SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
LightPath Technologies, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
LIGHTPATH TECHNOLOGIES, INC.
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Dear Shareholders:
You are cordially invited to attend the annual meeting of the shareholders
of LightPath Technologies, Inc., which will be held at the Crowne Plaza Pyramid,
5151 San Francisco Road, N.E., Albuquerque, New Mexico, 87109, on Friday,
October 6, 2000 at 12:00 noon M.S.T.
Details of the business to be conducted at the annual meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
If you plan on attending the meeting you will need a ticket. Please contact
Shelia Acklin at 505-342-1100 extension 1601 to obtain your ticket number.
Whether of not you attend the annual meeting it is important that your shares be
represented and voted at the meeting. Therefore, I urge you to sign, date and
promptly return the enclosed proxy in the postage-paid envelope. If you can
attend the annual meeting, you will of course have the opportunity to vote in
person.
Sincerely,
/s/ Robert Ripp
Robert Ripp
Chairman of the Board
<PAGE>
LIGHTPATH TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholders:
The annual meeting of the shareholders of LightPath Technologies, Inc. will
be held at Crowne Plaza Pyramid, 5151 San Francisco Road., N.E., Albuquerque,
New Mexico, 87109 on Friday, October 6, 2000 at 12:00 noon M.S.T. for the
following purposes:
1. To elect directors;
2. To ratify the appointment of independent auditors;
3. To approve the adoption of the increase in the number of shares
available for the Omnibus Incentive Plan, and
4. To approve the adoption of the increase in the number of shares
available for the Amended and Restated Directors Stock Option Plan.
Only shareholders of record at the close of business on September 6, 2000
are entitled to notice of, and to vote, at this meeting.
By Order of the Board of Directors.
/s/ Donald Lawson
Donald Lawson
Chief Executive Officer
<PAGE>
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 6, 2000
LIGHTPATH TECHNOLOGIES, INC.
6820 ACADEMY PARKWAY EAST N.E.
ALBUQUERQUE, NM 87109
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This Proxy Statement, which was first mailed to shareholders on or about
September 8, 2000, is furnished in connection with the solicitation of proxies
by the Board of Directors of LightPath Technologies, Inc. ( the "Company"), to
be voted at the annual meeting of shareholders which will be held on October 6,
2000, at the Crowne Plaza Pyramid, 5151 San Francisco Road., N.E., Albuquerque,
New Mexico, 87109 on Friday, October 6, 2000 at 12:00 noon, for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. If you plan
on attending the meeting you will need a ticket. Please contact Shelia Acklin at
505-342-1100 extension 1601 to obtain your ticket number. Holders of Class A
Common Stock and Class E Common Stock who wish to vote at the meeting by proxy
should complete and return the enclosed proxy card. 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 (although attendance at the meeting will not in and of itself
constitute revocation of a proxy). The cost of soliciting proxies will be paid
by the Company
Only shareholders of record at the close of business on September 6, 2000,
will be entitled to vote at the meeting or any adjournment or postponement
thereof. As of the Record Date, there were approximately 18,219,442 shares of
$.01 par value Class A Common Stock and 4,022,037 shares of $.01 par value Class
E Common Stock of the Company outstanding. Holders of Class E Common Stock 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, her or its name.
On May 2, 2000, the Company commenced a class action lawsuit in the
Chancery Court of Delaware, New Castle County. The action seeks a declaratory
judgment with respect to, among other things, the right of the holders of Class
E Common Stock to vote at the meeting. As of the date this proxy statement was
printed, this issue had not yet been resolved. Therefore, Class E Common
Stockholders will receive a proxy statement, but the rights of these shares to
vote at the annual meeting is undetermined as of the date of this proxy
statement.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
Our Board of Directors currently consists of seven members. Our Board is
divided into classes serving staggered three year terms. Directors for each
class are elected at the annual meeting of shareholders held in the year in
which the term for their class expires. The term for two Class II Directors will
expire at the 2000 annual meeting. Directors elected at the 2000 annual meeting
will hold office until the 2003 annual meeting or until the election and
qualification of his or her respective successor. Information regarding the
business experience of each nominee director is provided below. Ms. Dietze has
requested that she not stand for reelection at this time due to medical reasons.
The Company has decided to leave this Class II Board seat vacant at this time.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF JAMES L. ADLER, JR.
AS A CLASS II DIRECTOR TO SERVE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN
2003.
2
<PAGE>
ELECTION OF CLASS II DIRECTORS - TERM EXPIRING IN 2000
JAMES L. ADLER, JR. (age 72) has served as a Director of the Company since
October 1997. Since 1989 he has been a partner in the law firm of Squire,
Sanders & Dempsey L.L.P., which has acted as general counsel to the Company
since February 1996. Mr. Adler was formerly a partner of Greenbaum, Wolff &
Ernst, New York City, and of Storey & Ross, Phoenix, until the merger of the
latter firm with Squire, Sanders & Dempsey L.L.P. in 1989. Mr. Adler is a
corporate, securities, energy, and international lawyer. From 1998-1999, Mr.
Adler served as President of the Arizona Business Leadership Association. He is
a member of the Arizona District Export Council and a Trustee of the Phoenix
Committee on Foreign Relations. In March 1999, Mr. Adler was appointed by the
government of Japan to a five year term as Honorary Consul General of Japan at
Phoenix. He has previously served as Chairman of the International Law Section
of the Arizona State Bar Association and, by gubernatorial appointments, as a
Member of the Investment Committee of the Arizona State Retirement System and a
Member and Chairman of the Investment Committee of the State Compensation Fund.
Mr. Adler graduated from Carleton College, magna cum laude, and from Yale Law
School in 1952. He is a member of the Arizona State Bar.
DIRECTOR NOT STANDING FOR REELECTION
KATHERINE E. DIETZE (age 42) has served as a Director of the Company since
October 1998. She has requested that she not stand for reelection at this time
due to medical reasons. She currently is a managing director in the Global
Telecommunications and Media Group in the Investment Banking Department of
Credit Suisse First Boston, a leading global investment bank which she joined in
September 1996. For the prior eleven years she was with the investment banking
firm of Salomon Brothers. Ms. Dietze received her B.A. from Brown University and
her M.B.A. from Columbia University Graduate School of Business.
CONTINUING DIRECTORS
The remaining directors are not up for election this year and will continue in
office for the remainder of their terms or earlier in accordance with our
bylaws. Information regarding the business experience of each director is
provided below.
CLASS I DIRECTORS - TERMS EXPIRING IN 2001
ROBERT RIPP (age 59) has served as Chairman of the Company since November 11,
1999. Mr. Ripp was Chairman and CEO of AMP Inc. from August 1998 until April
1999 when AMP was sold to TYCO, International Ltd. Mr. Ripp held various
executive positions at AMP from 1994 to August 1999. Mr. Ripp spent 29 years
with IBM of Armonk, NY. He held positions in all aspects of operations within
IBM culminating in the last four years as Vice President and Treasurer and he
retired from IBM in 1993. Mr. Ripp represents the Company as a member of the
LightChip, Inc. (an affiliate) board of directors. Mr. Ripp graduated from Iona
College in 1963 and in 1967 received his M.B.A. from New York University. Mr.
Ripp is currently on the board of directors of Ace, Ltd. and A.J. Gallagher both
of which are listed on the New York Stock Exchange.
LESLIE A. DANZIGER (age 47) has been Director, and former Chairwoman, of the
Company since its incorporation in June 1992, and has also held the position of
CEO until April 1998, and President from August 1995 until October 1997.
Effective January 1, 1999, Ms. Danziger, with approval of the Board, modified
the terms and responsibilities of her position to perform consulting services to
the Company until October 1999. Ms. Danziger was a partner or executive officer
of our predecessors from 1985 until incorporation of LightPath. 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 our long-term business strategies
and the development and commercialization of our 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.
3
<PAGE>
CLASS III DIRECTORS - TERMS EXPIRING IN 2002
LOUIS LEEBURG, (age 46) has served as a Director of the Company since May 1996.
Mr. Leeburg is a self-employed business consultant. 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, these funds are affiliated
with a significant stockholder of the Company.
DONALD E. LAWSON (age 49) has served as a Director of the Company and has been
CEO since April 1998, President since October 1997 and Treasurer since September
1995. He previously held the position of Executive Vice President from May 1995
until April 1998. Mr. Lawson has also served as our Chief Operating Officer
since June 1995. From 1991 to 1995, Mr. Lawson served as Vice President,
Operations for Lukens Medical Corporation, a medical device manufacturer. From
1980 to 1990, Mr. Lawson served in various capacities, including Production
Superintendent, for Ethicon, Inc., a division of Johnson & Johnson and a
manufacturer of medical products. Mr. Lawson received a B.B.A. degree in Finance
from Texas A & M University.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors has an Audit Committee, a Compensation Committee and
a Finance Committee. The Board of Directors does not have a standing nominating
committee. The entire Board of Directors held twelve meetings, including
telephonic meetings, during fiscal 2000. All the Directors attended all of the
meetings of the Board of Directors and all of the meetings held by committees of
the Board on which he or she served, with the exception of Ms. Dietze who has
attended less than 75% of the meetings due to illness.
The Audit Committee, which consists of Louis Leeburg, Leslie Danziger and
Katherine Dietze, met twice during fiscal 2000, with management and our
independent accountants to discuss the annual report and financial statements of
the Company, and the effectiveness of the Company's financial and accounting
functions and organization.
The Compensation Committee, which consists of Robert Ripp and James L.
Adler, Jr., met five times during fiscal 2000. 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 Omnibus Incentive Plan,
pursuant to which incentive awards, including stock options, are granted to
officers, and key employees of the Company.
The Finance Committee which consists of Robert Ripp, James L. Adler, Jr.,
Louis Leeburg and Donald Lawson, met four times during fiscal 2000. The Finance
Committee reviews and provides guidance to the Board of Directors and management
with respect to our major financial policies.
DIRECTORS' COMPENSATION
During fiscal 2000, non-employee Directors were compensated for their
services in cash on a quarterly basis ($1,840 per quarter) and through the grant
of options to acquire shares of Class A Common Stock based on a formula as
provided by the Directors Stock Option Plan (the "Plan"). On May 1, 1999, each
director received a nonqualified stock option to purchase 27,176 shares of Class
A Common Stock. The number of shares underlying these options was based on the
fair market value of the Class A Common Stock on the date of grant, and the
options vest ratably over their three year term. Upon appointment to the board,
each new director receives an option which vests over three years and the number
of shares to be granted is based on the fair market value of the Class A Common
Stock on the date of grant.
4
<PAGE>
All Directors are reimbursed for their reasonable out-of-pocket expenses
incurred in connection with attendance at meetings of the Board of Directors and
Committees thereof. 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.
On November 5, 1999, Mr. Ripp purchased 62,500 shares of the Company's
Class A Common Stock for $4.00 per share in connection with his election to
serve as Chairman of the Board of Directors. Mr. Ripp also received warrants to
purchase up to 281,250 shares of Class A Common Stock at $6.00 per share at any
time through November 10, 2009.
On November 11, 1999 Robert Ripp was elected to serve as Chairman of the
Board of Directors effective immediately. The Company and Mr. Ripp have agreed
that Mr. Ripp will assist the Company in a number of areas which include: the
restructure of the Company's balance sheet, provide input and guidance on our
strategic direction, monitor operating performance, and provide assistance with
investor relations and business development matters. The Company was and
continues to be anxious to have Mr. Ripp assist the Company to accelerate the
deployment of the Company's technology to enhance shareholder value.
A key objective for Mr. Ripp is to participate in the potential of the
Company by becoming a significant stakeholder as the Company works to maximize
shareholder value. In addition to Mr. Ripp's investment in Class A Common Stock
and warrants, the parties agreed to a contract with an incentive bonus
arrangement that would provide compensation to Mr. Ripp if certain market
capitalization levels were realized. At that time, the Company had approximately
7 million shares outstanding. One clause in the contract specified he would
receive a 10% cash bonus (subject to certain conditions) upon a sale or merger
of the Company for a value in excess of $250 million by December 2001. In
connection with the bonus, a substitution clause specified that if the Company
was not sold or merged by December 2001 or the Company's Class A Common Stock
price traded above certain thresholds for a stated period, he would receive
additional shares of Class A Common Stock. The Company recognized that a
non-cash compensation charge would be incurred to reflect this expense.
Shortly after the contract was signed, the Company's Class A Common Stock
price increased and the redemption of the Class A warrants caused the market
capitalization to exceed the threshold levels. The Company and Mr. Ripp believe
it is in the best interest of shareholders not to have the operating results
impacted by potentially volatile swings caused by the potential compensation
expense resulting from variable accounting treatment of the substitution clause
in Mr. Ripp's original contract.
The Company and Mr. Ripp have amended the original contract as follows: 1)
removed the substitution clause defined in the agreement and replaced it with a
fixed option agreement that will eliminate the potential for fluctuations in
future compensation charges, and 2) fixed the number of shares to be used to
determine market capitalization for the bonus to a maximum of 24 million shares
and decrease the bonus from 10% to 3.25% upon a sale or merger of the Company
for a value in excess of $250 million by December 2001. On April 12, 2000, the
Company granted Mr. Ripp two nonqualified stock options that vest on December
2001 and will have a term of ten years. The first option is for one million
shares of Class A Common Stock at an exercise price of $6 per share and the
second is for 500,000 shares of Class A Common Stock at an exercise price of $24
per share. The Company will incur a non-cash charge of approximately $18 million
for stock based compensation which will be amortized over the vesting period
(April 2000 through December 2001). This will result in a non-cash charge of
approximately $2.7 million per quarter for each quarter through December 2001.
These changes to the original contract reduced the total stock based
compensation charge as of April 12, 2000 and provides for less dilution to the
shareholders.
5
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth, as of August 7, 2000, the number and
percentage of outstanding shares of the Company's Class A and Class E Common
Stock, each as a separate class and taken together, owned 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 taken together, (ii)
each director, (iii) each of the Named Officers identified in the Summary
Compensation Table and (iv) all executive officers and Directors of the Company
as a group.
<TABLE>
<CAPTION>
Class A Common Stock Class E Common Stock
---------------------- -------------------- % of Vote of all
Name and Address of Number of Percent Number of Percent Classes of
Beneficial Owner (1) Shares (3) Owned Shares (2) Owned Common Stock
-------------------- ---------- ----- ---------- ----- ------------
<S> <C> <C> <C> <C> <C>
Robert Ripp 1,847,686(4) 10% -- -- 8.3%
Leslie A. Danziger 255,601(5) 1.4% 751,756(6) 19% 4.5%
Donald E. Lawson 220,129(7) 1.2% 25,000 1% 1%
Mark Fitch 32,500 * -- -- 1%
James L. Adler, Jr. 32,618(8) * -- -- *
Katherine Dietze 28,118(9) * -- -- *
Louis Leeburg 93,390(10,17) * 29,088(17) 1% 1%
Haydock H. Miller, Jr.(13) 67,357(11) * 73,819(12) 2% 1%
James Wimbush(15) 44,176(14) * -- -- *
The John E. Fetzer
Institute, Inc. (16) 118,447 1% 473,789 12% 3%
All executive officers
and Directors as a group
(9 persons) 2,621,575 14.4% 879,663 22% 16%
</TABLE>
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* Less than one percent.
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 and Officers is care of LightPath Technologies, Inc., 6820
Academy Parkway East N.E., Albuquerque, New Mexico, 87109.
2. Includes Classes E-1, E-2 and E-3 Common Stock.
3. Includes shares underlying options which are exercisable on August 7, 2000
or within 60 days thereafter .
4. Includes 1,503,936 shares underlying options and 281,250 shares underlying
warrants of which 120,000 are held in trusts for children and as to which
Mr. Ripp disclaims beneficial ownership.
5. Includes 202,651 shares underlying options and 37,591 Class A shares held
by Ms. Danziger's spouse.
6. Includes 101,466 shares underlying options for Class E shares and 36,363
Class E shares held by Ms. Danziger's spouse.
7. Includes 185,000 shares underlying options.
8. Includes 32,118 shares underlying options.
9. Includes 28,118 shares underlying options.
10. Includes 27,118 shares underlying options.
11. Includes 35,912 shares underlying options.
12. Includes 29,161 options for Class E shares.
13. Retired as a director of the Company in November 1999.
14. Includes 40,176 shares underlying options.
15. Resigned as a director of the Company in April 2000.
16. The address of The John E. Fetzer Institute, Inc. is 9292 KL Avenue,
Kalamazoo, Michigan 49009.
17. Includes 50,454 Class A shares and 21,816 Class E shares held directly and
indirectly by Mr. Leeburg's brother. Shares held by the John E. Fetzer
Institute are not, however, included in the beneficial ownership amounts
for Mr. Leeburg.
6
<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, 2000,
1999 and 1998 to the Company's Chief Executive Officer and the only other
executive officer of the Company whose salary and bonus exceeded $100,000 during
the last fiscal year (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------------ ------------
Class A
Name and Position Year Salary Bonus Options (1)
----------------- ---- ------ ----- -----------
Donald E. Lawson FY 2000 $166,330 (2) $75,000 100,000(5)
CEO and President (2) FY 1999 141,333 (3) 0 50,000(6)
FY 1998 125,000 (4) 0 125,000(7)
Mark Fitch FY 2000 $121,250 (8) 0 60,000(11)
Senior Vice President FY 1999 101,000 (9) 0 30,000(12)
FY 1998 70,500 (10) 0 50,000(13)
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(1) Options are for Class A Common Stock.
(2) Base salary was increased to $225,000 on April 1, 2000. Mr. Lawson
purchased Company Class A stock at fair market value through a payroll
deduction in the first quarter for a total of $8,800.
(3) Base salary was increased to $160,000 on March 1, 1999. Mr. Lawson
purchased Company Class A stock at fair market value through a payroll
deduction on a quarterly basis for a total of $12,560.
(4) Base salary was increased to $132,000 on February 1, 1998. Mr. Lawson
purchased Company Class A stock at fair market value through a payroll
deduction on a quarterly basis for a total of $8,160.
(5) Options to purchase 100,000 Class A shares, which vest ratably from April
2001 to April 2005.
(6) Options to purchase 50,000 Class A shares, of which 25,000 shares are
immediately exercisable and the balance which vested June 2000.
(7) Options to purchase 125,000 Class A shares, of which 75,000 shares are
immediately exercisable and the balance which vest as follows; 25,000
shares in June 2000 and 25,000 shares in June 2001.
(8) Base salary was increased to $130,000 on February 1, 2000.
(9) Base salary was increased to $115,000 on March 1, 1999.
(10) Mr. Fitch was hired effective October 1, 1997.
(11) Options to purchase 60,000 Class A shares, which vest as follows: 15,000
shares annually from October 2000 until April 2004.
(12) Options to purchase 30,000 Class A shares, which vest as follows: 7,500
shares annually each September until September 2002.
(13) Options to purchase 50,000 Class A shares, of which 12,500 shares are
immediately exercisable and the balance which vest as follows: 12,500 each
October until October 2001.
7
<PAGE>
The following table sets forth information regarding Options granted to each of
the Named Officers during the fiscal year ended June 30, 2000:
OPTION GRANTS FOR THE
YEAR ENDED JUNE 30, 2000
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise Price
Name Granted(1) Employees Per Share Expiration Date
---- ---------- --------- --------- ---------------
Donald E. Lawson 100,000 4.0% $23.47 April 2010
40,000 1.6% $ 4.00 October 2009
Mark Fitch 20,000 .8% $16.59 April 2010
----------
(1) Each option entitles the holder to purchase the indicated number of shares
of Class A Common Stock and has a ten year life. Mr. Lawson's option vests
as follows; 25,000 shares annually from April 2001 through April 2005. Mr
Fitch's options vest 10,000 shares annually each October through 2003 and
5,000 shares annually each April through 2004.
The following table sets forth information regarding options exercised by
each of the Named Officers during the fiscal year ended June 30, 2000 and the
value of options held by each of the Named Officers at the fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END VALUES
<TABLE>
<CAPTION>
# of Securities Value of
Underlying Unexercised
Unexercised In-the-money
Shares Options at FY End, Options at FY End
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized (2) Unexercisable Unexercisable
---- -------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Donald E. Lawson (1) 25,000 $1,192,000 185,000/125,000 $6,194,400/$2,446,425
Mark Fitch (1) 32,500 $1,414,000 0/107,500 $0/$3,502,295
</TABLE>
----------
(1) Value shown relate solely to unexercised options to purchase Class A Common
Stock and assumes a fiscal year end value of $39.81 per share of Class A
Common Stock, based on the Nasdaq National Market closing price for the
Class A Common Stock on June 30, 2000.
(2) Had the shares exercised been sold immediately upon exercise, the
individuals would have realized the gain shown.
8
<PAGE>
EMPLOYMENT AGREEMENTS
Donald E. Lawson executed a three-year employment agreement in April 1998,
when he became the Chief Executive Officer of the Company. Mark Fitch executed a
three-year employment agreement in March 1999, when he became the Senior Vice
President of the Company. These agreements provide for annual base salaries of
$225,000 and $130,000 for Mr. Lawson and Mr. Fitch, respectively. In the event
the Company terminates 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 one year with respect to Mr. Lawson, and six months with respect to
Mr. Fitch, (ii) continue to receive benefits until the earlier of obtaining
comparable employment with another company or the corresponding periods stated
in (i) above, (iii) immediate vesting of all unvested stock options, 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.
In addition, if the termination without cause 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
The Company owed an aggregate of $7,500 of deferred salary to Mr. Lawson at
June 30, 2000. This amount was placed into a contingent liability account to be
paid only upon the resolution of issues regarding the conversion of Class E-1
Common Stock into Class A Common Stock.
During the fiscal year ended June 30, 2000 the law firm in which James L.
Adler, Jr. is a partner, Squire Sanders & Dempsey L.L.P., provided legal
services to the Company for which the Company was billed approximately $425,000.
During the fiscal year ended June 30, 1999, James L. Adler, Jr. and James
Wimbush (or their firms) provided legal and consulting services to the Company
for which the Company was billed approximately $127,000. Mr. Wimbush resigned as
a member of the Board of Directors of the Company in April 2000. Neither Mr.
Adler nor Mr. Wimbush beneficially owns more than 1% of the Company's
outstanding 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
COMPLIANCE WITH SECTION 16(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. 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 year ended June 30, 2000, all Section 16(a) filing requirements
applicable to its officers, Directors and greater than 10% beneficial owners
were satisfied.
9
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PROPOSAL NO. 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the independent public accounting firm
of KPMG LLP to audit the Company's financial statements for the year ending June
30, 2001. Although it is not required to do so, the Board of Directors has
submitted the selection of KPMG LLP to the shareholders for ratification. Unless
a contrary choice is specified, proxies will be voted for ratification of the
selection of KPMG LLP. OUR BOARD OF DIRECTORS RECOMMENDS THE RATIFICATION OF ITS
SELECTION OF KPMG LLP AS OUR INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING JUNE 30, 2001.
PROPOSAL NO. 3 - APPROVAL FOR SHARES RESERVED UNDER EMPLOYEE INCENTIVE PLAN
At the meeting, the shareholders will be requested to approve an increase
in the number of shares of Class A Common Stock available for issuance under the
1992 Omnibus Incentive Plan ("Incentive Plan"). As of June 30, 2000, options for
substantially all of the shares authorized for issuance under the Incentive Plan
had been granted. The Board recommends approval of an amendment to the Incentive
Plan to permit the issuance of up to 3,275,000 shares of Class A Common Stock
thereunder. This represents an increase of 1,450,000 shares of Class A Common
Stock. A copy of the Incentive Plan may be obtained upon written request to the
Company's Investor Relations Department at the address listed on page 13.
The Board believes that, 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. The Incentive Plan
has been effective in retaining and motivating key employees and attracting and
retaining experienced and seasoned individuals to work on behalf of the Company.
DESCRIPTION OF THE PLAN
Under the terms of the Incentive Plan, employees and officers of the
Company and any subsidiary 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. No consideration is received by the
Company upon the grant of any options or awards, however, the Company will
receive consideration upon exercise of any options. To date, the only forms of
awards under the Incentive Plan have been Incentive Options and Nonqualified
Options. The Incentive Plan is administered by a committee (the "Committee") of
the Board consisting of "disinterested" directors. As of August 1, 2000,
approximately 125 persons were eligible to participate in the Incentive Plan;
however, awards may be granted only to such employees and officers of the
Company as the Committee selects from time to time in its sole discretion. In
October 1997, the Incentive Plan had 1,825,000 shares of Class A Common Stock
reserved for issuance. Since that time, options for approximately 1,741,000
shares have been granted. As of June 30, 2000, an aggregate of only 84,000
shares remain available for grant under the Incentive Plan.
Incentive Options are generally exercisable for a period of up to ten years
from the date of grant and the exercise price may not be less than the fair
market value of the Class A Common Stock on the date of the grant.
Options granted under the Incentive Plan may be exercised only while the
recipient is employed or retained by the Company or within three months after
the date of termination of employment. However, if termination is due to death
or permanent disability of the option holder, the option may be exercised within
10
<PAGE>
one year of the date of termination. To exercise an award, the option holder's
payment may be made by cash or by any other means approved by the Board of
Directors or the Committee.
Under the Incentive Plan, an option holder has none of the rights of a
stockholder with respect to the shares issuable upon the exercise of the option
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 is exercisable
only by the option holder. No option may be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution.
TAX CONSEQUENCES
The federal income tax consequences for an option holder are complex and
subject to change. The following discussion is only a summary of the general
rules applicable to the Incentive Plan.
Incentive Options holders incur no federal ordinary income tax liability at
the time of grant or upon exercise of such option. However, upon exercise, the
excess of the fair market value of the shares less the option price (the
"Spread") must be included in alternative minimum taxable income. An option
holder's basis in the shares received on exercise of an Incentive Options will
be the option price paid for such shares. Generally, 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 option holder 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
will not exceed the excess, if any, of the proceeds of such sale over the option
price. If an option holder makes a Disqualifying Disposition, the amount of the
option holder's taxable income will be deductible by the Company in the year of
the Disqualifying Disposition.
Under current tax law, there are no federal income tax consequences to
either the option holder or the Company on the grant of Nonqualified Options.
Generally, upon exercise of a Nonqualified Option, the Spread at the date of
exercise is taxable as ordinary income to the option holder in the year it is
exercised and is deductible by the Company as compensation.
The following table summarizes all options granted to i) each of the Named
Officers, and ii) all non-executive officer employees as a group (the
"Non-Executive Officer Employee Group"), as of August 7, 2000:
Shares Underlying
Name Position Options (1)(2)
---- -------- --------------
Donald E. Lawson CEO and President 310,000
Mark Fitch Senior Vice President 107,500
Non-Executive Officer Employee
Group (60 persons) 862,257
----------
1. Consists of Class A Common Stock.
2. Stock options are issued at fair market value of the underlying common
stock at date of grant. The dollar value of each of the above stock options
range shall be equal to the difference between the exercise price and the
fair market value of the common stock underlying such option on the date of
exercise.
11
<PAGE>
VOTE REQUIRED AND BOARD RECOMMENDATION
On July 11, 2000, the Board of Directors resolved, subject to approval by
the shareholders, to increase the number of shares of Class A Common Stock
available under the Incentive Plan by 1,450,000 shares to a total of 3,275,000
shares. THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE PROPOSAL TO AMEND THE
INCENTIVE PLAN.
PROPOSAL NO. 4 - APPROVAL FOR SHARES RESERVED UNDER DIRECTORS
STOCK OPTION PLAN
At the meeting, the shareholders will be requested to approve an increase
in the number of shares of Class A Common Stock available for issuance under the
Amended and Restated Directors Stock Option Plan ("Directors Plan"). As of June
30, 2000, options for substantially all of the shares authorized for issuance
under the Directors Plan had been granted. The Board recommends approval of an
amendment to the Directors Plan to permit the issuance of up to 450,000 shares
of Class A Common Stock thereunder. This represents an increase of 100,000
shares of Class A Common Stock. A copy of the Directors Plan may be obtained
upon written request to the Company's Investor Relations Department at the
address listed on page 13.
The Board believes that, to attract and retain directors of the highest
caliber, it is in the best interests of the Company and its shareholders to
provide directors of the Company, through the granting of stock options, the
opportunity to participate in the appreciation in value of the Company's common
stock.
DESCRIPTION OF THE PLAN
Under the terms of the Directors Plan, each director is granted a
Nonqualified Option with an exercise price equal to the fair market value of the
Class A Common Stock on the date of grant, and a three-year vesting period. The
number of options granted is based on a formula for total stock compensation
divided by the fair market value of the Class A Common Stock on the date of
grant.
The Directors Plan currently has 350,000 shares of Class A Common Stock
reserved for issuance. Since inception, approximately 267,000 shares have been
awarded. As of June 30, 2000, an aggregate of only 83,000 shares remain
available for grant under the Directors Plan.
Nonqualified Options are generally exercisable for a period of up to 10
years from the date of grant. To exercise an option, the option holder's payment
may be made by cash or by any other means approved by the Board of Directors or
the Committee.
Under the Directors Plan, an option holder has none of the rights of a
stockholder with respect to the shares issuable upon the exercise of the
options, 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 Directors Plan. During the lifetime of
the recipient, an award is exercisable only by the option holder. No option may
be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent and distribution.
TAX CONSEQUENCES
The federal income tax consequences for a director are complex and subject
to change. The following discussion is only a summary of the general rules
applicable to options granted under the Directors Plan.
12
<PAGE>
Under current tax law, there are no federal income tax consequences to
either the director or the Company on the grant of Nonqualified Options.
Generally, upon exercise of a Nonqualified Option, the Spread at the date of
exercise is taxable as ordinary income to the option holder in the year it is
exercised and is deductible by the Company as compensation.
VOTE REQUIRED AND BOARD RECOMMENDATION
On July 11, 2000, the Board of Directors resolved, subject to approval by
the shareholders, to increase the number of shares of Class A Common Stock
available under the Directors Plan by 100,000 shares to a total of 450,000
shares. THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE PROPOSAL TO AMEND THE
DIRECTORS PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG LLP to audit the financial
statements of the Company for the fiscal year ending June 30, 2001. KPMG LLP has
served as the Company's independent public accountants since June 1996.
Representatives of KPMG LLP are expected to be present at the Annual Meeting and
will have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 2001
annual shareholders' meeting must be received by the Company no later than May
11, 2001, 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 as to which the Company did
not have notice of prior to August 1, 2000 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.
2000 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, 2000, as filed with the Securities and Exchange
Commission have been included in this mailing. Additional copies may be obtained
without charge upon written request to Investor Relations, LightPath
Technologies, Inc., 6820 Academy Parkway East N.E., Albuquerque, New Mexico
87109.
Albuquerque, New Mexico
Dated: September 6, 2000
13
<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 each of Robert Ripp and Donald Lawson, 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
October 6, 2000, at noon, M.S.T. at the Crowne Plaza Pyramid, 5151 San Francisco
Road, NE, Albuquerque, New Mexico, 87109 and any adjournments or postponements
thereof, and thereat to vote all shares of Class A and Class E 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) Proposal No. 1: Election of Class II Director: Nominees are James L. Adler,
Jr.
[ ] FOR [ ] WITHHOLD AUTHORITY
to vote for the following nominees:__________
(2) Proposal No. 2: Ratify the selection of KPMG LLP as independent accountants
for the Company for the fiscal year ending June 30, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN__________
(3) Proposal No. 3: Approval to amend the 1992 Omnibus Incentive Plan to
increase the number of shares of Class A Common Stock available for
issuance thereunder by 1,450,000 shares to a total of 3,275,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN__________
(4) Proposal No. 4: Approval to amend the Amended and Restated Directors Stock
Option Plan to increase the number of shares of Class A Common Stock
available for issuance thereunder by 100,000 shares to a total of 450,000
shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN__________
In his/her discretion, the proxies are 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)
<PAGE>
(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 II DIRECTOR, "FOR" THE RATIFICATION OF THE SELECTION OF KPMG LLP AS
INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30,
2001, "FOR" AN AMENDMENT TO THE 1992 THE OMNIBUS INCENTIVE PLAN TO INCREASE THE
NUMBER OF SHARES OF CLASS A COMMON STOCK AVAILABLE FOR ISSUANCE THEREUNDER BY
1,450,000 SHARES TO A TOTAL OF 3,275,000 SHARES AND, "FOR" AN AMENDMENT TO THE
AMENDED AND RESTATED DIRECTORS STOCK OPTION PLAN TO INCREASE THE NUMBER OF
SHARES OF CLASS A COMMON STOCK AVAILABLE FOR ISSUANCE THEREUNDER BY 100,000
SHARES TO A TOTAL OF 450,000 SHARES. 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;______________________________2000
(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.)
