Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
IN ACCORDANCE WITH RULE 201 OF REGULATION S-T,
THIS PROXY STATEMENT IS BEING FILED IN PAPER
PURSUANT TO A TEMPORARY HARDSHIP EXEMPTION.
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
Logic Devices Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), 14a-6(j)(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 Rule 14-a-
6(i)(4) and 0-11
[X] 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 registrant statement number, or the Form
or Schedule and the date of its filing.
<PAGE>
LOGIC DEVICES INCORPORATED
628 East Evelyn Avenue
Sunnyvale, California 94086
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 13, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Logic Devices Incorporated, a California corporation (the
"Company"), will be held at the offices of Logic Devices
Incorporated, 628 East Evelyn Avenue, Sunnyvale, California
94086, on June 13, 1995 at 1:30 p.m., local time, for the
following purposes:
1. To elect a Board of Directors;
2. To ratify the issuance of warrants to the non-employee
members of the Board of Directors; and
3. To transact such other business as may properly come
before the meeting.
Shareholders of record at the close of business on April 18,
1995, are entitled to notice of and to vote at the Annual Meeting
or any adjournment thereof.
By Order of the Board of Directors,
TODD J. ASHFORD
Secretary
Sunnyvale, California
May 8, 1995
THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL
SHAREHOLDERS TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN AS
PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN THE ACCOMPANYING REPLY
ENVELOPE. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR
PROXIES AND VOTE IN PERSON.
<PAGE>
LOGIC DEVICES INCORPORATED
628 East Evelyn Avenue
Sunnyvale, California 94086
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
June 13, 1995
INTRODUCTION
The accompanying Proxy is solicited by the Board of
Directors (the "Board") of Logic Devices Incorporated, a
California corporation (the "Company"), for use at the Annual
Meeting of Shareholders of the Company to be held on the date, at
the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders and at any
adjournments thereof. The Company's principal executive offices
are located at 628 East Evelyn Avenue, Sunnyvale, California
94086, and its telephone number is (408) 737-3300. Shareholders
of record at the close of business on April 18, 1995 are entitled
to notice of and to vote at the meeting. This Proxy Statement and
the accompanying Proxy are being mailed to shareholders on or
about May 8, 1995.
THE MEETING
On April 18, 1995, there were issued and outstanding
4,855,417 shares of common stock, no par value ("Common Stock"),
held by approximately 778 holders of record. Each share of Common
Stock entitles the holder thereof to one vote on all matters
submitted to a vote of shareholders, except for the election of
directors in which holders of Common Stock may cumulate their
votes.
The presence in person or by proxy of the holders of a
majority of the Company's outstanding shares of Common Stock will
constitute a quorum. The affirmative vote of a majority of the
outstanding shares of Common Stock represented and voting at the
meeting, in person or by proxy, (which shares voting
affirmatively also constitute at least a majority of the quorum)
will be necessary for the taking of all action which may properly
come before the meeting. Abstentions are considered present at
the Annual Meeting and counted in determining whether a quorum is
present. Shares represented by broker non-votes will be
considered present at the Annual Meeting and will be counted in
determining whether a quorum is present. With respect to all
matters, abstentions and broker non-votes will not be counted in
determining the number of shares voted for or against any
proposal.
Shareholders are permitted to vote cumulatively in the
election of directors, and the candidates receiving the highest
number of affirmative votes will be elected. Cumulative voting
entitles each shareholder to cast a number of votes equal to the
number of directors to be elected multiplied by the number of
shares owned by such shareholder and permits each shareholder to
cumulate such votes for one candidate or distribute such votes
among the candidates in such proportion as the shareholder may
determine. In order to vote cumulatively a shareholder must give
notice of his intention to cumulate votes by proxy or at the
meeting, and all candidates must be placed in nomination prior to
the voting. After any shareholder has properly given such notice,
every shareholder will be entitled to cumulate his votes in the
election of directors.
The named proxies do not intend to give notice of their
intention to cumulate their votes, but they may elect to do so in
the event of a contested election or any other unexpected
circumstances. Discretionary authority to cumulate votes is being
solicited hereby, including the authority to cumulate votes for
all or fewer than all of the nominees, in the discretion of the
persons named as proxies. See "Election of Directors."
Proxies and Proxy Solicitation
All shares of Common Stock represented by properly executed
proxies will be voted at the meeting in accordance with the
directions marked on the proxies, unless such proxies previously
have been revoked. If no directions are indicated, the proxies
will be voted for the election of each nominee named below under
"Election of Directors" in such cumulative proportions as the
proxies determine, in their sole discretion. If any other
matters are properly presented at the meeting for action, which
is not presently anticipated, the proxy holders will vote the
proxies (which confer discretionary authority upon such holders
to vote on such matters) in accordance with their best judgment.
Each proxy executed and returned by a shareholder may be revoked
at any time before it is voted by timely submission of written
notice of revocation or by submission of a duly executed proxy
bearing a later date (in either case directed to the Secretary of
the Company), or if a shareholder is present at the meeting, he
may elect to vote his shares personally.
In addition to solicitation by mail, certain directors,
officers and other employees of the Company, not specially
employed for this purpose, may solicit proxies, without
additional remuneration therefor, by personal interview, mail,
telephone or telegram. The Company will also request brokers and
other fiduciaries to forward proxy soliciting material to the
beneficial owners of shares of Common Stock which are held of
record by such brokers and fiduciaries and will reimburse such
persons for their reasonable out-of-pocket expenses.
<PAGE>
ELECTION OF DIRECTORS
At the meeting, a Board of four Directors is to be elected.
Due to the retirement of the Company's Senior Vice President and
concurrent resignation of such individual from the Board, there
is currently one vacancy on the Board. The Board is interested
in considering qualified candidates, and shareholders are invited
to write to the Board regarding potential candidates. See
"Election of Directors--Information Concerning the Board of
Directors." Each director elected at the meeting will hold office
until the next annual meeting of shareholders of the Company or
until his respective successor is duly elected and qualified. See
"The Meeting."
The Board has nominated and it is the intention of the
persons named as proxies in the enclosed proxy, unless otherwise
instructed, to vote for the election of the nominees named below,
each of whom has consented to serve as a director if elected. All
of the nominees have previously served as directors of the
Company. The proxies solicited hereby will not be voted for a
greater number of persons than the number of nominees named.
Information Concerning Nominees for Election as Directors
The following information is furnished with respect to each
nominee:
Year
First Principal Occupation
Nominee Age Elected Other Directorships (1)
Howard L. Farkas 71 1983 Mr. Farkas is Chairman of the Board of the
Company and has been a director since
1983. Mr. Farkas has been part owner of
and a broker with Farkas Group, Inc., a
commercial real estate company, since
1981. He has been a business advisor to
Mr. S.A. Hellerstein, trustee of the
Farkas Trusts, and Mr. Hellerstein's
predecessor as Trustee, since 1964. He
serves as a director of Synthetech, Inc.,
Power Cell, Inc. and Acquisition
Industries, Inc. Mr. Farkas is a vice
president of G.A.S. Corp., a privately
held corporation which serves as the
corporate general partner of Gas
Acquisition Services Limited Partnership.
On June 27, 1990, such limited partnership
sought protection under Chapter 11 of the
federal bankruptcy laws. On September 23,
1992, Mr. Farkas filed for personal
protection under Chapter 7 of the federal
bankruptcy laws.
William J. Volz 47 1983 Mr. Volz is a founder of the Company and
has been a director since its inception.
Mr. Volz has been President and principal
operating officer of the Company since
December 1987. He served as the
Company's Vice President of Engineering
from August 1983 to December 1987.
Burton W. Kanter 64 1983 Mr. Kanter has served as a director of the
Company since 1983. He is Chief Executive
Officer of Walnut Capital Corp., a private
venture capital firm and small business
investment company. He is of counsel to
the law firm of Neal Gerber & Eisenberg in
Chicago. He serves as a director of
HealthCare COMPARE Corp., Scientific
Measurement Systems, Inc., Channel America
LPTV Holdings, Inc. and PowerCell-Inc.
Albert Morrison, Jr 56 1983 Mr. Morrison has served as a director of
the Company since 1983 and has been
President of Morrison Brown Argiz &
Company, P.C., a certified public
accounting firm in Miami, Florida, since
1969.
(1) Only directorships of issuers with a class of securities
registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or subject to the requirements of Section 15(d)
of that Act or directorships of issuers registered as
investment companies under the Investment Company Act of
1940 are listed in the above table.
Information Concerning the Board of Directors
The Board has an Audit Committee and a Compensation
Committee. Presently, the members of the Audit Committee are
Howard L. Farkas, Burton W. Kanter and Albert Morrison, Jr., and
the members of the Compensation Committee are Howard L. Farkas,
William J. Volz and Burton W. Kanter.
The functions of the Audit Committee include reviewing the
independence of the Company's independent auditors, recommending
to the Board the engagement and discharge of independent
auditors, reviewing with the independent auditors the plan and
results of auditing engagements, reviewing the scope and adequacy
of internal accounting controls and directing and supervising
special investigations. The Audit Committee held one meeting
during fiscal 1994. All members of the Audit Committee were
present at the meeting
The functions of the Compensation Committee include
reviewing and making recommendations to the Board with respect to
the compensation of officers and other employees of the Company
and establishing employee benefit programs. The Compensation
Committee held one meeting during fiscal 1994. All members of
the Compensation Committee were present at the meeting.
The Board has not designated a Nominating Committee; rather,
the Board as a whole performs the functions which would otherwise
be delegated to such committee. In recommending board
candidates, the Board seeks individuals of proven judgement and
competence and considers such factors as anticipated
participation in Board actions, education, geographic location
and special talents or attributes. Shareholders who wish to
suggest qualified candidates should write to the Board stating
in detail the qualifications of such persons for consideration.
The Board held three meetings during fiscal 1994. All
members of the Board attended each meeting during the year except
for Mr. Morrison who attended only one of the meetings personally
and participated in one of the other meetings by conference
telephone call.
Directors and Executive Officers
The following is a list of the directors and executive officers
of the Company as of December 31, 1994, all of whom are elected
annually:
Positions Held
Name Age With the Company
William J. Volz 47 President
Director
Todd J. Ashford 38 Chief Financial Officer
Secretary
Antony Bell 56 Vice President/Technology
William Jackson 46 Vice President/Manufacturing
Howard L. Farkas 71 Chairman of the Board
Burton W. Kanter 64 Director
Albert Morrison, Jr.56 Director
Mr. Volz is a founder of the Company. He has served as a
director since its inception and has been the President of the
Company since December 1987. Mr. Volz served as the Company's
Vice President of Engineering from 1983 to 1987. He was
previously employed by Texas Instruments, Inc., Mostek
Corporation, and E-Systems, Inc.
Mr. Ashford joined the Company in 1984 as Director of
Finance and Administration. Since 1985, Mr. Ashford has served
as the Company's Chief Financial Officer. Mr. Ashford was
previously employed by W.R. Grace & Company, Inc.
Mr. Bell joined the Company in 1988 as Vice President of
Technology. From August 1987 to 1988, Mr. Bell served as a
consultant to the Company. Mr. Bell was previously employed by
ECAD, Inc., and VLSI Design Associates.
Mr. Jackson joined the Company in 1990. Before joining the
Company, Mr. Jackson held various engineering and management
positions at Advanced Micro Devices ("AMD") and Monolithic
Memories Inc. ("MMI"). Prior to AMD and MMI, he was employed by
Raytheon Corporation, Litronix Corporation, and Western Electric.
Mr. Jackson was appointed Vice President of Manufacturing in
1992.
Mr. Farkas is Chairman of the Board of the Company and has
been a director since 1983. Mr. Farkas has been part owner of
and a broker with Farkas Group, Inc., a commercial real estate
company, since 1981. He has been a business advisor to Mr. S. A.
Hellerstein, trustee of the Farkas Trusts, and Mr. Hellerstein's
predecessor since 1964. He serves as a director of Synthetech,
Inc., Power Cell, Inc. and Acquisition Industries, Inc. Mr.
Farkas is vice president of G.A.S. Corp., a privately held
corporation which serves as the corporate general partner of Gas
Acquisition Services Limited Partnership. On June 27, 1990, such
limited partnership sought protection under Chapter 11 of the
federal bankruptcy laws. On September 22, 1992, Mr. Farkas filed
for personal protection under Chapter 7 of the federal bankruptcy
laws.
Mr. Kanter has served as a director of the Company since
1983. He is the Chief Executive Officer and a director of Walnut
Capital Corp., a private venture capital firm and small business
investment company, and a director of Walnut Financial Services,
Inc., the parent of Walnut Capital Corp. He is of counsel to the
law firm of Neal Gerber & Eisenberg in Chicago. He serves as a
director of HealthCare COMPARE Corp., Scientific Measurement
Systems, Inc., Channel America LPTV Holdings, Inc. and PowerCell-
Inc.
Mr. Morrison has served as a director since 1983 and has
been President of Morrison Brown Argiz & Company, P.C., a
certified public accounting firm in Miami, Florida, since 1969.
<PAGE>
RATIFICATION OF DIRECTOR WARRANT GRANTS
On February 15, 1995, the three non-employee directors were
granted warrants to purchase an aggregate of 220,000 shares of
the Company's Common Stock. The exercise price is $2.5625 per
share which is the last reported transaction price on the grant
date. Mr. Farkas and Mr. Kanter each received warrants to
purchase 100,000 shares of the Company's Common Stock for their
services as directors and members of the Board's Executive
Committee and Mr. Morrison received warrants to purchase 20,000
shares of the Company's Common Stock for his services as an
outside director to the Company's Board of Directors. The
warrants were approved at a meeting of the Board of Directors on
February 15, 1995. Mr. Volz was not present at the meeting.
Given that these individuals are long-standing members of
the Board of Directors and Messrs. Farkas and Kanter are long-
standing member of the Executive Committee and have received no
compensation in their capacities as such in over ten years, it
was believed appropriate to grant them warrants to purchase the
Company's stock based on the stock's last reported transaction
price on the date of grant. In this fashion, the value of the
warrants, and therefore , the interests of the warrantholders,
are tied to the performance of the stock. It is believed that
such arrangements serve to reinforce the goals of furthering
shareholder objectives through enhancement of stock value.
Ratification of the warrant grants to the non-employee
directors requires the affirmative vote of a majority of the
shares represented, whether in person or by proxy, and voting at
the meeting (which shares voting affirmatively also constitute at
least a majority of the quorum). The Directors recommend that
shareholders vote FOR the ratification of the warrant grants to
the non-employee directors, and it is the intention of the
persons named as proxies in the enclosed proxy, unless otherwise
instructed, to vote for ratification.
The warrants have a duration of five years and expire on
February 15, 2000. The warrants as well as the shares of Common
Stock issuable upon exercise of the warrants will constitute
restricted securities for purposes of the Securities Act of 1933,
as amended (the "Act"), and cannot be sold or otherwise
transferred in the absence of registration under the Act and all
other applicable securities laws unless an exemption from the
registration provisions of the Act and all other applicable
securities laws is available and the Company receives a
satisfactory opinion of counsel as to such exemption. The
Company has granted the holders of the warrants certain
registration rights whereby the holders of a majority of the
shares of Common Stock issued or issuable to the holders upon
exercise of the warrants can request that the Company register
the securities at Company expense. Such demand right must be
exercised on or prior to February 15, 2000. The warrantholders
also have the right to "piggyback" onto certain other
registrations proposed or undertaken by the Company; provided,
however, that they have agreed not to participate in any
registration requested by the holders of shares of Common Stock
issued to Star Semiconductor Corporation ("Star") as part of an
acquisition by the Company of certain of the assets of Star
unless otherwise agreed by the holders of a majority of the
shares issued to Star.
In the event the Company issues any shares of its Common
Stock for a consideration per share less than the exercise price
of the warrants issued to the non-employee directors, the terms
of the warrants provide for an adjustment of the exercise price
to such issuance price. Comparable adjustments are made in the
event of the issuance of options or convertible securities where
the price per share for which the Common Stock is issuable upon
the exercise of the options or conversion of the securities is
less than the exercise price in effect immediately prior to the
option grant or convertible securities issuance. Notwithstanding
the foregoing, no exercise price adjustment will be made in the
case of up to 250,000 shares issuable pursuant to employee stock
option plans and 75,000 shares which have been issued to Star.
In paying the exercise price , a warrantholder may utilize
any one or more of the following options: (a) cash payment, (b)
offset of the other amounts owed to the holder by the Company,
(c) delivery of stock certificates evidencing shares of the
Company's Common Stock with a value (based on the average of the
closing bid and ask price for the Company's Common Stock over the
five trading days immediately preceding delivery) equal to the
exercise price or (d) on a "net issuance" basis. "Net issuance"
allows purchase without cash and takes into account the value of
the shares (determined as set forth in (c) of the preceding
sentence) at the time the warrants are being exercised so as to
reduce the number of shares received by the holder. For
instance, if the value of the shares is three times the exercise
price, the holder will receive two-thirds of the shares for which
the warrant is exercised and will in essence surrender the
remaining one-third to the Company in payment of the exercise
price.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS
The following table sets forth, as of April 17, 1995,
certain information concerning the beneficial ownership of Common
Stock and Preferred Stock by each shareholder known by the
Company to be the beneficial owner of more than 5% of either the
Common Stock or Preferred Stock by each director and nominee, by
each non-director executive officer and by all executive officers
and directors as a group. The persons named in the table have
sole voting and investment power with respect to the shares owned
by them subject to community property laws where applicable and
the information contained in the footnotes to this table.
Beneficial
Share Percentage
Name and Address Ownership(1)
Ownership(1)(2)
Common Stock:
5% Shareholders:
Howard L. Farkas 1,468,840(3) 29.1%
5460 South Quebec Street
Suite 300
Englewood, CO 80111
S.A. Hellerstein
Trustee of the Farkas Trusts(4) 1,368,840(4) 27.7%
1139 Delaware Street
Denver, CO 80204
Burton W. Kanter 1,325,890 (5) 26.4%
2 North LaSalle Street
Tenth Floor
Chicago, IL 60602
Solomon A. Weisgal
Trustee of the Bea Ritch Trusts (6) 602,513(6) 12.2%
9795 South Dixie Highway
Miami, FL 33156
Windy City, Inc.(7) 620,000 12.8%
8000 Tower Crescent Drive
Suite 1070
Vienna, Virginia 22182
William J. Volz 282,206(8) 5.8%
628 East Evelyn Avenue
Sunnyvale, CA 94086
Directors Not Disclosed Above:
Albert Morrison, Jr. 20,877(9) 0.4%
9795 South Dixie Highway
Miami, FL 33156
Non-Director Executive Officers:
William Jackson 10,882(10) 0.2%
628 East Evelyn Avenue
Sunnyvale, CA 94086
Antony Bell 29,072(11) 0.6%
628 East Evelyn Avenue
Sunnyvale, CA 94086
Todd J. Ashford 6,994(12) 0.1%
628 East Evelyn Avenue
Sunnyvale, CA 94086
All Executive Officers and Directors
as a Group (7 Persons) 3,142,261(3)(5)(13) 59.7%
(1) Assumes the exercise of any warrants or options held by
such person, but not the exercise of any other person's
warrants or options.
(2) Assumes 4,855,417 shares of Common Stock outstanding as of
April 17, 1995.
(3) Includes the 1,280,962 shares of Common Stock reflected in
the table as held of record by Mr. Hellerstein, as Trustee
of the Farkas Trusts, the beneficiaries of which consist of
Mr. Farkas and members of his family, 75,045 shares
issuable to Mr. Hellerstein (as Trustee) upon exercise of
certain warrants ("Warrants") issued pursuant to a loan
extension (see "Certain Transactions"), 12,833 issuable to
the Farkas Trusts upon conversion of the Preferred Stock
and 100,000 shares of Common Stock issuable to Mr. Farkas
upon exercise of certain warrants issued to him. See
"Ratification of Director Warrant Grants." Mr. Farkas
disclaims any beneficial ownership of the shares held by or
issuable to Mr. Hellerstein, as Trustee of the Farkas
Trusts.
(4) Consists of 15 irrevocable trusts administered by Mr.
Hellerstein, an independent Trustee, the beneficiaries of
which consist of Mr. Farkas and members of his family.
Included is 75,045 shares of Common Stock that can be
purchased upon exercise of the Warrants.
(5) Includes the 527,558 shares of Common Stock reflected in the
table as held of record by Mr. Weisgal, as Trustee of the
Bea Ritch Trusts, the beneficiaries of which consist of
members of the family of Mr. Kanter, but do not include Mr.
Kanter, 74,955 shares issuable to Mr. Weisgal (as Trustee)
upon exercise of the Warrants, 620,000 shares of Common
Stock held by Windy City, Inc., 877 shares of Common Stock
which Mr. Kanter owns individually, 2,500 which he owns
through an SEP and 100,000 shares of Common Stock issuable
to Mr. Kanter upon exercise of certain warrants issued to
him. See "Ratification of Director Warrant Grants." Mr.
Kanter disclaims any beneficial ownership interest in the
shares of stock held by or issuable to Mr. Weisgal as
Trustee of the Bea Ritch Trusts or Windy City, Inc.
(6) Consists of 25 irrevocable trusts administered by Mr.
Weisgal, an independent Trustee, the beneficiaries of which
consist of members of the family of Mr. Kanter, but do not
include Mr. Kanter. Included are 74,955 shares of Common
Stock that can be purchased through the Warrants. Mr.
Weisgal disclaims any beneficial ownership to 7,495 shares
which are held for the benefit of Mr. Kanter's two brothers.
(7) The shareholders of Windy City, Inc. include Mr. Weisgal, as
Trustee of the Bea Ritch Trusts. Mr. Weisgal disclaims any
beneficial ownership of the shares of the Company's common
Stock held by Windy City, Inc.
(8) Such beneficial share ownership also reflects an aggregate
of 9,280 shares of Common Stock allocated to the ESOP
account of Mr. Volz.
(9) Includes 20,000 shares of Common Stock issuable to Mr.
Morrison upon exercise of certain warrants issued to him.
See "Ratification of Director Warrant Grants."
(10) Such beneficial share ownership reflects an aggregate of
5,882 shares of Common Stock allocated to the ESOP account
of Mr. Jackson and 5,000 shares of exercisable options of
Common Stock.
(11) Such beneficial share ownership reflects an aggregate of
9,072 shares of Common Stock allocated to the ESOP account
of Mr. Bell and 20,000 shares of exercisable options of
Common Stock.
(12) Such beneficial share ownership reflects an aggregate of
6,994 shares of Common Stock allocated to the ESOP account
of Mr. Ashford.
(13) Such beneficial share ownership reflects an aggregate of
31,288 shares of Common Stock allocated to the ESOP accounts
for this group, exercisable warrants to purchase 220,000
shares of Common Stock and 25,000 shares of exercisable
options of Common Stock for this group.
Beneficial
Share Percentage
Name and Address Ownership(1) Ownership(1)(2)
Preferred Stock:
Howard L. Farkas 77(1) 100%
5460 South Quebec Street
Suite 300
Englewood, CO 80111
S.A. Hellerstein
Trustee of the Farkas Trusts 77 100%
1139 Delaware Street
Denver, CO 80204
(1) Includes all of the shares of Preferred Stock reflected in
the Table as held of record by Mr. Hellerstein as Trustee of
the Farkas Trusts. Mr. Farkas disclaims any beneficial
ownership of the shares held by or issuable to Mr.
Hellerstein, as Trustee of the Farkas Trusts.
Section 16(a) of the Securities Exchange Act of 1934
requires that the Company's executive officers and Directors and
persons who own more than 10% of the Company's Common Stock file
reports of ownership and changes in ownership with the Securities
and Exchange Commission and with the exchange on which the
Company's shares of Common Stock are traded. Such persons are
also required to furnish the Company with copies of all Section
16(a) forms they file. Based solely on the Company's review of
the copies of such forms furnished to the Company, the Company is
not aware that any of its directors and executive officers or 10%
shareholders failed to comply with the filing requirements of
Section 16(a) during the period commencing January 1, 1994
through December 31, 1994 or prior fiscal years.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
Furnished below is information with respect to compensation
paid or accrued for services in all capacities during the twelve
months ended December 31, 1994, to the Company's most highly paid
executive officers serving at the end of 1994 whose total annual
salary and bonus exceed $100,000:
Annual Compensation Long-Term Compensation
Name and Principal Securities All Other
Position Year Salary(1) Bonus Underlying Options Compensation (2)
William J. Volz 1992 $126,996 - - -
President, 1993 131,904 - - -
CEO 1994 121,177 - - -
William Jackson 1992 94,683 - - -
Vice President, 1993 106,886 - 20,000 -
Manufacturing 1994 102,503 - 20,000 -
Antony Bell 1992 107,923 $151,855 - -
Vice President 1993 113,348 72,673 - -
of Technology 1994 164,555 - - -
Todd J. Ashford 1992 89,477 - - $6,000
Chief Financial 1993 105,001 - - 6,000
Officer 1994 107,431 - - 6,000
(1) Includes compensation as the result of distributions of
stock under the Company's ESOP valued at market price at
the time of distribution.
(2) Includes compensation consisting of automobile allowances.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table provides information related to the
number of stock options exercised during 1994, the number of
exercisable and unexercisable options held at December 31, 1994,
and the year-end value of exercisable and unexercisable options
held at December 31, 1994.
Value of
Number of Securities Unexercised
Underlying In-the-Money
Shares Unexercised Options Options
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
A. Bell - - 20,000 - $45,000 -
W. Jackson 20,000 $90,938 10,000 - $16,250 -
Compensation of Directors
Directors did not receive any compensation during 1994 or
the previous ten years for either their services as directors or
for their services on the various Board committees. Officers of
the Company, who are also directors, received no additional
compensation during 1994 or the previous ten years for either
their services as directors or for their services on the various
Board committees. As discussed under "Ratification of Director
Warrant Grants", the three non-employee directors were granted on
February 15, 1995 warrants to purchase an aggregate of 220,000
shares of the Company's Common Stock at an exercise price of
$2.5625 per share (the last reported Nasdaq transaction price on
February 15, 1995).
Employment Contracts
The Company currently has no employment agreements with any
of its employees.
Other
The Company had no long term incentive plans as of December
31, 1994 and there were no option grants during 1994 to executive
officers serving at the end of 1994. Mr. James McAllister, who
served as Senior Vice President and Director, retired in August
of 1994 and, as part of his retirement, was granted options to
purchase 25,000 shares of Common Stock at fair market value at
the time of his retirement.
<PAGE>
CERTAIN TRANSACTIONS
Various trusts consisting of 15 separate irrevocable trusts
administered by S.A. Hellerstein, the beneficiaries of which
consist of Mr. Howard Farkas, the Company's Chairman of the
Board, and members of his family (the "Farkas Trusts") and 25
separate irrevocable trusts administered by Solomon A. Weisgal,
the beneficiaries of which consist of members of the family of
Mr. Burton Kanter, a director of the Company, but do not include
Mr. Kanter (the "Bea Ritch Trusts" and, collectively with the
Farkas Trusts, the "Trusts") have loaned various amounts to the
Company and, in December of 1987, entered into an agreement with
the Company pursuant to which the unpaid principal and all
accrued but unpaid interest on loans from the Trusts (or their
assignors) to the Company were consolidated into a single loan
(the "Shareholder Loan") having an original principal balance as
of December 31, 1987 of $3,367,913. The Bea Ritch Trusts hold a
49.97% undivided interest in the Shareholder Loan (10% of such
49.97% is held for the benefit of Carl Kanter and Gerald Kanter,
brothers of Burton W. Kanter) with the remaining 50.03% interest
held by the Farkas Trusts. The entire unpaid principal balance
of the Shareholder Loan and all accrued but unpaid interest
thereunder initially was due and payable in full on or before
March 31, 1991.
In January 1991, the Company commenced renegotiation of the
terms of the Shareholder Loan. As a result of such negotiations,
the Trusts agreed to extend the maturity date of such obligations
to July 1, 1993, subject to earlier acceleration in the event of
a default under the Shareholder Loan or the Company's obligations
to other lenders, the Company becomes insolvent or other similar
events occur. In consideration of the Trusts' forbearance, the
Company agreed, subject to various terms and conditions, to enter
into a Loan Extension and Warrant Purchase Agreement (the "Loan
Extension Agreement") with the Trusts.
Under the terms of the Loan Extension Agreement, the Company
has agreed to: (a) pay interest on the unpaid principal balance
of the Shareholder Loan at an annual rate of 12.5% per annum, (b)
pay principal in the amount of $50,000 per calendar quarter
commencing June 30, 1991, (c) make a $200,000 principal payment
at the time the Company finalized arrangements regarding a new
banking relationship then under discussion and (d) make a final
principal payment on the maturity date of July 1, 1993. The
Company entered into the new banking relationship in May 1991 and
made the required $200,000 principal payment. As of March 15,
1995, the Company was current with all the $50,000 quarterly
payments.
Under the terms of the Loan Extension Agreement, if the
Shareholder Loan was not paid in full prior to July 1, 1992, the
Company agreed to issue the Trusts warrants ("Warrants") to
purchase up to 120,000 shares of the Company's Common Stock for
an aggregate price of $1,200. The exercise price of the Warrants
is $3.45 per share (120% of the March 31, 1991 closing bid price
of $2.875). The aggregate number of shares of the Company's
Common Stock that can be purchased upon exercise of the Warrants
increased by 2,500 for each full month prior to July 1, 1993,
that the Shareholder Loan remained outstanding up to a maximum
increase of 30,000 shares. The Warrants are exercisable at the
option of the Trusts until March 1, 1996. The Shareholder Loan
was not paid in full prior to July 1, 1992, and is still
outstanding. As of March 15, 1995, Warrants to purchase an
aggregate of 150,000 shares of Common Stock had been issued
pursuant to the Loan Extension Agreement. The shares underlying
the Warrants have been registered under the Securities Act, but
none of the Warrants had been exercised as of March 15, 1995.
The Shareholder Loan was due and payable on July 1, 1993 but
the Company and the Trusts extended the maturity date to March
31, 1995 pursuant to the terms of a First Amendment to the Loan
Extension Agreement and have further extended the maturity date
to March 31, 1996 pursuant to the terms of a Second Amendment to
the Loan Extension Agreement. The principal amount of the
Shareholder Loan as of April 15, 1995, was $813,913.
The Shareholder Loan is secured by a blanket first priority
lien in the Company's assets and the proceeds thereof, subject,
under certain circumstances, to subordination by the Trusts in
favor of certain other lenders (including the Company's current
banking lender) to the Company.
See "Ratification of Directors Warrant Grants" for discussion
of the terms of certain warrant grants to non-employee members of
the Board of Directors.
Any future transactions with the Company's officers,
directors or principal shareholders, or any of their affiliates,
will be on the terms the Board of Directors believe to be no less
favorable to the Company than those that could be obtained from
an unrelated third party in an arms-length transaction.
ACCOUNTANTS
The firm of Meredith Cardozo was the Company's principal
accountants for the fiscal year ended December 31, 1994 and has
been selected to examine the financial statements of the Company
for 1995. A representative of Meredith Cardozo is expected to
attend the meeting where he will have the opportunity to make a
statement if he so desires and will be available to respond to
appropriate questions.
1996 ANNUAL MEETING OF SHAREHOLDERS
Any proposals of shareholders intended to be personally
presented at the 1996 Annual Meeting of Shareholders must be
received by the Secretary of the Company for inclusion in the
Company's Proxy Statement and form of Proxy no later than
December 31, 1995. Any such proposals will be subject to the
proxy rules adopted under the Securities Exchange Act of 1934, as
amended.
