---------------------------------------------------------------
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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):
[X] $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
[ ] 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
1320 ORLEANS DRIVE
SUNNYVALE, CA 94089
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 19, 1997
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, 1320 Orleans Drive, Sunnyvale,
California 94089, on June 19, 1997 at 10:30 a.m., local time, for the
following purposes:
1. To elect a Board of Directors;
2. Approval of Stock Incentive Plan;
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on May 1, 1997, 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
April 29, 1997
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
1320 ORLEANS DRIVE
SUNNYVALE, CA 94089
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 19, 1997
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 1320 Orleans
Drive, Sunnyvale, California 94089, and its telephone number is (408) 542-
5400. Shareholders of record at the close of business on May 1, 1997 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 7, 1997.
THE MEETING
On May 1, 1997, there were issued and outstanding 6,121,750 shares of
common stock, no par value ("Common Stock"), held by approximately 3,700
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, and for the approval of the
Stock Incentive Plan. 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 five Directors is to be elected. See
"Election of Directors--Information Concerning Nominees for Election as
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 73 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 49 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 66 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., PowerCell-Inc.,
and Walnut Financial Services, Inc.
Albert Morrison, Jr. 58 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.
Bruce B. Lusignan 47 1996 Dr. Lusignan has served as a director since 1996.
Dr. Lusignan is Director of the Communications
Satellite Planning Center, a research laboratory of
Stanford University's Electrical Engineering
Department. Dr. Lusignan is Vice President of
Engineering for Primary Communication, Inc., a small
telecommunications consulting firm, and does
consulting work for Becker, Gurman, Lucas, Meyers and
O'Brien (regulatory law), Mendes and Mount (satellite
insurance), the Intergovernmental Bureau of
Informatics, Cairo University, King Saud University,
E.F. Johnson Corporation, and the U.S. Congress
Office of Technology Assessment.
(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.
BOARD AND COMMITTEE MEETINGS
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 1996. 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 1996. 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 1996. 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' COMPENSATION
Directors did not receive any compensation during 1996 or the previous
ten years for either their services as directors or for their services on the
various Board committees. As discussed under "Certain Relationships and
Related Transactions", the three current 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). During 1996 the
Company extended loans to two of the non-employee director warrant holders to
purchase 120,000 shares of Common Stock at the warrant exercise price of
$2.5625. The notes mature July 1998 and accrue interest at the reference rate
of the Company's primary commercial lender plus 2%.
<PAGE>
PROPOSAL TO ADOPT STOCK INCENTIVE PLAN
On April 12, 1997, the Board of Directors unanimously adopted resolutions
approving the Logic Devices Incorporated 1996 Stock Incentive Plan (the "Stock
Incentive Plan"), subject to shareholder approval, to promote equity ownership
by directors, selected officers and employees of the Company, to increase
their proprietary interest in the success of the Company, and to encourage
them to remain in the employ of the Company.
ADMINISTRATION
The Stock Incentive Plan is to be administered by the Stock Incentive
Plan Administrative Committee which will be comprised of at least two
non-employee directors appointed by the Board of Directors (the "Stock
Incentive Committee"). The Stock Incentive Committee will have the authority,
subject to review by the Board of Directors, to select the individuals to whom
awards may be granted, to determine the terms of each award, to interpret the
provisions of the Stock Incentive Plan and to make all other determinations
that it may deem necessary or advisable for the administration of the Stock
Incentive Plan.
The Stock Incentive Plan provides for the grant of "incentive stock
options," as defined under Section 422(b) of the Internal Revenue Code of
1986, as amended, options that do not so qualify (referred to herein as
"nonstatutory options"), restricted stock and stock appreciation rights
("SARs"), as determined in each individual case by the Stock Incentive
Committee. The Board of Directors has reserved 600,000 shares of Common Stock
for issuance under the Stock Incentive Plan. In general, if any award granted
under the Stock Incentive Plan expires, terminates, is forfeited or is
canceled for any reason, the shares of Common Stock allocable to such award
may again be made subject to an award granted under the Stock Incentive Plan.
AWARDS
Directors and key policy-making employees of the Company are eligible to
receive grants under the Stock Incentive Plan. Awards may be granted subject
to a vesting requirement. The exercise price of incentive stock options
granted under the Stock Incentive Plan must at least equal the fair market
value of the Common Stock subject to the option (determined as provided in the
plan) on the date the option is granted. The exercise price of nonstatutory
options and SARs will be determined by the Stock Incentive Committee.
Directors may not receive incentive stock options.
An incentive stock option granted under the Stock Incentive Plan to an
employee owning more than 10% of the total combined voting power of all
classes of capital stock of the Company is subject to the further restriction
that such option must have an exercise price of at least 110% of the fair
market value of the shares of Common Stock issuable upon exercise of the
option (determined as of the date the option is granted) and may not have an
exercise term of more than five years. Incentive stock options are also
subject to the further restriction that the aggregate fair market value
(determined as of the date of grant) of Common Stock as to which any such
incentive stock option first becomes exercisable in any calendar year, is
limited to $100,000. To the extent options covering more than $100,000 worth
of Common Stock first become exercisable in any one calendar year, the excess
will be nonstatutory options. For purposes of determining which, if any,
options have been granted in excess of the $100,000 limit, options will be
considered to become exercisable in the order granted.
Each director and key employee eligible to participate in the Stock
Incentive Plan will be notified by the Stock Incentive Committee. To receive
an award under the Stock Incentive Plan, an award agreement must be executed
which specifies the type of award to be granted, the number of shares of
Common Stock (if any) to which the award relates, the terms and conditions of
the award and the date granted. In the case of an award of options, the award
agreement will also specify the price at which the shares of Common Stock
subject to the option may be purchased, the date(s) on which the option
becomes exercisable and whether the option is an incentive stock option or a
nonstatutory option.
The full exercise price for all shares of Common Stock purchased upon the
exercise of options granted under the Stock Incentive Plan must be paid by
cash, personal check, personal note, award surrender or Common Stock owned at
the time of exercise. Incentive stock options granted to employees under the
Stock Incentive Plan may remain outstanding and exercisable for ten years from
the date of grant or until the expiration of ninety days (or such lesser
period as the Stock Incentive Committee may determine) from the date on which
the person to whom they were granted ceases to be employed by the Company.
Nonstatutory options and SARs granted under the Stock Incentive Plan remain
outstanding and exercisable for such period as the Stock Incentive Committee
may determine.
No awards have been made by the Stock Incentive Committee pursuant to the
Stock Incentive Plan at this time. Awards to be made in the future have not
yet been determined.
INCOME TAX
Incentive stock options granted under the Stock Incentive Plan have
certain advantageous tax attributes to the recipient under the income tax
laws. No taxable income is recognized by the option holder for income tax
purposes at the time of the grant or exercise of an incentive stock option,
although neither is there any income tax deduction available to the Company as
a result of such a grant or exercise. Any gain or loss recognized by an option
holder on the later disposition of shares of Common Stock acquired pursuant to
the exercise of an incentive stock option generally will be treated as capital
gain or loss if such disposition does not occur prior to one year after the
date of exercise of the option, or two years after the date the option was
granted.
As in the case of incentive stock options, the grant of nonstatutory
stock options, restricted stock or SARs will not result in taxable income for
income tax purposes to the recipient of the awards, nor will the Company be
entitled to an income tax deduction. Upon the exercise of nonstatutory stock
options or SARs, or the lapse of restrictions on restricted stock, the award
holder will generally recognize ordinary income for income tax purposes equal
to the difference between the exercise price and the fair market value of the
shares of Common Stock acquired or deemed acquired on the date of exercise,
and the Company will be entitled to an income tax deduction in the amount of
the ordinary income recognized by the option holder. In general, any gain or
loss realized by the option holder on the subsequent disposition of such
shares will be a capital gain or loss.
AMENDMENT AND TERMINATION
The Stock Incentive Plan expires ten years after its adoption, unless
sooner terminated by the Board of Directors. The Board of Directors has
authority to amend the Stock Incentive Plan in such manner as it deems
advisable, except that the Board of Directors is not permitted without
stockholder approval to amend the plan in a manner which would prevent the
grant of incentive stock options or increase the number of shares of Common
Stock available. The Stock Incentive Plan provides for appropriate adjustment,
as determined by the Stock Incentive Committee, in the number and kind of
shares subject to unexercised options, in the event of any change in the
outstanding shares of Common Stock by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization, merger or similar
event.
REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the annual meeting is required to
approve the Stock Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSED
STOCK INCENTIVE PLAN.
Shareholders will be provided a copy of the Plan upon request. Contact Todd
Ashford at Logic Devices Incorporated, 1320 Orleans Drive, Sunnyvale, CA
94089, (408) 542-5400.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 1, 1997, 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%, by each director, 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)
5% SHAREHOLDERS:
S.A. Hellerstein
Trustee of the Farkas Trusts(3) 749,305(3) 12.2%
1139 Delaware Street
Denver, CO 80204
BRT Partnership(4) 319,482 5.2%
120 South Riverside Drive
Suite 1420
Chicago, Illinois 60606
Windy City, Inc.(5)
8000 Towers Crescent Drive 500,000 8.2%
Suite 1070
Vienna, Virginia 22182
DIRECTORS:
Howard L. Farkas 100,000(6) 1.6%
5460 South Quebec Street
Suite 300
Englewood, CO 80111
William J. Volz 125,165 2.0%
1320 Orleans Drive
Sunnyvale, CA 94089
Albert Morrison, Jr. 20,877(7) 0.3%
9795 South Dixie Highway
Miami, FL 33156
Burton W. Kanter 877(8) 0.0%
2 North LaSalle Street
Twenty Second Floor
Chicago, IL 60602
Bruce B. Lusignan - 0.0%
Communications Satellite Planning Center
Stanford University
Stanford, CA 94305
NON-DIRECTOR EXECUTIVE OFFICERS:
William Jackson 10,000(9) 0.2%
1320 Orleans Drive
Sunnyvale, CA 94089
Todd J. Ashford 10,691(10) 0.2%
1320 Orleans Drive
Sunnyvale, CA 94089
ALL EXECUTIVE OFFICERS
AND DIRECTORS AS A GROUP (7 PERSONS) 267,610(11) 4.4%
(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 6,121,750 shares of Common Stock outstanding as of May 1, 1997.
(3) 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.
(4) An Illinois general partnership. 25 of the partners of the BRT
Partnership are separate and individual trusts commonly and
collectively known as the Bea Ritch Trusts administered by Mr. Soloman
A. Weisgal, an independent trustee, for the benefit of various members
of Mr. Kanter's extended family but excluding Mr. Kanter.
(5) The BRT Partnership owns 100% of the outstanding common stock of Windy
City, Inc which constitutes all of the currently existing voting stock
of Windy City, Inc..
(6) Consisting of 100,000 shares of Common Stock issued to Mr. Farkas upon
exercise of certain warrants funded through a loan from the Company.
See "Certain Relationships and Related Transactions". Mr. Farkas
disclaims any beneficial ownership of the shares held by or issuable to
Mr. Hellerstein, as Trustee of the Farkas Trusts.
(7) Includes 20,000 shares of Common Stock issued to Mr. Morrison upon
exercise of certain warrants funded through a loan from the Company,
See "Cerain Relationships and Related Transactions".
(8) Mr. Kanter disclaims any beneficial ownership of the shares held by BRT
Partnership and Windy City, Inc.
(9) Such beneficial share ownership reflects an aggregate of 10,000 shares
of exercisable options of Common Stock.
(10) Such beneficial share ownership reflects an aggregate of 7,000 shares
of exercisable options of Common Stock.
(11) Such beneficial share ownership reflects an aggregate of 17,000 shares
of exercisable options of Common Stock for this group.
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, 1996, to the Company's most highly paid executive officers serving at the
end of 1996 whose total annual salary and bonus exceed $100,000:
LONG-TERM
OTHER COMPENSATION
ANNUAL AWARDS
NAME AND ANNUAL COMPENSATION Compensation (options)
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (NO. OF SHARES)
William J. Volz.... 1996 $110,374 - - -
President and 1995 118,942 - - -
Chief Executive 1994 131,904(1) - - -
Officer
William Jackson.... 1996 96,486 - - -
Vice President, 1995 105,756 - - 15,000
Manufacturing 1994 110,558(2) - - 20,000
Todd J. Ashford.... 1996 108,581(3) - - -
Chief Financial 1995 99,334(3) - - 7,000
Officer 1994 119,814(3) - - -
________________________
(1) Includes compensation as a result of distributions of common stock
under the Company's ESOP to Mr. Volz during 1994 of $12,026 which were
valued at the market price at the time of distributions.
(2) Includes compensation as a result of distributions of common stock
under the Company's ESOP to Mr. Jackson during 1994 of $8,055 which
were valued at the market price at the time of distributions.
(3) Includes compensation as a result of distributions of common stock
under the Company's ESOP to Mr. Ashford during 1994 of $9,383 which
were valued at the market price at the time of distributions and also
includes compensation consisting of automobile allowances of $6,000 for
each of 1994, 1995. and 1996.
STOCK OPTIONS
The following table sets forth information concerning the Stock Options
granted under the 1990 Incentive and Non-Qualified Stock Option Plan during
the 1996 fiscal year to the named Executive Officers. The table also sets
forth hypothetical gains or potential "option spreads" for those options at
the end of their respective ten-year terms. These potential realizable values
are based on the assumption that the market price of the Company's common
stock will appreciate at a rate of five percent (5%) and ten percent(10%),
compounded annually, from the date the option was granted to the last day of
the full option term. The actual value realized upon the exercise of these
options, if any, will be dependant upon the future performance of the
Company's common stock and overall market conditions. During the 1996 fiscal
year, no stock appreciation rights were granted to the named Executive
Officers.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS Value at Assumed
% of Total Annual Rates of
Options Options Exercise Stock Price
Granted Granted to Price Appreciation for
(No. of Employees in Per Expiration OPTION TERM
NAME SHARES) FISCAL YEAR SHARE ($) DATE 5%($) 10%($)
William J. Volz.. - - - - - -
William Jackson.. - - - - - -
Todd J. Ashford.. - - - - - -
_____________________
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information related to the number of stock
options exercised during 1996, the number of exercisable and unexercisable
options held at December 31, 1996, and the year-end value of exercisable and
unexercisable options held at December 31, 1996.
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY OPTIONS AT
SHARES UNEXERCISED OPTIONS FISCAL YEAR END (MARKET
ACQUIRED AT FISCAL YEAR-END PRICE OF SHARES LESS
ON VALUE(1) (NO. OF SHARES) EXERCISE PRICE)($)(2)(3)
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
William
J. Volz... - - - - - -
William
Jackson... 5,000 $ 13,750 7,500 7,500 - -
Todd
J. Ashford. - - 3,500 3,500 - -
_______________________
(1) The "value realized" represents the difference between the exercise
price of the option shares and the market price of the option shares on the
date the option was exercised. The value realized was determined without
considering any taxes which may have been owed.
(2) "In-the-money" options are options whose exercise price was less than
the market price of the common stock at December 29, 1996.
(3) Assuming a stock price of $2.188 per share, which was the closing price
of a share of the Company's common stock reported on the Nasdaq
National Market System on December 29, 1996.
COMPENSATION OF DIRECTORS
Directors did not receive any cash compensation during 1996 or the
previous ten years for either their services as directors or for their
services on the various Board committees. As discussed under "Certain
Relationships and Related Transactions", three of the current 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). During 1996 the Company extended loans to two of the non-employee
director warrant holders to purchase 120,000 shares of Common Stock at the
warrant exercise price of $2.5625. The notes mature July 1998 and accrue
interest at the reference rate of the Company's primary commercial lender plus
2%.
EMPLOYMENT CONTRACTS
The Company currently has no employment agreements with any of its
employees. None of the Company's executive officers has employment or
severance arrangements with the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Howard L. Farkas, William J. Volz and Burton W. Kanter served as members
of the Compensation Committee of the Company's Board of Directors during the
fiscal year ended December 31, 1996. Mr. Volz was and currently is the
Company's President and Chief Executive Officer. Messrs. Farkas and Kanter
each received warrants to purchase 100,000 shares of the Company's Common
Stock during the fiscal year ended December 31, 1995. See "Certain
Relationships and Related Transactions." Mr. Volz is eligible to receive
stock under the Company's Incentive and Non-qualified Stock Option Plan and,
if the Stock Incentive Plan is approved, will be eligible to receive stock
under the Stock Incentive Plan. Mr. Volz does not vote on committee matters
regarding his salary or option grants and has not received any option grants
under the Incentive and Non-qualified Stock Option Plan.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee
has responsibility for executive compensation matters including; review and
approval of base salaries, approving individual bonuses and bonus programs for
executive officers, administration of certain employee benefit programs, and
review and approval of stock option grants to all employees, including the
executive officers of the Company.
OVERVIEW
The over-all policy of the Committee is to offer the Company's executive
officers competitive compensation opportunities based upon their personal
performance, the financial performance of the Company and their contribution
to that performance. Each executive officer's compensation package is
generally comprised of three elements: (i) base salary, which is determined on
the basis of the individual's position and responsibilities with the Company,
the level of his performance, and the financial performance of the Company,
(ii) incentive performance awards payable in cash and tied to the achievement
of performance goals, and (iii) long term stock-based incentive awards
designed to strengthen the mutuality of interest between the executive
officers and the Company's shareholders.
COMPONENTS OF EXECUTIVE COMPENSATION
Several important factors considered in establishing the components of
each executive officer's compensation package are summarized below.
Additional factors were taken into account to a lesser degree. The Committee
may in its discretion apply entirely different factors, such as different
measures of financial performance, for future fiscal years.
BASE SALARY. The base salary for each officer is set primarily on the
basis of personal performance and internal comparability considerations, and
to a lesser extent on the financial performance of the Company. Because of
the Company's financial performance over the past two fiscal years, the base
salary levels of the executive officers have not increased above the levels in
effect for them for the 1993 fiscal year. There were two exceptions to this
policy: first, the base salary for Mr. Jackson was increased during the 1994
fiscal year to take into account his added responsibilities and second, the
base salary for Mr. Bell which was tied to the financial performance of the
Company's SRAM product line for 1989 to 1993.
CASH INCENTIVE COMPENSATION. The Company has no regular established Cash
Incentive Compensation program for its executive officers. The Compensation
Committee does review the possibility of cash incentives for executive
officers based on the performance of the specific officer and on the financial
performance of the Company. Over the past several years no cash bonuses have
been issued to executive officers except Mr. Bell who received Cash Incentive
Compensation based on the performance of the Company's SRAM product financial
performance.
LONG-TERM STOCK-BASED INCENTIVE COMPENSATION. The Company has had two
long-term Stock-Based Incentive Compensation programs in place for which each
of the Company's executive officers have been eligible to participate: the
Logic Devices Incorporated Employee Stock Ownership Plan (the "ESOP"), and the
Logic Devices Incorporated Incentive and Non-qualified Stock Option Plan (the
"Option Plan"). The ESOP is designed to align the interest of each employee,
including the executive officers, with those of the shareholders and provide
each individual with a performance incentive from the perspective of an owner
with an equity stack in the business. The ESOP was funded as a leveraged ESOP
for the years 1989 to 1994 and was terminated in 1995. All participating
employees, including executive officers, were allowed to take rollover
distributions out of the plan in 1995. Under the ESOP, the Company's
executive officers received distributions of shares of common stock for the
years 1991 to 1994 based on the plan formula. For 1993 and 1994 this
compensation is included in the salary of each executive at the market price
of the shares at the time of distribution to the executives' ESOP account.
There were no distribution of additional shares made to executive officers in
1995 under the ESOP.
Under the Option Plan, the Compensation Committee from time to time
approves grant of common stock options to the executive officers. The grants
are designed to align the interest of each executive officer with those of the
shareholders and provide each individual with a significant incentive to
manage the Company from the perspective of an owner with an equity stake in
the business. Each grant generally allows the officer to acquire shares of
the Company's common stock at a fixed price per share (the market price on the
grant date) over a specified period of time (up to 10 years), thus providing a
return to the executive officer only if the market price of the shares
appreciates over the option term and the officer continues in the Company's
employ. The size of the option grant to each executive officer is designed to
create a meaningful opportunity for stock ownership and is based upon the
executive officer's current position with the Company, internal comparability
with option grants made to other Company executives, the current level of
ownership in relation to other executive officers, the executive officer's
current level of performance and the executive officer's potential for future
responsibility and promotion over the option term. The Compensation Committee
also takes into account the number of vested and unvested options held by the
executive officer in order to maintain an appropriate level of equity
incentive for that individual. The Committee does not adhere to any specific
guidelines as to the relative option holding of the Company's executive
officers under the Option Plan. The options granted to executive officers
under the Option Plan for the years 1994 to 1996 are included in the Summary
Compensation Table as Long-Term Compensation Awards. No further shares are
available under the Company's Incentive and non-qualified Stock Option Plan so
shareholder approval is being sought for the Stock Incentive Plan. See
"Proposal to Adopt Stock Incentive Plan."
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Volz is currently the Company's President and Chief Executive
Officer. There is no employment or severance agreement between Mr. Volz and
the Company. The Compensation Committee determines the Chief Executive
Officer's compensation in the same manner as described above for all
executives. In setting the base salary and cash incentive levels for the
Chief Executive Officer, the Compensation Committee reviews comparative
information reflecting recent compensation data for the industry. Mr. Volz
base salary has been set accordingly and Mr. Volz has not received any cash
incentive compensation. Mr. Volz has been eligible to receive stock under
both the Company's ESOP and Option Plan, but Mr. Volz has elected not to
receive any option grants under the Option Plan.
With respect to matters related to all elements of compensation the
Compensation Committee submits this report.
William J. Volz
Howard L. Farkas
Burton W. Kanter
<PAGE>
COMPANY PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG LOGC, THE S&P 500 INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS STOCK INDEX
Set forth below is a line graph comparing the cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return of the Nasdaq Electronic Components Stock Index, S&P 500 Index, and
S&P High Tech Stock Index for the period of five years commencing December 31,
1991 and ending December 31, 1996. The Company is changing from the S&P High
Tech Index use in 1996 proxy statement to the Nasdaq Electronic Components
Stock Index because the Company believes the Nasdaq Electronic Components
Stock Index is more representative of the Company's peer group. The graph and
table assume that $100 was invested on December 31, 1991 in each of the
Company's Common Stock, the Nasdaq Electronics Components Index, the S&P 500
Index, and the S&P High Tech Index and that all dividends were reinvested.
(Insert Chart)
1991 1992 1993 1994 1995 1996
Nasdaq Elec. Components Stock Index $ 100 $ 156 $ 215 $ 237 $ 393 $ 679
S&P 500 $ 100 $ 104 $ 112 $ 110 $ 148 $ 178
S&P High Tech Stock Index $ 100 $ 104 $ 128 $ 149 $ 214 $ 390
LOGC $ 100 $ 77 $ 173 $ 98 $ 305 $ 80
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED 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. The various loans were
consolidated into a single loan which had an original principal balance of
$3,367,913 as of December 31, 1987, and the maturity date of such loan was
extended on several occasions. In June 1995 the Company obtained a term loan
from its bank for repayment of the entire shareholder loan (principal plus
accrued interest). The total principal plus accrued interest paid by the
Company on the shareholder loan for the fiscal year ended December 31, 1995
was $863,900 and $44,200, respectively.
In connection with various of the loan extensions, the Trusts were issued
warrants ("Warrants") to purchase an aggregate of 150,000 shares of Common
Stock. As of March 1996, all of the Warrants had been exercised. The exercise
price of the Warrants was $3.45 per share (120% of the March 31, 1991 closing
bid price of $2.875). The shares underlying the Warrants are registered under
the Securities Act.
On February 15, 1995, the three then 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. The warrant
grants were approved by the shareholders at the 1995 annual meeting of
shareholders. The warrant initially issued to Mr. Kanter was transferred by
him after the 1995 fiscal year end and is currently outstanding. The
warrants issued to Messrs. Farkas and Morrison were exercised in 1996 through
financing provided by the Company. The loans are evidenced by promissory
notes which are secured by the shares of Common Stock acquired on exercise of
the warrants, bear interest at the reference rate, as announced by the
Company's primary commercial lender from time to time, plus 2% and mature in
July 1998.
Any future transactions with the Company's officers, directors or
principal shareholders, or any of their affiliates, will be on terms the Board
of Directors believes to be no less favorable to the Company than those that
could be obtained from an unrelated third party in an arms-length transaction.
<PAGE>
ACCOUNTANTS
The firm of Meredith, Cardozo & Lanz LLP was the Company's principal
accountants for the fiscal year ended December 31, 1996 and has been selected
to examine the financial statements of the Company for 1997. A representative
of Meredith, Cardozo & Lanz LLP 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.
1998 ANNUAL MEETING OF SHAREHOLDERS
Any proposals of shareholders intended to be personally presented at the
1998 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, 1997. Any such proposals will be subject to the proxy
rules adopted under the Securities Exchange Act of 1934, as amended.
By order of the Board of
Directors
Todd J. Ashford, Secretary
April 29, 1997
Sunnyvale, California
