<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
Schedule 14D-9
(Rule 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14 (d) (4)
OF THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 1
_______________
LASER POWER CORPORATION
(Name of Subject Company)
LASER POWER CORPORATION
(Name of Person (s) filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Including the associated Preferred Share Purchase Rights)
(Title of Class of Securities)
51806K104
(CUSIP number of Class of Securities)
DICK O. SHARMAN
CHIEF EXECUTIVE OFFICER
LASER POWER CORPORATION
36570 BRIGGS ROAD
MURRIETA, CALIFORNIA 92563
TELEPHONE: (909) 926-1866
(Name, address and telephone number of person authorized to receive
notice and communication on behalf of the person (s) filing statement)
WITH COPIES TO:
GEORGE M. REYES, ESQ.
BEST BEST & KRIEGER LLP
3750 UNIVERSITY AVENUE
P.O. BOX 1028
RIVERSIDE, CALIFORNIA 92502
TELEPHONE: (909) 686-1450
FACSIMILIE: (909) 686-3083
/ / Check the box if the filing relates solely to preliminary communications
made prior to commencement of a tender offer.
================================================================================
<PAGE>
LASER POWER CORPORATION
FORM 14D-9 INDEX
<TABLE>
<CAPTION>
PAGE
-------
<S> <C> <C>
ITEM 1. Subject Company Information 1
ITEM 2. Identity and Background of Filing Person 1
ITEM 3. Past Contracts, Transactions, Negotiations and Agreements 3
ITEM 4. Solicitation or Recommendation 6
ITEM 5. Person/Assets, Retained, Employed, Compensated or Used 10
ITEM 6. Interest in Securities of the Subject Company 11
ITEM 7. Purposes of the Transaction and Plans or Proposals 11
ITEM 8. Additional Information 11
ITEM 9. Exhibits 12
</TABLE>
2
<PAGE>
This Amendment No. 1 amends and restates the solicitation/recommendation
statement on Schedule 14D-9 filed by Laser Power Corporation with the Securities
and Exchange Commission ("SEC") on July 13, 2000. The purpose of this Amendment
No. 1 is:
(a) to clarify the mechanism described in Item 2(b) with respect to how
the maximum price and floor price are calculated and the mix of cash
and stock payable to Laser Power shareholders at different value
levels; and
(b) to reflect the terms of that certain First Amendment to Agreement and
Plan of Merger whereby II-VI Acquisition Corporation, II-VI
Incorporated and Laser Power Corporation agreed to change the deadline
for calculation of the II-VI Formula Price (as discussed in Item 2(b))
from one day prior to the expiration of the offer to three.
ITEM 1. SUBJECT COMPANY INFORMATION
This Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Statement") is filed by the subject company: Laser Power Corporation, a
Delaware corporation (the "Company"). The Company's executive offices are
located at 36570 Briggs Road, Murrieta, California 92563, telephone: (909)
926-1866. The class of equity securities to which this statement relates is the
Company's common stock, par value $.001 per share including associated preferred
stock purchase rights issued pursuant to the Share Purchase Rights Plan, dated
October 15, 1999, between the Company and American Stock Transfer Inc., as
amended (collectively, the "Common Stock"). As of July 1, 2000, there were
9,701,421 shares of Common Stock outstanding and 345,557 shares of Common Stock
issuable upon exercise of outstanding stock options and warrants. Reference
herein to "Shares" means shares of the Common Stock including the associated
preferred stock purchase rights.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) The name, address and telephone number of the Company, the person
filing this Statement, are set forth in Item 1.
(b) This Statement relates to an exchange offer by II-VI Acquisition Corp.,
a Delaware corporation ("Purchaser"), a wholly-owned subsidiary of II-VI
Incorporated, a Pennsylvania corporation (hereinafter referred to as "Parent" or
"II-VI"), whereby II-VI would exchange $2.89 and .052 shares of II-VI for each
Share of the Company. The exchange offer protects the value of the stock portion
by providing a minimum value or floor price of $2.26 per share and limits the
maximum value to $2.76 per share, thereby providing total merger consideration
of $5.15 to $5.65 per share of the Company's Common Stock. The volume weighted
average trading price of II-VI stock during the twelve days ending on the third
trading day immediately preceding the expiration date of the offer (the "II-VI
Formula Value") will determine the value of II-VI stock for purposes of this
transaction. For example, if the II-VI Formula Value is $43.46, the value of
.052 shares of II-VI stock will be $43.46 x .052 = $2.26. If the value of .052
shares of II-VI stock goes above the maximum value of $2.76, the amount of II-VI
stock will automatically decrease so that the actual amount of II-VI stock to be
received by the shareholder is equivalent in value to $2.76. If the value of the
.052 shares of II-VI stock goes below the floor price of $2.26, then in addition
to the $2.89 and .052 shares of II-VI stock, the Purchaser is obligated to make
up the deficit by increasing either the amount of cash or the amount of stock
payable to the shareholder to maintain the minimum price of $5.15 payable for
each share of Laser Power common stock. Whether the Purchaser makes up the
deficit in cash or stock is at the Purchaser's sole discretion, however, the
floor price of $5.15 will not change.
The exchange offer is subject to the terms and conditions set forth in the
"Prospectus" which is part of the Registration Statement filed on Form S-4,
dated July 13, 2000, as amended by that Registration Statement filed on
Amendment No. 1 to Form S-4 on August 2, 2000, by the Parent with the Securities
and Exchange
3
<PAGE>
Commission (the "SEC"). The Prospectus and the related Letter of Transmittal,
together with any amendments and supplements thereto, collectively constitute
the "Offer". The Offer is further disclosed in the Tender Offer Statement on
Schedule TO, dated July 13, 2000 (the "Schedule TO") also filed by Parent and
Purchaser with the SEC, as amended.
The Offer is made pursuant to an Agreement and Plan of Merger, dated June
28, 2000, among Parent, Purchaser and the Company (the "Merger Agreement"), as
amended by that First Amendment to Agreement and Plan of Merger dated August 1,
2000 (the "First Amendment to Merger Agreement"). The Merger Agreement and the
First Amendment to Merger Agreement shall be referred to hereafter collectively
as the "Merger Agreement". A copy of the Merger Agreement is filed as Exhibit 5
and is incorporated by reference. A copy of the First Amendment to Merger
Agreement is filed as Exhibit 8 and is incorporated by reference. The Merger
Agreement provides that, among other things, as soon as practicable after
consummation of the Offer and satisfaction of the other conditions set forth in
the Merger Agreement and in accordance with relevant provisions of the General
Corporation Law of Delaware ("Delaware Law"), Purchaser will be merged with and
into the Company (the "Merger"), with the Company continuing as the surviving
corporation. In the Merger, each share of the Company's common stock, except
dissenting shares and any shares cancelled pursuant to the Merger Agreement,
will convert into a right to receive the cash and fractional share of II-VI
common stock specified in the Offer.
According to the Schedule TO filed by the Parent and Purchaser, their
principal executive offices are 375 Saxonburg Blvd., Saxonburg, Pennsylvania
16056. All information contained or incorporated by reference in this Statement
with respect to the Purchaser or Parent is taken from the Offer or the Schedule
TO and the Company assumes no responsibility therefore.
ITEM 3. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Contracts, agreements, arrangement or understandings between the Company,
its affiliates, directors and executive officers are, except as noted below,
described in the Information Statement pursuant to Section 14 (f) of the
Securities Exchange act of 1934, as amended, and Rule 14f-1 thereunder (the
"Information Statement") that is attached as Exhibit 3 to this Statement and is
incorporated by reference. Except as set forth in the response to this Item 3
or in Exhibit 3 or as incorporated by reference, to the knowledge of the
Company, there are no material agreements, arrangements or understandings and no
actual or potential conflicts of interest between the Company or its affiliates
and (i) the Company's executive officers, directors or affiliates, or (ii) the
Parent or its respective executive officers, directors or affiliates.
THE MERGER AGREEMENT.
The summary of the Merger Agreement contained in the Offer is incorporated
by reference, and should be read in its entirety for a description of the terms
and provisions of the Merger Agreement. Some of the information set forth below
summarizes portions of the Merger Agreement and related agreements that concern
arrangements between the Company, and Purchaser, Parent and/or the Company's
executive officers and directors. The summary of the Merger Agreement contained
in the Offer and the summary set forth below are qualified in their entirety by
reference to the Merger Agreement, a copy of which is attached as Exhibit 5 and
incorporated by reference.
STOCK OPTIONS.
The Merger Agreement provides that as soon as practicable following the
date of the Merger Agreement, the Board of Directors shall adopt resolutions or
take other actions as required to terminate the Company's stock option plans on
or prior to the Effective Time and to make any amendments to the terms of any
stock option plans necessary to give effect to the transactions contemplated by
the Agreement. The purchase of Common Stock pursuant to the Offer will
constitute a "Change of Control" for purposes of the
4
<PAGE>
Company's employee stock option and stock incentive plans. As a result, unvested
stock options held by active employees will vest.
Options with exercise prices equal to or greater than the Merger
Consideration will be cancelled. All other vested and exerciseable options
outstanding as of the Effective Time shall be canceled and the holders thereof
shall receive a cash payment from the Company equal to the product of the number
of shares subject to the option multiplied by the excess of Merger Consideration
over the exercise price of the Option.
"Stock Option or Option" means any option to purchase Company Common Stock
granted under any Company Stock Plan or Warrant agreement, including but not
limited to, the 1981 Stock Option Plan, 1993 Stock Option Plan, 1997 Equity
Incentive Plan, and the 1997 Employee Stock Purchase Plan.
INDEMNIFICATION AND INSURANCE.
The Merger Agreement provides that the Surviving Corporation shall honor
the Company's obligations to indemnify and hold harmless the Company's present
and former officers and directors relating to acts or omissions occurring prior
to the Effective Time to the extent provided under the Company's certificate of
incorporation. These obligations shall survive the Merger and shall continue in
full force and effect in accordance with the terms of the Surviving
Corporation's certificate of incorporation and bylaws, from the Effective Time
until the expiration of the applicable statute of limitations with respect to
any claims against present or former directors or officers arising out of acts
or omissions; provided that the indemnification shall be subject to any
limitation imposed from time to time under applicable law.
For a period of three (3) years after the Effective Time, the Surviving
Corporation shall maintain the Company's current officers and directors'
liability insurance policies, or substantially identical policies from another
reputable and financially sound carrier, relating to acts or omissions occurring
prior to the Effective Time covering each Person currently covered by the
policies now in effect; provided, however, that the Parent is not required to
expend more than 150% of the current annual premium paid by the Company to
secure coverage, or such coverage as is available for 150% of the current annual
premium.
THE BOARD OF DIRECTORS.
The Merger Agreement provides that promptly following the purchase by
Purchaser of a majority of the outstanding Shares of the Company pursuant to the
Offer, the Company will take all necessary action to cause three persons
designated by the Purchaser (the "Purchaser Designees") to be members of the
Board. Although the Merger Agreement provides that one of such designees shall
be a completely disinterested outside director, the Company, Parent and
Purchaser have agreed to waive this requirement.
CONFIDENTIALITY AGREEMENT.
The Company and Parent entered into a Confidentiality Agreement dated
January 5, 2000, whereby the Company and Parent agreed to keep confidential and
not to disclose to third parties any confidential or proprietary information
disclosed by either party during the process of Parent's evaluation of Company
as a potential acquisition target. The confidentiality agreement further
limited Parent's use of any confidential information disclosed by Company for
the sole purpose of making such evaluation. The confidentiality agreement
supercedes a prior non-disclosure agreement. The foregoing summary is qualified
in its entirety by reference to the Confidentiality Agreement, a copy of which
is attached as Exhibit 7 and incorporated by reference.
5
<PAGE>
RAW MATERIALS PURCHASE.
On June 27, 2000, the Company sold Parent a supply of Germanium, a raw
material utilized by both Company and Parent in their respective manufacturing
processes, pursuant to a purchase order from Parent on commercially reasonable
terms. The Germanium sold by Company was excess stock and is not expected to
have any adverse impact on the Company's work in progress.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS.
At meetings held on June 23 and June 26, 2000, the Board of Directors of
the Company (i) determined that the Offer, the Merger and the Merger Agreement
are advisable, fair to, and in the best interests of, the Company shareholders,
(ii) approved the Merger Agreement and the transactions contemplated thereby,
including the Merger and the Offer, and (iii) determined to recommend that the
Company shareholders accept the Offer and tender their Shares pursuant thereto
and approve and adopt the Merger Agreement.
(b) BACKGROUND OF THE OFFER.
Initial Contact and Preliminary Conversations (January 1999 - May 1999)
Parent (hereinafter referred to as II-VI in this section) and the Company
have maintained informal contacts regarding various issues for a number of
years, however, in January, 1999, II-VI contacted the Company regarding possible
joint business opportunities including a possible investment in, or the
acquisition of, the optics business unit. Union Miniere contacted the Company
in February 1999 to ascertain if the Company might be receptive to discussions
regarding a possible acquisition of the optics business unit. The Company was
receptive to these discussions and, after execution of appropriate non-
disclosure agreements, held informal meetings with both II-VI and Union Miniere.
These discussions covered relative valuation ranges and the scope of the parties
respective interest. The discussions were cordial, but indicated that
significant valuation differences existed between the expectations of the
Company and the parties. After the preliminary conversations, infrequent and
informal contacts continued, but the matter became dormant.
First Round of Substantive Negotiations (June 1999 - September 1999)
In June 1999, II-VI informed the Company that it had retained PNC Capital
Markets ("PNC") to assist it in discussions with the Company. In response, the
Company designated three members of the Board of Directors to act as an informal
committee of the Board. The committee met individually and as a group with PNC
on July 21, 1999 and subsequently on August 18, 1999 with both II-VI and PNC.
The purpose of these meetings was to provide II-VI and PNC with supplemental
information regarding the Company's business and prospects, and to provide
support and justification for an increased valuation of the Company. The
negotiations included discussion of valuation and alternative transaction
structures. Substantially identical data was provided to Union Miniere.
At the Company's regular Board of Directors meeting held on August 6, 1999,
the Board formally established the Special Committee consisting of Messrs.
Klimasewski, Perkins and Sharman and chartered the Committee to review, analyze
and negotiate any acquisition proposal received by the Company and with the
investigation of other strategic alternatives including the disposal of the
Company's Micro-Laser and Research divisions.
Discussions with II-VI and Union Miniere resulted in the Company receiving
an acquisition proposal from II-VI and an indication of valuation from Union
Miniere. After careful review and analysis, the Special Committee and the
Company's Board of Directors rejected the proposal and valuation as inadequate.
6
<PAGE>
Second Round of Substantive Negotiations (September 1999 - February 2000)
In response to the Company's rejection, II-VI disclosed its proposal in a
September 22, 1999 press release. The Company reaffirmed its prior rejection of
the offer as inadequate. On September 29, 1999, the Company was notified that
II-VI had acquired 1.25 million shares or approximately 14.7% of the Company's
outstanding common stock and that, among other things, II-VI would seek a change
in control of the Company.
In response, the Company retained Roth Capital Partners, Inc. to assist the
Special Committee with the evaluation of any acquisition proposal received by
the Company and other strategic alternatives.
On October 6, 1999, the Company was notified that Union Miniere had
increased its ownership position to approximately 14.3% of the outstanding
common stock of the Company, and that Mr. Laird, an officer of Union Miniere was
resigning from the Company's Board of Directors and that Union Miniere, among
other things, might also seek a change in control of the Company.
On October 12, 1999, the Company was informed that II-VI intended to
nominate a slate of candidates for the Board of Directors at the Company's next
annual shareholders meeting. II-VI's proposed slate included Mr. Sharman, an
executive officer, member of the Board and the Special Committee. In response
to all of the preceding, on October 15, 1999, the Company adopted the Share
Purchase Rights Plan and Mr. Sharman resigned from the Special Committee.
During October through December 1999, the Special Committee and Roth
Capital Partners met numerous times, both in person and telephonically, with
II-VI, Union Miniere and their representatives to discuss their acquisition
proposals and to review comparable market valuations and other strategic
alternatives.
As a result of these discussions and review, the Company instructed Roth
Capital Partners to continue discussions with II-VI and Union Miniere and to
seek other potential purchasers for the Company. Commencing in January 2000,
the Company and Roth Capital Partners contacted four (4) additional companies,
including key customers, to determine their interest in acquiring the Company.
II-VI and Union Miniere were the only companies that indicated an interest in
pursuing an acquisition of the Company at the time. An opportunity for due
diligence was provided to both prospective acquirers.
As a result of the increase in the Company's stock price during January and
February 2000, both II-VI and Union Miniere indicated that they were unwilling
to make an offer to acquire the Company on financial terms consistent with
current market valuations. Accordingly, the Company announced in a press
release on February 2, 2000, that all discussions with respect to the potential
sale of the Company had been discontinued. On February 4, 2000, the Company was
notified by II-VI that it was withdrawing its proposed slate of candidates for
the Company's Board of Directors.
Third Round of Substantive Negotiations (May 2000 - June 2000)
The Company's share price returned to historic levels during March and
April 2000. In mid May 2000, II-VI and Union Miniere expressed an interest in
re-starting substantive negotiations with the Company at valuation levels nearly
double the then current share price. The Board resumed negotiations with II-VI
and Union Miniere during the second half of May 2000, when it became clear, in
the business judgment of the Board, that the January-February market valuations
were not sustainable and unlikely to recur.
As the result of competitive negotiations between the Company, Union
Miniere and II-VI, the Company was presented with competing offers wherein UM
proposed an all cash tender offer in the amount of $4.00 per share and II-VI
proposed an all stock, exchange transaction, with guaranteed minimum
consideration of $3.65 per share. The II-VI proposal also included conditions
concerning certain due diligence matters which were not present in the Union
Miniere proposal.
7
<PAGE>
The Board instructed Roth Capital Partners to ascertain whether II-VI would
increase its offer further. Given the certainty of the Union Miniere cash
offer, the Company asked II-VI to provide minimum consideration for its stock
offer of at least $4.00 per share. The Company also requested, after agreeing
to provide II-VI the opportunity to complete their due diligence, that the due
diligence conditions be eliminated from their proposal.
Union Miniere, in connection with negotiating a merger agreement, required
a termination fee of $2 million plus potentially significant fees and expenses.
The Company successfully negotiated a reduction to a flat $2 million fee. Union
Miniere stated that it would not enter into the contract without a termination
fee, and the Board was advised by Roth Capital Partners that the proposed fee
was both customary and fair. The Board, in the exercise of its business
judgment, determined that the termination fee was appropriate in order to secure
for shareholders the benefits of the merger transaction.
The Board accepted the Union Miniere offer because, after a thorough
analysis and consultation with Roth Capital Partners, the Board concluded that
the Union Miniere offer was clearly superior to any other offer that the Company
had been able to obtain and was in the best interests of the shareholders.
Before the merger agreement with Union Miniere was executed, II-VI
specifically stated that it would not increase its offer at that time.
Competitive Bidding (June 2000)
In its Form 8-K filed on June 2, 2000, the Company announced that it had
entered into an Agreement and Plan of Merger ("Merger Agreement") with Union
Miniere U.S.A., Inc., a subsidiary of n.v. Union Miniere s.a., and ACEC, Inc., a
wholly owned subsidiary of Union Miniere whereby Union Miniere, through its
subsidiary ACEC, Inc., would commence a tender offer in June for up to 100% of
the issued and outstanding shares of the Company's common stock at a price of $4
per share.
Pursuant to the terms of the Merger Agreement and consistent with its
fiduciary duties under Delaware Law, the Board of Directors preserved its right
to evaluate competing proposals for the purchase of the Company's common stock
and to terminate the Merger Agreement in the event the Board received a superior
proposal that was not matched by Union Miniere. Consistent with exercising its
duties, the Board undertook a comprehensive review of the June 5, 2000, public
offer made by II-VI for the purchase of the Company's common stock consisting of
cash and stock with a minimum consideration per share for Company stock of $4.05
and a maximum potential consideration of $5.00. In its Form 8-K filed on June
15, 2000, the Company announced that the Board had determined that a revised
II-VI offer was a Superior Proposal to the Union Miniere offer as defined in the
Merger Agreement. The revised II-VI offer consisted of cash and stock with a
minimum consideration per share for Company stock of $4.10 and a maximum
potential consideration of $5.05, depending on the value of II-VI stock at the
time its exchange offer closed. Under the terms of the Merger Agreement, the
Board's determination triggered Union Miniere's right to make a counter-offer at
least as favorable as the II-VI offer. On June 16, 2000, Union Miniere
announced that it was increasing its all cash offer to provide minimum per share
consideration for the Company's stock of $4.25 and a maximum potential
consideration of $4.55, depending on the value of II-VI stock at the time its
tender offer commenced.
As a result of inquiries made by the Board with respect to its evaluation
of the Union Miniere counter-offer, Union Miniere revised its counter-offer
upward to an all cash offer of $4.40 per share. Upon careful deliberation and
consideration of the advice of the Board's financial advisor, Roth Capital
Partners, the full Board of Directors adopted the Special Committee's
recommendation that the cash offer was at least as favorable to the Company's
shareholders as the offer by II-VI. Upon making this determination, the Board
notified Union Miniere that the Company would enter into an amendment to the
Merger Agreement reflecting Union Miniere's revised counter-offer and formally
notified II-VI that its offer had been rejected.
8
<PAGE>
On June 20, 2000, II-VI presented the Company with a new offer whereby
II-VI would commence an exchange offer wherein shareholders would be offered
$2.89 in cash and .052 share of II-VI stock. II-VI offered to protect the value
of the stock portion of the exchange offer by raising the "floor" for the value
of II-VI stock to $2.26 per share, with a cap on the value of II-VI stock in the
amount of $2.76. The volume weighted average trading price of II-VI stock during
the twelve days prior to the closing of the exchange offer would determine the
value of II-VI stock.
On June 21, 2000, the Board determined that the revised II-VI offer was a
Superior Proposal to the Union Miniere offer of $4.40 per share and once again
triggered the two day response period for Union Miniere to make a counter-offer
at least as favorable as the II-VI offer. On June 22, 2000, Union Miniere
formally informed the Company that it would not make a counter-offer. The
Company subsequently exercised its right under Section 11.1(f) of the Merger
Agreement to terminate the Merger Agreement with Union Miniere and paid the
requisite termination fee.
On June 28, 2000, the Company and II-VI formalized the current II-VI offer
by entering into the Merger Agreement.
(c) REASONS FOR THE COMPANY BOARD'S RECOMMENDATIONS.
The Board has approved the Merger Agreement and the Offer, and recommends
that stockholders tender their shares of Common Stock in the Offer. In reaching
this determination, the Board considered recommendations of the Special
Committee, consulted with the Company's senior officers and legal and financial
advisors, and considered the following important factors that supported the
Board's recommendations:
- The Board's knowledge of the Company's business and earnings prospects,
near term and long term business risks, historical stock prices, the
competitive business environment in which the Company operates, and
business and valuation trends in the Company's industry.
- The extensive discussions with other potential buyers undertaken before
the signing of the Merger Agreement, as described under "Background of
the Offer."
- The minimum per share price of $5.15 to be paid in the Offer and the
Merger, which represents a premium of approximately 101% over the per
share closing price of $2.56 on June 1, 2000, the last trading day before
the announcement of the execution of the initial merger agreement with
Union Miniere, and approximately 415% over the closing price range of $1
in February 1999, the date when the Company first commenced discussions
with II-VI.
- The price per share of Company Common Stock demonstrated extreme
volatility during the first quarter of 2000, reaching a peak of $13.50
during trading on March 2, the stock rapidly dropped back towards
historic levels and hit a low of $1.81 on May 26. Based upon the Board's
knowledge and the advice of Roth Capital Partners regarding the core
value of the Company and the Company's historic trading level, it was the
Board determined that it was unlikely that the stock price would return
to the levels experienced during the first quarter of 2000 and that an
acquisition would increase the value of the Company to the shareholders.
- The presentation of the fairness opinion analysis of Roth Capital
Partners dated June 23, 2000 to the effect that, as of that date and
based upon and subject to certain matters stated in the opinion, the
$5.15 per share minimum consideration to be received by shareholders was
fair, from a financial point of view. The full text of Roth's written
opinion letter dated June 28, 2000 is attached hereto as Exhibit 4 and is
incorporated by reference. Roth's opinion is directed only to the
fairness, from a financial point of view, of the $5.15 per share minimum
consideration payable pursuant to the Offer and the Merger and is not
intended to constitute, and does not constitute, a recommendation as to
whether any stockholder should tender shares pursuant to the
9
<PAGE>
Offer or to any other matter relating to the Offer or the Merger.
Shareholders are urged to read the entire opinion carefully.
- The Board's belief that II-VI is an attractive, interested acquirer of
the Company, with the ability to complete the Offer and the Merger
promptly without a financing contingency.
- The Board's belief that the combination of the Company with II-VI will
create a strong competitor within the industry which will provide a
potential upside for shareholders who decide to hold the II-VI shares
received in the Offer and the Merger.
- The terms and conditions of the Merger Agreement, including the
limitations they impose on the Company's ability to seek alternative
transactions with other parties.
- Possible alternatives to the Offer, including continuing to operate as an
independent public company, increasing the Company's emphasis on
strategic acquisitions, or continuing to seek a sale of the Company to
another party, and the effect, benefits and risks, short term and long
term, of such alternatives on the value of the Common Stock.
The foregoing discussion of the information and factors considered by the Board
is not meant to be exhaustive, but summarizes the material factors considered by
the Board. The Board did not quantify or attach any particular weight to the
various factors, or determine that any particular factors were of primary
importance. Rather, the Board made its determination that the Merger Agreement
and the Offer are fair to, and in the best interests of, the Company and its
stockholders based on the totality of the information presented to and
considered by the Board. Individual members of the Board may have given
different weight to these different factors.
(d) INTENT TO TENDER.
To the Company's knowledge, except for Shares the sale of which may trigger
liability for the holder(s) under Section 16(b) of the Exchange Act, all of the
Company's executive officers, directors and affiliates currently intend to
either (i) tender all shares of Common Stock held of record or beneficially by
them pursuant to the Offer, or (ii) vote all shares of Common Stock held of
record or beneficially by them for the approval and adoption of the Merger
Agreement. The foregoing does not include any shares over which, or with
respect to which, an executive officer, director or affiliate acts in a
fiduciary or representative capacity or is subject to the instructions of a
third party with respect to a tender or vote.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
Pursuant to letter agreements dated October 6, 1999 and February 14, 2000,
the Company retained Roth Capital Partners, Inc. ("Roth") to act as its
financial advisor in connection with one or more financial transactions,
including a possible acquisition, sale, merger, joint venture or business
combination, and to render an opinion to the Board of Directors regarding the
fairness, from a financial point of view, to the holders of the Company's
Common Stock. The Board of Directors retained Roth based upon Roth's
qualifications, experience and expertise. Roth is a nationally recognized
investment banking and advisory firm. Roth, as part of its investment banking
and financial advisory business, is continuously engaged in the valuation of
businesses and securities in connection with various transactions and for
corporate and other purposes. In the ordinary course of business, Roth has had
or may have dealings with certain other holders of the Company's securities, in
matters unrelated to the Company. Roth has and has had numerous clients in a
wide variety of industries. It is possible that some of these past or present
Roth clients may have some connection to the Company or to holders of its
securities.
Pursuant to the engagement letters, in June 1999 the Company paid Roth a
retainer, deductible from any fees earned by Roth in connection with
consummating the Merger Agreement, of $75,000. Roth will receive
10
<PAGE>
approximately $950,000, if the Company consummates the transaction described in
this Statement, plus reimbursements for certain costs and expenses. In addition,
the Company has agreed to indemnify Roth against certain liabilities and
expenses arising out of Roth's engagement or, if indemnification is unavailable
to Roth or insufficient to hold it harmless, then the Company has agreed to
contribute to the amount paid or payable by Roth.
Except as described above, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to shareholders on its behalf concerning
the Offer or the Merger.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Except as set forth below, and other than amendments to the Share Purchase
Rights Plan, no transactions in the Shares have been effected during the past 60
days by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company. All outstanding
Shares, except for Shares held by the Company's executive officers and directors
are deemed to be held by non-affiliates.
Mr. Michael Hogg, a director, purchased 4,000 shares for $2.20 per share on
May 16, 2000.
Mr. Dick Sharman, the Company's Chief Executive Officer and a director,
sold 11,715 shares for $1.88 per share on May 24, 2000.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Except as set forth in this Statement, the Company is not currently
undertaking or engaged in any negotiations in response to the Offer that relate
to (1) a tender offer for or other acquisition of the Company's securities by
the Company, any subsidiary of the Company or any other person; (2) an
extraordinary transaction, such as a merger, reorganization or liquidation,
involving the Company or any subsidiary of the Company; (3) a purchase, sale, or
transfer of a material amount of assets of the Company or any subsidiary of the
Company; or (4) any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company.
Except as set forth in this Statement, there are no transactions,
resolutions of the Board of Directors, agreements in principle, or signed
contracts in response to the Offer that relate to one or more of the events
referred to in the preceding paragraph.
ITEM 8. ADDITIONAL INFORMATION.
THE SHARE PURCHASE RIGHTS PLAN.
On October 15, 1999, the Company designated 150,000 shares of Preferred
Stock as Series A Junior Participating Preferred Stock and declared a dividend
of one preferred share purchase right (a "Right") for each outstanding share of
Common Stock. Each Right entitles a Stockholder to purchase one one-hundredth
of a share of Series A Junior Participating Preferred Stock at an exercise price
of $10.00, subject to adjustment. The Rights are exercisable only when a person
or group of affiliated or associated persons (an "Acquiring Person") acquires or
obtains the right to acquire 15% or more of the company's outstanding Common
Stock or announces a tender or exchange offer that would result in an Acquiring
Person beneficially owning more than 15% of the company's outstanding shares.
In the event any person becomes an Acquiring Person each holder of a Right,
other than Rights beneficially owned by the Acquiring Person, will thereafter
have the right to receive on exercise that number of shares of common stock of
the company, or, in certain business combinations, of the
11
<PAGE>
acquiring company, having a market value of two times the exercise price of the
Right. The Rights expire on October 15, 2009 unless extended prior thereto by
the Board, or earlier redeemed or exchanged by the Company.
The Company and the Rights Agent under the Share Purchase Rights Plan
amended the Rights Plan as of June 26, 2000 to provide, among other things,
II-VI and its affiliates will not be considered an Acquiring Person under the
Rights Plan solely by virtue of (i) the approval, execution, delivery or
performance of the Merger Agreement, (ii) the making of consummation of the
Offer or Merger in accordance with the provisions of the Merger Agreement or any
public announcement relating thereto, (iii) the acquisition of Common Shares in
accordance with the provisions of the Merger Agreement pursuant to the Offer or
the Merger or (iv) the consummation of any other transaction to be effected
pursuant or the Merger Agreement in accordance with the provisions thereof.
LITIGATION.
As reported on Form 8-K dated June 19, 2000, a complaint naming Laser Power
Corporation and certain current and former directors of the company as
defendants was served on the Corporation. It is styled C. Oliver Burt, III v.
Laser Power Corp., et al., Case No. GIC 749273 (San Diego Superior Court). The
Complaint seeks to assert a breach of fiduciary duty claim arising out of the
decision of the Board of Directors to enter into the June 2, 2000 merger
agreement with Union Miniere and requests class action relief. The Complaint
alleges, amongst other things, that the price per share offered in the Union
Miniere agreement was inadequate and unfair to the Company's shareholders and
that the following transactions were inappropriate (i) the termination fee and
no-shop provisions contained in the Union Miniere agreement; (ii) the January 1,
2000 employment agreement between the Company and its chief executive officer,
Dick Sharman, a summary of which is contained in the Information Statement
attached hereto as Exhibit 3; and (iii) stock transactions by certain Directors,
all of which transactions are a matter of public filings with the SEC. The
complaint seeks as relief, amongst other things, preliminary and permanent
injunctive relief enjoining the transactions set forth in the Union Miniere
Agreement and monetary damages in an unspecified amount. The Company and the
Board believe that this action is without merit and intend to vigorously defend
themselves.
ITEM 9. EXHIBITS.
The following Exhibits are filed herewith:
Exhibit 1 Prospectus* (incorporated by reference from Parent's
Registration Statement on Amendment No. 1 to Form S-4 filed on
August 2, 2000).
Exhibit 2 Letter of Transmittal* (incorporated by reference to Exhibit
99.01 of Parent's Registration Statement on Amendment No. 1 to
Form S-4 filed on August 2, 2000).
Exhibit 3 Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder.
Exhibit 4 Written Opinion of Roth Capital Partners, Inc. dated June 28,
2000.
Exhibit 5 Agreement & Plan of Merger between Company, Parent and Purchaser
dated June 28, 2000 (incorporated by reference to Exhibit 2.01
of Parent's Registration Statement on Form S-4 filed on July 13,
2000).
Exhibit 6 Letter to Stockholders
Exhibit 7 Confidentiality Agreement between Company and Parent dated
January 5, 2000.
Exhibit 8 First Amendment to Agreement & Plan of Merger between Company,
Parent and Purchaser dated August 1, 2000* (incorporated by
reference to Exhibit 2.02 of Parent's Registration Statement on
Amendment No. 1 to Form S-4 filed on August 2, 2000)
*Included with materials of Parent and Purchaser mailed to Stockholders
along with this Schedule 14D-9.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER POWER CORPORATION
Date: August 2, 2000 By: /s/ Bernard J. Brady
Bernard J. Brady
Vice President,
Chief Financial Officer and Secretary
(Principal Financial and Accounting
Officer)
13
<PAGE>
EXHIBIT 3
LASER POWER CORPORATION
36570 BRIGGS ROAD
MURRIETA, CALIFORNIA 92563
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND YOU ARE REQUESTED NOT
TO SEND THE COMPANY A PROXY.
This Information Statement, which is being mailed on or about August 3,
2000 to the holders of common stock, par value $.001 per share (collectively
"Shares" or "Common Shares") of Laser Power Corporation, a Delaware corporation
(the "Company"), is being furnished in connection with the possible designation
by II-VI Acquisition Corp. ("Purchaser") of persons to the Board of Directors of
the Company (the "Board") pursuant to an Agreement and Plan of Merger dated as
of June 28, 2000 (the "Merger Agreement") among the Company, Purchaser and II-VI
Incorporated ("Parent"), as amended by the First Amendment to Agreement and Plan
of Merger dated August 1, 2000.
The terms of the Merger Agreement, a summary of the events leading up to
the Offer and execution of the Merger Agreement and other information concerning
the Offer and Merger are contained in the Offer and in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
copies of which are being delivered to shareholders of the Company
contemporaneously herewith. Certain other documents (including the Merger
Agreement) were filed with the Securities and Exchange Commission (the "SEC") as
exhibits to the Schedule 14D-9 and as exhibits to the Tender Offer Statement on
Schedule TO ("Schedule TO") and the Registration Statement on Form S-4
("Registration Statement"), each filed by Purchaser and Parent on July 13, 2000,
together with that certain Registration Statement on Amendment No. 1 to
Form S-4 filed by Purchaser and Parent on August 2, 2000.
No action is required by the shareholders of the Company in connection with
the election or appointment of the Purchaser Designees (as defined below.
However, Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires mailing to the Company's shareholders of the
information set forth in this Information Statement prior to a change in a
majority of the Company's directors otherwise than at a meeting of the Company's
shareholders.
The information in this Information Statement concerning the Parent, the
Purchaser and the Purchaser Designees has been furnished to the Company by them,
and the Company assumes no responsibility for the accuracy or completeness of
such information. The Schedule TO indicates that the principal executive office
of the Parent and Purchaser is located at 375 Saxonburg Boulevard, Saxonburg, PA
16056.
GENERAL
The Common Shares are the only class of voting securities of the Company
currently issued and outstanding which are entitled to vote for the election of
directors. Each Share is entitled to one vote. As of July 1, 2000, there were
9,701,421 Shares outstanding.
Exhibit 3 - Page 1
<PAGE>
RIGHT TO DESIGNATE DIRECTORS
The Merger Agreement provides that promptly following the purchase by
Purchaser of a majority of the outstanding Shares of the Company pursuant to the
Offer, the Company will take all necessary action to cause three persons
designated by the Purchaser (the "Purchaser Designees") to be members of the
Board. Although the Merger Agreement provides that one of such designees shall
be a completely disinterested outside director, the Company, Parent and
Purchaser have agreed to waive this requirement.
Purchaser has informed the Company that each of the Purchaser Designees
listed below has consented to act as a director. To the Company's best
knowledge and belief, none of the Purchaser Designees owns any equity securities
of the Company. It is expected that the Purchaser Designees will assume office
following the acquisition by Purchaser of the number of Common Shares required
to satisfy the Minimum Condition, which cannot be earlier than August 10, 2000,
and that, upon assuming office, the Purchaser Designees will thereafter
constitute a majority of the members of the Board.
Biographical information concerning each of the Purchaser Designees and the
current directors and executive officers of the Company is presented below.
PURCHASER DESIGNEES
With respect to the Purchaser Designees, the following section, prepared
from information furnished to the Company by Purchaser, sets forth the name,
age, present principal occupation or employment and employment history for each
of the persons who may be designated by Purchaser as Purchaser Designees. If
necessary, Purchaser may choose additional or other Purchaser Designees, subject
to the requirements of Rule 14f-1. The business address of each person is c/o
II-VI Incorporated, 375 Saxonburg Boulevard, Saxonburg, PA 16056.
Carl J. Johnson, 57, a co-founder of Parent in 1971, serves as Chairman,
Chief Executive Officer, and Director of Parent. He served as President of
Parent from 1971 until 1985, and has been a Director since its founding and
Chairman since 1985. From 1966 to 1971, Dr. Johnson was Director of Research &
Development for Essex International, Inc., an automotive electrical and power
distribution products manufacturer. From 1964 to 1966, Dr. Johnson worked at
Bell Telephone Laboratories as a member of the technical staff. Dr. Johnson
completed his Ph.D. in Electrical Engineering at the University of Illinois in
1969. He holds B.S. and M.S. degrees in Electrical Engineering from Purdue
University and Massachusetts Institute of Technology (MIT), respectively. Dr.
Johnson serves as a director of Xymox Technology, Inc., Armstrong Laser
Technology, Inc. and Applied Electro-Optics Corporation.
Francis J. Kramer, 51, has served as a Director of Parent since 1989. Mr.
Kramer has been employed by Parent since 1983, and has been its President and
Chief Operating Officer since 1985. Mr. Kramer joined Parent as Vice President
and General Manager of Manufacturing, and was named Executive Vice President and
General Manager of Manufacturing in 1984. Prior to his employment by Parent, Mr.
Kramer was the Director of Operations for the Utility Communications Systems
Group of Rockwell International Corp. Mr. Kramer graduated from the University
of Pittsburgh in 1971 with a B.S. degree in Industrial Engineering and from
Purdue University in 1975 with an M.S. degree in Industrial Administration.
James Martinelli, 41, has been employed by Parent since 1986 and has served
as Treasurer, Chief Financial Officer and Assistant Secretary since May of 1994.
Mr. Martinelli joined Parent as Accounting Manager and was named Controller in
1990. Prior to his employment by Parent, Mr. Martinelli was Accounting Manager
at Tippins Incorporated and Pennsylvania Engineering Corporation from 1980 to
1985. Mr. Martinelli graduated from Indiana University of Pennsylvania in 1980
with a B.S. degree in Accounting and is a member of the Pennsylvania Institute
of Certified Public Accountants.
Exhibit 3 - Page 2
<PAGE>
None of the Purchaser Designees is a director of or holds any position with
the Company, and except as disclosed in the Offer, none of the Purchaser
Designees beneficially owns any securities (or rights to acquire any securities)
of the Company or has been involved in any transactions with the Company or any
or its directors, executive officers or affiliates that require disclosure
pursuant to the rules of the SEC, except as may be disclosed in the Offer. To
the knowledge of Parent and Purchaser, none of the Purchaser Designees has any
family relationship with any current director or executive officer of the
Company.
Purchaser has advised the Company that each of the persons listed in the
table has consented to act as a director, and that none of them has, during the
last five years, been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was, or is, subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws or is involved in
any other legal proceeding which is required to be disclosed under Item 401(f)
of Regulation S-K promulgated by the SEC.
It is expected that the Purchaser Designees will assume office promptly
upon the acquisition by Purchaser of Shares pursuant to the Offer, which cannot
be earlier than August 10, 2000.
CURRENT BOARD OF DIRECTORS
The Bylaws of the Company provide for a five member Board of Directors.
The Company currently has a four member Board of Directors, with one vacancy.
Each director holds office until his successor is elected and qualified at the
next shareholders meeting, or until his death, resignation or removal. Except
for Mr. Hogg, the members of the Board were elected at the annual meeting of
stockholders held on February 25, 2000. Mr. Hogg was appointed to fill a
vacancy created by the resignations of Mr. Fredrick.
NAME AGE POSITION
---------------------------- --- -------------------------------------------
Dick Sharman 66 Chairman, Chief Executive Officer, Director
Robert G. Klimasewski 56 Director
Robert P. Perkins 48 Director
Michael J. Hogg 56 Director
Dick Sharman, Chairman of the Board since April 2000, a director since
February 1998 and Chief Executive Officer since December 1998. Mr. Sharman was
Chairman of the Board, President and Chief Executive Officer of EMI Acquisition
Corp. ("EMI") from 1993 until February 1998, and Chairman of the Board of Exotic
Materials, Inc. ("Exotic"), a wholly owned subsidiary of EMI, from 1988 until
February 1998.
Robert G. Klimasewski, a director since 1980 and Chairman of the Board from
December 1998 to April 2000. Mr. Klimasewski has served as the Chairman of the
Board, President and Chief Executive Officer of Transmation, Inc., an electronic
instrumentation manufacturer, since 1994 and as Vice Chairman of Burleigh
Instruments, Inc., a scientific instrument and laser manufacturer, since 1972.
Robert P. Perkins, a director since February 1998. Mr. Perkins has been a
private investor and business consultant since 1991. From 1991 to February
1998, Mr. Perkins served as a director of Exotic. From June 1993 until February
1998, Mr. Perkins also served as a director of EMI.
Michael J. Hogg was appointed to the Board on April 19, 2000. Mr. Hogg
served as Chief Executive Officer of Vinten Broadcasting and Vinten Electro
Optics. Mr. Hogg retired from Vitec in 1998 and has since
Exhibit 3 - Page 3
<PAGE>
served as a business consultant with Hunting Technical Services principally
engaged in a consulting assignment for the Company's Precision Optics Group.
Board Committees and Meetings
The Board of Directors has Audit, Compensation and Special Committees. The
Board dissolved its Committee on Directors on April 28, 2000.
The Audit Committee consists of Messrs. Perkins, Klimasewski and Hogg. The
Audit Committee makes recommendations regarding the selection of independent
auditors, reviews the results and scope of the audit and other service provided
by the independent auditors and reviews and evaluates the Company's audit and
control functions.
The Compensation Committee consists of Messrs. Klimasewski and Perkins.
The Compensation Committee makes recommendations regarding the Company's 1997
Equity Incentive Plan and Employee Stock Purchase Plan as well as decisions
concerning salaries and incentive compensation for officers and employees of the
Company.
The Special Committee consists of Messrs. Perkins and Klimasewski. The
Special Committee is chartered to review, analyze and negotiate any acquisition
proposal received by the Company any matters related thereto and with the
investigation of other strategic alternatives.
DIRECTOR AND EXECUTIVE COMPENSATION
Compensation of Directors
As consideration for service on the Company's Board of Directors, non-employee
directors receive $4,000 per year. Mr. Klimasewski received a $2,000 monthly
fee for his service as non-executive Chairman of the Board and Mr. Perkins
received $4,000 for his services as interim Chief Financial Officer from March
7, 2000 through April 16, 2000. In addition, non-employee directors receive a
$1,000 fee for their attendance at each Board meeting and a $500 fee for their
attendance at each committee meeting and are reimbursed for reasonable out-of-
pocket expenses in connection with attendance at Board and committee meetings.
During fiscal year 2000, the Company granted options to the following non-
employee directors: William G. Fredrick, Jr., 5,000 shares; Robert G.
Klimasewski, 5,000 shares; Robert P. Perkins, 5,000 shares; and John C. Stiska,
5,000 shares. Options are exercisable upon grant at an exercise price of $7.50
per share. Messrs. Fredrick and Stiska subsequently resigned from the board and
their options expired.
Compensation of Executive Officers
The following table sets forth for the nine months ended July 1, 2000 and the
fiscal years ended September 30, 1999 and 1998 compensation awarded, paid or
earned by, the Company's present and former chief executive officers, the three
executive officers of the Company who earned more than $100,000 in the fiscal
year ended September 30, 1999, one former executive officer (Mr. Brawley) who
was not serving as an executive officer at the end of fiscal year 1999 and the
Company's current Chief Financial Officer (collectively, the "Named Executive
Officers"):
Exhibit 3 - Page 4
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Long-Term
Compensation Compensation
------------------------------------------ --------------
Securities
Name and Principal Underlying All Other
Position Year Salary (1) Bonus Options Compensation (2)
---------------------------- ------------ ------------- ------------ -------------- -----------------
<S> <C> <C> <C> <C> <C>
Dick Sharman (3) 2000 187,500 12,600 -
Chairman of the Board and 1999 201,100 6,600 - 87,930
Chief Executive Officer 1998 - - - -
Glenn H. Sherman, Ph.D (4)
Former Chairman of the 2000 - - - 104,501
Board and Chief Executive 1999 82,100 - - 174,400
Officer 1998 195,685 - - 34,715
Douglas H. Tanimoto, Ph.D (5) 2000 34,541 - - 180,000
Former President, 1999 160,000 - - 15,700
Research Division 1998 150,961 - - 26,279
Dean T. Hodges, Ph.D (6) 2000 6,000 - - -
Former President, 1999 155,900 - - 15,900
Microlasers Division 1998 147,019 - - 20,946
Thomas Brawley (7) 2000 - - - 63,808
Former President, 1999 159,655 26,500 - 23,100
Precision Optics Group 1998 149,004 - - 4,973
Paul P. Wickman (8) 2000 37,445 10,000 - 145,600
Former Chief Financial 1999 138,700 - 25,000 17,200
Officer 1998 129,712 - 25,000 19,460
Bernard J. Brady (9) 2000 26,538 - 60,000 -
Vice President, Treasurer 1999 - - - -
and Chief Financial Officer 1998 - - - -
</TABLE>
_______________________
(1) In accordance with the rules of the SEC, the compensation described in this
table does not include medical, group life insurance or other benefits received
by the Named Executive Officers, which are available generally to all salaried
employees of the Company, and certain perquisites and other personal benefits
received by the Named Executive Officers, which do not exceed 10% of the
officer's salary and bonus disclosed in this table.
(2) Includes premium payments made by the Company for split dollar life
insurance policies owned by the Named Executive Officers. The policy owners
assigned the Company proceeds from termination of the policies or from payment
of death benefits in an amount equal to the lesser of the cash surrender value
or the cumulative payments made by the Company on their behalf. The insurance
premium payments for Messrs. Sherman, Tanimoto, Hodges, Brawley and Wickman
amounted to (i) in fiscal 1998 $29,691, $21,191, $18,146, $0, and
Exhibit 3 - Page 5
<PAGE>
$14,765, respectively, and (ii) in fiscal 1999 $0, $10,900, $14,000, $2,900, and
$13,000, respectively. The Company terminated this benefit program during fiscal
year 1999. Also includes 401(k) Plan employer matching contributions for Messrs.
Sherman, Tanimoto, Hodges, Brawley, Wickman and Sharman of (i) in fiscal 1998
$5,024, $5,088, $2,800, $0, $4,695 and $0, respectively and (ii) in fiscal year
1999 $1,100, $4,800, $1,900, $1,100, $4,200 and $4,600, respectively.
(3) Mr. Sharman was appointed Chairman of the Board on April 28, 2000 and Chief
Executive Officer on December 4, 1998. During fiscal year 1999, $83,333 of Mr.
Sharman's salary was deferred and paid in February 2000.
(4) Dr. Sherman resigned as Chief Executive Officer and Chairman of the Board in
December 1998. Dr. Sherman's other compensation for 2000 and 1999 represents
payment for his services to the Company as a consultant.
(5) Dr. Tanimoto resigned as an executive officer and director on January 17,
2000.
(6) Dr. Hodges resigned as an executive officer on December 16, 1999.
(7) Mr. Brawley resigned as President of the Precision Optics Group, on May 12,
1999. Mr. Brawley's other compensation includes payment for his services to the
Company as a consultant.
(8) Mr. Wickman resigned as Senior Vice President, Chief Financial Officer,
Treasurer and Secretary, in March 2000. The Company re-priced 25,000 stock
options previously granted to Mr. Wickman under the 1997 Plan. See "--Option
Grants Last Fiscal Year and Option Re-pricing Information."
(9) Mr. Brady joined the Company as Vice President, Chief Financial Officer,
Treasurer and Secretary, in April 2000.
Exhibit 3 - Page 6
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under the 1997 Plan. As of
July 1, 2000, 388,922 shares remained available for grant thereunder to all
employees, including executive officers. As of June 30, 2000, options to
purchase 81,241 shares were outstanding and held by current and former executive
officers of the Company.
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during the
nine months ended July 1, 2000 and the fiscal year ended September 30, 1999 to
each of the Named Executive Officers:
<TABLE>
<CAPTION>
for Option Term (3)
Options Fiscal Price Expiration ---------------------
Name Granted Year (%)(2) ($/Share) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Dick Sharman - - - - - -
Glenn H. Sherman, Ph.D - - - - - -
Douglas H. Tanimoto, Ph.D - - - - - -
Dean T. Hodges, Ph.D - - - - - -
Thomas J. Brawley - - - - - -
Paul P. Wickman 25,000(4) 5.7 $3.00 12/8/07 $ 0(5) $ 0(5)
Bernard J. Brady 60,000 75.0 2.51 4/17/10 $106,977 $279,079
</TABLE>
__________________
(1) Options granted under the 1997 Plan generally become exercisable over a
four-year period with 25% vesting on the first anniversary of the date of grant
and the remainder vesting monthly thereafter. The options will fully vest upon
a change of control, as defined in the Company's 1997 Plan, unless the acquiring
company assumes the options or substitutes similar options. The term of the
options is ten years.
(2) Based on options to purchase 80,000 shares granted during the nine months
ended July 1, 2000 and 437,579 shares granted and re-priced in fiscal year 1999,
including to the Named Executive Officers.
(3) The potential realizable value, or gain, is calculated based on the term of
the option at its time of grant (ten years). It is calculated assuming that the
stock price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option, and that the option is
exercised and sold on the last day of its term for the appreciated stock price.
These amounts represent certain assumed rates of appreciation only, in
accordance with the rules of the SEC, and do not reflect the Company's estimate
or projection of future stock price performance. Actual gains, if any, are
dependent on the actual future performance of the Company's Common Stock and no
gain to the optionee is possible unless the stock price increases over the
option term, which will benefit all stockholders.
(4) On December 4, 1999, the Board of Directors approved a re-pricing of 25,000
stock options granted to Mr. Wickman under the 1997 Plan. The stock options
were previously granted at an exercise price of $7.00. Other than the exercise
price of the options, the terms of Mr. Wickman's stock options remained the
same. See "--Compensation of Executive Officers, Option Re-pricing
Information."
(5) Because the exercise price of the re-priced options had a greater value than
the market price of the underlying securities as of September 30, 1999, the
potential realizable value of Mr. Wickman's options is $0.
Exhibit 3 - Page 7
<PAGE>
Option Re-pricing Information
The following table shows certain information concerning the re-pricing of
options received by the Company's executive officers during the last ten years.
<TABLE>
<CAPTION>
Ten Year Option Repricing
Length of
Number of Original
Securities Term
Underlying Market Price of Exercise Price at Net Remaining at
Repriced Stock at Time of Time of Exercise Date of
Name Date Options Repricing Repricing Price Repricing
---------------------- ----------- -------------- ------------------- ------------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul P Wickman (1) 12/4/98 25,000 $1.625 $7.00 $3.00 9
</TABLE>
__________________
(1) On December 4, 1998, the Board of Directors approved a re-pricing of
certain stock options held by employees of the Company and Mr. Wickman. All of
the re-priced stock options were re-priced with an exercise price of $3.00 per
share. The Company re-priced 25,000 stock options previously granted to Mr.
Wickman under the 1997 Plan. See "--Compensation of Executive Officers, Option
Grants in Last Fiscal Year."
Exhibit 3 - Page 8
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Option Values at July 1,
2000
The following table sets forth information with respect to the exercise of
stock options by the Named Executive Officers during the nine months ended July
1, 2000 and the number and value of securities underlying unexercised options
held by the Named Executive Officers as of July 1, 2000:
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Options at
July 1, 2000 (2) July 1, 2000 (3)
-------------------------- ---------------------------
Shares
Acquired on Value
Name Exercise Realized (1) Exercisable Unexercisable Excercisable Unexercisable
-------------------------- --------------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Dick Sharman - -
Glenn H. Stephens, PhD 90,665 176,502 12,667 6,334
Douglas H. Tanimoto, PhD 120,679 700,066
Dean T. Hodges 164,500 272,197
Thomas J. Brawley 99,205 297,615
Paul P. Wickman 87,015 264,353 8,754 7,503
Bernard J. Brady - - 60,000 149,400
</TABLE>
_________________________
(1) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price (or the actual sales
price if the shares were sold by the optionee simultaneously with the exercise)
without taking into account any taxes that may be payable in connection with the
transaction.
(2) Includes both "in-the-money" and "out-of-the-money" options. "In-the-money"
options are options with exercise prices below the market price of the Company's
Common Stock.
(3) Based on the fair market value of the Common Stock as of July 1, 2000.
Amounts reflected are based on the fair market value minus the exercise price
and do not indicate that the optionee sold such stock.
Exhibit 3 - Page 9
<PAGE>
EMPLOYMENT AGREEMENTS
January 1, 2000, the Company and Dick Sharman renegotiated and extended his
employment agreement, pursuant to which Mr. Sharman receives an annual salary of
$250,000, subject to adjustment by mutual agreement of the Company and Mr.
Sharman, plus an annual bonus determined by the Board of Directors based on
achievements during the fiscal year. This agreement has a one year term that
rolls over on a monthly basis with a maximum term of three years unless Mr.
Sharman or the Company elect to terminate the agreement. The employment
agreement provides that if employment is terminated for cause or the employee
voluntarily resigns, the employee shall receive only the salary payments earned
prior to the date of termination. If employment is terminated without cause,
the employee will receive severance payments equal to his monthly salary with
full benefits for a period of twelve months. In addition, during the term of
employment, and for so long as Mr. Sharman is receiving severance payments, Mr.
Sharman will not, subject to certain limitations, compete with the Company.
On April 17, 2000, the Company entered into an Employment Agreement with Bernard
J. Brady, its Chief Financial Officer, which specifies Mr. Brady's initial
annual salary of $138,000, and provides Mr. Brady the Company's normal employee
benefits, options to purchase 60,000 shares of the Company's stock,
participation in the Company's management incentive compensation program, nine
(9) months severance and relocation reimbursement. The initial term of this
agreement is nine (9) months to a maximum thirty six (36) months. The agreement
includes non-disclosure and confidentiality provisions.
The Company had employment agreements with the following former executive
officers: (1) Dean T. Hodges, Ph.D., former President, Microlaser Division, (2)
Douglas H. Tanimoto, Ph.D., former President, Research Division and (3) Paul P.
Wickman, former Chief Financial Officer. Pursuant to these agreements, as
adjusted by the Compensation Committee, Messrs. Hodges, Tanimoto, and Wickman
were entitled to receive annual salaries of $145,000, $150,000 and $120,000,
respectively, subject to adjustment and annual bonuses at the discretion of the
Board of Directors. The Company negotiated termination of these agreements
during Fiscal 2000 and any severance paid is included in "All Other
Compensation" on the Summary Compensation Table.
The Company has entered into a Separation Agreement with Dr. Sherman pursuant to
which Dr. Sherman receives $17,333 per month and certain other benefits until
December 4, 2000 for his services to the Company as a consultant.
Mr. Brawley's service as the President of the Precision Optics Group ended on
May 12, 1999. Pursuant to a Memorandum of Understanding, dated May 21, 1999,
Mr. Brawley received severance benefits until February 2000.
Exhibit 3 - Page 10
<PAGE>
REPORT OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION/1/
The Company's executive compensation program is administered by the Board of
Directors and the Compensation Committee of the Board. The Compensation
Committee is comprised of two non-employee directors.
Overall Compensation Policy
The Board believes that for the Company to succeed, it must attract and retain
qualified executives. The Board's objective in determining the type and amount
of executive compensation is to provide a compensation package that allows the
Company to attract and retain talented executives and to align their interests
with those of stockholders.
Base Salary
Base salaries are intended to be competitive with salaries of similar executive
positions in comparable companies in the industry. Annual adjustments in base
salaries are made at the beginning of the fiscal year and therefore reflect in
large part the prior year's business and individual performance achievements.
Bonus
Annual incentive bonuses reflect the Board's belief that a significant portion
of executive compensation should be contingent upon the performance of the
Company. Accordingly, the executive officers of the Company, including the
Chief Executive Officer, participate in an annual incentive bonus plan (the
"Incentive Plan") which provides cash bonuses based upon the Company's overall
financial performance and the achievement of specified levels of profitability
and other financial and non-financial objectives. Awards are made by the Board
after reviewing recommendations made by the Compensation Committee which
establishes target profitability levels and other objectives for the ensuing
fiscal year in conjunction with the Company's annual operating plan. The
purpose of the Incentive Plan is to reward and reinforce executive management's
commitment to achieve levels of profitability and return consistent with
increasing stockholder value. Cash bonuses earned under the Incentive Plan are
paid each year upon completion of the Company's annual audit of the results of
operations for the previous fiscal year by the Company's independent auditors.
The Company paid cash bonuses of $12,600 and $10,000 during the first nine
months of fiscal year 2000 to Dick Sharman and Paul Wickman, respectively.
Long Term Incentives
The final portion of the executive officers' compensation consists of stock
options as listed in this Proxy Statement in the table entitled "Option Grants
in Last Fiscal Year". It is this award that the Company utilizes to provide
long term incentives.
____________________
/1/ The material in this report and under the caption "Performance Measurement
Comparison" are not "soliciting material," are not deemed filed with the SEC and
are not to be incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act
whether made before or after the date of this proxy statement and irrespective
of any general incorporation language therein.
Exhibit 3 - Page 11
<PAGE>
Chief Executive Officer Compensation
Dick Sharman was appointed Chief Executive Officer on December 4, 1998. During
fiscal year 1999, the Company's Chief Executive Officer was eligible to
participate in the same executive compensation plans as were available to other
executive officers of the Company, including the Incentive Plan and the 1997
Plan. Based on the Company's performance in 1998 and 1999 and the Board's
assessment of Mr. Sharman's ongoing personal performance in the position of
Chief Executive Officer, Mr. Sharman's base salary for fiscal year 1999 was
determined to be $284,430. Among the factors considered by the Board in its
consideration of Mr. Sharman's performance were progress in the development of
the Company's technologies and product lines and the further strengthening of
the Company's infrastructures. Mr. Sharman originally agreed to take over as
Chief Executive Officer for only a period of one year and during fiscal year
1999, the Company undertook a search for qualified candidates to fill the
position of Chief Executive Officer. Several candidates were interviewed,
however, given ongoing negotiations regarding the potential acquisition of the
Company, the Board did not feel that it was prudent to bring in a new Chief
Executive Officer at that time. In order to provide continuity for the Company,
the Board and Mr. Sharman agreed to a new employment agreement which is
described above in the section "Employment Agreements".
On December 4, 1998, Dr. Glenn H. Sherman tendered his resignation as Chief
Executive Officer, Chairman of the Board and director and all other positions he
held with the Company or any of its subsidiaries. The Company has entered into
a Separation Agreement with Dr. Sherman pursuant to which he receives $17,333
per month and certain other benefits until December 4, 2000 for his services to
the Company as a consultant.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
limits the Company's deduction for federal income tax purposes to no more than
$1 million of compensation paid to certain executive officers in a taxable year.
At this time, the amount of compensation (as defined for Code Section 162(m)
purposes) paid to the Company's executive officers does not exceed the $1
million pay limit and will most likely not be affected by the statute and
regulations in the near future. Compensation above $1 million may be deducted
if it is "performance-based compensation" within the meaning of the Code.
The Compensation Committee has determined that stock options granted under the
1997 Plan with an exercise price at least equal to the fair market value of the
Company's Common Stock on the date of grant will be treated as "performance-
based compensation."
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee currently consists of Messrs. Klimasewski
and Perkins. No member of the Compensation Committee has at any time been an
officer or employee of the Company, except for Mr. Perkins who served as interim
Chief Financial Officer from March 7, 2000 to April 16, 2000, for which he
received $4,000.
In September 1, 1991, the Company acquired substantially all of the assets of
Burleigh Northwest Optical, Inc. In consideration for the assets acquired, the
Company executed a secured promissory note in the amount of $150,000 payable to
Burleigh Instruments, Inc., an entity of which Robert G. Klimasewski is a
director and 50% stockholder. The note bears interest at 8.25% per annum and is
payable in 120 equal monthly installments. As of September 30, 1999, the
outstanding balance on such note was approximately $39,015. The Company
extinguished its obligation to Burleigh on May 2000.
Exhibit 3 - Page 12
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company as of July 1, 2000 by
(i) each person (or group of affiliated persons) who is known by the Company to
own beneficially more than 5% of the Company's Common Stock, (ii) the Named
Executive Officers, (iii) each of the Company's directors, and (iv) all
directors and executive officers as a group:
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
----------------------------------------
Number of Percent of
Directors, Officers and 5% Stockholders Shares Total
--------------------------------------- -------------- -------------
<S> <C> <C>
Union Miniere USA, Inc. 957,795 9.8%
3120 Highwood Boulevard, Suite 110
Raliegh, North Carolina 27604
II-VI Incorporated 1,252,100 12.9%
375 Saxonburg Boulevard
Saxonburg, Pa 16056
Dick Sharman 16,741 *
Douglas H. Tanimoto, Ph.D. 5,332 *
Robert P. Perkins (2) 60,000 *
Dean T. Hodges, Ph.D. (9) - *
Thomas J. Brawley (11) - *
Paul P. Wickman (3) 2,604 *
Robert G. Klimasewski (4) 59,491 *
Michael J. Hogg 4,000 *
Bernard J. Brady (5) 15,100 *
All directors and officers as a group (8 persons)(14) 163,268 1.7%
9,701,421
</TABLE>
__________________
* Less than one percent.
(1) This table is based upon information supplied by executive officers,
directors and principal stockholders and Schedules 13D and 13G filed with the
SEC. Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned. Applicable percentages
of beneficial ownership are based on 9,701,421 shares of Common Stock
outstanding on July 1, 2000, adjusted as required by rules promulgated by the
SEC.
(2) Includes 50,000 shares held jointly by Mr. Perkins and his wife Gail A.
Perkins, and 10,000 shares subject to options exercisable within 60 days of
July 1, 2000.
(3) Includes 2,084 shares subject to options exercisable within 60 days of
July 1, 2000.
(4) Includes 23,332 shares subject to warrants exercisable within 60 days of
July 1, 2000 and 10,000 shares subject to options exercisable within 60 days of
July 1, 2000.
(5) Includes 15,000 shares issuable upon exercise of options exercisable within
60 days of July 1, 2000.
Exhibit 3 - Page 13
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's directors and executive officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. As a
result of changing law firms, the From 4 reports required from Messrs. Perkins,
Stiska and Fredrick for the month of February were filed late.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the nine months ended July 1, 2000, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with.
PERFORMANCE MEASUREMENT COMPARISON(1)
The following table shows a comparison of cumulative total returns for the
Company, the SIC Code Index for companies listed with SIC Code 3827 "Optical
Instruments and Lenses" and the Nasdaq Market Index for the period that
commenced June 19, 1997 (the date on which the Company's Common Stock was first
traded on the Nasdaq National Market) and ended on July 1, 2000. The graph
assumes that all dividends have been reinvested.
CUMULATIVE TOTAL RETURN
(Laser Power Corporation, SIC Code Index, Nasdaq Market Index)
ASSUMES $100 INVESTED ON JUNE 19, 1997
<TABLE>
<CAPTION>
June 19 Sept. 30 March 31 Sept. 30 March 31 Sept. 30 June 30
1997 1997 1998 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C> <C> <C>
Laser Power Corp 100.00 127.47 87.91 30.77 16.48 53.50 87.91
SIC Code Index 100.00 119.95 95.57 53.47 85.05 153.88 656.13
NASDAQ Market Index 100.00 116.59 128.03 118.37 171.92 190.12 274.79
</TABLE>
________________________
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act whether made before or after the
date hereof and irrespective of any general incorporation language in any such
filing.
Exhibit 3 - Page 14
<PAGE>
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.
The Company has entered into certain additional transactions with its directors
and officers, as described under the caption "Executive Compensation."
In September 1991, the Company acquired substantially all of the assets of
Burleigh Northwest Optical, Inc. In consideration for the assets acquired, the
Company executed a secured promissory note in the amount of $150,000 payable to
Burleigh Instruments, Inc., an entity of which Robert G. Klimasewski is a
director and 50% stockholder. The note bears interest at 8.25% per annum and is
payable in 120 equal monthly installments. As of September 30, 1999, the
outstanding balance on such note was approximately $39,015. The Company
extinguished its obligation to Burleigh in May 2000.
On December 4, 1998, the Board of Directors approved a re-pricing of certain
stock options held by Mr. Wickman the Company's former Chief Financial Officer.
See "Executive Compensation - Compensation of Executive Officers."
Exhibit 3 - Page 15
<PAGE>
EXHIBIT 4
WRITTEN OPINION OF ROTH CAPITAL PARTNERS
ROTH CAPITAL PARTNERS, INC.
24 CORPORATE PLAZA
NEWPORT BEACH, CA 92660
June 28, 2000
Board of Directors
Laser Power Corporation
36570 Briggs Road
Murrieta, CA 92563
Gentlemen:
We have been requested by the Board of Directors of Laser Power Corporation
("Laser Power") to render our opinion with respect to the fairness, from a
financial point of view, to the shareholders of Laser Power of the proposed
acquisition (the "Acquistion") of Laser Power by II-VI Corporation ("II-VI").
We understand that, II-VI and Laser Power have entered into an Agreement and
Plan of Merger, dated as of June 28, 2000 (the "Merger Agreement"). The terms
of the Merger Agreement require II-VI to acquire all of the outstanding capital
stock of Laser Power with compensation of cash and newly-issued shares of II-VI
common stock. Laser Power stockholders will receive $2.89 per share in cash and
0.052 shares of II-VI stock for every share of Laser Power. The terms and
conditions of the Acquisition are set forth in more detail in the Merger
Agreement.
In connection with our opinion, we have, among other things: (i) reviewed
certain publicly available financial and other information about Laser Power and
II-VI, including the consolidated financial statements for recent years and
interim periods, and certain other relevant financial and operating data; (ii)
reviewed certain business and financial information regarding Laser Power and
II-VI furnished to us by them; (iii) reviewed the financial terms and conditions
of the Merger Agreement; (iv) reviewed information concerning the trading of
Laser Power Common Stock and II-VI Common Stock; (v) compared Laser Power and
II-VI with certain other publicly-traded companies which we deemed to be
relevant; (vi) considered the financial terms of selected recent business
combinations of companies which we deemed to be comparable to the Acquisition;
and (vii) performed such other analyses and examinations as we have deemed
appropriate.
In connection with our review, we have not assumed any obligation independently
to verify the foregoing information received from Laser Power and II-VI and have
relied on such information being accurate and complete in all material respects.
With respect to the financial forecasts for Laser Power, we have assumed that
management has reasonably prepared the forecasts of financial performance
reflecting the best available estimates and judgments at the time of preparation
and that the forecast provides a reasonable basis to assist us in forming our
opinion. Laser Power does not publicly disclose internal management forecasts
of the type provided to us in connection with our review of the Acquisition.
Such forecasts were not prepared with a view toward public disclosure. In
addition, such forecasts were based upon numerous variables and assumptions that
are inherently uncertain including, without limitation, factors related to
general economic and competitive conditions. Accordingly, actual results could
vary significantly from those set forth in such forecasts. We have assumed no
liability for such forecasts. We have also assumed that there have been no
material changes in Laser Power's or II-VI's assets, financial condition,
results of operations, business or prospects since the respective dates of their
last financial statements made available to us. We have relied on advice of
counsel and
Exhibit 4 - Page 1
<PAGE>
independent accountants of Laser Power as to all legal and financial reporting
matters with respect to Laser Power, the Acquisition and the Merger Agreement.
We have assumed that the Acquisition will be consummated in a manner that
complies in all respects with the applicable provisions of the Securities Act of
1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934 and
all other applicable federal and state statutes, rules and regulations. In
addition, we have not assumed responsibility for making an independent
evaluation, appraisal or physical inspection of any of the assets or liabilities
(contingent or otherwise) of Laser Power or II-VI, nor have we been furnished
with any such appraisals. Finally, our opinion is based on economic, monetary,
market and other conditions as in effect on, and the information made available
to us as of, the date hereof. Accordingly, although subsequent developments may
affect this opinion, we have not assumed any obligation to update, revise or
reaffirm this opinion.
We have further assumed that the Acquisition will be consummated in accordance
with the terms described in the Merger Agreement, without any further amendments
thereto, and without waiver by Laser Power or II-VI of any of the conditions to
its obligations thereunder.
In the ordinary course of our business, we may actively trade the equity
securities of Laser Power or II-VI for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
Based upon the foregoing and in reliance thereon, it is our opinion as
investment bankers that the Acquisition is fair, from a financial point of view,
to the stockholders of Laser Power as of the date hereof. This opinion is
consistent with the fairness opinion analysis presented to the Board of
Directors of Laser Power on June 23, 2000.
This opinion is directed to the Board of Directors of Laser Power in its
consideration of the Acquisition and is not a recommendation to any stockholder
as to how such stockholder should vote with respect to the Acquisition.
Further, this opinion addresses only the financial fairness of the Acquisition
and does not address the relative merits of the Acquisition and any alternatives
to the Acquisition, Laser Power's underlying decision to proceed with or effect
the Acquisition or any other aspect of the Acquisition. This opinion may not be
used or referred to by Laser Power, or quoted or disclosed to any person in any
manner, without our prior written consent, which consent is hereby given to the
inclusion of this opinion in any solicitation/recommendation statement, proxy
statement or prospectus filed with the Securities and Exchange Commission in
connection with the Acquisition. In furnishing this opinion, we do not admit
that we are experts within the meaning of the term "experts" as used in the
Securities Act and the rules and regulations promulgated thereunder, nor do we
admit that this opinion constitutes a report or valuation within the meaning of
Section 11 of the Securities Act.
Very truly yours,
ROTH CAPITAL PARTNERS, INC.
Exhibit 4 - Page 2
<PAGE>
EXHIBIT 6
LETTER TO STOCKHOLDERS OF LASER POWER CORPORATION
[LASER POWER LOGO]
July 13, 2000
To Our Stockholders:
I am pleased to inform you that on June 28, 2000 Laser Power Corporation
executed an Agreement and Plan of Merger with II-VI Incorporated, a company
listed on the Nasdaq National Market, and its wholly owned subsidiary II-VI
Acquisition Corp. Pursuant to the Agreement and Plan of Merger, II-VI
Acquisition Corp. has commenced a tender offer to purchase all of the
outstanding shares of the Company's Common Stock at a price per share of $2.89
in cash and .052 shares of II-VI common stock. The Offer provides that each
fractional share of II-VI common stock will have a minimum value of $2.26 per
share and a maximum value of $2.76 per share at closing, thereby providing a
total price of $5.15 to $5.65 per share for the Company's Common Stock.
Following conclusion of the Offer and subject to certain conditions, II-VI
Acquisition Corp. will merge into the Company, and each share of the Company's
Common Stock not acquired in the Offer will convert into a right to receive the
consideration paid pursuant to the Offer. The Offer is currently scheduled to
expire at 12:00 midnight, Eastern time, on August 10, 2000.
Your Board of Directors unanimously approved the Offer and the Merger and
has determined that the Offer and the Merger are fair to, and in the best
interests of, the Company's stockholders. The Board unanimously recommends that
stockholders accept the Offer and tender their shares.
The Offer and related materials, including a Letter of Transmittal for you to
use when tendering your shares, are enclosed with this letter. These documents
describe in detail the terms and conditions of the Offer and the Merger and
provide `how to' instructions for tendering your shares. We recommend that you
read the enclosed materials carefully.
Attached to this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission, which includes information regarding the
factors considered by your Board in its deliberations, and other information
regarding the Offer and the Merger. Included as Exhibit 3 to the Recommendation
is an Information Statement which describes a proposed change in control of the
Board pursuant to the terms of the Merger Agreement after the purchase of a
majority of the Company's shares by II-VI Acquisition Corp. Also Included as
Exhibit 4 to the Recommendation is the written opinion dated June 28, 2000, of
Roth Capital Partners, the Company's financial advisor, to the effect that, as
of the opinion date and based upon and subject to certain matters stated
therein, the $5.15 to $5.65 per share price to be received was fair to the
shareholders, from a financial point of view. We recommend that you carefully
read the Information Statement and the Roth opinion.
On behalf of the Board of Directors, I thank you for your continued
support.
Sincerely,
Dick Sharman
Chairman of the Board and
Chief Executive Officer
Exhibit 6 - Page 1
<PAGE>
EXHIBIT 7
CONFIDENTIALITY AGREEMENT
LASER POWER CORPORATION
January 5, 2000
II-VI Incorporated
375 Saxonburg Boulevard
Saxonburg, PA 16056
Attn: James Martinelli
Ladies and Gentlemen:
In order to facilitate the consideration and negotiation of a possible
negotiated transaction involving II-VI Incorporated (the "Recipient") and Laser
Power Corporation (the "Company"), the Recipient has requested access to certain
non-public information regarding the Company and its subsidiaries. This letter
agreement sets forth the Recipient's obligations regarding the use and
disclosure of such information.
The Recipient, intending to be legally bound, acknowledges and agrees as
follows:
1. Limitations on Use and Disclosure of Confidential Information. Subject
to section 4 below, neither the Recipient nor any of the Recipient's
Representatives (as defined in section 12 below) will, at any time, directly or
indirectly:
(a) make use of any Confidential Information (as defined in section II
below), except for the specific purpose of considering and evaluating
a possible transaction between the Recipient and the Company; or
(b) disclose any Confidential Information to any other Person (as
defined in Section 12 below).
The Recipient will be liable and responsible for any breach of this
letter agreement by any of its Representatives and for any other action or
conduct on the part of any of its Representatives that is inconsistent with any
provision of this letter agreement. The Recipient will (at its own expense)
take all actions necessary to restrain its Representatives from making any
unauthorized use or disclosure of any Confidential Information.
2. Company Contact. Any request by the Recipient or any of its
Representatives to review Confidential Information must be directed to the
Company's Representatives or its Chief Executive Officer (the "Company
Contacts"). Neither the Recipient nor any of the Recipient's Representatives
will contact or otherwise communicate with any employee of the Company without
the prior written authorization of the Company Contacts other than contact or
communications with employees who are stockholders of the Company in Recipient's
role as a stockholder of the Company.
3. No Representations by the Company. Subject to applicable law, the
Company Contacts will have the exclusive authority to decide what Confidential
Information (if any) is to be made available to the Recipient and its
Representatives. Neither the Company nor any of the Company's Representatives
will be under any obligation to make any particular Confidential Information
available to the Recipient or any of the Recipient's Representatives or to
supplement or update any Confidential Information previously furnished. Neither
the Company nor any of its Representatives has made or is making any
representation or warranty,
Exhibit 7 - Page 1
<PAGE>
express or implied, as to the accuracy or completeness of any Confidential
Information, and neither the Company nor any of its Representatives will have
any liability to the Recipient or to any of the Recipient's Representatives
relating to or resulting from the use of any Confidential Information or any
inaccuracies or errors therein or omissions therefrom. Only those
representations and warranties (if any) that are included in any final
definitive written agreement that provides for the consummation of a negotiated
transaction between the Recipient and the Company and is validly executed on
behalf of the Recipient and the Company (a "Definitive Agreement") will have
legal effect. Nothing in this paragraph will restrict the Recipient's right to
information as provided by applicable state and federal law.
4. Permitted Disclosures.
(a) Notwithstanding the limitations set forth in section 1 above:
(i) the Recipient may disclose Confidential Information if and
to the extent that the Company consents in writing to the Recipient's
disclosure thereof;
(ii) subject to section 4(b) below, the Recipient may disclose
Confidential Information to any Representative of the Recipient, but only
to the extent such Representative (A) needs to know such Confidential
Information for, the purpose of helping the Recipient evaluate or negotiate
a possible transaction between the Recipient and the Company, and (B) has
been provided with a copy of this letter agreement and has agreed to abide
and be bound by the provisions hereof; and
(iii) subject to section 4(c) below, the Recipient may disclose
Confidential Information to the extent required by applicable law or
governmental regulation or by valid legal process.
(b) If the Company delivers to the Recipient a written notice stating
that certain Confidential Information may be disclosed only to specified
Representatives of the Recipient, then notwithstanding anything to the contrary
contained in section 4(a)(ii) above, the Recipient shall not disclose or permit
the disclosure of any of such Confidential Information to any other
Representative of the Recipient.
(c) If the Recipient or any of the Recipient's Representatives is
required by law or governmental regulation or by subpoena or other valid legal
process to disclose any Confidential Information to any Person, the Recipient
will immediately provide the Company with written notice of the applicable law,
regulation or process so that the Company may seek a protective order or other
appropriate remedy. The Recipient and its. Representatives will cooperate fully
with the Company and the Company's Representatives in any attempt by the Company
to obtain any such protective order or other remedy. If the Company elects not
to seek, or is unsuccessful in obtaining, any such protective order or other
remedy in connection with any requirement that the Recipient disclose
Confidential Information, and if the Recipient furnishes the Company with a
written opinion of reputable legal counsel acceptable to the Company confirming
that the disclosure of such Confidential Information is legally required, then
the Recipient may disclose such Confidential Information to the extent legally
required; provided, however, that the Recipient and its Representatives will use
their best efforts to ensure that such Confidential Information is treated
confidentially by each Person to whom it is disclosed.
5. Return of Confidential Information. Upon the Company's request, the
Recipient and the Recipient's Representatives will promptly deliver to the
Company any Confidential Information (and all copies thereat) obtained or
possessed by the Recipient or any of the Recipient's Representatives; provided,
however, that, in lieu of delivering to the Company any written materials of the
type described in clause "(b)" of the first sentence of section 11 below, the
Recipient may destroy such written materials and deliver to the Company a
certificate confirming their destruction. Notwithstanding the delivery to the
Company (or the destruction by the Recipient) of Confidential Information
pursuant to this section, the Recipient and its Representatives will continue to
be bound by their confidentiality obligations and other obligations under this
letter agreement.
Exhibit 7 - Page 2
<PAGE>
6. Limitation on Soliciting Employees. During the one-year period
commencing on the date of this letter agreement, neither the Recipient nor any
of the Recipient's Representatives will solicit (other than by advertisements
not expressly directed at the Company's employees) any Person who is an employee
of the Company or any subsidiary or other affiliate of the Company as of the
date of this letter agreement or who becomes an employee of the Company or of
any subsidiary or other affiliate of the Company before the termination of
discussions regarding a possible transaction involving the Recipient and the
Company.
7. No Obligation to Pursue Transaction. Unless the Recipient and
the Company enter into a Definitive Agreement, no agreement providing for a
transaction involving the Company will be deemed to exist between the Recipient
and the Company, and the Company will be under no obligation to negotiate or
enter into any such agreement or transaction with the Recipient. Subject to
applicable law, the Company reserves the right, in its sole discretion: (a) to
conduct any process it deems appropriate with respect to any transaction or
proposed transaction involving the Company, and to modify any procedures
relating to any such process without giving notice to the Recipient or any other
Person; (b) to reject any proposal made by the Recipient or any of the
Recipient's Representatives with respect to a transaction involving the Company;
and (c) to terminate discussions and negotiations with the Recipient at any
time. The Recipient recognizes that, subject to applicable law, and except as
expressly provided in any Definitive Agreement between the Recipient and the
Company: (i) the Company and its Representatives will be free to negotiate with,
and to enter into any agreement or transaction with, any other interested party;
and (ii) the Recipient will not have any rights or claims against the Company or
any of the Company's Representatives arising out of or relating to any
transaction or proposed transaction involving the Company except its rights as a
stockholder.
8. No Waiver. No failure or delay by the Company or any of its
Representatives in exercising any right, power or privilege under this letter
agreement will operate as a waiver thereof, and no single or partial exercise of
any such right, power or privilege will preclude any other or future exercise
thereof or the exercise of any other right, power or privilege under this letter
agreement. No provision of this letter agreement can be waived or amended except
by means of a written instrument that is validly executed on behalf of the
Company and that refers specifically to the particular provision or provisions
being waived or amended.
9. Remedies. The Recipient shall indemnify and hold harmless the Company
and the Company's Representatives against and from, and shall compensate and
reimburse the Company and the Company's Representatives for, any damage, loss,
claim, liability or expense (including legal fees and the cost of enforcing the
Company's rights under this letter agreement) arising directly or indirectly out
of or resulting directly or indirectly from any unauthorized use or disclosure
of any Confidential Information or any other breach of this letter agreement.
The Recipient acknowledges that money damages would not be a sufficient remedy
for any breach of this letter agreement by the Recipient or any of the
Recipient's Representatives and that the Company would suffer irreparable harm
as a result of any such breach. Accordingly, the Company will also be entitled
to equitable relief, including injunction and specific performance, as a remedy
for any breach or threatened breach of this letter agreement. The
indemnification and equitable remedies referred to above will not be deemed to
be the exclusive remedies for a breach of this letter agreement, but rather will
be in addition to all other remedies available at law or in equity to the
Company. In the event of litigation relating to this letter agreement, if a
court of competent jurisdiction determines that the Recipient or any of its
Representatives has breached this letter agreement, the Recipient will be liable
for, and will pay to the Company and the Company's Representatives, the
reasonable legal fees incurred by the Company and the Company's Representatives
in connection with such litigation (including any appeal relating thereto).
10. Successors and Assigns; Applicable Law; Jurisdiction and Venue. This
letter agreement will be binding upon the Recipient and its Representatives and
their respective heirs, successors and assigns, and will inure to the benefit of
the Company and its Representatives and their respective heirs, successors and
assigns. This letter agreement will be governed by and construed in accordance
with the laws of the State of California (without giving effect to principles of
conflicts of laws). The Recipient and its Representatives: (a) irrevocably and
unconditionally consent and submit to the jurisdiction of the state and federal
courts located in the State of California for purposes of any action, suit or
proceeding arising out of or relating to this letter agreement; (b)
Exhibit 7 - Page 3
<PAGE>
agree that service of any process, summons, notice or document by U.S.
registered mail to the address set forth at the end of this letter agreement
shall be effective service of process for any action, suit or proceeding brought
against the Recipient or any of the Recipient's Representatives; (c) irrevocably
and unconditionally waive any objection to the laying of venue of any action,
suit or proceeding arising out of or relating to this letter agreement in any
state or federal court located in the State of California; and (d) irrevocably
and unconditionally waive the right to plead or claim, and irrevocably and
unconditionally agree not to plead or claim, that any action, suit or proceeding
arising out of or relating to this letter agreement that is brought in any state
or federal court located in the State of California has been brought in an
inconvenient forum.
11. Confidential Information. For purposes of this letter agreement,
"Confidential Information" will be deemed to include:
(a) any information (including any technology, know-how, patent
application, test result, research study, business plan, budget, forecast
or projection) relating directly or indirectly to the business of the
Company, any predecessor entity or any subsidiary or other affiliate of the
Company (whether prepared by the Company or by any other Person and whether
or not in written form) that is made available to the Recipient or any
Representative of the Recipient by or on behalf of the Company or any
Representative of the Company after the date hereof;
(b) any memorandum, analysis, compilation, summary, interpretation,
study, report or other document, record or material that is or has been
prepared by or for the Recipient or any Representative of the Recipient and
that contains, reflects, interprets or is based directly or indirectly upon
any information of the type referred to in clause "(a)" of this sentence;
(c) the existence and terms of this letter agreement, and the fact
that information of the type referred to in clause "(a)" of this sentence
has been made available to the Recipient or any of its Representatives; and
(d) the fact that discussions or negotiations are or may be taking
place with respect to a possible transaction involving the Recipient and
the Company, and the proposed terms of any such transaction.
However, "Confidential Information" will not be deemed to include:
(i) any information that is or becomes generally available to
the public or the Company's stockholders other than as a direct or
indirect result of the disclosure of any of such information by the
Recipient or by any of the Recipient's Representatives;
(ii) any information that was in the Recipient's possession
prior to the time it was first made available to the Recipient or any
of the Recipient's Representatives by or on behalf of the Company or
any of the Company's Representatives, provided that the source of such
information was not and is not bound by any contractual or other
obligation of confidentiality to the Company or any other Person with
respect to any of such information; or
(iii) any information that becomes available to the Recipient on
a non-confidential basis from a source other than the Company or any
of the Company's Representatives, provided that such source is not
bound by any contractual or other obligation of confidentiality to the
Company or any other Person with respect to any of such information.
12. Miscellaneous.
(a) For purposes of this letter agreement, a Party's
"Representatives" will be deemed to include each Person that is or becomes
(i) a subsidiary or other affiliate of such party, or (ii) an officer,
Exhibit 7 - Page 4
<PAGE>
director, employee, partner, attorney, advisor, accountant, agent or
representative of such party or of any of such party's subsidiaries or
other affiliates.
(b) The term "Person," as used in this letter agreement, will be
broadly interpreted to include any individual and any corporation,
partnership, entity, group, tribunal or governmental authority.
(c) The bold-faced captions appearing in this letter agreement have
been included only for convenience and shall not affect or be taken into
account in the interpretation of this letter agreement.
(d) The invalidity or unenforceability of any provision of this
letter agreement shall not affect the validity or enforceability of any
other provision of this letter agreement.
(e) By making Confidential Information or other information available
to the Recipient or the Recipient's Representatives, the Company is not,
and shall not be deemed to be, granting (expressly or by implication) any
license or other right under or with respect to any patent, trade secret,
copyright, trademark or other proprietary or intellectual property right.
(f) This letter agreement constitutes the entire agreement between
the Recipient and the Company regarding the subject matter hereof and
supersedes any prior agreement between the Recipient and the Company
regarding the subject matter hereof.
Very truly yours,
Laser Power Corporation
Address: 12777 High Bluff Drive
San Diego, CA 92130
Accepted:
II-VI Incorporated
Exhibit 7 - Page 5
