EXHIBIT 10.8
ADVANCED LIGHTING TECHNOLOGIES, INC.
Common Stock Purchase Agreement
THIS AGREEMENT is dated as of July 27, 2005 between ADVANCED LIGHTING
TECHNOLOGIES, INC. (the "Company"), and Xxxxx X. Xxxxxxx ("Purchaser").
WITNESSETH:
WHEREAS, the Company has given Purchaser an award attached hereto as Annex
1 (the "Award") pursuant to the Company's 2003 Equity Incentive Plan (the
"Plan") and
WHEREAS, the Award permits the Purchaser to purchase up to 2.202 shares
within 30 days of the Date of Grant specified in the Award; and
WHEREAS, pursuant to the Award, Purchaser desires to purchase shares of
the Company as herein described, on the terms and conditions set forth in this
Agreement, the Award and the Plan. Certain capitalized terms used in this
Agreement are defined in the Plan.
NOW, THEREFORE, it is agreed between the parties as follows:
1. PURCHASE OF SHARES.
Pursuant to the terms of the Award, Purchaser hereby agrees to purchase
from the Company and the Company agrees to sell and issue to Purchaser 2.202
shares [cannot exceed number of Shares above] of the Company's common stock (the
"Stock") for the Purchase Price Per Share specified in the Award payable by
personal check, cashier's check or money order. Payment shall be delivered at
the Closing, as such term is hereinafter defined. The closing hereunder (the
"Closing") shall occur at the offices of the Company on August 1, 2005, or such
other time and place as may be designated by the Company (the "Closing Date").
2. REPURCHASE OR FORFEITURE OF UNVESTED STOCK.
All unvested shares of the Stock purchased by the Purchaser pursuant to
this Agreement (sometimes referred to as the "Unvested Stock") shall be subject
to the following forfeiture or mandatory repurchase requirement (the "Unvested
Stock Requirement"):
In the event the Purchaser ceases to be an Employee of the Company as
defined in the Plan, i.e. terminates service with the Company ("Service") for
any reason, other than a Permitted Reason, all Unvested Stock shall immediately
be forfeited and cancelled without consideration to the Purchaser of any kind.
If Purchaser ceases to be an Employee of the Company for a Permitted
Reason, the Company shall purchase the Unvested Stock as hereinafter provided.
Purchaser understands that the Stock is being sold in order to induce Purchaser
to become and/or remain associated with the Company and to work diligently for
the success of the Company and that the unvested Stock will
vest in accordance with the schedule set forth in the Award. Accordingly, the
Company shall be required within 60 days after the termination of Service for a
Permitted Reason to purchase from the Purchaser all shares of Stock purchased
hereunder which have not vested on the date of termination of Service in
accordance with the terms of such vesting schedule in the Award; provided
further, however, if at the time of the exercise of such Right of First Refusal
there shall exist any Company Payment Condition, the Company may defer the
payment for the purchase until such time as the Company Payment Condition no
longer exists. The purchase price for such Unvested Stock shall be the Purchase
Price Per Share paid by Purchaser for such shares pursuant to the Award (the
"Purchase Price"). The purchase price shall be paid by check and/or by
cancellation of any indebtedness of Purchaser to the Company. The Company's
rights under this paragraph shall be freely assignable, in whole or in part,
and, following such assignment, such rights will not be limited by any Company
Payment Condition.
Nothing in this Agreement shall be construed as a right by Purchaser to be
employed by Company, or a parent or subsidiary of Company.
3. ESCROW OF STOCK.
As security for Purchaser's faithful performance of the terms of this
Agreement and to ensure the availability for delivery of Purchaser's shares upon
repurchase by the Company, Purchaser agrees at the Closing hereunder, to deliver
to and deposit with the Escrow Agent named in the Joint Escrow Instructions
attached hereto as Exhibit C, the certificate or certificates evidencing the
Unvested Stock and four Assignments Separate from Certificate duly executed
(with date and number of shares in blank) in the form attached hereto as Exhibit
D. Such documents are to be held by the Escrow Agent and delivered by the Escrow
Agent pursuant to the Joint Escrow Instructions, which instructions shall also
be delivered to the Escrow Agent at the Closing hereunder.
Within 30 days after each anniversary of the Grant Date (as defined in the
Award), if Purchaser so requests, the Escrow Agent will deliver to Purchaser
certificates (including any voting trust certificates) representing so many
shares of Stock as are no longer subject to the Unvested Stock Requirement (less
such shares as have been previously delivered).
4. ADJUSTMENT OF SHARES.
Subject to the provisions of the Articles of Incorporation of the Company,
if, from time to time during the term of the Unvested Stock Requirement:
(a) there is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character
or amount of any of the outstanding securities of the Company,
or
(b) there is any consolidation, merger or sale of all or
substantially all, of the assets of the Company,
2
then, in such event, any and all new, substituted or additional securities or
other property to which Purchaser is entitled by reason of Purchaser's ownership
of the shares shall be immediately subject to such Unvested Stock Requirement
with the same force and effect as the shares from time to time subject to the
Unvested Stock Requirement. While the total Purchase Price shall remain the same
after each such event, the Purchase Price Per Share of Unvested Stock shall be
appropriately and equitably adjusted as determined by the Board of Directors of
the Company.
5. THIRD PARTY TRANSFER RESTRICTIONS.
5.1 Prior to a Major Event. (a) Vested Shares. Prior to the
occurrence of a Major Event, the Purchaser may not transfer
vested Shares, other than by a Permitted Transfer or otherwise
with the prior written consent of the Company.
(b) Unvested Shares. The Purchaser may not transfer unvested
Shares, other than by a Permitted Transfer.
5.2 After a Major Event. (a) Vested Shares. In the event the
Purchaser proposes to sell, pledge or otherwise transfer to a
party other than a Permitted Transferee, pursuant to a bona
fide purchase offer, any vested Shares acquired under the Plan
or any interest in such Shares at any time after the
occurrence of a Major Event and prior to the Initial Public
Offering, the Company shall have the "Right of First Refusal"
with respect to all (and not less than all) of such Shares.
The Purchaser must give a written "Transfer Notice" to the
Company describing fully the proposed transfer, including the
number of Shares proposed to be transferred, the proposed
transfer price and the name and address of the proposed
transferee and including a copy of the bona fide purchase
offer. The Transfer Notice shall be signed both by the
Purchaser and by the proposed transferee and must constitute a
binding commitment of both parties to the transfer of the
Shares. Such right of First Refusal with respect to vested
Shares shall terminate upon the sale of Common Stock by the
Company pursuant to an Initial Public Offering.
The Company and its assignees shall have the right to purchase
all, and not less than all, of the Shares on the terms
described in the Transfer Notice (subject, however, to any
change in such terms permitted in the next paragraph) by
delivery of a Notice of Exercise of the Right of First Refusal
within 30 days after the date when the Transfer Notice was
received by the Company.
If the Company fails to exercise its Right of First Refusal
within 30 days after the date when it received the Transfer
Notice, the Purchaser may, not later than 60 days following
receipt of the Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer Notice
3
on the terms and conditions described in the Transfer Notice.
Any proposed transfer on terms and conditions different from
those described in the Transfer Notice, as well as any
subsequent proposed transfer by the Purchaser, shall again be
subject to the Right of First Refusal and shall require
compliance with the procedure described in the paragraph
above. If the Company exercises its Right of First Refusal,
the Purchaser and the Company (or its assignees) shall
consummate the sale of the Shares on the terms set forth in
the Transfer Notice; provided, however, that the purchase
price for such shares shall be the lesser of the price
described in such Transfer Notice or Fair Market Value and,
provided further, however, if at the time of the exercise of
such Right of First Refusal there shall exist any Company
Payment Condition, the Company may defer the payment for the
purchase until such time as the Company Payment Condition no
longer exists.
The Company's Right of First Refusal shall inure to the
benefit of its successors and assigns and shall be binding
upon any transferee of the Shares. The Company's rights under
this Subsection shall be freely assignable, in whole or in
part.
(b) Unvested Shares. Prior to a termination of Service, the
Purchaser may not transfer Unvested Shares, other than
pursuant to a Permitted Transfer.
5.3 Termination of Service. (a) Prior to a Major Event. (i)
Termination for Other than a Permitted Reason. Following the
Purchaser's termination of Service for other than a Permitted
Reason, as defined in Section 5.3(b) below, the Company shall
the right, but not the obligation, to purchase all or any
portion of the vested Shares of the Purchaser at any time
within 12 months following such termination of Service. Such
purchase will be at the Fair Market Value of such Shares at
the time of the exercise of such right. To exercise such
right, Company shall give the Purchaser written notice of the
sale in the same manner and with the same effect as a
Compelled Sale, pursuant to Section 5.4; provided, however, if
at the time of the exercise of such right there shall exist
any Company Payment Condition, the Company may defer the
payment for the purchase until such time as the Company
Payment Condition no longer exists. After any such termination
of Service, all unvested Shares of the Purchaser shall be
forfeited by the Purchaser and shall be cancelled without
payment of any kind.
(ii) Termination of Service for A Permitted Reason. (A)
Following a termination of Service (I) by the Company for any
reason other than "cause," (II) by the Purchaser by
resignation with "good reason," (III) death or (IV)
"disability," each as defined in the Purchaser's employment
contract, or, if the Purchaser does not have such a contract,
as defined on Annex 2 to this Agreement (a "Permitted
Reason"), the Company shall
4
have the right to purchase all or any portion of the vested
Shares of the Purchaser at any time within 12 months following
such termination of Service. Such purchase will be at the Fair
Market Value of such Shares at the time of the exercise of
such right. To exercise such right, Company shall give the
Purchaser written notice of the sale in the same manner and
with the same effect as a Compelled Sale, pursuant to Section
5.4; provided, however, if at the time of the exercise of such
right there shall exist any Company Payment Condition, the
Company may defer the payment for the purchase until such time
as the Company Payment Condition no longer exists. The Company
will purchase all unvested Shares of such Purchaser within 60
days of the Purchaser's such termination of Service; provided,
however, if at the time of the exercise of such right there
shall exist any Company Payment Condition, the Company may
defer the payment for the purchase until such time as the
Company Payment Condition no longer exists.
(B) Following any such termination of Service for a Permitted
Reason, such Purchaser shall have the right to compel the
purchase (a "Vested Put") of that number of vested Shares of
Purchaser, at the Fair Market Value at the time of exercise of
such right, necessary to make the aggregate consideration, for
all unvested Shares purchased pursuant to Subsection
5.3(a)(ii)(A) and the vested Shares to be purchased pursuant
the Vested Put, would be equal to the total consideration
initially paid by such Purchaser for such vested and unvested
Shares; provided however, that if the purchase of all such
vested and unvested Shares at the prices specified results in
aggregate consideration which is less than such total
consideration, all vested Shares shall be purchased pursuant
to the Vested Put at Fair Market Value. Such right shall be
exercised within twelve (12) months following such termination
of Service and the purchase by the Company shall take place
within 60 days of such exercise; provided, however, if at the
time of the exercise of such right there shall exist any
Company Payment Condition, the Company may defer the payment
for the purchase until such time as the Company Payment
Condition no longer exists.
(iii) Company's Rights Assignable. The Company's rights under
this Section shall be freely assignable, in whole or in part,
and, following such assignment, such rights will not be
limited by any Company Payment Condition.
(b) After a Major Event. The Company shall not have any
obligation to purchase vested Shares following the Purchaser's
termination of Service for any reason after the occurrence of
a Major Event.
5.4 Right to Compel Sale. (a) Compelled Sale. If members of the
Saratoga Group propose a Change of Control Transaction, then
Saratoga shall have
5
the right (whether the Change of Control results from the sale
of all, or some lesser portion, of the Saratoga Group's
Shares) to require the Purchaser (or his Permitted Transferee)
to sell all, or a Pro Rata Portion, of his Shares to the
prospective purchaser of the Saratoga Shares (if such right is
exercised, a "Compelled Sale"). If the prospective purchaser
in the Change of Control Transaction proposed by the Saratoga
Group is to acquire Shares of the Saratoga Group, but Saratoga
does not elect to cause a Compelled Sale pursuant to the
foregoing sentence, the Purchaser (or such Permitted
Transferee) shall have the right to elect to sell to the
prospective purchaser, as part of the Change of Control
Transaction, the Pro Rata Portion of the Purchaser's (or such
Permitted Transferee's) Shares (if such right is exercised, a
"Co-Sale"). The consideration to be received by the Purchaser
(or such Permitted Transferee) for each Share in the Compelled
Sale or Co-Sale shall be the same consideration per Share to
be received by the Saratoga Group, and the terms and
conditions of such sale by the Purchaser (or such Permitted
Transferee) shall be the same as those upon which the Saratoga
Group sell their Shares, except that the Purchaser (or such
other party) shall not be bound by the terms of any indemnity,
hold-back or escrow given to the purchaser in connection with
such sale to the extent that such indemnity is not limited in
value with respect to the Purchaser (or such Permitted
Transferee) to at most the aggregate consideration to be
received for his Shares in such sale.
(b) Notice and Sale Procedures. (i) The Company shall provide
written notice to the Purchaser (or his Permitted Transferee)
of any proposed Change of Control Transaction, which notice (a
"Control Transaction Notice") shall (A) set forth the
consideration per Share to be paid by the prospective
purchaser and (B) state whether Saratoga is electing pursuant
to Section 5.4(a) to cause a Compelled Sale. If Saratoga does
not elect to cause a Compelled Sale and the Purchaser (or such
Permitted Transferee) desires to cause a Co-Sale pursuant to
Section 5.4(a), the Purchaser (or such Permitted Transferee)
must give written notice of his election to cause such Co-Sale
(a "Co-Sale Notice") to Saratoga (or the representative of
Saratoga as may be designated in the Control Transaction
Notice) within ten (10) days following the date of the Control
Transaction Notice. Within ten (10) days following the date of
the Control Transaction Notice in which Saratoga has elected
to cause a Compelled Sale, the Purchaser (or Permitted
Transferee) shall deliver to Saratoga (or such designated
representative), or in the case of a Co-Sale, the Co-Sale
Notice shall be accompanied by, the certificates representing
the Shares held by the Purchaser (or Permitted Transferee) to
be sold in such Compelled Sale or Co-Sale, together with a
suitably executed blank stock power and all other documents
required to be executed in connection with such Change of
Control Transaction. In the event that the Purchaser (or
Permitted Transferee) should fail to deliver such certificates
and other documents as aforesaid, the Company shall cause the
books and records of the Company
6
to show that such Shares are bound by the provisions of this
Section 5.4 and that such Shares shall be transferred only to
the purchaser identified in the Change of Control Notice upon
surrender for transfer by the Purchaser (or any other party)
thereof.
(ii) If, within one hundred twenty (120) days after the
Saratoga Group gives the notice they have not completed the
sale of Shares described in the notice, the Saratoga Group
shall return to the Purchaser (or such Permitted Transferee)
all certificates representing Shares that the Purchaser (or
such Permitted Transferee) delivered for sale pursuant hereto,
together with any such other documents delivered by the
Purchaser.
(iii) Promptly after the consummation of the sale of the
Shares of the Saratoga Group and Purchaser (or Permitted
Transferee) pursuant to this Section, the Saratoga Group shall
remit to the Purchaser (or Permitted Transferee) the total
sales price of the Shares of the Purchaser (or Permitted
Transferee) sold pursuant thereto, and shall furnish such
other evidence of the completion and time of completion of
such sale or other disposition and the terms thereof as may be
reasonably requested by the Purchaser (or Permitted
Transferee).
6. PURCHASER'S RIGHTS UPON REPURCHASE.
At such time as the Company makes available, the consideration for the
Stock to be repurchased in accordance with the provisions of Sections 2 and 5 of
this Agreement, then from and after such time the person from whom such shares
are to be repurchased shall no longer have any rights as a holder of such shares
(other than the right to receive payment of such consideration in accordance
with this Agreement). Such shares shall be deemed to have been repurchased in
accordance with the applicable provisions hereof, whether or not the
certificate(s) therefor have been delivered as required by this Agreement.
7. TRANSFER BY PURCHASER TO CERTAIN TRUSTS.
Purchaser shall have the right to transfer all or any portion of
Purchaser's interest in the shares issued under this Agreement which have been
delivered to Purchaser under the provisions of Section 3 of this Agreement, to a
trust established by Purchaser for the benefit of Purchaser, Purchaser's spouse
or Purchaser's children, without being subject to the provisions of Section 5
hereof, provided that the trustee on behalf of the trust shall agree in writing
to be bound by the terms and conditions of this Agreement. The transferee shall
execute a copy of Exhibit E attached hereto and file the same with the Secretary
of the Company.
7
8. LEGEND ON SHARES.
All certificates representing the Stock purchased under this Agreement
shall, where applicable, have endorsed thereon the legends set forth in the
Award and any other legends required by applicable securities laws.
9. PURCHASER'S INVESTMENT REPRESENTATIONS.
This Agreement is made with Purchaser in reliance upon Purchaser's
representation to the Company, which by Purchaser's acceptance hereof Purchaser
confirms, that the Stock which Purchaser will receive will be acquired with
Purchaser's own funds for investment for an indefinite period for Purchaser's
own account, not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof, and that Purchaser has no present intention of
selling, granting participation in, or otherwise distributing the same, but
subject, nevertheless, to any requirement of law that the disposition of
Purchaser's property shall at all times be within Purchaser's control. By
executing this Agreement, Purchaser further represents that Purchaser does not
have any contract, understanding or agreement with any person to sell, transfer,
or grant participation, to such person or to any third person, with respect to
any of the Stock.
Purchaser understands that the Stock will not be registered or qualified
under federal or state securities laws on the ground that the sale provided for
in this Agreement is exempt from registration or qualification under federal or
state securities laws and that the Company's reliance on such exemption is
predicated on Purchaser's representations set forth herein.
Purchaser agrees that in no event will Purchaser make a disposition of any
of the Stock (including a disposition under Section 7 of this Agreement), unless
and until (i) Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition and (ii) Purchaser shall have
furnished the Company with an opinion of counsel satisfactory to the Company to
the effect that (A) such disposition will not require registration or
qualification of such Stock under federal or state securities laws or (B)
appropriate action necessary for compliance with the federal or state securities
laws has been taken or (iii) the Company shall have waived, expressly and in
writing, its rights under clauses (i) and (ii) of this section.
With respect to a transaction occurring prior to such date as the Plan and
Stock thereunder are covered by a valid Form S-8 or similar federal registration
statement, this subsection shall apply unless the transaction is covered by Rule
701 under the Securities Act of 1933, as amended (the "Securities Act") or
another exemption. In connection with the investment representations made
herein, Purchaser represents that Purchaser is able to fend for himself or
herself in the transactions contemplated by this Agreement, has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of Purchaser's investment, has the ability to bear the
economic risks of Purchaser's investment and has been furnished with and has had
access to such information as would be made available in the form of a
registration statement together with such additional information as is necessary
to verify the accuracy of the information supplied and to have all questions
answered by the Company.
8
Purchaser understands that if a registration statement covering the Stock
(or a filing pursuant to the exemption from registration under Regulation A of
the Securities Act) under the Securities Act is not in effect when Purchaser
desires to sell the Stock, Purchaser may be required to hold the Stock for an
indeterminate period. Purchaser also acknowledges that Purchaser understands
that any sale of the Stock which might be made by Purchaser in reliance upon
Rule 144 under the Securities Act may be made only in limited amounts in
accordance with the terms and conditions of that Rule.
10. NO DUTY TO TRANSFER IN VIOLATION HEREUNDER.
The Company shall not be required (a) to transfer on its books any shares
of Stock of the Company which shall have been sold or transferred in violation
of any of the provisions set forth in this Agreement or (b) to treat as owner of
such shares or to accord the right to vote as such owner or to pay dividends to
any transferee to whom such shares shall have been so transferred.
11. RIGHTS OF PURCHASER.
Except as otherwise provided herein, Purchaser shall, during the term of
this Agreement, exercise all rights and privileges of a stockholder of the
Company with respect to the Stock.
12. SECTION 83(b) ELECTIONS.
Purchaser hereby acknowledges that he or she has been informed that unless
an election is filed by the Purchaser with the Internal Revenue Service and, if
necessary, the proper state taxing authorities, within 30 days of the purchase
of the Shares (and attached to Purchaser's individual income tax return for that
year), electing pursuant to Section 83(b) of the Internal Revenue Code of 1986,
as amended (the "Code") to be taxed currently on any difference between the
purchase price of the Shares and their fair market value on the date of
purchase, there will be a recognition of taxable income to the Purchaser,
measured by the excess, if any, of the fair market value of the Shares, at the
time the Company's Unvested Stock Requirement lapses over the purchase price for
the Shares. Purchaser represents that Purchaser has consulted any tax
consultant(s) that Purchaser deems advisable in connection with the purchase of
the Shares or the filing of the Election under Section 83(b). A form of Election
under Section 83(b) is attached hereto as Exhibit B for reference.
PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT THE
COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON HIS OR HER
BEHALF.
13. OTHER NECESSARY ACTIONS.
The parties agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Agreement.
9
14. NOTICE.
Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon the earliest of personal delivery,
receipt or the third full day following deposit in the United States Post Office
with postage and fees prepaid, addressed to the other party hereto at the
address last known or at such other address as such party may designate by 10
days' advance written notice to the other party hereto.
15. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of the successors and assigns of
the Company and, subject to the restrictions on transfer herein set forth, be
binding upon Purchaser and Purchaser's heirs, executors, administrators,
successors and assigns. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of a like or different nature.
16. APPLICABLE LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Ohio, as such laws are applied to contracts entered into
and performed in such state.
17. NO FEDERAL OR OTHER STATE REGISTRATION.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAW OF ANY
STATE AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART
OF THE CONSIDERATION THEREFOR PRIOR TO SUCH REGISTRATION OR QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM SUCH REGISTRATION OR
QUALIFICATION. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH REGISTRATION OR QUALIFICATION BEING OBTAINED, UNLESS THE
SALE IS SO EXEMPT.
18. NO ORAL MODIFICATION.
No modification of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
19. TERMINATION.
This Agreement shall terminate and be of no further force and effect if
the Closing Date has not occurred on or before the 30th day following the Grant
Date, unless the failure is due to a default by the Company or the designation
by the Board of Directors of the Company, in writing, of a later date as the
Closing Date.
10
20. ENTIRE AGREEMENT.
This Agreement and the Award constitute the entire complete and final
agreement between the parties hereto with regard to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ADVANCED LIGHTING PURCHASER
TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxxxx /s/ Xxxxx X. Xxxxxxx
---------------------------- -------------------------------
Title: CHIEF OPERATING OFFICER Xxxxx X. Xxxxxxx
11
ANNEX 1
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
ADVANCED LIGHTING TECHNOLOGIES, INC.
2003 EQUITY INCENTIVE PLAN
AWARD
ADVANCED LIGHTING TECHNOLOGIES, INC. (the "Company"), hereby grants this
Award to purchase, within 30 days of the Grant Date specified below, shares of
its common stock ("Shares") to the Participant named below. The terms and
conditions of the Award are set forth in this cover sheet, the Stock Purchase
Agreement to be entered into between the Company and the Participant including
the attachments (the "Purchase Agreement") and in the Company's 2003 Equity
Incentive Plan (the "Plan").
Grant Date: July 27, 2005
Name of Participant: Xxxxx X. Xxxxxxx
Participant's Social Security Number: _____________________
Number of Shares Covered by Award: 2.202
Purchase Price Per Share: $1,000
Company:___________________________________
(Signature)
Title: ___________________________________
1
ADVANCED LIGHTING TECHNOLOGIES, INC.
2003 EQUITY INCENTIVE PLAN
AWARD
VESTING Your shares will vest, and no longer be subject to the
Unvested Stock Agreement pursuant to the Purchase Agreement,
over a 4-year period, beginning on the Grant Date as shown
on the cover sheet, as follows:
25% of the Shares covered by the Award will vest and no
longer be subject to the Unvested Stock Requirement on the
first anniversary of the Grant Date; 25% of the Shares
covered by the Award will vest and no longer be subject to
the Unvested Stock Requirement on the second anniversary of
the Grant Date; 25% of the Shares covered by the Award will
vest and no longer be subject to the Unvested Stock
Requirement on the third anniversary of the Grant Date; and
25% of the Shares covered by the Award will vest and no
longer be subject to the Unvested Stock Requirement on the
fourth anniversary of the Grant Date;
Notwithstanding the foregoing, in the event of a Change in
Control (as defined in the Plan) of the Company, your shares
will immediately vest.
No additional Shares will vest after your employment with
the Company or any Affiliate of the Company (including any
approved leaves of absence) ("Service") has terminated for
any reason.
VOTING CONTROL Prior to the occurrence of a "Major Event," the Shares
purchased shall be transferred into a voting trust or
similar arrangement ("Voting Trust"). Pursuant to the terms
of the Voting Trust, the Participant shall be the
beneficiary but Saratoga Lighting Holdings LLC shall vote
all shares in the Voting Trust until the occurrence of a
Major Event, at which time the Voting Trust shall terminate.
RETENTION RIGHTS YOU ACKNOWLEDGE AND AGREE THAT THE VESTING OF SHARES
PURSUANT TO THIS AWARD IS EARNED ONLY BY CONTINUING
CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS AWARD OR
ACQUIRING SHARES HEREUNDER). YOU FURTHER ACKNOWLEDGE AND
AGREE THAT NOTHING IN THIS AWARD, NOR IN THE PLAN SHALL
CONFER UPON YOU ANY RIGHT WITH RESPECT TO CONTINUATION OF
EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT
INTERFERE IN ANY WAY WITH YOUR RIGHT OR THE COMPANY'S RIGHT
TO TERMINATE
2
YOUR EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.
LEGENDS All certificates representing the Shares issued pursuant to
this Award and Purchase Agreement shall, where applicable,
have endorsed thereon the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND REPURCHASE
REQUIREMENTS AS SET FORTH IN AN AGREEMENT BETWEEN THE
COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER'S
PREDECESSOR IN INTEREST. SUCH AGREEMENT IMPOSES CERTAIN
TRANSFER RESTRICTIONS AND CERTAIN REPURCHASE REQUIREMENTS ON
THE COMPANY (OR ITS ASSIGNS) UPON THE SALE OF THE SHARES OR
UPON TERMINATION OF SERVICE WITH THE COMPANY. A COPY OF SUCH
AGREEMENTS IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY
AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY
OF THE COMPANY BY THE HOLDER OF SHARES REPRESENTED BY THIS
CERTIFICATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD
ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE
COMPANY IS PROVIDED AN OPINION OF COUNSEL, SATISFACTORY TO
THE COMPANY AND ITS COUNSEL, THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT
REQUIRED."
THE PLAN AND
OTHER AGREEMENTS The text of the Plan is incorporated in this Award by
reference.
Certain capitalized terms used in this Agreement are defined
in the Plan.
This Award, the Purchase Agreement including its
attachments, and the Plan constitute the entire
understanding between you and the Company regarding the
shares which are subject to this Award. Any prior
agreements, commitments or negotiations concerning such
shares are superseded.
3
EXHIBIT A
TAX SUMMARY
Set forth below is a brief summary as of the date of the right of some of
the federal tax consequences of purchase and disposition of the Shares.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS
ARE SUBJECT TO CHANGE. PARTICIPANTS SHOULD CONSULT A TAX ADVISER BEFORE
PURCHASING OR DISPOSING OF THE SHARES.
PURCHASE OF SHARES PRIOR TO VESTING BY CERTAIN PARTICIPANTS
The Stock Purchase Agreement gives Participants the right to purchase
certain shares which are subject to repurchase by the Company at cost prior to
"vesting." In these situations, an election may be filed by the Participant with
the Internal Revenue Service within 30 days of the purchase of the Shares,
electing pursuant to Section 83(b) of the Code to be taxed currently on the
bargain purchase element on the date of purchase for alternative minimum tax
purposes. EVEN WHERE THERE IS NO BARGAIN ELEMENT FAILURE TO FILE THE 83(b)
ELECTION WILL RESULT IN ALTERNATIVE MINIMUM TAXABLE INCOME MEASURED AND
RECOGNIZED BY PARTICIPANT AT THE TIME OR TIMES ON WHICH THE COMPANY'S REPURCHASE
REQUIREMENT LAPSES. Participant is strongly encouraged to seek the advice of his
or her tax consultants in connection with the purchase of the Shares and the
advisability of filing of the election under Section 83(b) and similar tax
provisions. A form of Election under Section 83(b) is attached to the Stock
Purchase Agreement as Exhibit B for reference.
THE TAX CONSEQUENCES OF THE PURCHASE AND SALE OF COMMON SHARES AND THE
TERMINATION OF COMPANY REPURCHASE RIGHTS FOR UNVESTED SHARES, MAY DIFFER
DEPENDING UPON THE CIRCUMSTANCES OF EACH PARTICIPANT, THE TERMS OF THE AWARD AND
THE TIMING OF ANY EXERCISE OR SALE. PARTICIPANTS ARE ADVISED TO SEEK INDEPENDENT
TAX ADVICE TO MAKE SURE THEY UNDERSTAND THE INCOME TAX CONSEQUENCES OF ANY
AWARD.
EXHIBIT B
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with taxpayer's receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME: TAXPAYER:_______________ SPOUSE: ___________________________________
ADDRESS: _________________________________________________________________
IDENTIFICATION NO.: TAXPAYER: ________________ SPOUSE: ___________________
TAXABLE YEAR: ____________________________
2. The property with respect to which the election is made is described as
follows: ______ shares (the "Shares") of the Common Stock of Advanced
Lighting Technologies, Inc. (the "Company").
3. The date on which the property was transferred is: ______________ , 20___
4. The property is subject to the following restrictions:
The Shares may not be transferred and are subject to forfeiture under the
terms of an agreement between the taxpayer and the Company. These
restrictions lapse upon the satisfaction of certain conditions contained
in such agreement.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will never
lapse, of such property is: $______.
6. The amount (if any) paid for such property is: $_____.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated:______________________, 20___ ___________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated:_____________________, 20___ ___________________________
Spouse of Taxpayer
EXHIBIT C
Joint Escrow Instructions
August 1, 2005
Secretary
ADVANCED LIGHTING TECHNOLOGIES, INC.
Dear Sir or Madam:
As Escrow Agent for both ADVANCED LIGHTING TECHNOLOGIES, INC. (the
"Company"), and Xxxxx X. Xxxxxxx ("Purchaser"), you are hereby authorized and
directed to hold the documents and Common Stock certificates delivered to you
pursuant to the terms of that certain Common Stock Purchase Agreement (the
"Agreement") of even date herewith, to which a copy of these Joint Escrow
Instructions is attached as Exhibit C to the Agreement, in accordance with the
following instructions:
1. In the event the Company is required to purchase Shares pursuant to the
Unvested Stock Requirement set forth in the Agreement, the Company shall
give to Purchaser and you a written notice as provided in the Agreement.
Purchaser and the Company hereby irrevocably authorize and direct you to
close the transaction contemplated by such notice, including prompt
delivery of stock certificates.
2. At the closing, you are directed (a) to date the stock assignment form or
forms necessary for the transfer in question, (b) to fill in the number of
shares being transferred, and (c) to deliver same, together with the
certificate or certificates evidencing the shares to be transferred, to
the Company against the simultaneous delivery to you of the purchase price
(by certified or bank cashier's check) for the number of shares being
purchased pursuant to the Unvested Stock Requirement.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as
Purchaser's attorney-in-fact and agent for the term of this escrow to
execute with respect to such securities all documents necessary or
appropriate to make such securities negotiable and to complete any
transaction herein contemplated. Subject to the provisions of this
Xxxxxxxxx 0, Xxxxxxxxx shall exercise all rights and privileges, including
but not limited to, the right to vote and to receive dividends (if any),
of a stockholder of the Company while the shares are held by you.
4. In accordance with the terms of Section 5 of the Agreement, you may from
time to time deliver to Purchaser a certificate or certificates
representing so many shares as are no longer subject to the Unvested Stock
Requirement.
1
5. This escrow shall terminate upon the release of all shares held under the
terms and provisions hereof.
6. If at the time of termination of this escrow you should have in your
possession any documents, securities or other property belonging to
Purchaser, you shall deliver all of same to Purchaser and shall be
discharged from all further obligations hereunder.
7. Your duties hereunder may be altered, amended, modified or revoked only by
a writing signed by all of the parties hereto.
8. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party
or parties. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact of Purchaser
while acting in good faith and in the exercise of your own good judgment,
and any act done or omitted by you pursuant to the advice of your own
attorneys shall be conclusive evidence of such good faith.
9. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees
of any court. In case you obey or comply with any such order, judgment or
decree of any court, you shall not be liable to any of the parties hereto
or to any other person, firm or corporation by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been
entered without jurisdiction.
10. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting
to execute or deliver the Agreement or any documents or papers deposited
or called for hereunder.
11. You shall not be liable for the outlawing of any rights under any statute
of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
12. You shall be entitled to employ such legal counsel and other experts as
you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.
13. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by
written notice of each party. In the event of any such termination, the
Company shall appoint any officer of the Company as successor Escrow
Agent.
2
14. If you reasonably require other or further instruments in connection with
these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
15. It is understood and agreed that should any dispute arise with respect to
the delivery and/or ownership or right of possession of the securities
held by you hereunder, you are authorized and directed to retain in your
possession without liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written
agreement of the parties concerned or by a final order, decree or judgment
of a court of competent jurisdiction after the time for appeal has expired
and no appeal has been perfected, but you shall be under no duty
whatsoever to institute or defend any such proceedings.
16. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit
in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled.
17. By signing these Joint Escrow Instructions, you become a party hereto only
for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
18. This instrument shall be governed by and construed in accordance with the
laws of the State of Ohio.
This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Very truly yours,
ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ XXXX XXXXXXXX
-------------------------------
ESCROW AGENT: PURCHASER:
__________________________ /s/ Xxxxx X.Xxxxxxx
-------------------
3
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED Xxxxx X. Xxxxxxx hereby sells, assigns and transfers
unto _________________________ ______ and Two and Two Hundred Two One
Thousandths (2.202) shares of the Common Stock of ADVANCED LIGHTING
TECHNOLOGIES, INC. (the "Company"), standing in my name on the books of the
Company represented by Certificate No. ___________ herewith and hereby
irrevocably constitutes and appoints ________________ Attorney to transfer said
stock on the books of the Company with full power of substitution in the
premises.
Dated: __________, 20____ _____________________________
EXHIBIT E
Acknowledgment of and Agreement to be Bound
By the Common Stock Purchase Agreement of
ADVANCED LIGHTING TECHNOLOGIES, INC.
The undersigned, as transferee of shares of ADVANCED LIGHTING
TECHNOLOGIES, INC., hereby acknowledges that he or she has read and reviewed the
terms of the Common Stock Purchase Agreement of ADVANCED LIGHTING TECHNOLOGIES,
INC. and hereby agrees to be bound by the terms and conditions thereof, as if
the undersigned had executed said Agreement as an original party thereto.
Dated:___________________, 20____ By: ________________________________