As filed with the Securities and Exchange Commission on January 10, 2000
Registration No._______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
LIGHTPATH TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 3674 86-0708398
(State or other jurisdiction of (Primary Standard Industrial (I. R. S. Employer
incorporation or organization) Classification Code Number) Identification No.)
6820 Academy Parkway East, N.E., Albuquerque, New Mexico 87109
(505) 342-1100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Donald Lawson
Chief Executive Officer
Lightpath Technologies, Inc.
6820 Academy Parkway East, N.E.
Albuquerque, New Mexico 87109
(505) 342-1100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Joseph Crabb, Esq.
Squire, Sanders & Dempsey L.L.P
40 North Central Avenue
Phoenix, Az 85004
Telephone: (602) 528-4000
Facsimile: (602) 253-8129
APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: As soon as practicable after
the effective date of this Registration Statement. If the only securities being
registered on this form are being offered pursuant to dividend or interest
reinvestment plans, please check the following box [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462 (c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ] __________
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE AGGREGATE PRICE PROPOSED AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT * OFFERING PRICE REGISTRATION FEE
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Class A Common stock,
$.01 par value 2,279,847** $20.875 $47,591,806 $12,564.24
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* Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933, as amended,
pursuant to Rules 457 (c) and 457 (h) under the Securities Act, on the
basis of the average of the high and low prices for shares of Common Stock
as reported by the Nasdaq SmallCap Market on January 5, 2000.
** Represents estimated number of shares issuable upon conversion of
outstanding Preferred Stock, as payment of interest on the Preferred Stock,
and upon exercise of Class K and Class L Warrants.
In accordance with Rules 416 and 457 under the Securities Act of 1933, the
shares of common stock registered hereby shall also be deemed to cover an
indeterminate number of additional shares of common stock to be issued as a
result of the conversion of the Preferred Stock or as a result of the exercise
of the warrants referred to in this footnote to prevent dilution resulting from
stock splits, stock dividends or similar transactions.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDER MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JANUARY 10, 2000
PROSPECTUS
LIGHTPATH TECHNOLOGIES, INC.
2,279,847 SHARES
OF CLASS A COMMON STOCK
THE ISSUER
We manufacture, market and distribute optoelectronic, fiber telecommunication
and traditional optics products that incorporate our proprietary GRADIUM glass
and other fiber optic packaging technologies. Our current product line consists
of glass lenses, single mode fiber collimators and fiberoptic optomechanical
switches. To date, we have made sales primarily to laser manufacturers and third
parties for their evaluation of our products as components of their own product
offerings. We have not yet made substantial sales of telecommunication products
for broad commercial use.
We can be located at:
LightPath Technologies, Inc.
6820 Academy Parkway, N.E.
Albuquerque, New Mexico 87109
Telephone: (503) 342-1100
THE OFFERING
All of the shares of common stock being offered in this prospectus will be
issued by LightPath Technologies to the shareholders who are offering them for
sale. The total shares covered by this prospectus will be issued to the selling
shareholders upon conversion of Series F Preferred Stock and upon exercise of
their outstanding warrants. The selling shareholders can use this prospectus to
sell all or part of the shares they receive through the exercise of their Series
F Preferred Stock and warrants. In addition, this prospectus relates to 73,597
shares outstanding from prior sales of common stock and 281,250 shares will be
issued to the Chairman of the Board upon exercise of the Warrant.
MARKET FOR COMMON STOCK
Our common stock is traded in the over-the counter market through the Nasdaq
SmallCap Market system.
Closing Price
Symbol on January 5, 2000
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LPTHA $20.875
PROCEEDS FROM THIS OFFERING
The shares offered here will be sold at prices agreed to by the selling
shareholders, which may be the then prevailing market price or a negotiated
price. All of the proceeds from sales of the shares will be received by the
shareholders making the sale, minus any commissions or expenses they incur. We
will receive up to $4,760,500 from the exercise, if any, of warrants by the
selling shareholders. We will bear all of the costs and expenses of registering
the shares under the federal and state securities laws. These total costs and
expenses are estimated to be $34,564.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING AT PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is January 10, 2000.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information
with the U.S. Securities and Exchange Commission. You may read and copy any
document that we have filed at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, DC, 20549. Please call the SEC at 1-800-SEC-0330 for
further information about the operation of its public reference facilities. Our
SEC filings are also available to you free of charge at the SEC's web site at
http://www.sec.gov.
Copies of publicly available documents that we have filed with the SEC
can also be inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
We have filed a registration statement on Form S-3 with the SEC that
covers the resale of the common stock offered by this prospectus. This
prospectus is a part of that registration statement, but the prospectus does not
include all of the information included in the registration statement. You
should refer to the registration statement for additional information about us
and the common stock being offered in this prospectus. Statements that we make
in this prospectus relating to any documents filed as an exhibit to the
registration statement or any document incorporated by reference into the
registration statement may not be complete and you should review the referenced
document itself for a complete understanding of its terms.
The SEC allows us to "incorporate by reference" to the information we file
with them, which means that we can disclose important information to you in this
prospectus by referring you to those documents. The documents that have been
incorporated by reference are an important part of the prospectus, and you
should be sure to review that information in order to understand the nature of
any investment by you in the common stock. In addition to previously filed
documents that are incorporated by reference, documents that we file with the
SEC after the date of this prospectus will automatically update the registration
statement. The documents that we have previously filed and that are incorporated
by reference into this prospectus include the following:
+ our annual report on Form 10-KSB/A-2 for the fiscal year ended June 30,
1999;
+ our proxy statement relating to the 1999 Annual Meeting except that
information shown under "Security Ownership of Principal Stockholders and
management" has been modified by certain recent events as described in this
prospectus on page 14;
+ our quarterly report on Form 10-QSB/A for the quarter ended September 30,
1999; and
+ the description of our Class A Common Stock included in our registration
statement on Form 8-A filed on January 13, 1996.
All documents and reports filed by us pursuant to Sections 13 (a), 13 (c),
14 or 15 (d) of the Securities Exchange Act of 1934 after the date of this
prospectus and prior to the date that this offering is terminated will
automatically be incorporated by reference into this prospectus.
We will provide you with copies of any of the documents incorporated by
reference, at no charge to you, however, we will not deliver copies of any
exhibits to those documents unless the exhibit itself is specifically
incorporated by reference. If you would like a copy of any document, please
write or call us at:
LightPath Technologies, Inc.
6820 Academy Parkway, N.E.
Albuquerque, New Mexico 87109
Attn: Corporate Secretary
Telephone: (505) 342-1100
You should only rely upon the information included in or incorporated
by reference into this prospectus or in any prospectus supplement that is
delivered to you. We have not authorized anyone to provide you with additional
or different information. You should not assume that the information included in
or incorporated by reference into this prospectus or any prospectus supplement
is accurate as of any date later than the date on the front of the prospectus or
prospectus supplement.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY SHOULD BE READ BY YOU TOGETHER WITH THE MORE
DETAILED INFORMATION INCLUDED AT OTHER SECTIONS OF THIS PROSPECTUS. IN ADDITION,
YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER "RISK FACTORS"
BEGINNING AT PAGE 6 OF THIS PROSPECTUS. OUR FISCAL YEAR ENDS ON JUNE 30 AND
REFERENCES TO YEARS IN THIS PROSPECTUS REFER TO OUR FISCAL YEAR ENDED AS OF JUNE
30 OF THE REFERENCED CALENDAR YEAR.
LIGHTPATH TECHNOLOGIES, INC.
LightPath produces GRADIUM(R) glass, utilizes other optical materials
and specialized optical packaging concepts to producE products that manipulate
light, and performs research and development for optical solutions in the fiber
telecommunications and traditional optics markets.
WHAT IS GRADIUM GLASS? GRADIUM glass is an optical quality glass
material with varying refractive indices, capable of reducing optical
aberrations inherent in conventional lenses and performing with a single lens
tasks traditionally performed by multi-element conventional lens systems. We
believe that GRADIUM glass lenses provide advantages over conventional lenses
for certain applications. By reducing optical aberrations, we believe that
GRADIUM glass lenses can provide sharper images, higher resolution, less image
distortion, a wider usable field of view and a smaller focal spot size. By
reducing the number of lenses in an optical system, GRADIUM glass can provide
more efficient light transmission and greater brightness, lower production
costs, and a simpler, smaller product. Although other researchers have likely
sought to produce optical quality lens material with properties similar to that
of GRADIUM glass, we are not aware of any other person or firm that has
developed a repeatable manufacturing process for producing such material on a
prescribable basis. To date, LightPath has been issued eighteen US patents for
GRADIUM glass products and currently has numerous filed patent applications
pending related to our GRADIUM glass materials composition, product design and
fabrication processes for production. Additional patent applications have been
filed or are in process for laser fusion techniques and fiberoptic
optomechanical switch technologies. We are continually developing new GRADIUM
glass materials with various refractive index and dispersion profiles and for
the telecommunications field; fiberoptic optomechanical switches, multiplexers,
interconnects and cross-connects.
TO WHAT INDUSTRIES ARE LIGHTPATH'S GRADIUM GLASS PRODUCTS BEING
MARKETED? We believe that GRADIUM glass and our other optical materials can
potentially be marketed for use in most optics and optoelectronics products.
During 1998, we restructured our internal organization and marketing focus with
the intended purpose of serving two distinct markets: optoelectronics and fiber
telecommunications and traditional optics (e.g. lasers, medical equipment,
consumer optics, etc.).
Optoelectronics technologies consist of an overlap of photonics and
electronics and are key enablers of "Information Age" technologies, such as
fiber optic communications, optical data storage, laser printers, digital
imaging, and sensors for machine vision and environmental monitoring. Prior to
1998, we targeted various optoelectronic industry market niches as potential
purchasers of our GRADIUM glass products. During 1998, we began to develop
products for the emerging optoelectronics markets, specifically in the areas of
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fiber telecommunications. With the resolution of fiber optic issues concerning
packaging and alignment and utilizing advances made by LightChip, an affiliate,
in the area of WDM equipment, we began to produce and demonstrate a passive
optoelectronic product, the single mode fiber collimator assembly. During 1999
we expanded this product line with the goal of demonstrating to the
telecommunication optical components industry our ability to provide low cost
products and provide solutions to their telecom needs.
For traditional optics, we initially emphasized laser products because
our management believed at that time that GRADIUM lenses could have a
substantial immediate commercial impact in laser products with a relatively
small initial financial investment. Generally, optical designers can substitute
GRADIUM glass components from our standard line of products in lieu of existing
conventional laser lens elements. Lasers are presently used extensively in a
broad range of consumer and commercial products, including fiber optics,
robotics, wafer chip inspection, bar code reading, document reproduction and
audio and video compact disc machines. Because GRADIUM glass can concentrate
light transmission into a much smaller focal spot than conventional lenses, we
believe, and customers' test results confirm, that GRADIUM glass has the ability
to improve the current standard of laser performance. One of our distributors,
Permanova Lasersystems AB of Sweden, qualified GRADIUM YAG lenses into systems
produced by Rofin-Sinar GmbH, a significant original equipment manufacturer,
OEM, of high-powered CO2 and YAG lasers headquartered in Germany. Our growth
strategy is to increase our emphasis on key laser market niches and establish
the necessary products and partnership alliances to sell into Europe and Asia as
well as the U.S. market. During fiscal 1999, LightPath and Rodenstock
Prazisionsoptik GmbH (Rodenstock) executed an agreement to transfer to
Rodenstock the exclusive, application-related utilization and distribution of
GRADIUM lenses throughout the whole of Europe. The agreement was for an initial
five-year period. Rodenstock's one hundred years of experience in the field of
advanced optical systems and employs over 6,000 people worldwide, will be a
strong asset to the expansion of LightPath's presence in Europe. We have
established relationships with eight foreign distributors. We believe these
distributors will enable us to establish and maintain a presence in foreign and
domestic markets without further investment in this product area. In addition to
laser applications, we, through our printed and Internet on-line catalog, offer
a standard line of GRADIUM glass lenses for commercial sales to optical
designers developing particular systems for OEMs or in-house products.
HOW HAS LIGHTPATH DEVELOPED GRADIUM GLASS PRODUCTS? From our inception
in 1985 until June 1996, we were classified as a development stage enterprise
that engaged in basic research and development. We believe that most of our
product sales made during this period were to persons evaluating the commercial
application of GRADIUM glass or using the products for research and development.
During fiscal year 1997, our operational focus begin to shift to commercial
product development and sales. We completed numerous prototypes for production
orders and received our first orders for catalog sales of standard lens
profiles. We also began to offer standard, computer-based profiles of GRADIUM
glass that engineers use for product design. During fiscal 1998, sales of lenses
to the traditional optics market continued with significant increases in sales
of lenses used in the YAG laser market, catalog and distributor sales, and
lenses used in the wafer inspection markets. In fiscal year 1998, we also began
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to explore the development of products for emerging markets such as
optoelectronics, photonics and solar due to the number of potential customers
inquiries into the ability of GRADIUM glass to solve optoelectronic problems,
specifically in the areas of fiber telecommunications. Our resolution of
packaging and alignment issues, and advances made by LightChip, an affiliate,
with WDM equipment, led us in 1998 to develop a strategy for entering the
optoelectronic markets. Our first passive optoelectronic product, a single mode
fiber collimator assembly, or SMF assembly, was demonstrated in February 1998.
The SMF assembly is a key element in all fiber optic systems, including WDM
equipment. The SMF assembly straighten and make parallel, diverging light as it
exits a fiber. Beginning in fiscal 1999, we began offering, and have delivered
for testing to potential customers, three product levels, the collimating lens,
the SMF assembly and the large beam collimating assembly. The telecommunications
collimator marketplace is currently estimated by industry experts to generate
annual gross revenues of $125 million in 1999 with projected growth to $256
million in five years.
The current focus of our development group has been to expand
application of GRADIUM products to the areas of fiberoptic optomechanical
switches, multiplexers, interconnects and cross-connects for the
telecommunications field, further refinement of the crown glass product line to
supplement its existing flint products, and further development of acrylic axial
gradient material to extend the range of existing product applications.
WHERE YOU CAN FIND US. LightPath was incorporated in Delaware in 1992.
Our corporate headquarters are located at 6820 Academy Parkway East N.E.,
Albuquerque, New Mexico, 87109 and our telephone number is (505) 342-1100.
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THE OFFERING
Securities Offered by the A total of 2,279,847 shares of Class A
Selling Shareholders ............. Common Stock are covered by this
prospectus. These shares are being
offered as follows:
1,925,000 shares issuable upon conversion
of outstanding Series F Preferred Stock
and upon exercise of Class K and Class L
warrants;
73,597 shares of outstanding restricted
common stock; and
281,250 shares issuable upon exercise of
the Warrant held by Mr. Ripp.
A description of the terms of the common
stock, preferred stock and warrants are
included in this prospectus under
"Selling Shareholders" at page 15.
Common Stock Outstanding as of November 30, 1999:
Class A Common Stock 6,833,199 shares(1)(3)
Class E-1 Common Stock 1,492,480 shares(2)
Class E-2 Common Stock 1,492,480 shares(2)
Class E-3 Common Stock 994,979 shares(2)
Use of Proceeds ................... We will not receive any of the proceeds
of sales of common stock by the Selling
shareholders but we will receive up to
$4,760,500 from the exercise, if any, of
warrants by the selling shareholders.
Risk Factors ...................... The shares of common stock offered hereby
involve a high degree of risk. See "Risk
Factors" on page 6.
Nasdaq SmallCap Market Symbols .... Class A Common Stock - "LPTHA"
Units - "LPTHU"
Class A Warrants - "LPTHW"
Class B Warrants - "LPTHZ"
- ----------
(1) Does not include shares underlying options outstanding at November 30, 1999
to purchase 1,284,516 shares of Class A Common Stock, (which includes
71,102 options which the holders receives, upon exercise, 71,102 Class A
shares, 106,652 shares of Class E-1, 106,652 shares of Class E-2 and 71,102
shares of Class E-3 Common Stock) which are exercisable at option exercise
prices ranging from $2.84 to $51.56 per share and 887,984 shares of Class A
Common Stock reserved for issuance upon future grants of options under
LightPath's stock option plans.
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(2) Each share of outstanding Class E-1 Common Stock, Class E-2 Common Stock
and Class E-3 Common Stock, collectively referred to as the Class E shares,
will, on a class basis, automatically convert into Class A Common Stock if
and as the Company attains certain earnings levels with respect to each of
the three separate classes. The Class E shares will be redeemed by
LightPath for a nominal amount if such earnings levels are not achieved.
(3) Does not include an aggregate of 10,984,735 shares of Class A Common Stock
issuable upon exercise of (i) the Unit Purchase Option (160,000 Class A
common shares) granted to the IPO underwriter and the 160,000 Class A and
160,000 Class B Common Stock Purchase Warrants underlying the Unit Purchase
Option; (ii) the 160,000 additional Class B Warrants issuable upon exercise
of the Class A Warrants referred to in (i); (iii) 1,828,649 Class A
Warrants and 1,851,351 Class B Warrants forming part of the IPO Units; (iv)
the 1,828,649 additional Class B Warrants issuable upon exercise of the
Class A Warrants referred to in (iii); (v) the 839,000 Class A Warrants
issued at the IPO; (vi) the 839,000 additional Class B Warrants issuable
upon exercise of the Class A Warrants referred to in (v) above, (vii) the
additional 801,836 shares of Class A Common Stock issuable upon exercise of
the Class C, Class D, Class E, Class F, Class G, and Class H Warrants,
(viii) the additional 150,000 shares of Class A Common Stock issuable upon
exercise of the Class J Warrants (ix) 1,925,000 shares of Class A Common
Stock issuable upon conversion of the Series F Preferred Stock and exercise
of the Class K and Class L Warrants and (x) 281,250 shares of Class A
Common Stock issuable upon exercise of the Chairman's Warrant.
FORWARD-LOOKING STATEMENTS
Throughout this prospectus and the other documents incorporated by
reference into this prospectus we make certain "forward-looking" statements.
These are statements about future events, results of operation, business plans
and other matters. We use words such as "expect", "anticipate", "intend" or
other similar words to identify forward looking statements. These statements are
made based on our current knowledge and understanding. However, there can be no
assurances as to whether or not actual results will be consistent with these
statements. In fact, actual events or results could vary dramatically from these
statements as a result of among other factors:
+ Economic conditions, domestically and internationally
+ Technological developments
+ Industry trends
+ Risk factors described in this prospectus.
We have no obligation to update the forward-looking statements made in
this prospectus or incorporated by reference herein.
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RISK FACTORS
BEFORE YOU BUY ANY OF THE SHARES OF COMMON STOCK BEING OFFERED BY THIS
PROSPECTUS, YOU SHOULD CAREFULLY READ AND CONSIDER EACH OF THE RISK FACTORS WE
HAVE DESCRIBED IN THIS SECTION. YOU SHOULD BE PREPARED TO ACCEPT ALL OF THESE
RISKS, INCLUDING THE RISK THAT YOU MAY LOSE YOUR ENTIRE INVESTMENT, BEFORE YOU
MAKE A DECISION TO BUY ANY OF THE SHARES OF COMMON STOCK.
WE HAVE EXPERIENCED LOSSES IN PRIOR YEARS
Our operations have never been profitable. We believe that our
introduction of products for the telecommunication market in 1999 may generate
sales in excess of amounts realized to date, although there can be no assurance
in this regard. We expect to continue operating at a deficit during the current
fiscal year and until such time, if ever, as our operations generate sufficient
revenues to cover our costs. The likelihood of our financial success must be
considered in light of the delays, uncertainties, difficulties and risks
inherent in a new business, many of which are beyond our ability to control.
These risks include, but are not limited to, unanticipated problems relating to
product development, testing, manufacturing, marketing and competition, and
additional costs and expenses that may exceed our current estimates. There can
be no assurance that our revenues will increase significantly in the future or
that, even if they do, our operations will ever be profitable.
WE MAY BE UNABLE TO CONTINUE OPERATING AS A GOING CONCERN.
We have received a report from our independent auditors that includes
an explanatory paragraph regarding uncertainty as to our ability to continue as
a going concern. The factors cited by the auditors as raising substantial doubt
as to our ability to continue as a going concern are our recurring losses from
operations and resulting continued dependence on external sources of capital. We
may incur losses for the foreseeable future due to the significant costs
associated with the development, manufacturing and marketing of our products and
due to the continued research and development activities that will be necessary
to further refine our technology and products and to develop products with
additional applications.
WE ANTICIPATE THE NEED FOR ADDITIONAL FUTURE FINANCING IN ORDER TO FUND OUR
OPERATIONS AND PLANS FOR GROWTH.
We anticipate that our projected product sales and the net proceeds
from our private placement of 6% Convertible Debentures and related warrants,
completed in July 1999, will be available to fund our working capital needs for
fiscal 2000. The net proceeds from the sale in November 1999 of Series F
Preferred Stock, approximately $3.9 million, and $250,000 purchase of 62,500
shares of Class A Common Stock by Robert Ripp, will be used to expand collimator
production, further development of the optical switch and provide working
capital. In addition, our ability to fund future capital requirements will
depend on the extent that our products become commercially accepted, if at all,
and if our marketing program is successful in generating sales sufficient to
sustain our operations. At this time, the Company does not believe product sales
will reach the level required to sustain its operations and growth plans in the
near term; therefore, the Company is actively pursuing additional financing. We
do not have any commitments from others to provide such additional financing and
there can be no assurance that any such additional financing will be available
if needed or, if available, will be on terms favorable to us. In the event such
needed financing is not obtained, our operations will be materially adversely
affected and we will have to cease or substantially reduce operations. Any
additional equity financing may be dilutive to stockholders, and debt
financings, if available, may involve restrictive covenants.
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WE MAY HAVE DIFFICULTIES IN MANAGING GROWTH
We will need to grow our product sales and manufacturing output
significantly in order to be successful. If we are unable to manage growth
effectively, it could have material adverse effects on our results of
operations, financial condition or business. We cannot guarantee that we will
successfully expand or that any expansion will enhance our profitability. We
expect our planned growth will place a significant strain on our management and
operations. Our future growth will depend in part on the ability of our officers
and other key employees to implement and expand financial control systems and to
expand, train and manage our employee base and provide support to an expanded
customer base.
OUR PRODUCTS ARE AT AN EARLY STAGE OF DEVELOPMENT AND MAY NOT ACHIEVE MARKET
ACCEPTANCE.
Through June 1996, our primary activities were basic research and
development of glass material properties. Our current line of GRADIUM products
have not generated sufficient revenues to sustain operations and our
telecommunications products are still in the introduction phase. While we
believe our existing products are commercially viable, we anticipate the need to
educate the optical components market in order to generate market demand and
market feedback may require us to further refine these products. Development of
additional product lines will require significant further research, development,
testing and marketing prior to commercialization. There can be no assurance that
any proposed products will be successfully developed, demonstrate desirable
optical performance, be capable of being produced in commercial quantities at
reasonable costs or be successfully marketed.
OUR PRODUCTS HAVE NOT BEEN DEMONSTRATED TO BE COMMERCIALLY SUCCESSFUL.
Our telecommunication products have not yet achieved commercial
acceptance. The traditional optics have been accepted commercially, however,
their benefits are not widely known. Although we are engaged in negotiations and
discussions with potential customers, there can be no assurance that any such
discussions will lead to development of commercially viable products or
significant revenues, if any, or that any products currently existing or to be
developed in the future will attain sufficient market acceptance to generate
significant revenues. In order to persuade potential customers to purchase
GRADIUM products, we will need to overcome industry resistance to, and suspicion
of, gradient lens technology that has resulted from previous failed attempts by
various researchers and manufacturers unrelated to us to develop a repeatable,
consistent process for producing lenses with variable refractive indices. We
must also satisfy industry-standard Bellcore Testing on telecommunication
products to meet customer requirements, as well as satisfy prospective customers
that we will be able to meet their demand for quantities of products, since we
may be the sole supplier and licensor. We do not have demonstrated experience as
a manufacturer and do not have a substantial net worth. We may be unable to
accomplish any one or more of the foregoing to the extent necessary to develop
market acceptance of our products. Prospective customers will need to make
substantial expenditures to redesign products to incorporate GRADIUM lenses.
There can be no assurances that potential customers will view the benefits of
our products as sufficient to warrant such design expenditures.
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WE DEPEND UPON KEY PERSONNEL
Our inability to retain or attract key employees could have a material
adverse effect on our business and results of operations. Our operations depend,
to a great extent, upon the efforts of our CEO and President, Donald Lawson, who
conceived our strategic plan and who is substantially responsible for planning
and guiding our direction, and upon Mark Fitch, our senior vice president. We
also depend upon our ability to attract additional members to our management and
operations teams to support our expansion strategy. The loss of any of these key
employees would adversely affect our business. We have obtained a key employee
life insurance policy in the amount $1,000,000 on the life of Mr. Lawson. We had
thirty-three employees on November 30, 1999. Additional personnel will need to
be hired if we are able to successfully expand our operations. There can be no
assurance that we will be able to identify, attract and retain employees with
skills and experience necessary and relevant to the future operations of our
business.
COMPETITION MAY ADVERSELY AFFECT OUR OPERATIONS AND FINANCIAL RESULTS
The optical lens and telecommunication components markets are intensely
competitive and numerous companies offer products and services competitive to
those offered by us. Substantially all of these competitors have greater
financial and other resources than we do. We compete with manufacturers of
conventional spherical lens products and aspherical lens products, producers of
optical quality glass and other developers of gradient lens technology and
telecom product manufacturers. In the markets for conventional and aspheric
lenses, we are competing against, among others, established international
industry giants. Many of these companies also are primary customers for optical
components, and therefore have significant control over certain markets for our
products. We are also aware of other companies that are attempting to develop
radial gradient lens technology. There may also be others of which we are not
aware that are attempting to develop axial gradient lens technology similar to
our technology. There can be no assurance that existing or new competitors will
not develop technologies that are superior to or more commercially acceptable
than our existing and planned technology and products.
WE HAVE LIMITED MARKETING AND SALES CAPABILITIES, AND MUST MAKE SALES IN A
FRAGMENTED MARKET.
Our operating results will depend to a large extent on our ability to
educate the various industries utilizing optical glass about the advantages of
GRADIUM and other optical materials to market products to the participants
within those industries. We currently have very limited marketing capabilities
and experience and will need to hire additional sales and marketing personnel,
develop additional sales and marketing programs and establish sales distribution
channels in order to achieve and sustain commercial sales of our products.
Although we have developed a marketing plan, there can be no assurance that the
plan will be implemented or, if implemented, will succeed in creating sufficient
levels of customer demand for our products. The markets for optical lenses and
telecommunication components are highly fragmented. Consequently, we will need
to identify and successfully target particular market segments in which we
believe we will have the most success. These efforts will require a substantial,
but unknown, amount of effort and resources.
8
<PAGE>
The fragmented nature of the optical products market may impede our
ability to achieve commercial acceptance for our products. In addition, our
success will depend in great part on our ability to develop and implement a
successful marketing and sales program. There can be no assurance that any
marketing and sales efforts undertaken by us will be successful or will result
in any significant product sales.
WE ARE HIGHLY DEPENDENT ON OUR PATENTS AND PROPRIETARY TECHNOLOGY.
Our success will depend, in part, on our ability to obtain protection
for products and technologies under United States and foreign patent laws, to
preserve trade secrets, and to operate without infringing the proprietary rights
of others. There can be no assurance that patent applications relating to our
products or potential products will result in patents being issued, that any
issued patents will afford adequate protection or not be challenged,
invalidated, infringed or circumvented, or that any rights granted will afford
competitive advantages to us. Furthermore, there can be no assurance that others
have not independently developed, or will not independently develop, similar
products and/or technologies, duplicate any of our product or technologies, or,
if patents are issued to, or licensed by, us, design around such patents. There
can be no assurance that patents owned or licensed and issued in one
jurisdiction will also issue in any other jurisdiction. Furthermore, there can
be no assurance that we can adequately preserve proprietary technology and
processes that we maintain as trade secrets. If we are unable to develop and
adequately protect our proprietary technology and other assets, our business,
financial condition and results of operations will be materially adversely
affected.
OUR BUSINESS DEPENDS UPON THE EFFORTS OF THIRD PARTIES.
Our strategy for the research, development and commercialization of
certain products entails entering into various arrangements with corporate
partners, OEMs, licensees and others in order to generate product sales, license
fees, royalties and other funds adequate for product development. We may also
rely on our collaborative partners to conduct research efforts, product testing
and to manufacture and market certain of our products. Although we believe that
parties to any such arrangements would have an economic motivation to succeed in
performing their contractual responsibilities, the amount and timing of
resources to be devoted to these activities may not be within our control. There
can also be no assurance that we will be successful in establishing any such
collaborative arrangements or that, if established, the parties to such
arrangements will assist us in commercializing products. We currently have
development agreements with a mechanical switch manufacturer and an endoscope
manufacturer pursuant to which we have developed prototypes of products for use
in each of those areas. However, there can be no assurance that such agreements
will progress to a production phase or, if production commences, that we will
receive significant revenues from these relationships. We have a non-exclusive
agreement with a catalog company to distribute certain of its products. We have
formalized relationships with eight foreign distributors to create markets for
GRADIUM in their respective countries. There can be no assurance that these
parties, or any future partners, will perform their obligations as expected or
that any revenue will be derived from such arrangements.
WE HAVE ONLY LIMITED MANUFACTURING CAPABILITIES.
We believe that our present manufacturing facilities, with the clean
room addition which was completed in October 1999, are sufficient for our
planned operations over the next several years. However, we do not have any
experience manufacturing products in quantities sufficient to meet commercial
demand. If we are unable to manufacture products in sufficient quantities and in
a timely manner to meet customer demand, our business, financial condition and
results of operations will be materially adversely affected.
9
<PAGE>
WE FACE PRODUCT LIABILITY RISKS.
The sale of our optical products will involve the inherent risk of
product liability claims by others. We do not currently maintain product
liability insurance coverage, although we do intend to procure such insurance in
the future. Product liability insurance is expensive, subject to various
coverage exclusions and may not be obtainable on terms acceptable to us.
Moreover, the amount and scope of any coverage may be inadequate to protect us
in the event that a product liability claim is successfully asserted.
WE WILL RECOGNIZE A SUBSTANTIAL CHARGE TO INCOME UPON CONVERSION OF OUR CLASS E
COMMON STOCK.
In the event any shares of the Class E Common Stock held by
stockholders who are officers, directors, employees or consultants of the
Company are converted into shares of Class A Common Stock, we will record
compensation expense for financial reporting purposes during the period in which
such conversion occurs. Such charge will equal the fair market value of such
shares on the date of release, which may be substantial. Although the amount of
compensation expense recognized will not affect the total stockholders' equity,
it may have a material negative effect on the market price of our securities,
particularly the shares of Class A Common Stock. Additionally, since Class E
shares are not treated as outstanding for purposes of earnings per share
calculations, the increase in the number of shares of Class A Common Stock upon
conversion of any series of Class E Common Stock may have a material adverse
effect on our earnings per share.
OUR OPERATIONS MAY BE ADVERSELY AFFECTED BY PROBLEMS ASSOCIATED WITH THE YEAR
2000 ISSUE.
Some computer applications were originally designed to recognize
calendar years by their last two digits. As a result, calculations performed
using these truncated fields will not work properly with dates from the year
2000 and beyond. This problem is commonly referred to as the "Year 2000 Issue".
We have determined that our internal computer systems, manufacturing equipment
and software products were produced to be Year 2000 compliant and no material
remediation costs have been incurred or are expected to be incurred by us.
During the third quarter of fiscal 1999, we confirmed in writing whether the
internal business operations of third parties with whom we have a material
relationship will be affected by the Year 2000 Issue. Our assessment of third
parties is complete and based on their responses, we believe our material third
party relationships will not be adversely impacted by the Year 2000 Issue
barring any unforeseen circumstances. Under a worst case scenario we may
experience delays in receiving products and services thereby impacting product
shipments. We plan on having adequate inventory levels to minimize such impact,
if any. We will continue to monitor third parties and develop contingency plans
if a third party is subsequently found to be non-compliant.
10
<PAGE>
OUR STOCK PRICE IS VOLATILE
Broad market fluctuations or fluctuations in our operations may
adversely affect the market price of our common stock. The market for our common
stock is volatile. The trading price of our common stock has been and will
continue to be subject to:
+ Volatility in the trading markets generally;
+ significant fluctuations in response to quarterly variations in
operating results;
+ announcements regarding our business or the business of our
competitors;
+ changes in prices of our or our competitors' products and
services;
+ changes in product mix; and
+ changes in revenue and revenue growth rates for us as a whole or
for geographic areas, and other events or factors.
Statements or changes in opinions, ratings or earnings estimates made
by brokerage firms or industry analysts relating to the markets in which we
operate or expect to operate could have an adverse effect on the market price of
our common stock. In addition, the stock market as a whole has from time to time
experienced extreme price and volume fluctuations which have particularly
affected the market price for the securities of many small cap companies and
which often have been unrelated to the operating performance of these companies.
POTENTIAL CONTROL BY THE EXISTING MANAGEMENT AND SHAREHOLDERS
If our management and shareholders act in concert, disposition of
matters submitted to shareholders or the election of the entire Board of
Directors may be hindered. The principal stockholders beneficially owned 12% of
the total combined voting power of all of the Common Stock outstanding at August
19, 1999.
SOME PROVISIONS IN OUR CHARTER DOCUMENTS AND BYLAWS MAY HAVE ANTI-TAKEOVER
EFFECTS
Our Articles of Incorporation and Bylaws contain some provisions that
could have the effect of discouraging a prospective acquirer from making a
tender offer, or which may otherwise delay, defer or prevent a change in
control.
ABSENCE OF DIVIDENDS TO SHAREHOLDERS
Our Board has never declared a dividend on our common stock. We do not
anticipate paying dividends on the common stock in the foreseeable future. It is
anticipated that earnings, if any, will be reinvested in the expansion of our
business.
11
<PAGE>
OUR WARRANTS AND OPTIONS MAY AFFECT OUR FUTURE FINANCING
The existence of our outstanding Preferred Stock, options or warrants
may adversely affect the terms on which we can obtain additional financing. As
of November 30, 1999, there was outstanding:
+ 2,667,649 Class A Warrants to purchase an aggregate of 2,667,649
shares of Class A Common Stock and 2,667,649 Class B Warrants;
+ 1,851,351 Class B Warrants to purchase 1,851,351 shares of Class
A Common Stock;
+ the Unit Purchase Option to purchase an aggregate of 160,000
Units, each Unit consists of 160,000 Class A Common Stock,
160,000 Class A Warrants to purchase an aggregate of 160,000
shares of Class A Common Stock and 160,000 Class B Warrants; and
160,000 Class B Warrants;
+ 160,750 shares of Class A Common Stock issuable upon exercise of
Class C and Class D Warrants;
+ 336,177 shares of Class A Common Stock issuable upon exercise of
Class E and Class F Warrants;
+ 304,909 shares of Class A Common Stock issuable upon exercise of
Class G and Class H Warrants;
+ 150,000 shares of Class A Common Stock issuable upon exercise of
Class J Warrants;
+ 1,925,000 shares of Class A Common Stock reserved for issuance to
the selling shareholders upon conversion of the Series F
Preferred stock and exercise of the Class K and Class L Warrants;
+ 281,250 shares of Class A Common Stock issuable upon exercise of
the Chairman's Warrant;
+ outstanding options to purchase an aggregate of 1,284,516 shares
of Class A Common Stock (which includes 71,102 options which the
holder receives, upon exercise, 71,102 shares of Class A, 106,652
shares of Class E-1, 106,652 shares of Class E-2 and 71,102
shares of Class E-3 Common Stock);
+ 887,984 shares of Class A Common Stock reserved for issuance
pursuant to future grants made under the Omnibus Incentive Plan
and Directors Stock Incentive Plan.
For the life of such options, warrants and Preferred Stock, the holders
will have the opportunity to profit from a rise in the price of the underlying
common stock, with a resulting dilution in the interest of other holders of
common stock upon exercise or conversion. Further, the option and warrant
holders can be expected to exercise their options and warrants at a time when we
would, in all likelihood, be able to obtain additional capital by an offering of
our unissued common stock on terms more favorable to us than those provided by
such options or warrants.
The eligibility of the foregoing shares to be sold to the public,
whether pursuant to Rule 144 or an effective registration statement, may have a
material adverse effect on the market value and trading price of the common
stock.
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<PAGE>
WE HAVE AGREED TO CERTAIN LIMITATIONS UPON POTENTIAL LIABILITY OF OUR DIRECTORS.
Our Certificate of Incorporation provides that directors will not be
personally liable for monetary damages to LightPath or its stockholders for a
breach of fiduciary duty as a director, subject to limited exceptions. Although
such limitation of liability does not affect the availability of equitable
remedies such as injunctive relief or rescission, the presence of these
provisions in the Certificate of Incorporation could prevent the recovery of
monetary damages by LightPath or its stockholders.
THE LIQUIDITY OF OUR STOCK COULD BE SEVERELY REDUCED IF IT BECOMES CLASSIFIED AS
PENNY STOCK.
If our securities were delisted from Nasdaq, they could become subject
to Rule 15g-9 under the Exchange Act, which imposes additional sales practice
requirements on broker-dealers that sell such securities to persons other than
established customers and "accredited investors".
The Commission has adopted regulations which generally define a "penny
stock" to be any non-Nasdaq equity security that has a market price (as therein
defined) of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require substantial additional disclosure
obligations. The foregoing required penny stock restrictions will not apply to
our securities so long as they continue to be listed on Nasdaq and have certain
price and volume information provided on a current and continuing basis or meet
certain minimum net tangible assets or average revenue criteria. There can be no
assurance that the our securities will qualify for exemption from these
restrictions. In any event, even if our securities were exempt from such
restrictions, they would remain subject to Section 15(b)(6) of the Exchange Act,
which gives the Commission the authority to prohibit any person that is engaged
in unlawful conduct while participating in a distribution of a penny stock from
associating with a broker-dealer or participating in a distribution of a penny
stock, if the Commission finds that such a restriction would be in the public
interest.
If our securities were subject to the existing rules on penny stocks,
the market liquidity for our securities could be severely adversely affected.
WE MUST MAINTAIN COMPLIANCE WITH CERTAIN CRITERIA IN ORDER TO MAINTAIN LISTING
OF OUR SHARES ON THE NASDAQ MARKET.
The Units, Class A Common Stock and Class A and Class B Warrants are
currently traded on the Nasdaq SmallCap Market. Failure to meet the applicable
quantitative and/or qualitative maintenance requirements of Nasdaq could result
in our securities being delisted from Nasdaq, with the result that such
securities would trade on the OTC Bulletin Board or in the "pink sheets"
maintained by the National Quotation Bureau Incorporated. As a consequence of
such delisting, an investor could find it more difficult to dispose of or to
obtain accurate quotations as to the market value of our securities. Among other
consequences, delisting from Nasdaq may cause a decline in the stock price and
difficulty in obtaining future financing.
WE MAY NOT HAVE ENOUGH FUNDS AVAILABLE TO REDEEM OUTSTANDING SHARES OF PREFERRED
STOCK .
In the event of automatic conversion of the Series F Preferred Stock,
three years after issuance, or exercise of their accompanying Class K warrants
in a manner that would cause an undue dilution of its common stock, LightPath
has the right to redeem such preferred stock and warrants for cash. In addition,
a Liquidation Event, as defined in the applicable Certificate of Designation,
may require redemption of the Series F Preferred Stock for cash. There can be no
assurance that in either of the foregoing events we will have adequate cash to
effect such cash redemptions.
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<PAGE>
RISK THAT FORWARD-LOOKING STATEMENTS MAY NOT COME TRUE
This prospectus and the documents incorporated herein by reference,
contain forward-looking statements that involve risks and uncertainties. We use
words such as "believe", "expect," "anticipate," "plan" or similar words to
identify forward-looking statements. Forward-looking statements are made based
upon our belief as of the date that such statements are made. These
forward-looking statements are based largely on our current expectations and are
subject to a number of risks and uncertainties, many of which are beyond our
control. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Our actual
results could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by us described above and
elsewhere in this prospectus.
14
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The Proxy Statement for the 1999 Annual Meeting contained information
concerning the number of shares included in the Voting Trust that Leslie
Danziger, former Chairwoman of the Board of Directors was entitled to vote. As
of September 16, 1999, Ms. Danziger is no longer the Chairwoman of the Board and
as a result the Voting Trust has dissolved by its terms. Information in the
proxy statement or any other documents incorporated by reference into this
prospectus concerning the Voting Trust is no longer applicable and all shares
previously subject to the voting trust are now held directly by their beneficial
owners, each of whom independently votes and has the power to dispose of such
shares.
SELLING SHAREHOLDERS
On November 2, 1999, we issued 408 shares of Series F Preferred Stock
for $4,080,000 and 489,600 attached Class K warrants to the selling shareholders
in a private placement. 125,000 Class L Warrants were also issued to the
placement agent as compensation for their services.
Each Class K and Class L Warrant entitles the holder to purchase one
share of Class A Common Stock at $5.00 per share at any time through November 2,
2004. For a description of the Class K Warrants see Exhibit 4.4 to our
registration statement. For a description of the Class L Warrants see Exhibit
4.5 to our registration statement. Each share of Series F Preferred Stock can be
converted by the holder into a number of shares of our Class A Common Stock at
the option of the holder at any time until November 2, 2004. The number of
shares of Class A Common Stock issuable upon conversion of each share of
preferred stock is determined by dividing its stated value on the date of
conversion by a conversion price. The conversion price is defined as the lesser
of (i) the fixed conversion price, $5.00, or (ii) 80% of the five day average
closing bid price of our Class A Common Stock at the conversion date. For
purposes of the information set forth in the table below, it is assumed that
each outstanding share of Series F Preferred Stock was converted at $5.00 as of
November 30, 1999. The stated value of the Preferred Stock increases at the rate
of 7% per annum until conversion or a liquidation event.
Mr. Ripp's Warrant entitles the holder to purchase up to 281,250 shares
of Class A Common Stock at $6.00 per share at any time through November 10,
2009. For a description of the Chairman's Warrant see Exhibit 4.6 to the
registration statement.
This Prospectus covers shares of Class A Common Stock that may be
acquired by the selling shareholders upon conversion of the Series F Preferred
Stock and the shares issuable upon exercise of the Class K and Class L Warrants
and the Chairman's Warrant.
The following table provides information as of November 30, 1999, with
respect to the Class A Common Stock beneficially owned by each selling
shareholder. For purposes of the information set forth in this table, it is
assumed that each share of Series F Preferred Stock outstanding was converted at
$5.00 as of November 30, 1999. Some of these selling shareholders have a
material relationship with us. Information about these relationships is
disclosed in the footnotes to the table. As part of that sale, we entered into
certain agreements with the selling shareholders. These agreements are described
under "Certain Relationships" below. We believe that the selling shareholders
named in the following table have sole voting and investment power with respect
to the respective shares of Class A Common Stock set forth opposite their names.
The shares of Class A Common Stock offered by this prospectus may be offered
from time to time by the selling shareholders named below or their nominees.
15
<PAGE>
TOTAL SHARES OUTSTANDING 6,833,199 CLASS A COMMON STOCK
AS OF NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Beneficially Owned After Offering
Shares --------------------------------------
Beneficially Percent of Percent of
Owned Prior Number of Class A All Classes
to the Shares Number of Common of Common
Offering (1)(2) Being Offered(2) Shares(1) Stock(19) Stock
--------------- ---------------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
Cranshire Capital, LLP 553,493(3,4) 480,000(4) 73,493(3) 7.6% 4.9%
EP Opportunity Fund, LLC 489,810(5,6) 400,000(6) 89,810(5) 6.7% 4.4%
EP Opportunity Fund
International, LLC 24,000(7) 24,000(7) 0 * *
EP.com Fund, LLC 24,000(8) 24,000(8) 0 * *
EP.com Fund
International, LLC 25,600(9) 25,600(9) 0 * *
The dot Com Fund LLC 160,000(10) 160,000(10) 0 2.3% 1.5%
Keyway Investments Ltd. 572,926(11,12) 160,000(12) 412,926(11) 7.8% 5.1%
JRA Enterprises 38,869(13,14) 32,000(14) 4,869(13) * *
Eric S. Swartz 89,948 (19) 47,000 42,948(21) 1.3% *
Kendrick Family Partnership 62,309(19) 47,000 15,309(22) * *
P. Bradford Hathorn 5,500(19) 4,500 4,000(23) * *
Gerald D. Harris 9,500(19) 9,500 0 * *
Carlton M. Johnson, Jr. 10,000(19) 4,500 5,500(24) * *
Glenn R. Archer 4,500(19) 4,500 0 * *
Charles M. Whiteman 3,000(19) 3,000 0 * *
Dwight B. Bronnum 2,000(19) 1,500 500(25) * *
Robert L. Hopkins 2,000(19) 1,500 500(26) * *
H. Nelson Logan 1,000(19) 1,000 0 * *
James D. Mills 1,000(19) 1,000 0 * *
Robert Ripp 161,250(15) 161,250(16) 0 2.3% 1.5%
Irrevocable Trust for the
Benefit of Robert S. Ripp 60,833(17) 60,833(17) 0 * *
Irrevocable Trust for the
Benefit of Kathleen Desmond 60,833(17) 60,833(17) 0 * *
Irrevocable Trust for the
Benefit of Johnathan Ripp 60,834(17) 60,834(17) 0 * *
Donald Lawson 16,129(17) 11,097 5,032 * *
</TABLE>
- ----------
* Represents beneficial ownership of less than 1%.
(1) Except as otherwise noted, and subject to community property laws, where
applicable, each person named in the table has sole voting power and
investment power with respect to all shares shown as beneficially owned.
(2) As noted below, the information set forth below for certain selling
shareholders includes shares of Class A Common Stock issuable upon
conversion of shares of our Series F Preferred Stock. Each share of Series
F Preferred Stock is convertible into a number of shares of Class A Common
Stock determined by dividing its stated value on the date of conversion by
a conversion price. The stated value is equal to the original issue price,
$10,000 per share and increases at a rate of 7% per annum. The conversion
price is defined as the lesser of (i) the fixed conversion price $5.00 or
(ii) 80% of the five day average closing bid price of our Class A Common
Stock at the conversion date. For purposes of the information set forth in
this table, it is assumed that each outstanding Series F Preferred Stock
was converted at $5.00 as of November 30, 1999.
As required by SEC regulations, the number of shares shown as beneficially
owned includes shares which could be acquired within 60 days after the date
of this prospectus. The actual number of shares of Class A Common Stock
issuable upon the conversion of the Series F Preferred Stock is subject to
adjustment and could be significantly more than the number estimated in the
table. This variation is due to factors that cannot be predicted by us at
this time. The most significant of these factors is the future market price
of the Class A Common Stock.
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<PAGE>
(3) Includes 73,493 shares issuable the exercise of 34,542 Class E Warrants and
38,951 Class G Warrants to purchase Class A Common Stock.
(4) Represents 480,000 shares issuable upon (A) conversion of 150 shares of
Series F Preferred Stock and (B) the exercise of 180,000 Class K Warrants
to purchase Class A Common Stock.
(5) Represents 89,810 shares issuable the exercise of 89,810 Class E Warrants
to purchase Class A Common Stock.
(6) Represents 400,000 shares issuable upon (A) conversion of 125 shares of
Series F Preferred Stock and (B) the exercise of 150,000 Class K Warrants
to purchase Class A Common Stock.
(7) Represents 24,000 shares issuable upon (A) conversion of 7.5 shares of
Series F Preferred Stock and (B) the exercise of 9,000 Class K Warrants to
purchase Class A Common Stock.
(8) Represents 24,000 shares issuable upon (A) conversion of 7.5 shares of
Series F Preferred Stock and (B) the exercise of 9,000 Class K Warrants to
purchase Class A Common Stock.
(9) Represents 25,600 shares issuable upon (A) conversion of 8 shares of Series
F Preferred Stock and (B) the exercise of 9,600 Class K Warrants to
purchase Class A Common Stock.
(10) Represents 160,000 shares issuable upon (A) conversion of 50 shares of
Series F Preferred Stock and (B) the exercise of 60,000 Class K Warrants to
purchase Class A Common Stock.
(11) Includes 412,926 shares issuable upon the exercise of 70,000 Class C
Warrants, 138,169 Class E Warrants and 194,757 Class G Warrants to purchase
Class A Common Stock.
(12) Includes 160,000 shares issuable upon (A) conversion of 50 shares of Series
F Preferred Stock and (B) the exercise of 60,000 Class K Warrants to
purchase Class A Common Stock.
(13) Includes 4,869 shares issuable upon the exercise of 4,869 Class G Warrants
to purchase Class A Common Stock.
(14) Includes 32,000 shares issuable upon (A) conversion of 10 shares of Series
F Preferred Stock and (B) the exercise of 12,000 Class K Warrants to
purchase Class A Common Stock.
(15) Mr. Ripp was appointed as Chairman of the Board of Directors of LightPath
on November 11, 1999. Includes 161,250 shares issuable upon the exercise of
a Warrant to purchase Class A Common Stock. In addition, 62,500 shares of
Class A Common Stock and 120,000 shares issuable upon exercise of Warrants
are held by three Irrevocable Trusts for the benefit of Mr. Ripp's
Children.
(16) Includes shares issuable upon the exercise of Warrants.
(17) Includes 40,000 shares issuable upon the exercise of Warrants to purchase
Class A Common Stock.
(18) Mr. Lawson is currently President, Chief Executive Officer and a member of
the Board of Directors of LightPath.
(19) This person is an employee of Dunwoody Brokerage Services, Inc., which
acted as placement agent for the sale of the Series F Preferred Stock and
attached Class K Warrants. The Class L Warrants were originally issued to
Dunwoody as compensation for its services.
(20) The percentage interest of each selling shareholder is based on the
beneficial ownership of that selling shareholder divided by the sum of the
current outstanding shares of Class A Common Stock plus the additional
shares, if any, which would be issued to that selling shareholder (but not
any other selling shareholder) when converting Series F Preferred Stock or
exercising Warrants or other right in the future.
(21) Includes 42,948 shares issuable upon the exercise of 15,750 Class D
Warrants, 11,889 Class F Warrants and 15,309 Class H Warrants to purchase
Class A Common Stock.
(22) Includes 15,309 shares issuable upon the exercise of 15,309 Class H
Warrants to purchase Class A Common Stock.
(23) Includes 4,000 shares issuable upon the exercise of 2,000 Class F Warrants
and 2,000 Class H Warrants to purchase Class A Common Stock.
(24) Includes 5,500 shares issuable upon the exercise of 2,000 Class D Warrants,
2,000 Class F Warrants and 1,500 Class H Warrants to purchase Class A
Common Stock.
(25) Includes 500 shares issuable upon the exercise of 250 Class F Warrants and
250 Class H Warrants to purchase Class A Common Stock.
(26) Includes 500 shares issuable upon the exercise of 250 Class F Warrants and
250 Class H Warrants to purchase Class A Common Stock.
17
<PAGE>
USE OF PROCEEDS
The selling shareholders will receive the net proceeds from the sale of
their shares of common stock. We will not receive any proceeds from these sales.
We will however receive proceeds from the exercise of the warrants. Each Class K
and Class L Warrant entitles the holder to purchase shares of common stock at a
price of $5.00 and the Chairman's Warrant may be exercised for $6.00 per share.
This purchase price is payable in cash or by surrendering a number of shares of
our common stock having a fair market value equal to the applicable exercise
price on the exercise date. If all of the warrants are exercised for cash, we
will receive up to $4,760,500.
CERTAIN RELATIONSHIPS
All of the Class L Warrants were issued to Dunwoody Brokerage Services,
Inc., together with a cash placement fee of $163,200 equal to 4% of the gross
proceeds from the sale of Series F Preferred Stock as compensation for their
services as placement agent in connection with the November 1999 private
placement of 408 shares of LightPath's Series F Preferred Stock. Dunwoody
subsequently transferred these warrants to the persons listed in the selling
shareholders table. Dunwoody is affiliated with Swartz Investments LLC, which
acted as placement agent in connection with the sales of our Series A, B and C
Preferred Stock and associated warrants.
The purchasers of the Company's Series F Preferred Stock have a right
of first offer to participate in any issuances of equity or debt securities by
the Company during the one year period ending November 2, 2000. Dunwoody has the
right to additional compensation as placement agent with respect to any future
private financings by the Company during the three year period ending November
2002, if the private placement includes sales to any of the initial investors in
the Series F Preferred Stock.
Mr. Ripp was appointed to serve as Chairman of the Board of Directors
on November 11, 1999. Mr. Lawson is currently President, Chief Executive Officer
and a member of the Board of Directors of LightPath.
DETERMINATION OF OFFERING PRICE
The selling shareholders may use this prospectus from time to time to
sell their shares of common stock at a price determined by the shareholder
making such sale. The price at which the common stock is sold may be based on
market prices prevailing at the time of sale, at prices relating to such
prevailing market prices, or at negotiated prices.
18
<PAGE>
PLAN OF DISTRIBUTION
The common stock may be sold from time to time by the selling
shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market or otherwise, at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The common stock may be sold in one or more of the following types
of transactions:
(a) a block trade in which a selling shareholder will engage a
broker-dealer who will then attempt to sell the common stock,
or position and resell a portion of the block as principal to
facilitate the transaction;
(b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
(c) an exchange distribution in accordance with the rules of such
exchange; and
(d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers. In effecting sales, broker-dealers
engaged by the selling shareholders may arrange for other
broker-dealers to participate in the resales.
In connection with distributions of the common stock or otherwise, the
selling shareholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the common stock in the course of hedging the positions they assume with selling
shareholders. The selling shareholders may also sell common stock short and
redeliver the common stock to close out such short positions. The selling
shareholders may also enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the common
stock, which the broker-dealer may resell or otherwise transfer pursuant to this
prospectus. The selling shareholders may also loan or pledge common stock to a
broker-dealer and the broker-dealer may sell the common stock so loaned or, upon
a default, the broker-dealer may effect sales of the pledged common stock
pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling shareholders in amounts
to be negotiated in connection with the sale. Such broker-dealers and any other
participating broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. In addition, any securities covered by
this prospectus which qualify for sale pursuant to Rule 144 may be sold in an
unregistered transaction under Rule 144 rather than pursuant to this prospectus.
We are bearing all of the costs and expenses of registering under the
Securities Act the sale of the common stock offered by this prospectus.
Commissions and discounts, if any, attributable to the sales of the common stock
will be borne by the selling shareholders.
We have agreed to indemnify the selling shareholders against certain
liabilities in connection with the offering of the common stock, including
liabilities arising under the Securities Act. The selling shareholders may agree
to indemnify any broker-dealer or agent that participates in transactions
involving sales of the common stock against various liabilities, including
liabilities arising under the Securities Act.
19
<PAGE>
In order to comply with the securities laws of various states, if
applicable, sales of the common stock made in those states will only be made
through registered or licensed brokers or dealers. In addition, some states do
not allow the securities to be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with by us and the
selling shareholders.
Under applicable rules and regulations of the Exchange Act, any person
engaged in the distribution of the common stock may not simultaneously engage in
market-making activities with respect to our common stock for a period of up to
five business days prior to the commencement of such distribution. In addition
to those restrictions, each selling shareholder will be subject to the Exchange
Act and the rules and regulations under the Exchange Act, including, Regulation
M and Rule 10b-7, which provisions may limit the timing of the purchases and
sales of our securities by the selling shareholders.
DESCRIPTION OF SECURITIES
We have previously registered our Class A Common Stock under the
Exchange Act by filing a Form 8-A on January 13, 1996. Please refer to that
registration statement for a description of the rights, privileges and
preferences of our common stock.
LEGAL MATTERS
Certain legal matters have been passed upon for us by Squire, Sanders &
Dempsey L.L.P., Phoenix, Arizona.
EXPERTS
Our financial statements as of June 30, 1999 and 1998, and for the
years then ended, have been incorporated by reference in this Prospectus in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The report of KPMG LLP covering the June 30, 1999, financial statements
contains an explanatory paragraph that states that the Company's recurring
losses from operations and resulting continued dependence on external sources of
capital raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of that uncertainty.
INTERESTS OF NAMED EXPERTS AND COUNSEL
On October 13, 1997, James L. Adler, Jr. was appointed to serve as a
director of LightPath until the 2000 annual meeting of shareholders. Mr. Adler
is a partner of the law firm of Squire, Sanders & Dempsey L.L.P., which has
issued an opinion as to the validity of the shares offered by this prospectus
and also provides legal services to us on a regular basis. Mr. Adler owns
options under the Directors Stock Option Plan to purchase 50,176 shares of Class
A Common Stock at exercise prices ranging from $2.84 to $9.81. As of January 1,
2000, these shares represented less than 1% of the total outstanding shares of
Class A Common Stock.
20
<PAGE>
INDEMNIFICATION
Article TENTH of the Company's Certificate of Incorporation, as
amended, provides as follows:
TENTH: No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not apply
to any liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for any transaction from which the director derived an improper
personal benefit, or (iv) under Section 174 of the DGCL. This Article shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the time this Article became effective.
Article VII of the Company's Bylaws provides, in summary, that the
Company is required to indemnify to the fullest extent permitted by applicable
law, any person made or threatened to be made a party or involved in a lawsuit,
action or proceeding by reason that such person is or was an officer, director,
employee or agent of the Company. Indemnification is against all liability and
loss suffered and expenses reasonably incurred. Unless required by law, no such
indemnification is required by the Company of any person initiating such suit,
action or proceeding without board authorization. Expenses are payable in
advance if the indemnified party agrees to repay the amount if he is ultimately
found to not be entitled to indemnification. For a full text of Article VI of
the Bylaws, see Exhibit 3.3 to this Registration Statement.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, the Act, may be permitted to directors, officers and controlling
person of LightPath pursuant to the foregoing provisions, or otherwise, we have
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
21
<PAGE>
====================================== ======================================
NO DEALER, SALES PERSON OR OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE LIGHTPATH TECHNOLOGIES, INC.
COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY BY ANYONE IN ANY 2,279,847 SHARES
JURISDICTION IN WHICH SUCH OFFER OR CLASS A COMMON STOCK
SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO
OR TO ANY PERSON TO WHOM IT IS PROSPECTUS
UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT
THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE SUCH
DATE.
TABLE OF CONTENTS
Page
----
Where You Can Find More
Information (ii)
Prospectus Summary 1
The Offering 4
Risk Factors 6
Security Ownership of Principal
Stockholders and Management 15
Selling Shareholders 15
Use of Proceeds 18
Certain Relationships 18
Determination of Offering Price 18
Plan of Distribution 19 January 10, 2000
Description of Securities 20
Legal Matters 20
Experts 20
Interest of Named Experts
and Counsel 20
Indemnification 21
====================================== ======================================
<PAGE>
PART II TO FORM S-3
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
It is estimated that the following expenses will be incurred in
connection with the proposed offering hereunder. All of such expenses will be
borne by the Company:
Amount
------
SEC Registration Fee............................................ $12,564.24
Legal fees and expenses......................................... 15,000.00 (1)
Accounting fees and expenses.................................... 5,000.00 (1)
Printing expenses............................................... 2,000.00 (1)
----------
Total........................................................... $34,564.24
==========
(1) Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article TENTH of the Company's Certificate of Incorporation, as
amended, provides as follows:
TENTH: No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not apply
to any liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for any transaction from which the director derived an improper
personal benefit, or (iv) under Section 174 of the DGCL. This Article shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the time this Article became effective.
Article VII of the Company's Bylaws provides, in summary, that the
Company is required to indemnify to the fullest extent permitted by applicable
law, any person made or threatened to be made a party or involved in a lawsuit,
action or proceeding by reason that such person is or was an officer, director,
employee or agent of the Company. Indemnification is against all liability and
loss suffered and expenses reasonably incurred. Unless required by law, no such
indemnification is required by the Company of any person initiating such suit,
action or proceeding without board authorization. Expenses are payable in
advance if the indemnified party agrees to repay the amount if he is ultimately
found to not be entitled to indemnification. For a full text of Article VI of
the Bylaws, see Exhibit 3.3 to this Registration Statement.
II-1
<PAGE>
ITEM 16. EXHIBITS.
Exhibit Page Number or
Number Description Method of Filing
- ------ ----------- ----------------
3.2 Certificate of Designation filed November 2, 1999
with the Secretary of State of the State of Delaware *
4.1 Form of Warrant Agreement (1)
4.2 Form of Unit Purchase Option (1)
4.3 Specimen Certificate for the Class A Common Stock (1)
4.4 Form of Class K Warrants *
4.5 Form of Class L Warrants *
Form of Warrant, dated November 11, 1999, issued to
4.6 Robert Ripp *
5 Opinion and Consent of Squire, Sanders & Dempsey LLP *
23.1 Consent of KPMG LLP, Independent Auditors *
23.2 Consent of Squire, Sanders & Dempsey LLP Included in
Exhibit 5
24 Powers of Attorney See signature page
- ----------
* Filed herewith.
1. Previously filed as an exhibit to registrant's registration statement on
Form SB-2 filed on December 7, 1995 (File No. 33-80119)(the "SB-2").
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that:
(1) It will file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(2) For purposes of determining any liability under the Securities Act,
it will treat each post-effective amendment as a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) It will file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
additional or changed material information on the plan of distribution.
(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described in Item 15 hereof, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person thereof in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, there unto duly
authorized, in the City of Albuquerque, State of New Mexico, on January 5, 2000.
LIGHTPATH TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Donald Lawson
----------------------------
Donald Lawson
Chief Executive Officer
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned,
constitutes and appoints each of Robert Ripp and Donald E. Lawson, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all pre and post-effective amendments (including all
subsequent registration statements and amendments thereto filed pursuant to Rule
462(b)) to this Form S-3 Registration Statement, and to file the same with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting such attorney-in-fact and agents, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in person, hereby ratifying and confirming all that such
attorney-in-fact and agents may lawfully do or cause to be done by virtue
hereof. Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
--------- ----- ----
/s/ Robert Ripp Chairman of the Board January 5, 2000
- ----------------------------
Robert Ripp
/s/ Donald E. Lawson CEO, President and Treasurer January 5, 2000
- ---------------------------- (Principal Executive, Financial
Donald E. Lawson and Accounting Officer)
/s/ James A. Adler, Jr. Director January 5, 2000
- ----------------------------
James A. Adler, Jr.
/s/ Louis Leeburg Director January 5, 2000
- ----------------------------
Louis Leeburg
/s/ Leslie A. Danziger Director January 5, 2000
- ----------------------------
Leslie A. Danziger
/s/ Katherine Dietze Director January 5, 2000
- ----------------------------
Katherine Dietze
/s/ James A. Wimbush Director January 5, 2000
- ----------------------------
James A. Wimbush
II-4
EXHIBIT 3.2
CERTIFICATE OF DESIGNATION OF
SERIES F PREFERRED STOCK
OF
LIGHTPATH TECHNOLOGIES, INC.
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is LightPath
Technologies, Inc., a Delaware corporation.
2. The certificate of incorporation of the Company authorizes the issuance
of five million (5,000,000) shares of preferred stock, $.01 par value per share,
and expressly vests in the Board of Directors of the Company the authority
provided therein to issue any or all of said shares in one (1) or more series
and by resolution or resolutions to establish the designation and number and to
fix the relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series F issue of Preferred Stock:
RESOLVED, that five hundred (500) of the five million (5,000,000)
authorized shares of Preferred Stock of the Company shall be designated Series F
Preferred Stock, $.01 par value per share, and shall possess the rights and
preferences set forth below:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall have a
par value of $.01 per share and shall be designated as Series F Preferred Stock
(the "Series F Preferred Stock," or the "Preferred Shares") and the number of
shares constituting the Series F Preferred Stock shall be five hundred (500).
The Series F Preferred Stock shall be offered at a purchase price of Ten
Thousand Dollars ($10,000) per share (the "Original Series F Issue Price"), with
a seven percent (7%) per annum accretion rate as set forth herein.
Section 2. RANK. The Series F Preferred Stock shall rank: (i) junior to any
other class or series of capital stock of the Company hereafter created
specifically ranking by its terms senior to the Series F Preferred Stock
(collectively, the "Senior Securities"); (ii) prior to all of the Company's
Class A, Class E-1, Class E-2, and Class E-3 Common Stock, all at a $.01 par
value per share ("Common Stock"); (iii) prior to any class or series of capital
stock of the Company hereafter created not specifically ranking by its terms
senior to or on parity with any Series F Preferred Stock of whatever subdivision
(collectively, with the Common Stock, "Junior Securities"); and (iv) on parity
with the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and with any class or series of capital stock of
the Company hereafter created specifically ranking by its terms on parity with
the Series F Preferred Stock ("Parity Securities") in each case as to
distributions of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (all such distributions being referred
to collectively as "Distributions").
<PAGE>
Section 3. DIVIDENDS. The Series F Preferred Stock will bear no dividends,
and the holders of the Series F Preferred Stock ("Holders") shall not be
entitled to receive dividends on the Series F Preferred Stock.
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Company ("Liquidation Event"), either voluntary or involuntary, the then Holders
of shares of Series F Preferred Stock shall be entitled to receive, immediately
after any distributions to Senior Securities required by the Company's
Certificate of Incorporation or any certificate of designation, and prior in
preference to any distribution to Junior Securities but in parity with any
distribution to Parity Securities, an amount per share equal to the sum of (i)
the Original Series F Issue Price for each outstanding share of Series F
Preferred Stock and (ii) an amount equal to seven percent (7%) of the Original
Series F Issue Price, per annum, accruing daily, for the period that has passed
since the date that, in connection with the consummation of the purchase by
Holder of shares of Series F Preferred Stock from the Company, the escrow agent
first had in its possession funds representing full payment for the shares of
Series F Preferred Stock (such amount being referred to herein as the
"Premium"). If upon the occurrence of such event, and after payment in full of
the preferential amounts with respect to the Senior Securities, the assets and
funds available to be distributed among the Holders of the Series F Preferred
Stock and Parity Securities shall be insufficient to permit the payment to such
Holders of the full preferential amounts due to the Holders of the Series F
Preferred Stock and the Parity Securities, respectively, then the entire assets
and funds of the Company legally available for distribution shall be distributed
among the Holders of the Series F Preferred Stock and the Parity Securities, pro
rata, based on the respective liquidation amounts to which each such series of
stock is entitled by the Company's Certificate of Incorporation and any
certificate(s) of designation relating thereto.
(b) Upon the completion of the distribution required by subsection
4(a), if assets remain in this Company, they shall be distributed to holders of
Junior Securities in accordance with the Company's Certificate of Incorporation
including any duly adopted certificate(s) of designation.
(c) At each Holder's option, a sale, conveyance or disposition of all
or substantially all of the assets of the Company or the effectuation by the
Company of a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed of shall be
deemed to be a Liquidation Event as defined in Section 4(a); provided further
that (i) a consolidation, merger, acquisition, or other business combination of
the Company with or into any other publicly traded company or companies shall
not be treated as a Liquidation Event as defined in Section 4(a) but instead
shall be treated pursuant to Section 5(d) hereof, and (ii) a consolidation,
merger, acquisition, or other business combination of the Company with or into
any other non-publicly traded company or companies in which the surviving entity
is not a publicly traded company shall be treated as a Liquidation Event as
defined in Section 4(a). The Company shall not effect any transaction described
in subsection 4(c)(ii) unless it first gives thirty (30) business days prior
notice of such transaction during which time the Holder shall be entitled to
immediately convert any or all of its shares of Series F Preferred Stock into
Class A Common Stock at the Conversion Price, as defined below, then in effect,
which conversion shall not be subject to the conversion restrictions set forth
in Section 5(a).
2
<PAGE>
(d) In the event that, immediately prior to the closing of a
transaction described in Section 4(c) which would constitute a Liquidation
Event, the cash distributions required by Section 4(a) or Section 6 have not
been made, the Company shall either: (i) cause such closing to be reasonably
postponed until such cash distributions have been made, (ii) cancel such
transaction, in which event the rights of the Holders of Series F Preferred
Stock shall be the same as existing immediately prior to such proposed
transaction or (iii) agree, and shall require that any successor company
resulting from a Liquidation Event agrees, to make such distributions as quickly
after the closing of such Liquidation Event as reasonably practicable, upon the
same terms and in the same amounts as the Company would have made if such
distribution was made immediately prior to the closing of such transaction.
Section 5. CONVERSION. Subject to Section 4(c) herein, the record Holders
of this Series F Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) RIGHT TO CONVERT. The record Holder of the Series F Preferred
Stock shall be entitled to convert and the conversion restrictions herein below,
any or all the aggregate principal amount of the Series F Preferred Stock on or
after the date that is four (4) months after the Last Closing Date, as defined
below, at the office of the Company or its designated transfer agent (the
"Transfer Agent"), into that number of fully-paid and non-assessable shares of
Class A Common Stock calculated in accordance with the following formula (the
"Conversion Rate"):
Number of shares of Class A Common Stock issued upon conversion of one
(1) share of Series F Preferred Stock =
(.07) (N/365) (10,000) + 10,000
-------------------------------
Conversion Price
where,
* N= the number of days between (i) the date that, in connection with
the consummation of the initial purchase by Holder of shares of Series
F Preferred Stock from the Company, the escrow agent first had in its
possession funds representing full payment for the shares of Series F
Preferred Stock for which conversion is being elected, and (ii) the
applicable Date of Conversion (as defined in Section 5(b)(iv) below)
for the shares of Series F Preferred Stock for which conversion is
being elected, and
* CONVERSION PRICE = the lesser of (x) $5.00 (the "Fixed Conversion
Price"), or (y) 80% of the average Closing Bid Price, as that term is
defined below, of the Company's Class A Common Stock for the five (5)
trading days immediately preceding the Date of Conversion, as defined
below (the "Variable Conversion Price"),
provided, however, that, unless otherwise indicated herein, beginning on the
date that is four (4) months following the Last Closing Date, as defined below,
the right of the Holder to convert into Class A Common Stock using the Variable
Conversion Price initially shall be limited to a maximum of twenty percent (20%)
of the aggregate principal amount of the Series F Preferred Stock issued to such
Holder, and for each one (1) month period which expires thereafter, the Holder
shall accrue the right to convert into Class A Common Stock an additional twenty
3
<PAGE>
percent (20%) of the aggregate principal amount of the Series F Preferred Stock
issued to such Holder, (the number of shares that may be converted at any given
time using the Variable Conversion Price, in the aggregate, is referred to
hereinafter as the "Conversion Quota"); and provided, further, in the event that
the Holder elects not to convert its full Conversion Quota during any one (1)
month period, the unconverted amount shall be carried forward and added to the
Conversion Quota, and thereafter the Holder may, from time to time, convert any
portion of the Conversion Quota at the Variable Conversion Price; and provided,
further, that subsequent to the date that is nine (9) months following the Last
Closing Date, there shall be no restrictions on the number of shares of Series F
Preferred Stock that may be converted into Class A Common Stock using the
Variable Conversion Price; and provided, further, that a Holder can convert one
hundred percent (100%) of the Series F Preferred Stock, or any portion thereof,
into Class A Common Stock using the Fixed Conversion Price on or after the date
that is four (4) months after the Last Closing Date whether or not the Fixed
Conversion Price is less than the Variable Conversion Price.
As used herein, "Last Closing Date" shall mean the date of the last closing
of a purchase and sale of the Series F Preferred Stock that occurs pursuant to
the offering of the Series F Preferred Stock by the Company.
For purposes hereof, any Holder which acquires shares of Series F Preferred
Stock from another Holder (the "Transferor") and not upon original issuance from
the Company shall be entitled to exercise its conversion right as to the
percentages of such shares specified under Section 5(a) in such amounts and at
such times such that the number of shares eligible for conversion by such Holder
at any time shall be in the same proportion that the number of shares of Series
F Preferred Stock acquired by such Holder from its Transferor bears to the total
number of shares of Series F Preferred Stock originally issued by the Company to
such Transferor (or its predecessor Transferor).
For purposes hereof, the term "Closing Bid Price" shall mean the closing
bid price of the Company's Class A Common Stock on the Nasdaq Small Cap Market,
or if no longer traded on the Nasdaq Small Cap Market, the closing bid price on
the principal national securities exchange or the over-the-counter on which the
Class A Common Stock is so traded and if not available, the mean of the high and
low prices on the principal national securities exchange or the over-the-counter
system on which the Class A Common Stock is so traded.
(b) MECHANICS OF CONVERSION. In order to convert Series F Preferred
Stock into full shares of Class A Common Stock, the Holder shall (i) send via
facsimile, on or prior to 11:59 p.m., New York City time (the "Conversion Notice
Deadline") on the Date of Conversion, a copy of the fully executed notice of
conversion ("Notice of Conversion") to the Company at the office of the Company
and to its designated transfer agent (the "Transfer Agent") for the Series F
Preferred Stock stating that the Holder elects to convert, which notice shall
specify the Date of Conversion, the number of shares of Series F Preferred Stock
to be converted, the applicable Conversion Price and a calculation of the number
of shares of Class A Common Stock issuable upon such conversion (together with a
copy of the front page of each certificate to be converted) and (ii) surrender
to a common courier for delivery to the office of the Company or the Transfer
Agent, the original certificates representing the Series F Preferred Stock being
converted (the "Preferred Stock Certificates"), duly endorsed for transfer;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Class A Common Stock issuable upon such conversion
unless either the Preferred Stock Certificates are delivered to the Company or
its Transfer Agent as provided above, or the Holder notifies the Company or its
Transfer Agent that such certificates have been lost, stolen or destroyed
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(subject to the requirements of subparagraph (i) below). Upon receipt by the
Company of a facsimile copy of a Notice of Conversion, the Company shall
immediately send, via facsimile, a confirmation of receipt of the Notice of
Conversion to Holder which shall specify that the Notice of Conversion has been
received and the name and telephone number of a contact person at the Company
whom the Holder should contact regarding information related to the Conversion.
In the case of a dispute as to the calculation of the Conversion Rate, the
Company shall promptly issue to the Holder the number of Shares that are not
disputed and shall submit the disputed calculations to its outside accountant
via facsimile within three (3) days of receipt of Holder's Notice of Conversion.
The Company shall cause the accountant to perform the calculations and notify
the Company and Holder of the results no later than two business days from the
time it receives the disputed calculations. Accountant's calculation shall be
deemed conclusive absent manifest error.
(i) LOST OR STOLEN CERTIFICATES. Upon receipt by the Company of
evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series F Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity or security reasonably satisfactory
to the Company, and upon surrender and cancellation of the Preferred Stock
Certificate(s), if mutilated, the Company shall execute and deliver new
Preferred Stock Certificate(s) of like tenor and date. However, the Company
shall not be obligated to re-issue such lost or stolen Preferred Stock
Certificates if Holder contemporaneously requests the Company to convert such
Series F Preferred Stock into Class A Common Stock.
(ii) DELIVERY OF COMMON STOCK UPON CONVERSION. The Company shall
or shall cause the Transfer Agent to, no later than the close of business on the
second (2nd) business day (the "Deadline") after receipt by the Company or the
Transfer Agent of a facsimile copy of a Notice of Conversion and receipt by
Company or the Transfer Agent of all necessary documentation duly executed and
in proper form required for conversion, including the original Preferred Stock
Certificates to be converted (or after provision for security or indemnification
in the case of lost or destroyed certificates, if required), issue and surrender
to a common courier for either overnight or (if delivery is outside the United
States) two (2) day delivery to the Holder at the address of the Holder as shown
on the stock records of the Company a certificate for the number of shares of
Class A Common Stock to which the Holder shall be entitled as aforesaid.
(iii) NO FRACTIONAL SHARES. If any conversion of the Series F
Preferred Stock would create a fractional share of Class A Common Stock or a
right to acquire a fractional share of Class A Common Stock, such fractional
share shall be disregarded and the number of shares of Class A Common Stock
issuable upon conversion, in the aggregate, shall be the next higher number of
shares.
(iv) DATE OF CONVERSION. The date on which conversion occurs (the
"Date of Conversion") shall be deemed to be the date set forth in such Notice of
Conversion, provided (i) that the advance copy of the Notice of Conversion is
sent via facsimile to the Company before 11:59 p.m., New York City time, on the
Date of Conversion, and (ii) that the original Preferred Stock Certificates
representing the shares of Series F Preferred Stock to be converted are
surrendered by depositing such certificates with a common courier, for delivery
to the Company or the Transfer Agent as provided above, as soon as practicable
after the Date of Conversion. The person or persons entitled to receive the
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shares of Class A Common Stock issuable upon such conversion shall be treated
for all purposes as the record Holder or Holders of such shares of Class A
Common Stock on the Date of Conversion.
(c) AUTOMATIC CONVERSION OR REDEMPTION. Each share of Series F
Preferred Stock outstanding on the date which is three (3) years after the Last
Closing Date or, if not a business day, the first business day thereafter
("Termination Date") automatically shall, at the option of the Company, either
(i) be converted ("Automatic Conversion") into Class A Common Stock on such date
at the Conversion Rate then in effect (calculated in accordance with the formula
in Section 5(a) above), and the Termination Date shall be deemed the Date of
Conversion with respect to such conversion for purposes of this Certificate of
Designation, or (ii) be redeemed ("Automatic Redemption") by the Company for
cash in an amount equal to the Stated Value (as defined in Section 6(b)(i)
below) of the shares of Series F Preferred Stock being redeemed. If the Company
elects to redeem, on the Termination Date, the Company shall send to the Holders
of outstanding Series F Preferred Stock notice (the "Automatic Redemption
Notice") via facsimile of its intent to effect an Automatic Redemption of the
outstanding Series F Preferred Stock. If the Company does not send such notice
to Holder on such date, an Automatic Conversion shall be deemed to have
occurred. If an Automatic Conversion occurs, the Company and the Holders shall
follow the applicable conversion procedures set forth in this Certificate of
Designation; provided, however, that the Holders are not required to send the
Notice of Conversion contemplated by Section 5(b). If the Company elects to
redeem, each Holder of outstanding Series F Preferred Stock shall send their
certificates representing the Series F Preferred Stock to the Company within
five (5) days of the date of receipt of the Automatic Redemption Notice from the
Company, and the Company shall pay the applicable redemption price to each
respective Holder within five (5) days of the receipt of such certificates. The
Company shall not be obligated to deliver the redemption price unless the
certificates representing the Series F Preferred Stock are delivered to the
Company, or, in the event one or more certificates have been lost, stolen,
mutilated or destroyed, unless the Holder has complied with Section 5(b)(i). If
the Company elects to redeem under this Section 5(c) and the Company fails to
pay the Holders the redemption price within five (5) days of its receipt of the
certificates representing the shares of Series F Preferred Stock to be redeemed
as required by this Section 5(c), then an Automatic Conversion shall be deemed
to have occurred and, upon receipt of the Preferred Stock certificates, the
Company shall immediately deliver to the Holders the certificates representing
the number of shares of Class A Common Stock to which the Holders would have
been entitled upon Automatic Conversion.
(d) ADJUSTMENT TO CONVERSION RATE.
(i) ADJUSTMENT TO FIXED CONVERSION PRICE DUE TO STOCK SPLIT,
STOCK DIVIDEND, ETC. If, prior to the conversion of all of the Series F
Preferred Stock, the number of outstanding shares of Class A Common Stock is
increased by a stock split, stock dividend, or other similar event, the Fixed
Conversion Price shall be proportionately reduced, or if the number of
outstanding shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Fixed Conversion Price
shall be proportionately increased.
(ii) ADJUSTMENT TO VARIABLE CONVERSION PRICE. If, at any time
when any shares of the Series F Preferred Stock are issued and outstanding, the
number of outstanding shares of Class A Common Stock is increased or decreased
by a stock split, stock dividend, or other similar event, which event shall have
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taken place during the reference period for determination of the Conversion
Price for any conversion of the Series F Preferred Stock, then the Variable
Conversion Price shall be calculated giving appropriate effect to the stock
split, stock dividend, combination, reclassification or other similar event for
all five (5) trading days immediately preceding the Date of Conversion.
(iii) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, prior to
the conversion of all Series F Preferred Stock, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Class A Common Stock of the
Company shall be changed into the same or a different number of shares of the
same or another class or classes of stock or securities of the Company or
another entity or there is a sale of all or substantially all the Company's
assets or there is a change of control transaction not deemed to be a
liquidation pursuant to Section 4(c), then the Holders of Series F Preferred
Stock shall thereafter have the right to receive upon conversion of Series F
Preferred Stock, upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Class A Common Stock immediately theretofore
issuable upon conversion, such stock, securities and/or other assets which the
Holder would have been entitled to receive in such transaction had the Series F
Preferred Stock been converted immediately prior to such transaction, and in any
such case appropriate provisions shall be made with respect to the rights and
interests of the Holders of the Series F Preferred Stock to the end that the
provisions hereof (including, without limitation, provisions for the adjustment
of the Conversion Price and of the number of shares issuable upon conversion of
the Series F Preferred Stock) shall thereafter be applicable, as nearly as may
be practicable in relation to any securities thereafter deliverable upon the
exercise hereof. The Company shall not effect any transaction described in this
subsection 5(d)(iii) unless (a) it first gives at least thirty (30) days prior
notice of such merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event (during which time the Holder shall be
entitled to convert its shares of Series F Preferred Stock into Class A Common
Stock) and (b) the resulting successor or acquiring entity (if not the Company)
assumes by written instrument the obligations of the Company under this
Certificate of Designation including this subsection 5(d)(iii).
(iv) NO FRACTIONAL SHARES. If any adjustment under this Section
5(d) would create a fractional share of Class A Common Stock or a right to
acquire a fractional share of Class A Common Stock, such fractional share shall
be disregarded and the number of shares of Class A Common Stock issuable upon
conversion shall be the next higher number of shares.
Section 6. Company's Right to Redeem at Its Election. Subject to Sections
6(iv) and 6(v) below, the Company shall have the right, in its sole discretion,
to redeem ("Redemption at the Company's Election"), from time to time, any or
all of the Preferred Shares at the Redemption Price at the Company's Election
(as defined below). If the Company elects to redeem some, but not all, of the
Preferred Shares, the Company shall redeem a pro rata amount from each holder of
Preferred Shares based on the number of Preferred Shares held by such holder
relative to the number of Preferred Shares outstanding.
(i) Redemption Price at the Company's Election. The "Redemption
Price at the Company's Election" shall be an amount per Preferred Share equal to
the product of (A) 1.3 multiplied by (B) the sum of (I) (.07)(P/365)($10,000)
plus (II) $10,000; where "P" means the number of days from, but excluding, the
issuance date of such Preferred Share through and including the Date of
Redemption at the Company's Election (as defined in Section 6(ii)).
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(ii) Mechanics of Redemption at the Company's Election. The
Company shall effect each such redemption no sooner than 20 trading days nor
later than 40 trading days after delivering written notice of its Redemption at
the Company's Election via facsimile and overnight courier ("Notice of
Redemption at the Company's Election") to (A) each holder of the Preferred
Shares and (B) the Transfer Agent. Such Notice of Redemption at the Company's
Election shall indicate (I) the number of Preferred Shares that have been
selected for redemption, (II) the date that such redemption is to become
effective (the "Date of Redemption at the Company's Election") and (III) the
applicable Redemption Price at the Company's Election. Notwithstanding the
above, any holder may convert into Common Stock pursuant to Section 5, on or
prior to the date immediately preceding the Date of Redemption at the Company's
Election, any Preferred Shares held by such holder (and, after such holder's
receipt of the Notice of Redemption at the Company's Election, without regard to
the conversion limitations set forth in Section 5), including Preferred Shares
that have been selected for Redemption at the Company's Election pursuant to
this Section 6.
(iii) Payment of Redemption Price. Each holder submitting
Preferred Shares being redeemed under this Section 6 shall send such holder's
Preferred Stock Certificates so redeemed to the Transfer Agent within five (5)
business days after the Date of Redemption at the Company's Election, and the
Company shall pay the applicable Redemption Price at the Company's Election to
that holder in cash within three (3) business days after such holder's Preferred
Stock Certificates are delivered to the Company or its Transfer Agent. If the
Company shall fail to pay the applicable Redemption Price at the Company's
Election to such holder on a timely basis as described in this Section 6(iii),
in addition to any remedy such holder of Preferred Shares may have under this
Certificate of Designations and the Subscription Agreement, the Fixed Conversion
Price and Variable Conversion Price shall each be automatically reduced by ten
percent (10%). Notwithstanding the foregoing, if the Company fails to pay the
applicable Redemption Price at the Company's Election to a holder within the
time period described in this Section 6 due to a dispute as to the arithmetic
calculation of the Redemption Price at the Company's Election, such dispute
shall be resolved pursuant to Section 5(b) above.
(iv) Company Must Have Immediately Available Funds or Credit
Facilities. The Company shall not be entitled to send any Notice of Redemption
at the Company's Election pursuant to Section 6(ii) above and begin the
redemption procedure under this Section 6, unless it has:
(A) the full amount of the Redemption Price at the Company's
Election in cash, available in a demand or other immediately available account
in a bank or similar financial institution;
(B) credit facilities, with a bank or similar financial
institutions that are immediately available and unrestricted for use in
redeeming the Preferred Shares, in the full amount of the Redemption Price at
the Company's Election;
(C) a written agreement with a standby underwriter or
qualified buyer ready, willing and able to purchase from the Company a
sufficient number of shares of stock to provide proceeds necessary to redeem any
stock that is not converted prior to a Redemption at the Company's Election; or
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(D) a combination of the items set forth in the preceding
clauses (A), (B) and (C), aggregating the full amount of the Redemption Price at
the Company's Election.
(v) Certain Conditions During Notice Period. The Company shall
not be entitled to redeem the Preferred Shares on a Date of Redemption at the
Election of the Company, unless each of the following conditions are satisfied
as of the date of the Notice of Redemption at the Company's Election and on each
day from such date until and including the later of the Date of Redemption at
the Company's Election and the date on which the Company pays the applicable
Redemption Price:
(A) The Registration Statement shall be effective and
available for the sale of no less than 100% of the sum of (I) the number of
shares of common stock then issuable upon the conversion of all outstanding
Preferred Shares and (II) the number of shares of common stock then issuable
upon exercise of all outstanding warrants held by the holders of Preferred
Shares;
(B) The Common Stock is designated for quotation on the
Nasdaq National Market, Nasdaq Small-Cap Market, The New York Stock Exchange,
Inc. or The American Stock Exchange, Inc. and is not suspended from trading;
(C) The Company has delivered shares of common stock upon
conversion of the Preferred Shares and exercise of the warrants held by the
holders of Preferred Shares to the holders of Preferred Shares on a timely basis
as set forth in Section 5 of this Certificate of Designations and as set forth
in the warrants held by such holders, respectively; and
(D) The Company otherwise has satisfied its obligations and
is not in default under this Certificate of Designations, the Subscription
Agreement, the warrants held by the holders of Preferred Shares and the
Registration Rights Agreement.
Section 7. VOTING RIGHTS. The Holders of the Series F Preferred Stock shall
have no voting power whatsoever, except as otherwise provided by the General
Corporation Law of the State of Delaware ("Delaware Law"), and no Holder of
Series F Preferred Stock shall vote or otherwise participate in any proceeding
in which actions shall be taken by the Company or the shareholders thereof or be
entitled to notification as to any meeting of the shareholders.
Notwithstanding the above, the Company shall provide Holder with
notification of any meeting of the shareholders regarding any major corporate
events affecting the Company. In the event of any taking by the Company of a
record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire any share of any class or any other
securities or property (including by way of merger, consolidation or
reorganization), or to receive any other right, or for the purpose of
determining shareholders who are entitled to vote in connection with any
proposed sale, lease or conveyance of all or substantially all of the assets of
the Company, or any proposed liquidation, dissolution or winding up of the
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Company, the Company shall mail a notice to Holder, at least ten (10) days prior
to the record date specified therein, of the date on which any such record is to
be taken for the purpose of such dividend, distribution, right or other event,
and a brief statement regarding the amount and character of such dividend,
distribution, right or other event to the extent known at such time.
To the extent that under Delaware Law the vote of the Holders of the Series
F Preferred Stock, voting separately as a class, is required to authorize a
given action of the Company, the affirmative vote or consent of the Holders of
at least a majority of the shares of the Series F Preferred Stock represented at
a duly held meeting at which a quorum is present or by written consent of a
majority of the shares of Series F Preferred Stock (except as otherwise may be
required under Delaware Law) shall constitute the approval of such action by the
class. To the extent that under Delaware Law the Holders of the Series F
Preferred Stock are entitled to vote on a matter with holders of Class A Common
Stock, voting together as one (1) class, each share of Series F Preferred Stock
shall be entitled to a number of votes equal to the number of shares of Class A
Common Stock into which it is then convertible using the record date for the
taking of such vote of stockholders as the date as of which the Conversion Price
is calculated. Holders of the Series F Preferred Stock also shall be entitled to
notice of all shareholder meetings or written consents with respect to which
they would be entitled to vote, which notice would be provided pursuant to the
Company's by-laws and applicable statutes.
Section 8. PROTECTIVE PROVISION. So long as shares of Series F Preferred
Stock are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by Delaware Law) of the
Holders of at least seventy-five percent (75%) of the then outstanding shares of
Series F Preferred Stock, and at least seventy-five percent (75%) of the then
outstanding Holders:
(a) alter or change the rights, preferences or privileges of
the Series F Preferred Stock or any securities so as to affect adversely the
Series F Preferred Stock;
(b) create any new class or series of stock having a
preference over or on parity with the Series F Preferred Stock with respect to
Distributions (as defined in Section 2 above) or increase the size of the
authorized number of Series F Preferred; or
(c) do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series F Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
In the event Holders of at least seventy-five percent (75%) of the then
outstanding shares of Series F Preferred Stock and at least seventy-five percent
(75%) of the then outstanding Holders agree to allow the Company to alter or
change the rights, preferences or privileges of the shares of Series F Preferred
Stock, pursuant to subsection (a) above, so as to affect the Series F Preferred
Stock, then the Company will deliver notice of such approved change to the
Holders of the Series F Preferred Stock that did not agree to such alteration or
change (the "Dissenting Holders") and Dissenting Holders shall have the right
for a period of thirty (30) business days to convert pursuant to the terms of
this Certificate of Designation as they exist prior to such alteration or change
(notwithstanding the holding requirements set forth in Section 5(a) hereof), or
continue to hold their shares of Series F Preferred Stock, as amended.
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Section 9. STATUS OF CONVERTED OR REDEEMED STOCK. In the event any shares
of Series F Preferred Stock shall be converted or redeemed pursuant to Section 5
or Section 6 hereof, the shares so converted or redeemed shall be canceled,
shall return to the status of authorized but unissued Preferred Stock of no
designated series, and shall not be issuable by the Company as Series F
Preferred Stock.
Section 10. PREFERENCE RIGHTS. Nothing contained herein shall be construed
to prevent the Board of Directors of the Company from issuing one (1) or more
series of Preferred Stock with dividend and/or liquidation preferences junior to
the dividend and liquidation preferences of the Series F Preferred Stock.
Section 11. AUTHORIZATION AND RESERVATION OF SHARES OF COMMON STOCK.
(a) AUTHORIZED AND RESERVED AMOUNT. The Company shall have authorized
and reserved and keep available for issuance one million nine hundred
twenty-five thousand (1,925,000) shares of Class A Common Stock (the "Reserved
Amount") solely for the purpose of effecting the conversion of the Series F
Preferred Stock, and exercise of the warrants to acquire Class A Common Stock
(the "Common Warrants") issued or to be issued to the Holders. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Class A Common Stock a sufficient number of shares of Class A Common
Stock to provide for the full conversion of all outstanding Series F Preferred
Stock, and issuance of the shares of Class A Common Stock in connection
therewith and the full exercise of the Common Warrants and issuance of the
shares of Class A Common Stock in connection therewith.
(b) INCREASES TO RESERVED AMOUNT. Without limiting any other provision
of this Section 11, if the Reserved Amount for any three (3) consecutive trading
days (the last of such three (3) trading days being the "Reservation Trigger
Date") shall be less than one hundred twenty-five percent (125%) of the number
of shares of Class A Common Stock issuable upon conversion of this Series F
Preferred Stock, and one hundred percent of the number of shares of Class A
Common Stock issuable upon exercise of the Common Warrants on such trading days
(a "Share Authorization Failure"), the Company shall immediately notify all
Holders of such occurrence and shall take action as soon as possible, but in any
event within sixty (60) days after a Reservation Trigger Date (including, if
necessary, seeking shareholder approval to authorize the issuance of additional
shares of Class A Common Stock) to increase the Reserved Amount to one hundred
fifty percent (150%) of the number of shares of Class A Common Stock then
issuable upon conversion of the Series F Preferred Stock, and one hundred
percent of the number of shares of Class A Common Stock issuable upon exercise
of the Common Warrants.
(c) REDUCTION OF RESERVED AMOUNT UNDER CERTAIN CIRCUMSTANCES. Prior to
complete conversion of all Series F Preferred Stock the Company shall not reduce
the number of shares required to be reserved for issuance under this Section 11
without the written consent of all Holders except for a reduction proportionate
to a reverse stock split effected for a business purpose other than affecting
the obligations of Holder under this Section 11, which reverse stock split
affects all shares of Class A Common Stock equally. Following complete
conversion of all the Series F Preferred Stock, the Company may, with fifteen
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(15) days prior written notice to Holder, reduce the Reserved Amount to one
hundred twenty-five percent (125%) of the number of shares of Class A Common
Stock issuable upon the full exercise of the Common Warrants; provided, however,
that the Reserved Amount shall continue to be subject to increase pursuant to
Section 11 hereof.
(d) ALLOCATION OF RESERVED AMOUNT. Each increase to the Reserved
Amount shall be allocated pro rata among the Holders based on the number of
Series F Preferred Stock, and Common Warrants held by each Holder at the time of
the establishment of or increase in the Reserved Amount. In the event a Holder
shall sell or otherwise transfer any of such Holder's Series F Preferred Stock,
or Common Warrants, each transferee shall be allocated a pro rata portion of
such transferor's Reserved Amount. Any portion of the Reserved Amount which
remains allocated to any person or entity which does not hold any Series F
Preferred Stock shall be allocated to the remaining Holders, pro rata based on
the number of Series F Preferred Stock, and Common Warrants then held by such
Holders.
(e) CAP AMOUNT. Unless otherwise permitted by Nasdaq, in no event
shall the total number of shares of Common Stock issued upon exercise of all of
the Warrants and upon conversion of the Series F Preferred Stock exceed the
maximum number of shares of Common Stock (the "Cap Amount") that the Company
can, without shareholder approval, so issue pursuant to Nasdaq Rule
4460(i)(1)(d)(ii) (or any other applicable Nasdaq Rules or any successor rule)
(the "Nasdaq 20% Rule"). The Cap Amount shall be allocated pro-rata to the
holders of Series F Preferred Stock as provided in subsection (f) below. In the
event the Company is prohibited from issuing shares of Common Stock as a result
of the operation of this subsection (e), the Company shall comply with
subsection (g) below.
(f) ALLOCATIONS OF CAP AMOUNT AND RESERVED AMOUNT. The initial Cap
Amount and Reserved Amount shall be allocated pro rata among the Holders of
Series F Preferred Stock based on the number of the shares of Series F Preferred
Stock initially issued to each Holder. Each increase to the Cap Amount and
Reserved Amount shall be allocated pro rata among the Holders of Series F
Preferred Stock based on the number of the shares of Series F Preferred Stock
held by each Holder at the time of the increase in the Cap Amount or Reserved
Amount, as the case may be. In the event a holder shall sell or otherwise
transfer any of such Holder's shares of Series F Preferred Stock, each
transferee shall be allocated a pro rata portion of such transferor's Cap amount
and Reserved Amount. Any portion of the Cap Amount or Reserved Amount which
remains allocated to any person or entity which does not hold any Series F
Preferred Stock shall be allocated to the remaining holders of shares of Series
F Preferred Stock, pro rata based on the number of shares of Series F Preferred
Stock then held by such Holders.
(g) INABILITY TO CONVERT DUE TO CAP AMOUNT.
(i) OBLIGATION TO CURE. If, on the last business day of any
month, or at any time a Holder so notifies the Company in writing, the then
unissued portion of any Holder's Cap Amount is less than 125% of the number of
shares of Common Stock then issuable upon conversion of such Holder's shares of
Series F Preferred Stock (a "Trading Market Trigger Event"), the Company shall
immediately notify the Holders of Series F Preferred Stock of such occurrence
and shall immediately take all necessary action (including, if necessary,
approval of its shareholders to authorize the issuance of the full number of
shares of Common Stock which would be issuable upon the conversion of Series F
Preferred Stock but for the Cap Amount) to eliminate any prohibitions under
applicable law or the rules or regulations of any stock exchange, interdealer
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quotation system or other self-regulatory organization with jurisdiction over
the Company or any of its securities on the Company's ability to issue shares of
Common Stock in excess of the Cap Amount.
(ii) REMEDIES. In the event the Company fails to eliminate all
such prohibitions within one hundred twenty (120) days after the Trading Market
Trigger Event (provided, however, that (A) the Company must file preliminary
proxy materials with the SEC within thirty (30) days of the Trading Market
Trigger Event and (B) officers and directors of the Company shall promptly upon
the occasion of any such Trading Market Trigger event enter into irrevocable
agreements to vote all of their shares in favor of eliminating such
prohibitions), each Holder of Series F Preferred Stock shall thereafter have the
option, exercisable in whole or in part at any time and from time to time by
delivery of written notice ("Cap Redemption Notice") to the Company, to require
the Company to purchase for cash, at an amount per share to the Redemption Price
at the Company's Election (as defined in Section 6(i) above), a portion of the
Holder's Series F Preferred Stock such that, after giving effect to such
purchase, the holder's allocated portion of the Cap Amount exceeds 125% of the
total number of shares of Common Stock issuable to such holder upon conversion
of its Series F Preferred Stock on the date of such Cap Redemption Notice.
Section 12. FAILURE TO SATISFY CONVERSIONS.
(a) CONVERSION FAILURE PAYMENTS. If, at any time, (x) a Holder submits
a Notice of Conversion (or is deemed to submit such notice pursuant to Section
5(d) hereof), and the Company fails for any reason to deliver, on or prior to
the expiration of the Deadline ("Delivery Period") for such conversion, such
number of shares of Class A Common Stock to which such Converting Holder is
entitled upon such conversion, or (y) the Company provides notice to Holder at
any time of its intention not to issue shares of Class A Common Stock upon
exercise by Holder of its conversion rights in accordance with the terms of this
Certificate of Designation (each of (x) and (y) being a "Conversion Failure"),
then the Company shall pay to such Holder damages in an amount equal to the
lower of:
(i) "Damages Amount" X "D" X .005, and
(ii) the highest interest rate permitted by applicable law,
where:
"D" means the number of days beginning the date of the Conversion Failure
through and including the Cure Date with respect to such Conversion Failure;
"Damages Amount" means the Original Series F Issue Price for each share of
Series F Preferred Stock subject to conversion plus all accrued and unpaid
interest thereon as of the first day of the Conversion Failure.
"Cure Date" means (i) with respect to a Conversion Failure described in
clause (x) of its definition, the date the Company effects the conversion of the
shares of Series F Preferred Stock submitted for conversion and (ii) with
respect to a Conversion Failure described in clause (y) of its definition, the
date the Company undertakes in writing to issue Class A Common Stock in
satisfaction of all conversions of Series F Preferred Stock in accordance with
the terms of this Certificate of Designation.
The payments to which a Holder shall be entitled pursuant to this Section
are referred to herein as "Conversion Failure Payments." The parties agree that
the damages caused by a breach hereof would be difficult or impossible to
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estimate accurately. A Holder may elect to receive accrued Conversion Failure
Payments in cash or to convert all or any portion of such accrued Conversion
Failure Payments, at any time, into Class A Common Stock at the lowest
Conversion Price in effect during the period beginning on the date of the
Conversion Failure through the Cure Date for such Conversion Failure. In the
event a Holder elects to receive any Conversion Failure Payments in cash, it
shall so notify the Company in writing no later than three (3) business days
after the Deadline and failure to so notify the Company, shall entitle the
Company, in its sole discretion, to elect to make such Conversion Failure
Payments in cash, Class A Common Stock or some combination of the two. In the
event a Holder elects to convert all or any portion of the Conversion Failure
Payments, such Holder shall indicate on a Notice of Conversion such portion of
the Conversion Failure Payments which such Holder elects to so convert in
accordance with this Section 12(a) and such conversion shall otherwise be
effected in accordance with provisions of Section 5.
(b) BUY-IN CURE. Unless a Conversion Failure described in clause (y)
of Section 12(a) hereof has occurred with respect to such a Holder, if (i) the
Company fails for any reason to deliver during the Delivery Period shares of
Class A Common Stock to a Holder upon a conversion of the Series F Preferred
Stock and (ii) after the applicable Delivery Period with respect to such
conversion, a Holder purchases (in an open market transaction or otherwise)
shares of Class A Common Stock to make delivery upon a sale by a Holder of the
shares of Class A Common Stock (the "Sold Shares") which such Holder anticipated
receiving upon such conversion (a "Buy-In"), the Company shall pay such Holder
(in addition to any other remedies available to Holder) the amount by which (x)
such Holder's total purchase price (including brokerage commission, if any) for
the shares of Class A Common Stock so purchased exceeds (y) the net proceeds
received by such Holder from the sale of the Sold Shares. For example, if a
Holder purchases shares of Class A Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to shares of Class A Common Stock sold
for $10,000, the Company will be required to pay such Holder $1,000. A Holder
shall provide the Company written notification indicating any amounts payable to
Holder pursuant to this Section 12.
(c) ADJUSTMENT TO CONVERSION PRICE. If a Holder has not received
certificates for all shares of Class A Common Stock within five (5) business
days following the expiration of the Delivery Period with respect to a
conversion of any portion of any of such Holder's Series F Preferred Stock for
any reason, then the Conversion Price for the affected Series F Preferred Stock
shall thereafter be the lesser of (i) the Fixed Conversion Price on the
Conversion Date specified in the Notice of Conversion which resulted in the
Conversion Failure and (ii) the lowest Conversion Price in effect during the
period beginning on, and including, such Conversion Date through and including
the Cure Date. If there shall occur a Conversion Failure of the type described
in clause (y) of Section 12(a), then the Fixed Conversion Price with respect to
any conversion thereafter shall be the lowest Conversion Price in effect at any
time during the period beginning on, and including, the date of the occurrence
of such Conversion Failure through and including the Cure Date. The Conversion
Price shall thereafter be subject to further adjustment for any events described
in Section 5(d).
Section 13. EVENTS OF DEFAULT.
(a) HOLDER'S OPTION TO DEMAND PREPAYMENT. Upon the occurrence of an
Event of Default (as herein defined), each Holder shall have the right to elect
at any time and from time to time prior to the cure by the Company of such Event
14
<PAGE>
of Default to have all or any portion of such Holder's then outstanding Series F
Preferred Stock prepaid by the Company for an amount equal to the Holder Demand
Prepayment Amount (as herein defined).
(i) The right of a Holder to elect prepayment shall be
exercisable upon the occurrence of an Event of Default by such Holder in its
sole discretion by delivery of a Demand Prepayment Notice (as herein defined) in
accordance with the procedures set forth in this Section 13. Notwithstanding the
exercise of such right, the Holder shall be entitled to exercise all other
rights and remedies available under the provisions of this Certificate of
Designation and at law or in equity.
(ii) A Holder shall effect each demand for prepayment under this
Section 13 by giving at least two (2) business days prior to written notice (the
"Demand Prepayment Notice") of the date which such prepayment is to become
effective (the "Effective Date of Demand of Prepayment"), the Series F Preferred
Stock selected for prepayment and the Holder Demand Prepayment Amount to the
Company at the address and facsimile number provided in the stock records of the
Company, which Demand Prepayment Notice shall be deemed to have been delivered
on the business day after the date of transmission of Holder's facsimile (with a
copy sent by overnight courier to the Company) of such notice.
(iii) The Holder Demand Prepayment Amount shall be paid to a
Holder whose Series F Preferred Stock are being prepaid within one (1) business
day following the Effective Date of Demand of Prepayment; provided, however,
that the Company shall not be obligated to deliver any portion of the Holder
Demand Prepayment Amount until one (1) business day following either the date on
which the Series F Preferred Stock being prepaid are delivered to the office of
the Company or the Transfer Agent, or the date on which the Holder notifies the
Company or the Transfer Agent that such Series F Preferred Stock have been lost,
stolen or destroyed and delivers the documentation required in accordance with
Section 5(b)(i) hereof.
(b) HOLDER DEMAND PREPAYMENT AMOUNT. The "Holder Demand Prepayment
Amount" means the greater of: (a) 1.3 times the Stated Value of the Series F
Preferred Stock for which demand is being made, plus all accrued and unpaid
interest thereon and accrued and unpaid Conversion Failure Payments (if any)
through the date of prepayment and (b) the product of (1) the highest price at
which the Class A Common Stock is traded on the date of the Event of Default (or
the most recent highest closing bid price if the Class A Common Stock is not
traded on such date) divided by the Conversion Price in effect as of the date of
the Event of Default, and (2) the sum of the Stated Value and all accrued and
unpaid Conversion Failure Payments (if any) through the date of prepayment.
(c) EVENTS OF DEFAULT. An "Event of Default" means any one of the
following:
(i) a Conversion Failure described in Section 12(a) hereof;
(ii) a Share Authorization Failure described in Section 11(b)
hereof, if such Share Authorization Failure continues uncured for ninety (90)
days after the Reservation Trigger Date;
15
<PAGE>
(iii) the Company fails, and such failure continues uncured for
three (3) business days after the Company has been notified thereof in writing
by a Holder, to satisfy the share reservation requirements of Section 11 hereof;
(iv) the Company fails to maintain an effective registration
statement as required by Section 2, Section 3 and Section 6 of the Registration
Rights Agreement, between the Company and the Holder(s) (the "Registration
Rights Agreement") except where such failure lasts no longer than three (3)
consecutive trading days and is caused solely by failure of the Securities and
Exchange Commission to timely review the customary submission of or respond to
the customary requests of the Company;
(v) for three (3) consecutive trading days or for an aggregate of
ten (10) trading days in any nine (9) month period, the Class A Common Stock
(including any of the shares of Class A Common Stock issuable upon conversion of
the Series F Preferred Stock, and exercise of the Common Warrants) is (i)
suspended from trading on any of NASDAQ SmallCap, NMS, NYSE, AMEX or the OTC
Bulletin Board, or (ii) is not qualified for trading on at least one of NASDAQ
SmallCap, NMS, NYSE, AMEX or the OTC Bulletin Board;
(vi) the Company fails, and such failure continues uncured for
three (3) business days after the Company has been notified thereof in writing
by a Holder, to remove any restrictive legend on any certificate for any shares
of Class A Common Stock issued to a Holder upon conversion of any Series F
Preferred Stock, or exercise of any Common Warrant as and when required by this
Certificate of Designation, the Common Warrants, the Subscription Agreement,
between the Company and the Holder(s) (the "Subscription Agreement") or the
Registration Rights Agreement;
(vii) the Company breaches, and such breach continues uncured for
three (3) business days after the Company has been notified thereof in writing
by a Holder, any significant covenant or other material term or condition of
this Certificate of Designation, the Subscription Agreement, the Common Warrants
or the Registration Rights Agreement;
(viii) any representation or warranty of the Company made herein
or in any agreement, statement or certificate given in writing pursuant hereto
or in connection herewith (including, without limitation, the Subscription
Agreement and Registration Rights Agreement), shall be false or misleading in
any material respect when made;
(ix) the Company or any subsidiary of the Company shall make an
assignment for the benefit of its creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business, or such receiver or trustee shall otherwise be appointed;
or
(x) bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Company or any
subsidiary of the Company (and such proceedings shall continue unstayed for
thirty (30) days).
(d) FAILURE TO PAY DAMAGES AMOUNT. If the Company fails to pay the
Holder Demand Prepayment Amount within five (5) business days of its receipt of
a Demand Prepayment Notice, then such Holder shall have the right, at any time
16
<PAGE>
and from time to time prior to the payment of the Holder Demand Prepayment
Amount, to require the Company, upon written notice, to immediately convert (in
accordance with the terms of Section 5) all or any portion of the Holder Demand
Prepayment Amount, into shares of Class A Common Stock at the then current
Conversion Price, provided that if the Company has not delivered the full number
of shares of Class A Common Stock issuable upon such conversion within five (5)
business days after the Company receives written notice of such conversion, the
Conversion Price with respect to such Holder Demand Prepayment Amount shall
thereafter be deemed to be the at the lowest Conversion Price in effect during
the period beginning on the date of the Event of Default through the date on
which the Company delivers to the Holder the full number of freely tradable
shares of Class A Common Stock issuable upon such conversion. In the event the
Company is not able to pay all amounts due and payable with respect to all
Series F Preferred Stock subject to Holder Demand Prepayment Notices, the
Company shall pay the Holders such amounts pro rata, based on the total amounts
payable to such Holder relative to the total amounts payable to all Holders.
Signed on November 2, 1999.
/s/ Donald E. Lawson
- -----------------------------------
Donald E. Lawson, President
17
EXHIBIT 4.4
FORM OF CLASS K WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SUBSCRIBERS
MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED. SEE THE RISK FACTORS SET FORTH IN THE ATTACHED DISCLOSURE DOCUMENTS AS
EXHIBIT F.
Warrant to Purchase
__________ shares
CLASS K WARRANT TO PURCHASE COMMON STOCK
OF
LIGHTPATH TECHNOLOGIES, INC.
THIS CERTIFIES that ________________ or any subsequent holder hereof
("Holder"), has the right to purchase from LIGHTPATH TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), up to _______________ fully paid and
nonassessable shares of the Company's Class A common stock, $.01 par value per
share ("Common Stock"), subject to adjustment as provided herein, at a price
equal to the Exercise Price as defined in Section 3 below, at any time beginning
on the Date of Issuance (defined below) and ending at 5:00 p.m., New York, New
York time, on November, 2004 (the "Exercise Period").
Holder agrees with the Company that this Warrant to Purchase Common Stock
of LightPath Technologies, Inc. (this "Warrant") is issued and all rights
hereunder shall be held subject to all of the conditions, limitations and
provisions set forth herein.
1. DATE OF ISSUANCE.
This Warrant shall be deemed to be issued on November 2, 1999 ("Date of
Issuance").
2. EXERCISE.
(a) MANNER OF EXERCISE. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly completed and executed, together with the
full Exercise Price (as defined below) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 6820 Academy
Parkway East NE, Albuquerque, New Mexico 87109; Attention: President, Telephone
No. (505) 342-1100, Telecopy No. (505) 342-1111, or at such other office or
agency as the Company may designate in writing, by overnight mail, with an
advance copy of the Exercise Form sent to the Company and its Transfer Agent by
facsimile (such surrender and payment of the Exercise Price hereinafter called
the "Exercise of this Warrant").
(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
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<PAGE>
(c) CANCELLATION OF WARRANT. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
(d) HOLDER OF RECORD. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. PAYMENT OF WARRANT EXERCISE PRICE.
The Exercise Price shall equal $5.00 per share ("Exercise Price").
Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:
(i) CASH EXERCISE: cash, bank or cashiers check or wire transfer; or
(ii) CASHLESS EXERCISE: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes
of this Section 3(ii), the "Market Price" shall be defined as the
average closing bid price of the Common Stock for the five (5)
trading days prior to the Date of Exercise of this Warrant (the
"Average Closing Price"), as reported by the National Association
of Securities Dealers Automated Quotation System ("Nasdaq") Small
Cap Market, or if the Common Stock is not traded on the Nasdaq
Small Cap Market, the Average Closing Price in any other
over-the-counter market; provided, however, that if the Common
Stock is listed on a stock exchange, the Market Price shall be
the Average Closing Price on such exchange for the five (5)
trading days prior to the date of exercise of the Warrants. If
the Common Stock is/was not traded during the five (5) trading
days prior to the Date of Exercise, then the closing price for
the last publicly traded day shall be deemed to be the closing
price for any and all (if applicable) days during such five (5)
trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; (y) be then
registered pursuant to an effective registration statement filed pursuant to
that certain Registration Rights Agreement dated on or about November 1, 1999 by
and among the Company and certain investors; or (z) otherwise be registered
under the Securities Act of 1933, as amended.
2
<PAGE>
4. TRANSFER AND REGISTRATION.
(a) TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
(b) REGISTRABLE SECURITIES. The Common Stock issuable upon the exercise of
this Warrant constitutes "Registrable Securities" under that certain
Registration Rights Agreement dated on or about November 1, 1999 between the
Company and certain investors and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
5. ANTI-DILUTION ADJUSTMENTS.
(a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at any time
effect a recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which Holder shall be
entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give Holder the same notice it provides to holders of Common Stock
of any transaction described in this Section 5(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding year) then, in
any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board of Directors of the Company in its discretion) and the denominator of
which is such Exercise Price.
(d) NOTICE OF CONSOLIDATION OR MERGER. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exerciseable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not affect any Corporate Change unless it first shall have given
thirty (30) days notice to Holder hereof of any Corporate Change.
3
<PAGE>
(e) EXERCISE PRICE ADJUSTED. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b) or (c)
of this Section 5, and thereafter shall mean said price as adjusted from time to
time in accordance with the provisions of said subsection. No such adjustment
under this Section 5 shall be made unless such adjustment would change the
Exercise Price at the time by $.01 or more; provided, however, that all
adjustments not so made shall be deferred and made when the aggregate thereof
would change the Exercise Price at the time by $.01 or more. No adjustment made
pursuant to any provision of this Section 5 shall have the net effect of
increasing the Exercise Price. The number of shares of Common Stock subject
hereto shall increase proportionately with each decrease in the Exercise Price.
(f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event that
at any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant,
Holder may purchase only a whole number of shares of Common Stock. If, on
Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for the Exercise of
this Warrant and payment of the Exercise Price. The Company covenants and agrees
that upon the Exercise of this Warrant, all shares of Common Stock issuable upon
such exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8. RESTRICTIONS ON TRANSFER.
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant has been issued in a
transaction exempt from the registration requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Warrant and the Common Stock issuable upon the Exercise of this Warrant may not
be pledged, transferred, sold or assigned except pursuant to an effective
registration statement or an exemption to the registration requirements of the
Act and applicable state laws.
(b) ASSIGNMENT. If Holder can provide the Company with reasonably
satisfactory evidence that the conditions of (a) above regarding registration or
exemption have been satisfied, Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a
written notice to Company, substantially in the form of the Assignment attached
hereto as Exhibit B, indicating the person or persons to whom the Warrant shall
be assigned and the respective number of warrants to be assigned to each
assignee. The Company shall effect the assignment within ten (10) days, and
shall deliver to the assignee(s) designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.
4
<PAGE>
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person other
than the Company and Holder any legal or equitable right, remedy or claim under
this Warrant and this Warrant shall be for the sole and exclusive benefit of the
Company and Holder.
10. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the state of Delaware, without giving
effect to conflict of law provisions thereof.
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS.
Notices or demands pursuant to this Warrant to be given or made by Holder
to or on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
President, 6820 Academy Parkway East NE, Albuquerque, New Mexico 87109,
Telephone No. (505) 342-1100, Telecopy No. (505) 342-1111. Notices or demands
pursuant to this Warrant to be given or made by the Company to or on Holder
shall be sufficiently given or made if sent by certified or registered mail,
return receipt requested, postage prepaid, and addressed, to the address of
Holder set forth in the Company's records, until another address is designated
in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 2nd
day of November, 1999.
LIGHTPATH TECHNOLOGIES, INC.
By: /s/ Donald E. Lawson
-----------------------------------------
Donald E. Lawson, President
5
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EXHIBIT A
EXERCISE FORM FOR CLASS K WARRANT
TO: LIGHTPATH TECHNOLOGIES, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Class A Common Stock (the "Common Stock") of
LIGHTPATH TECHNOLOGIES, INC., a Delaware corporation (the "Company"), evidenced
by the attached warrant (the "Warrant"), and herewith makes payment of the
exercise price with respect to such shares in full, all in accordance with the
conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated: _________________________
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Print Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
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EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Class A Common Stock of
LIGHTPATH TECHNOLOGIES, INC., evidenced by the attached Warrant and does hereby
irrevocably constitute and appoint _______________________ attorney to transfer
the said Warrant on the books of the Company, with full power of substitution in
the premises.
Dated: ___________ ____________________________________________
Signature
Fill in for new registration of Warrant:
- ----------------------------------
Name
- ----------------------------------
Address
- ----------------------------------
Please print name and address of
assignee (including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
7
EXHIBIT 4.5
FORM OF CLASS L WARRANT
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SUBSCRIBERS
MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED. SEE THE RISK FACTORS SET FORTH IN THE ATTACHED DISCLOSURE DOCUMENTS AS
EXHIBIT F.
Warrant to Purchase
125,000 shares
SERIES L WARRANT TO PURCHASE COMMON STOCK
OF
LIGHTPATH TECHNOLOGIES, INC.
THIS CERTIFIES that Dunwoody Brokerage Services, Inc. or any subsequent
("Holder") hereof, has the right to purchase from LIGHTPATH TECHNOLOGIES, INC.,
a Delaware corporation (the "Company"), not more than 125,000 fully paid and
nonassessable shares of the Company's Class A Common Stock, $.01 par value
("Common Stock"), at a price equal to the Exercise Price as defined in Section 3
below, subject to adjustment as provided herein, at any time on or before 5:00
p.m., Atlanta, Georgia time, on November 2, 2004.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. DATE OF ISSUANCE.
This Warrant shall be deemed to be issued on November 2, 1999 ("Date of
Issuance").
2. EXERCISE.
(a) MANNER OF EXERCISE. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, LightPath Technologies, Inc., 6820 Academy Parkway East NE,
Albuquerque, New Mexico 87109, Attention: President, Telephone No. (505)
342-1100, Telecopy No. (505) 342-1111, or at such other office or agency as the
Company may designate in writing, by overnight mail, with an advance copy of the
Exercise Form attached as Exhibit A ("Exercise Form") sent by facsimile to the
Company and its Transfer Agent (such surrender and payment of the Exercise Price
hereinafter called the "Exercise of this Warrant").
(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company and its Transfer Agent, provided that
the original Warrant and Exercise Form are received by the Company within five
(5) business days thereafter. The original Warrant and Exercise Form must be
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received within five (5) business days of the Date of Exercise, or the exercise
may, at the Company's option, be considered void. Alternatively, the Date of
Exercise shall be defined as the date the original Exercise Form is received by
the Company, if Holder has not sent advance notice by facsimile.
(c) CANCELLATION OF WARRANT. This Warrant shall be canceled upon its
Exercise, and, as soon as practical after the Date of Exercise, the Holder
hereof shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise, and if this Warrant is not exercised in full, the
Holder shall be entitled to receive a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to such Common Stock.
(d) HOLDER OF RECORD. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to have become the
Holder of record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of such shares of Common Stock. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company.
3. PAYMENT OF WARRANT EXERCISE PRICE.
The Exercise Price ("Exercise Price") shall equal $5.00 ("Initial Exercise
Price") or, if the Date of Exercise is more than one (1) year after the Date of
Issuance, the lesser of (i) the Initial Exercise Price or (ii) the "Lowest Reset
Price", as that term is defined below. The Company shall calculate a "Reset
Price" on each six month anniversary date of the Date of Issuance which shall
equal one hundred percent (100%) of the average Closing Price of the Company's
Common Stock for the five (5) trading days ending on such six month anniversary
date of the Date of Issuance. The "Lowest Reset Price" shall equal the lowest
Reset Price determined on any six month anniversary date of the Date of Issuance
preceding the Date of Exercise, taking into account, as appropriate, any
adjustments made pursuant to Section 5 hereof.
For purposes hereof, the term "Closing Price" shall mean the closing bid
price on the National Association of Securities Dealers Automated Quotation
System ("Nasdaq") Small Cap Market or OTC Bulletin Board, or if no longer traded
on the Nasdaq Small Cap Market or OTC Bulletin Board, the closing price on the
principal national securities exchange or the over-the-counter system on which
the Common Stock is so traded and, if not available, the mean of the high and
low prices on the principal national securities exchange or the National
Securities Exchange on which the Common Stock is so traded.
Payment of the Exercise Price may be made by either of the following or a
combination thereof, at the election of Holder:
(i) CASH EXERCISE: cash, bank or cashiers check or wire transfer; or
(ii) CASHLESS EXERCISE: surrender of this Warrant at the principal office
of the Company together with notice of cashless election, in which event the
Company shall issue Holder a number of shares of Common Stock computed using the
following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes
of this Section 3(ii), the "Market Price" shall be defined as the
average closing price of the Common Stock for the five (5)
trading days prior to the Date of Exercise of this Warrant (the
"Average Closing Price"), as reported by Nasdaq or if the Common
Stock is not traded on Nasdaq, the Average Closing Price in the
over-the-counter market; provided, however, that if the Common
Stock is listed on a stock exchange, the Market Price shall be
the Average Closing Price on such exchange. If the Common Stock
is/was not traded during the five (5) trading days prior to the
Date of Exercise, then the closing price for the last publicly
traded day shall be deemed to be the closing price for any and
all (if applicable) days during such five (5) trading day period.
B = the Exercise Price.
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For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
4. TRANSFER AND REGISTRATION.
(a) TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and the Holder of this Warrant shall be entitled to receive
a new Warrant or Warrants as to the portion hereof retained.
(b) REGISTRABLE SECURITIES. The Common Stock issuable upon the exercise of
this Warrant constitute "Registrable Securities" under that certain Registration
Rights Agreement dated on or about October ___, 1999 by and between the Company
and Dunwoody Brokerage Services, Inc., and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
5. ANTI-DILUTION ADJUSTMENTS.
(a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then the Holder hereof, upon Exercise of this
Warrant after the record date for the determination of Holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is Exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been Exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at any time
effect a recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which the Holder hereof shall
be entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give the Warrant Holder the same notice it provides to holders of
Common Stock of any transaction described in this Section 5(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute to Holders
of Common Stock cash, evidences of indebtedness or other securities or assets
(other than cash dividends or distributions payable out of earned surplus or net
profits for the current or preceding year) then, in any such case, the Holder of
this Warrant shall be entitled to receive, upon exercise of this Warrant, with
respect to each share of Common Stock issuable upon such Exercise, the amount of
cash or evidences of indebtedness or other securities or assets which such
Holder would have been entitled to receive with respect to each such share of
Common Stock as a result of the happening of such event had this Warrant been
Exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board in its discretion) and the denominator of which is such Exercise Price.
(d) NOTICE OF CONSOLIDATION OR MERGER. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
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be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be assumed by the
acquiring entity or any affiliate thereof and thereafter this Warrant shall be
exercisable into such class and type of securities or other assets as the Holder
would have received had the Holder exercised this Warrant immediately prior to
such Corporate Change; provided, however, that Company may not affect any
Corporate Change unless it first shall have given thirty (30) days notice to the
Holder hereof of any Corporate Change.
(e) EXERCISE PRICE ADJUSTED. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, as it may be reset from time to time, until the occurrence of an event
stated in subsection (a), (b) or (c) of this Section 5 and thereafter shall mean
said price as adjusted from time to time in accordance with the provisions of
said subsection. No such adjustment under this Section 5 shall be made unless
such adjustment would change the Exercise Price at the time by $.01 or more;
provided, however, that all adjustments not so made shall be deferred and made
when the aggregate thereof would change the Exercise Price at the time by $.01
or more. No adjustment made pursuant to any provision of this Section 5 shall
have the effect of increasing the total consideration payable upon Exercise of
this Warrant in respect of all the Common Stock as to which this Warrant may be
exercised. Notwithstanding anything to the contrary contained herein, the
Exercise Price shall not be reduced to an amount below the par value of the
Common Stock.
(f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event that
at any time, as a result of an adjustment made pursuant to this Section 5, the
Holder of this Warrant shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, the
Holder hereof may purchase only a whole number of shares of Common Stock. If, on
Exercise of this Warrant, the Holder hereof would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon conversion shall be the next higher number of shares.
7. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for Exercise and
payment of the Exercise Price of this Warrant. The Company covenants and agrees
that upon Exercise of this Warrant, all shares of Common Stock issuable upon
such Exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8. RESTRICTIONS ON TRANSFER.
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant and the Common Stock
issuable on Exercise hereof have not been registered under the Securities Act of
1933, as amended, and may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of in the absence of registration or the
availability of an exemption from registration under said Act. All shares of
Common Stock issued upon Exercise of this Warrant shall bear an appropriate
legend to such effect, if applicable.
(b) ASSIGNMENT. Assuming the conditions of (a) above regarding registration
or exemption have been satisfied, the Holder may sell, transfer, assign, pledge
or otherwise dispose of this Warrant, in whole or in part. Holder shall deliver
a written notice to Company, substantially in the form of the Assignment
attached hereto as Exhibit B, indicating the person or persons to whom the
Warrant shall be assigned and the respective number of warrants to be assigned
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to each assignee. The Company shall effect the assignment within ten days, and
shall deliver to the assignee(s) designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.
(c) INVESTMENT INTENT. The Warrant and Common Stock issuable upon
conversion are intended to be held for investment purposes and not with an
intent to distribution, as defined in the Act.
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person other
than the Company and the Holder of this Warrant any legal or equitable right,
remedy or claim under this Warrant and this Warrant shall be for the sole and
exclusive benefit of the Company and the Holder of this Warrant.
10. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the state of Georgia, without giving
effect to conflict of law provisions thereof.
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS.
Notices or demands pursuant to this Warrant to be given or made by the
Holder of this Warrant to or on the Company shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Company, LightPath Technologies, Inc., 6820 Academy Parkway East NE,
Albuquerque, New Mexico 87109, Attention: President, Telephone No. (505)
342-1100, Telecopy No. (505) 342-1111. Notices or demands pursuant to this
Warrant to be given or made by the Company to or on the Holder of this Warrant
shall be sufficiently given or made if sent by certified or registered mail,
return receipt requested, postage prepaid, and addressed, Attn: Holder, address:
c/o Eric S. Swartz, 200 Roswell Summit, Suite 285, 1080 Holcomb Bridge Road,
Roswell, Georgia 30076, until another address is designated in writing by
Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 2
day of November, 1999.
LIGHTPATH TECHNOLOGIES, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
------------------------------------
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EXHIBIT A
EXERCISE FORM FOR SERIES L WARRANT
TO: ___________________.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of LIGHTPATH TECHNOLOGIES, INC., a
Delaware corporation, evidenced by the attached Series L Warrant, and herewith
makes payment of the Exercise Price with respect to such shares in full, all in
accordance with the conditions and provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of such Common Stock, except in accordance with the provisions of Section 8
of the Warrant, and consents that the following legend may be affixed to the
stock certificates for the Common Stock hereby subscribed for, if such legend is
applicable:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any
provincial or state securities law, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of until either (i) a
registration statement under the Securities Act and applicable
provincial or state securities laws shall have become effective with
regard thereto, or (ii) an exemption from registration under the
Securities Act or applicable provincial or state securities laws is
available in connection with such offer, sale or transfer."
The undersigned requests that stock certificates for such shares be issued,
and a warrant representing any unexercised portion hereof be issued, pursuant to
the Warrant in the name of the Registered Holder and delivered to the
undersigned at the address set forth below:
Dated:
- --------------------------------------------------------------------------------
Signature of Registered Holder
- --------------------------------------------------------------------------------
Name of Registered Holder (Print)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of LIGHTPATH TECHNOLOGIES, INC.
evidenced by the attached Series L Warrant and does hereby irrevocably
constitute and appoint _______________________ attorney to transfer the said
Warrant on the books of the Company, with full power of substitution in the
premises.
Dated: __________________ ________________________________________
Signature
Fill in for new Registration of Warrant:
- -----------------------------------
Name
- -----------------------------------
Address
- -----------------------------------
Please print name and address of
assignee (including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
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EXHIBIT 4.6
FORM OF WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. THE SUBSCRIBER
MUST RELY ON HIS OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED. SEE THE RISK FACTORS SET FORTH IN THE ATTACHED DISCLOSURE DOCUMENTS AS
EXHIBIT C.
Warrant to Purchase
281,250 shares
WARRANT TO PURCHASE CLASS A COMMON STOCK
OF
LIGHTPATH TECHNOLOGIES, INC.
THIS CERTIFIES that the ROBERT RIPP or any subsequent holder hereof
("Holder"), has the right to purchase from LIGHTPATH TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), up to 281,250 fully paid and nonassessable
shares of the Company's Class A common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (defined below) and ending at 5:00 p.m., New York, New York time, on
November 10, 2009 (the "Exercise Period").
Holder agrees with the Company that this Warrant to Purchase Common Stock
of LightPath Technologies, Inc. (this "Warrant") is issued and all rights
hereunder shall be held subject to all of the conditions, limitations and
provisions set forth herein.
By accepting this Warrant, Holder acknowledges that this Warrant has been
issued by the Company in reliance upon those representations and warranties made
by the Holder in that certain Subscription Agreement previously delivered to the
Company, and further affirms that all of such representations and warranties are
true and correct in all material respects as of the date of this Warrant.
The issuance of this Warrant and the Holder's rights hereunder are not
conditional on the Holder's status as a director of the Company and this Warrant
shall not be forfeited or otherwise affected if the Holder is not a director of
the Company.
1. DATE OF ISSUANCE. This Warrant shall be deemed to be issued on November
11, 1999 ("Date of Issuance").
2. EXERCISE
(a) MANNER OF EXERCISE. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly completed and executed, together with the
full Exercise Price (as defined below) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 6820 Academy
Parkway East NE, Albuquerque, New Mexico 87109; Attention: President, Telephone
No. (505) 342-1100, Telecopy No. (505) 342-1111, or at such other office or
agency as the Company may designate in writing, by overnight mail, with an
advance copy of the Exercise Form sent to the Company and its Transfer Agent by
facsimile (such surrender and payment of the Exercise Price hereinafter called
the "Exercise of this Warrant").
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(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
(c) CANCELLATION OF WARRANT. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive certificates representing a number of shares
of Common Stock purchased upon such Exercise of this Warrant, and if this
Warrant is not exercised in full, Holder shall be entitled to receive a new
Warrant (containing terms identical to this Warrant) representing any
unexercised portion of this Warrant in addition to such Common Stock.
(d) HOLDER OF RECORD. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. PAYMENT OF WARRANT EXERCISE PRICE. The Exercise Price shall equal $6.00
per share ("Exercise Price").
Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:
(i) CASH EXERCISE: cash, bank or cashiers check or wire transfer; or
(ii) CASHLESS EXERCISE: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes
of this Section 3(ii), the "Market Price" shall be defined as the
average closing bid price of the Common Stock for the five (5)
trading days prior to the Date of Exercise of this Warrant (the
"Average Closing Price"), as reported by the National Association
of Securities Dealers Automated Quotation System ("Nasdaq") Small
Cap Market, or if the Common Stock is not traded on the Nasdaq
Small Cap Market, the Average Closing Price in any other
over-the-counter market; provided, however, that if the Common
Stock is listed on a stock exchange, the Market Price shall be
the Average Closing Price on such exchange for the five (5)
trading days prior to the date of exercise of the Warrant. If the
Common Stock is/was not traded during the five (5) trading days
prior to the Date of Exercise, then the closing price for the
last publicly traded day shall be deemed to be the closing price
for any and all (if applicable) days during such five (5) trading
day period.
B = the Exercise Price.
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For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is
intended, understood and acknowledged that the Common Stock issuable upon
exercise of this Warrant in a cashless exercise transaction shall be deemed to
have been acquired at the time this Warrant was issued. Moreover, it is
intended, understood and acknowledged that the holding period for the Common
Stock issuable upon exercise of this Warrant in a cashless exercise transaction
shall be deemed to have commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may
not be exercised in a cashless exercise transaction if, on the Date of Exercise,
the shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; or (y)
otherwise be registered under the Securities Act of 1933, as amended.
4. TRANSFER. Neither this Warrant nor any shares of Common Stock acquired
upon exercise of this Warrant may be transferred within twelve months of the
Date of Issuance without the approval of the Company's Board of Directors;
provided, however, that the Holder may transfer this Warrant and any shares of
Common Stock acquired upon exercise of this Warrant to a spouse, children and
grandchildren and trusts for his or their benefit. Subject to the provisions of
this Section 4 and Section 8 of this Warrant, this Warrant may be transferred on
the books of the Company, in whole or in part, in person or by attorney, upon
surrender of this Warrant properly completed and endorsed. This Warrant shall be
canceled upon such surrender and, as soon as practicable thereafter, the person
to whom such transfer is made shall be entitled to receive a new Warrant or
Warrants as to the portion of this Warrant transferred, and Holder shall be
entitled to receive a new Warrant as to the portion hereof retained.
5. ANTI-DILUTION ADJUSTMENTS
(a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at any time
effect a recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which Holder shall be
entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give Holder the same notice it provides to holders of Common Stock
of any transaction described in this Section 5(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding year) then, in
any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board of Directors of the Company in its discretion) and the denominator of
which is such Exercise Price.
3
<PAGE>
(d) NOTICE OF CONSOLIDATION OR MERGER. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exercisable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not affect any Corporate Change unless it first shall have given
thirty (30) days notice to Holder hereof of any Corporate Change.
(e) EXERCISE PRICE ADJUSTED. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b) or (c)
of this Section 5, and thereafter shall mean said price as adjusted from time to
time in accordance with the provisions of said subsection. No such adjustment
under this Section 5 shall be made unless such adjustment would change the
Exercise Price at the time by $.01 or more; provided, however, that all
adjustments not so made shall be deferred and made when the aggregate thereof
would change the Exercise Price at the time by $.01 or more. No adjustment made
pursuant to any provision of this Section 5 shall have the net effect of
increasing the Exercise Price. The number of shares of Common Stock subject
hereto shall increase proportionately with each decrease in the Exercise Price.
(f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event that
at any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. FRACTIONAL INTERESTS. No fractional shares or scrip representing
fractional shares shall be issuable upon the Exercise of this Warrant, but on
Exercise of this Warrant, Holder may purchase only a whole number of shares of
Common Stock. If, on Exercise of this Warrant, Holder would be entitled to a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon exercise shall be the next higher number of
shares.
7. RESERVATION OF SHARES. The Company shall at all times reserve for
issuance such number of authorized and unissued shares of Common Stock (or other
securities substituted therefor as herein above provided) as shall be sufficient
for the Exercise of this Warrant and payment of the Exercise Price. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to preemptive rights, rights of first
refusal or similar rights of any person or entity.
4
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8. RESTRICTIONS ON TRANSFER
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant has been issued in a
transaction exempt from the registration requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Warrant and the Common Stock issuable upon the Exercise of this Warrant may not
be pledged, transferred, sold or assigned except pursuant to an effective
registration statement or an exemption to the registration requirements of the
Act and applicable state laws.
(b) ASSIGNMENT. Subject to Section 4 hereof, if Holder can provide the
Company with reasonably satisfactory evidence that the conditions of (a) above
regarding registration or exemption have been satisfied, Holder may sell,
transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in
part. Holder shall deliver a written notice to Company, substantially in the
form of the Assignment attached hereto as Exhibit B, indicating the person or
persons to whom the Warrant shall be assigned and the respective number of
warrants to be assigned to each assignee. The Company shall effect the
assignment within ten (10) days, and shall deliver to the assignee(s) designated
by Holder a Warrant or Warrants of like tenor and terms for the appropriate
number of shares.
9. BENEFITS OF THIS WARRANT. Nothing in this Warrant shall be construed to
confer upon any person other than the Company and Holder any legal or equitable
right, remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and Holder.
10. APPLICABLE LAW. This Warrant is issued under and shall for all purposes
be governed by and construed in accordance with the laws of the state of
Delaware, without giving effect to conflict of law provisions thereof.
11. LOSS OF WARRANT. Upon receipt by the Company of evidence of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of indemnity or security reasonably satisfactory to the
Company, and upon surrender and cancellation of this Warrant, if mutilated, the
Company shall execute and deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS. Notices or demands pursuant to this Warrant to be
given or made by Holder to or on the Company shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Company, to Attention: President, 6820 Academy Parkway East NE, Albuquerque, New
Mexico 87109, Telephone No. (505) 342-1100, Telecopy No. (505) 342-1111. Notices
or demands pursuant to this Warrant to be given or made by the Company to or on
Holder shall be sufficiently given or made if sent by certified or registered
mail, return receipt requested, postage prepaid, and addressed, to the address
of Holder set forth in the Company's records, until another address is
designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
20th day of December, 1999.
LIGHTPATH TECHNOLOGIES, INC.
By: /s/ Donald E. Lawson
---------------------------------------
Donald E. Lawson, President
5
<PAGE>
EXHIBIT A
EXERCISE FORM FOR WARRANT
TO: LIGHTPATH TECHNOLOGIES, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Class A Common Stock (the "Common Stock") of
LIGHTPATH TECHNOLOGIES, INC., a Delaware corporation (the "Company"), evidenced
by the attached warrant (the "Warrant"), and herewith makes payment of the
exercise price with respect to such shares in full, all in accordance with the
conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
with appropriate restrictive legend(s), if any, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated:
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Print Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
6
<PAGE>
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Class A Common Stock of
LIGHTPATH TECHNOLOGIES, INC., evidenced by the attached Warrant and does hereby
irrevocably constitute and appoint _______________________ attorney to transfer
the said Warrant on the books of the Company, with full power of substitution in
the premises.
Dated: ___________ ____________________________________________
Signature
Fill in for new registration of Warrant:
- -----------------------------------
Name
- -----------------------------------
Address
- -----------------------------------
Please print name and address of
assignee (including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Phone: (602) 528-4000
Facsimile: (602) 253-8129
January 5, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: LightPath Technologies, Inc.
Registration Statement on Form S-3 (Registration No. ________)
Ladies and Gentlemen:
This firm is counsel for LightPath Technologies, Inc., a Delaware
corporation (the "Company"). As such, we are familiar with the Certificate of
Incorporation, as amended, and Bylaws of the Company, as well as resolutions
adopted by its Board of Directors authorizing the issuance and sale of 2,279,847
shares of the Company's $.01 par value Class A Common Stock (the "Common
Stock"), including 2,206,250 shares of Common Stock issuable upon conversion of
408 shares of outstanding Series F Preferred Stock and upon exercise of
outstanding Class K Warrants, Class L Warrants and Chairman's Warrants, which
are the subject of a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended. We have also examined
all such instruments, documents and records, and undertaken such further
inquiry, as we have deemed relevant and necessary for the basis of our opinion
hereinafter expressed. In such examination, we have assumed the genuineness and
authority of all signatures and the authenticity of all documents submitted to
us as originals and the conformity to the originals of all documents submitted
to us as copies. In giving our opinion hereinafter expressed, we have assumed
further that the Company has properly reserved the number of authorized and
unissued shares of Common Stock required to be issued upon the conversion of the
outstanding Series F Preferred Stock and exercise of the Class K Warrants, Class
L Warrants and Chairman's Warrants and that as of the date of such issuance the
Company continues to exist. Our opinion is based solely on the General
Corporation Law of the State of Delaware.
Based upon the foregoing, it is our opinion that the 73,597 shares of
Common Stock are validly issued, fully paid and nonassessable and that, upon
receipt by the Company of the consideration provided for upon conversion of the
Series F Preferred Stock and upon exercise of the Class K Warrants, Class L
Warrants and Chairman's Warrants, respectively, the 2,206,250 shares of Common
Stock, when issued in compliance with the Series F Preferred Stock and the Class
K Warrants, Class L Warrants and Chairman's Warrants, respectively, will be
validly issued, fully paid and nonassessable.
We acknowledge that we are referred to under the heading "Legal
Matters" in the Prospectus which is part of the Registration Statement and we
hereby consent to the use of our name in such Registration Statement. We further
consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement and with the state regulatory agencies in such states as may require
such filing in connection with the registration of the Common Stock for offer
and sale in such states.
Respectfully submitted,
/s/ SQUIRE, SANDERS & DEMPSEY L.L.P.
[LETTERHEAD OF KPMG LLP]
The Board of Directors
LightPath Technologies, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
Our report dated August 10, 1999, except for note 5 which is as of December 14,
1999, contains an explanatory paragraph that states that the Company has
suffered recurring losses from operations and is dependent on external sources
of capital, which raise substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of that uncertainty.
/s/ KPMG LLP
Albuquerque, New Mexico
January 5, 2000
