EXHIBIT 10.6
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 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Company has given Purchaser an award attached hereto as Annex
1 (the "Award") pursuant to the Company's 2005 Equity Incentive Plan (the
"Plan") and
WHEREAS, the Award permits the Purchaser to purchase up to 17.985 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 17.985
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.
If any Unvested Stock is subject to a vesting requirement which must be met by a
date certain (the "Vesting Deadline"), and such vesting requirement is not met
on or prior to such date, the Company shall purchase
such 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 (i) termination of Service for a Permitted Reason or (ii) the
Vesting Deadline, as the case may be, to purchase from the Purchaser (A) 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 or (B) all shares of Unvested Stock which could no longer vest after a
Vesting Deadline, as the case may be; provided further, however, if at the time
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 the vesting of a portion of an Award (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
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(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 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.
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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 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 have 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.
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(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 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. If such Company purchase would occur
before (a) the Purchaser has held the Shares six months or (b)
the date which is six months following the vesting of the
Shares to be purchased, the repurchase shall occur six months
and one day after the later of the purchase of the Shares by
the Purchaser or vesting, as the case may be, and for the then
current Fair Market Value. 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. If such Company
purchase would occur before (a) the Purchaser has held the
Shares six months or (b) the date which is six months
following the vesting of the Shares to be purchased, the
repurchase shall occur six months and one day after the later
of the purchase of the Shares by the Purchaser or vesting, as
the case may be, and for the then current 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;
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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 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
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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 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.
(b) 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.
(c) 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
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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.
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
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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.
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
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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.
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
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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.
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------- --------------------------
Title: CEO ▇▇▇▇ ▇▇▇▇▇▇▇▇
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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.
2005 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 2005 Equity
Incentive Plan (the "Plan").
Grant Date: July 27, 2005
Name of Participant: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Participant's Social Security Number: _____________________________
Number of Shares Covered by Award: 17.985
Purchase Price Per Share: $1,000.00
Company: _________________________________
(Signature)
Title:____________________________________
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ANNEX 2
CERTAIN DEFINITIONS
(FOR USE FOR GRANTS TO EMPLOYEES WITHOUT EMPLOYMENT AGREEMENTS)
For purposes hereof, the term "cause" shall mean:
Employee's committing an act constituting a misdemeanor involving fraud,
dishonesty, or theft or a felony;
Employee's engaging in habitual or repeated alcohol or drug abuse;
Employee's disregarding the instructions of the Board of Directors of
ADLT;
Employee's neglecting duties (other than by reason of disability or
death), with five (5) business days notice to cure;
Employee shall fail to devote his full business time to his employment and
perform diligently such duties as are, or may be, required by the Board of
Directors of ADLT or their designee consistent with Employee's duties and
authority at the date of this Agreement or such other duties as may be
mutually agreed, with five (5) business days notice to cure; provided such
duties are within the bounds of reasonableness and acceptable business
standards;
Employee shall, without the prior written consent of ADLT, which shall not
be unreasonably withheld, directly or indirectly, render services of a
business, professional or commercial nature to any other person or firm,
whether for compensation or otherwise, other than in the performance of
duties naturally inherent in the businesses of ADLT or any subsidiary or
affiliate of ADLT, with five (5) business days notice to cure; provided,
however, Employee may continue to render services to and participate in
philanthropic and charitable causes, in each case, in a manner and to the
extent consistent with his past practice;
Employee shall fail to comply with all policies and procedures of ADLT,
including but not limited to, all terms and conditions set forth in any
employee handbook and any other memoranda pertaining to ADLT's policies,
procedures, rules and regulations, with five (5) business days notice to
cure; or
Employee's willful misconduct or gross negligence.
13
ANNEX 2
PAGE 2
For purposes hereof, the term "good reason" shall mean: without Employee's
written consent, a material reduction of Employee's duties, authority,
compensation, benefits or responsibilities.
For purposes hereof, the term "disability" shall mean: the inability of
Employee to perform satisfactorily his usual or customary occupation for a
period of 120 days in the aggregate out of 150 consecutive days as a
result of a physical or mental illness or other disability which in the
written opinion of a physician of recognized ability and reputation, is
likely to continue for a significant period of time.
14
ADVANCED LIGHTING TECHNOLOGIES, INC.
2005 EQUITY INCENTIVE PLAN
AWARD
VESTING Your shares will vest, and no longer be subject to the
Unvested Stock Agreement pursuant to the Purchase Agreement,
as follows:
25% of the Shares covered by the Award will vest and no longer
be subject to the Unvested Stock Requirement provided that the
Company achieves Cumulative Adjusted EBITDA for any 4
consecutive fiscal quarters, ending on or before June 30,
2007, equal to or greater than $32,977,000; 25% of the Shares
covered by the Award will vest and no longer be subject to the
Unvested Stock Requirement provided that the Company achieves
Cumulative Adjusted EBITDA for any 8 consecutive fiscal
quarters, ending on or before June 30, 2008, equal to or
greater than $71,075,000; 25% of the Shares covered by the
Award will vest and no longer be subject to the Unvested Stock
Requirement provided that the Company achieves Cumulative
Adjusted EBITDA for any 12 consecutive fiscal quarters, ending
on or before June 30, 2009, equal to or greater than
$113,140,000; and 25% of the Shares covered by the Award will
vest and no longer be subject to the Unvested Stock
Requirement provided that the Company achieves Cumulative
Adjusted EBITDA for any 16 consecutive fiscal quarters, ending
on or before June 30, 2010, equal to or greater than
$159,147,000; provided, however, if the Company enters into a
significant corporate transaction (such as an acquisition,
divestiture or merger) which could reasonably be expected to
affect Cumulative Adjusted EBITDA, the amount of Cumulative
Adjusted EBITDA required for vesting on any date shall be
adjusted, by the Board of Directors of the Company, to reflect
the EBITDA expected to be added or lost as a result of such
transaction.
Notwithstanding the foregoing, in the event of a Change in
Control or an Initial Public Offering (each as defined in the
Plan) of the Company, your unexpired shares will immediately
vest, provided the aggregate cash amounts received by Saratoga
in respect of its Company stock and from such transaction
prior to June 30, 2009 are not less than $90,000,000. If a
Change of Control or Initial Public Offering occurs in a
transaction which does not result in aggregate cash amounts of
at least $90,000,000 being received by Saratoga on or prior to
the closing of such transaction, and Saratoga receives or
retains securities of the Company or its
15
successors or assigns at or after the closing of such
transaction, Saratoga shall provide an escrow of a portion of
such securities or other arrangement to assure the
participants of the economic benefits of vesting if the
aggregate cash amounts received in respect of its Company
stock, in such transaction and on liquidation of the
securities received or retained by Saratoga results in
aggregate amounts received by Saratoga of at least $90,000,000
by June 30, 2009.
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 (as defined in the
Plan), 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 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
16
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.
CERTAIN
DEFINITIONS For the purposes of this Award, "Adjusted EBITDA" shall mean
"Income from Operations" (a) plus "Amortization of Intangible
Assets" plus "Depreciation", (b) plus "Income from
Investments", or minus "Loss from Investments" to the extent
such Income or Loss from Investments relates to the Company's
investment in AAPL, all of the above as reported in the
Company's financial statements, (c) plus the amount recorded
in the Company's financial statements for the following items:
(i) Amounts payable to the Saratoga Group pursuant to the
Management Services Agreement ("Management Services
Agreement") between Saratoga Management Company LLC and the
Company, (ii)
17
amounts recorded as expense related to "Additional Bonuses"
described in ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ employment contract, the
after-tax proceeds of which are applied to repayment of ▇▇▇▇▇
▇▇▇▇▇▇▇'▇ loan from the Company, and (iii) amounts in respect
of fees and expenses, prior to an Initial Public Offering, in
connection with the services of any non-management Director,
and (d) plus any one-time expense item, or minus any one time
income item, as explicitly designated by the Board of
Directors.
For the purposes of this Award, "Cumulative Adjusted EBITDA"
shall mean Adjusted EBITDA over the relevant number of
consecutive quarters, accrued on a cumulative basis (taken as
one accounting period).
18
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.
19
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.
20
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
21
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 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("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
▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ 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.
22
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.
23
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
ESCROW AGENT: PURCHASER:
_______________________ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
24
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________ Seventeen and Nine Hundred Eighty-Five One-Thousandths
(17.985) shares of the Common Stock of ADVANCED LIGHTING TECHNOLOGIES, INC. (the
"Company"), standing in _____________________________ 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___
_____________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
25
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: _______________________________
26