SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sect. 240.14a11(c) or
Sect. 240.14a12
Lifschultz Industries, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rule 14a6(i)(4) and
011.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 011 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 011(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Lifschultz Industries, Inc., a Delaware corporation (the "Company"), will
be held at the Company's Utah offices, 799 East Utah Valley Drive, American
Fork, Utah 840039775 at 10:00 a.m., mountain standard time, on Monday,
December 15, 1997 (the "Annual Meeting").
At the Annual Meeting, the shareholders will be asked to (i) consider
and vote for the election of directors, (ii) approve the reappointment of
the firm of Grant Thornton LLP, independent certified public accountants,
as the Company's auditors, and (iii) any other business that may be lawfully
brought before the Annual Meeting. The foregoing items of business are more
fully described in the Proxy Statement accompanying this Notice. Only
shareholders of record at the close of business on Monday, October 20, 1997
(the record date), are entitled to notice of and to vote at the Annual
Meeting, or at any continuance(s) or adjournment(s) thereof.
=========================================================================
THE ELECTION OF DIRECTORS WILL BE DETERMINED BY PLURALITY VOTE. APPROVAL
OF THE REAPPOINTMENT OF THE COMPANY'S AUDITORS, AND ANY OTHER MATTER
LAWFULLY BROUGHT BEFORE THE ANNUAL MEETING, WILL REQUIRE THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE VOTING SHARES OF LIFSCHULTZ INDUSTRIES, INC.
STOCK, REPRESENTED IN PERSON OR BY PROXY, WHICH ARE CAST AT THE ANNUAL
MEETING.
=========================================================================
By Order of the Board of Directors
DENNIS R. HUNTER
DENNIS R. HUNTER, President
November 13, 1997
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PLEASE NOTE: YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
EVEN IF YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, PLEASE FILL IN, DATE,
SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY TO ENSURE THAT YOUR SHARES ARE
REPRESENTED AT THE ANNUAL MEETING. IF YOU ATTEND THE ANNUAL MEETING IN
PERSON, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN THOUGH YOU HAVE
PREVIOUSLY SENT IN YOUR PROXY. PLEASE MAIL YOUR PROXY PROMPTLY.
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LIFSCHULTZ INDUSTRIES, INC.
641 WEST 59TH STREET
NEW YORK, NY 10019
(212) 3977788
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to shareholders of Lifschultz
Industries, Inc., a Delaware corporation (the "Company"), in connection with
the solicitation, by order of the Company's Board of Directors, of proxies
to be voted at the 1997 Annual Meeting of Shareholders to be held on
December 15, 1997, at 10:00 a.m. mountain standard time, at the Company's Utah
offices at 799 East Utah Valley Drive, American Fork, Utah 840039775 and
at any continuation(s) or adjournment(s) thereof (the "Annual Meeting").
The accompanying Proxy is being solicited on behalf of the Board of
Directors of the Company. This Proxy Statement was first mailed on or about
November 17, 1997 to shareholders of record of the Company as of Monday,
October 20, 1997, accompanied by the Company's Annual Report to Shareholders
for the fiscal year ended July 31, 1997.
At the meeting, the following matters will be considered and voted on:
1. PROPOSAL NO. 1. Election of Sidney B. Lifschultz, David K.
Lifschultz and Dennis R. Hunter as directors to hold office until the 1998
Annual Meeting of Shareholders and until their successors shall have been
duly elected and qualified (see "PROPOSAL ONE ELECTION OF DIRECTORS");
2. PROPOSAL NO. 2. Appointment of Grant Thornton LLP as the
Company's independent certified public accountants for the 1998 fiscal year
(see "PROPOSAL TWO INDEPENDENT PUBLIC ACCOUNTANTS"); and
3. GENERAL. Such other business as may properly come before the
Annual Meeting.
The Board of Directors recommends that shareholders vote FOR all
nominees for director listed in Proposal No. 1, and FOR Proposal No. 2.
INFORMATION CONCERNING SOLICITATION AND VOTING
VOTING RIGHTS
The outstanding voting securities of the Company on October 20, 1997
were (i) 55,569,495 shares of common stock, par value $0.001 per share
("Common Stock"); (ii) 5,200 shares of Series A Convertible Preferred Stock,
par value $0.01 per share ("Series A Shares"); and (iii) 21,231 shares of
Series E Convertible Preferred Stock, par value $0.01 per share ("Series E
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Shares"). Holders of Common Stock at the close of business on October 20,
1997 (the "Record Date") will be entitled to one vote at the Annual Meeting
for each share of Common Stock held of record by them. Holders of Series A
Shares at the close of business on the Record Date will be entitled to ten
votes at the Annual Meeting for each Series A Share held of record by them.
Holders of Series E Shares at the close of business on the Record Date will
be entitled to ten votes at the Annual Meeting for each Series E share held
of record by them. The holders of Series A Shares and Series E Shares are
entitled to vote with the holders of Common Stock on all matters presented
at the Annual Meeting.
VOTING AND REVOCATION OF PROXIES
All of the voting securities of the Company represented by valid
Proxies, unless the holder of the securities otherwise specifies therein,
or unless the holder validly revokes the Proxy, will be voted FOR the
election of the persons nominated as directors, FOR the appointment of Grant
Thornton LLP as the Company's independent certified public accountants for
the fiscal year ending July 31, 1998, and in the discretion of the Proxy
holders on any other matters that may properly come before the Annual
Meeting. In the event any nominee is unable to serve, the Proxies will be
voted for a substitute nominee, if any, to be designated by the Board of
Directors. The Board of Directors does not know of any matters to be
considered at the Annual Meeting other than the proposals referred to above.
Where a shareholder has appropriately specified how a Proxy is to be voted,
the Proxy will be voted accordingly.
A Proxy may be revoked by delivering a written statement to the
President of the Company stating that the Proxy is revoked, or by a
subsequent Proxy executed by or on behalf of the person or entity executing
the prior Proxy and presented to the Annual Meeting, or by voting in person
at the Annual Meeting.
QUORUM AND VOTING REQUIREMENTS
A quorum of the shares must be present at the Annual Meeting for a vote
to be taken. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, a quorum will be present if a majority of the
shares outstanding and entitled to vote at the meeting are present in person
or by proxy. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, abstentions and broker nonvotes will be counted
for the purposes of determining whether a quorum is present at the Annual
Meeting. Under Proposal No. 1, directors are elected by a plurality of the
shares present in person or by proxy and voting at the Annual Meeting. With
regard to the election of directors, votes may be cast in favor or withheld;
votes that are withheld will be excluded entirely from the vote and will
have no effect. The appointment of auditors under Proposal No. 2 requires
the affirmative vote of a majority of the votes cast at the Annual Meeting.
With regard to Proposal No. 2 or any other matters properly coming before
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the meeting, abstentions and broker nonvotes are not counted for purposes
of determining whether a proposal has been approved.
ADJOURNMENT OF ANNUAL MEETING
In the event that Proxies representing sufficient votes to constitute
a quorum are not received by the date of the Annual Meeting, the persons
named as Proxies may propose one or more adjournments of the Annual Meeting
to permit further solicitation of Proxies. At such adjournments, once a
quorum is present, directors may be elected by plurality vote and other
proposals can be approved by the affirmative vote of the holders of a
majority of the Company's voting shares present in person or by Proxy. The
persons named as Proxies will vote in favor of any such proposed
adjournments.
SOLICITATION
The solicitation of Proxies pursuant to this Proxy Statement will be
made primarily by mail. In addition, officers, employees and
representatives of the Company may solicit Proxies by telephone, mail or
personal interviews, and arrangements may be made with banks, brokerage
firms and others to forward solicitation materials to the beneficial owners
of shares held of record by them.
The total cost of all such solicitation efforts, including reimbursement of
the expenses of brokers and other nominees, will be borne by the Company.
SECURITY OF OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 20,
1997 with respect to (i) each person who is known to the Company to
beneficially own more than five percent of the outstanding shares of Common
Stock or a class of Preferred Stock, (ii) the beneficial ownership of such
securities by each executive officer and director of the Company, and (iii)
the beneficial ownership of all such securities by all of the Company's
directors and executive officers as a group. Unless otherwise indicated, the
persons or entities named in the table have sole voting and investment power
with respect to all shares of stock beneficially owned by them, subject to
applicable community property laws. Stock that is "beneficially owned"
includes all the stock that the person has the right to acquire within 60 days
of October 20, 1997. The percentage ownership for any person is calculated
assuming that all the stock that could be acquired by that person within 60
days by option exercise or otherwise, is in fact outstanding and that no other
stockholder has exercised a similar right to acquire additional shares. The
number of shares representing 100% of the outstanding stock of the Company is
as follows: 55,569,495 shares of common stock; 5,200 shares of Series A
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preferred stock; and 21,231 shares of Series E preferred stock.
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT
CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
Common David K. Lifschultz 24,146,554[1] 42.1%
641 West 59th Street
New York, NY 10019
Common Sidney B. Lifschultz 702,006[2] 1.3%
641 West 59th Street
New York, NY 10019
Common Charlotte K. Lifschultz 10,390,444[3] 18.7%
641 West 59th Street
New York, NY 10019
Common Hudson Waterfront 4,499,522[4] 8.1%
Associates, L.P.
c/o Paul Davis
725 Fifth Ave.
New York, NY 10022
Common Merrill E. Brown 2,822,129[5] 5.1%
1444 County Road 502
Bayfield, CO 81122
Common Dennis R. Hunter 1,539,036[6] 2.7%
515 East 1860 South
Provo, UT 84606
Common J. Randall Owen 50,000[7] 0.1%
799 E. Utah Valley Drive
American Fork, UT 84003
Common Michael Hirst 1,360,209[8] 2.4%
799 E. Utah Valley Drive
American Fork, UT 84003
Common James C. Triplett 0[9] 0
779 E. Utah Valley Drive
American Fork, UT 84003
Common James Solomon 0[10] 0
1455 West Center
Orem, UT 84058
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Series A John G. Bartol 5,200 100%
Preferred 645 W. Rockford Drive
Tempe, AZ 85281
Series E Reboul, MacMurray, Hewitt 20,679 97.4%
Preferred & Kristol
45 Rockefeller Plaza
New York, NY 10111
Common All directors and executive 27,417,805[1,2,6,7,8,9,10] 49.3%
officers (7 persons) as a Group
[1] Chairman and Chief Executive Officer of the Company. Includes:
(i) 9,729,309 shares held directly; (ii) 1,750,000 shares of common
stock underlying employee stock options which are currently exercisable;
(iii) 10,272,685 shares for which David K. Lifschultz shares voting power as
cotrustee with Charlotte K. Lifschultz for the Sidney B. Lifschultz 1992
Family Trust; and (iv) 2,394,560 shares of stock held by Lifschultz Terminal
and Leasing Company for which David K. Lifschultz shares voting power as an
officer and director of Lifschultz Terminal and Leasing Company. Except for
the shares identified in the foregoing item (iii), excludes shares shown as
beneficially owned by Sidney B. Lifschultz (father) and Charlotte K.
Lifschultz (mother).
[2] Director of the Company. Includes: (i) 544,980 shares held
directly; and (ii) 157,026 shares for which Sydney B. Lifschultz holds
shared voting power as cotrustee of certain trusts for family members.
Excludes shares shown as beneficially owned by Charlotte K. Lifschultz
(spouse) and David K. Lifschultz (son).
[3] Includes only shares of stock for which Charlotte K. Lifschultz
(wife of Sydney B. Lifschultz) has shared voting power as a cotrustee with
David K. Lifschultz for the Sydney B. Lifschultz 1992 Family Trust and trusts
for the benefit of family members. Note that 10,272,685 of the shares shown
for Charlotte K. Lifschultz are also reported for David K. Lifschultz as they
share voting power for such shares. Except as stated in the foregoing
sentence, excludes shares shown as beneficially owned by Sidney B. Lifschultz
(spouse) and David K. Lifschultz (son).
[4] Beneficial owner of 5% of the shares indicated. Includes 4,499,522
shares held directly.
[5] Beneficial owner of 5% of the shares indicated. Includes: 2,822,129
shares for which Merrill E. Brown holds shared or sole voting power as trustee
of trusts for various family members.
[6] President, Chief Financial Officer and director of the Company.
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Includes only shares underlying employee stock options held by Dennis R.
Hunter which are currently exercisable.
[7] President and Chief Operating Officer of subsidiary Hart Scientific,
Inc. Includes 50,000 shares of common stock held directly.
[8] Vice President and director of subsidiary Hart Scientific, Inc.
Includes: (i) 1,098,317 shares held directly; and (ii) 261,892 shares of
common stock underlying employee stock options which are currently
exercisable. Excludes 10,000 shares held by an immediate family
member for which Michael W. Hirst disclaims beneficial ownership.
[9] Chairman and Chief Executive Officer of subsidiary Hart Scientific,
Inc.
[10] Director of subsidiary Hart Scientific, Inc.
As of October 20, 1997, there are only two holders of Series E Preferred
Stock and one holder of Series A Preferred Stock.
The Company knows of no arrangements, including any pledge by any
person of securities of the Company, the operation of which may, at a
subsequent date, result in a change in control of the Company.
PROPOSAL ONE ELECTION OF DIRECTORS
NOMINEES
The three current directors, David K. Lifschultz, Sidney B. Lifschultz,
and Dennis R. Hunter, are proposed to be reelected at the Annual Meeting. In
the event any nominee is unable to serve, the proxies will be voted for a
substitute nominee, if any, to be designated by the Board of Directors. The
Board of Directors currently has no reason to believe that any nominee will be
unavailable or unwilling to serve.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information concerning directors
and executive officers of the Company and certain officers/directors of
subsidiaries of the Company, Lifschultz Fast Freight, Inc. ("LFF") and Hart
Scientific, Inc. ("Hart"), and Hart's subsidiary, Calorimetry Sciences
Corporation ("CSC"):
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BEGAN SERVICE AS AN
NAME AGE POSITIONS HELD OFFICER OR DIRECTOR
David K. Lifschultz 51 Chairman and 1991
CEO of the Company
(also President and
director of LFF)
Dennis R. Hunter 46 President, director, and 1988
CFO of the Company (also CEO,
President, and Chairman of
CSC and director of Hart)
Sidney B. Lifschultz 85 Director of the Company 1991
James C. Triplett 47 Chairman and CEO of Hart 1988
J. Randall Owen 39 President and COO of Hart 1994
Michael Hirst 48 Vice President and 1988
director of Hart
James Solomon 47 Director of Hart 1995
David K. Lifschultz is the son of Sidney B.
Lifschultz. No other family relationship exists among any of the
directors or officers. All directors hold office until the next Annual
Meeting of shareholders or until their successors are duly elected and
qualified. Officers serve at the pleasure of the Board of Directors.
The Company currently does not have any standing committees of the Board
of Directors, including audit, nominating or compensation committees, or
committees performing similar functions. In the next six months, however, the
Company anticipates it will establish an Audit Committee comprised of at least
two outside directors. During the Company's fiscal year ended July 31, 1997,
the Board of Directors held one meeting, which Sidney B. Lifschultz did not
attend.
The principal occupations of the executive officers and directors named
above for at least the past five (5) years are as follows:
DAVID K. LIFSCHULTZ has been employed as the Chairman and Chief Executive
Officer of the Company and President and a director of Lifschultz Fast
Freight, Inc., a whollyowned subsidiary of the Company, for more than the
past five years. Mr. Lifschultz studied at New York University.
DENNIS R. HUNTER has been employed as the President and Chief Financial
Officer of the Company for more than the past five years. He is also a
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director of Hart and the President, Chief Executive Officer, and Chairman of
CSC. Prior to joining Hart in 1988, Mr. Hunter held positions as Vice
President of Marketing for Diser, Inc. and Vice President of Business
Development and Product Planning for Modtech International. He received his
M.B.A. from Brigham Young University in 1977.
SIDNEY B. LIFSCHULTZ, retired, received a B.S. degree in Engineering
from the University of Illinois in 1933 and an M.B.A. degree from Harvard
University in 1935. Mr. Lifschultz previously served as Chairman of the
Board of Lifschultz Fast Freight, Inc. for more than five years. He has
also served as a director of Intermodal Express, Inc., a privately held
affiliate of Lifschultz Fast Freight, Inc. for more than the past five
years.
JAMES C. TRIPLETT has served as an officer and director of Hart for more
than the past five years. Mr. Triplett is a former director of Technovest
Corporation and has served as a Managing General Partner of Technovest
Management Group, both of which were engaged in venture capital and investment
activities. He was also employed by Crown Zellerbach Corporation, Alcan
Aluminum Corporation, and Northwest Pipeline Corporation in various
engineering and management positions. He has a B.S. degree in engineering and
an M.B.A.
J. RANDALL OWEN joined Hart in 1987 with responsibility for the sales and
marketing of Hart's temperature calibration products. He previously owned
and operated a company that manufactured and marketed industrial
thermometers. Prior to that he was employed in the engineering departments
of WatkinsJohnson Corporation, Veeco Macronetics, and the Farinon
Corporation. Mr. Owen attended Brigham Young University where he studied
business and international relations.
MICHAEL HIRST has served in various capacities with the original Hart
company since he cofounded Hart's business in 1979, prior to its
acquisition by the Company in 1988. He currently serves with Hart as a
director, Vice President, and Secretary. Mr. Hirst has a B.S. degree in
Design Technology from Brigham Young University.
JAMES E. SOLOMON has served as a director of Hart since 1995.
Since August 1997, Mr. Solomon has been the President and CEO of Paragraphics,
a manufacturer of engraving equipment with annual sales of approximately
$4 million. From January 1996 to March 1997 he was the President of
the Burges Lamont Company, a distributor of consumer goods with over
$30,000,000 in annual sales and 130 employees. During the past five years,
Mr. Solomon owned or coowned various businesses, and has served as an adjunct
professor at the University of Utah College of Business. He has a B.S. degree
in finance from the University of Utah and has been a Certified Public
Accountant since 1975.
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SIGNIFICANT EMPLOYEES
EDWIN A. LEWIS, age 50, serves as Vice President, Secretary and Chief
Scientist of CSC. Previously, Dr. Lewis was a research professor at Brigham
Young University from 1981 until 1992, during which time he worked for Hart
as a consultant. He joined Hart on a full time basis in 1992. Dr. Lewis
received his Ph.D. in physical chemistry from the University of New Mexico
in 1972.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the compensation of the Chief Executive
Officer of the Company and certain other highly compensated executive
officers of the Company for each of the Company's last three fiscal years
whose total salary and bonus for the year ended July 31, 1997 exceeded
$100,000 for services rendered in all capacities to the Company during such
fiscal years.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Name Other
and Annual
Principal Position Year Salary Bonus Compensation
David K. Fiscal $229,408 $72,000 0
Lifschultz 1997
CEO and
Chairman of the Fiscal $209,779 $66,500 0
Company 1996
Fiscal $156,307 $10,000 0
1995
Dennis R. Hunter Fiscal $174,138 $27,715 0
President, director, 1997
and CFO of the
Company Fiscal $154,790 $114,057 0
1996
Fiscal $133,895 $102,462 0
1995
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James C. Triplett Fiscal $225,909 $176,829 0
Chairman and CEO 1997
of Hart
Fiscal $182,735 $148,208 0
1996
Fiscal $156,460 $118,414 0
1995
J. Randall Owen Fiscal $175,705 $115,058 0
President and 1997
COO of Hart
Fiscal $135,547 $92,719 0
1996
Fiscal $114,838 $68,414 0
1995
Michael Hirst Fiscal $136,074 $71,705 0
Vice President and 1997
director of Hart
Fiscal $105,219 $57,898 0
1996
Fiscal $93,633 $45,227 0
1995
SUMMARY COMPENSATION TABLE (continued)
LONG TERM COMPENSATION
Awards Payouts
Securities
Restric Underlying LTI All Other
ted Stock Options/ Pay Compen
Name Year Awards SARs outs sation[1]
David K. Fiscal 0 0 0 0
Lifschultz 1997
Fiscal 0 0 0 0
1996
Fiscal 0 250,000 0 0
1995
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Dennis R. Hunter Fiscal 0 0 0 $4,750
1997
Fiscal 0 0 0 $4,625
1996
Fiscal 0 250,000 0 $2,125
1995
James C. Triplett Fiscal 0 0 0 $4,750
1997
Fiscal 0 0 0 $4,620
1996
Fiscal 0 0 0 $2,500
1995
J. Randall Owen Fiscal 0 0 0 $4,750
1997
Fiscal 0 0 0 $4,620
1996
Fiscal 0 0 0 $1,875
1995
Michael Hirst Fiscal 0 0 0 $3,200
1997
Fiscal 0 0 0 $2,400
1996
Fiscal 0 0 0 $1,375
1995
(1) Amounts shown are those paid by the Company or its subsidiaries into
401(k) plans on behalf of the listed employees.
Hart has adopted an informal, unwritten bonus plan for its employees
and executive officers. Under the plan, the Board of Directors typically
evaluates Hart's productivity and allocates bonuses twice a year based
primarily on the employee's performance.
STOCK OPTIONS/SARS
Company issued no stock options or SAR grants in the last fiscal year
to the executive officers named in the table above.
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AGGREGATED STOCK OPTION/SAR EXERCISES
The following table sets forth the aggregated stock options and SARs
exercised by the named executive officers in the last fiscal year and the
year end value of unexercised options and SARs:
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED JULY 31, 1997 AND
FISCAL YEAREND OPTION/SAR VALUES
Name Shares Value Number of Value of
Acquired on Realized Unexercised Unexercised In
Exercise ($) Options/SARS at TheMoney
(#) FYEnd Options/SARS at
(#) FYEnd
($)
Exercisable/ Exercisable/
Unexercisable Unexercisable
David K. Lifschultz 0 0 1,750,000[1]/ $164,063[5]/
0 0
Dennis R. Hunter 0 0 1,539,036[2]/ $144,285[5]/
125,000[3] $11,719
J. Randall Owen 50,000 $9,373 0/ 0/
0 0
Michael W. Hirst 0 0 261,892[4]/ $24,552[5]/
0 0
(1) Includes 1,500,000 options exercisable at $0.0313 per share and 250,000
options exercisable at $0.0625 per share. All options expire August 1,
2007.
(2) Includes 1,289,036 options exercisable at $0.0313 per share and 250,000
options exercisable at $0.0625 per share. All options expire August 1,
2007.
(3) Includes 125,000 options which become exercisable at $0.0313 per share
when the average closing price of the Company's stock exceeds $2.00 per
share for ten consecutive days. These options expire August 1, 2007.
(4) Includes options exercisable at $0.0313 per share, 161,892 of which
expire January 6, 1998, and 100,000 of which expire February 8, 2003.
(5) Values calculated by subtracting the exercise price from the closing
sales price on the Nasdaq SmallCap Market on July 31, 1997.
DIRECTOR COMPENSATION
Except for one outside director of Hart, the Company's present
directors are not compensated separately for their service in that capacity,
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but are compensated for their service as officers and employees of the
Company, Hart or CSC. Hart compensates James Solomon, Hart's outside
director, at a rate of $2,500 per year and allows him to participate in the
informal Hart bonus plan described above. Under that bonus plan, Hart
awarded Mr. Solomon a bonus of $6,000 for fiscal year 1997. For its other
directors, the Company may in the future establish separate compensation
for service as a director.
EMPLOYMENT AGREEMENTS
DENNIS R. HUNTER
On August 1, 1994, CSC entered into a new employment agreement with
Dennis R. Hunter. On June 27, 1995, the term of the agreement was extended
from three years to six years. Under the agreement, for his services as
president and CEO of CSC, Mr. Hunter receives a base salary of $133,350,
with a minimum 5% increase each year. Annual increases may be set at a
higher level at the discretion of CSC's Board of Directors. If Mr. Hunter's
employment is terminated by CSC without cause before the end of the agreement,
he is to be paid 50% of his remaining base compensation under the agreement or
one year's salary, whichever is greater. Failure by a successor of the
Company to fully assume Mr. Hunter's contract will require the immediate
payment of all yet to be paid compensation and an additional $125,000 in
compensation to Mr. Hunter.
Under his employment agreement, Mr. Hunter has a put option with
respect to his stock which he may implement during a sixyear period
following termination or expiration of the agreement, other than termination
by CSC for certain defined causes or termination by Mr. Hunter without
certain defined good reasons. Under the option, Mr. Hunter may require CSC
to repurchase up to 1,158,214 shares of Company stock and stock options
owned by Mr. Hunter as of August 1, 1994, at specified prices and at a
maximum rate of 250,000 shares or options per year. The agreement further
contains provisions regarding assignment of inventions by Mr. Hunter, a
twoyear covenant not to compete by Mr. Hunter, and indemnification by CSC.
JAMES C. TRIPLETT
On August 25, 1997, Hart entered into a new employment agreement with
James C. Triplett for a term of ten years. For his services as Chairman and
Chief Executive Officer of Hart, he receives an annual base salary of
$285,0000, subject to reduction in certain circumstances. He will receive
annual increases of at least 5% as set by the Board of Directors. If Mr.
Triplett's employment is terminated without cause before the end of the
agreement, he is to be paid 50% of his remaining base compensation under the
agreement or one year's salary, whichever is greater. Mr. Triplett may
terminate the agreement upon 90 days notice or otherwise for "Good Reason" as
defined in the agreement. Failure by a successor of the Company to fully
assume Mr. Triplett's employment agreement will require the immediate payment
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of all yet to be paid compensation under the agreement. The agreement further
contains provisions regarding assignment of inventions by Mr. Triplett, a two
year covenant not to compete by Mr. Triplett, and indemnification by Hart.
J. RANDALL OWEN
Hart entered into a new agreement with J. Randall Owen on August 25,
1997. The agreement has a term of two years, with a provision for three one
year renewal periods upon mutual agreement of the parties. Under the
agreement, for his services as president of Hart, Mr. Owen receives a base
salary of $226,000, subject to reduction in certain circumstances. If the
agreement is terminated by Hart "for cause," Mr. Owen is entitled to three
month's severance pay. If Hart otherwise terminates the agreement before the
end of the term, Mr. Owen is entitled to 50% of his base compensation yet to
be paid under the agreement. Failure by a successor of Hart to fully assume
Mr. Owen's contract will require the immediate payment of all yet to be paid
compensation under the agreement. The agreement further contains a provision
requiring assignment of inventions by Mr. Owen and a twoyear covenant not to
compete.
MICHAEL W. HIRST
Hart entered into an agreement with Michael W. Hirst on August 1,
1993. The agreement has a term of ten years. Under the agreement, for his
services as vice president of Hart, Mr. Hirst receives a base salary of
$82,000. Annual increases are set at the discretion of Hart's Board of
Directors. Additionally, after ten years and cessation of fulltime
employment, Hart agrees to employ Mr. Hirst as a parttime consultant for five
years at 25% of the Agreement's sixth year base compensation, for a maximum of
500 hours of consultation per year.
If Hart terminates the agreement before the end of the term without
"cause", Mr. Hirst is entitled to 50% of his remaining base compensation or
one year's salary, which ever is greater. Failure by a successor of Hart
to fully assume Mr. Hirst's contract will require the immediate payment of
all yet to be paid compensation and an additional $200,000 in compensation
to Mr. Hirst. Mr. Hirst may terminate the agreement without cause upon 90
days notice after July 31, 1998. The agreement further contains provisions
regarding assignment of inventions by Mr. Hirst, a twoyear covenant not to
compete by Mr. Hirst, and indemnification by Hart.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires that
the Company's executive officers and directors, and persons who beneficially
own more than ten percent of the Company's common stock, file initial
reports of stock ownership and reports of changes in stock ownership with
the Securities and Exchange Commission. Officers, directors, and greater
than tenpercent owners are required by applicable regulations to furnish
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the Company with copies of all Section 16(a) forms that they file.
Based solely on a review of the copies of such forms furnished to the
Company or written representations from certain persons, the Company
believes that during the Company's 1997 fiscal year, all filing requirements
applicable to its current officers and directors (some of which are also
tenpercent beneficial owners of the Company) were met by such persons
except as follows: David K. Lifschultz filed 16 late reports covering 23
transactions; Sidney B. Lifschultz filed 16 late reports covering 23
transactions; Charlotte K. Lifschultz filed 15 late reports covering 19
transactions; the Sidney B. Lifschultz Family Trust filed three late reports
covering three transactions; Randall Owen filed two late reports covering two
transactions; and James Solomon filed one late Form 3 report. The foregoing
reports resulted from the Company's decision to assist its key management with
Section 16 reporting compliance. In the case of the members of the Lifschultz
family indicated above, the number of late reports is largely due to the
requirement that each family member report changes in ownership of the other
family members. Thus, in many cases, each of the family members separately
reported the same transaction as required under Section 16. Additionally, the
great majority of the reports involved transfers between family members and
trusts, or conversions of preferred stock to common stock, and not
acquisitions or dispositions of Company stock. The Company intends to assist
its key management personnel with future compliance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As indicated in the discussion above, David K. Lifschultz and Dennis R.
Hunter have stock option agreements with the Company. Also as explained
above, Dennis R. Hunter, J. Randall Owen, James C. Triplett, and Michael W.
Hirst have employment agreements with either the Company, Hart, or CSC.
During fiscal year 1997 Hart purchased approximately $88,000 in
instrument components from Owen Instruments. Owen Instruments is owned and
operated by Suzette Owen, the wife of J. Randall Owen, President and Chief
Operating Officer of Hart. The business relationship between Hart and Owen
Instruments continues one that predates Mr. Owen's association with Hart.
ANTICIPATED CORPORATE GOVERNANCE CHANGES
The Company is presently undertaking efforts to modify its corporate
governance structure to comply with new requirements imposed by The Nasdaq
Stock Market. Beginning in February 1998, the Company must comply with
such requirements in order to maintain its listing on The Nasdaq SmallCap
Market. These requirements include the following, many of which the Company
had previously adopted.
* Distribution of annual and interim reports
* A minimum of two independent directors
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* An audit committee, a majority of which are independent directors
* An annual shareholders meeting
* Quorum requirements
* Solicitation of proxies
* Review of conflicts of interest
* Shareholder approval of certain major corporate actions
* Voting rights
To comply with these requirements, the Company will, among other items,
need to recruit two outside directors and establish an audit committee in the
next few months.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF ALL
NOMINEES TO THE BOARD OF DIRECTORS NAMED ON THE ACCOMPANYING PROXY CARD.
PROPOSAL TWO APPOINTMENT OF AUDITORS
Grant Thornton LLP has been the Company's independent auditors since
July 5, 1994. Proposal No. 2 is to reappoint Grant Thornton LLP as the
Company's independent public accountants for the fiscal year ending July 31,
1998. No representative of Grant Thornton LLP is expected to be present at
the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPOINTMENT OF
GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING JULY 31, 1998.
OTHER ITEMS
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report of the Company to its shareholders for the fiscal
year ended July 31, 1997, including audited financial statements,
accompanies this Proxy Statement.
ANNUAL REPORT ON FORM 10KSB
The Company will provide without charge, at the written request of any
record beneficial shareholder as of October 20, 1997, a copy of the
Company's Annual Report on Form 10KSB, as filed with the Securities and
Exchange Commission, except exhibits thereto. The Company will provide
copies of the exhibits, should they be requested by eligible shareholders,
and the Company may impose a reasonable fee for providing such exhibits.
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Requests for copies of the Company's Form 10KSB should be mailed to:
LIFSCHULTZ INDUSTRIES, INC.
799 East Utah Valley Drive
American Fork, Utah 840039775
Attn: Dennis R. Hunter
SHAREHOLDER PROPOSALS
In order for proposals of shareholders intended for presentation at the
Company's 1998 Annual Meeting of Shareholders to be included in the
Company's Proxy Statement and form of Proxy relating to that meeting, such
proposals must be received at the Utah offices of the Company, 799 East Utah
Valley Drive, American Fork, Utah 840039775, Attention: Dennis R. Hunter,
on or before July 1, 1998.
By Order of the Board of Directors
DENNIS R. HUNTER
DENNIS R. HUNTER, President
APPENDIX
PROXY BALLOT
LIFSCHULTZ
INDUSTRIES, INC. THIS PROXY
799 EAST UTAH VALLEY DRIVE, AMERICAN FORK, UTAH 840039775 IS SOLICITED
ON BEHALF
OF THE BOARD
OF DIRECTORS
The undersigned shareholder hereby appoints David K. Lifschultz and
Dennis R. Hunter as Proxies, each with the power to appoint his substitute,
and hereby authorizes them, or either of them, to represent and to vote, as
designated below, all the shares of common stock of Lifschultz Industries,
Inc. held of record by the undersigned and/or all of the votes to which the
undersigned is entitled pursuant to the terms of the Series A or Series E
Preferred Stock held by the undersigned, on October 20, 1997 (the record
date), at the Annual Meeting of Shareholders to be held on December 15, 1997
or at any continuation(s) or adjournment(s) thereof. The proposals listed
below are made by the Board of Directors.
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1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all
nominees listed below
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Sidney B. Lifschultz David K. Lifschultz Dennis R. Hunter
2. APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING JULY 31, 1998
FOR AGAINST ABSTAIN
3. The Proxies are authorized to vote, IN THEIR DISCRETION, upon such
other business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THEN
THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR LISTED IN PROPOSAL
1 AND FOR PROPOSAL 2.
Please sign exactly as your name appears on the records of the
Company's transfer agent. When shares are held by joint tenants, both
should sign. When signing as attorney, or as executor, administrator,
trustee or guardian, please give your full title as such. If a corporation,
please sign in the full corporate name by the President or other authorized
officer. If a partnership, please sign in the partnership name by an
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY.
DATED:
Name of entity which owns the shares if
other than an individual
By
Signature (if signing individually) Signature of authorized signer
Additional signature if held jointly Title of authorized signer
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