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 Rules 14a6(i)(4)
and 011.
1) Title of each class of securities to which transaction
applies:
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 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
<PAGE>
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 0-11(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:
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
Notice is hereby given that the next 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 84003-9775 at 10:00 a.m., mountain standard time, on Thursday, December 14,
2000 (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 re-appointment 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 30, 2000 (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 re- appointment of the Company's auditors, 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, President
November 6, 2000
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 AND SAVE THE COMPANY THE EXPENSE
OF ADDITIONAL REQUESTS FOR PROXIES.
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<PAGE>
LIFSCHULTZ INDUSTRIES, INC.
641 WEST 59TH STREET
NEW YORK, NY 10019
(212) 397-7788
PROXY STATEMENT
General
This Proxy Statement is furnished to shareholders of Lifschultz Industries,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies to be voted at the Company's next Annual Meeting of
Shareholders. The Annual Meeting will be held on Thursday, December 14, 2000, at
10:00 a.m., mountain standard time, at the Company's Utah offices at 799 East
Utah Valley Drive, American Fork, Utah 84003-9775. 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 10, 2000 to shareholders of
record of the Company as of Monday, October 30, 2000 accompanied by the
Company's 2000 Annual Report to Shareholders.
At the meeting, the following matters will be considered and voted on:
1. Proposal No. 1. Election of Sidney B. Lifschultz, David K. Lifschultz,
Dennis R. Hunter, Joseph C. Fatony and James E. Solomon as directors to hold
office until the 2001 Annual Meeting of Shareholders or 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 2001 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.
1
<PAGE>
INFORMATION CONCERNING PROXY SOLICITATION AND VOTING
Voting Rights
The outstanding voting securities of the Company on October 5, 2000 were
(i) 1,121,655 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) 552 shares of Series E
Convertible Preferred Stock, par value $0.01 per share ("Series E Shares").
Holders of Common Stock at the close of business on October 30, 2000 (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 one-fifth of one vote 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
one-fifth of one vote 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
By completing and returning the accompanying proxy form, the shareholder
authorizes David K. Lifschultz and Dennis R. Hunter, as designated on the face
of the proxy form (the "Proxy Holders"), to vote all shares for the shareholder.
All proxies returned to the Company that are properly signed and dated will be
voted by the Proxy Holders as the shareholder directs. If no direction is given,
valid proxies will be voted by the Proxy Holders FOR the election of the persons
nominated as directors and FOR the appointment of Grant Thornton LLP as the
Company's independent certified public accountants for the fiscal year ending
July 31, 2001. Additionally, the shares represented by a valid proxy will be
voted by the Proxy Holders, in their discretion, on any other matters that may
properly come before the Annual Meeting and that the Company did not have notice
of as of October 16, 2000. The Board of Directors does not know of any matters
to be considered at the Annual Meeting other than the proposals described above.
In the event that any director 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.
A proxy may be revoked by (i) delivering a written statement to the
President of the Company stating that the proxy is revoked, (ii) by delivering
to the President of the Company or presenting at the Annual Meeting a new proxy
executed on a later date by or on behalf of the person or entity executing the
prior proxy, or (iii) by voting in person at the Annual Meeting. A revoked proxy
will not be voted.
Quorum and Voting Requirements
A quorum of the voting shares of the Company 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
voting 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 non-votes will be counted for
the purposes of determining whether a quorum is present at the Annual Meeting.
With regard to 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
2
<PAGE>
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, abstentions and
broker non-votes 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 Proxy Holders may
propose one or more adjournments of the Annual Meeting to permit further
solicitation of proxies. At such adjournments the proxies will continue to be
valid and, once a quorum is present in person or by proxy, directors may be
elected by plurality vote and the Company will otherwise conduct the business of
the Annual Meeting. The Proxy Holders 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 will 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 Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of October 5, 2000,
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. Stock is considered "beneficially owned" by a person if
such person, directly or indirectly, through any contract, arrangement,
understanding or otherwise, has or shares: (i) voting power for the stock;
and/or (ii) investment power for the stock (including the power to dispose of
the stock). Such "beneficial ownership" also includes stock that a person has
the right to acquire within 60 days of October 5, 2000. 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. The percentage ownership for each
person is calculated assuming that all the stock that could be acquired by that
person within 60 days, by option exercise or otherwise, has in fact been
acquired and that no other shareholder has exercised a similar right to acquire
additional shares.
3
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Ownership Percent
Class Beneficial Owner of Class
<S> <C> <C> <C>
Common David K. Lifschultz 508,683(1) 43.6%
641 West 59th Street
New York, NY 10019
Common Charlotte K. Lifschultz 156,457(2) 13.9%
641 West 59th Street
New York, NY 10019
Common Hudson Waterfront 89,992(3) 8.0%
Associates, L.P.
725 Fifth Ave.
New York, NY 10022
Common Dennis R. Hunter 56,262(4) 4.9%
515 East 1860 South
Provo, UT 84606
Common Michael Hirst 44,449(5) 4.0%
799 E. Utah Valley Drive
American Fork, UT 84003
Common James C. Triplett 70,481(6) 6.0%
799 E. Utah Valley Drive
American Fork, UT 84003
Common James Solomon 20,481(7) 1.8%
1455 West Center
Orem, UT 84058
Common Sidney B. Lifschultz 18,186(8) 1.6%
641 West 59th Street
New York, NY 10019
Common J. Randall Owen 1,000(9) *
799 E. Utah Valley Drive
American Fork, UT 84003
Common Joseph C. Fatony -0-(10) -0-
888 Seventh Ave., #402
New York, NY 10106
Common All directors and executive 637,618(1,4,5,6,7,8,9,10) 50.8%
officers (8 persons) as a Group
Series E Preferred Thomas Martelli 522 100%
10300 Michael Drive
Palos Hills, IL 60454
Series E Preferred All directors and executive -0- -0-
officers (8 persons) as a Group
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
<S> <C> <C> <C>
Series A Preferred John G. Bartol 5,200 100%
645 W. Rockford Drive
Tempe, AZ 85281
Series A Preferred All directors and executive -0- -0-
officers (8 persons) as a Group
</TABLE>
* Less than one percent.
1 Chairman and Chief Executive Officer of the Company. Includes: (i)
241,059 shares held directly; (ii) 45,000 shares of Common Stock underlying
employee stock options that are currently exercisable; (iii) 154,091 shares held
by the Sidney B. Lifschultz 1992 Family Trust for which David Lifschultz is a
co-trustee with his mother, Charlotte Lifschultz; (iv) 47,892 shares of stock
held by a corporation for which David K. Lifschultz is an officer and director;
(v) 160 shares held by subsidiary, Lifschultz Fast Freight, Inc., for which
David Lifschultz shares voting and investment power as an officer and director
of Lifschultz Fast Freight; and (vi) 20,481 shares held by subsidiary, Hart
Scientific, Inc., for which David Lifschultz shares voting and investment power
as a director of Hart Scientific.
2 Beneficial owner of 5% of the class shares indicated. Includes: (i)
154,091 shares held by the Sidney B. Lifschultz 1992 Family Trust for which
Charlotte Lifschultz (wife of Sidney Lifschultz) is a co-trustee with David
Lifschultz; and (ii) 2,361 shares held by trusts for the benefit of certain
family members for which Charlotte Lifschultz is a trustee. Note that 154,091 of
the shares shown for Charlotte Lifschultz are also reported for David Lifschultz
as they are co-trustees for the Sidney B. Lifschultz 1992 Family Trust.
3 Beneficial owner of more than 5% of the class of shares indicated.
Includes 89,992 shares held directly.
4 President, Chief Financial Officer and director of the Company. Includes:
(i) 35,781 shares underlying employee stock options held by Dennis Hunter that
are currently exercisable; and (ii) 20,481 shares held by subsidiary, Hart
Scientific, Inc., for which Dennis Hunter shares voting and investment power as
a director of Hart Scientific. Excludes: 2,500 shares underlying employee stock
options held by Dennis Hunter that become exercisable only upon the stock price
exceeding $100 per share for ten days.
5 Vice President and director of Hart Scientific. Includes: (i) 21,968
shares held directly; (ii) 2,000 shares of Common Stock underlying employee
stock options that are currently exercisable; and (iii) 20,481 shares held by
Hart Scientific for which Michael Hirst shares voting and investment power as a
director of Hart Scientific.
6 Chairman and Chief Executive Officer of Hart Scientific. Includes: (i)
50,000 shares underlying employee stock options held by James C. Triplett that
are currently exercisable; and (ii) 20,481 shares held by Hart Scientific for
which James Triplett shares voting and investment power as an officer and
director of Hart Scientific. While Mr. Triplett shares voting rights for the
20,481 shares held by Hart Scientific, he does not currently have the right to
acquire those shares at any time in the future.
7 Director of the Company and Hart Scientific. Includes: 20,481 shares held
by Hart Scientific for which James Solomon shares voting and investment power as
a director of Hart Scientific.
8 Director of the Company. Includes: (i) 15,044 shares held indirectly
through a partnership in which Sidney Lifschultz is a general partner; and (ii)
3,142 shares held by trusts for certain family members for which Sidney
Lifschultz is co-trustee.
5
<PAGE>
9 President and Chief Operating Officer of Hart Scientific. Includes: 1,000
shares of Common Stock held directly.
10 Director of the Company.
As of October 5, 2000, there was one holder of Series E Convertible
Preferred Stock and one holder of Series A Convertible 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 five current directors, David K. Lifschultz, Sidney B. Lifschultz,
Dennis R. Hunter, Joseph C. Fatony, and James E. Solomon, are proposed to be
re-elected 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.
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 the wholly
owned subsidiaries of the Company, Lifschultz Fast Freight, Inc. ("LFF") and
Hart Scientific, Inc. ("Hart"), and Hart's wholly owned subsidiary, Calorimetry
Sciences Corporation ("CSC"):
<TABLE>
<CAPTION>
Began Service as an
Name Age Positions Held Officer or Director
<S> <C> <C> <C>
David K. Lifschultz 54 Chairman and CEO of the 1991
Company (also President and
director of LFF)
Dennis R. Hunter 49 President, director, and CFO 1988
of the Company, (also CEO,
President, and Chairman of
CSC and director of Hart)
Sidney B. Lifschultz 88 Director of the Company 1991
Joseph C. Fatony 53 Director of the Company 1998
James E. Solomon 50 Director of the Company and 1998
Hart
James C. Triplett 50 Chairman and CEO of Hart 1988
J. Randall Owen 42 President and COO of Hart 1994
Michael Hirst 51 Vice President and director of 1988
Hart
=================================== ================ ================================== =============================
</TABLE>
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's Board of Directors has an Audit Committee and a Compensation
Committee. The members of both committees are David Lifschultz, Joseph Fatony
and James Solomon. The Audit Committee, in addition to such other duties and
responsibilities as determined from time to time by the Board of Directors,
advises the Board with regard to each external audit, any related management
letter, management's responses to recommendations made by the external auditor,
the Company's annual financial statements, and any significant disputes between
management and the external auditor that arise in connection with the
preparation of the financial statements. The Audit Committee held three meetings
during last the fiscal year. The Compensation Committee advises the Board of
Directors on the compensation of executive officers of the Company. The
Compensation Committee held two meetings during the last fiscal year. The Board
of Directors held three meetings during the last fiscal year.
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 LFF, 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 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 LFF for
more than five years.
Joseph C. Fatony currently is a managing director for AFC Realty Capital
Inc., a New York real estate investment banking firm. Prior to joining AFC
Realty Capital, Mr. Fatony was a principal and founder of SRF Builders Capital
Corp., a New York State mortgage bank. During the past 25 years, he has held
several executive positions in the banking industry, including Vice President
with The Bank of New York for over 20 years. He is an adjunct professor of
finance and marketing at Long Island University and a Trustee of the American
Institute for Economic Research. Mr. Fatony earned an M.B.A. from Long Island
University in 1978 and a B.A. from L.I.U. in 1973.
James E. Solomon has served as a director of Hart since 1995. Since January
2000, Mr. Solomon has focused most of his time on Solomon Advisory Services, a
consulting firm serving emerging growth companies. During 1999, Mr. Solomon was
the Chief Operating Officer of Red Rock Capital Group, a late stage venture
capital firm. From August 1997 to December 1998, Mr. Solomon served as the
President and CEO of Paragraphics, a manufacturer of engraving equipment. From
January 1996 to
6
<PAGE>
March 1997 he was the President of the Borges Lamont Company, a distributor of
consumer goods. During the past five years, Mr. Solomon owned or co-owned
various businesses, and serves 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.
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 Watkins-Johnson
Corporation, Veeco Macronetics, and the Farinon Corporation. Mr. Owen attended
Brigham Young University where he studied business and international relations.
He currently is working part-time for Hart.
Michael Hirst has served in various capacities with the original Hart
company since he co-founded 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.
Significant Employees
Edwin A. Lewis, age 52, 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, 2000 exceeded $100,000 for services
rendered in all capacities to the Company during such fiscal years.
Other than the 401(k) plans of the Company and its subsidiaries, the
Company and its subsidiaries have no pension or retirement plan for its
executive officers. The Company prefers to pay higher cash compensation in lieu
of making substantial pension plan contributions. The Company and its
subsidiaries have adopted informal, unwritten bonus plans for its employees and
executive officers. Under the plans, each company's Board of Directors typically
evaluates the company's productivity and allocates bonuses twice a year based
primarily on such productivity and the employee's performance.
7
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation All Other
Compen
sation(1)
Awards Pay-
outs
Other
Name Annual Restric LTIP
and Compen ted Stock Options Pay-
Position Year Salary Bonus sation Awards /SARs outs
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David K. Lifschultz, Fiscal $360,033 $148,000 -0- -0- -0- -0- $4,370
CEO and Chairman of 2000
the Company
Fiscal $331,465 $112,000 -0- -0- --0- -0- $5,000
1999
Fiscal $319,491 $103,000 -0- -0- 10,000 -0- 4,750
1998
Dennis R. Hunter Fiscal $258,900 $99,600 -0- -0- -0- -0- $7,370
President, director, 2000
and CFO of the
Company
Fiscal $243,375 $94,720 -0- -0- -0- -0- $8,000
1999
Fiscal $220,158 $74,200 -0- -0- 5,000 -0- $26,224
1998
James C. Triplett Fiscal $330,941 $219,352 -0- -0- -0- -0- $8,721
Chairman and CEO of 2000
Hart
Fiscal $310,930 $160,520 -0- -0- -0- -0- $9,233
1999
Fiscal $285,928 $172,621 -0- -0- 50,000 -0- $9,921
1998
J. Randall Owen Fiscal $202,611 $132,178 -0- -0- -0- -0- $5,512
President and COO of 2000
Hart
Fiscal $241,748 $101,707 -0- -0- -0- -0- $5,000
1999
Fiscal $226,728 $108,716 -0- -0- -0- -0- $5,394
1998
Michael Hirst Fiscal $184,788 $74,438 -0- -0- -0- -0- $7,432
Vice President and 2000
director of Hart
=======================
Fiscal $178,072 $61.491 -0- -0- -0- -0- $6,103
1999
Fiscal $168,697 $64,221 -0- -0- -0- -0- $6,078
1998
============ ============ =========== =========== ============ =========== ========= =============
</TABLE>
(1) Includes amounts paid by the Company or its subsidiaries into 401(k) plans
and term life insurance premiums for the benefit of the named officer:
401(k) Contribution Insurance Premium
David K. Lifschultz 2000 $ 4,370 $ 0
1999 $ 5,000 $ 0
1998 $ 4,750 $ 0
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<PAGE>
401(k) Contribution Insurance Premium
Dennis R. Hunter 2000 $ 4,370 $ 3,000
1999 $ 5,000 $ 3,000
1998 $ 4,750 $21,474
James C. Triplett 2000 $ 4,379 $ 4,351
1999 $ 5,000 $ 4,233
1998 $ 4,750 $ 5,171
J. Randall Owen 2000 $ 4,370 $ 742
1999 $ 5,000 $ 0
1998 $ 4,750 $ 644
Michael Hirst 2000 $ 4,370 $ 3,062
1999 $ 5,000 $ 1,103
1998 $ 4,750 $ 1,328
Stock Option Grants and Aggregated Stock Option/SAR Exercises
The Company granted no stock options or stock appreciation rights ("SARs")
to the named executive officers in the last fiscal year. The following table
sets forth the aggregated Common Stock options exercised by the named executive
officers in the last fiscal year and the year-end value of unexercised options:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Fiscal Year Ended July 31, 1999
and Fiscal Year-End Option Values
Name Shares acquired Value realized Number of Value of
on exercise (#) ($) unexercised unexercised in-
options/SARs at the-money
FY-end (#) options/SARs at
exercisable/ FY-end ($)
unexercisable exercisable/
unexercisable(6)
<S> <C> <C> <C> <C>
David K. Lifschultz -0- -0- 45,000(1)/ $491,175/
-0- -0-
Dennis R. Hunter -0- -0- 35,781(2)/ $393,555/
2,500(3) $28,587
James C. Triplett -0- -0- 50,000(4)/ $433,750/
-0- -0-
Michael W. Hirst -0- -0- 2,000(5)/ $22,870/
-0- -0-
================================ ===================== ================== ===================== =====================
</TABLE>
(1) Includes: (i) options for 30,000 shares of Common Stock exercisable at
$1.565 per share which expire August 1, 2007; (ii) options for 5,000 shares
of Common Stock exercisable at $3.125 per share which expire May 5, 2010;
and (iii) options for 10,000 shares of Common Stock exercisable at $3.125
per shares, which expire December 8, 2012.
(2) Includes: (i) options for 25,781 shares of Common Stock exercisable at
$1.565 per share which expire August 1, 2007; (ii) options for 5,000 shares
Common Stock exercisable at $3.125 per share which expire May 5, 2010;
9
<PAGE>
and (iii) options for 5,000 shares of Common Stock exercisable at $3.125
per share, which expire December 8, 2012.
(3) Includes: options for 2,500 shares of Common Stock that become exercisable
at $1.565 per share when the average closing price of the Company's stock
exceeds $100.00 per share for ten consecutive days and expire August 1,
2007.
(4) Includes: (i) options for 10,000 shares of Common Stock exercisable at
$3.125 per share, which expire December 8, 2012; and (ii) options for
40,000 shares of Common Stock exercisable at $4.625 per share and expire
February 24, 2013.
(5) Includes options for 2,000 shares of Common Stock exercisable at $1.565 per
share, which expire February 8, 2003.
(6) The value per share of option stock is calculated by subtracting the
exercise price from the closing sales price on The Nasdaq SmallCap Market
on July 31, 2000 ($13.00).
Director Compensation
For their services as non-employee directors of the Company, the Company
compensates Joseph Fatony $10,000 per year and James Solomon and Sidney
Lifschultz $5,000 per year each. Hart separately compensates James Solomon, for
his services as a director of Hart, 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 a bonus to Mr. Solomon of $10,000 for fiscal year 2000. The
Company does not separately compensate directors of the Company that are also
employees of the Company, Hart or CSC for their service as directors. The
Company may in the future establish separate compensation for service for such
employee directors.
Employment Agreements
Dennis R. Hunter
On August 1, 1998, CSC entered into an employment agreement with Dennis R.
Hunter. The term of the agreement is five years, with a temporary extension of
up to one year if CSC determines not to offer Mr. Hunter a new employment
agreement at the end of five years. Under the agreement, for his services as
Chairman, President and CEO of CSC, Mr. Hunter receives a base salary of
$231,000 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 CSC terminates
Mr. Hunter's employment without cause, or Mr. Hunter terminates employment for
certain good reasons, he will be paid 50% of his remaining base compensation
under the agreement or one year's base compensation, whichever is greater, plus
certain medical insurance benefits. Failure by a successor of the Company to
fully assume Mr. Hunter's contract will require the same payment.
Under his employment agreement, Mr. Hunter has a put option with respect to
certain stock options that he holds. He may exercise the put option over a
three-year 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 reasons. Under the put option, Mr. Hunter may require
CSC to repurchase up his stock options for up to 5,260 shares of Company stock
per year at a price of $5.94 per share (plus any exercise price if previously
paid by Mr. Hunter). The employment agreement further contains provisions
regarding assignment of inventions by Mr. Hunter, a two-year covenant not to
compete by Mr. Hunter, and indemnification by CSC.
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James C. Triplett
On August 25, 1997, Hart entered into an 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 $285,000,
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 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. On April 24, 2000, the Company entered into an
additional compensation agreement with James Triplett in lieu of granting Mr.
Triplett additional stock options. Under the agreement, if the Company is
acquired by a third party within three years of the date of the agreement, the
Company will pay Mr. Triplett 10% of the acquisition value in excess of $25
million. The agreement does not obligate the Company in any manner to consummate
any such acquisition.
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 full-time employment, Hart agrees to employ Mr. Hirst as
a part-time 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, whichever 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 provision regarding assignment of
inventions by Mr. Hirst, a two-year covenant not to compete by Mr. Hirst, and
indemnification by Hart.
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.
In June, 2000, CSC acquired a 50% interest in Energetic Genomics
Corporation, a Delaware corporation ("EGC") formed by Dennis Hunter, a Company
director and officer, and Edwin Lewis, a key CSC employee. CSC acquired its
interest in exchange for $10,000 and a royalty free, perpetual, non- exclusive
license of its proprietary technology and know-how. CSC's agreement with EGC
contains a limited covenant not to compete by EGC and grants CSC a first right
of refusal under certain circumstances
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<PAGE>
on technology being sold by EGC. The board of directors of EGC is comprised of
Dennis Hunter, Edwin Lewis, David Lifschultz and Joseph Fatony. Mr. Hunter
serves as its President and CEO. EGC, in conjunction with CSC, plan to develop
and commercialize promising high-throughput energy array and related
technologies for use in bio-technology and other applications, but it has yet to
begin significant operations. Energetic Genomics and CSC management believes
that such a development effort, while having the potential for becoming a
significant business for the Company, will require raising substantial equity
investments from third party sources and/or strategic alliances with potential
customers. EGC is currently exploring such opportunities.
During fiscal year 1999 Hart purchased approximately $137,000 in instrument
components from Thermoworks. Thermoworks 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 Thermoworks continues one that predates
Mr. Owen's association with Hart.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF ALL
NOMINEES TO THE BOARD OF DIRECTORS NAMED ON THE ACCOMPANYING PROXY FORM.
PROPOSAL TWO - APPOINTMENT OF AUDITORS
Grant Thornton LLP has been the Company's independent auditors since July
1994. Proposal No. 2 is to reappoint Grant Thornton LLP as the Company's
independent public accountants for the fiscal year ending July 31, 2001. 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, 2001.
OTHER ITEMS
Annual Report to Shareholders
The Annual Report of the Company to its shareholders for the fiscal year
ended July 31, 2000, including audited financial statements, accompanies this
Proxy Statement.
Annual Report on Form 10-KSB
The Company will provide without charge, at the written request of any
record beneficial shareholder as of October 30, 2000 a copy of the Company's
Annual Report on Form 10-KSB, 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. Requests for copies of the
Company's Form 10-KSB should be mailed to:
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<PAGE>
LIFSCHULTZ INDUSTRIES, INC.
799 East Utah Valley Drive
American Fork, Utah 84003-9775
Attn: Dennis R. Hunter
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 ten-percent
owners are required by applicable regulations to furnish 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 2000 fiscal year, all filing requirements applicable
to its officers, directors and ten-percent owners of the Company were met by
such persons, except as follows: Michael Hirst, a director of Hart, filed late
two Form 4's reporting two sales of Company Common Stock totaling 1,700 shares.
Shareholder Proposals
In order for a shareholder's proposal to be considered for inclusion in the
Company's proxy materials for the 2001 Annual Meeting of Shareholders (the "2000
Annual Meeting"), the proposal must be received by the Company's President at
the above address no later than August 4, 2000, and must otherwise comply with
the requirements of Rule 14a-8 of the Securities Exchange Act of 1934 as
amended.
Proposals of shareholders submitted for consideration at the Company's 2000
Annual Meeting other than those submitted for inclusion in the Company's proxy
material pursuant to Rule 14a-8, must be delivered to the Company's President no
later than October 1, 2001. If such timely notice of a shareholder's proposal is
not given, the Company's Proxy Holders may exercise discretionary voting
authority to vote on the proposal when and if it is raised at the 2001 Annual
Meeting.
By Order of the Board of Directors
DENNIS R. HUNTER, President
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<PAGE>
Appendix A - Form of Proxy
LIFSCHULTZ PROXY
INDUSTRIES, INC. This Proxy is Solicited on Behalf of the Board of Directors
799 East Utah Valley Drive
American Fork, Utah 84003-9775
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 30, 2000 (the record date), at the Annual Meeting
of Shareholders to be held on December 14, 2000, or at any continuation(s) or
adjournment(s) thereof. The proposals listed below are made by the Board of
Directors.
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.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Sidney B. Lifschultz David K. Lifschultz Dennis R. Hunter Joseph C. Fatony James E. Solomon
</TABLE>
2. APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING JULY 31, 2001
FOR AGAINST ABSTAIN
3. The Proxies are authorized to vote, in their discretion, upon such other
matters as may properly come before the meeting provided the Company did
not have notice of such matter on or before October 16, 2000.
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 this proxy promptly. By signing below, the
undersigned also acknowledges receipt of the Company's Proxy Statement and
Annual Report accompanying this proxy.
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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