<PAGE>

                                                                    EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT entered into and effective as of December 10,
2003, among, ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio corporation ("ADLT"),
and JAMES SCHOOLENBERG ("EMPLOYEE");

                                   WITNESSETH:

         WHEREAS, ADLT and Employee desire to terminate any and all prior
agreements, whether oral or written, between the parties and between Employee
and ADLT relating to Employee's employment; and

         WHEREAS, ADLT and Employee desire to enter into an Employment Agreement
as set forth herein below to ADLT of the services of Employee as President of
APL Engineered Materials, Inc., an Illinois corporation and affiliate of ADLT
("APL") and to set forth the rights and duties of the parties hereto,

         NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:

1.       TERMINATION OF PRIOR AGREEMENTS. ADLT and Employee hereby terminate any
         and all prior agreements, whether oral or written, between the parties
         relating to Employee's employment, provided, however that any existing
         agreement between Employee and ADLT or any subsidiary of ADLT regarding
         non-competition, non-solicitation or confidentiality or ownership of
         intellectual property rights shall continue in full force and effect as
         supplemented by this Employment Agreement.

2.       EMPLOYMENT.

         (a)      ADLT hereby employs Employee, and Employee hereby accepts
                  employment, upon the terms and conditions hereinafter set
                  forth.

         (b)      During the term of this Employment Agreement, (for purposes
                  hereof, all references to the term of this Employment
                  Agreement shall be deemed to include all renewals or
                  extensions hereof, if any), Employee shall devote his full
                  business time to his employment and shall perform diligently
                  such duties as are, or may be, required by the Board of
                  Directors of ADLT or their designee, which duties shall be
                  within the bounds of reasonableness and acceptable business
                  standards and ethics.

         (c)      During the term of this Employment Agreement, Employee shall
                  not, 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 APL, ADLT or any subsidiary or
                  affiliate of ADLT; provided, however, Employee may continue to

<PAGE>

                  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.

         (d)      During the term of this Employment Agreement, Employee shall
                  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. Failure to comply
                  with all such policies and procedures shall be grounds for
                  disciplinary action, including termination for "cause"
                  pursuant to Section 6(a) of this Employment Agreement.

3.       TERM AND POSITION.

         (a)      Subject to the termination provisions contained herein, the
                  term of this Employment Agreement shall commence as of
                  DECEMBER 10, 2003 and shall continue for a term of THREE (3)
                  YEARS from such date, subject, however, to the provisions of
                  Section 6.

         (b)      Employee shall serve as President of APL, and in such offices
                  or positions with ADLT as shall be agreed upon by Employee and
                  the Board of Directors of ADLT, as the case may be, without,
                  however, any change in Employee's compensation (but such
                  offices or positions shall be consistent with the office and
                  position stated herein).

         (c)      The principal business office of Employee shall be in Solon,
                  Ohio.

4.       COMPENSATION.

         (a)      Subject to the provisions of this Employment Agreement, for
                  all services which Employee may render to ADLT during the term
                  of this Employment Agreement, Employee shall receive a salary
                  at the rate of ONE HUNDRED NINETY THOUSAND DOLLARS ($190,000)
                  per annum for the first year of this Employment Agreement,
                  which shall be payable in equal, consecutive biweekly
                  installments.

         (b)      Employees will receive options at the commencement of the term
                  of this Employment Agreement as set forth on EXHIBIT A.

         (c)      Provided that Employee satisfactorily performs his services
                  under this Employment Agreement, Employee shall be eligible
                  for salary increases from time to time as determined by the
                  Compensation Committee of ADLT.

         (d)      Provided that Employee has satisfactorily performed his
                  services under this Employment Agreement, Employee shall be
                  eligible for bonuses from time to time as described on EXHIBIT
                  A.

<PAGE>

5.       OTHER BENEFITS.

         During the term of this Employment Agreement, Employee shall be
         entitled to such vacation privileges, life insurance, medical and
         hospitalization benefits, and such other benefits as are typically
         provided to other executive officers of ADLT and its subsidiaries in
         comparable positions; provided, however, that such benefits shall be
         comparable to those benefits provided by ADLT in ADLT's fiscal year
         ended June 30, 2003.

6.       TERMINATION AND FURTHER COMPENSATION.

         (a)      The employment of Employee under this Employment Agreement,
                  for the term thereof, may be terminated by the Board of
                  Directors of ADLT for cause at any time. For purposes hereof,
                  the term "cause" shall mean:

                  (i)      Employee's committing an act constituting a
                           misdemeanor involving fraud, dishonesty, or theft or
                           a felony;

                  (ii)     Employee's engaging in habitual or repeated alcohol
                           or drug abuse;

                  (iii)    Employee's disregarding the instructions of the Board
                           of Directors, President or Chief Executive Officer of
                           ADLT;

                  (iv)     Employee's neglecting duties (other than by reason of
                           disability or death), with five (5) business days
                           notice to cure;

                  (v)      Employee's willful misconduct or gross negligence; or

                  (vi)     Employee's material breach of this Employment
                           Agreement, in whole or in part, with five (5) days
                           notice to cure.

                  Any termination by reason of the foregoing shall not be in
                  limitation of any other right or remedy ADLT may have under
                  this Employment Agreement or otherwise.

         (b)      In the event of (i) termination of the Employment Agreement
                  for any of the reasons set forth in Subparagraph (a) of this
                  Section 6, or (ii) if Employee shall voluntarily terminate his
                  employment hereunder prior to the end of the term of this
                  Employment Agreement, then in either event Employee shall be
                  entitled to no further salary, bonus or other benefits under
                  this Employment Agreement, except as to that portion of any
                  unpaid salary and other benefits accrued and earned by him
                  hereunder up to and including the effective date of such
                  termination. In the event the Employee voluntarily terminates
                  this Employment Agreement, Employee shall provide 30 days'
                  prior written notice to ADLT of such voluntary termination.

         (c)      In the event that ADLT terminates Employee's employment
                  without "cause" (as defined herein above) or Employee
                  terminates employment with "good reason" (as defined below)
                  prior to the end of the term of this Employment Agreement,
                  then, in addition to any salary and bonus amounts and medical
                  benefits due to Employee for the remainder of the term or
                  renewal term of this Employment Agreement, as the case may be,
                  Employee shall be entitled to an immediate payment equal to
                  three (3) months salary upon the terms and as set forth
                  herein; provided however, notwithstanding continuation salary
                  following such termination, bonus amounts shall

                                                                    PAGE 3 of 11
<PAGE>

                  be paid or payable with respect only to fiscal years of ADLT
                  commencing prior to such termination. Such salary, bonus and
                  benefits shall be paid in accordance with ADLT's normal
                  payment practices. At the conclusion of the term of this
                  Employment Agreement, all salary, medical and other benefits
                  as set forth herein shall cease. Employee shall have no other
                  rights and remedies except as set forth in this Section 6. For
                  purposes hereof, the term "good reason" shall mean (i) without
                  the express written consent of Employee, a material reduction
                  of Employee's duties, authority, compensation, benefits or
                  responsibilities or (ii) a material breach of this Employment
                  Agreement by ADLT.

         (d)      In the event of Employee's death or permanent disability (as
                  defined herein below) occurring during the term of this
                  Employment Agreement, this Employment Agreement shall be
                  deemed terminated for cause and Employee or his estate, as the
                  case may be, shall be entitled to no further salary or other
                  compensation provided for herein except as to that portion of
                  any unpaid salary accrued or earned by Employee hereunder up
                  to and including the date of death or permanent disability,
                  and any benefits under any insurance policies or other plans.

         (e)      "Permanent disability" means 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.

         (f)      In the event this Employment Agreement is terminated with
                  cause, before the end of the term, ADLT may, in its sole
                  discretion, notify Employee that ADLT intends to continue to
                  pay all compensation, benefits and monies due under the terms
                  of the Employment Agreement for the remainder of the term. In
                  such event, and provided ADLT continues to make such payments,
                  Employee shall continue to be bound by the terms of the
                  non-competition provisions in Section 7 hereof, during the
                  remainder of the term and for a period of one (1) year
                  immediately following the stated term of the Agreement.

         (g)      "Change of Control" as used in this Agreement means such time
                  as (i) (a) a "person" or "group" (within the meaning of
                  Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
                  1934, as amended [the "Exchange Act"]) becomes the ultimate
                  "beneficial owner" (as defined in Rule 13d-3 under the
                  Exchange Act) of more than 35% of the total voting power of
                  ADLT on a fully diluted basis and (b) such ownership
                  represents a greater percentage of the total voting power of
                  the voting stock of ADLT, on a fully diluted basis, than may
                  then be voted by (I) Saratoga Lighting Holdings LLC or any
                  person, directly or indirectly, controlling, controlled by or
                  under common control with Saratoga Lighting Holdings LLC (the
                  "Saratoga Group"), (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) voting stock of ADLT representing a
                  majority of the voting power of the voting stock owned by such
                  group (the "Existing

                                                                    PAGE 4 of 11
<PAGE>

                  Stockholders") and (III) the five individuals who were the
                  most highly compensated officers or employees of ADLT and its
                  subsidiaries, taken as a whole, for the most recently ended
                  fiscal year of ADLT (the "Executive Managers") on such date;
                  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
                  35% of the total voting power of ADLT on a fully diluted
                  basis; or (ii) individuals who on the date of this Agreement
                  (or within 120 days thereafter as contemplated by ADLT's plan
                  of reorganization) constitute the Board of Directors (together
                  with any new or successor directors whose election by the
                  Board of Directors or whose nomination by the Board of
                  Directors for election by ADLT's stockholders was approved by
                  a vote of at least two-thirds of the members of the Board of
                  Directors on the date of their election or nomination) cease
                  for any reason to constitute a majority of the members of the
                  Board of Directors then in office.

7.       COVENANTS REGARDING NON-COMPETITION AND CONFIDENTIAL INFORMATION.

         (a)      Non-Competition.

                  (i)      Recognizing that Employee will have been involved as
                           an executive officer of APL and that ADLT and its
                           affiliates, are engaged in the supply of products
                           and/or services in every state of the United States
                           and internationally, therefore, upon termination of
                           his employment by ADLT or its subsidiaries, whether
                           such termination is initiated by ADLT or Employee and
                           whether at the expiration of the term of this
                           Employment Agreement or otherwise, for any reason, he
                           agrees that he will not, for a period of ONE (1) YEAR
                           immediately following such termination, engage, in
                           the United States or in any country where ADLT or any
                           of its subsidiaries or affiliates conduct business,
                           either directly or indirectly on behalf of himself or
                           on behalf of an another, as an employee, consultant,
                           director, partner or shareholder (other than with
                           respect to holding up to one percent (1%) of a
                           publicly traded corporation) of any corporation,
                           limited liability company, partnership or other
                           business entity, in any business of the type and
                           character or in competition with the business carried
                           on by ADLT or any of its subsidiaries or affiliates
                           (as conducted on the date Employee ceases to be
                           employed by ADLT in any capacity).

                  (ii)     Employee will not, for a period of ONE (1) YEAR
                           immediately following the termination of his
                           employment by ADLT or its subsidiaries, whether such
                           termination is initiated by ADLT or Employee and
                           whether at the expiration of the term of this
                           Employment Agreement or otherwise, either directly or
                           indirectly or on behalf of another, as an employee,
                           consultant, director, partner or shareholder (other
                           than with respect to holding up to one percent (1%)
                           of a publicly traded corporation) of any corporation,
                           limited liability company, partnership or other
                           business entity, recruit, hire or otherwise entice
                           any employee(s) of ADLT or its subsidiaries or
                           affiliates, to terminate his or

                                                                    PAGE 5 of 11
<PAGE>

                           her employment with ADLT or to accept employment with
                           anyone or any entity other than ADLT.

                  (iii)    Employee will not, for a period of ONE (1) YEAR
                           immediately following the termination of his
                           employment by ADLT or its subsidiaries, whether such
                           termination is initiated by ADLT or Employee and
                           whether at the expiration of the term of this
                           Employment Agreement or otherwise, either directly or
                           indirectly or on behalf of another, as an employee,
                           consultant, director, partner or shareholder (other
                           than with respect to holding up to one percent (1%)
                           of a publicly traded corporation) of any corporation,
                           limited liability company, partnership or other
                           business entity, solicit, do business with or employ
                           any current or former employee of ADLT, or any of its
                           subsidiaries or affiliates, or any customer or client
                           of ADLT in connection with any business of the type
                           and character or in competition with the business
                           carried on by ADLT or any of its subsidiaries or
                           affiliates (as conducted on the date Employee ceases
                           to be employed by ADLT in any capacity)

                  (iv)     Employee will not, directly or indirectly, disclose,
                           divulge, discuss or copy to or for any person or
                           entity, or otherwise use or suffer to be used in any
                           manner or for any purpose, except for the benefit of
                           ADLT or any of its subsidiaries or affiliates, any
                           ideas, methods, customer lists or other customer
                           information, business plans, product research or
                           engineering data or other trade secrets, intellectual
                           property, or any other confidential or proprietary
                           information of ADLT or any of its subsidiaries or
                           affiliates, it being acknowledged by Employee that
                           all such information regarding the business of ADLT
                           or its subsidiaries or affiliates conceived,
                           suggested, developed, compiled or obtained by or
                           furnished to Employee while Employee shall have been
                           employed by or associated with ADLT or its
                           subsidiaries or affiliates is confidential
                           information and ADLT's or its subsidiaries' or
                           affiliates' exclusive property. Employee's
                           obligations under this Section 7(a)(iv) will not
                           apply to any information which (A) is known to the
                           public other than as a result of Employee's acts or
                           omissions, (B) is approved for release, in writing,
                           by ADLT, (C) is disclosed to Employee by a third
                           party without restriction, or (D) Employee is legally
                           required to disclose.

         (b)      Employee expressly agrees and understands that the remedy at
                  law for any breach by him of this Section 7 will be inadequate
                  and that the damages flowing from such breach are not readily
                  susceptible to being measured in monetary terms. Accordingly,
                  it is acknowledged that upon adequate proof of Employee's
                  violation of any legally enforceable provision of this Section
                  7, ADLT shall be entitled to immediate injunctive relief and
                  may obtain a temporary order restraining any threatened or
                  further breach. Nothing in this Section 7 shall be deemed to
                  limit ADLT's remedies at law or in equity for any breach by
                  Employee of any of the provisions of this Section 7 which may
                  be pursued or availed of by ADLT or any of its affiliates
                  including but not limited to ADLT.

                                                                    PAGE 6 of 11
<PAGE>

         (c)      In the event Employee shall violate any legally enforceable
                  provision of this Section 7 as to which there is a specific
                  time period during which he is prohibited from taking certain
                  actions or from engaging in certain activities as set forth in
                  such provision then, in such event, such violation shall toll
                  the running of such time period from the date of such
                  violation until such violation shall cease.

8.       RENEWAL.

         This Employment Agreement shall be automatically renewed for successive
         one (1) year periods, notwithstanding whether the initial terms of this
         Agreement was for a term other than one (1) year, unless and until ADLT
         or Employee delivers written notice to the other party of its intent to
         terminate this Employment Agreement upon completion of the current
         term. In the event Employee or ADLT desires to terminate this
         Employment Agreement upon completion of the current term, such
         terminating party must deliver written notice to the other party not
         later than three (3) months prior to the end of the term (or any
         successive term) of this Employment Agreement.

9.       SEVERABLE PROVISIONS.

         The provisions of this Employment Agreement are severable and if any
         one or more provisions may be determined to be illegal or otherwise
         unenforceable, in whole or in part, the remaining provisions and any
         partially unenforceable provision to the extent enforceable in any
         jurisdiction shall, nevertheless, be binding and enforceable.

10.      ARBITRATION.

         Any controversy or claim arising out of or relating to this Employment
         Agreement, or the breach thereof, shall be settled by arbitration by a
         single arbitrator in the City of Solon, State of Ohio, in accordance
         with the Rules of the American Arbitration Association, and judgment
         upon the award rendered by the Arbitrator may be entered in any court
         having jurisdiction thereof. The Arbitrator shall be deemed to possess
         the powers to issue mandatory orders and restraining orders in
         connection with such arbitration; provided, however, that nothing in
         this Section 10 shall be construed so as to deny ADLT the right and
         power to seek and obtain injunctive relief in a court of equity for any
         breach or threatened breach of Employee of any of his covenants
         contained in Section 7 hereof.

11.      NOTICES

                                                                    PAGE 7 of 11
<PAGE>

         (a)      Each notice, request, demand or other communication ("NOTICE")
                  by either party to the other party pursuant to this Employment
                  Agreement shall be in writing and shall be personally
                  delivered or sent by U.S. certified mail, return receipt
                  requested, postage prepaid, or by nationally recognized
                  overnight commercial courier, charges prepaid, or by facsimile
                  transmission (but each such Notice sent by facsimile
                  transmission shall be confirmed by sending a copy thereof to
                  the other party by U.S. mail or commercial courier as provided
                  herein no later than the following business day), addressed to
                  the address of the receiving party or to such other address as
                  such party shall have communicated to the other party in
                  accordance with this Section. Any Notice hereunder shall be
                  deemed to have been given and received on the date when
                  personally delivered, on the date of sending when sent by
                  facsimile, on the third business day following the date of
                  sending when sent by mail or on the first business day
                  following the date of sending when sent by commercial courier.

         (b)      If a Notice is to ADLT, then such Notice shall be addressed to
                  Advanced Lighting Technologies, Inc., 32000 Aurora Road,
                  Solon, Ohio, attention of the Board of Directors.

         (c)      If a Notice is to Employee, then such Notice shall be
                  addressed to Employee at his home address last known on the
                  payroll records of ADLT.

12.      WAIVER.

         The failure of either party to enforce any provision or provisions of
         this Employment Agreement shall not in any way be construed as a waiver
         of any such provision or provisions as to any future violations
         thereof, nor prevent that party thereafter from enforcing each and
         every other provision of this Employment Agreement. The rights granted
         the parties herein are cumulative and the waiver of any single remedy
         shall not constitute a waiver of such party's right to assert all other
         legal remedies available to it under the circumstances.

13.      MISCELLANEOUS.

         This Employment Agreement supersedes all prior agreements and
         understandings between the parties and may not be modified or
         terminated orally. No modification, termination or attempted waiver
         shall be valid unless in writing and signed by the party against whom
         the same it is sought to be enforced.

14.      GOVERNING LAW.

         This Employment Agreement shall be governed by and construed according
         to the laws of the State of Ohio.

                                                                    PAGE 8 of 11
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the day and year first set forth above.

WITNESS:                                  ADVANCED LIGHTING
                                          TECHNOLOGIES, INC.

By: /s/ Jill Ann Blanck                   By: /s/ Christopher Zerull
    --------------------------------          -------------------------------
Name: Jill Ann Blanck                     Name: Christopher Zerull
                                          Its: Vice President


By: /s/ James S. Hogg                     /s/ James L. Schoolenberg
    --------------------------------      -----------------------------------
Name: James S. Hogg                       JAMES L. SCHOOLENBERG


                                                                    PAGE 9 of 11
<PAGE>

                                    EXHIBIT A
                               (BONUS AND OPTIONS)

EMPLOYEE: James L. Schoolenberg
BASE SALARY: $190,000.00

I. BONUS SCALE:

Employee shall be eligible for a bonus, as a percentage of Employee's base
salary, contingent upon ADLT's achieving certain financial targets (Base, Goal
and Superior) measured in terms of ADLT's Adjusted EBITDA (after accruing the
applicable bonus) for each fiscal year pursuant to the following scale:

<TABLE>
<CAPTION>
FY 2004 (7/1/03-6/30/04)        EBITDA (ADJUSTED) *                    BONUS (% OF BASE SALARY)
-------------------------------------------------------------------------------------------------
<S>                             <C>                                    <C>
No Bonus                        Below $23,500,000.00                   --
-------------------------------------------------------------------------------------------------
Base                            $23,500,000.00                         25%
-------------------------------------------------------------------------------------------------
Goal                            $25,000,000.00                         50%
-------------------------------------------------------------------------------------------------
Superior                        $27,000,000.00                         75%
-------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
FY 2005 (7/1/04-6/30/05)        EBITDA (ADJUSTED)**                    BONUS (% OF BASE SALARY)
-------------------------------------------------------------------------------------------------
<S>                             <C>                                    <C>
No Bonus                        Below 112.50% of the higher of (a)     --
                                FY 2004 EBITDA (Adjusted) or (b)
                                $24,000,000
-------------------------------------------------------------------------------------------------
Base                            112.50% of the higher of (a) FY 2004   25%
                                EBITDA (Adjusted) or (b) $24,000,000
-------------------------------------------------------------------------------------------------
Goal                            120.00% of the higher of (a) FY 2004   50%
                                EBITDA (Adjusted) or (b) $24,000,000
-------------------------------------------------------------------------------------------------
Superior                        130.00% of the higher of (a) FY 2004   75%
                                EBITDA (Adjusted) or (b) $24,000,000
-------------------------------------------------------------------------------------------------
</TABLE>

* Bonus increase in FY 2004 will be on a sliding scale whereby the percentage of
base salary bonus will increase proportionally based on the amount by which ADLT
exceeds one financial target but falls short of a higher financial target. For
example: If the ADLT has an adjusted EBITDA in FY 2004 of $26,000,000.00 (which
amount is the midpoint between the Goal and Superior targets) then Employee
would be entitled to a bonus of 62.5% (50% + an additional 12.5%).

**Bonus in FY 2005 is based on the percentage increase over the final adjusted
EBITDA for FY 2004. The bonus will be increased on a sliding scale whereby the
percentage of base salary will increase proportionally based on the amount by
which the adjusted EBITDA for FY 2005 exceeds the adjusted EBITDA for FY 2004.
For example: If the adjusted EBITDA for FY 2004 is $24,000,000.00 and the
adjusted EBITDA for FY 2005 is $27,600,000.00 (an increase of 15%) then the
Employee shall be entitled to a bonus of 25% for hitting the Base target plus an

                                                                   PAGE 10 of 11
<PAGE>

additional 8.3% for exceeding the Base target by 2.5% (3.33% for each 1%
increase until the Goal target is met) for a total bonus equal to 33.3 % (25%
+8.3%) of Employee's base salary.

II. OPTIONS:

Employee shall participate in the ADLT equity compensation plan to the extent of
1.5 % of the equity stock of ADLT on the date of this Agreement, which shall
vest in four (4) equal increments on the anniversary dates of the grant date.

                                                                   PAGE 11 of 11