SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Lightpath Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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/_/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
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*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
LightPath Technologies, Inc.
6820 Academy Parkway East N.E.
Albuquerque, NM 87109
================================================================================
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 30, 1996
To the Shareholders of LightPath Technologies, Inc.:
The annual meeting of the shareholders of LightPath Technologies, Inc., (the
"Company") will be held at the Holiday Inn Pyramid, 5151 San Francisco Road NE,
Albuquerque, New Mexico, 87109 on Monday, September 30, 1996 at 4:00 p.m. M.S.T.
for the following purposes:
1. To elect one Director to Class III of the Board of Directors to
serve for a three year term in accordance with the articles of
incorporation;
2. To consider and act upon a proposal to ratify the selection of
KPMG Peat Marwick, LLP as the Company's independent public
accountants for the fiscal year ending June 30, 1997; and
3. To consider and act upon a proposal to increase the number of
shares of Class A common stock which may be issued upon exercise
of options granted under the Company's June 1992 Omnibus
Incentive Plan from 104,545 shares to 325,000 shares.
4. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of Business on August 28, 1996, are entitled
to vote at the meeting and at any adjournment of postponement thereof. Shares
can be voted at the meeting only if the holder is present or represented by
proxy. A list of shareholders entitled to vote at the meeting will be available
for inspection at the Company's corporate headquarters for any purpose germane
to the meeting during ordinary business hours for ten (10) days prior to the
meeting.
A copy of the Company's 1996 10-KSB, which includes certified financial
statements, is enclosed. Management and the Board of Directors cordially invite
you to attend the annual meeting.
By order of the Board of Directors,
/s/ Leslie A. Danziger
Leslie A. Danziger
Chairman, President
Albuquerque, New Mexico
September 4, 1996
<PAGE>
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
LightPath Technologies, Inc.
6820 Academy Parkway East N.E.
Albuquerque, NM 87109
================================================================================
The accompanying proxy is solicited by the Board of Directors of
LightPath Technologies, Inc., a Delaware corporation ("Company") for use at its
annual meeting of shareholders to be held on September 30, 1996, or any
adjustment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. This Proxy Statement and
the accompanying form of proxy are first being mailed to shareholders on or
about September 6, 1996.
SOLICITATION AND VOTING OF PROXIES
The cost of soliciting proxies, including the cost of preparing and
mailing the Notice and Proxy Statement, will be paid by the Company.
Solicitation will be primarily by mailing this Proxy Statement to all
shareholders entitled to vote at the meeting. Proxies may be solicited by
officers and directors of the Company personally or by telephone or facsimile,
but at no additional compensation. The Company may reimburse brokers, bankers,
and others holding shares in their names for others for the cost of forwarding
proxy material and obtaining proxies from their principals.
Only shareholders of record at the close of business on August 28,
1996, may vote at the meeting or any adjournment or postponement thereof. As of
that date, there were 2,722,191 shares of $.01 par value Class A Common Stock
and 3,878,785 shares of $.01 par value Class E Common Stock of the Company, and
no outstanding shares of Preferred Stock of the Company. Holders of Class E-1,
Class E-2 and Class E-3 vote together as a single class with the Class A Common
Stock, and each shareholder of record is entitled to one vote for each share of
Common Stock registered in his or her name. Cumulative voting is not permitted.
The Company's Bylaws provide that a majority of all the shares of stock
entitled to vote, whether present in person or represented by proxy, shall
constitute a quorum for the transaction of business at the meeting. Votes
withheld from any proposal or director nominee are counted for purposes of
determining the presence of a quorum, but have no legal effect under Delaware
law. Abstentions and broker non-votes will also be included in the determination
of the number of shares represented for a quorum. For purposes of determining
whether the requisite amount of shares have been cast in favor of a proposal,
"Abstentions" will have the same effect as a vote against the proposal. However,
broker non-votes will not be counted for purposes of voting on proposals. The
Company shall in advance of the meeting, appoint one or more Inspectors of
Election to count all proxies, votes and ballots at the meeting and make a
written report thereof.
All valid proxies received before the meeting and not revoked will be
exercised. All Shares represented by proxy will be voted, and where a
shareholder specifies by means of his or her proxy a choice with respect to any
matter to be acted upon, the shares will be voted in accordance with the
specifications so made. If no choice is indicated on the proxy, the shares will
be voted in accordance with the recommendations of the Board of Directors as to
such matters. Proxies may be revoked at any time prior to the time they are
voted by: (a) delivering to the Secretary of the Company a written instrument of
revocation bearing a date later than the date of the proxy; or (b) duly
executing and delivering to the Secretary a subsequent proxy relating to the
same shares; or (c) attending the meeting and voting in person (attendance at
the meeting will not in and of itself constitute revocation of a proxy).
1
<PAGE>
Compliance With Section(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). 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. Form 3 filings which were required at the date of the IPO by Leslie
A. Danziger, Louis P. Wagman, Donald E. Lawson, David W. Collins, Milton Klein
and Haydock H. Miller Jr., were filed late. Based solely upon a review of the
copies of such forms furnished to the Company, or written representations that
no Forms 5 were required, the Company believes that during the period from the
IPO until June 30, 1996, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with,
with the exception that the newly elected member to the board of directors,
Louis Leeburg, did not file a Form 3 at the time of his election and Mr. Lawson
did not file a Form 4 when stock options were granted to him on July 8, 1996 but
both submitted a Form 5 by August 15, 1996.
SECURITY OWNERSHIP OF PRINCIPAL STECKHOLDERS AND MANAGEMENT
The following table sets forth, as of August 15, 1996, the number and
percentage of outstanding shares of the Company's Class A, and Class E Common
Stock, by (i) each stockholder known by the Company to own beneficially five
percent or more of the outstanding Class A and Class E Common Stock of the
Company, (ii) each director, (iii) each person named in the Executive
Compensation Table and (iv) all executive officers and directors of the Company
as a group.
<TABLE>
<CAPTION>
(1) Class A (2) Class E
Common Stock Common Stock
------------ ------------
% of Vote of all
Name and Address of Number of Percent Number of Percent Classes of Common
Beneficial Owner Shares Owned Shares Owned Stock
---------------- ------ ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
Leslie A. Danziger 112,946 (3) 4% 751,878(4) 19% 13%
Louis P. Wagman 18,742 (5) * 99,965(6) 3% 2%
Donald E. Lawson 22,000 (7) 1% 25,000 1% 1%
David W. Collins 4,907 (8) * 19,627(9) * *
Milton Klein 29,945(10) 1% 119,786(11) 3% 2%
Louis Leeburg 9090(15) * 36,360(15) 1% 1%
Haydock H. Miller, Jr. 18,454(12) * 73,819(13) 2% 1%
The John E. Fetzer 118,447 4% 473,789 12% 9%
Institute, Inc. (14)
All executive officers 216,088 8% 1,126,435 29% 20%
and directors as a group
(7 persons)
</TABLE>
- --------------------
* Less than one percent.
2
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1. Except as otherwise noted, each of the parties listed above has sole
voting and investment power over the securities listed. The address for
all directors is care of LightPath Technologies, Inc., 6820 Academy
Parkway East N.E., Albuquerque, New Mexico, 87109.
2. Includes Class E-1, E-2 and E-3 Common Stock.
3. Includes 25,397 Class A shares represented by immediately exercisable
options and 9,090 Class A shares represented by immediately exercisable
options held by Joel Goldblatt, Ms. Danziger's spouse.
4. Includes 101,589 Class E shares represented by immediately exercisable
options and 36,360 Class E shares represented by immediately exercisable
options held by Joel Goldblatt, Ms. Danziger's spouse.
5. Includes 18,218 Class A shares represented by immediately exercisable
options.
6. Includes 72,873 Class E shares represented by immediately exercisable
options.
7. Includes 22,000 Class A shares represented by immediately exercisable
options.
8. Includes 1,091 Class A shares represented by immediately exercisable
options.
9. Includes 4,364 Class E shares represented by immediately exercisable
options.
10. Includes 11,720 Class A shares represented by immediately exercisable
options.
11. Includes 46,880 Class E shares represented by immediately exercisable
options.
12. Includes 10,182 Class A shares represented by immediately exercisable
options.
13. Includes 40,727 Class E shares represented by immediately exercisable
options.
14. The address of The John E. Fetzer Institute, Inc. is 9292 KL Avenue,
Kalamazoo, Michigan 49009.
15. Includes 7272 Class A shares and 29088 Class E shares held by Mr.
Leeburg's brother. Mr. Leeburg is the treasurer and trustee for two funds
associated with the John E. Fetzer Institute, Inc. which do not hold any
shares in the Company. Shares held by the John E. Fetzer Institute, Inc.
are not, however, included in the beneficial ownership amounts for Mr.
Leeburg.
Voting Trust Agreement
Stockholders of the Company owning an aggregate of 1,105,704 shares of
Common Stock, which represents 17% of the total voting power outstanding at June
30, 1996, entered into a Voting Trust Agreement dated January 10,1996. Pursuant
to that Agreement, Leslie A. Danziger, the President and Chairman of the
Company, is designated as the trustee of the trust and empowered to vote all
shares subject to the trust with respect to any matter subject to a vote by the
Company's stockholders, including voting in favor of the election of herself as
a director of the Company and in favor of ratification and approval of acts of
herself as a director in the conduct of business affairs of the Company.
Consequently, combined with her individual holdings, Ms. Danziger will
effectively control 27% of the total voting power of the Company. The
stockholders' agreements to deposit their shares in the voting trust are
irrevocable for 13 months following February 22, 1996. Thereafter, parties to
the agreement may withdraw their shares upon ten days' prior written notice. The
Voting Trust Agreement terminates upon the earlier of five years or the date on
which Ms. Danziger ceases to be Chairman of the Board or resigns as trustee
under the Agreement.
PROPOSAL No. 1 - BOARD OF DIRECTORS
CLASS III DIRECTOR - TERM EXPIRING IN 1996
The term of the Class III director on the Company's Board of Directors expires
as of the meeting. At the meeting, one Class III director will be elected to
serve a term of three years and until the election and qualification of his
respective successor. David W. Collins had served as the Class III director of
the Company since 1992. In June 1996, Dr. Collins determined not to stand for
reelection and tendered his resignation from the Board of Directors effective
September 30, 1996.
3
<PAGE>
The nominee receiving the greatest number of votes cast at the annual meeting of
shareholders will be elected to Class III of the Board of Directors. In May 1996
the Board of Directors elected to increase the size of the board by one member.
The Board of Directors elected Mr. Louis Leeburg to fill this vacancy and has
nominated Mr. Leeburg for election by the shareholders at the meeting. The Board
of Directors recommends voting "For" Louis Leeburg as a Class III director to
serve until the annual meeting of shareholders in 1999.
Louis Leeburg, age 42 has served as a Director of the Company since May 1996.
Since 1993 Mr. Leeburg has been with the investment firm, Jay A. Fishman, Ltd.
From December 1988 until August 1993 he was the Vice President, Finance of The
Fetzer Institute, Inc. From 1980 to 1988 he was in financial positions with
different organizations with an emphasis in investment management. Mr. Leeburg
was an audit manager for Price Waterhouse & Co. until 1980. Mr. Leeburg received
a B.S. in accounting from Arizona State University. Mr. Leeburg is a member of
Financial Foundation Officers Group and the treasurer and trustee for the John
E. Fetzer Memorial Trust Fund and the John E. Fetzer ILM Trust Fund, affiliated
with a significant stockholder of the Company.
Unless otherwise instructed, the proxies will vote to elect the above listed
nominee. Shareholders are not entitled to cumulate votes. If the nominee becomes
unavailable for reelection for any reason, or if a vacancy on the Board should
occur before the annual meeting, which events are not anticipated, the shares
represented by the enclosed proxy may be voted for such other persons as the
Board of Director may recommend.
CONTINUING DIRECTORS
CLASS II DIRECTORS - TERMS EXPIRING IN 1997
Milton Klein, M.D. has been a Director of the Company since its
inception. Dr. Klein is principally involved in medically related uses for
LightPath GRADIUM materials. In March 1992 Dr. Klein organized the Company's
group of scientific advisors to explore the use of the Company's technology in
endoscopic equipment, microscopy and related medical optical systems. Dr. Klein
specializes in cardiology and from 1982 to the present has been a Clinical
Associate Professor of Medicine at The Baylor College of Medicine, Houston,
Texas. He is a Fellow of the American College of Cardiology and the American
College of Physicians. Dr. Klein received a B.S. degree from McGill University
and an M.D. from the University of California in San Diego. Dr. Klein is the
brother-in-law of Leslie A. Danziger.
CLASS I DIRECTORS - TERMS EXPIRING IN 1998
Leslie A. Danziger has been Chairman of the Company since its
incorporation in June 1992, and has also held the position of President since
August 1995, Ms. Danziger was a partner or executive officer of the Company's
predecessors from 1985 until incorporation of the Company. Ms. Danziger is a
founder of the Company and a co-inventor of the first two LightPath patents. She
has developed and guided the execution of the Company's long-term business
strategies and the development and commercialization of the Company's
technologies. From 1974 to 1979 she served as an Executive Vice President of
COS, Inc., and from 1979 to 1982 she served as Executive Vice President of
Arctic Communications Corporation. Both of these communication consulting firms
developed tools designed to assist clients in resolving conflicts relating to
economic development, land use and natural resource issues. Ms. Danziger
attended the University of Texas. Ms. Danziger is married to Joel C. Goldblatt,
the Company's Vice President of Strategic Planning and Communications, and is
the sister-in-law of Milton Klein, M.D., a Director of the Company.
Haydock H. Miller, Jr. has served as a Director of the Company since
January 1993. Since that time he has advised the Company on administrative,
management and financial matters. Mr. Miller served as an executive with the
Aluminum Company of America (ALCOA) from 1949 until his retirement in 1983. Mr.
Miller received a B.A. degree from Yale University. His last position with ALCOA
was Manager of Organization Analysis, an internal consulting group for all ALCOA
departments and divisions prior hereto he was Manager for salaried job
evaluations for ALCOA and its subsidiaries and immediately before that, was
4
<PAGE>
Superintendent of several ALCOA plants, concentrating on quality control and
production techniques, and consultant to its operations in the United Kingdom.
Since 1983, Mr. Miller has been an independent management consultant.
Meetings and Committees of the Board of Directors
The Board of Directors held 8 meetings, including telephonic meetings,
during the fiscal year ended June 30, 1996. Each of the directors attended all
of the meetings of the Board of Directors and of the meetings held by committees
of the Board on which he served. The Board of Directors has a Compensation
Committee which met two times during the fiscal year ended June 30, 1996. The
Compensation Committee reviews and recommends to the Board of Directors the
compensation and benefits of all officers of the Company and also administers
the Company's Omnibus Incentive Plan, pursuant to which incentive awards,
including stock options, are granted to officers and key employees. The Board of
Directors appointed an Audit Committee comprised of Louis Leeburg on July 8,
1996. It is anticipated that the Audit Committee will review, with the Company's
independent accountants, the annual financial statements of the Company, and
also will review the effectiveness of the Company's financial and accounting
functions and organization and make recommendations to the Board of Directors in
that regard.
Directors' Compensation
During the year end June 30, 1996 directors were not compensated for
their services in that capacity or for serving on committees. On July 8, 1996
the Board of Directors approved a proposal to compensate each non-employee
director $1,000 per meeting attended. Non-employee Directors serving on the
Company's Board receive nonqualified stock options of Class A Common Stock as
part of the Directors Stock Plan. The plan provides for an automatic annual
grant of 182 shares and an initial option grant of 900 shares at the time a
director commences service to the Company. On August 21, 1996, the Board of
Directors approved a proposal to modify the plan for fiscal 1997, to provide for
an automatic annual grant of 3,000 shares and an initial option grant of 10,000
shares at the time a director commences service to the Company.
All Directors are reimbursed for their reasonable out-of-pocket
expenses incurred in connection with attendance at Board and Committee meetings.
Directors who are employees of the Company do not receive compensation for
service on the Board or Committees of the Board other than their compensation as
employees.
PROPOSAL No. 2 - SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The independent auditors utilized by the Company during the fiscal year ended
June 30, 1996 was Ernst & Young LLP. When the Company relocated to Albuquerque
in April 1996, management decided to review its financial services since Ernst &
Young LLP did not have offices in Albuquerque. Upon the recommendation of the
Board of Directors, the Company, has selected KPMG Peat Marwick LLP as
independent public accountants to audit the financial statements of the Company
for the fiscal year ending June 30, 1997 and to perform other accounting
services as requested by the Company. There were no disagreements on accounting
practice with Ernst & Young LLP.
Although it is not required to do so, the Board of Directors has submitted the
selection of KPMG Peat Marwick LLP to the shareholders for ratification. Unless
a contrary choice is specified, proxies will be voted for ratification of the
selection of KPMG Peat Marwick LLP. The Board of Directors unanimously
recommends the ratification if its selection of KPMG Peat Marwick LLP as the
Company's independent public accountants for the fiscal year ending June 30,
1997.
5
<PAGE>
PROPOSAL No. 3 - AMEND 1992 OMNIBUS INCENTIVE PLAN
A total of 104,545 shares of Class A common stock are available for
issuance under the 1992 Omnibus Incentive Plan ("Incentive Plan"). Substantially
all of such shares are accounted for by outstanding options. On August 21, 1996,
the Company's Board of Directors resolved to increase the number of shares
available under the Incentive Plan to 325,000 shares.
The Board believes that in order to attract and retain officers and
employees of the highest caliber, provide increased incentive for such persons
to strive to attain the Company's long-term goal of increasing shareholder
value, and to continue to promote the well being of the Company, it is in the
best interests of the Company and its shareholders to provide officers and
employees of the Company, through the granting of stock options, the opportunity
to participate in the appreciation in value of the Company's common stock.
Incentive Plan has been effective in retaining and motivating key employees and
attracting and retaining experienced and seasoned individuals on behalf of the
Company. As of June 30, 1996 options to purchase an aggregate of 102,384 shares
had been granted under the Incentive Plan. Additionally, the Board has
authorized for grant options to purchase an additional 80,000 shares, which
options will be deemed to have been granted under the Incentive Plan in the
event the stockholders approve the proposed amendment to the Incentive Plan at
the Meeting. To the extent the amendment is not approved by the stockholders at
the Meeting, the aforementioned options will be considered to have been granted
outside the Plan. The Board of Directors recommends voting "For" the proposal to
amend the Incentive Plan.
Pursuant to the terms of the Incentive Plan, employees and officers of
the Company and any subsidiary corporations are eligible to receive incentive
stock options ("incentive options") within the meaning of Section 422 of the
Internal Revenue Code ("Code"), as well as options that do not qualify as
incentive options ("nonqualified options"), stock appreciation rights,
restricted stock awards and/or performance bonuses of cash or stock. To date,
the only forms of awards under the Incentive Plan have been incentive and
nonqualified stock options. The Incentive Plan, is administered by a committee
of the Board consisting of "disinterested" directors as defined in Rule 16b-3
Securities Exchange Act of 1934. Awards may be granted only to such employees
and officers of the Company as the committee shall select from time to time in
its sole discretion.
Incentive options are exercisable for a period of up to 10 years from
the date of grant at an exercise price which is not less than the fair market
value of the Common Stock on the date of the grant, except that the term of an
incentive option granted under the Incentive Plan to a stockholder owning more
than 10% of the outstanding voting power may not exceed five years and its
exercise price may not be less than 110% of the fair market value of the common
stock on the date of the grant. To the extent that the aggregate fair market
value, as of the date of grant, of the shares for which incentive options become
exercisable for the first time by an optionee during the calendar year exceeds
$100,000, the portion of such option which is in excess of the $100,000
limitation will be treated as a nonqualified option. The Company will not issue
options with exercise prices below the fair market value of the Class A common
stock on the date of grant of the option. For the 18 month period following the
IPO, the Company also agreed not to issue options with exercise prices below the
initial public offering price.
Awards granted under the Incentive Plan may be exercised only while the
recipient is employed or retained by the Company or within three months of the
date of termination of employment. However, awards which become exercisable at
the time of termination by reason of death or permanent disability of the
optionee may be exercised within one year of the date of termination of
employment. Upon the exercise of an award, payment may be made by cash or by any
other means the Board of Directors or the committee determines.
Under the Incentive Plan, an award recipient has none of the rights of
a stockholder with respect to the shares issuable upon the exercise or
satisfaction of conditions for the award, until such shares are issued. No
adjustment may be made for dividends or distributions or other rights for which
the record date is prior to the date of exercise, except as provided in the
Incentive Plan. During the lifetime of the recipient, an award shall
6
<PAGE>
be exercisable only by the recipient. No option may be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of decent and distribution.
Under current tax law, there are no Federal income tax consequences to
either the employee of the Company on the grant of nonqualified options if
granted under the terms set forth in the Incentive Plan. Upon exercise of a
nonqualified option, the excess of the fair market value of the shares subject
to the option over the option price (the "Spread") at the date of exercise is
taxable as ordinary income to the optionee in the year it is exercised and is
deductible by the Company as compensation for Federal income tax purposes, if
Federal income tax is withheld on the Spread. However, if the shares are subject
to vesting restrictions conditioned on future employment or the holder is
subject to short-swing profits liability restrictions of Section 16(b) of the
Exchange Act (i.e., is an executive officer, director or 10% stockholder of the
Company), then taxation and measurement of the Spread is deferred until such
restrictions lapse, unless a special election is made under 83(b) of the Code to
report such income currently without regard to such restrictions. The optionee's
basis in the shares will be equal to the fair market value on the date taxation
is imposed and the holding period commences on such date.
Incentive option holders incur no regular Federal income tax liability
at the time of grant or upon exercise of such option, assuming that the optionee
was an employee of the Company from the date the option was granted until 90
days before such exercise. However, upon exercise, the Spread must be added to
regular Federal taxable income in computing the optionee's "alternative minimum
tax" liability. An optionee's basis in the shares received on exercise of an
incentive stock option will be the option price of such shares for regular
income tax purposes. No deduction is allowable to the Company for Federal income
tax purposes in connection with the grant or exercise of incentive options.
If the holder of shares acquired through exercise of an incentive
option sells such shares within two years of the date of grant of such option or
within one year from the date of exercise of such option (a "Disqualifying
Disposition"), the optionee will realize income taxable at ordinary rates.
Ordinary income is reportable during the year of such sale equal to the
difference between the option price and the fair market value of the shares at
the date the option is exercised, but the amount includable as ordinary income
shall not exceed the excess, if any, of the proceeds of such sale over the
option price. In addition to ordinary income, a Disqualifying Disposition may
result in taxable income subject to capital gains treatment if the sales
proceeds exceed the optionee's basis in the shares (i.e., the option price plus
the amount includable as ordinary income). The amount of the optionee's taxable
income will be deductible by the Company in the year of the Disqualifying
Disposition.
7
<PAGE>
Executive Compensation
The following table sets forth the compensation paid or accrued by the
Company for the services rendered during the fiscal years ended June 30, 1996,
1995 and 1994 to the Company's Chief Executive Officer and the other executive
officers of the Company or any employee who earned in excess of $100,000 during
the last fiscal year (collectively, the "Named Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
-------------------------- Long Term
Annual Compensation Compensation
--------------------- ------------
Bundled Stock Class A
Name and Position Year Salary Bonus Options (1) Options (2)
- ----------------- ---- ------ ----- ----------- -----------
<S> <C> <C> <C> <C> <C>
Leslie A. Danziger
Chairman, President FY 1996 $150,000(3)
FY 1995 150,000(4) 90,910
FY 1994 120,000(5) 36,077
Louis P. Wagman
Executive Vice President FY 1996 120,000(6)
FY 1995 120,000(7) 5,000 58,182
FY 1994 120,000(8) 32,909
Donald E. Lawson
Executive Vice President FY 1996 90,000(9) 25,000
FY 1995 10,269(10)
</TABLE>
(1) With respect to the Bundled Stock Options, the total amount of shares
indicated consists of 20% shares of Class A common stock, 30% shares of
Class E-1common stock, 30% shares of Class E-2 common stock, and 20% shares
of Class E-3 common stock.
(2) Options are for Class A common stock only.
(3) Of this amount, $125,591 was paid, and the remainder has been deferred
contingent upon the Company meeting the Class E-1 conversion conditions.
(4) Of this amount, $31,250 was paid, $30,250 has been deferred contingent upon
the Company meeting the Class E-1 conversion conditions and the remainder
converted into Class E common stock at a $1 per share conversion price.
(5) Of this amount, $37,500 was paid and the remainder converted into Class E
common stock at a $1 per share conversion price.
(6) Of this amount, $111,410 was paid and the remainder has been deferred
contingent upon the Company meeting the Class E-1 conversion conditions.
(7) Of this amount, $87,500 was paid, $32,500 has been deferred contingent upon
the Company meeting the Class E-1 conversion conditions and the remainder
converted into Class E common stock at a $1 per share conversion price.
(8) Of this amount, $78,750 was paid, $16,250 has been deferred contingent upon
the Company meeting the Class E-1 conversion conditions and the remainder
converted into Class E common stock at a $1 per share conversion price.
(9) Of this amount, $65,000 was paid, and the remainder converted into Class E
common stock at a $1 per share conversion price.
(10) Of this amount, $2,770 was paid, and the remainder has been deferred
contingent upon the Company meeting the Class E-1 conversion conditions.
Mr. Lawson was hired in May 1995.
8
<PAGE>
The following table sets forth information regarding Options granted to
the Named Officers during the fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
Option Grants For The
Year Ended June 30, 1996
Options % of Total
Name Granted(1) Options Granted Exercise Price Expiration Date
- ---- ---------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Leslie A. Danziger 0 0 0 -
Louis P. Wagman 0 0 0 -
Donald E. Lawson 25,000 45% $5.00 Feb. 22, 2006
</TABLE>
(1) Options represented are to purchase shares of Class A Common Stock.
The following table sets forth information regarding options exercised by the
Named Officers during the fiscal year June 30, 1996 and the value of options
held by the Named Officers at the fiscal year end.
<TABLE>
<CAPTION>
Option Exercises And Year End Values
# of Unexercised Value of
Options at FY end, Unexercised
Shares Exercisable/ In-The-Money
Name Acquired on Value Unexercisable Options at FY End
Exercise Realized -Class A (3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leslie A. Danziger (1) 0 $0 126,987/0 $105,787
Louis P. Wagman (1) 0 $0 91,091/0 $ 75,882
Donald E. Lawson (2) 0 $0 10,000/15000 $3,750/5,625
</TABLE>
(1) The options presented are Bundled Stock Options and the total amount of
shares indicated consists of 20% shares of Class A common stock, 30% shares
of Class E-1 common stock, 30% shares of Class E-2 common stock, and 20%
shares of Class E-3 common stock.
(2) Options represented are to purchase shares of Class A common stock.
(3) Assumes a fiscal year end value of $5.375 per share of Class A common
stock. To compute the unrealized value of Class A common stock, the
underlying E shares were excluded and 20% of the option exercise price was
attributed to the Class A portion of the options. If the E shares were
included neither the shares held by Ms. Danziger or Mr. Wagman would be
in-the-money at June 30, 1996.
9
<PAGE>
Employment Agreements
Effective November 8, 1995, the Company entered into three-year
employment agreements with its senior executive officers, Leslie A. Danziger,
Louis P. Wagman and Donald E. Lawson. The agreements provide for base salaries
of $150,000, $120,000 and $90,000 for Ms. Danziger, Mr. Wagman and Mr. Lawson,
respectively. In the event the Company terminates any of the executive's
employment during the term of the agreement without cause, or in the event the
executive terminates the agreement for good reason, the executive is entitled to
(i) continue to receive salary until the earlier of obtaining comparable
employment with another company or the lapse of two years, with respect to Ms.
Danziger, one year, with respect to Mr. Wagman, and six months, with respect to
Mr. Lawson, (ii) continue to receive benefits until the earlier of obtaining
comparable employment with another company or the corresponding periods stated
in (i) above, (iii) have all unvested stock options become immediately
exercisable, and (iv) receive a lump sum payment equal to the average of the
annual bonuses paid to the executive during the previous three fiscal years. The
Agreement defines "cause" to mean termination due to felony conviction, willful
disclosure of confidential information or willful failure to perform the
executive's duties. The Agreement defines "good reason" as a material
detrimental alteration in the executive's position or responsibilities, a
material reduction in compensation, relocation, exclusion from compensation
plans or fringe benefits enjoyed by other executives, or a material breach by
the Company. The executive officers have agreed not to terminate for good reason
as a result of the Company's move to Albuquerque, New Mexico. In addition, if
the termination under the foregoing events occurs after a change in control of
the Company, the executive shall also receive a lump sum severance payment equal
to 2.99 times the executive's annual compensation, including bonuses. The
Agreement defines "change in Control" as an acquisition of 40% of Company's
combined voting power by any party, a change in the majority of the directors
over a two-year period (unless supported by the incumbent directors), a
reorganization or other business combination resulting in the present
stockholders of the Company no longer owning more than 50% of the combined
voting power of the Company, a sale of substantially all of the assets of the
Company or other similar transactions. The employment agreements reaffirm the
executives' agreements pursuant to previously executed confidential information
and invention agreements to, among other things, not compete with the Company
for a period of two years following termination of employment and to assign any
inventions, patents and other proprietary rights to the Company. Any
controversies regarding the employment agreements are to be settled by binding
arbitration.
CERTAIN TRANSACTIONS
During the period from November 1993 through August 1995, the Company
deferred payment of salary to its executive officers due to a shortage of
working capital. In November 1995, Leslie A. Danziger, Louis P. Wagman and
Donald E. Lawson agreed to convert $300,000, $25,000 and $25,000, respectively,
of deferred salary into shares of Class E Common Stock at an average per share
conversion price of $1.00 per share. Consequently, Ms. Danziger received 112,500
shares of Class E-1 Common Stock, 112,500 shares of Class E-2 Common Stock and
75,000 shares of Class E-3 Common Stock. Messrs. Wagman and Lawson each received
9,375 shares of Class E-1 Common Stock, 9,375 shares of Class E-2 Common Stock
and 6,250 shares of Class E-3 Common Stock. Mr. Wagman also converted a $5,000
bonus into common stock at a conversion price of $1 per share. He received 182
shares of Class A Common Stock, 273 shares of Class E-1 Common Stock, 273 shares
of Class E-2 Common Stock and 182 shares of Class E-3 Common Stock. An aggregate
of $119,500 of deferred salary is owed to the executive officers at June 30,
1996 and was placed into a contingent liability account to be paid only upon the
accomplishment of the milestones for conversion of the Class E-1 common stock
into Class A common stock.
10
<PAGE>
From January to July 1995, the Company privately placed units
consisting of a $50,000 promissory note (Unit Notes) and 1,818 Class A shares,
2,727 Class E-1 shares, 2,727 Class E-2 shares and 1,818 Class E-3 shares for a
per unit purchase price of $50,000. Family members of Leslie A. Danziger and
Louis P. Wagman purchased units in that private offering on the same terms as
other investors. In September, October and November 1995, the Company agreed
with certain holders of the Unit Notes to convert such notes into shares of
Class A and Class E Common Stock at an adjusted per share conversion rate of
$5.50 per share. As additional consideration for the debt conversion, the
Company issued an aggregate of 214,000 Class A Warrants to all of the Unit Note
holders. In connection with the foregoing, family members of Leslie A. Danziger
and Louis P. Wagman, each agreed to convert their respective outstanding debt
into 19,220, and 18,666 shares of Class A and Class E Common Stock,
respectively, and received 21,000 and 17,000 Class A Warrants, respectively. The
19,220 represents 3,844 Class A shares, 5,766 Class E-1 shares, 5,766 Class E-2
shares and 3,844 Class E-3. The 18,666 represents 3,733 Class A shares, 5,600
Class E-1 shares, 5,600 Class E-2 shares and 3,733 Class E-3 shares.
During the fiscal year ended June 30, 1996 and 1995, David W. Collins
and Haydock H. Miller, Jr., Directors of the Company, provided legal and
consulting services to the Company for which they billed the Company
approximately, $58,000 and $54,000 respectively. In February 1994, Dr. Collins
converted $54,000 of receivables into a six month loan. In June 1995, Dr.
Collins agreed to convert this loan into shares of Class A and Class E common
stock. In addition the company was provided legal and consulting services by
several individuals and companies who are shareholders (none of which own more
than .05% of common stock) of the Company, for which they billed $144,000. The
Company has retained the legal services of a shareholder for licensing work to
be performed during fiscal year 1997 for $90,000 of which half is paid in cash
and half in Class A common stock.
Milton Klein, a Director of the Company, loaned the Company $50,000 in
January 1995 in consideration for a three month promissory note bearing interest
at an annual rate of 9%. The note was subsequently converted to a Unit Note
consisting of a $50,000 promissory note and 1,818 Class A shares, 2,727 Class
E-1 shares, 2,727 Class E-2 shares and 1,818 Class E-3 shares as part of the
private placement noted above. In September, 1995, Dr. Klein agreed to convert
the $50,000 note, receiving 1,926 Class A shares, 2,889 Class E-1 shares, 2,889
Class E-2 shares and 1,926 Class E-3 shares and the Company issued Dr. Klein
16,000 Class A Warrants as part of its debt conversion efforts. Additionally, in
November 1995, Dr. Klein converted other indebtedness owed to him by the Company
in the total amount of $27,984 into 1,018 Class A shares, 1,527 Class E-1
shares, 1,527 Class E-2 shares and 1,018 Class E-3 shares.
In connection with the Company's initial public offering, the Company
agreed with certain other debt holders to convert outstanding debt into shares
of Class A and Class E Common Stock of the Company (in the same proportion as
the Recapitalization) at an adjusted per share conversion price per share of
$5.50 per share. In connection with the debt conversion on the same terms as
other debt holders, the John E. Fetzer Institute, Inc. (a principal stockholder
of the Company) converted debt of $2,043,241 into 74,300 shares of Class A
Common Stock, 111,450 shares of Class E-1 Common Stock, 111,450 shares of Class
E-2 Common Stock and 74,300 shares of Class E-3 Common Stock.
The Company believes that all of the transactions set forth above were
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties. In addition, ongoing and future transactions
with affiliates will be on terms no less favorable than may be obtained from
third parties, and any loans to affiliates will be approved by a majority of the
disinterested directors.
11
<PAGE>
SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's
1997 annual shareholders' meeting must be received by the Company no later than
May 9, 1997, to be evaluated by the Board for inclusion in the proxy statement
for that meeting.
OTHER BUSINESS
The Board of Directors is not aware of any other business to be
considered or acted upon at the annual meeting of shareholders other than that
for which notice is provided, but in the event other business is properly
presented at the meeting, requiring a vote of shareholders, the proxy will be
voted in accordance with the judgment on such matters of the person or persons
acting as proxy. If any matter not appropriate for action at the meeting should
be presented, the holders of the proxies shall vote against the consideration
thereof or action thereon.
1996 ANNUAL REPORT ON FORM 10-KSB
Copies of the Company's annual report included in the Form 10-KSB for
the fiscal year ended June 30, 1996, as filed with the Securities and Exchange
Commission have been included in this mailing. Additional copies may be obtained
without charge by any shareholder to whom this proxy statement is delivered upon
written request to Investor Relations, LightPath Technologies, Inc., 6820
Academy Parkway East N.E., Albuquerque, New Mexico 87107.
By order of the Board of Directors,
/s/ Leslie A. Danziger
Leslie A. Danziger
President
Albuquerque, New Mexico
September 4, 1996
12
<PAGE>
LightPath Technologies, Inc.
6820 Academy Parkway East N.E.
Albuquerque, NM 87109
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Leslie A. Danziger, as the attorney and
proxy of the undersigned, with full power of substitution, for and in the name
and stead of the undersigned, to attend the Annual Meeting of Stockholders of
LightPath Technologies, Inc. (the "Company") to be held on September 30, 1996,
at 4:00 p.m., M.S.T. at the Holiday Inn Pyramid, 5151 San Francisco Road NE,
Albuquerque, New Mexico, 87109 and any adjournment or postponement thereof, and
thereat to vote all shares of Common Stock which the undersigned would be
entitled to cast if personally present at indicated herein:
PLEASE MARK YOUR CHOICES IN BLUE OR BLACK INK
(1) Election of Class III Director: Nominees is Louis Leeburg
FOR the nominee
WITHHOLD AUTHORITY to vote for the nominee
(2) Proposal No. 2, ratify the selection of KPMG Peat Marwick as independent
accountants for the Company for fiscal year ended June 30, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Proposal No. 3, amend the 1992 Omnibus Incentive Plan to increase the
authorized shares for issuance under the plan from 104,545 to 325,000
shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In his/her discretion, the proxy is authorized to vote on such other
business as may properly be brought before the meeting or any adjournment
or postponement thereof.
(Please date and sign on the reverse side)
(Continued from other side)
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
SUCH DIRECTION IS GIVEN, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEE FOR CLASS III DIRECTOR, "FOR" THE RATIFICATION OF THE SELECTION OF KPMG
PEAT MARWICK AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR
ENDED JUNE 30, 1997 AND "FOR" THE PROPOSAL TO AMEND THE 1992 OMNIBUS INCENTIVE
PLAN. THIS PROXY ALSO DELEGATES AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER
BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting,
Proxy Statement and Form 10-KSB of LightPath Technologies, Inc.
PLEASE SIGN, DATE AND MAIL THIS
PROXY PROMPTLY IN THE ENCLOSED
REPLY ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED
STATES.
___________________________________
SIGNATURE
___________________________________
SIGNATURE
Dated;_________________________1996
(When signing as an attorney,
executor, administrator, trustee or
guardian, please give title as
such. If stockholder is a
corporation please sign in full
corporate name by a duly authorized
officer or officers. Where stock is
issued in the name of two or more
persons, all such persons should
sign.)
