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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
LOGICON, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO OF LOGICON]
TORRANCE, CALIFORNIA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MONDAY, AUGUST 5, 1996
TO THE STOCKHOLDERS OF LOGICON, INC.
The Annual Meeting of Stockholders of Logicon, Inc. will be held in the
Roman Room, The Biltmore Hotel, 506 South Grand, Los Angeles, CA 90071, on
Monday, August 5, 1996, at 10:30 a.m. Pacific Daylight Savings Time, to
consider and act upon the following matters:
(1) the election of three Directors;
(2) the amendment to the Logicon, Inc. 1979 Restricted Stock Purchase
Plan;
(3) the amendment to the Logicon, Inc. 1992 Employee Incentive Stock
Option Plan;
(4) such other business as may properly come before the meeting.
The Board of Directors, pursuant to the By-Laws, has set June 4, 1996, at
the close of business, as the record date for the meeting. Only stockholders
of record of the Company on the record date will be entitled to receive notice
of, and to vote at, the meeting and any adjournments thereof. All stockholders
are cordially invited to attend the meeting in person.
A complete list of stockholders entitled to vote at the meeting will be open
for examination by any stockholder for ten days prior to the meeting, at the
office of the Secretary, 3701 Skypark Drive, Suite 200, Torrance, California
90505, during regular business hours.
By Order of the Board of Directors of
LOGICON, INC.
/s/ E. BENJAMIN MITCHELL, JR.
E. BENJAMIN MITCHELL, JR.
Secretary
June 25, 1996
IT IS DESIRABLE THAT AS MANY AS POSSIBLE OF THE STOCKHOLDERS BE REPRESENTED
AT THE MEETING. THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN
PERSON, PLEASE SIGN AND RETURN THE ACCOMPANYING PROXY. YOU MAY REVOKE OR
CHANGE YOUR PROXY AT ANY TIME BEFORE THE VOTING. IF YOU ATTEND THE MEETING YOU
MAY REVOKE YOUR PROXY AND VOTE IN PERSON. A RETURN ENVELOPE IS ENCLOSED FOR
YOUR USE AND NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. PLEASE
RESPOND AS SOON AS POSSIBLE.
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[LOGO OF LOGICON]
3701 SKYPARK DRIVE
TORRANCE, CALIFORNIA 90505
(310) 373-0220
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
PROXY STATEMENT
(APPROXIMATE DATE OF MAILING--JUNE 25, 1996)
----------------
GENERAL INFORMATION
Your Proxy in the enclosed form is solicited by the Board of Directors of
Logicon, Inc. (the "Company") for use at its Annual Meeting of Stockholders to
be held on August 5, 1996, and any postponement or adjournment thereof, for
the purposes set forth in the foregoing Notice of Annual Meeting of
Stockholders.
The 13,998,313 shares of common stock outstanding as of June 4, 1996, are
the only voting securities issued by the Company. Each stockholder of record
at the close of business on June 4, 1996, is entitled to one vote for each
share then held. The holders of a majority of the shares entitled to vote,
which are present or represented by Proxy, will constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business.
Any stockholder giving a Proxy may revoke it at any time before it is
exercised by filing with the Secretary of the Company an instrument revoking
the Proxy or substituting a duly executed Proxy bearing a later date. Any
Proxy given by a stockholder will be revoked automatically if the stockholder
who has given the Proxy is present at the meeting and elects to vote in
person. Unless revoked, the Proxy will be voted as specified therein.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO ANY
STOCKHOLDER UPON WRITTEN REQUEST TO THE COMMUNICATIONS DEPARTMENT AT THE
COMPANY'S ADDRESS ABOVE.
I. ELECTION OF DIRECTORS
NOMINEES AND VOTING
The By-Laws provide for a seven-member Board of Directors that is divided
into three classes. Three Directors for Class III are to be elected to serve
until the 1999 Annual Meeting of Stockholders. The terms of the other four
Directors do not expire until 1997 or 1998.
The Board of Directors has nominated the three individuals indicated as
nominees below, and the shares represented by Proxies solicited by the Board
of Directors will be voted, unless otherwise directed, for these three
individuals. Should any of the nominees fail to accept nomination at the
meeting, the Proxies solicited by the Board of Directors will be voted for the
remaining nominees, and for such other person(s) as the Nominating Committee
may nominate, or the size of the Board will be reduced. Stockholders may
nominate persons to the Board of Directors if done in compliance with the
provisions of the Company's By-Laws. The affirmative vote of the holders of a
majority of the shares of common stock, which are present or represented and
entitled to vote
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at the Annual Meeting, or any adjournment thereof, is required in order to
elect the nominees listed below. Abstentions and broker non-votes will not
count towards the election of these nominees.
The Board of Directors does not know of any matters to be voted upon at the
Annual Meeting other than as listed in the Notice of Annual Meeting of
Stockholders and discussed herein. However, if other matters properly come
before the meeting or any adjournments thereof, the persons named in the Proxy
will vote the shares represented by the Proxy as directed by the Board of
Directors. Stockholders may properly bring business before the meeting if done
in compliance with the provisions of the Company's By-Laws.
Biographical information concerning each of the nominees and Directors
continuing in office is presented below:
Nominees for Directors for Three-Year Term Ending 1999, Class III:
DR. CHARLES T. HORNGREN (age 69, Director since 1993). On June 1, 1993 Dr.
Horngren was elected to Class III of the Board of Directors. Dr. Horngren has
been the Edmund W. Littlefield Professor of Accounting at Stanford University
since 1966 and presently serves on the Board of Directors of ABM Industries,
Inc.
W. EDGAR JESSUP, JR. (age 73, Director since 1969). For more than five years
Mr. Jessup has been a partner in the law firm of Ervin, Cohen & Jessup, the
firm which has been counsel to the Company since its formation in 1961.
JOHN R. WOODHULL (age 62, Director since 1965). Mr. Woodhull has served as
President and Chief Executive Officer of the Company for more than the past
five years. He also serves on the Board of Directors of Sunrise Medical, Inc.
and FirstFed Financial Corp.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE
THREE NOMINEES NAMED ABOVE.
Directors Whose Terms Expire in 1997, Class I
JAMES L. HESBURGH (age 62, Director since 1995). On October 5, 1995 Mr.
Hesburgh was elected to Class I of the Board of Directors. Mr. Hesburgh has
been the President and Chief Executive Officer of James L. Hesburgh
International, Inc. since 1977 and presently serves on the Board of Directors
of Fremont Funding Corporation, FirstFed Financial Corp. and Toastmaster, Inc.
ROBERT G. WALDEN (age 71, Director since 1989). On October 12, 1989 Mr.
Walden was elected to Class I of the Board of Directors. From 1977 to
September, 1989 Mr. Walden was Senior Vice President and Chief Financial
Officer of the Company.
Directors Whose Terms Expire in 1998, Class II
CHARLES F. SMITH (age 63, Director since 1993). On June 1, 1993 Mr. Smith
was elected to Class II of the Board of Directors. Since 1983 Mr. Smith has
been the President and Chief Executive Officer of Charles F. Smith & Co., Inc.
He also serves on the Board of Directors of FirstFed Financial Corp., Fremont
Funding Corporation and Sizzler International.
ROLAND R. SPEERS (age 62, Director since 1977). Mr. Speers, formerly a
partner at the law firm of Speers, Dana, Teal, Balfour & MacDonald, now has
his own law practice.
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BOARD COMPENSATION AND BENEFITS
Non-Employee Directors are compensated at the rate of $1,300 per month, plus
$1,300 for each Board or committee meeting attended. Additionally, under
agreements entered into on December 9, 1994, Non-Employee Directors retire at
age 75. Under the terms of these agreements, which replace the previous
agreements of February 7, 1992, Non-Employee Directors who have five or more
years of service and resign or retire may elect to continue serving as a
Director Emeritus to provide consulting services from time to time as
requested. Under the terms of the agreements, a former Director will be
entitled to receive amounts for a period equal to the lessor of 120 months or
the number of months of service provided as a Non-Employee Director. The
amount of the payment is based on the monthly amount that the former Director
was receiving at the time of his retirement.
Effective October 5, 1995, J.R. Johnson, who served on the Board of
Directors since 1977, retired from the Board of Directors after reaching the
age of 75. Mr. Johnson continues to serve as a Director Emeritus and receives
a monthly payment of $1,300.
Under the Company's 1991 Stock Option Plan for Non-Employee Directors each
person serving as a Non-Employee Director on February 8, 1991 received a grant
of stock options for 6,500 shares of common stock of the Company at the fair
market value of such shares on that date. In addition, each Non-Employee
Director received a grant of stock options for 750 shares of common stock of
the Company at the fair market value of such shares on February 8, 1994, and
will receive the same number of shares each February 8 thereafter until the
end of the plan on February 8, 2001. The plan also provides that, from August
5, 1991 until February 8, 2001, each new Non-Employee Director first elected
after February 8, 1991 will receive a one-time grant of stock options on the
date of such election for 6,500 shares of common stock of the Company at the
fair market value of such shares on that date. All of the above stock options
will have a term of five years from the date of grant and will generally not
become exercisable until two years from that date.
COMMITTEES OF THE BOARD
The Board of Directors held 8 meetings during the fiscal year ended March
31, 1996. During that period, overall attendance at Board and Committee
meetings was 97.8%.
The Audit Committee, which held 2 meetings during Fiscal Year 1996, consists
of Messrs. Horngren, Jessup, Speers and Walden. The Audit Committee meets with
the Company's independent accountants, reviews external and internal audit
plans and the Company's financial controls, and reviews and approves in
advance the scope of the audit and estimated fees for such audit services.
The Executive Committee, which did not meet during Fiscal Year 1996,
consists of Messrs. Jessup, Smith, Speers and Woodhull. The Executive
Committee acts on behalf of the Board as appropriate.
The Nominating Committee, which held one meeting during Fiscal Year 1996,
consists of Messrs. Smith, Speers and Woodhull. The Nominating Committee
selects nominees for election to the Board.
The Executive Compensation Committee, which held two meetings during Fiscal
Year 1996, consists of Messrs. Hesburgh, Smith and Speers. The Executive
Compensation Committee reviews and establishes remuneration arrangements for
the Executive Officers of the Company.
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No current Executive Officer of the Company serves on the Executive
Compensation Committee and there are no "interlocks", as defined by the
Securities and Exchange Commission.
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II. AMENDMENT TO THE LOGICON, INC. 1979 RESTRICTED STOCK PURCHASE PLAN
The proposed amendment to the Logicon, Inc. 1979 Restricted Stock Purchase
Plan (the "1979 Plan"), which was adopted by the Directors on June 7, 1996,
subject to stockholder approval, will add several features to the existing
1979 Plan. The description of the amendment is qualified in its entirety by
reference to the text of such amendment set forth in Appendix A.
Principal Features of the Amendment
First, the amendment will allow for the award of incentive stock options as
defined by Section 422 of the Internal Revenue Code (the "Code") and non-
statutory (or non-incentive) options out of the 1979 Plan. Second, the
amendment is designed to qualify the 1979 Plan as a performance based plan as
defined in Section 162(m) of the Code. Designation as a performance based plan
will allow the Company to preserve its tax deductions for certain awards under
the 1979 Plan. Third, the 1979 Plan will allow participants to use Company
stock to pay for stock purchases, option exercises and tax withholding.
Fourth, the name of the 1979 Plan will be changed to "Logicon, Inc. 1979
Restricted Stock Purchase and Stock Option Plan". All other provisions of the
1979 Plan remain unchanged.
STOCK SUBJECT TO THE 1979 PLAN
The stock to be offered under the amendment will be authorized but unissued
shares of the Company's $.10 par value common stock. The 1979 Plan currently
has 1,189,190 shares available for issue and no additional shares have been
added as a result of the amendment.
The current number of shares available for issue are subject to adjustment
upon the occurrence of certain events, including stock splits, stock
dividends, mergers, consolidations, reorganizations, recapitalizations, or
other capital structure adjustments.
ADMINISTRATION OF THE 1979 PLAN
The amendment does not change the current administration of the 1979 Plan
which is administered by the Executive Compensation Committee of the Board of
Directors of the Company (the "Committee"). The Committee consists of three
members of the Board who are disinterested Directors and, therefore, not
eligible to participate in the 1979 Plan. The Committee determines and
designates those Officers and key employees who will be eligible to be granted
stock options under the 1979 Plan and the number of shares to be subject to
such options. The Committee also has the authority to interpret the 1979 Plan
and to prescribe, amend, and rescind rules and regulations relating to the
1979 Plan.
GRANT OF OPTIONS
Only Officers and key employees, as determined by the Committee, of the
Company or any of its subsidiaries are eligible to participate in the 1979
Plan. Directors of the Company who are not employees are not eligible to
participate in the 1979 Plan.
The option price for incentive stock options shall be 100% of the fair
market value of the Company's common stock on the date of grant of the stock
option. However, any option granted to an employee who owns more than 10% of
the Company's outstanding stock must have an exercise price of at least 110%
of the fair market value on the date of the option grant.
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For a Participant to obtain the favorable tax consequences described below,
the aggregate fair market value (determined on the date an option is granted)
of the Company's stock for which an employee may be granted incentive stock
options in any calendar year shall not exceed $100,000.
No employee shall receive options to purchase more than 300,000 shares of
Company stock under the 1979 Plan in any one calendar year. This amount shall
be proportionally adjusted pursuant to the anti-dilution provisions of the
1979 Plan.
The Committee shall have the discretion to award options which do not
constitute incentive stock options under Section 422 of the Code, provided any
such options are designated non-incentive stock options. Any non-incentive
stock options granted under the 1979 Plan will be subject to all the
provisions of the 1979 Plan, except that the dollar limitation on the amount
of option shares and option prices stated above shall not apply.
EXERCISE OF OPTIONS
All options granted under the 1979 Plan shall have a term which does not
exceed 10 years. The term of each individual option shall be decided at the
discretion of the Committee. The Committee shall decide whether the options
shall be exercised in installments, or all at one time.
Payment for the exercise of an option shall be by cash or cashier's check,
or the employee may tender existing shares of the Company's common stock
previously owned by the Participant having a fair market value equal to the
exercise price. A Participant may also execute a Promissory Note to the
Company for payment of the option exercise price. In addition to the payment
methods described above, the option granted to any eligible Participant may
provide that the option can be exercised and payment made by delivering a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
necessary to pay the exercise price and, unless otherwise allowed by the
Committee, any applicable tax withholding required under the Code. In
addition, a Participant may satisfy any applicable tax withholding requirement
utilizing any of the methods of payment described above, including the
delivery of previously owned Company shares. The Company shall not be
obligated to deliver certificates for the shares unless and until it receives
full payment of the exercise price.
If a Participant terminates employment with the Company for reasons other
than death or permanent disability, and not in violation of his/her option
agreement, the Participant will have three months to exercise the option. If
employment is terminated for reasons of death or permanent disability, the
Participant or his/her beneficiary shall have twelve months in which the
option may be exercised, provided the option does not expire at an earlier
date by its own terms.
AMENDMENT & TERMINATION
Unless previously terminated by the Board of Directors, the 1979 Plan will
terminate as of December 31, 1999. The Board may at any time suspend, amend or
terminate the 1979 Plan. However, no such amendment shall, without the
approval of a majority of the stockholders, increase the maximum number of
shares that may be issued under the 1979 Plan, decrease the minimum option
price, increase the maximum term of the options or otherwise materially
increase the benefits accruing to the participants under the 1979 Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is intended only as a general guide as to the federal
income tax consequences under current law with respect to participation in the
1979 Plan and does not attempt to describe all possible federal or
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other tax consequences of such participation. Furthermore, the tax
consequences of options are complex and subject to change, and a taxpayer's
particular situation may be such that some variation of the described rules is
applicable.
THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE LAW
IN THIS AREA. EMPLOYEES ELIGIBLE UNDER THE 1979 PLAN SHOULD CONSULT THEIR OWN
TAX ADVISORS PRIOR TO THE EXERCISE OF ANY OPTION AND PRIOR TO THE DISPOSITION
OF ANY SHARES OF COMMON STOCK ACQUIRED UPON THE EXERCISE OF AN OPTION.
Options granted under the 1979 Plan are intended to constitute "incentive
stock options" as defined in Section 422 of the Code. No taxable income will
be recognized by the Participant at the time of a grant of an incentive stock
option. The bargain element (difference between fair market value on day of
exercise and the option price) at the time of exercise on incentive stock
options is an item of tax preference required to be included in the
alternative minimum tax calculation. Thus, the exercise of an incentive stock
option may be a taxable transaction depending on the applicable tax preference
exclusion for each individual. If the holding requirements of Section 422 are
met, primarily that the Participant does not sell the stock received under the
option within two years of the date of grant and not within one year from date
of exercise, any gain (loss) realized by the Participant upon disposition of
the stock will be treated as a long-term capital gain (loss). If the
requirements of Section 422 are met by the Participant, the Company will not
be entitled to a deduction for federal income tax purposes as a result of the
issuance of such stock pursuant to the option.
If the stock acquired through the exercise of an incentive stock option is
disposed of prior to the holding period requirements as outlined above, the
Participant will recognize ordinary income on any gain realized during the
period in which the disqualifying disposition occurred. When such a
disqualifying disposition occurs, ordinarily the Company will be entitled to
take a deduction for federal income tax purposes. The size of the Company's
deduction shall be equal to the amount of ordinary income recognized by the
Participant.
Options granted under the 1979 Plan which are intended to be non-incentive
stock options have different tax consequences. Upon exercise of a non-
incentive stock option, the Participant will recognize ordinary income equal
to the amount by which the fair market value on the date the option is
exercised exceeds the option price. Accordingly, shares acquired through the
exercise of non-incentive stock options shall have basis equal to the fair
market value on the date of exercise. Gain (loss) recognized on the
disposition of the shares will qualify for long-term capital gain (loss)
treatment only if the shares have been held for more than one year after date
of exercise, or such other holding period for capital gain (loss) as may be
set forth in the Code.
The 1979 Plan initially was approved by stockholders on August 4, 1980 and
subsequently amended and approved by stockholders on August 7, 1989 to extend
the 1979 Plan for ten years. The affirmative vote of the holders of a majority
of the shares of common stock which are present or represented and entitled to
vote at the Annual Meeting of Stockholders is required in order to approve
this amendment.
THE BOARD OF DIRECTORS BELIEVES THE AMENDMENT TO BE IN THE BEST INTERESTS OF
THE COMPANY AND STRONGLY URGES YOU TO VOTE "YES" ON THIS PROPOSAL.
III. AMENDMENT TO THE LOGICON, INC. 1992 EMPLOYEE INCENTIVE STOCK OPTION PLAN
On June 7, 1996, the Board adopted, subject to approval by stockholders,
certain amendments to the Logicon, Inc. 1992 Employee Incentive Stock Option
Plan (the "1992 Stock Option Plan"), described herein
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and in Appendix B. The description of the amendment is qualified in its
entirety by reference to the text of such amendment set forth in Appendix B.
First, the amendment provides that no employee shall receive options to
purchase more than 300,000 shares of Company stock under the 1992 Stock Option
Plan in any one calendar year. This provision is designed to qualify the 1992
Stock Option Plan as a performance based plan as defined in Section 162(m) of
the Code. Designation as a performance based plan will allow the Company to
preserve its tax deductions for certain awards under the 1992 Stock Option
Plan. Second, the 1992 Stock Option Plan will allow Participants to use
Company stock to pay for tax withholding.
The 1992 Stock Option Plan was initially approved by stockholders on August
5, 1991 and subsequently amended on October 11, 1991 to allow for an early
retirement provision. The 1992 Stock Option Plan currently has 1,426,200
shares available for issue and no additional shares have been added as a
result of this amendment. The affirmative vote of the holders of a majority of
the shares of Common Stock which are present or represented and entitled to
vote at the Annual Meeting of Stockholders is required in order to approve
this amendment.
THE BOARD OF DIRECTORS BELIEVES THE AMENDMENT TO BE IN THE BEST INTERESTS OF
THE COMPANY AND STRONGLY URGES YOU TO VOTE "YES" ON THIS PROPOSAL.
IV. EXECUTIVE COMPENSATION COMMITTEE REPORT
This report is furnished by the Executive Compensation Committee of the
Board of Directors of Logicon, Inc. (the "Executive Compensation Committee")
which is composed of the individuals listed below who are outside directors
with responsibility for setting the policies and overseeing the administration
of all compensation matters for the Executive Officers of the Company.
The Executive Officer compensation program has been designed to provide
Executive Officers with total direct compensation which is competitive with
companies of similar size having comparable performance and serving similar
markets. The objectives of the program are to:
. enhance stockholder value;
. motivate the Executive Officers to achieve long-term business goals and
reward them accordingly;
. provide compensation opportunities which are competitive to those
offered by employers of comparable size, thus allowing the Company to
compete for and retain talented executives who are critical to the long-
term success of the Company; and
. align the interests of Executive Officers with the long-term interests
of stockholders through award opportunities that can result in ownership
of common stock.
The Executive Compensation Committee has employed independent compensation
specialists to help design the total direct compensation program and to verify
that compensation levels are competitive with companies of similar size and
with similar performance. In addition, the Executive Compensation Committee
tests its actions against compensation survey information which the Company
purchases.
The Executive Compensation Committee is aware that the Internal Revenue Code
restricts Corporate tax deductions for certain compensation paid to executive
officers of publicly held companies. In order to qualify the Logicon, Inc.
1979 Restricted Stock Purchase Plan and the Logicon, Inc. 1992 Employee
Incentive Stock
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Option Plan as "performance based" plans as defined in Section 162(m) of the
Internal Revenue Code, the Company is proposing amendments to both plans which
establish 300,000 as the maximum annual grant of option shares to any employee
during any one calendar year under each Plan.
THE EXECUTIVE COMPENSATION PROGRAM
Compensation paid the Executive Officers in Fiscal Year 1996, as reflected
in the Summary Compensation Table, consisted of the following elements: base
salary, annual bonus, restricted stock purchased, incentive stock options,
performance units and amounts under certain employee benefit plans.
ANNUAL COMPENSATION PROGRAM
The annual compensation for Executive Officers consists of a base salary and
an annual bonus. The total value of the salary and bonus is designed to be
competitive with other companies of a similar size and performance. Such
compensation, which is established with the assistance of independent
compensation specialists, is deemed to be competitive if it is within ten
percent of the median for similar sized companies. The annual bonus is
determined by the performance of the executive and his operating unit and
although the actual amount of the bonus is subjective, the Executive
Compensation Committee considers several factors consisting of profits,
bookings, use of capital, achievement of goals and a discretionary element.
LONG-TERM COMPENSATION PROGRAM
Restricted Stock Purchase Plan
Sales of restricted stock to Executive Officers under the 1979 Restricted
Stock Purchase Plan are designed to align the long-term interests of the
Company's Executive Officers and its stockholders. Under the Restricted Stock
Purchase Plan the Executive Compensation Committee selects the employees who
are eligible to purchase stock under the terms of the plan and determines the
number of shares available for purchase. The employees selected are entitled
to purchase "restricted" shares of the Company's common stock at a discount
from market value. Generally, the restriction (which prevents the stock from
being sold) is removed from a percentage of the shares after the date of
purchase. However, legends prohibiting transfers remain on the certificates
and are not removed until loans which may have been made by the Company to the
participant in connection with the purchase of the shares have been satisfied.
The Executive Compensation Committee has full discretion in determining the
percentage restriction and loan requirements with respect to the Restricted
Stock Purchase Plan.
Sales of restricted stock to Executive Officers are determined as part of
the total direct compensation package with the assistance of independent
compensation specialists. In determining the number of shares of restricted
stock to be sold to Executive Officers, the Executive Compensation Committee
takes into account the Executive Officer's level of responsibility and
practices of other companies. The Executive Compensation Committee does not
take into consideration restricted stock previously purchased by the Executive
Officer.
Incentive Stock Option Plan
Grants of incentive stock options to Executive Officers under the 1992
Incentive Stock Option Plan are also designed to align the long-term interests
of the Company's Executive Officers and its stockholders. Under the Incentive
Stock Option Plan the Executive Compensation Committee selects the employees
who are eligible to receive option awards to purchase the Company's common
stock at a price fixed to the market price on the date of the option award.
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Grants of incentive stock options to Executive Officers are determined as
part of the total direct compensation package with the assistance of
independent compensation specialists. In determining the number of options to
be awarded to Executive Officers, the Executive Compensation Committee takes
into account the Executive Officer's level of responsibility and practices of
other companies. The Executive Compensation Committee does not take into
consideration options previously granted to the Executive Officer.
Performance Units Plan
The Performance Units Plan represents a second element of an Executive
Officer's long-term compensation. Under the plan, Executive Officers and key
management employees may receive awards, made by the Executive Compensation
Committee, which represent the right to receive a cash payment at the end of
an "incentive period" of three consecutive fiscal years commencing with the
first day of the fiscal year in which the units are awarded. The amount of
payment depends on the Company's cumulative earnings per share over the three
year period and the number of units awarded.
In awarding the performance units, which are considered as part of the
Executive Officer's total compensation package, the Executive Compensation
Committee takes into account the Executive Officer's level of responsibility
and competitive practices of other companies.
MR. WOODHULL'S FISCAL YEAR 1996 COMPENSATION
The total compensation package provided to Mr. Woodhull in Fiscal Year 1996
consisted of a base salary, annual bonus, incentive stock options, performance
units and amounts under certain employee benefit plans. The total direct
compensation package is designed to be competitive with other companies of a
similar size and is established with the assistance of independent
compensation specialists.
Mr. Woodhull's total annual compensation (salary plus annual bonus) is
designed to be competitive with companies of a similar size. Although the
actual amount of Mr. Woodhull's annual bonus is subjective, the Executive
Compensation Committee considers the overall financial performance of the
Company and his individual performance as an executive officer.
The long-term portion of Mr. Woodhull's compensation package consists of
performance units and incentive stock options. The value of the long-term
awards is designed to be consistent with competitive practices of similar
sized companies. Compensation specialists have been retained by the Executive
Compensation Committee to provide recommendations regarding competitive
practices of similar sized companies. These recommendations have been taken
into consideration by the Executive Compensation Committee in determining Mr.
Woodhull's long-term compensation consistent with competitive practices.
The Executive Compensation Committee believes that the award of incentive
stock options to Mr. Woodhull encourages long-term performance while aligning
stockholder and management interests regarding the value of the common stock.
The Executive Compensation Committee does not take into consideration stock
options previously granted to Mr. Woodhull. The performance units incentivize
management to achieve long-term earnings performance. The amount of payment
depends on the Company's cumulative earnings per share over the three year
period and the number of units awarded.
SUBMITTED BY THE EXECUTIVE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS:
James L. Hesburgh
Charles F. Smith Roland R. Speers
9
<PAGE>
The following table summarizes the total compensation of the Chief Executive
Officer and the four other most highly compensated Executive Officers of the
Company ("the Named Executive Officers") for Fiscal Year 1996, as well as the
total compensation paid to each such individual for the Company's two previous
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------- --------------------- ---------
OTHER LONG-TERM ALL
ANNUAL RESTRICTED INCENTIVE OTHER
COMPEN- STOCK STOCK PLAN COMPEN-
NAME AND FISCAL SATION PURCHASED OPTIONS PAYOUTS SATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) ($)(2) (SHARES) ($) ($)
------------------ ------ ---------- --------- ------- ---------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John R. Woodhull 1996 $325,548 $335,000 -- None 14,400 $348,000 $73,163(8)
President & Chief 1995 310,740 300,000 -- $121,800(3) None 165,103 70,670
Executive Officer 1994 296,916 275,000 -- 110,938 None 307,200 68,327
Frank T. Cummings 1996 217,448 105,000 -- 53,382(4) None 116,800 37,533(9)
Vice President 1995 208,827 91,500 -- 51,100 None 73,280 36,816
1994 199,328 77,000 -- 48,813 None 136,000 32,576
James E. Dalton 1996 217,448 100,000 -- 53,382(5) None 117,400 39,014(10)
Vice President 1995 209,088 92,500 -- 51,100 None 73,878 33,324
1994 199,844 89,000 -- 48,813 None 139,800 30,625
Dr. James F. Harvey 1996 217,448 103,500 -- None 6,100 116,800 29,481(11)
Vice President 1995 208,724 103,000 -- 51,100(6) None 73,280 59,536
1994 199,328 101,000 -- 48,813 None 136,000 76,419
Ralph L. Webster 1996 186,832 90,000 -- None 5,200 98,600 26,409(12)
Vice President & 1995 179,232 88,000 -- 44,100(7) None 61,913 25,215
Chief Financial Officer 1994 169,780 85,000 -- 42,156 None 116,000 24,753
</TABLE>
- --------
(1) Where dashes are indicated, there is no requirement to report.
(2) Dividends are paid at the same rate paid to all stockholders.
(3) As of the last day of Fiscal Year 1996 Mr. Woodhull held in the aggregate
59,800 shares of restricted stock with a net pre-tax value of $1,371,700
(equal to the market price of the shares less consideration paid by Mr.
Woodhull).
(4) As of the last day of Fiscal Year 1996, Mr. Cummings held in the
aggregate 31,340 shares of restricted stock with a net pre-tax value of
$690,635 (equal to the market price of the shares less consideration paid
by Mr. Cummings).
(5) As of the last day of Fiscal Year 1996, Mr. Dalton held in the aggregate
51,340 shares of restricted stock with a net pre-tax value of $1,268,135
(equal to the market price of the shares less consideration paid by Mr.
Dalton).
(6) As of the last day of Fiscal Year 1996, Dr. Harvey held in the aggregate
44,100 shares of restricted stock with a net pre-tax value of $1,135,900
(equal to the market price of the shares less consideration paid by Dr.
Harvey).
10
<PAGE>
(7) As of the last day of Fiscal Year 1996, Mr. Webster held in the aggregate
32,100 shares of restricted stock with a net pre-tax value of $793,775
(equal to the market price of the shares less consideration paid by Mr.
Webster).
(8) Includes (i) $12,880 allocated by the Company to Mr. Woodhull's account
under the Company's Profit Sharing Plan; (ii) a $42,293 payment equal to
the lost Company Profit Sharing Plan allocation caused by IRS
limitations; (iii) $9,728 allocated by the Company to Mr. Woodhull's
account under the Company's Employee Stock Purchase Plan; and (iv) the
portion of the Group Term Life Insurance Premium reportable as income
$8,262.
(9) Includes (i) $12,880 allocated by the Company to Mr. Cummings' account
under the Company's Profit Sharing Plan; (ii) a $14,701 payment equal to
the lost Company Profit Sharing Plan allocation caused by IRS
limitations; (iii) $6,524 allocated by the Company to Mr. Cummings'
account under the Company's Employee Stock Purchase Plan; and (iv) the
portion of the Group Term Life Insurance Premium reportable as income
$3,428.
(10) Includes (i) $11,065 allocated by the Company's subsidiary, Logicon R & D
Associates ("Logicon RDA"), to Mr. Dalton's account under the Logicon RDA
Profit Sharing Plan; (ii) a $11,818 payment equal to the lost Logicon RDA
Profit Sharing Plan allocation caused by IRS limitations; (iii) $6,531
allocated by the Company to Mr. Dalton's account under the Company's
Employee Stock Purchase Plan; and (iv) the portion of the Group Term Life
Insurance Premium reportable as income $9,600.
(11) Includes (i) $9,144 allocated by the Company's subsidiary, Logicon Eagle
Technology, Inc., to Dr. Harvey's account under the Logicon Eagle
Technology Profit Sharing Plan; (ii) a $10,391 payment equal to the lost
Logicon Eagle Technology Profit Sharing Plan allocation caused by IRS
limitations; (iii) $6,524 allocated by the Company to Dr. Harvey's
account under the Company's Employee Stock Purchase Plan; and (iv) the
portion of the Group Term Life Insurance Premium reportable as income
$3,422.
(12) Includes (i) $12,880 allocated by the Company to Mr. Webster's account
under the Company's Profit Sharing Plan; (ii) a $10,656 payment equal to
the lost Company Profit Sharing Plan allocation caused by IRS
limitations; and (iii) the portion of the Group Term Life Insurance
Premium reportable as income $2,873.
V. STOCK OPTIONS
Under the Company's 1992 Employee lncentive Stock Option Plan, key employees
are selected by the Executive Compensation Committee to receive option awards
to purchase the Company's common stock at a price fixed to the market price on
the date of the option award. The options awarded under this plan are intended
to be incentive stock options as that term is defined by Section 422 of the
Internal Revenue Code.
11
<PAGE>
The following table provides information on stock options granted in Fiscal
Year 1996 to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
- --------------------------------------------------------------------- POTENTIAL REALIZABLE
% OF VALUE AT ASSUMED
# OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE FULL OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------------
NAME GRANTED IN FY 96 (PER SHARE) DATE 5% 10%
---- ---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
John R. Woodhull........ 14,400 11.8% $23.375 10/12/00 $ 92,996 $ 205,498
Frank T. Cummings....... None -- -- -- -- --
James E. Dalton......... None -- -- -- -- --
Dr. James F. Harvey..... 6,100 5.0% $23.375 10/12/00 $ 39,394 $ 87,051
Ralph L. Webster........ 5,200 4.3% $23.375 10/12/00 $ 33,582 $ 74,207
</TABLE>
- --------
(1) The per share option exercise price is the fair market value of the
Company's common stock on the date of the grant, and the term of each
option is five years. Of the 14,400 options granted to Mr. Woodhull on
10/12/95, 4,278 were exercisable on 12/31/95, 4,278 are exercisable on
10/12/96, 4,278 are exercisable on 10/12/97, and the remaining 1,566 are
exercisable on 10/12/98. Of the 6,100 options granted to Dr. Harvey on
10/12/95, 4,275 were exercisable on 12/31/95 and the remaining 1,825 are
exercisable on 10/12/96. Of the 5,200 options granted to Mr. Webster on
10/12/95, 4,275 were exercisable on 12/31/95 and the remaining 925 are
exercisable on 10/12/96. All options were granted under the Logicon, Inc.
1992 Employee Incentive Stock Option Plan.
(2) In accordance with Securities and Exchange Commission rules, the figures
in these columns reflect the value of the options assuming (i) for the 5%
column, a five percent annual rate of appreciation in the Company's stock
price compounded annually over the term of the option, and (ii) for the
10% column, a ten percent annual rate of appreciation in the Company's
stock price compounded annually over the term of the option. The actual
gains, if any, on stock option exercises are dependent upon the future
performance of the Company's common stock. Accordingly, the amounts
reflected in this table may not necessarily be indicative of the actual
results obtained.
12
<PAGE>
The following table summarizes option exercises during Fiscal Year 1996 by
the Named Executive Officers, and the value of the options held by such
persons at the end of Fiscal Year 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT END OPTIONS AT END OF
OF FISCAL YEAR FISCAL YEAR
1996 1996(1)
-------------- -----------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE RECEIVED(2) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
John R. Woodhull........ None None 4,278/10,122 $36,363/86,037
Frank T. Cummings....... 6,364 $171,828 0/0 0/0
James E. Dalton......... 6,596 144,287 0/0 0/0
Dr. James F. Harvey..... None None 4,275/1,825 36,337/15,512
Ralph L. Webster........ 3,456 62,856 4,275/925 36,337/7,862
</TABLE>
- --------
(1) Computed as the difference between the option exercise price and $31.875
(the closing market price of the Company's stock at Fiscal Year End).
(2) Computed as the difference between the option exercise price and the
closing market price of the Company's stock at the date of exercise.
VI. OTHER REMUNERATION PLANS
Logicon has several benefit plans for employees and Executive Officers. The
following narrative briefly describes each of the benefit plans in which the
Executive Officers may participate:
Logicon has a Profit Sharing Plan intended to provide benefits to qualifying
long-term employees. Generally, eligible employees participate in this plan
commencing one year after the date of their initial employment, subject to
certain dollar amount limitations. Company contributions (which are determined
annually by the Board of Directors upon review of the Company's financial
condition, its accumulated profits, and expected profits for the fiscal year
just ended) and forfeitures are allocated to participants in proportion to
their compensation and the number of years of a participant's continuous
employment with the Company, and become fully vested seven years after the end
of the fiscal year in which such employment commenced. The amounts allocated
under this plan in Fiscal Year 1996 to the Named Executive Officers' accounts
are disclosed in the Summary Compensation Table.
The Company's subsidiary, Logicon R & D Associates ("Logicon RDA") has a
Profit Sharing Plan intended to provide benefits to qualifying long-term
employees. Generally, eligible employees participate in this plan commencing
one year after the date of their initial employment, subject to certain dollar
amount limitations. The Logicon RDA contributions (which are determined
annually by the Logicon RDA Board of Directors upon review of the financial
condition, accumulated profits, and expected profits for the fiscal year just
ended) and forfeitures are allocated to participants in proportion to their
compensation and the number of years of a participant's continuous employment
with Logicon RDA, and become fully vested seven years after the end of the
fiscal year in which such employment commenced. The amount allocated under
this plan in Fiscal Year 1996 to Mr. Dalton's account is disclosed in the
Summary Compensation Table.
13
<PAGE>
The Company's subsidiary, Logicon Eagle Technology, Inc. ("Logicon Eagle
Technology") has a Profit Sharing Plan intended to provide benefits to
qualifying long-term employees. Generally, eligible employees participate in
this plan commencing one year after the date of their initial employment,
subject to certain dollar amount limitations. The Logicon Eagle Technology
contributions (which are determined annually by the Logicon Eagle Technology
Board of Directors upon review of the financial condition, accumulated
profits, and expected profits for the fiscal year just ended) and forfeitures
are allocated to participants in proportion to their compensation and the
number of years of a participant's continuous employment with Logicon Eagle
Technology and become fully vested seven years after the end of the fiscal
year in which such employment commenced. The amount allocated under this plan
in Fiscal Year 1996 to Dr. Harvey's account is disclosed in the Summary
Compensation Table.
The Company's Employee Stock Purchase Plan allows all eligible employees of
the Company, and of the Company's wholly-owned subsidiaries, to participate.
Amounts voluntarily contributed by a participant may not exceed six percent of
the employee's base salary. Under this plan the Company will contribute 50
cents for each dollar contributed by the employee and apply such funds toward
the purchase of the Company's common stock. An employee must be a participant
in the plan for two years before the Company contribution vests in favor of
the participant. Forfeitures serve to reduce the Company contribution. The
amounts allocated by the Company under this plan in Fiscal Year 1996 to the
Named Executive Officers' accounts are disclosed in the Summary Compensation
Table.
The Board of Directors has approved, and on April 13, 1993 the Company
entered into executive termination agreements with Frank T. Cummings, James E.
Dalton, Dr. James F. Harvey, Ralph L. Webster, John R. Woodhull and three
other Executive Officers who are not named in the Summary Compensation Table,
which would provide, in substance, that if a change in control of Logicon were
to occur without the Board of Directors approval sometime before the fifth
year of the agreement and the Executive Officer's employment terminated for
any reason whatsoever, he would receive, as severance compensation, a lump sum
equal to three times the sum of his annual salary plus his annual bonus. The
annual salary and annual bonus shall be the most recent amounts established by
the Executive Compensation Committee prior to the change in control. In the
event a change in control occurred during the current fiscal year and all such
Executive Officers ended their employment with the Company or were terminated,
the maximum liability to the Company would be approximately $7,852,740. The
agreements also provide that if a change in control of Logicon were to occur
with the Board of Directors approval sometime before the fifth year of the
agreement and the Executive Officer did not voluntarily terminate his
employment, he would receive monthly payments of one-twelfth ( 1/12) of the
sum of his annual salary plus his most recent annual bonus paid immediately
prior to the change in control, for a maximum of 24 months after the change in
control.
14
<PAGE>
VII. LONG-TERM INCENTIVE PLAN AWARDS TABLE
In 1979 Logicon adopted the Performance Units Plan. Under this plan,
Executive Officers and key management employees may receive awards, made by
the Executive Compensation Committee, which represent the right to receive a
cash payment at the end of an "incentive period" of three consecutive fiscal
years commencing with the first day of the fiscal year in which the units are
awarded. Under the plan the per unit value for awards made in Fiscal Year 1996
will range from $0 to $200 depending on the aggregate per share earnings for
Fiscal Years 1996, 1997 and 1998. Payment under the plan is based on the
cumulative earnings of the Company over the performance period. To receive the
minimum payment of fifty dollars per unit the Company's cumulative earnings
must correspond to a compound growth rate of six percent for the three year
period. To receive a payment of $200 per unit the Company's earnings must
achieve a compound growth rate of twenty percent for the three year period.
PERFORMANCE UNITS PLAN--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-
PERFORMANCE BASED PLANS
OR OTHER ---------------------------
PERIOD UNTIL [50] [200]
NUMBER OF MATURATION OR THRESHOLD TARGET MAXIMUM
NAME UNITS (#) PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- --------- ------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
John R. Woodhull............ 1,905 March, 1998 $95,250 N/A $381,000
Frank T. Cummings........... 641 March, 1998 32,050 N/A 128,200
James E. Dalton............. 641 March, 1998 32,050 N/A 128,200
Dr. James F. Harvey......... 641 March, 1998 32,050 N/A 128,200
Ralph L. Webster............ 550 March, 1998 27,500 N/A 110,000
</TABLE>
15
<PAGE>
VIII. COMMON STOCK PERFORMANCE
As part of the executive compensation information presented in this Proxy
Statement, the Securities and Exchange Commission requires a line graph
presentation comparing cumulative, five-year stockholder returns on an indexed
basis with the S&P 500 Stock Index and either a nationally recognized industry
standard or an index of peer companies selected by the Company. The Board of
Directors has approved the S&P Aerospace/Defense Index which has been used for
purposes of the following performance comparison.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG LOGICON, INC., S&P 500 INDEX & S&P AEROSPACE/DEFENSE INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period S&P 500 S&P AEROSPACE/
(Fiscal Year Covered) LOGICON, INC. INDEX DEFENSE INDEX
- --------------------- ------------- -------- --------------
<S> <C> <C> <C>
Measurement Pt-1991 $100.00 $100.00 $100.00
FYE 1992 $146.96 $111.04 $105.27
FYE 1993 $190.09 $127.95 $119.22
FYE 1994 $244.27 $129.84 $155.51
FYE 1995 $318.82 $150.05 $187.29
FYE 1996 $615.58 $198.22 $289.91
</TABLE>
AEROSPACE/DEFENSE INDEX
<TABLE>
<S> <C> <C> <C>
Boeing Company Lockheed Martin Northrop Grumman Rockwell International
General Dynamics McDonnell Douglas Raytheon Company United Technologies
</TABLE>
There can be no assurance that the Company's stock performance will continue
into the future with the same or similar trends depicted in the graph above.
The Company will not make nor endorse any predictions as to future stock
performance.
LOGO
16
<PAGE>
IX. CERTAIN TRANSACTIONS
Pursuant to the provisions of the 1979 Restricted Stock Purchase Plan, the
Company has loaned certain amounts to Executive Officers. All such loans are
secured by the stock sold under the plan and are held by the Company until the
loan plus interest (ranging between two and six percent) has been paid off.
For each Executive Officer who had loans outstanding totaling in excess of
$60,000 during Fiscal Year 1996 the amounts shown below reflect (i) the
largest aggregate amount of such loans outstanding at any time during Fiscal
Year 1996 and (ii) the loan amounts outstanding as of June 4, 1996. For
Messrs. Cummings, Dalton, Hartwick, Harvey, Mitchell, Webster and Woodhull,
the amounts are (i) $407,724, $431,524, $337,556, $314,397, $206,110, $261,197
and $816,035, respectively, and (ii) $393,924, $417,724, $337,556, $267,882,
$197,830, $227,907 and $753,935, respectively.
X. SHARES OWNED BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table shows the number of shares of the Company's common stock
deemed beneficially owned by each Director and Named Executive Officer and by
all Directors and Named Executive Officers as a group on June 4, 1996. The
percentage of ownership is calculated on the number of shares outstanding,
including shares subject to options owned by such group. The shares held in
trust for the benefit of participants in the Employee Stock Purchase Plan are
voted by those Directors and Executive Officers who are the members of the
Administration Committee for the plan (see footnote (3) below). Accordingly,
the 405,425 shares held by the plan on June 4, 1996, have been included as
beneficially owned.
COMMON STOCK DEEMED BENEFICIALLY OWNED
INCLUDING STOCK PURCHASE PLAN SHARES
<TABLE>
<CAPTION>
NAME AMOUNT (1) PERCENTAGE (2)
---- ---------- --------------
<S> <C> <C>
DIRECTORS:
James L. Hesburgh................................ 7,250 0.1%
Charles T. Horngren.............................. 24,750 0.2
W. Edgar Jessup, Jr.............................. 61,589 0.4
Charles F. Smith................................. 17,150 0.1
Roland R. Speers................................. 42,750 0.3
Robert G. Walden................................. 3,750 0.0
NAMED EXECUTIVE OFFICER AND DIRECTOR:
John R. Woodhull................................. 994,514(3) 7.1(3)
NAMES EXECUTIVE OFFICERS:
Frank T. Cummings................................ 216,726 1.5
James E. Dalton.................................. 124,936 0.9
Dr. James F. Harvey.............................. 85,100 0.6
Ralph L. Webster................................. 130,556 0.9
All Directors and Named Executive Officers as a
Group............................................. 1,709,071 12.1
</TABLE>
- --------
(1) These amounts include 77,700 unissued shares subject to options owned by
the Directors and Named Executive Officers. Options awarded prior to the
August 23, 1995 two-for-one split of the Company's stock have been
adjusted.
17
<PAGE>
(2) The shares subject to options described in the preceding footnote were
added to the shares outstanding on June 4, 1996, for purposes of
calculating this percentage.
(3) Includes 405,425 shares held by the Trustee of the Employee Stock Purchase
Plan of Logicon, Inc., representing 2.9% of the total shares outstanding
on June 4, 1996. Mr. Woodhull, as a member of the Employee Stock Purchase
Plan Committee, votes these shares, which are purchased for, but not as
yet distributed to, the participants in the plan.
XI. OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Except as indicated, the Company is not aware of any other person or group
who beneficially owned more than five percent of its outstanding common stock
on March 31, 1996.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNERS OWNERSHIP OF CLASS
-------------- ----------------------- ---------- --------
<S> <C> <C> <C>
Common Stock $.10 Par
Value Harris Associates, L.P. 779,600 5.6%
</TABLE>
XII. COMPLIANCE WITH THE SECURITIES EXCHANGE ACT
The Company's Executive Officers and Directors are required under the
Securities Exchange Act of 1934 to file reports of ownership and changes in
ownership with the Securities Exchange Commission and the New York Stock
Exchange. Copies of those reports must also be furnished to the Company.
Based solely on a review of the copies of reports furnished to the Company
and written representations that no other reports were required, the Company
believes that during Fiscal Year 1996 all filing requirements applicable to
Executive Officers and Directors have been complied with.
XIII. INDEPENDENT ACCOUNTANTS
Price Waterhouse has served as independent accountants for the Company
continuously since 1968 and has again been selected by the Company's Board of
Directors to examine the Company's financial records and statements for the
current fiscal year. Representatives of Price Waterhouse are expected to
attend the Annual Meeting of Stockholders and be available to respond to
appropriate questions. The representatives will also have the opportunity to
make a formal statement if they so desire.
During the fiscal year ended March 31, 1996, the Company's independent
accountants provided services related to the annual audit, which included
reviews of quarterly reports and filings with the Securities and Exchange
Commission, and nonaudit services.
Each year the Audit Committee reviews and approves, in advance, the scope of
the audit and the estimated fees for the annual audit services to be provided
by the Company's independent accountants.
XIV. STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Stockholder proposals which are to be considered for inclusion in next
year's Proxy materials for the 1997 Annual Meeting of Stockholders must be
received at the Company's address before March 1, 1997.
18
<PAGE>
XV. EXPENSES OF SOLICITATION
Proxies will be solicited principally by mail, and the cost of soliciting
Proxies will be borne by the Company. Although no special arrangements have
been made to do so, Proxies may also be solicited by telephone or letter. The
Company will request banks, brokers, custodians, and other fiduciaries to
solicit their principals who beneficially own common stock of the Company and
will reimburse these fiduciaries for their reasonable out-of-pocket expenses
of solicitation.
In addition, the Company has retained Corporate Investor Communications,
Inc., a professional firm of proxy solicitors, to assist in the solicitation
of Proxies. Management estimates that the fees of such firm will be
approximately $6,000, plus out-of-pocket expenses, all of which will be paid
by the Company.
XVI. ALL EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth, as of June 4, 1996, all of the Executive
Officers of the Company, the offices and positions held by each of them, their
ages, and the year in which each assumed the office listed.
<TABLE>
<CAPTION>
YEAR OFFICE
AGE ASSUMED OFFICES AND POSITIONS
--- ----------- ------------------------
<C> <C> <C> <S>
John R. Woodhull.............................. 62 1969 President (a)(b)(c)
Frank T. Cummings............................. 56 1971 Vice President
James E. Dalton............................... 65 1985 Vice President
R. Dean Hartwick.............................. 60 1987 Vice President
Dr. James F. Harvey........................... 56 1990 Vice President
E. Benjamin Mitchell, Jr...................... 42 1989 Vice President--
General
Counsel/Secretary (b)
Dan B. Wallace................................ 61 1986 Vice President
Ralph L. Webster.............................. 55 1978 Vice President--
Chief Financial Officer
(b)
</TABLE>
- --------
(a) Member of the Board of Directors of the Company.
(b) Logicon Employee Stock Purchase Plan Committee Member.
(c) Executive Committee Member.
Each of the Executive Officers of Logicon has been with the Company in a
senior management or executive capacity for five years or more.
19
<PAGE>
APPENDIX A
SIXTH AMENDMENT AND RESTATEMENT OF LOGICON, INC.
1979 RESTRICTED STOCK PURCHASE AND STOCK OPTION PLAN
Subject to stockholder approval, the former Logicon, Inc. 1979 Restricted
Stock Purchase Plan was amended and restated by action of the Board of
Directors of Logicon, Inc. as of June 7, 1996 as follows:
1. PURPOSE
This 1979 Restricted Stock Purchase and Stock Option Plan (the "Plan") is
intended to allow employees of Logicon, Inc. ("Logicon") and Subsidiaries
which it may have from time to time (together the "Company") to purchase
Logicon common stock, at a substantial discount from market value but subject
to vesting over a number of years and to issue incentive stock options and
non-statutory stock options. The purpose of the Plan is to provide the
employees with additional incentives to make significant and extraordinary
contributions to the long term performance and growth of the company and to
attract and retain employees of exceptional ability. Awards may be
concentrated among officers and key management employees. Employees receiving
awards under the Plan are herein referred to as "Participants". "Subsidiary"
herein shall mean any corporation in an unbroken chain of corporations
beginning with Logicon, if at the time of the award each of the corporations
other than the last in the chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
2. ADMINISTRATION
(a) The Plan shall be administered by the Executive Compensation Committee
("the Committee") of the Logicon Board of Directors (the "Board of
Directors"). The Committee shall select one of its members as Chairman and
shall act by vote of a majority of a quorum, or by unanimous written consent.
A majority of its members shall constitute a quorum. The Committee shall be
governed by the provisions of the Logicon By-laws and of Delaware law
applicable to the Board of Directors except as otherwise provided herein or
determined by the Board of Directors.
(b) The Committee shall have full and complete authority, in its discretion,
but subject to the express provisions of the Plan, to adopt such rules and
regulations and to make all other determinations deemed necessary or desirable
for the administration of the Plan. Any interpretation or construction of the
Plan by the Committee, and its action thereunder, shall be binding and
conclusive on all persons for all purposes.
(c) The Company hereby agrees to indemnify and hold harmless any Committee
member or any employee of the Company, and the estates and heirs of such
Committee member or employee, against all claims, liabilities, expenses,
penalties, damages or other pecuniary losses, including legal fees incurred by
such Committee member or employee, which such Committee member or employee,
his estate or heirs may suffer as a result of his responsibilities,
obligations or duties in connection with the Plan. Such indemnification shall
be paid by the Company to the Committee member, employee, or his estate or
heirs to the extent that insurance, if any, does not cover the payment of such
items.
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(d) Except for non-incentive stock options granted in accordance with
paragraph 5 below, the interpretation and construction by the Committee of any
provision of the Plan or of any option agreement or collateral agreement
entered into under the Plan shall be in accordance with the provisions of
Section 422 of the Internal Revenue Code (the "Code") and the regulations
which may be issued thereunder, in order that all options granted pursuant to
the Plan shall constitute "incentive stock options" within the meaning of the
Code. No amendment, change or adjustment under any option granted pursuant
hereto shall be made if such amendment, change or adjustment would cause any
option granted hereunder to cease to so qualify. The interpretation and
construction by the Committee of any provisions of the Plan or of any option
granted under it shall be final and conclusive.
3. STOCKHOLDER APPROVAL
No restricted stock shall be issued under the Plan unless and until the Plan
is approved by the written consent of a majority of the shares of common stock
of the Company or by the affirmative vote of a majority of such shares present
or represented at a duly held stockholders' meeting. No options shall be
granted under the Plan until an amendment to the Plan specifically permitting
the granting of incentive stock options and non-incentive stock options has
been approved by the written consent of a majority of the common stock of the
Company or the affirmative vote of such shares present or represented at a
duly held stockholders' meeting.
4. ELIGIBILITY AND RESTRICTED STOCK AWARDS
Any employee (including any officer) of the Company shall be eligible to
receive an award or successive awards under the Plan. No employee who is a
member of the Committee shall be eligible under the Plan. The Committee in its
sole discretion shall select the employees to whom awards shall be made and
shall designate for each award its date, the price per share, the number of
shares subject thereto and all other terms and conditions of such award (which
need not be identical to those of any other award but shall be subject to the
provisions of this Plan). Notwithstanding the foregoing and subject to
paragraph 6, the price per share shall not be less than $5.00 per share unless
the market value of Logicon common stock at the time of the award is less than
$10.00 per share (for reasons other than a stock split or similar action), in
which case the price shall not be less than one-half of such market value.
5. STOCK SUBJECT TO AWARDS; LIMITATIONS PER EMPLOYEE
(a) The stock subject to awards made under the Plan shall be shares of
Logicon's $.10 par value common stock, subject to paragraph 6 below. The total
number of shares which may be subject to awards made under the Plan shall not
exceed ten percent (10%) of the number of shares issued and outstanding at the
time of the award, and in no event shall exceed 1,779,600. This calculation
shall include shares issued hereunder but shall exclude awards which lapse and
shares repurchased by Logicon hereunder. It shall be in addition to shares,
options and awards under all other employee benefit plans of the Company. The
stock subject to awards shall be authorized but unissued common stock, or if
the Committee shall so elect, shall be treasury shares.
(b) Stock options issued under this Plan are intended to be incentive stock
options as that term is defined in Section 422 of the Code, unless otherwise
specifically designated by the Committee as non-incentive options. The stock
subject to the options shall be shares of the Company's authorized but
unissued $.10 par value common stock.
(c) The aggregate fair market value (determined as provided in paragraph 7
below on the date an option is granted) of the Company's stock with respect to
which incentive stock options are exercisable for the first time
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by any Participant during any calendar year (under all plans of the Company
and any parent or subsidiary of the Company) shall not exceed $100,000. Non-
incentive stock options shall not be subject to the limitations relating to
incentive stock options described in the preceding sentence. An employee to
whom an option has been granted may, if he is otherwise eligible, be granted
an additional non-incentive option or options if the Committee shall so
determine.
(d) The Committee may, with Participant approval, cancel and reissue
options. Options which terminate unexercised or are canceled may be reissued
under the Plan.
(e) No employee shall receive more than three hundred thousand (300,000)
options to purchase shares of Company stock under this Plan in any one
calendar year. This amount shall be proportionally adjusted pursuant to the
anti-dilution provisions of this Plan contained in Section 6.
6. CHANGE IN CAPITALIZATION
(a) The aggregate number and class of shares which may be issued or granted
under this Plan may be adjusted proportionately, in the discretion of the
Committee, for any increase or decrease in the number of issued shares
resulting from a stock split, stock dividend or dividends exceeding a total of
five percent (5%) for which the record dates occur in any one fiscal year, a
recapitalization or other like capital adjustment including merger,
reorganization or consolidation. The adjustment described above shall apply to
the price per share, the number and class of shares subject to each option
outstanding prior to the adjustment.
(b) Upon any reorganization, merger or consolidation of the Company with one
or more corporations as a result of which the Company is not the surviving
corporation, or upon a sale of all or substantially all of the property of the
Company to another corporation, or upon any dividend or distribution to
shareholders of more than five percent (5%) of the Company's assets, adequate
adjustment or other provisions shall be made by the Committee or the other
party to such transaction. The holders of outstanding Logicon options shall be
entitled to receive upon exercise thereafter, the shares, securities or assets
which would have been issuable or payable had the Participant been the owner
of the number of Logicon shares subject to the option on the applicable date
of reorganization, merger or consolidation. Any securities so substituted
shall be subject to similar successive adjustments. Any adjustment made under
this paragraph 6 shall be made by the Board of Directors, whose determination
with regard thereto shall be final and conclusive.
7. OPTION PRICE
The purchase price ("the Exercise Price") of shares covered by each
incentive stock option granted pursuant to the Plan shall be determined by the
Committee, but in no event shall any such Exercise Price be less than one
hundred percent (100%) of the fair market value of such shares on the date the
option is granted. The Committee shall have full authority and discretion in
fixing the Exercise Price and determining the fair market value of the
Company's stock and shall be fully protected in doing so, provided that (a) if
the stock of the Company is not listed upon an established stock exchange, the
fair market value per share shall not be less than the mean between
representative "bid" and "ask" quotations of the stock in the over-the-counter
market for the most recent trading date prior to the date of grant as reported
by the Wall Street Journal (Western Edition), and (b) if the stock is listed
upon an established stock exchange or exchanges, the fair market value shall
not be less than the fair market value of such shares on the date of grant or
not less than the last sales price on any such exchange for the most recent
trading date prior to the date of grant as reported by the Wall Street Journal
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(Western Edition). The Exercise Price of shares covered by each option granted
to a stockholder who owns more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, or of any subsidiary
corporation, shall be at least one hundred ten percent (110%) of the fair
market value of such shares on the date the option is granted.
8. OPTION PERIOD AND EXERCISE OF OPTIONS
(a) The period of time within which any option granted pursuant to this Plan
may be exercised shall be determined in each case by the Committee, but in no
event shall any such exercise period exceed 10 years from the date of the
grant of the option. However, in the case of a grant to an employee who owns
more than 10% of the total combined voting power of all classes of stock of
the Company, or of any subsidiary corporation, the exercise period shall not
exceed five (5) years from the date of the grant of the option.
(b) Subject to the provisions of paragraph 8(c), the Committee shall have
the discretion to determine whether any particular option or options shall be
exercisable all at one time or in installments, which may be cumulative or
noncumulative. No option may be exercised for a fraction of a share. The
Exercise Price of any shares purchased upon exercise of any option granted
pursuant to the Plan shall be paid in full at the time of exercise. The
Participant may pay for the exercised option (a) in cash or cashier's check;
(b) by tendering shares of the Company's stock having a fair market value
equal to the Exercise Price, determined in the manner provided in paragraph 7
above, as of the most recent trading date for the Company's stock prior to the
date of exercise; (c) if applicable, by tendering a promissory note in
accordance with paragraph 10 below, (d) in addition to the payment methods
described above, the option granted to any eligible employee may provide that
the option can be exercised and payment made by delivering a properly executed
exercise Notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds necessary to pay
the Exercise Price, and in addition to the methods of payment for the option
exercise described above, the Participant may satisfy any tax withholding
requirements using any of the payment methods described above including, but
not limited to, the tender of additional shares of previously owned Company
Stock. The Company may not be obligated to deliver certificates for the shares
unless and until it receives full payment of the Exercise Price therefor. The
Company may withhold all applicable taxes upon the exercise of a non-statutory
option.
(c) Exercise of each option is conditioned upon the agreement of the
Participant to the terms and conditions of this Plan and of such option as
evidenced by his execution and delivery of a Notice and Agreement of Exercise
in a form to be determined by the Committee in its discretion. Such Notice and
Agreement of Exercise shall set forth the agreement of the Participant that:
(a) no shares acquired hereunder will be sold or otherwise distributed in
violation of the Securities Act of 1933 or any other applicable federal or
state securities laws; (b) each share certificate may be imprinted with
legends reflecting any applicable federal and state securities law
restrictions and conditions; (c) the Company may comply with said securities
law restrictions and issue "stop transfer" instructions to its transfer agent
and registrar without liability; (d) if the Participant is subject to
reporting requirements under Section 16(a) of the Securities Exchange Act of
1934, the Participant will furnish to the Company a copy of each Form 4 or
Form 5 filed by him and will timely file all reports required under federal
securities laws; and (e) the Participant will report all sales of shares
acquired hereunder to the Company in writing on the form prescribed by the
Company.
(d) No option shall be exercisable unless and until any applicable
registration requirements of federal and state securities laws, and all other
legal requirements, have been fully complied with. The Company will use
reasonable efforts to maintain the effectiveness of a registration statement
under the Securities Act of 1933 for
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the issuance of options and shares acquired hereunder, but there may be times
at which no such registration statement will be currently effective. The
exercise of options may be temporarily suspended without liability to the
Company during times when no such registration statement is currently
effective, or during times when, in the reasonable opinion of the Committee,
such suspension is necessary to preclude violation of any requirements of
applicable law or regulatory bodies having jurisdiction over the Company. The
Company shall have no obligation to file any registration statement covering
resales of shares acquired hereunder.
9. PURCHASE OF RESTRICTED SHARES
(a) Awards made under the Plan shall constitute offers by the Company to
sell stock to the Participants receiving such awards in the manner herein
described. A Participant may accept any such offer only by tendering to
Logicon, at any time during the fifteen business days following notification
of the award, or during the fifteen business days following the date on which
stockholder approval is obtained in the case of awards made prior thereto, the
full purchase price of the stock subject to such award as determined pursuant
to paragraph 4 above. Every award made hereunder must be accepted in full, if
at all. The time for acceptance may be extended as provided in paragraph 15
below, and shall be extended, not exceeding 45 business days, for the time
during which a prospective Participant is on vacation, traveling on business,
ill or disabled.
(b) In lieu of the foregoing procedure, any Participant, upon being advised
that the Committee is considering making an award to him or her, may elect to
accept such award in advance by tendering to the Company a notice of
acceptance in the form to be established by the Committee. By such procedure,
the Participant will agree to receive and pay for the stock issued pursuant to
the award. The Participant shall thus be obligated to pay for the stock issued
in accordance with the provisions of this Plan, and the Committee shall be
authorized to fix the exact purchase price and other terms and conditions of
the award in accordance with this Plan. The full amount of the purchase price
as determined by the Committee shall become immediately due and payable to the
Company upon notification of the award to the Participant.
10. LOANS TO PARTICIPANTS
If the Committee in its discretion should so determine in conjunction with
any award or option granted under the Plan, the Company may loan to any
Participant the amount of the purchase price of the shares subject to such
award or option, less the par value of such shares. Any such loan shall be
evidenced by a promissory note executed by the Participant. Such promissory
note shall bear interest on the unpaid principal balance at a rate to be
determined in the discretion of the Committee at the time of the award, or
absent such determination at a rate of 5% per annum, and shall be repayable
over a term not in excess of five years. Any promissory note issued hereunder
shall be secured by a pledge to the Company of the shares acquired thereby and
such shares shall be held by the Company until such promissory note shall have
been fully satisfied by the Participant.
11. RESTRICTIONS ON TRANSFER
No shares of restricted stock purchased under the Plan may be sold, pledged
or otherwise transferred or disposed of except as permitted by this Plan. The
restricted stock purchased shall be represented by certificates bearing (as
applicable) the following legends:
(Always) "These shares were acquired pursuant to Logicon, Inc.'s 1979
Restricted Stock Purchase Plan and may not be sold, pledged or
otherwise disposed of except in accordance therewith."
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(Add for Affiliates)
"The holder of these shares may be an "affiliate" of Logicon,
Inc. and may not sell, pledge or otherwise dispose of such
shares except in accordance with registration under, or an
exemption (such as Rule 144) from registration under the
Securities Act of 1933, and may also be subject to Section 16 of
the Securities Exchange Act of 1934."
(Always) "Questions concerning the foregoing should be directed to the
Compensation Committee of Logicon, Inc. or to the person
designated by such Committee."
12. VESTING OF RESTRICTED SHARES
Unless the Committee shall otherwise specifically provide, in connection
with a particular award (either at the time of the award or thereafter),
twenty percent (20%) of the shares purchased under any award shall vest for
each year of continuous employment with the Company following the date of
purchase, except that vesting shall be deferred from day to day if and while
any payment due under any promissory note executed pursuant to paragraph 10
above is delinquent and provided further that vesting shall be deferred from
day to day if and while there remains unpaid under any such promissory note a
percentage of the face amount of such note which is larger than the percentage
of the award shares which would otherwise vest.
Nonvested shares shall be restricted in the manner provided in this Plan;
Logicon shall have the right (as provided in paragraph 15) and the obligation
(as provided in paragraph 14) to repurchase all nonvested shares upon the
retirement, disability or death, or upon the voluntary or involuntary
termination of employment of any Participant.
13. CHANGE IN CONTROL
In the event of a change in control of Logicon as herein defined ("Change in
Control"), all outstanding awards and options shall immediately become
exercisable and shall thereafter be vested in full, provided that any
promissory note executed pursuant to Paragraph 10 above has been fully paid,
with all restrictions removed. A Change in Control of Logicon shall be deemed
to have occurred: (a) on the date Logicon first has actual knowledge that any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) has become the beneficial owner (as defined in Rule 13d-
3 under the Securities Exchange Act of 1934), directly or indirectly, of
securities of Logicon representing twenty percent (20%) or more of the
combined voting power of Logicon's then outstanding securities without
approval of the Board of Directors; or (b) on the date the stockholders of
Logicon approve (i) a merger of Logicon with or into any other corporation in
which Logicon is not the surviving corporation or in which Logicon survives as
a wholly-owned subsidiary of another corporation, (ii) a consolidation of
Logicon with any other corporation, or (iii) a sale or disposition of all or
substantially all of the Company's assets or a plan of complete liquidation.
14. TERMINATION OF EMPLOYMENT
A. Except as otherwise provided in paragraph 15 below, upon termination of
employment of a Participant for any reason, all nonvested shares issued to
such Participant shall be repurchased by Logicon at their award purchase
price, plus any interest paid by the Participant under any promissory note
hereunder. Such repurchase shall be paid by first canceling the balance of any
promissory note of such Participant hereunder and by then paying any balance
in cash.
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B. Each Participant must agree, as a condition of receiving an option, that
he will at the request of the Company, remain in the continuous employ of the
Company for a period of not less than two years after the option is granted
and shall abide by the terms and conditions of the option agreement. However,
such agreement shall not impose upon the Company or any subsidiary any
obligation to retain the Participant in its employ for any period. Any
termination of the Participant's employment during such period that is either
for cause or voluntary on the part of the Participant and without the consent
of the Company shall be deemed a violation by the Participant of his
agreement. In the event of such violation, any option or options held by him,
to the extent not theretofore exercised, shall forthwith terminate.
C. If the employment of the Participant terminates for any reason other than
death or permanent and total disability, and not in violation of his option
agreement, his option (subject to earlier expiration as provided in paragraph
8 hereof) shall expire three months after the date of such termination. During
that three month period the option may be exercised only to the extent that it
was exercisable by its terms on the date employment terminated.
15. RETIREMENT, DISABILITY OR DEATH
A. RESTRICTED STOCK
(i) Upon the retirement at or after the Participant's Normal Retirement
Date, disability or death of any Participant, the Committee shall
determine, by special resolution, whether any or all nonvested shares of
such Participant shall vest. All shares of such Participant remaining
nonvested shall be sold to and purchased by Logicon at the price defined in
paragraph 14.
(ii) "Normal Retirement Date" shall mean the date on which the Employee
attains the age of sixty-five (65) years.
(iii) "Disability" shall mean total and permanent incapacity of an
Employee, due to physical impairment or legally established mental
incompetence, to perform the usual duties of his employment with the
Company, which disability shall be determined (i) on medical evidence by a
licensed physician designated by the Committee or (ii) on evidence that the
Employee has become entitled to receive primary benefits as a disabled
Employee under the Social Security Act in effect on the date of disability.
B. INCENTIVE AND NON-INCENTIVE STOCK OPTIONS
(i) If the employment of the Participant terminates due to permanent and
total disability within the meaning of Section 105(d)(4) of the Code, his
option (subject to earlier expiration as provided in paragraph 8 hereof)
shall expire twelve months after the date of such termination. During that
12-month period the option may be exercised only to the extent it was
exercisable by its terms on the date employment terminated.
(ii) Notwithstanding any other provision of this Paragraph 15, a
Participant who elects retirement (at age sixty-five (65) or early
retirement (at age fifty-five (55) with five (5) consecutive years of
service with the Company) shall be entitled to exercise the option in full
for a period of three (3) months after the Participant's retirement or
early retirement date.
(iii) If the employment of the Participant terminates because of death,
or if the Participant dies during the three month or one year periods
referred to in subparagraph 15(B)(i) above, the option may be exercised
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at any time prior to its expiration by the estate of the Participant or the
persons to whom the option was transferred by bequest or inheritance as
provided in Section 421(c) of the Code, subject to earlier termination at
the discretion of the Committee.
16. REGISTRATION OF SHARES
Notwithstanding any other provision of this Plan or any award hereunder,
Logicon shall be under no obligation to issue shares under the Plan while, in
the opinion of its counsel, any applicable legal requirement for the issuance
of such shares may not be satisfied, including but not limited to the
requirements of the Securities Act of 1933, California or other state
securities laws, and the listing of such shares with the New York Stock
Exchange. The Company shall use its best efforts to satisfy all such
applicable legal requirements. Any delay in meeting such requirements shall
not extend the vesting period but shall extend the award acceptance period the
same number of days.
If any award shares are issued without registration under the Securities Act
of 1933, then in addition to the legends provided for in paragraph 11, the
award shares shall bear a suitable restrictive legend and the acceptance of
such awards shall be subject to the execution of a suitable investment letter
by the Participant, in form and substance satisfactory to the Committee.
17. AMENDMENT AND TERMINATION
The Board of Directors may at any time suspend, amend or terminate the Plan,
except as otherwise provided herein. Except as provided in paragraphs 6 and 13
herein, amendment or modification of the Plan may be adopted, except subject
to shareholder approval, which would (a) increase the maximum number of shares
of common stock subject to awards under the Plan, (b) change the class of
employees eligible to participate under the Plan, (c) reduce the minimum
purchase price (except for adjustments pursuant to paragraph 6, or
(d) otherwise materially increase benefits to Participants under the Plan. No
suspension, amendment or termination of the Plan shall affect awards then
outstanding.
18. APPLICATION OF PROCEEDS
Proceeds from the sale of award shares shall constitute a part of the
general funds of Logicon.
19. SUCCESSORS IN INTEREST
The provisions of this Plan and the actions of the Committee shall be
binding on all heirs, successors and assigns of the Company and of
Participants.
20. NON-ASSIGNABILITY
Except as otherwise provided herein, no rights under the Plan, and no
nonvested options or shares purchased hereunder, may be sold, donated,
assigned, pledged, hypothecated or otherwise transferred in any manner,
whether by voluntary action, operation of law, or devolution upon death,
except with the written consent of the Committee. In the event of any transfer
of such restricted rights or shares (e.g., under any law which renders the
foregoing restriction inapplicable in the circumstances), such rights or
shares shall remain subject to all of the provisions of this Plan and of such
award, unless otherwise determined by the Committee.
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21. TAXATION OF RESTRICTED SHARES
Under present law each Participant will be required to recognize personal
services income equal to the spread between the market value of awarded shares
and their purchase price on the date restrictions (other than securities law
restrictions) upon disposition hereunder lapse, i.e., generally as to twenty
percent (20%) of the shares annually unless the Committee establishes a
different vesting schedule. If the employee voluntarily makes an election
under Section 83(b) of the Code then the Employee will recognize ordinary
income on the spread on the date of the award. The acceptance of each award or
the exercise of any option shall constitute an agreement by the Participant to
report such income in accordance with then applicable law and to cooperate
with the Company in establishing the amount of such income and the
corresponding deduction to the Company for its income tax purposes.
Withholding for federal or state income and employer tax purposes will be
done, if and as required by law, from the salaries (including bonuses and any
other form of cash remuneration) of Participants.
22. FORM OF DOCUMENTS
The form of award, acceptance of award, promissory note, investment letter,
option agreement, and any other documents incident to this Plan shall be as
established and modified by the Committee or under its direction and
supervision. All such other documents prepared and/or executed or delivered in
connection with the Plan shall be subject in every respect to the provisions
of this Plan, and in the event of any conflict between the terms of any such
document and this Plan, the Plan shall prevail.
23. MERGER, CONSOLIDATION OR TENDER OFFER
Upon any merger or consolidation of Logicon with or into any other
corporation, or upon any tender offer for Logicon common stock, in which cash
and/or securities of such corporation (or its parent or subsidiaries) are
offered or are to be substituted in whole or in part for Logicon common stock,
nonvested award shares may participate therein. The offeror may provide that
any such new securities shall be legended and shall be subject to any or all
of the prior provisions of such award to the extent such provisions (including
restrictions) are in effect at the time the transaction is consummated. Prior
to consummation of any such transaction, the Committee shall have the
discretion to accelerate or otherwise alter the vesting schedule of any or all
outstanding award shares as provided in paragraphs 12 and 13 above. Successive
mergers, consolidations or tender offers shall be handled in the same manner.
Notwithstanding the foregoing, in any transaction in which Logicon is the
surviving entity, or in which the management of Logicon continues
substantially as the management of the surviving entity, the provisions of
this Plan shall continue to apply to the substituted securities.
24. CONTINUED EMPLOYMENT
The Plan and awards hereunder shall not impose any obligation on the Company
to continue to employ any Participant and the Participant shall remain an at-
will employee of the Company. Moreover, no provisions of this Plan or any
document executed or delivered pursuant hereto shall be deemed modified in any
way by any employment contract between a Participant (or other employee) and
the Company.
25. MISCONDUCT OF PARTICIPANTS
Notwithstanding any other provision of the Plan to the contrary, in the
event that a Participant shall participate in fraud or dishonesty toward the
Company or its subsidiaries or shall wrongfully use or disclose any
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trade secret, confidential data or other information proprietary to the
Company, or shall intentionally take any other action materially inimical to
the best interests of the Company, as determined by the Committee, in its sole
and absolute discretion, such Participant shall forfeit all rights and
benefits under the Plan, and all stock purchased by such Participant under the
Plan, whether vested or not vested, shall be repurchased by the Company at the
price determined in paragraph 14 above.
26. TERM OF PLAN
This Plan was adopted by the Board of Directors as of October 5, 1979 and
shall terminate as of December 31, 1999. No award shall be made under the Plan
after such termination, but awards made prior thereto shall be unaffected by
such termination.
27. GOVERNING LAW
The Plan shall be construed in accordance with, and governed by the laws of
the State of Delaware.
28. SEVERABILITY
If any of the provisions of the Plan shall be held invalid, the remainder of
the Plan shall not be affected thereby.
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APPENDIX B
AMENDMENT TO THE LOGICON, INC.
1992 EMPLOYEE INCENTIVE STOCK OPTION PLAN
Subject to stockholder approval, the Logicon, Inc. 1992 Employee Incentive
Stock Option Plan (the " Plan") was amended by action of the Board of
Directors of Logicon, Inc. as of June 7, 1996 as follows:
1. A new Section 4.4 of the Plan is hereby incorporated to read as
follows:
"4.4 No employee shall receive options to purchase more than three
hundred thousand (300,000) shares of Company stock under this Plan in
any one calendar year. This amount shall be proportionately adjusted
pursuant to the anti-dilution provisions of Paragraph 10 of this Plan."
2. Section 6.2 of the Plan is hereby amended to read as follows:
"6.2 Subject to the provisions of paragraph 6.3, the Committee shall
have the discretion to determine whether any particular option or
options shall be exercisable all at one time or in installments, which
may be cumulative or noncumulative. No option may be exercised for a
fraction of a share. The Exercise Price of any shares purchased upon
exercise of any option granted pursuant to the Plan shall be paid in
full at the time of exercise. The optionee may pay for the exercised
option (a) in cash or cashier's check; (b) by tendering shares of the
Company's stock having a fair market value equal to the Exercise Price,
determined in the manner provided in paragraph 5 above, as of the most
recent trading date for the Company's stock prior to the date of
exercise; (c) if applicable, by tendering a promissory note
("Promissory Note") in accordance with paragraph 14 below; or (d) in
addition to the payment methods described above, the option granted to
any eligible employee may provide that the option can be exercised and
payment made by delivering a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds necessary to pay the
Exercise Price and, unless otherwise allowed by the Committee, any
applicable tax withholding required under the Code. In addition, an
optionee may satisfy any applicable tax withholding requirements
utilizing any of the methods of payment described above, including the
delivery of previously owned Company shares. The Company shall not be
obligated to deliver certificates for the shares unless and until it
receives full payment of the Exercise Price therefor."
3. In all other respects the Plan is reaffirmed and declared in full
force and effect.
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
LOGICON, INC.
The undersigned hereby appoints Charles F. Smith and Roland R. Speers prox-
ies, with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares of stock of Logicon, Inc. standing in the name of the under-
signed with all powers which the undersigned would possess if present at the
Annual Meeting of Stockholders of Logicon, Inc. to be held August 5, 1996 or
any adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark [X]
your votes as
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3. IF NOT
OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED FOR THE NOMINEES AND PROPOSALS
LISTED BELOW. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE MEETING,
THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES NAMED
HEREIN.
Item 1-ELECTION OF DIRECTORS WITHHELD
Nominees: FOR FOR ALL
Dr. Charles T. Horngren [_] [_]
W. Edgar Jessup, Jr.
John R. Woodhull
Item 2-Approval of an Amendment to the Logicon, Inc. FOR AGAINST ABSTAIN
1979 Restricted Stock Purchase Plan [_] [_] [_]
Item 3-Approval of an Amendment to the Logicon, Inc.
1992 Employee Incentive Stock Option Plan
WITHHELD FOR: (Write that nominee's name in the space provided below).
______________________________________________________________________
Signature(s) __________________________ Date _______________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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