<PAGE>
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
BIO-LOGIC SYSTEMS CORP.
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BIO-LOGIC SYSTEMS CORP.
- - - --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
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):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
One Bio-logic Plaza
Mundelein, Illinois 60060
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 25, 1995
To our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of BIO-LOGIC
SYSTEMS CORP., will be held at the Company's headquarters, One Bio-logic Plaza,
Mundelein, Illinois 60060 on August 25, 1995, at 10:00 A.M. Central Daylight
Time, for the following purposes:
1. To elect two Class III directors to hold office for a term of three years
and until their successors are elected and qualified; and
2. To consider and vote to approve an amendment to the Company's 1994 Stock
Option Plan; and
3. To consider and take action upon such other matters as may properly come
before the meeting or any adjournment or adjournments thereof.
The close of business on June 27, 1995 has been fixed as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting.
All shareholders are cordially invited to attend the meeting. Whether or not
you expect to attend, you are requested to sign, date and return the enclosed
proxy promptly in the accompanying envelope which requires no postage if mailed
in the United States.
By Order of the Board of Directors
Gabriel Raviv, Ph.D., President
and Chief Executive Officer
Mundelein, Illinois
June 28, 1995
<PAGE>
----------------------
PROXY STATEMENT
----------------------
[LOGO]
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Bio-logic Systems Corp. (the "Company") of proxies to be
voted at the Annual Meeting of Shareholders to be held at the Company's
headquarters, One Bio-logic Plaza, Mundelein, Illinois 60060 on August 25, 1995,
at 10:00 A.M. Central Daylight Time, and at any adjournment thereof, for the
purposes set forth in the foregoing Notice of Annual Meeting of Shareholders.
The persons named in the enclosed proxy form will vote the shares for which they
are appointed in accordance with the directions of the shareholders appointing
them. In the absence of such directions, such shares will be voted for the
Proposals listed below and, in the best judgment of those so appointed, will be
voted on any other matters as may come before the meeting. Any shareholder
giving such a proxy may revoke it at any time before it is exercised.
Only holders of shares of Common Stock of record at the close of business on
June 27, 1995 are entitled to vote at the meeting. On the record date, the
Company had outstanding and entitled to vote 4,147,999 shares of Common Stock,
each entitled to one vote upon all matters to be acted upon at the meeting. A
majority in interest of the outstanding Common Stock represented at the meeting
in person or by proxy shall constitute a quorum. The affirmative vote of a
plurality of the Common Stock so represented is necessary to elect the nominees
for election as directors and the affirmative vote of a majority of the Common
Stock so represented, excluding broker non-votes, is necessary to approve and
ratify the amendment to the Company's 1994 Stock Option Plan. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. If a shareholder, present in person
or by proxy, abstains on any matter, the shareholder's Common Stock will not be
voted on such matter. Thus, an abstention from voting on any matter has the same
legal effect as a vote "against" the matter even though the shareholder may
interpret such action differently. Except for determining the presence or
absence of a quorum for the transaction of business, broker non-votes are not
counted for any purpose in determining whether a matter has been approved.
The principal executive offices of the Company are located at One Bio-logic
Plaza, Mundelein, Illinois 60060. The Company expects to mail this Proxy
Statement and the accompanying form of proxy on or about June 28, 1995.
-1-
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's Common Stock, each director of the
Company, each executive officer of the Company named under "Executive
Compensation" and all officers and directors of the Company as a group as of
June 22, 1995:
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Beneficial of
Name of Beneficial Ownership Class
Holder or Identity of Group (1) (2)
- - - ------------------------------------------------------------- -----
<S> <C> <C>
Gabriel Raviv, Ph.D. 317,187 (3) 7.6 %
c/o Bio-logic Systems Corp.
One Bio-logic Plaza
Mundelein, IL 60060
Gil Raviv, Ph.D. 553,687 (4) 13.2 %
933 Sutton Drive
Northbrook, IL 60062
Charles Z. Weingarten, M.D. 380,184 (5) 9.1 %
c/o Bio-logic Systems Corp.
One Bio-logic Plaza
Mundelein, IL 60060
Bernard Levine, M.D. 385,143 (6) 9.3 %
c/o New York Medical Center
Department of Medicine
550 First Avenue
New York, NY 10016
Irving Kupferberg 17,250 (7) *
Craig W. Moore 4,500 (8) *
Albert Milstein 32,750 (9) *
Thomas S. Lacy 1,500 (10) *
All officers and directors as a group (8 persons) 1,307,433 (11) 30.6 %
<FN>
- - - ------------------------
(1) Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to the shares of Common Stock
shown as beneficially owned by them.
(2) Determined on the basis of 4,147,999 shares of Common Stock issued and
outstanding, except that shares underlying stock options which are
exercisable within 60 days are deemed to be outstanding for purposes of
determining the percentage owned by holders of such options.
(3) Includes (i) 45,000 shares underlying immediately exercisable options and
(ii) 30,000 shares owned by Gabriel Raviv as Trustee for the Gil Raviv
Family Trust. Does not include (i) 93,000 shares owned by Gil Raviv as
Trustee for the Gabriel Raviv Family Trust, (ii) 210,125 shares owned by
Gabriel Raviv's wife, as to which Dr. Raviv disclaims beneficial ownership,
and (iii) 55,000 shares underlying options which are not exercisable within
60 days.
(4) Includes (i) 45,000 shares underlying immediately exercisable options, (ii)
75,000 shares owned by Gil Raviv as Trustee for the Gabriel Raviv Family
Trust and (iii) 40,000 shares owned by a corporation of which Dr. Raviv has
approximately 42% of the voting power. Does not include (i) 30,000 shares
owned by Gabriel Raviv as Trustee for the Gil Raviv Family Trust, (ii)
2,750 shares owned by Gil Raviv's wife, as to which Dr. Raviv disclaims
beneficial ownership, and (iii) 15,000 shares underlying options which are
not exercisable within 60 days.
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
(5) Includes (i) 10,500 shares underlying immediately exercisable options and
(ii) 40,000 shares owned by a corporation of which Dr. Weingarten has
approximately 22% of the voting power. Does not include 1,500 shares
underlying options which are not exercisable within 60 days.
(6) Based on a Schedule 13D filed by Dr. Levine and other information provided
to the Company.
(7) Includes 10,500 shares underlying immediately exercisable options, but
excludes 1,500 shares underlying options which are not exercisable within
60 days.
(8) Includes 4,500 shares underlying immediately exercisable options but does
not include 4,500 shares underlying options which are not exercisable
within 60 days.
(9) Includes 750 shares owned by Mr. Milstein's son and 10,500 shares
underlying immediately exercisable options, but excludes 1,500 shares
underlying options which are not exercisable within 60 days.
(10) Consists of immediately exercisable options. Does not include options to
purchase 21,500 shares underlying options which are not exercisable within
60 days.
(11) Includes 127,875 shares underlying options which are exercisable within 60
days, but does not include 109,625 shares underlying options which are not
exercisable within 60 days.
</TABLE>
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. One class is elected
each year to hold office for a three-year term and until their successors are
duly elected and qualified. The term of office of the current Class III
directors expires at the 1995 Annual Meeting. The accompanying form of proxy
will be voted for the election as director of the two Class III nominees listed
below, who are now directors, unless the proxy contains contrary instructions.
Management has no reason to believe that the nominees should become unable or
unwilling to serve as directors. However, if the nominees should become unable
or unwilling to serve as directors, the proxy will be voted for the election of
such person or persons as shall be designated by the directors.
Class III directors with terms expiring at the 1995 Annual Meeting:
GABRIEL RAVIV (44) has been a director of the Company since its inception in
March 1979. He was Vice President of the Company from March 1979 until February
1981, when he became President and Chief Executive Officer. He is a member of
the Board of Trustees of the Midwest Bio-Laser Institute and an Adjunct
Professor at Northwestern University. From October 1975 until January 1981, Dr.
Raviv was the director of the Clinical Research Instrumentation Laboratory at
Evanston Hospital (an affiliate of Northwestern University). Dr. Raviv received
his M.S. and Ph.D. degrees in Electrical Engineering and Computer Sciences from
Northwestern University. Gabriel Raviv and Gil Raviv are brothers.
CRAIG W. MOORE (50) has been a director of the Company since 1992 and has
been Executive Vice President of West Suburban Kidney Center, S.C., a renal
dialysis business, since 1986. Mr. Moore has also been President of Continental
Health Care, Ltd., an extracorporeal services and supply company, since 1986,
and President of New York Dialysis Management, a dialysis management business,
since 1990. Mr. Moore has over 20 years of experience in the healthcare industry
with American Hospital Supply Corporation, Baxter Healthcare Corporation, and
his current companies.
Class I directors with terms expiring at the 1996 Annual Meeting:
CHARLES Z. WEINGARTEN (56) has been a director of the Company since its
inception in March 1979 and was President of the Company from its inception in
March 1979 until February 1981 when he became Vice President-Medical Products.
For more than 21 years, Dr. Weingarten has maintained a private surgical
practice. He is an attending physician at Evanston Hospital, Glenbrook Hospital
and Swedish Covenant, all located in the Chicago area. Dr. Weingarten is chief
of the Division of Otolaryngology and Maxillofacial Surgery at Evanston
Hospital. Dr. Weingarten is also an Assistant Professor at Northwestern Medical
School. Dr. Weingarten received his M.D. degree from Tulane University Medical
School and was certified by the American Board of Otolaryngology in 1969. He
devotes approximately 10% of his business time to the Company's affairs.
-3-
<PAGE>
ALBERT MILSTEIN (48) has been a director of the Company since 1984 and has
been a partner with the law firm of Winston & Strawn since 1978. Winston &
Strawn renders legal services to the Company.
Class II nominees with terms expiring at the 1997 Annual Meeting:
GIL RAVIV (39) has been a director of the Company since its inception in
March 1979 and was Executive Vice President from July 1984 until his resignation
effective as of January 1, 1993. Dr. Raviv has been President of Snap
Laboratories Inc., an apnea and snoring analysis business, since October 1993.
Dr. Raviv received his Ph.D. in Electrical Engineering and Computer Sciences
from Northwestern University and his M.S. in Physics from the Hebrew University,
Jerusalem, Israel. Gil Raviv and Gabriel Raviv are brothers.
IRVING KUPFERBERG (68) has been a director of the Company since 1983 and has
been President of Goldkup Investments, Inc., a firm specializing in packaging
investments and syndications, since January 1986. Prior to his retirement on
December 31, 1985, Mr. Kupferberg had been a partner of the public accounting
firm of Kupferberg, Goldberg and Neimark since 1955.
The Board of Directors met four times during fiscal 1995. Each of the
directors attended at least 75 percent of the aggregate of all meetings of (i)
the Board of Directors and (ii) the committees thereof on which such director
served, held during their terms. The Board of Directors has an Audit Committee.
The Company does not have a Compensation Committee or a Nominating Committee.
The functions of the Audit Committee, which currently consists of Albert
Milstein and Irving Kupferberg, include the selection of the independent public
accountants, the review of the annual audit, the approval of non-audit
professional services performed by such accountants and the review of the scope
and adequacy of the Company's internal accounting controls. The Audit Committee
met once during fiscal 1995. In June 1994, the Board of Directors established a
Stock Option Committee, consisting of Irving Kupferberg and Albert Milstein, to
administer the Company's 1994 Stock Option Plan.
The Company is the beneficiary under a term life insurance policy, in the
amount of $1.5 million, on the life of Gabriel Raviv.
DIRECTOR COMPENSATION
Directors who are not salaried officers of the Company received fees of
approximately $2,000 per meeting. Directors have also received, and future
directors will be entitled to receive, certain stock options under the 1994
Stock Option Plan. See "Proposal 2: Approval of Amendment to the 1994 Stock
Option Plan--Directors' Options."
-4-
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company to the Chief Executive Officer and
each other executive officer whose cash compensation exceeded $100,000 during
the fiscal year ended February 28, 1995, (the "named executive officers"), for
services rendered during the fiscal years ended February 28, 1995, February 28,
1994 and February 28, 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------
Name and All Other
Principal Position Year Salary Compensation
- - - ----------------------------------- ------------- ------------- ----------------
<S> <C> <C> <C>
Gabriel Raviv, Ph.D. 1995 $ 170,136 $ 7,620 (1)
President and Chief 1994 $ 155,347 $ 8,722 (2)
Executive Officer 1993 $ 152,833 $ 8,475 (3)
Thomas S. Lacy 1995 $ 109,178 $ 2,570 (4)
Vice President, 1994 $ 9,806(5)
Sales & Marketing
<FN>
- - - ------------------------
(1) Represents $3,255 paid by the Company for Dr. Raviv's automobile, a $1,365
split dollar life insurance premium paid by the Company for the benefit of
Dr. Raviv and a $3,000 discretionary contribution made on behalf of Dr.
Raviv by the Company to the 401(k) Plan. See "Transactions with
Management."
(2) Represents $3,265 paid by the Company for Dr. Raviv's automobile, a $2,230
split dollar life insurance premium paid by the Company for the benefit of
Dr. Raviv and a $3,227 discretionary contribution made on behalf of Dr.
Raviv by the Company to a profit sharing plan (the "401(k) Plan") under
Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"). See "Transactions with Management."
(3) Represents $3,115 paid by the Company for Dr. Raviv's automobile, a $2,106
split dollar life insurance premium paid by the Company for the benefit of
Dr. Raviv and a $3,254 discretionary contribution made on behalf of Dr.
Raviv by the Company to the 401(k) Plan. See "Transactions with
Management."
(4) Represents payments for Mr. Lacy's automobile.
(5) Mr. Lacy's employment with the Company commenced in January 1994.
</TABLE>
The following table sets forth certain information with respect to
individual grants of stock options during the fiscal year ended February 28,
1995 to each of the named executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------
% of Total
Options/SARs
Granted to Exercise or
Options/ SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date
- - - ------------------------ ------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Gabriel Raviv 30,000 44.2% $2.75 6/13/2004
Thomas S. Lacy (2) -- -- --
<FN>
- - - ------------------------
(1) On May 24, 1995, Dr. Raviv was granted options to pruchase 40,000 shares of
Common Stock at an exercise price of $2.6125 per share.
(2) Mr. Lacy was not granted any stock options during the fiscal year ended
February 28, 1995. On May 17, 1995, Mr. Lacy was granted options to
purchase 5,000 shares of Common Stock at an exercise price of $2.125 per
share.
</TABLE>
-5-
<PAGE>
The following table sets forth certain information with respect to each
exercise of stock options during the fiscal year ended February 28, 1995 by the
named executive officers and the number and value of unexercised options held by
the named executive officers as of February 28, 1995:
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised
Options/SARs In-the-Money
at Fiscal Options/SARs at
Year- End Fiscal Year-End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- - - ------------------------------------------------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Gabriel Raviv, Ph.D. 0 0 37,500/22,500 $117,188/$70,313
Thomas S. Lacy 0 0 1,500/16,500 $ 4,688/$51,563
</TABLE>
PROPOSAL 2: APPROVAL OF AMENDMENT TO THE 1994 STOCK OPTION PLAN
THE 1994 STOCK OPTION PLAN
In June 1994, the Board of Directors adopted, and in August 1994 the
shareholders approved, the 1994 Stock Option Plan (the "Plan") covering 450,000
shares of the Company's Common Stock pursuant to which employees, officers and
directors of, and consultants or advisers to, the Company and any subsidiary
corporations are eligible to receive incentive stock options ("incentive
options") within the meaning of Section 422 of the Code and/or options that do
not qualify as incentive options ("non-qualified options"). The Plan, which
expires in June 2004, is administered by the Board of Directors or the Stock
Option Committee of the Board of Directors, provided, however, that with respect
to "officers" and "directors," as such terms are defined for the purposes of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 ("Rule 16b-3"),
such Stock Option Committee shall consist of "disinterested" directors as
defined in Rule 16b-3, but only if at least two directors meet the criteria of
"disinterested" directors as defined in Rule 16b-3. The purposes of the Plan are
to ensure the retention of existing executive personnel, key employees,
directors, consultants and advisors and to provide additional incentive by
permitting such individuals to participation in the ownership of the Company,
and the criteria to be utilized by the Board of Directors or Stock Option
Committee in granting options pursuant to the Plan will be consistent with these
purposes. The Plan provides for automatic grants of options to directors in the
manner set forth below under "--Directors' Options." The Company proposes to
amend the Plan to increase the aggregate number of options to purchase shares
Common Stock that may be granted to any person in a calendar year to 100,000
shares.
Options granted under the Plan may be either incentive options or
non-qualified options. Incentive options granted under the Plan are exercisable
for a period of up to 10 years from the date of grant at an exercise price which
is not less than the fair market value of the Common Stock on the date of the
grant, except that the term of an incentive option granted under the Plan to a
stockholder owning more than 10% of the outstanding Common Stock may not exceed
five years and its exercise price may not be less than 110% of the fair market
value of the Common Stock on the date of the grant. To the extent that the
aggregate fair market value, as of the date of grant, of the shares for which
incentive options become exercisable for the first time by an optionee during
the calendar year exceeds $100,000, the portion of such option which is in
excess of the $100,000 limitation will be treated as a non-qualified option. As
amended by the Board of Directors in May 1995 subject to shareholder approval,
the aggregate number of shares of Common Stock that may be subject to options
granted to any person in a calendar year shall not exceed 100,000 shares of
Common Stock. Options granted under the Plan to officers, directors or employees
of the Company may be exercised only while the optionee is employed or retained
by the Company or within 90 days of the date of termination of the employment
relationship or directorship. However, options which are exercisable at the time
of termination by reason of death or permanent disability of the optionee may be
exercised within 12
-6-
<PAGE>
months of the date of termination of the employment relationship or
directorship. Upon the exercise of an option, payment may be made by cash or, if
provided in the option agreement, in shares of the Company's Common Stock having
a fair market value equal to the exercise price of the options, or any other
means that the Board of Directors or the Stock Option Committee determines. No
option may be granted under the Plan after June 2004.
Options may be granted only to such employees, officers and directors of,
and consultants and advisors to, the Company or any subsidiary of the Company as
the Board of Directors or the Stock Option Committee shall select from time to
time in its sole discretion, provided that only employees of the Company or a
subsidiary of the Company shall be eligible to receive incentive options. The
number of employees, offices and directors of the Company eligible to receive
grants under the Plan is approximately 80 persons. The number of consultants and
advisors to the Company eligible to receive grants under the Plan is not
determinable. An optionee may be granted more than one option under the Plan.
The Board of Directors or the Stock Option Committee will, in its discretion,
determine (subject to the terms of the Plan) who will be granted options, the
time or times at which options shall be granted, and the number of shares
subject to each option, whether the options are incentive options or
non-qualified options, and the manner in which options may be exercised. In
making such determination, consideration may be given to the value of the
services rendered by the respective individuals, their present and potential
contributions to the success of the Company and its subsidiaries and such other
factors deemed relevant in accomplishing the purpose of the Plan.
Under the Plan, the optionee has none of the rights of a stockholder with
respect to the shares issuable upon the exercise of the option until such shares
shall be issued upon such exercise. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to the date of
exercise, except as provided in the Plan. During the lifetime of the optionee,
an option shall be exercisable only by the optionee. No option may be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of decent and distribution.
The Board of Directors may amend or terminate the Plan except that
stockholder approval is required to effect a change so as to increase the
aggregate number of shares that may be issued under the Plan (unless adjusted to
reflect such changes as a result of a stock dividend, stock split,
recapitalization, merger or consolidation of the Company), to modify the
requirements as to eligibility to receive options, to increase materially the
benefits accruing to participants or as otherwise may be required by Rule 16b-3
or Section 422 of the Code. No action taken by the Board may materially and
adversely affect any outstanding option grant without the consent of the
optionee.
Under current tax law, there are no Federal income tax consequences to
either the employee or the Company on the grant of non-qualified options if
granted under the terms set forth in the Plan. Upon exercise of a non-qualified
option, the excess of the fair market value of the shares subject to the option
over the option price (the "Spread") at the date of exercise is taxable as
ordinary income to the optionee in the year it is exercised and is deductible by
the Company as compensation for Federal income tax purposes, if Federal income
tax is withheld on the Spread. However, if the shares are subject to vesting
restrictions conditioned on future employment or the holder is subject to the
short-swing profits liability restrictions of Section 16(b) of the Securities
Exchange Act of 1934 (i.e., is an executive officer or director of the Company)
then taxation and measurement of the Spread is deferred until such restrictions
lapse, unless a special election is made under Section 83(b) of the Code to
report such income currently without regard to such restrictions. The optionee's
basis in the shares will be equal to the fair market value on the date taxation
is imposed and the holding period commences on such date.
Incentive option holders incur no regular Federal income tax liability at
the time of grant or upon exercise of such option, assuming that the optionee
was an employee of the Company from the date the option was granted until 90
days before such exercise, and subject to the discussion below relating to
exercise by surrender of Common Stock. However, upon exercise, the Spread must
be added to regular Federal taxable income in computing the optionee's
"alternative minimum tax" liability. An optionee's basis in the shares received
on exercise of an incentive stock option will be the option price of such shares
for regular income tax purposes. No deduction is allowable to the Company for
Federal income tax purposes in connection with the grant or exercise of such
option.
-7-
<PAGE>
If the holder of shares acquired through exercise of an incentive option
sells such shares within two years of the date of grant of such option or within
one year from the date of exercise of such option (a "Disqualifying
Disposition"), the optionee will realize income taxable at ordinary rates.
Ordinary income is reportable during the year of such sale equal to the
difference between the option price and the fair market value of the shares at
the date the option is exercised, but the amount includable as ordinary income
shall not exceed the excess, if any, of the proceeds of such sale over the
option price. In addition to ordinary income, a Disqualifying Disposition may
result in taxable income subject to capital gains treatment if the sales
proceeds exceed the optionee's basis in the shares (i.e., the option price plus
the amount includable as ordinary income). The amount of the optionee's taxable
ordinary income will be deductible by the Company in the year of the
Disqualifying Disposition.
Shares of Common Stock delivered to pay for shares purchased on the exercise
of an incentive option or non-qualified option will be valued at the fair market
value at the date of exercise. In general, no gain or loss will be recognized
with respect to the previously owned shares ("old shares") so surrendered, and
the number of the shares received on exercise of the option ("new shares") which
is equal to the number of old shares surrendered will have a basis and holding
period equal to the previous basis and holding period of the old shares
surrendered. New shares received in excess of the number of old shares
surrendered, which will be equal in value to the Spread ("excess new shares")
will be treated as follows:
(a) if the option exercised was an incentive option, the value of the
new shares will not be taxed at exercise (subject to possible application
of the alternative minimum tax) and the excess new shares will have a
zero basis and a holding period beginning on the exercise date (if the
new shares are later disposed of in a Disqualifying Disposition, the
shares with the lowest basis are deemed to be the first disposed of);
(b) if the option exercised was a non-qualified option, the fair market
value of the excess new shares will be taxable compensation income to the
optionee as of the date of exercise and such new shares will have a basis
equal to such fair market value and a holding period beginning on the
exercise date (unless the shares received are subject to
employment-related vesting restrictions, in which case such taxation and
holding period will be deferred until such restrictions lapse, and the
amount of income realized and the basis of such new shares will be
measured by their fair market value at the later date).
Exceptions to the rule that no gain or loss is recognized with respect to
the surrender of the surrender of the old shares on exercise of an option will
apply where; (i) the old shares were acquired on exercise of an incentive
option, the holding periods to avoid a Disqualifying Disposition have not been
met, and the option being exercised is also an incentive option, in which event
the surrender of such old shares will be taxed as a Disqualifying Disposition;
and (ii) where the old shares were subject to employment-related vesting
restrictions which have not expired, in which case taxable compensation income
may be realized with respect to the old shares, unless the option being
exercised is a non-qualified option and the new shares are subject to the same
restrictions as the old shares. These tax consequences are in addition to those
described in subparagraphs (a) and (b) above.
At the time of sale of shares received upon exercise of an option (other
than a Disqualifying Disposition of shares received upon the exercise of an
incentive option), any gain or loss is long-term or short-term capital gain or
loss, depending upon the holding period. The holding period for long-term
capital gain or loss treatment is more than one (1) year.
The foregoing is not intended to be an exhaustive analysis of the tax
consequences relating to stock options issued under the Plan. For instance, the
treatment of options under state and local tax laws, which is not described
above, may differ from the treatment for Federal income tax purposes.
DIRECTORS' OPTIONS
The provisions of the Plan provide for the automatic grant of stock options
to purchase shares of Common Stock ("Director Options") to directors of the
Company. On June 14, 1994, each director received a Director Option to purchase
3,000 shares of Common Stock at an exercise price of $2.75 per share, except for
Craig Moore, who received a Director Option to purchase 9,000 shares of Common
Stock at an exercise
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price of $2.75 per share (3,000 of such options were granted to replace the same
number of options which were inadvertantly granted under the 1983 Plan
subsequent to its termination and which were rescinded by the Company) and
Gabriel Raviv, who received a Director Option to purchase 30,000 shares of
Common Stock at an exercise price of $3.03 per share. The exercise price of all
of such options was the fair market value of the Common Stock on the date of
grant, except for the exercise price of the options granted to Gabriel Raviv,
which was 110% of the fair market value of the Common Stock on the date of
grant.
Future directors of the Company will be granted a Director Option to
purchase 3,000 shares of Common Stock on the date that such person is first
elected or appointed a director ("Initial Director Option"). Further, commencing
on the day immediately following the date of the annual meeting of shareholders
for the Company's fiscal year ending February 28, 1995, each director will be
granted a Director Option to purchase 2,000 shares of Common Stock ("Automatic
Grant"), other than directors who received an Initial Director Option since the
last Automatic Grant, on the day immediately following the date of each annual
meeting of shareholders, as long as such director is a member of the Board of
Directors. The exercise price for each share subject to a Director Option shall
be equal to the fair market value of the Common Stock on the date of grant,
except for directors who receive incentive options and who own more than 10% of
the outstanding Common Stock, in which case the exercise price shall be not less
than 110% of the fair market value on the date of grant. Director Options are
exercisable in four equal annual installments, except for 3,000 of the Director
Options granted to Craig Moore, which vest as follows: 750 shares on December
15, 1994, 750 shares on June 15, 1995, 750 shares on June 15, 1996 and 750
shares on June 15, 1997. Director Options will expire the earlier of 10 years
after the date of grant or 90 days after the termination of the director's
service on the Board of Directors, except for directors who receive incentive
options and who own more than 10% of the outstanding Common Stock, in which case
such options will expire the earlier of 5 years after the date of grant or 90
days after the termination of the director's service on the Board of Directors.
PROPOSED AMENDMENT TO THE PLAN
As originally adopted, the Plan provides that the aggregate number of shares
of Common Stock that may be subject to options granted to any person in a
calendar year shall not exceed 30,000 shares of Common Stock. The Board of
Directors has approved, subject to shareholder approval, a proposal to amend the
Plan so that the aggregate number of shares of Common Stock that may be subject
to options granted to any person in a calendar year shall not exceed 100,000
shares of Common Stock.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
In May 1986, the Company entered into an employment agreement (the
"Agreement") with Gabriel Raviv, Ph.D. The Agreement is for two-year renewable
periods and provides for a salary with annual cost of living or other
adjustments, benefits and bonuses as the Board of Directors may determine which,
during fiscal 1995, aggregated $174,756. The Agreement provides for Dr. Raviv's
right to terminate his employment upon any change in control of the Company and
to receive upon such termination compensation approximately equal to three times
the present value of the average annual compensation received by Dr. Raviv
during the five years preceding the year in which the change in control occurs,
less any compensation arising out of any stock option or the value of life
insurance policies transferred to Dr. Raviv upon such termination. The Agreement
includes confidentiality and nondisclosure provisions and covenants not to
compete for one year after termination of employment.
In connection with his appointment as Vice President-Sales & Marketing of
the Company in January 1994, the Company agreed to pay to Thomas S. Lacy a
severance payment equal to six months salary if his employment with the Company
is terminated at any time, such severance payment to be based upon his minimum
annual salary at the time of any such termination.
In May 1986, the Company entered into an employment agreement with Gil
Raviv, Ph.D. on terms substantially identical to the terms of the employment
agreement entered into with Gabriel Raviv. On February 2, 1993, the Company and
Gil Raviv, Ph.D. entered into an Agreement and General Release in connection
with Dr. Raviv's resignation as Executive Vice President of the Company.
Pursuant to the terms
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of the Agreement and General Release, Dr. Raviv's employment agreement was
terminated as of January 1, 1993 and Dr. Raviv agreed to act as a consultant to
the Company for a period of six months and not to compete with the Company for a
period of 18 months. The Company agreed to make severance payments to Dr. Raviv
of $270,000 over a period of 18 months, to assign Dr. Raviv a split-dollar life
insurance policy valued at approximately $165,000, to continue to maintain and
pay the same medical, life (other than the split-dollar life insurance) and
disability insurance Dr. Raviv was receiving from the Company for 18 months and
to transfer to Dr. Raviv title to a Company car. The Company incurred a pretax
charge to earnings of approximately $450,000 in the quarter ended February 28,
1993 for these severance payments and related costs.
TRANSACTIONS WITH MANAGEMENT
In August 1985, the Company entered into a Stockholders' Agreement effective
June 1, 1985, as amended in April 1986, with Gabriel Raviv, Gil Raviv and
Charles Z. Weingarten. The Stockholders' Agreement, among other things, provided
that the Company purchase and maintain split-dollar life insurance, in the
amount of $1.5 million each on the lives of Gabriel Raviv and Gil Raviv.
Premiums paid by the Company are treated as non-interest bearing advances to the
insured for the policy. The initial proceeds of any death benefit are required
to be used to repay the indebtedness, and the balance of the insurance proceeds
are payable as designated by the insured. Pursuant to the terms of the Agreement
and General Release dated February 2, 1993 between the Company and Gil Raviv,
the Company transferred this life insurance policy to Gil Raviv in connection
with his resignation as Executive Vice President of the Company and provided Dr.
Raviv with severance and related compensation. See "Employment Contracts and
Termination of Employment and Change-In-Control Arrangements." The Stockholders'
Agreement was terminated pursuant to a Termination Agreement dated February 10,
1993 by and among Gabriel Raviv, Gil Raviv, Charles Z. Weingarten and the
Company. However, the Company continues to maintain the split-dollar life
insurance on the life of Gabriel Raviv. As of February 28, 1995, the amount
deemed loaned to Gabriel Raviv aggregated $215,479.
DELINQUENT SECTION 16(A) FILERS
To the Company's knowledge, there were no delinquent Section 16(a) filers
except as follows: Gabriel Raviv, the Company's President and Chief Executive
Officer, filed a late Form 4, Gil Raviv, Charles Z. Weingarten, M.D. and Craig
W. Moore, directors of the Company, each filed one late Form 4, and Irving
Kupferberg and Albert Milstein, directors of the Company, each filed a late Form
5.
GENERAL
Deloitte & Touche LLP served as the Company's independent auditors for the
fiscal year ended February 28, 1995. A representative of Deloitte & Touche LLP
will be present at the Annual Meeting with the opportunity to make a statement,
if he desires to do so, and will be available to respond to appropriate
questions. The Board of Directors of the Company has designated Deloitte &
Touche LLP as independent auditors for the current fiscal year.
The management of the Company does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, proxies
will be voted on these other matters in accordance with the best judgment of the
persons appointed to vote the proxies.
The Company will bear the cost of preparing, assembling and mailing all
proxy materials which may be sent to the shareholders in connection with this
solicitation. In addition to the solicitation of proxies by use of the mails,
officers and regular employees of the Company may solicit proxies, for no
additional compensation, by telephone. The Company does not expect to pay any
compensation for the solicitation of proxies.
The Annual Report of the Company for the fiscal year ended February 28, 1995
is being mailed with this proxy statement to shareholders entitled to vote at
the meeting. A copy of the Company's Annual Report on
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Form 10K-SB for its fiscal year ended February 28, 1995, as filed with the
Securities and Exchange Commission, will be furnished without charge to any
shareholder upon written request to Bio-logic Systems Corp., One Bio-logic
Plaza, Mundelein, Illinois 60060, Attn: Investor Relations.
SHAREHOLDER PROPOSALS
All proposals of shareholders intended to be presented at the Company's next
Annual Meeting of Shareholders must be received at the Company's executive
office no later than February 28, 1996, for inclusion in the proxy statement and
form of proxy related to that meeting.
By Order of the Board of Directors
Gabriel Raviv, Ph.D.,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Dated: June 28, 1995
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PROXY PROXY
BIO-LOGIC SYSTEMS CORP.
ONE BIO-LOGIC PLAZA
MUNDELEIN, ILLINOIS 60060
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Bio-Logic Systems Corp., a company organized
under the laws of the State of Delaware, hereby appoints Gabriel Raviv and
Charles Z. Weingarten as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of Common Stock of Bio-Logic Systems Corp. held of record by the
undersigned on June 27, 1995 A.M. Central Daylight on August 25, 1995, or at any
adjournment thereof.
Check here for address change / /
NEW ADDRESS:
---------------------------
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(Continued and to be signed and dated on reverse side)
<PAGE>
/x/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
1. To elect
FOR / /
WITHHOLD
AUTHORITY / /
Nominees: Gabe Raviv, Ph.D., Craig W. Moore
(INSTRUCTIONS: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, PRINT THAT
NOMINEE'S NAME ON THE LINE PRINTED BELOW.)
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2. To approve and ratify the amendment to / / / / / /
the Company's 1994 Stock Option Plan.
3. In their discretion, the proxies are
authorized to vote upon such other business
as may properly come before the meeting.
SIGNATURE(S) DATE
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When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
