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:
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2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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BIO-LOGIC(R)
SYSTEMS CORP.
One Bio-logic Plaza
Mundelein, Illinois 60060
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 14, 1996
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 14, 1996, at 10:00 A.M.
Central Daylight Time, for the following purposes:
1. To elect two Class I directors to hold office for a term of three years
and until their successors are elected and qualified; and
2 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 28, 1996 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, 1996
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PROXY STATEMENT
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 14, 1996,
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 28, 1996, are entitled to vote at the meeting. On the record
date, the Company had outstanding and entitled to vote 4,229,319 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. 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, 1996.
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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, 1996:
NAME OF BENEFICIAL AMOUNT AND NATURE OF PERCENT OF
HOLDER OR IDENTITY OF GROUP BENEFICIAL OWNERSHIP (1) CLASS (2)
- --------------------------- ------------------------ ------------
Gabriel Raviv, Ph.D. 307,612(3) 7.2%
c/o Bio-logic Systems Corp.
One Bio-logic Plaza
Mundelein, IL 60060
Gil Raviv, Ph.D. 538,937(4) 12.7%
933 Sutton Drive
Northbrook, IL 60062
Charles Z. Weingarten, M.D. 336,434(5) 7.9%
c/o Bio-logic Systems Corp.
One Bio-logic Plaza
Mundelein, IL 60060
Bernard Levine, M.D. 245,762 5.8%
c/o New York Medical Center
Department of Medicine
550 First Avenue
New York, NY 10016
Irving Kupferberg 18,000(7) *
Craig W. Moore 6,750(8) *
Albert Milstein 33,500(9) *
Thomas S. Lacy 6,250(10) *
All officers and directors as a group
(8 persons) 1,249,358(11) 29.1%
- ----------------------
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(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 4,229,319 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) 17,500 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) 39,500 shares underlying options which
are not exercisable within 60 days.
(4) Includes (i) 2,250 shares underlying immediately exercisable options,
(ii) 93,000 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) 2,750 shares
underlying options which are not exercisable within 60 days.
(5) Includes 11,250 shares underlying immediately exercisable options. Does
not include (i) 2,750 shares underlying options which are not
exercisable within 60 days and (ii) 40,000 shares owned by a
corporation of which Dr. Weingarten has approximately 22% of the voting
power.
(6) Based on a Schedule 13D filed by Dr. Levine.
(7) Includes 11,250 shares underlying immediately exercisable options, but
excludes 2,750 shares underlying options which are not exercisable
within 60 days.
(8) Includes 6,750 shares underlying immediately exercisable options but
does not include 4,250 shares underlying options which are not
exercisable within 60 days.
(9) Includes 750 shares owned by Mr. Milstein's son and 11,250 shares
underlying immediately exercisable options, but excludes 2,750 shares
underlying options which are not exercisable within 60 days.
(10) Includes 5,250 shares underlying immediately exercisable options, but
excludes 15,750 shares underlying options which are not exercisable
within 60 days.
(11) Includes 67,375 shares underlying options which are exercisable within
60 days, but does not include 76,125 shares underlying options which
are not exercisable within 60 days.
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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 I directors expires at the 1996 Annual Meeting. The accompanying form of
proxy will be voted for the election as director of the two Class I 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 I DIRECTORS WITH TERMS EXPIRING AT THE 1996 ANNUAL MEETING:
Charles Z. Weingarten (57) 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 at which time he became Vice President-Medical
Products. Dr. Weingarten resigned as Vice President - Medical Products effective
August 1995. 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.
Albert Milstein (49) 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 (40) 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 (69) 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.
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CLASS III DIRECTORS WITH TERMS EXPIRING AT THE 1998 ANNUAL MEETING:
Gabriel Raviv (45) 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 (51) has been a director of the Company since 1992 and
has been the Chairman of the Board and Chief Executive Officer of Everest Health
Care Services Corp., a provider of dialysis to patients with renal failure,
since October 1995. From March 1986 through September 1995, Mr. Moore was
Executive Vice President of West Suburban Kidney Center, S.C., a renal dialysis
business. 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.
The Board of Directors met four times during fiscal 1996. 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 Craig Moore
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 1996. 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 $1.75 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 during fiscal 1996. Directors have also
received, and future directors will be entitled to receive, certain stock
options under the 1994 Stock Option Plan. See "1994 Stock Option Plan-Directors'
Options."
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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 29, 1996, (the "named executive officers"), for
services rendered during the fiscal years ended February 29, 1996, February 28,
1995 and February 28, 1994:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
------------------------------------------
NAME AND ALL OTHER
PRINCIPAL POSITION YEAR SALARY COMPENSATION
------------------ ---- ------ ------------
Gabriel Raviv, Ph.D. 1996 $170,450 $7,005 (1)
President and Chief 1995 $170,136 $7,620 (2)
Executive Officer 1994 $155,347 $8,722 (3)
Thomas S. Lacy 1996 $123,000 $3,570 (4)
Vice President, 1995 $109,178 $2,570 (4)
Sales & Marketing 1994 $9,806 (5)
- -----------
(1) Represents $2,570 paid by the Company for Dr. Raviv's automobile, a
$1,435 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 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."
(2) 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."
(3) 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 $3,227 discretionary contribution made on
behalf of Dr. Raviv by the Company to the 401(k) Plan.
See "Transactions with Management."
(4) Represents payments for Mr. Lacy's automobile.
(5) Mr. Lacy's employment with the Company commenced in January 1994.
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The following table sets forth certain information with respect to
individual grants of stock options during the fiscal year ended February 29,
1996 to each of the named executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------
<TABLE>
% OF TOTAL
OPTIONS/SARS
GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) EXPIRATION DATE
---- ----------- ----------- ------------ ---------------
<S> <C> <C> <C> <C>
Gabriel Raviv 40,000 36.5% $2.61 5/24/00
2,000 1.8% $5.23 8/28/00
Thomas S. Lacy 5,000 4.6% $2.13 5/17/05
- -----------
</TABLE>
The following table sets forth certain information with respect to each
exercise of stock options during the fiscal year ended February 29, 1996 by the
named executive officers and the number and value of unexercised options held by
the named executive officers as of February 29, 1996:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FISCAL OPTIONS/SARS AT
YEAR-END FISCAL YEAR ENDED
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Gabriel Raviv, Ph.D. 45,000 $133,875 0/57,000 $ 0/97,550
Thomas S. Lacy 0 0 4,500/18,500 $7,875/30,750
</TABLE>
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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."
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. 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 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
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of the Company or a subsidiary of the Company shall be eligible to receive
incentive options. The number of employees, officers 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
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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.
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 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
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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 price of $2.75 per share (3,000 of such options
were granted to replace the same number of options which were inadvertently
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
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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.
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 1996, aggregated $174,505. 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 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.
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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 a $1,750,000 split-dollar
life insurance on the life of Gabriel Raviv. As of February 29, 1996, the amount
deemed loaned to Gabriel Raviv aggregated $291,005.
DELINQUENT SECTION 16(A) FILERS
To the Company's knowledge, there were no delinquent Section 16(a)
filers except as follows: Gil Raviv, a director of the Company, filed one late
Form 4 and Gabriel Raviv, President and a director of the Company, filed a late
Form 5.
GENERAL
Grant Thornton LLP served as the Company's independent auditors for the
fiscal year ended February 29, 1996. A representative of Grant Thornton 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 Grant Thornton 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.
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The Annual Report of the Company for the fiscal year ended February 29,
1996 is being mailed with this proxy statement to shareholders entitled to vote
at the meeting. A copy of the Company's Annual Report on Form 10K-SB for its
fiscal year ended February 29, 1996, 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, 1997, 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, 1996
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PROXY PROXY
BIO-LOGIC SYSTEMS CORP.
ONE BIO-LOGIC PLAZA
MUNDELEIN, ILLINOIS 60060
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Bio-logic System 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 Biologic Systems Corp. held of record
by the undersigned on June 28, 1996 A.M. Central Daylight on August 14, 1996, or
at any adjournment thereof.
NEW ADDRESS:________________________________
Check here for ____________________________________________
address change
--------------------------------------------
--------------------------------------------
(Continued and to be signed and dated on
reverse side)
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X
PLEASE MARK YOUR VOTES IN THIS EXAMPLE.
THIS PROXY, WHN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIDGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
WITHHOLD
FOR AUTHORITY Nominees: Charles Z. Weingarten, M.D.,
Albert Milstein
1. To elect
2 In their discretion, the proxies are
authorized to vote upon such other
business as may properly come before
the meeting.
(Instructions: To withhold authority for any
individual nominee, print that nominee's name
on the line printed below.)
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SIGNATURE(s)_______________________________________DATE_______________
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 coprorartion, pleease sign in full corporate name by President or
other authorized officer. If a partnership, please signn in partnership name by
authroized person.
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