositary shares may be issued in respect of shares of the preferred stock
of any series. Immediately following the issuance of any shares of preferred
stock by ADLT, ADLT will deposit the shares of preferred stock with the relevant
preferred stock depositary and will cause the preferred stock depositary to
issue, on behalf of ADLT, the related depositary receipts.
Reference is made to the applicable prospectus supplement relating to the
depositary shares offered thereby for specific terms, including (where
applicable),
- 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 thereof, 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 otherwise
specified in the applicable prospectus supplement, depositary receipts will be
issued in denominations evidencing any whole number of depositary shares. No
service charge will be made for any permitted transfer or exchange of depositary
receipts, but ADLT or the preferred stock depositary may require payment of any
tax or other governmental charge payable in connection therewith.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the related preferred stock to the
record holders of depositary receipts in proportion, insofar as possible, to the
number of depositary receipts owned by the holders on the relevant record date.
The preferred stock depositary will distribute only the amount, however, as can
be distributed without attributing to any holder of depositary receipts a
fraction of one cent, and any balance not so distributed will be added to and
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treated as part of the next sum, if any, received by the preferred stock
depositary for distribution to the record holders of depositary receipts.
In the event of a distribution other than in cash, the preferred stock
depositary will distribute property received by it to the record holders of
depositary receipts entitled thereto in proportion, insofar as possible, to the
number of depositary receipts owned by the holders on the relevant record date,
unless the preferred stock depositary determines that it is not feasible to make
the distribution, in which case the preferred stock depositary may, with the
approval of ADLT, adopt the method as it deems equitable and practicable for the
purpose of effecting the distribution, including sale (public or private) of the
property and distribution of 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
Upon surrender of the depositary receipts at an office or agency of the
preferred stock depositary maintained for this purpose (unless the related
shares of preferred stock have previously been called for redemption), the
holder thereof will be entitled to delivery, at the office or agency, to or upon
the holder's order, of the number of whole shares of the related series of
preferred stock and any money or other property represented by the depositary
receipts. Shares of preferred stock so withdrawn, however, may not be
redeposited. If the depositary receipts delivered by the holder evidence a
number of depositary shares in excess of the number of whole shares of preferred
stock to be withdrawn, the preferred stock depositary will deliver to the holder
at the same time a new depositary receipt evidencing the excess number of
depositary Shares.
REDEMPTION AND REPURCHASE OF PREFERRED STOCK
If a series of preferred stock represented by depositary shares is subject
to redemption at the option of ADLT, then, whenever ADLT redeems shares of
preferred stock of the series held by the preferred stock depositary, the
preferred stock depositary will redeem as of the same redemption date the number
of depositary shares representing the shares of the preferred stock so redeemed,
provided ADLT shall have paid in full to the preferred stock depositary the
redemption price of the preferred stock to be redeemed plus any other amounts or
property payable with respect to the preferred stock to be redeemed. The
redemption price per depositary share will be equal to the redemption price and
any other amounts or property per share payable with respect to the preferred
stock multiplied by the fraction of a share of preferred stock represented by
one depositary share. If less than all of the depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected by the preferred
stock depositary by lot or pro rata or other equitable method, in each case as
may be determined by ADLT. If the depositary shares evidenced by a depositary
receipt are to be redeemed in part only, one or more new depositary receipts
will be issued for any depositary shares not so redeemed.
After the date fixed for redemption, the depositary shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary receipts evidencing the depositary shares so called
for redemption will cease, except the right to receive any monies payable upon
redemption and any money or other property to which the holders of such
depositary receipts were entitled upon the redemption upon surrender of the
depositary receipts to the preferred stock depositary.
Depositary shares are not subject to repurchase by ADLT at the option of
the holders. Nevertheless, if the preferred stock represented by depositary
shares is subject to repurchase of the option of the holders, the related
depositary receipts may be surrendered by the holders thereof to the preferred
stock depositary with written instructions to the preferred stock depositary to
instruct ADLT to repurchase the preferred stock
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represented by the depositary shares evidenced by the depositary receipts at the
applicable repurchase price specified in the related prospectus supplement.
ADLT, upon receipt of the instructions and subject to ADLT having funds legally
available therefor, 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. Notwithstanding the foregoing, holders shall only be
entitled to request the repurchase of depositary shares representing one or more
whole shares of the related preferred stock. The repurchase price per depositary
share will be equal to the repurchase price and any other amounts per share
payable with respect to the preferred stock multiplied by the fraction of a
share of preferred stock represented by one depositary share. If the depositary
shares evidenced by a depositary receipt are to be repurchased in part only, one
or more new depositary receipts will be issued for any depositary shares not to
be repurchased.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the preferred
stock of any series represented by depositary shares are entitled to vote, the
relevant preferred stock depositary will mail the information contained in the
notice of meeting to the record holders of the related depositary receipts. Each
record holder of depositary receipts evidencing depositary shares on the record
date (which will be the same date as the record date for the preferred stock)
will be entitled to instruct the preferred stock depositary as to the exercise
of the voting rights pertaining to the amount of preferred stock represented by
the holder's depositary shares. The preferred stock depositary will endeavor,
insofar as practicable, to vote the number of shares of preferred stock
represented by the depositary shares in accordance with the instructions, and
ADLT will agree to take all reasonable action which may be deemed necessary by
the preferred stock depositary in order to enable the preferred stock depositary
to do so. The preferred stock depositary will abstain from voting shares of
preferred stock to the extent it does not receive specific instructions from the
holders of depositary receipts evidencing the depositary shares representing the
preferred stock.
CONVERSION AND EXCHANGE OF PREFERRED STOCK
If the preferred stock represented by depositary shares is exchangeable at
the option of ADLT for other securities, then, whenever ADLT exercises its
option to exchange all or a portion of the shares of preferred stock held by the
preferred stock depositary, the preferred stock depositary will exchange as of
the same exchange date a number of depositary shares representing the shares of
the preferred stock so exchanged, provided ADLT shall have issued and deposited
with the preferred stock depositary the securities for which 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 less than all of the depositary shares are to be exchanged, the depositary
shares to be exchanged will be selected by the preferred stock depositary by lot
or pro rata or other equitable method, in each case as may be determined by
ADLT. Unless otherwise stated in the applicable prospectus supplement,
fractional share interests resulting from any conversion or exchange will be
redeemed by ADLT for cash. If the depositary shares evidenced by a depositary
receipt are to be exchanged in part only, a new depositary receipt or receipts
will be issued for any depositary shares not to be exchanged.
Depositary shares are not convertible or exchangeable at the option of the
holders into other securities or property. Nevertheless, if the preferred stock
represented by depositary shares is convertible into or exchangeable for other
securities at the option of the holders, the related depositary receipts may be
surrendered by holders thereof to the preferred stock depositary with written
instructions to the preferred stock depositary to instruct ADLT to cause
conversion or exchange, as the case may be, of the preferred stock represented
by the depositary shares evidenced by the depositary receipts into a whole
number of shares of common stock or preferred stock, a whole number of common
stock warrants, or debt securities in authorized denominations, as specified in
the related prospectus supplement. ADLT, upon receipt of the instructions and
any amounts payable in respect thereof, will cause the conversion or exchange,
as the case may be, and will deliver to the holders the number of whole shares
of common stock or preferred stock, a whole number of common stock warrants, or
a principal amount of debt securities in authorized
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denominations (and cash in lieu of any fractional security). The exchange or
conversion rate per depositary share shall be equal to the exchange or
conversion rate per share of preferred stock multiplied by the fraction of a
share of preferred stock represented by one depositary share. If the depositary
shares evidenced by a depositary receipt are to be converted or exchanged in
part only, a new depositary receipt or receipts will be issued for any
depositary shares not to be converted or exchanged.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The depositary receipts evidencing depositary shares and any provision of
the related deposit agreement may at any time be amended by agreement between
ADLT and the preferred stock depositary. However, any amendment that materially
and adversely alters the rights of the holders of depositary receipts issued
under any deposit agreement will not be effective unless the amendment has been
approved by the holders of at least a majority of the depositary receipts then
outstanding (or such greater proportion as may be required by the rules of any
securities exchange on which the related depositary shares may be listed). In no
event may any amendment impair the right of any holder of depositary receipts,
subject to the conditions specified in the deposit agreement, to receive the
related preferred stock upon surrender of the depositary receipts as described
above under "--Withdrawal of Preferred Stock."
The deposit agreement may be terminated by ADLT upon not less than 60 days'
notice to the preferred stock depositary. In any case, the preferred stock
depositary shall deliver or make available to each holder of the related
depositary receipts, upon surrender of the depositary receipts, the number of
whole shares of the related series of preferred stock represented by the
depositary shares evidenced by the depositary receipts, together with cash in
lieu of any fractional shares (to the extent ADLT has deposited the cash with
the preferred stock depositary). If ADLT does not deposit cash adequate to pay
amounts with respect to any fractional shares, ADLT will remain obligated to pay
the amounts, but the preferred stock depositary will not be required to advance
any amounts on behalf of ADLT. The deposit agreement will automatically
terminate if all of the shares of preferred stock deposited thereunder shall
have been withdrawn, redeemed, converted or exchanged or if there shall have
been a final distribution in respect of 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 to ADLT
notice of its election to do so, and ADLT may at any time remove the preferred
stock depositary. The resignation or removal will take effect upon the
appointment of a successor preferred stock depositary.
MISCELLANEOUS
The preferred stock depositary will forward to holders of depositary
receipts any reports and communications from ADLT which are received by the
preferred stock depositary with respect to the related preferred stock.
Neither the preferred stock depositary nor ADLT will be liable if either is
prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the deposit agreement. The obligations of ADLT
and the preferred stock depositary under the deposit agreement will be limited
to performing their duties thereunder without gross negligence or willful
misconduct, and ADLT and the preferred stock depositary will not be obligated to
prosecute or defend any legal proceeding in respect of any
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depositary shares or any related shares of preferred stock or depositary
receipts unless satisfactory indemnity is furnished. ADLT and the preferred
stock depositary may rely on advice of counsel, accountants or other advisors,
and information provided by persons presenting shares of preferred stock for
deposit, holders of depositary receipts or other persons believed to be
authorized or competent and on documents believed to be genuine.
In the event that the preferred stock depositary shall receive conflicting
claims, requests or instructions from any holders of depositary receipts, on the
one hand, and ADLT, on the other hand, the preferred stock depositary shall be
entitled to act on 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, subject to adjustment if, prior to GE's
exercise, ADLT issues common stock priced below $6.75 per share (or, if higher,
below the then current market price). ADLT issued to GE this warrant
concurrently with GE's investment in ADLT's Series A Stock. ADLT may issue
warrants independently or together with any other securities offered by any
prospectus supplement, and the warrants may be attached to or separate from the
other securities. Each series of warrants will be issued under a separate
warrant agreement into which ADLT and a warrant agent will enter, as specified
in the applicable prospectus supplement. The warrant agent will act solely as
ADLT's agent in issuing the warrant(s); the warrant agent will not assume any
obligation or agency or trust relationship.
The applicable prospectus supplement will describe the terms of the
warrants in respect of which this prospectus is being delivered, including,
where applicable, the following
- the title of the warrants,
- the aggregate number of 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, with which the
warrants are issued and the number of warrants issued with each security,
- the date, if any, on and after which the warrants and the related
securities will be separately transferable,
- the price at which each security purchasable upon exercise of the
warrants may be purchased,
- the date on which the right to exercise the warrants shall commence and
the date on which the right shall expire,
- the minimum or maximum amount of the warrants which may be exercised at
any one time,
- information with respect to book-entry procedures, if any, and
- any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
DESCRIPTION OF TRUST PREFERRED SECURITIES
The Trust may issue only one series of trust preferred securities which
shall have terms described in the related prospectus supplement. The declaration
will authorize the regular trustees to issue on behalf of the Trust the trust
preferred securities. 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. The terms of the
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declaration will be those set forth in the declaration and those 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 and are subject to and are
qualified in their entirety by reference to all of the provisions of the
declaration and the trust securities, which provisions are incorporated by
reference in this prospectus.
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 to which any prospectus supplement may relate.
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, then the terms described in this prospectus shall be deemed to have
been superseded by the prospectus supplement.
The trust preferred securities will have terms, including distributions,
redemption, voting, liquidation, conversion rights and other preferred, deferred
or other special rights or restrictions as shall be set forth in the declaration
or made part of the declaration by the Trust Indenture Act, and which will
generally mirror the terms of the debt securities held by the Trust and
described in the prospectus supplement related thereto. Reference is made to the
prospectus supplement relating to the trust preferred securities for specific
terms, including
<TABLE>
<C> <S>
(1) the designation of the trust preferred securities;
(2) the number of trust preferred securities;
(3) the annual distribution rate (or method of determining such
rate) for the trust preferred securities and the date or
dates upon which the distributions shall be payable;
(4) whether distributions on the trust preferred securities
shall 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 from
which distributions on the trust preferred securities shall
be cumulative;
(5) the amount or amounts which shall be paid out of the assets
of the Trust to the holders of the trust preferred
securities upon voluntary or involuntary dissolution,
winding-up or termination of the Trust;
(6) the right or obligation, if any, of the Trust to purchase or
redeem the trust preferred securities and the price or
prices at which, the period or periods within which, and the
terms and conditions upon which, the trust preferred
securities shall or may be purchased or redeemed, in whole
or in part, pursuant to such obligation;
(7) the voting rights, if any, of the trust preferred securities
in addition to those required by law, including the number
of votes per 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;
(8) the terms and conditions, if any, upon which the trust
preferred securities may be converted into or exchanged for
shares of common stock or other securities, including the
conversion price per share or conversion rate and the
circumstances, if any, under which any such conversion right
shall expire;
(9) the terms and conditions, if any, upon which the debt
securities may be distributed to holders of the trust
preferred securities;
(10) if applicable, any securities exchange upon which the trust
preferred securities shall be listed; and
(11) any other relevant rights, preferences, privileges,
limitations or restrictions of the trust preferred
securities.
</TABLE>
All trust preferred securities offered hereby will be guaranteed by ADLT to
the extent set forth below under "Trust Preferred Securities Guarantee." Certain
United States Federal income tax considerations
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<PAGE> 37
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 the restrictions as shall be set forth therein. The terms
of the trust common securities will be substantially identical to the terms of
the trust preferred securities, and the trust common securities will rank
equally (pari passu), and payments will be made pro rata, with the trust
preferred securities except that, upon an event of default 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 CERTAIN 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 or to
direct the exercise of any trust or power conferred upon the property trustee
under the declaration, including 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 any other person or entity.
Notwithstanding the foregoing, if an event of default under the declaration has
occurred and is continuing and the event is attributable to the failure of ADLT
to pay the principal of or premium or interest, if any, on such debt securities
on the date such principal, premium or interest, as the case may be, is
otherwise 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 of the principal, premium or interest, as
the case may be, 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. In connection
with a holder's direct action, ADLT will be subrogated to the rights of the
holder of the trust preferred securities under the declaration to the extent of
any payment made by ADLT to the holder of trust preferred securities in the
direct action.
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 those set forth in
the trust preferred securities guarantee and those 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 and is subject to and
qualified in its entirety by reference to all of the provisions of the trust
preferred securities guarantee, which provisions of the trust preferred
securities guarantee (including defined terms) are incorporated herein by
reference. The trust preferred securities guarantee will be held by the
preferred guarantee trustee for the benefit of the holders of the trust
preferred securities.
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<PAGE> 38
The following description of the trust preferred securities guarantee sets
forth the general terms and provisions of the trust preferred securities
guarantee to which any prospectus supplement may relate. Specific terms of the
trust preferred securities guarantee will be described in the applicable
prospectus supplement. To the extent that any particular terms of the trust
preferred securities guarantee 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 the prospectus supplement.
Terms of the Trust Preferred Securities Guarantee
Pursuant to the trust preferred securities guarantee, ADLT will agree, to
the extent set forth therein, to pay in full to the holders of the trust
preferred securities, the guarantee payments (as defined herein) (except to the
extent paid by the Trust), as and when due, regardless of any defense, right of
setoff or counterclaim which the Trust may have or assert. 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 thereof (without duplication),
(1) any accrued and unpaid distributions which are required to be paid on
the trust preferred securities, to the extent the Trust shall have
funds available;
(2) the redemption price (if any) set forth in the applicable prospectus
supplement, which will not be lower than the liquidation amount, and
all accrued and unpaid distributions, to the extent the Trust has funds
available therefor, with respect to any trust preferred securities
called for redemption by the Trust; and
(3) 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 therefor. The trust preferred securities guarantee, when taken
together with ADLT's obligations under the debt securities, the indenture and
the declaration, including its obligations to pay certain 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
Except with respect to any changes which do not materially adversely affect
the rights of holders of trust preferred securities (in which case no vote will
be required), 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
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<PAGE> 39
outstanding trust preferred securities. The manner of obtaining the approval of
holders of the trust preferred securities will be as set forth in an
accompanying prospectus supplement. All guarantees and agreements contained in
the trust preferred securities guarantee shall bind the successors, assigns,
receivers, trustees and representatives of ADLT and shall inure to the benefit
of the holders of the trust preferred securities then outstanding.
Termination
The trust preferred securities guarantee will terminate (a) in connection
with a redemption of the trust preferred securities, upon full payment of the
redemption price of all trust preferred securities, (b) upon distribution of the
debt securities held by the Trust to the holders of the trust preferred
securities or the conversion or redemption, if applicable, of all of the trust
preferred securities or (c) 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, as the case may be, if at any time any holder of trust preferred
securities must restore payment of any sums 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 upon (a) the failure of ADLT to perform any of its payment or other
obligations thereunder or (b) if applicable, the failure by ADLT to deliver
common stock or other applicable securities upon an appropriate election by the
holder or holders of trust preferred securities to convert the trust preferred
securities into shares of common stock or other applicable securities, as the
case may be.
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 or 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 any other person or entity. 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 otherwise specified in the applicable prospectus supplement, the
trust preferred securities guarantee will constitute an unsecured obligation of
ADLT and will rank (i) subordinate and junior in right of payment to all other
liabilities of ADLT, (ii) equally (pari passu) in right of payment with the most
senior preferred or preference stock now or hereafter issued by ADLT, if any,
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 (iii) 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 is, 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 any other person or
entity).
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 and, after default, 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 under no
obligation to exercise any of the powers vested in it by a trust preferred
securities guarantee at
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<PAGE> 40
the request of any holder of the trust preferred securities, unless offered
reasonable indemnity against the costs, expenses and liabilities which might be
incurred thereby.
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 certain civil liabilities under the Federal securities laws
and other laws. The underwriters' obligations to purchase securities will be
subject to certain 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 certain 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. Certain conditions apply to those purchases.
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.
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 certain matters of New York law upon the opinion of Brown
& Wood LLP, and Brown & Wood LLP will rely as to certain matters of Ohio law
upon the opinion of Cowden, Humphrey & Sarlson Co., L.P.A.
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<PAGE> 41
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
Report on Form 10-Q/A of ADLT for the quarter ended September 30, 1999.
- Current Report on Form 8-K of ADLT dated June 1, 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.
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.
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<PAGE> 42
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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.
------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
$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.
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<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. 5 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 JUNE 6, 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 June 6, 2000
------------------------------------------------
Wayne R. Hellman
/s/ NICHOLAS R. SUCIC Chief Financial Officer, Vice June 6, 2000
------------------------------------------------ President and Treasurer (Chief
Nicholas R. Sucic Accounting Officer)
/s/ FRANCIS H. BEAM Director June 6, 2000
------------------------------------------------
Francis H. Beam*
/s/ JOHN E. BREEN Director June 6, 2000
------------------------------------------------
John E. Breen*
/s/ JOHN R. BUERKLE Director June 6, 2000
------------------------------------------------
John R. Buerkle*
/s/ THEODORE A. FILSON Director June 6, 2000
------------------------------------------------
Theodore A. Filson*
/s/ LOUIS S. FISI Director June 6, 2000
------------------------------------------------
Louis S. Fisi*
/s/ SUSUMA HARADA Director June 6, 2000
------------------------------------------------
Susuma Harada*
/s/ THOMAS K. LIME Director June 6, 2000
------------------------------------------------
Thomas K. Lime*
/s/ ALAN J. RUUD Director June 6, 2000
------------------------------------------------
Alan J. Ruud*
/s/ A GORDON TUNSTALL Director June 6, 2000
------------------------------------------------
A Gordon Tunstall*
* The undersigned, by signing his name hereto, does hereby execute this Amendment No. 5 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. 5 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 MAY 8, 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
