Document:

<PAGE>

                                                                    EXHIBIT 10.3

                               THIRD AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT

                                                              September 16, 2003

WELLS FARGO FOOTHILL, INC., as Agent and Lender
One Boston Place, 18th Floor
Boston, Massachusetts 02108

Ladies and Gentlemen:

         Wells Fargo Foothill, Inc., as Arranger and Administrative Agent
("Agent") and Lender ("Foothill"), Ableco Finance LLC ("Ableco"; and together
with Foothill, "Lenders") and Advanced Lighting Technologies, Inc., an Ohio
corporation and a debtor and debtor-in-possession ("Parent") and each of
Parent's Subsidiaries identified as a borrower on the signature pages hereof
(such Subsidiaries, together with Parent, are referred to hereafter each
individually as a "Borrower", and individually and collectively, jointly and
severally, as "Borrowers") have entered into certain financing arrangements
pursuant to the Loan and Security Agreement dated June 30, 2003 among Agent,
Lenders, Borrowers and the other Loan Parties (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the "Loan Agreement") and all other Loan Documents at any time
executed and/or delivered in connection therewith or related thereto. All
capitalized terms used herein shall have the meaning assigned thereto in the
Loan Agreement, unless otherwise defined herein.

         In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties to this Third Amendment to Loan and Security Agreement (this
"Amendment"), the parties hereto hereby agree as follows:

         1.       AMENDMENTS TO LOAN AGREEMENT.

         (a)      As of the effective date of this Amendment, the definition of
"Adjusted EBITDA" appearing in Section 1.1 of the Loan Agreement is hereby
amended and restated in its entirety as follows:

                  "Adjusted EBITDA" means, for any period, Parent's and its
         Subsidiaries consolidated net earnings (or loss) for such period plus
         (a) interest expense, (b) income taxes, (c) depreciation and
         amortization expense, (d) losses from minority interest and investments
         accounted for in the equity method, up to a maximum of $500,000, (e)
         non-recurring, non-cash charges, as approved in Lenders' Permitted
         Discretion, (f) the amount of professional, bank and refinancing fees
         related to the reorganization of Borrowers, which amount shall not
         exceed the amount set forth in the projections approved by Agent,
         styled "2004DraftModel108-28-03SaratogaFebExit1", minus (g) interest
         income, (h) income tax benefit (i)
<PAGE>

         extraordinary gains, (j) gains resulting from minority interests or
         investments accounted for on the equity method. All of the foregoing
         only to the extent included in the calculation of consolidated net
         earnings (or loss), without duplication, and determined in accordance
         with GAAP.

         (b)      As of the effective date of this Amendment, Section 3.4 of the
Loan Agreement is hereby amended and restated in its entirety as follows:

                  "TERM. This Agreement shall become effective upon the
                  execution and delivery hereof by Borrowers, Agent, and the
                  Lenders and shall continue in full force and effect for a term
                  ending on the earliest of (a) the effective date of
                  confirmation by the Bankruptcy Court of Borrowers' plan of
                  reorganization in the Chapter 11 Cases, (b) February 28, 2004
                  (the "Maturity Date"), (c) at Lenders' option, the conversion
                  of the Chapter 11 Cases to a case under Chapter 7 of the
                  Bankruptcy Code, (d) at Lenders' option, the Loan Parties
                  ceasing or discontinuing their ordinary business operations,
                  and (e) at Lenders' option, the appointment of a trustee or an
                  examiner with expanded powers under the Bankruptcy Code. The
                  foregoing notwithstanding, the Lender Group, upon the election
                  of the Required Lenders, shall have the right to terminate
                  their obligations under this Agreement immediately and without
                  notice upon the occurrence and during the continuation of an
                  Event of Default."

         (c)      As of the effective date of this Amendment, Section 7.20(a)(i)
of the Loan Agreement is hereby amended and restated in its entirety as follows:

                  "MINIMUM ADJUSTED EBITDA. Adjusted EBITDA, measured on a
                  monthly basis, of not less than the required amount set forth
                  in the following table for the applicable period set forth
                  opposite thereto;

<TABLE>
<CAPTION>
Applicable Amount            Applicable Period
--------------------------------------------------------
<S>                <C>
   $ 6,900,000     Five months ending September 30, 2003
--------------------------------------------------------
   $ 9,100,000      Six months ending October 31, 2003
--------------------------------------------------------
   $10,113,000     Seven months ending November 30, 2003
--------------------------------------------------------
   $11,238,000     Eight months ending December 31, 2003
--------------------------------------------------------
   $12,715,000      Nine months ending January 31, 2004
--------------------------------------------------------
   $14,554,000     Ten months ending February 28, 2004"
--------------------------------------------------------
</TABLE>

         (d)      As of the effective date of this Amendment, Section 7.20(b) of
the Loan Agreement is hereby amended and restated in its entirety as follows:

                                       2
<PAGE>

                  "CAPITAL EXPENDITURES. Make Capital Expenditures for any two
                  consecutive month period in an amount in excess of $1,000,000
                  beginning with the month ending August 31, 2003."

         2.       RIGHT OF FIRST REFUSAL. Borrowers hereby acknowledge, confirm
and agree that upon Borrowers' locating a source for financing arrangements for
the purpose of funding the Borrowers' plan of reorganization and other working
capital requirements, other than from the Lender Group, at any time prior to the
Maturity Date, Borrowers shall supply Agent with a copy of the commitment letter
("Commitment") obtained by Borrowers (but which Borrowers have not as yet
accepted) from the other financial institution (the "Replacement Financier"),
and which Commitment also obligates the Replacement Financier to make loans and
advances to Borrowers in an aggregate amount not less than the outstanding
Obligations due Agent and Lenders under the existing financing arrangements as
of Borrowers' anticipated closing date of the exit financing arrangements with
such Replacement Financier. Agent shall thereafter have the absolute,
unrestricted right for a period of time not to exceed fifteen (15) days from the
date of Agent's receipt of such Commitment, to agree to provide such exit
financing to Borrowers, which shall comply with all of the material terms and
provisions set forth in the Commitment supplied to Agent ("Right of First
Refusal"). If Agent shall notify Borrowers in writing of Agent's election to do
so, which Agent may exercise in Agent's sole option within the stated period of
time, Borrowers agree not to proceed with the Commitment or with such
Replacement Financier, and shall enter into the exit financing arrangements
among Agent, Lenders and Borrowers in accordance with the material terms and
provisions set forth in the Commitment. Should Agent elect at Agent's option not
to exercise such Right of First Refusal within the time period indicated above,
Borrowers shall be at liberty to proceed to implement the financing arrangements
with the Replacement Financier contemplated by the Commitment that Borrowers
have previously obtained. Any such arrangements with a Replacement Financier
would have to provide, among other things, for payment in full in immediately
available funds of all of the outstanding Obligations under the Loan Agreement
and Agent's receipt of an indemnity, from the Replacement Financier, in form and
substance satisfactory to Agent in all respects, as to any and all of Agent's
contingent Obligations.

         3.       REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Loan Parties to Agent and Lenders pursuant to the Loan Agreement and the
other Loan Documents, each Loan Party hereby represents, warrants and covenants
with and to Agent and Lenders as follows (which representations, warranties and
covenants are continuing and shall survive the execution and delivery hereof and
shall be incorporated into and made a part of the Loan Documents):

         (a)      No Event of Default exists on the date of this Amendment
(after giving effect to the amendments to the Loan Agreement set forth herein);
and

         (b)      This Amendment has been duly executed and delivered by each
Loan Party and is in full force and effect as of the date hereof, and the
agreements and obligations of each of the Loan Parties contained herein
constitute its legal, valid and binding obligations, enforceable against it in
accordance with the terms hereof.

                                       3
<PAGE>

         4.       CONDITIONS PRECEDENT. The effectiveness of this Amendment and
the agreement of Agent to the modifications and amendments set forth in this
Amendment are subject to the fulfillment of the following conditions precedent:

         (a)      the United States Bankruptcy Court for the Northern District
of Illinois shall have entered a final, non-appealable order, in form and
substance satisfactory to Agent in its sole discretion, authorizing the
modifications and amendments set forth in this Amendment; and

         (b)      Agent shall have received, in form and substance satisfactory
to Agent in its sole discretion, an original of this Amendment duly authorized,
executed and delivered by Loan Parties.

         5.       EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto,
no other changes or modifications to the Loan Agreement and the other Loan
Documents are intended or implied and in all other respects the Loan Agreement
and the other Loan Documents are hereby specifically ratified, acknowledged and
confirmed by all parties hereto as of the effective date hereof. To the extent
of any conflict between the terms of this Amendment and any of the Loan
Documents, the terms of this Amendment shall control. The Loan Agreement, as
amended hereby, the other Loan Documents and this Amendment shall be read and be
construed as one agreement.

         6.       FURTHER ASSURANCES. The parties hereto shall execute and
deliver such additional documents and take such additional actions as may be
necessary or desirable to effectuate the provisions and purposes of this
Amendment.

         7.       GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN THE
PARTIES HERETO, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW).

         8.       BINDING EFFECT. This Amendment shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.

                                       4

<PAGE>

         9.       COUNTERPARTS. This Amendment may be executed in any number of
counterparts, but all of such counterparts when executed shall together
constitute but one and the same agreement. In making proof of this Amendment, it
shall not be necessary to produce or account for more than one counterpart
thereof signed by each of the parties hereto. This Amendment may be executed and
delivered via telecopier with the same force and effect as if it were a manually
executed and delivered counterpart.

                                Very truly yours,

                                ADVANCED LIGHTING TECHNOLOGIES,
                                INC., an Ohio corporation, debtor and debtor-in-
                                possession, as a Borrower and a Loan Party

                                By: -s- Wayne Hellman
                                    --------------------------------------------

                                Name: Wayne Hellman
                                Title: CEO

                                APL ENGINEERED MATERIALS, INC.,
                                an Illinois corporation, debtor and debtor-in-
                                possession, as a Borrower and a Loan Party

                                By: -s- Wayne Hellman
                                    --------------------------------------------

                                Name: Wayne Hellman
                                Title: CEO

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                       5
<PAGE>

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                VENTURE LIGHTING INTERNATIONAL,
                                INC., an Ohio corporation, debtor and debtor-in-
                                possession, as a Borrower and a Loan Party

                                By: -s- Wayne Hellamn
                                    --------------------------------------------

                                Name: Wayne Hellman
                                Title: CEO

                                BALLASTRONIX (DELAWARE), INC.,
                                a Delaware corporation, debtor and debtor-in-
                                possession, as a Borrower and a Loan Party

                                By: -s- Wayne Hellman
                                    --------------------------------------------

                                Name: Wayne Hellman
                                Title: CEO

                                MICROSUN TECHNOLOGIES, INC.,
                                an Ohio corporation, debtor and debtor-in-
                                possession, as a Borrower and a Loan Party

                                By: -s- Wayne Hellman
                                    --------------------------------------------

                                Name: Wayne Hellman
                                Title: CEO

                                LIGHTING RESOURCES INTERNATIONAL,
                                INC., an Ohio corporation, debtor and debtor-in-
                                possession, as a Borrower and a Loan Party

                                By: -s- Wayne Hellman
                                    --------------------------------------------

                                Name: Wayne Hellman
                                Title: CEO

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                       6
<PAGE>

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                ADLT SERVICES, INC., an Ohio corporation,
                                debtor and debtor-in-possession, as a Borrower
                                and a Loan Party

                                By: -s- Wayne Hellman
                                    --------------------------------------------

                                Name: Wayne Hellman
                                Title: CEO

                                VENTURE LIGHTING POWER SYSTEMS,
                                NORTH AMERICA INC., a Nova Scotia corporation,
                                as a Loan Party

                                By: -s- R.G. Douglas Oulton
                                    --------------------------------------------

                                Name: R.G. Douglas Oulton
                                Title: V.P. Finance & Admin

                                PARRY POWER SYSTEMS LIMITED,
                                a corporation organized under the laws of the
                                United Kingdom, as a Loan Party

                                By: -s- E. Young
                                    --------------------------------------------

                                Name: E. Young
                                Title: Director

                                VENTURE LIGHTING EUROPE LTD.,
                                a corporation organized under the laws of the
                                United Kingdom, as a Loan Party

                                By: -s- E. Young
                                    --------------------------------------------

                                Name: E. Young
                                Title: Director

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                       7
<PAGE>

                    [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

                                DEPOSITION SCIENCES, INC.,
                                an Ohio corporation, as a Loan Party

                                By: -s- Wayne Hellman
                                    --------------------------------------------

                                Name: Wayne Hellman
                                Title: CEO

ACKNOWLEDGED AND AGREED:

WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent and as
a Lender

By: -s- John T. Leonard
    -------------------------------------

Name: John T. Leonard
Title: AVP

ABLECO FINANCE LLC, a Delaware
limited liability company, as a Lender

By: -s- Kevin Genda
    -------------------------------------

Name: Kevin Genda
Title: SVP

                                       8<PAGE>

                                                                    EXHIBIT 10.4

                              SETTLEMENT AGREEMENT

                  This Settlement Agreement ("Agreement") is made and entered
into this 8th day of September, 2003, by and among Advanced Lighting
Technologies, Inc. ("ADLT"), Venture Lighting International, Inc. ("Venture"),
Ruud Lighting, Inc. ("RLI"), and Alan J. Ruud, Susan Ruud, Theodore O. Sokoly,
Christopher A. Ruud, and Cynthia A. Johnson (collectively, the "Individual
Shareholders"). The above-named persons and entities are sometimes hereinafter
collectively referred to as "the Parties."

                                    RECITALS

                  1.       On February 5, 2003 (the "Petition Date"), ADLT and
various of its affiliates (collectively, the "Debtors") each filed a voluntary
petition for relief under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code"). The Debtors' bankruptcy cases are jointly administered in
the United States Bankruptcy Court for the Northern District of Illinois (the
"Bankruptcy Court") under Case No. 03 B 05255 (the "Bankruptcy Case").

                  2.       On May 29, 2003, RLI and the Individual Shareholders
filed substantially identical Proofs of Claim against ADLT (collectively, the
"ADLT Claim"), and RLI filed a Proof of Claim against Venture (the "Venture
Claim").

                  3.       The ADLT Claim is based in part on the Stock
Redemption and Purchase Agreement (as amended, the "Purchase Agreement") by and
among RLI, ADLT and the Individual Shareholders dated November 14, 2001.

                  4.       In the ADLT Claim, RLI and the Individual
Shareholders assert claims against ADLT relating to the Purchase Agreement and
certain other matters in a total amount in excess of $5,881,368, including:

                           a.       A claim for conversion, in which RLI and the
                  Individual Shareholders contend that ADLT received and
                  wrongfully retained $1,270,963 in payments that should have
                  been credited to RLI's accounts.

<PAGE>

                           b.       A claim for reimbursement of expenses
                  related to the lease of real property located in Elkhorn,
                  Wisconsin (the "Elkhorn Property"), pursuant to which RLI and
                  the Individual Shareholders contend that ADLT is liable to RLI
                  and the Individual Shareholders for an amount in excess of
                  $1.5 million.

                           c.       A claim for overstated inventory and
                  accounts receivable, in which RLI and the Individual
                  Shareholders contend that ADLT breached certain
                  representations and warranties in the Purchase Agreement by
                  failing accurately to report inventory and accounts receivable
                  of Kramer Lighting, Inc., thereby forcing RLI to write off
                  obsolete or otherwise unsaleable inventory and uncollectable
                  accounts receivable in excess of $2.3 million.

                           d.       A claim for tax payments, pursuant to which
                  RLI and the Individual Shareholders contend that ADLT is
                  liable for $45,990 in taxes, interest and penalties resulting
                  from a Michigan Single Business tax audit.

                           e.       A claim for post-closing expenses, in which
                  RLI and the Individual Shareholders contend that RLI has
                  incurred expenses that are the responsibility of ADLT under
                  the Purchase Agreement in the approximate amount of $714,415,
                  and legal and accounting fees in the approximate amount of
                  $50,000, for which ADLT agreed to indemnify RLI.

                           f.       Various additional claims for breaches of
                  representations and warranties.

                  5.       In the ADLT Claim, RLI and the Individual
Shareholders also assert a claim based on ADLT's possession of certain documents
and records which allegedly belong to RLI, and which ADLT has allegedly refused
to return, including various "month end binders" and computer tapes (the "Ruud
Documents").

                                      -2-
<PAGE>

                  6.       Further, in the ADLT Claim, RLI and the Individual
Shareholders assert a warranty claim (the "Warranty Claim") in which they seek a
sum potentially in excess of $50 million for the possible replacement of
allegedly defective component parts supplied to RLI by Venture and incorporated
by RLI into lighting fixtures sold to its customers. As part of the Warranty
Claim, RLI and the Individual Shareholders also assert that they may have
additional claims against ADLT and Venture relating to allegedly defective
component parts supplied by Venture, including, but not limited to, tort claims
for personal injury or property damage.

                  7.       In the Venture Claim, RLI asserts that it is owed
$43,510.83 by Venture for an unpaid invoice, and that Venture is also liable to
RLI for losses under the Contingent Warranty Claim.

                  8.       ADLT and Venture assert that they have claims against
RLI and the Individual Shareholders relating to the Purchase Agreement and
otherwise, including, but not limited to, the right of ADLT to receive payments
pursuant to the following promissory notes: (a) Subordinated Promissory Note,
dated December 12, 2001, in the amount of $3,000,000 (plus interest), made by
RLI payable to ADLT; (b) Callable Promissory Note, dated December 12, 2001, in
the amount of $1,503,000 (plus interest), made by Alan J. Ruud payable to ADLT;
(c) Callable Promissory Note, dated December 12, 2001, in the amount of $897,000
(plus interest), made by Christopher A. Ruud payable to ADLT; (d) Callable
Promissory Note, dated December 12, 2001, in the amount of $300,000 (plus
interest), made by Theodore O. Sokoly payable to ADLT; and (e) Callable
Promissory Note, dated December 12, 2001, in the amount of $300,000 (plus
interest), made by Cynthia A. Johnson payable to ADLT (collectively, the "Old
Ruud Notes").

                  9.       On June 16, 2003, the Debtors filed their Objection
to Proofs of Claim of Ruud Lighting, Inc.

                                      -3-
<PAGE>

                  10.      On July 15, 2003, RLI filed the Response of Ruud
Lighting, Inc. to Debtors' Objection to Proofs of Claim of Ruud Lighting, Inc.

                  11.      RLI, Venture and ADLT are parties to a Component
Purchase Agreement entered into as of December 3, 2001, as amended as of
November 18, 2002 and April 16, 2003 (the "Component Purchase Agreement").
Pursuant to paragraph 5 of the Component Purchase Agreement, RLI is entitled to
receive certain cash rebates for the purchase of products from Venture. The
amount and terms of the rebates are set forth in paragraph 5 of the Component
Purchase Agreement. The Component Purchase Agreement, unless terminated earlier
pursuant to its terms, has a term of five (5) years. The Parties desire to
continue to do business pursuant to the Component Purchase Agreement.

                  12.      RLI and ADLT's subsidiaries, Advanced Lighting
Technologies Australia, Inc. ("ADLT Australia") and Advanced Lighting
Technologies New Zealand, Ltd. ("ADLT New Zealand") are parties to a Fixture
Purchase Agreement (the "Fixture Purchase Agreement") entered into as of
December 3, 2001. The Parties desire to continue to do business pursuant to the
Fixture Purchase Agreement.

                  13.      The Parties have agreed, subject to Bankruptcy Court
approval, to compromise their disputes as set forth below.

                                    AGREEMENT

                  NOW THEREFORE, for good and valuable consideration, the
receipt, adequacy and sufficiency of which is acknowledged, the Parties agree as
follows:

                  1.       INCORPORATION OF RECITALS. Each of the Parties
represents and warrants that each of the above Recitals is true and correct to
the best of such Party's knowledge, information and belief, and such Recitals
are incorporated herein as part of this Agreement.

                                      -4-
<PAGE>

                  2.       BANKRUPTCY COURT APPROVAL. The Parties expressly
acknowledge that this Agreement is subject to approval by the Bankruptcy Court,
and agree to use their best efforts and good faith to obtain such approval.
Pursuant thereto, the Debtors promptly shall file a motion pursuant to
Bankruptcy Rule 9019 requesting that the Bankruptcy Court approve this Agreement
(the "Settlement Motion").

                  3.       EFFECTIVE DATE. The "Effective Date" of this
Agreement shall be the eleventh (11th) day after the Bankruptcy Court enters a
final, non-appealable order granting the Settlement Motion and authorizing ADLT
and Venture to enter into this Agreement.

                  4.       REPLACEMENT OF OLD RUUD NOTES. The Old Ruud Notes
shall be replaced by new promissory notes in the aggregate, principal amount of
$3 million due on December 1, 2006 (the "New Ruud Notes"). The New Ruud Notes
will be in the forms attached to this Agreement as Exhibits A-D, which are
incorporated herein by reference. Each of the New Ruud Notes will begin to
accrue interest as of the date of this Agreement. On the Effective Date, ADLT
will deliver to RLI and the Individual Shareholders the original Old Ruud Notes
stamped "cancelled," and the Individual Shareholders will deliver to ADLT the
duly executed original New Ruud Notes.

                  5.       ACKNOWLEDGEMENT OF SUBORDINATION. The parties
acknowledge that the Old Ruud Notes are subject to certain Subordination
Agreements pursuant to which ADLT subordinated the payment of the Old Ruud Notes
to the payment of all Superior Debt (as defined in such Subordination
Agreements). The parties also agree and acknowledge that the New Ruud Notes will
be subordinate to the Superior Debt in accordance with the terms of the
Subordination Agreements.

                  6.       APPLICATION OF REBATES TO NEW RUUD NOTES. Any rebates
creditable to RLI under paragraph 5 of the Component Purchase Agreement will be
applied to prepay amounts

                                      -5-
<PAGE>

due on the New Ruud Notes, copies of which are attached hereto as Exhibits A-D,
on a pro rata basis, said rebates to be applied first to accrued interest, and
then to principal.

                  7.       DIVISION OF SUBLEASE PROCEEDS. Fifty per cent (50%)
of all rent payments received by RLI pursuant to any sublease of the Elkhorn
Property shall be paid to ADLT. RLI shall make such sublease payments to ADLT
within three (3) days of the receipt of such payments. ADLT will not have any
obligations to RLI with respect to the Elkhorn Property and any obligations by
ADLT to RLI concerning the Elkhorn Property under the Purchase Agreement or
otherwise are waived and released in their entirety.

                  8.       ASSUMPTION OF AGREEMENTS. Venture and ADLT shall each
assume the Component Purchase Agreement pursuant to section 365 of the
Bankruptcy Code and shall be bound by its terms and provisions, subject to and
as modified by Section 11 hereof. The Settlement Motion shall request Bankruptcy
Court Approval of such assumptions pursuant to Bankruptcy Rule 6006.

                  9.       DELIVERY OF RUUD DOCUMENTS. ADLT shall, no later than
15 days following the Effective Date, deliver to RLI the Ruud Documents. In the
event that ADLT needs future access to the Ruud Documents, RLI will permit ADLT
to make copies of the Ruud Documents at ADLT's expense.

                  10.      DISALLOWANCE OF PROOFS OF CLAIM. The order entered by
the Bankruptcy Court approving the Settlement Motion and this Agreement shall
disallow, with prejudice, all claims filed and asserted, or that could be filed
and asserted, by RLI or the Individual Shareholders against the Debtors'
estates, including, without limitation, those set forth in the ADLT Claim and
the Venture Claim.

                  11.      RELEASE IN FAVOR OF ADLT AND VENTURE. Except for the
obligations of ADLT and Venture expressly set forth in this Agreement, RLI and
the Individual Shareholders,

                                      -6-
<PAGE>

on behalf of themselves and their current, former or future agents, parent
companies, subsidiaries, affiliates, representatives, attorneys, financial
consultants, advisors, trustees, beneficiaries, spouses, successors,
predecessors, assigns, and any other persons acting on their behalf, release,
disclaim, and discharge ADLT and Venture, and their respective parent companies,
subsidiaries, affiliates, agents, representatives, attorneys, financial
consultants, advisors, trustees, beneficiaries, subtrusts, officers, directors,
managers, shareholders, members, employees, partners, spouses, successors,
predecessors, assigns, and any other persons acting on their behalf, from any
and all claims, demands, suits, rights or causes of action or damages, expenses,
attorneys' fees, penalties, interest, costs, injunctive relief or any other
relief available in law or equity that RLI or the Individual Shareholders have
asserted, or presently could assert, against ADLT or Venture, if any, including,
without limitation, the ADLT claim, the Venture claim, and any claim or
potential claim arising under or relating to the Purchase Agreement. Nothing
herein shall be construed as releasing ADLT and Venture from their obligations
(1) with respect to rebates for products purchased by RLI on or after March 31,
2003, pursuant to the Component Purchase Agreement, or (2) to pay for products
purchased from RLI under the Fixture Purchase Agreement prior to the Effective
Date. Nothing herein shall be construed as releasing Venture from its
obligations to honor (1) its standard warranty as provided under paragraph 9 of
the Component Purchase Agreement, as amended, for Products, as defined in the
Component Purchase Agreement, that actually fail within the warranty period, or
(2) promotional end-user warranties that have been extended to RLI's customers
for Products that actually fail within the promotional end-user warranty period;
RLI acknowledges and agrees that the foregoing shall be its sole remedy with
respect to product warranties. The parties further acknowledge and agree that
the release set forth in this paragraph does not affect the rights of the
Individual Shareholders as shareholders of ADLT.

                                      -7-
<PAGE>

                  12.      RELEASE IN FAVOR OF RLI AND THE INDIVIDUAL
SHAREHOLDERS. Except for the obligations of RLI and the Individual Shareholders
expressly set forth in this Agreement, including, without limitation,
obligations under the New Ruud Notes, ADLT and Venture, on behalf of themselves
and their current, former or future agents, parent companies, subsidiaries,
affiliates, representatives, attorneys, financial consultants, advisors,
trustees, beneficiaries, spouses, successors, predecessors, assigns, and any
other persons acting on their behalf, release, disclaim, and discharge RLI and
the Individual Shareholders and their agents, representatives, attorneys,
financial consultants, advisors, trustees, beneficiaries, employees, partners,
spouses, successors, predecessors, assigns, and any other persons acting on
their behalf, from any and all claims, demands, suits, rights or causes of
action or damages, expenses, attorneys' fees, penalties, interest, costs,
injunctive relief or any other relief available in law or equity, that they
presently could assert against RLI or the Individual Shareholders, including,
without limitation, any claim or potential claim arising under or relating to
the Purchase Agreement. Nothing herein shall be construed as releasing RLI from
its obligations under (1) the Fixture Purchase Agreement with respect to
products purchased by ADLT Australia or ADLT New Zealand on or after the
Effective Date or (2) to pay for products purchased under the Component Purchase
Agreement prior to the Effective Date.

                  13.      NO ADMISSION OF LIABILITY. By entering into this
Agreement, each of the Parties recognizes that this Agreement is a compromise of
disputed litigation and claims and that nothing in this Agreement shall be
considered evidence or an admission with respect to liability or the truth of
any of the allegations made in the ADLT Claim or the Venture Claim, whether the
allegations be of fact or law.

                  14.      INDEMNIFICATION. The Individual Shareholders shall be
liable to ADLT and Venture and shall indemnify them for any and all costs,
including, without limitation,

                                      -8-
<PAGE>

reasonable attorneys' fees, in the event of a default as defined in paragraph 7
of the New Ruud Notes, to the extent ADLT and Venture were entitled to
indemnification pursuant to Section 9.2 of the Purchase Agreement in the event
of a default by RLI or the Individual Shareholders under the Old Ruud Notes.

                  15.      ADDITIONAL DOCUMENTS AND ACTS. Each Party shall
execute or procure and deliver to the other Parties such additional documents
and shall perform such acts as shall reasonably be necessary to evidence or
effectuate the terms of this Agreement.

                  16.      HEADINGS. The paragraph headings used in this
Agreement are for convenience of reference only and do not in any way limit or
amplify the terms and provisions hereof.

                  17.      COMPLETE AGREEMENT. This Agreement and attached
exhibits constitute a single, integrated written contract that expresses the
entire agreement of the Parties with respect to the matters contained herein and
supersedes all negotiations, prior discussions and preliminary agreements,
either oral or written. Any modification of this Agreement shall be effective
only if it is in writing, is signed by the Party to be charged or otherwise
adversely affected by it, and is approved by a final, non-appealable order of
the Bankruptcy Court.

                  18.      COUNTERPART SIGNATURES. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which, when taken together, shall constitute one and the
same instrument. This Agreement shall constitute a binding, enforceable
agreement after all Parties have signed and executed this Agreement and after
the Bankruptcy Court has entered a final, non-appealable order approving this
Agreement.

                  19.      TIME OF ESSENCE. Time and strict and punctual
performance are of the essence with respect to each provision of this Agreement.

                                      -9-
<PAGE>

                  20.      PARTIAL INVALIDITY. Each provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law. If any
provision of this Agreement or the application of such provision to any person
or circumstance shall, to any extent, be invalid or unenforceable, the remainder
of this Agreement, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected by such invalidity or unenforceability, unless such
provision or such application of such provision is essential to this Agreement.

                  21.      INTERPRETATION OF AGREEMENT. In interpreting this
Agreement, each of the Parties expressly agrees that the Agreement was prepared
by all of the Parties jointly, and that no ambiguity shall be resolved against
any Party on the basis that it was responsible, or primarily responsible, for
having drafted the Agreement. In addition, each of the Parties acknowledges that
it did not execute this Agreement under duress and was represented by competent
counsel in connection with this Agreement. Further, whenever the context so
requires: (a) all words used in the singular shall be construed to have been
used in the plural (and vice versa); (b) each gender shall be construed to
include any other genders; (c) the word "person" shall be construed to include a
natural person, a corporation, a firm, a joint venture, a trust, an estate, or
any other entity, and (d) the words "and" as well as "or" shall be construed
either disjunctively or conjunctively as necessary to bring within the scope of
any provision of this Agreement any person, right, obligation or concept which
might otherwise be construed to be outside the scope of such provision.

                  22.      NO WAIVER. No delay or omission in the exercise of
any right or remedy shall impair such right or remedy or be construed as a
waiver. A consent to or approval of any act shall not be deemed to waive or
render unnecessary consent to or approval of any other or

                                       -10-

<PAGE>

subsequent act. Any waiver of a default under this Agreement must be in writing
and shall not be a waiver of any other default concerning the same or any other
provision of this Agreement.

                  23.      GOVERNING LAW. This Agreement, and all of the
documents and instruments executed and delivered in connection with this
Agreement, shall be governed by and construed under the internal laws of the
State of Ohio (without regard to conflicts of law rules), except to the extent
that a Party may have greater rights or remedies under federal law, in which
case the choice of Ohio law shall not deprive the Party of its rights and
remedies as may be available under federal law.

                  24.      AUTHORITY TO EXECUTE AGREEMENT. Each person or entity
executing this Agreement represents that he/she/it is authorized to execute this
Agreement. Each person executing this Agreement on behalf of an entity
represents that he or she is authorized to execute this Agreement on behalf of
such entity.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

                                      -11-

<PAGE>

                  IN WITNESS WHEREOF, the Parties or their duly authorized
representatives have executed this Agreement, consisting of 12 pages (including
signature pages).

Advanced Lighting Technologies, Inc.        Venture Lighting International, Inc.

By: -s- Sabu Krishnan                       By: -s- Sabu Krishnan
    -----------------                           -----------------
    Its: Chief Operating Officer                Its: President

Ruud Lighting, Inc.

By: -s- Alan J. Ruud                        -s- Alan J. Ruud
    ----------------                        ----------------
                                            Alan J. Ruud
    Its: CEO / President

-s- Susan Ruud                              -s- Christopher A. Ruud
--------------                              -----------------------
Susan Ruud                                  Christopher A. Ruud

-s- Theodore O. Sokoly                      -s- Cynthia A. Johnson
----------------------                      ----------------------
Theodore O. Sokoly                          Cynthia A. Johnson

                                      -12-
<PAGE>

         PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT OR DOCUMENT
AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS
OF JOHNSON BANK, A WISCONSIN BANKING CORPORATION (THE "LENDER"), TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 12, 2001 FROM THE
PAYEE (AS DEFINED BELOW) TO THE LENDER.

                                 PROMISSORY NOTE

$1,503,000                                                     September 8, 2003

                  1.       For value received, the undersigned, ALAN J. RUUD, an
individual (the "Maker"), promises to pay to the order of ADVANCED LIGHTING
TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal sum of
$1,503,000 and interest payable at the rate of 8% per annum, compounded
semi-annually. Principal shall be payable in full on December 1, 2006. Interest
in arrears shall be payable in full on December 1, 2006; provided, however, that
upon written consent of the Lender, interest shall be payable semi-annually on
each June 1 and December 1, commencing December 1, 2003 or, if later, on the
first June 1 or December 1 following such consent.

                  2.       The principal sum and interest shall be payable in
lawful money of the United States to the Payee at 32000 Aurora Road, Solon, Ohio
44139, or another place the Payee may designate in writing. The Maker shall have
the right to prepay all or any portion of the principal sum and interest without
premium or penalty. Any rebates creditable to Ruud Lighting, Inc. ("RLI"), under
paragraph 5 of the Component Purchase Agreement, dated December 3, 2001, between
the Payee, Venture Lighting International, Inc. ("Venture"), and RLI, shall be
set off and credited against the Maker's obligations under this Promissory Note
first to accrued interest and then to principal, in the manner specified by
paragraph 6 of the Settlement Agreement dated September 8, 2003, between the
Payee, Venture, RLI, Susan Ruud, Theodore O. Sokoly, Christopher A. Ruud,
Cynthia A. Johnson, and the Maker.

                  3.       The Maker hereby waives presentment, notice of
dishonor, and protest. This Promissory Note shall be binding upon the Maker and
the Maker's successors and assigns.

                  4.       No delay on the part of any holder hereof in
exercising any power or rights hereunder shall operate as a waiver of any power
or rights. Any demand or notice hereunder to the Maker may be made in person or
by regular mail at the address set out in paragraph 6.

                  5.       This Promissory Note is being made in connection with
a commercial transaction and not a consumer transaction.

                  6.       This Promissory Note shall be deemed to have been
made at Solon, Ohio. This Promissory Note shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with the laws of
the State of Ohio. The Maker hereby consents to the jurisdiction of any state or
federal court located within the State of Ohio and consents that all such
service of process be made by registered or certified mail directed to the Maker
at 9201 Washington Avenue, Racine, WI 53406, and service so made shall be deemed
to be completed upon actual receipt thereof. The Maker waives any objection to
jurisdiction and venue of any

                                                                       Exhibit A
<PAGE>

action instituted hereunder and agrees not to assert any defense based on lack
of jurisdiction or venue. Nothing contained herein shall affect the right of the
Payee to serve legal process in any other manner permitted by law or affect the
right of the Payee to bring any action or proceeding against the Maker or
Maker's property in the courts of any other jurisdiction.

                  7.       The Maker is in default under this Promissory Note if
the Maker does not make a payment when due under this Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if the Maker:

                  A.       Defaults on any indebtedness to any Lender and such
                           default continues for a period of 30 days;

                  B.       Defaults on any other indebtedness for borrowed money
                           in excess of $100,000 if the Payee believes the
                           default may materially affect the Maker's ability to
                           pay this Promissory Note; or

                  C.       Becomes the subject of a proceeding under any
                           bankruptcy or insolvency law, has a receiver or
                           liquidator appointed for any part of the Maker's
                           business or property, or makes an assignment for the
                           benefit of the Maker's creditors.

                  8.       If the Maker is in default under this Promissory
Note, without notice or demand and without giving up any of his rights, the
Payee may:

                  A.       Require immediate payment of all amounts owing under
                           this Promissory Note;

                  B.       File suit and obtain judgment; or

                  C.       Take any and all lawful actions to enforce Payee's
                           rights and remedies hereunder.

                  9.       If any payment on this Promissory Note becomes due
and payable on a Saturday, Sunday or legal holiday for commercial banks under
applicable banking laws, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest hereon shall be computed on the
basis of a 360-day year, and assessed for the actual number of days elapsed.

                  10.      The rate of interest payable on this Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this Promissory Note is ever reduced as
a result of the preceding sentence and at any time thereafter the maximum rate
permitted by applicable law shall exceed the rate of interest provided for on
this Promissory Note, then the rate provided for on this Promissory Note shall
be

                                                                       Exhibit A

                                       2
<PAGE>

increased to the maximum rate permitted by applicable law for such period as is
required so that the total amount of interest received by the Payee is that
which would have been received by the Payee but for the operation of the
preceding sentence.

                  IN WITNESS WHEREOF, the Maker has executed this Promissory
Note.

                                     MAKER:

                                     Name: ___________________________________
                                           Alan J. Ruud

                                                                       Exhibit A

                                       3
<PAGE>

         PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT OR DOCUMENT
AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS
OF JOHNSON BANK, A WISCONSIN BANKING CORPORATION (THE "LENDER"), TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 12, 2001 FROM THE
PAYEE (AS DEFINED BELOW) TO THE LENDER.

                                 PROMISSORY NOTE

$897,000                                                       September 8, 2003

                  1.       For value received, the undersigned, CHRISTOPHER A.
RUUD, an individual (the "Maker"), promises to pay to the order of ADVANCED
LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal
sum of $897,000 and interest payable at the rate of 8% per annum, compounded
semi-annually. Principal shall be payable in full on December 1, 2006. Interest
in arrears shall be payable in full on December 1, 2006; provided, however, that
upon written consent of the Lender, interest shall be payable semi-annually on
each June 1 and December 1, commencing December 1, 2003 or, if later, on the
first June 1 or December 1 following such consent.

                  2.       The principal sum and interest shall be payable in
lawful money of the United States to the Payee at 32000 Aurora Road, Solon, Ohio
44139, or another place the Payee may designate in writing. The Maker shall have
the right to prepay all or any portion of the principal sum and interest without
premium or penalty. Any rebates creditable to Ruud Lighting, Inc. ("RLI"), under
paragraph 5 of the Component Purchase Agreement, dated December 3, 2001, between
the Payee, Venture Lighting International, Inc. ("Venture"), and RLI, shall be
set off and credited against the Maker's obligations under this Promissory Note
first to accrued interest and then to principal, in the manner specified by
paragraph 5 of the Settlement Agreement dated September 8, 2003, between the
Payee, Venture, RLI, Alan J. Ruud, Susan Ruud, Theodore O. Sokoly, Cynthia A.
Johnson, and the Maker.

                  3.       The Maker hereby waives presentment, notice of
dishonor, and protest. This Promissory Note shall be binding upon the Maker and
the Maker's successors and assigns.

                  4.       No delay on the part of any holder hereof in
exercising any power or rights hereunder shall operate as a waiver of any power
or rights. Any demand or notice hereunder to the Maker may be made in person or
by regular mail at the address set out in paragraph 7.

                  5.       This Promissory Note is being made in connection with
a commercial transaction and not a consumer transaction.

                  6.       This Promissory Note shall be deemed to have been
made at Solon, Ohio. This Promissory Note shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with the laws of
the State of Ohio. The Maker hereby consents to the jurisdiction of any state or
federal court located within the State of Ohio and consents that all such
service of process be made by registered or certified mail directed to the Maker
at 9201 Washington Avenue, Racine, WI 53406, and service so made shall be deemed
to be completed upon actual receipt thereof. The Maker waives any objection to
jurisdiction and venue of any

                                                                       Exhibit B
<PAGE>

action instituted hereunder and agrees not to assert any defense based on lack
of jurisdiction or venue. Nothing contained herein shall affect the right of the
Payee to serve legal process in any other manner permitted by law or affect the
right of the Payee to bring any action or proceeding against the Maker or
Maker's property in the courts of any other jurisdiction.

                  7.       The Maker is in default under this Promissory Note if
the Maker does not make a payment when due under this Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if the Maker:

                  A.       Defaults on any indebtedness to any Lender and such
                           default continues for a period of 30 days;

                  B.       Defaults on any other indebtedness for borrowed money
                           in excess of $100,000 if the Payee believes the
                           default may materially affect the Maker's ability to
                           pay this Promissory Note; or

                  C.       Becomes the subject of a proceeding under any
                           bankruptcy or insolvency law, has a receiver or
                           liquidator appointed for any part of the Maker's
                           business or property, or makes an assignment for the
                           benefit of the Maker's creditors.

                  8.       If the Maker is in default under this Promissory
Note, without notice or demand and without giving up any of his rights, the
Payee may:

                  A.       Require immediate payment of all amounts owing under
                           this Promissory Note;

                  B.       File suit and obtain judgment; or

                  C.       Take any and all lawful actions to enforce Payee's
                           rights and remedies hereunder.

                  9.       If any payment on this Promissory Note becomes due
and payable on a Saturday, Sunday or legal holiday for commercial banks under
applicable banking laws, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest hereon shall be computed on the
basis of a 360-day year, and assessed for the actual number of days elapsed.

                  10.      The rate of interest payable on this Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this Promissory Note is ever reduced as
a result of the preceding sentence and at any time thereafter the maximum rate
permitted by applicable law shall exceed the rate of interest provided for on
this Promissory Note, then the rate provided for on this Promissory Note shall
be

                                                                       Exhibit B

                                       2

<PAGE>

increased to the maximum rate permitted by applicable law for such period as is
required so that the total amount of interest received by the Payee is that
which would have been received by the Payee but for the operation of the
preceding sentence.

                  IN WITNESS WHEREOF, the Maker has executed this Promissory
Note.

                                     MAKER:

                                     Name: ___________________________________
                                           Christopher A. Ruud

                                                                       Exhibit B

                                       3
<PAGE>

         PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT OR DOCUMENT
AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS
OF JOHNSON BANK, A WISCONSIN BANKING CORPORATION (THE "LENDER"), TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 12, 2001 FROM THE
PAYEE (AS DEFINED BELOW) TO THE LENDER.

                                 PROMISSORY NOTE

$300,000                                                       September 8, 2003

                  1.       For value received, the undersigned, CYNTHIA A.
JOHNSON, an individual (the "Maker"), promises to pay to the order of ADVANCED
LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal
sum of $300,000 and interest payable at the rate of 8% per annum, compounded
semi-annually. Principal shall be payable in full on December 1, 2006. Interest
in arrears shall be payable in full on December 1, 2006; provided, however, that
upon written consent of the Lender, interest shall be payable semi-annually on
each June 1 and December 1, commencing December 1, 2003 or, if later, on the
first June 1 or December 1 following such consent.

                  2.       The principal sum and interest shall be payable in
lawful money of the United States to the Payee at 32000 Aurora Road, Solon, Ohio
44139, or another place the Payee may designate in writing. The Maker shall have
the right to prepay all or any portion of the principal sum and interest without
premium or penalty. Any rebates creditable to Ruud Lighting, Inc. ("RLI"), under
paragraph 5 of the Component Purchase Agreement, dated December 3, 2001, between
the Payee, Venture Lighting International, Inc. ("Venture"), and RLI, shall be
set off and credited against the Maker's obligations under this Promissory Note
first to accrued interest and then to principal, in the manner specified by
paragraph 6 of the Settlement Agreement dated September 8, 2003, between the
Payee, Venture, RLI, Alan J. Ruud, Susan Ruud, Christopher A. Ruud, Theodore O.
Sokoly, and the Maker.

                  3.       The Maker hereby waives presentment, notice of
dishonor, and protest. This Promissory Note shall be binding upon the Maker and
the Maker's successors and assigns.

                  4.       No delay on the part of any holder hereof in
exercising any power or rights hereunder shall operate as a waiver of any power
or rights. Any demand or notice hereunder to the Maker may be made in person or
by regular mail at the address set out in paragraph 6.

                  5.       This Promissory Note is being made in connection with
a commercial transaction and not a consumer transaction.

                  6.       This Promissory Note shall be deemed to have been
made at Solon, Ohio. This Promissory Note shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with the laws of
the State of Ohio. The Maker hereby consents to the jurisdiction of any state or
federal court located within the State of Ohio and consents that all such
service of process be made by registered or certified mail directed to the Maker
at 9201 Washington Avenue, Racine, WI 53406, and service so made shall be deemed
to be completed upon actual receipt thereof. The Maker waives any objection to
jurisdiction and venue of any

                                                                       Exhibit C

<PAGE>

action instituted hereunder and agrees not to assert any defense based on lack
of jurisdiction or venue. Nothing contained herein shall affect the right of the
Payee to serve legal process in any other manner permitted by law or affect the
right of the Payee to bring any action or proceeding against the Maker or
Maker's property in the courts of any other jurisdiction.

                  7.       The Maker is in default under this Promissory Note if
the Maker does not make a payment when due under this Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if the Maker:

                  A.       Defaults on any indebtedness to any Lender and such
                           default continues for a period of 30 days;

                  B.       Defaults on any other indebtedness for borrowed money
                           in excess of $100,000 if the Payee believes the
                           default may materially affect the Maker's ability to
                           pay this Promissory Note; or

                  C.       Becomes the subject of a proceeding under any
                           bankruptcy or insolvency law, has a receiver or
                           liquidator appointed for any part of the Maker's
                           business or property, or makes an assignment for the
                           benefit of the Maker's creditors.

                  8.       If the Maker is in default under this Promissory
Note, without notice or demand and without giving up any of his rights, the
Payee may:

                  A.       Require immediate payment of all amounts owing under
                           this Promissory Note;

                  B.       File suit and obtain judgment; or

                  C.       Take any and all lawful actions to enforce Payee's
                           rights and remedies hereunder.

                  9.       If any payment on this Promissory Note becomes due
and payable on a Saturday, Sunday or legal holiday for commercial banks under
applicable banking laws, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest hereon shall be computed on the
basis of a 360-day year, and assessed for the actual number of days elapsed.

                  10.      The rate of interest payable on this Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this Promissory Note is ever reduced as
a result of the preceding sentence and at any time thereafter the maximum rate
permitted by applicable law shall exceed the rate of interest provided for on
this Promissory Note, then the rate provided for on this Promissory Note shall
be

                                                                       Exhibit C

                                       2

<PAGE>

increased to the maximum rate permitted by applicable law for such period as is
required so that the total amount of interest received by the Payee is that
which would have been received by the Payee but for the operation of the
preceding sentence.

                  IN WITNESS WHEREOF, the Maker has executed this Promissory
Note.

                                     MAKER:

                                     Name: ___________________________________
                                           Cynthia A. Johnson

                                                                       Exhibit C

                                       3

<PAGE>

         PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT OR DOCUMENT
AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATED AND SUBJECT TO THE RIGHTS
OF JOHNSON BANK, A WISCONSIN BANKING CORPORATION (THE "LENDER"), TO THE EXTENT
PROVIDED IN THE SUBORDINATION AGREEMENT DATED AS OF DECEMBER 12, 2001 FROM THE
PAYEE (AS DEFINED BELOW) TO THE LENDER.

                                 PROMISSORY NOTE

$300,000                                                       September 8, 2003

                  1.       For value received, the undersigned, THEODORE O.
SOKOLY, an individual (the "Maker"), promises to pay to the order of ADVANCED
LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the "Payee"), the principal
sum of $300,000 and interest payable at the rate of 8% per annum, compounded
semi-annually. Principal shall be payable in full on December 1, 2006. Interest
in arrears shall be payable in full on December 1, 2006; provided, however, that
upon written consent of the Lender, interest shall be payable semi-annually on
each June 1 and December 1, commencing December 1, 2003 or, if later, on the
first June 1 or December 1 following such consent.

                  2.       The principal sum and interest shall be payable in
lawful money of the United States to the Payee at 32000 Aurora Road, Solon, Ohio
44139, or another place the Payee may designate in writing. The Maker shall have
the right to prepay all or any portion of the principal sum and interest without
premium or penalty. Any rebates creditable to Ruud Lighting, Inc. ("RLI"), under
paragraph 5 of the Component Purchase Agreement, dated December 3, 2001, between
the Payee, Venture Lighting International, Inc. ("Venture"), and RLI, shall be
set off and credited against the Maker's obligations under this Promissory Note
first to accrued interest and then to principal, in the manner specified by
paragraph 6 of the Settlement Agreement dated September 8, 2003, between the
Payee, Venture, RLI, Alan J. Ruud, Susan Ruud, Christopher A. Ruud, Cynthia A.
Johnson, and the Maker.

                  3.       The Maker hereby waives presentment, notice of
dishonor, and protest. This Promissory Note shall be binding upon the Maker and
the Maker's successors and assigns.

                  4.       No delay on the part of any holder hereof in
exercising any power or rights hereunder shall operate as a waiver of any power
or rights. Any demand or notice hereunder to the Maker may be made in person or
by regular mail at the address set out in paragraph 6.

                  5.       This Promissory Note is being made in connection with
a commercial transaction and not a consumer transaction.

                  6.       This Promissory Note shall be deemed to have been
made at Solon, Ohio. This Promissory Note shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with the laws of
the State of Ohio. The Maker hereby consents to the jurisdiction of any state or
federal court located within the State of Ohio and consents that all such
service of process be made by registered or certified mail directed to the Maker
at 9201 Washington Avenue, Racine, WI 53406, and service so made shall be deemed
to be completed upon actual receipt thereof. The Maker waives any objection to
jurisdiction and venue of any

                                                                       Exhibit D
<PAGE>

action instituted hereunder and agrees not to assert any defense based on lack
of jurisdiction or venue. Nothing contained herein shall affect the right of the
Payee to serve legal process in any other manner permitted by law or affect the
right of the Payee to bring any action or proceeding against the Maker or
Maker's property in the courts of any other jurisdiction.

                  7.       The Maker is in default under this Promissory Note if
the Maker does not make a payment when due under this Promissory Note and such
failure continues for a period of 10 days following written notice of such
default, or if the Maker:

                  A.       Defaults on any indebtedness to any Lender and such
                           default continues for a period of 30 days;

                  B.       Defaults on any other indebtedness for borrowed money
                           in excess of $100,000 if the Payee believes the
                           default may materially affect the Maker's ability to
                           pay this Promissory Note; or

                  C.       Becomes the subject of a proceeding under any
                           bankruptcy or insolvency law, has a receiver or
                           liquidator appointed for any part of the Maker's
                           business or property, or makes an assignment for the
                           benefit of the Maker's creditors.

                  8.       If the Maker is in default under this Promissory
Note, without notice or demand and without giving up any of his rights, the
Payee may:

                  A.       Require immediate payment of all amounts owing under
                           this Promissory Note;

                  B.       File suit and obtain judgment; or

                  C.       Take any and all lawful actions to enforce Payee's
                           rights and remedies hereunder.

                  9.       If any payment on this Promissory Note becomes due
and payable on a Saturday, Sunday or legal holiday for commercial banks under
applicable banking laws, the maturity thereof shall be extended to the next
succeeding business day and interest thereon shall be payable at the then
applicable rate during such extension. Interest hereon shall be computed on the
basis of a 360-day year, and assessed for the actual number of days elapsed.

                  10.      The rate of interest payable on this Promissory Note
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on this Promissory Note is ever reduced as
a result of the preceding sentence and at any time thereafter the maximum rate
permitted by applicable law shall exceed the rate of interest provided for on
this Promissory Note, then the rate provided for on this Promissory Note shall
be

                                                                       Exhibit D

                                       2

<PAGE>

increased to the maximum rate permitted by applicable law for such period as is
required so that the total amount of interest received by the Payee is that
which would have been received by the Payee but for the operation of the
preceding sentence.

                  IN WITNESS WHEREOF, the Maker has executed this Promissory
Note.

                                     MAKER:

                                     Name: ___________________________________
                                           Theodore O. Sokoly

                                                                       Exhibit D

                                       3

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