EXHIBIT 10.1.17
ADVANCED LIGHTING TECHNOLOGIES, INC.
STOCK PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Purchase Agreement") is dated as of May 25,
2004 between ADVANCED LIGHTING TECHNOLOGIES, INC. (the "Company"), and Xxxxxx
Xxxxx ("Purchaser").
WITNESSETH:
WHEREAS, the Company has given Purchaser an award attached hereto as ANNEX
2 (the "Award");
WHEREAS, the Award permits Purchaser to purchase up to 20 shares of the
Company's common stock 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
Purchase Agreement and the Award. Certain capitalized terms used in this
Purchase Agreement are defined in ANNEX 1 attached hereto.
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 20 shares
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 June 24, 2004, or such other time and place as may be designated
by the Company (the "Closing Date").
2. REPURCHASE OF UNVESTED STOCK.
All unvested shares of the Stock purchased by Purchaser pursuant to this
Purchase Agreement (sometimes referred to as the "Unvested Stock") shall be
subject to the following repurchase requirement (the "Unvested Stock
Requirement"):
In the event Purchaser ceases to be an Employee of the Company, i.e.
terminates Service with the Company for any 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.
Nothing in this Purchase 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
Purchase 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 five 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 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,
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 of Stock 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 Stock. Prior to the occurrence of
a Major Event, Purchaser may not transfer vested shares of the Stock
(the "Vested Stock"), other than by a Permitted Transfer or
otherwise with the prior written consent of the Company.
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(b) Unvested Stock. Purchaser may not transfer the Unvested Stock, other
than by a Permitted Transfer.
5.2 After a Major Event. (a) Vested Stock. In the event Purchaser proposes to
sell, pledge or otherwise transfer to a party other than a Permitted
Transferee, pursuant to a bona fide purchase offer, shares of the Vested
Stock acquired pursuant to this Purchase Agreement or any interest in such
Vested Stock 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 of the
Vested Stock. 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
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 the Vested Stock 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 of the Vested Stock 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, Purchaser may, not
later than 60 days following receipt of the Transfer Notice by the
Company, conclude a transfer of the shares of the Vested Stock subject to
the Transfer Notice 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 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,
Purchaser and the Company (or its assignees) shall consummate the sale of
the shares of the Vested Stock 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
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Company's rights under this Subsection shall be freely assignable, in
whole or in part.
(b) Unvested Stock. Prior to a termination of Service, Purchaser may not
transfer any shares of the Unvested Stock, other than pursuant to a
Permitted Transfer.
5.3 Termination of Service. (a) Prior to a Major Event. Following a
termination of Service of Purchaser for any reason: (A) the Company shall
have the right to purchase all or any portion of the Vested Stock of
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 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; and (B) the Company will purchase all shares of the
Unvested Stock of such Purchaser within 60 days of Purchaser's such
termination of Service, such purchase will be at the Purchase Price Per
Share paid by Purchaser for all such shares pursuant to the Award;
provided, however, if at the time of the termination of Service 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 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 any shares of the Vested Stock following 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 the
right (whether the Change of Control results from the sale of all, or some
lesser portion, of the Saratoga Group's shares of the Company's common
stock) to require Purchaser (or his Permitted Transferee) to sell all, or
a Pro Rata Portion, of his shares of the Stock to the prospective
purchaser of the shares owned by Saratoga (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
Company's common stock owned the Saratoga Group, but Saratoga does not
elect to cause a Compelled Sale pursuant to the foregoing sentence, then
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 Purchaser's (or such Permitted
Transferee's) Stock (if such right is exercised, a "Co-Sale"). The
consideration to be received by Purchaser (or such Permitted Transferee)
for each share of Stock in the Compelled Sale or Co-Sale shall be the same
consideration per share to be received by the Saratoga Group,
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and the terms and conditions of such sale by Purchaser (or such Permitted
Transferee) shall be the same as those upon which the Saratoga Group sell
their shares, except that Purchaser (or such other party) shall not be
bound by the terms of any indemnity, hold-back or escrow given to the
prospective purchaser in connection with such sale to the extent that such
indemnity is not limited in value with respect to Purchaser (or such
Permitted Transferee) to at most the aggregate consideration to be
received for his shares of the Stock in such sale.
(b) Notice and Sale Procedures. (i) The Company shall provide written
notice to 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 Purchaser (or such Permitted Transferee)
desires to cause a Co-Sale pursuant to Section 5.4(a), 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, 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 of the Stock held
by 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 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 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 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 Saratoga's shares
described in the notice, the Saratoga Group shall return to Purchaser (or
such Permitted Transferee) all certificates representing shares that
Purchaser (or such Permitted Transferee) delivered for sale pursuant
hereto, together with any such other documents delivered by 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 Purchaser (or Permitted
Transferee) the total sales price of the shares of the Stock of Purchaser
(or Permitted Transferee) sold pursuant thereto, and shall furnish such
other evidence of the completion and time
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of completion of such sale or other disposition and the terms thereof as
may be reasonably requested by 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 Purchase 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 Purchase 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 Purchase
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 of Stock issued under this Purchase Agreement
which have been delivered to Purchaser under the provisions of Section 3 of this
Purchase 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
Purchase Agreement. The transferee shall execute a copy of EXHIBIT E attached
hereto and file the same with the Secretary of the Company.
8. LEGEND ON SHARES.
All certificates representing the Stock purchased under this Purchase
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 Purchase 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 Purchase 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 Purchase Agreement is
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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 Purchase
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 Stock is
covered by a valid 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
Purchase 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.
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 Purchase 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.
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11. RIGHTS OF PURCHASER.
Except as otherwise provided herein, Purchaser shall, during the term of
this Purchase 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 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 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
Purchase Agreement.
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 Purchase 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 Purchase Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of a like or different nature.
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16. APPLICABLE LAW.
This Purchase 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 PURCHASE
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 PURCHASE
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 Purchase Agreement shall be valid unless made in
writing and signed by the parties hereto.
19. TERMINATION.
This Purchase 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.
20. ENTIRE AGREEMENT.
This Purchase Agreement and the Award constitute the entire complete and
final agreement between the parties hereto with regard to the subject matter
hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement as of the day and year first above written.
ADVANCED LIGHTING PURCHASER
TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxx
-------------------------- -------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxx Xxxxx
Its: Executive Vice President Its: _______________________
and Treasurer
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ANNEX 1
DEFINITIONS
Affiliate shall mean, with respect to any person or entity, a person or entity
which controls, is controlled by or is under common control with, such person or
entity.
Award shall mean the Award attached as Annex 2 to the Purchase Agreement.
Board of Directors or Board shall mean the Board of Directors of the Company, as
constituted from time to time.
Change in Control means, (i) (a) such time as a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the ultimate
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 50% of the total voting power of the Stock on a fully diluted basis, and
(b) such ownership represents a greater percentage of the total voting power of
the Stock on a fully diluted basis than may be voted by (I) Saratoga and/or any
of its Affiliates, (II) any "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act) that includes a member of the Saratoga Group; if
members of the Saratoga Group "beneficially own" (within the meaning of Rule
13d-3 under the Exchange Act) Stock representing the majority of the voting
power of the Stock owned by such group and (III) Executive Managers; provided
however that a Change of Control shall not be deemed to have occurred by reason
of the fact that one or more of the Executive Managers become the beneficial
owners of more than 50% of the total voting power of the Company on a fully
diluted basis; or (ii) individuals who on the effective date of the Purchase
Agreement constitute the members of the Board (together with any new or
successor directors whose election by the Board or whose nomination by the Board
for election by stockholders was approved by a vote of at least two-thirds of
the members of the Board on the date of their election or nomination) cease for
any reason to constitute a majority of the members of the Board then in office.
Change of Control Transaction shall mean a transfer of Shares for value by one
or more members of the Saratoga Group effecting a Change of Control.
Code shall mean the Internal Revenue Code of 1986, as amended.
Committee shall mean a committee of the Board of Directors consisting of all of
the Outside Directors other than Xxxxxx Xxxxx.
Common-Law Employee means an individual paid from W-2 Payroll of the Company or
an Affiliate. If, during any period, the Company (or Affiliate, as applicable)
has not treated an individual as a Common-Law Employee and, for that reason, has
not paid such individual in a manner which results in the issuance of a Form W-2
and withheld taxes with respect to him or her, then that individual shall not be
an eligible Employee for that period, even if any person, court of law or
government agency determines, retroactively, that that individual is or was a
Common-Law Employee during all or any portion of that period.
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Company Payment Condition shall mean any restrictions on the purchase of Stock
by the Company contained in (i) its principal secured credit facility, (ii) the
indenture relating to its Senior Notes due 2009, and (iii) applicable law.
Employee shall mean (i) any individual who is a Common-Law Employee of the
Company or of an Affiliate, (ii) a member of the Board of Directors, including
(without limitation) an Outside Director, or an Affiliate of a member of the
Board of Directors, (iii) a member of the Board of Directors of an Affiliate of
the Company, or (iv) an independent contractor who performs services for the
Company or an Affiliate of the Company.
Exchange Act means the Securities and Exchange Act of 1934, as amended.
Executive Managers means the five individuals who were the most highly
compensated officers or employees of the Company and its Subsidiaries, taken as
a whole, for the most recent fiscal year of the Company.
Fair Market Value means the market price of Shares, determined by the Committee
as follows:
If the Shares were traded over-the-counter on the date in question but
were not traded on the NASDAQ Stock Market or the NASDAQ National Market
System, then the Fair Market Value shall be equal to the mean between the
last reported representative bid and asked prices quoted for such date by
the principal automated inter-dealer quotation system on which the Shares
are quoted or, if the Shares are not quoted on any such system, by the
"Pink Sheets" published by the National Quotation Bureau, Inc.;
If the Shares were traded over-the-counter on the date in question and
were traded on the NASDAQ Stock Market or the NASDAQ National Market
System, then the Fair Market Value shall be equal to the last-transaction
price quoted for such date by the NASDAQ Stock Market or the NASDAQ
National Market;
If the Shares were traded on a stock exchange on the date in question,
then the Fair Market Value shall be equal to the closing price reported by
the applicable composite transactions report for such date; and
If none of the foregoing provisions is applicable, then the Fair Market
Value shall be determined by the Committee in good faith on the basis of
existing facts and circumstances.
In all cases, the determination of Fair Market Value by the Committee
shall be conclusive and binding on all persons.
Grant Date means the date the Board of Directors approves an Award.
Initial Public Offering shall mean an underwritten public offering or offerings
of Stock by the Company pursuant to one or more effective registration
statements under the Securities Act
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which in the aggregate result in (i) aggregate net proceeds to the Company of
not less than $20,000,000.00 and (ii) at least 20% of the issued and outstanding
Stock of the Company being held by persons other than any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which is
the ultimate "beneficial power" (as defined in Rule 13d-3 under the Exchange
Act) of more than 5% of the total voting power of the voting stock of the
Company on a fully diluted basis. If an Initial Public Offering is the result of
more than one public offering, the Initial Public Offering shall be deemed to
have occurred upon completion of the last public offering constituting the
Initial Public Offering.
Major Event shall mean the earlier to occur of (a) a Change in Control, (b) the
Initial Public Offering, or (c) a sale of substantially all the Company's assets
to an unrelated person or entity.
Outside Director shall mean a member of the Board who is not a Common-Law
Employee of the Company.
Permitted Transfer shall mean a transfer or assignment of Shares from Purchaser
to a Permitted Transferee.
Permitted Transferee shall mean (a) Purchaser's immediate family members or
linear descendants, (b) a trust for the benefit of Purchaser and/or such family
members or (c) a partnership consisting solely of Purchaser and one or more such
family members; provided however, that such transferee, at the time of such
transfer shall agree in writing to abide by the terms of the transfer
restrictions in the Award or Purchase Agreement. Restricted Shares held by any
such transferee shall be subject to all the conditions and restrictions set
forth in the Award or Purchase Agreement, as if such transferee were a party to
such Agreement.
Purchase Price Per Share shall mean the consideration for which one Share may be
acquired pursuant to the Award.
Pro Rata Portion shall mean, with respect to Purchaser, the percentage of such
Purchaser's Shares which equals the number of Shares transferred by members of
the Saratoga Group in a Change of Control transaction, divided by the number of
Shares held by members of the Saratoga Group prior to such transaction.
Restricted Share shall mean a Share sold or granted to an eligible Employee
which is nontransferable and subject to substantial risk of forfeiture until
restrictions lapse.
Saratoga shall mean Saratoga Lighting Holdings LLC, its successors and assigns.
Saratoga Group shall mean Saratoga and each and every Affiliate of Saratoga.
Securities Act shall mean the Securities Act of 1933, as amended.
Service shall mean service as an Employee.
Share shall mean one share of Stock.
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Stock shall mean the common stock of the Company.
Subsidiary means any subsidiary corporation within the meaning of Code Section
424(f)) with respect to the Company.
W-2 Payroll means whatever mechanism or procedure that the Company or an
Affiliate of the Company utilizes to pay any individual which results in the
issuance of Form W-2 to the individual. "W-2 Payroll" does not include any
mechanism or procedure which results in the issuance of any form other than a
Form W-2 to an individual, including, but not limited to, any Form 1099 which
may be issued to an independent contractor, an agency employee or a consultant.
Whether a mechanism or procedure qualifies as a "W-2 Payroll" shall be
determined in the absolute discretion of the Company (or Affiliate, as
applicable), and the Company or Affiliate determination shall be conclusive and
binding on all persons.
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ANNEX 2
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.
AWARD
ADVANCED LIGHTING TECHNOLOGIES, INC. (the "Company"), hereby grants this
Incentive Award ("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 Purchase Agreement to be entered into between the Company and the
Participant including the attachments.
Grant Date: May 25, 2004
Name of Participant: Xxxxxx Xxxxx
Participants's Social Security Number: _____________________
Number of Shares Covered by Award: 20
Purchase Price Per Share: $1,000
Company: Xxxxx Xxxxxxx
------------------------------------
(Signature)
Title: Executive Vice President and Treasurer
--------------------------------------
ADVANCED LIGHTING TECHNOLOGIES, INC.
AWARD
VESTING Your shares will vest, and no longer be subject to
the Unvested Stock Requirement pursuant to the
Purchase Agreement, over a 5-year period, beginning
on the Grant Date as shown on the cover sheet, as
follows:
20% 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; 20% 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; 20% 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; 20% 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; and 20% of the Shares covered by the Award will
vest and no longer be subject to the Unvested Stock
Requirement on the fifth anniversary of the Grant
Date
Notwithstanding the foregoing, in the event of a
Change in Control (as defined in the Purchase
Agreement) 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 You shall have the right to vote your Shares, whether vested
or unvested.
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 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 YOUR EMPLOYMENT OR CONSULTANCY AT ANY TIME,
WITH OR WITHOUT CAUSE.
-2-
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 PURCHASE
AGREEMENT The text of the Purchase Agreement is incorporated in this
Award by reference.
Certain capitalized terms used in this Award are defined in
the Purchase Agreement.
This Award and the Purchase Agreement including its
attachments 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.
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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 Purchase Agreement gives Purchaser 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 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: 20 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: $20,000.
6. The amount (if any) paid for such property is: $20,000.
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
January __, 2005
Secretary
ADVANCED LIGHTING TECHNOLOGIES, INC.
Dear Sir or Madam:
As Escrow Agent for both ADVANCED LIGHTING TECHNOLOGIES, INC. (the
"Company"), and Xxxxxx Xxxxx ("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 Stock Purchase Agreement (the "Purchase
Agreement") of even date herewith, to which a copy of these Joint Escrow
Instructions is attached as Exhibit C to the Purchase 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 Purchase Agreement, the Company
shall give to Purchaser and you a written notice as provided in the Purchase
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 Purchase
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 Purchase 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.
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 Purchase 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 Purchase 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: __________________________
ESCROW AGENT: PURCHASER:
/s/ Xxxxxx Xxxxx
----------------------------- ---------------------------
-3-
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED Xxxxxx Xxxxx hereby sells, assigns and transfers unto
_________________________ Four (4) 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___ /s/ Xxxxxx Xxxxx
------------------------
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 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 Stock Purchase Agreement as an original party
thereto.
Dated: __________________, 20____ By:
------------------------
