<PAGE> 1
SCHEDULE 14A
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 240.14a-11(c) or 240.14a-12
LOGIC DEVICES, INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LOGIC DEVICES INCORPORATED
1320 ORLEANS DRIVE
SUNNYVALE, CA 94089
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 16, 1998
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 16, 1998 at 2:00 p.m., local time, for the following
purposes:
1. To elect a Board of Directors;
2. To approve the adoption of the Company's 1998 Director 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 13, 1998, are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors,
Mary C. deRegt
Secretary
Sunnyvale, California
April 29, 1998
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> 3
LOGIC DEVICES INCORPORATED
1320 ORLEANS DRIVE
SUNNYVALE, CA 94089
-------------
PROXY STATEMENT
-------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 16, 1998
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 13, 1998 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 15, 1998.
THE MEETING
On May 13, 1998, there were issued and outstanding 6,121,750 shares of
common stock, no par value ("Common Stock"), held by approximately 3,500 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 required quorum)
will be necessary for the taking of all action which may properly come before
the meeting. The shares owned by the directors will not be voted with respect to
Proposal No. 2: Approval of 1998 Director Stock Incentive Plan. 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."
1
<PAGE> 4
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.
2
<PAGE> 5
PROPOSAL NO. 1:
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 74 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
and was subsequently liquidated. On September
23, 1992, Mr. Farkas filed for personal
protection under Chapter 7 of the federal
bankruptcy laws and was released on November
26, 1996.
William J. Volz 50 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 67 1983 Mr. Kanter has served as a director of the
Company since 1983. He is Chief Executive
Officer of Walnut Capital Corp., a regulated
small business investment company providing
early stage venture capital. 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., and Walnut Financial
Services, Inc. He is a member of the faculty of
the University of Chicago Law School and a
trustee of several private charitable
foundations.
Albert Morrison, 59 1983 Mr. Morrison has served as a director of the
Jr. Company since 1983 and has been President of
Morrison Brown Argiz & Company, P.C., a
certified public accounting firm in Miami,
Florida, since 1969. He serves as a director
of Heico Corp.
Bruce B. Lusignan 48 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.
3
<PAGE> 6
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 1997. 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 three meetings during fiscal 1997. All members of
the Compensation Committee were present at each 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 a
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 four meetings during fiscal 1997. 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.
4
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 29, 1998, 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.
<TABLE>
<CAPTION>
BENEFICIAL
SHARE PERCENTAGE
NAME AND ADDRESS OWNERSHIP(1) OWNERSHIP(1)(2)
- ---------------- ------------ ---------------
<S> <C> <C>
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) 500,000 8.2%
8000 Towers Crescent Drive, Suite 1070
Vienna, VA 22182
Dimensional Fund Advisors, Inc. 317,400(6) 5.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
DIRECTORS:
Howard L. Farkas 100,000(7)(8) 1.6%
5460 South Quebec Street, Suite 300
Englewood, CO 80111
William J. Volz 174,445(8) 2.8%
1320 Orleans Drive
Sunnyvale, CA 94089
Albert Morrison, Jr. 20,877(8)(9) 0.3%
9795 South Dixie Highway
Miami, FL 33156
Burton W. Kanter 877(8)(10) 0.0%
2 North LaSalle Street, Twenty Second Floor
Chicago, IL 60602
Bruce B. Lusignan --(8) 0.0%
Communications Satellite Planning Center
Stanford University
Stanford, CA 94305
NON-DIRECTOR EXECUTIVE OFFICERS:
William Jackson 55,000(11) 0.9%
1320 Orleans Drive
Sunnyvale, CA 94089
Todd J. Ashford -- 0.0%
1320 Orleans Drive
Sunnyvale, CA 94089
Mary C. deRegt 20,000(12) 0.4%
1320 Orleans Drive
Sunnyvale, CA 94089
Michael S. Andrews 37,500(13) 0.6%
16776 Bernardo Center Drive, Suite #203
San Diego, CA 92121
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (9 PERSONS) 408,699(8)(14) 6.6%
</TABLE>
5
<PAGE> 8
- ----------
(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 13, 1998.
(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. Mr. Kanter disclaims any beneficial ownership of
the shares held by the BRT Partnership.
(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) In a schedule 13G filing with the Company dated February 9, 1997,
Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, reported beneficial ownership of 317,400 shares of Common Stock as
of December 31, 1997, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware Business
Trust, or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
Fund Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(7) 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
"Compensation of Executive Officers and Directors - Compensation of
Directors". Mr. Farkas disclaims any beneficial ownership of the shares
held by or issuable to Mr. Hellerstein, as Trustee of the Farkas Trusts.
(8) Does not include shares underlying options pursuant to the 1998 Director
Stock Incentive Plan which the shareholders are being asked to approve.
See Proposal No. 2: Approval of 1998 Director Stock Incentive Plan.
(9) Includes 20,000 shares of Common Stock issued to Mr. Morrison upon exercise
of certain warrants funded through a loan from the Company. See "
Compensation of Executive Officers and Directors - Compensation of
Directors ".
(10) Mr. Kanter disclaims any beneficial ownership of the shares held by BRT
Partnership and Windy City, Inc.
(11) Such beneficial share ownership reflects an aggregate of 55,000 shares of
underlying granted options of Common Stock, of which 21,250 shares are
currently exercisable.
(12) Such beneficial ownership reflects an aggregate of 20,000 shares of
underlying granted options of Common Stock, of which 5,000 shares are
currently exercisable.
(13) Such beneficial share ownership reflects an aggregate of 37,500 shares of
underlying granted options of Common Stock, of which 9,375 shares are
currently exercisable.
(14) Such beneficial share ownership reflects an aggregate of 112,500 shares of
underlying granted options of Common Stock, of which 35,625 shares are
currently exercisable.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of Form 3 and 4 and amendments thereto furnished to
the Company pursuant to Rule 16a-3(e) during its most recent fiscal year end and
Form 5 and amendments thereto furnished to the Company with respect to its most
recent fiscal year, the Company is not aware of any directors, officers or
beneficial owner of more than 10% of the shares of the Company's Common Stock
who failed to file on a timely basis, as disclosed in the above Forms, reports
required by Section 16(a) of the Exchange Act during the most recent fiscal year
or prior fiscal year except that Michael S. Andrews did not timely file a Form 3
when he was elected Chief Technical Officer in March of 1996. The Form 3 was
filed in December of 1997.
6
<PAGE> 9
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, 1997,
to the Company's most highly paid executive officers serving at the end of 1997
whose total annual salary and bonus exceeded $100,000:
<TABLE>
<CAPTION>
LONG-TERM
OTHER COMPENSATION
ANNUAL AWARDS
ANNUAL COMPENSATION COMPENSATION (OPTIONS)
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (NO. OF SHARES)
- --------------------------- ---- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
William J. Volz .................... 1997 $125,252 -- -- --
President and Chief Executive 1996 110,374 -- -- --
Officer 1995 118,942 -- -- --
William Jackson .................... 1997 122,003 -- -- 25,000
Vice President, 1996 96,486 -- -- --
Manufacturing 1995 105,756 -- -- 15,000
Todd J. Ashford .................... 1997 120,698(1) -- -- --
Chief Financial 1996 108,581(1) -- -- --
Officer 1995 99,334(1) -- -- 7,000
Michael S. Andrews ................. 1997 134,200(2) -- -- 25,000
Chief Technical
Officer
</TABLE>
- ------------------------
(1) Includes compensation consisting of automobile allowances of $6,000 for
each of 1995, 1996, and 1997.
(2) Includes compensation consisting of automobile allowances of $4,200 for
1997.
STOCK OPTIONS
The following table sets forth information concerning the Stock Options
granted under the 1996 Stock Incentive Plan and 1990 Incentive and Non-Qualified
Stock Option Plan during the 1997 fiscal year to the named Executive Officers.
The table also sets forth hypothetical gains or potential "option spreads" for
those options at the end of their respective ten-year terms. These potential
realizable values are based on the assumption that the market price of the
Company's common stock will appreciate at a rate of five percent (5%) and ten
percent(10%), compounded annually, from the date the option was granted to the
last day of the full option term. The actual value realized upon the exercise of
these options, if any, will be dependant upon the future performance of the
Company's common stock and overall market conditions. During the 1997 fiscal
year, no stock appreciation rights were granted to the named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS OPTIONS EXERCISE APPRECIATION FOR
GRANTED GRANTED TO PRICE OPTION TERM
(NO. OF EMPLOYEES IN PER EXPIRATION -----------------------
NAME SHARES) FISCAL YEAR SHARE ($) DATE 5% ($) 10% ($)
- ------------------------ ---------- ----------------- --------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
William J. Volz ........ -- -- -- -- -- --
William Jackson ........ 25,000(1) 13% 2.125 August 1997 2,675 5,325
Todd J. Ashford ........ -- -- -- -- -- --
Michael S. Andrews ..... 25,000(1) 13% 2.125 August 1997 2,675 5,325
</TABLE>
- ---------------------
(1) Options vest over a three year period. Twenty-five percent vest immediately
upon grant, with the remainder vesting equally over the next three years.
7
<PAGE> 10
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information related to the number of stock
options exercised during 1997, the number of exercisable and unexercisable
options held at December 31, 1997, and the year-end value of exercisable and
unexercisable options held at December 31, 1997.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY OPTIONS AT
UNEXERCISED OPTIONS FISCAL YEAR END (MARKET
AT FISCAL YEAR-END PRICE OF SHARES LESS
SHARES (NO. OF SHARES) EXERCISE PRICE) ($)(2)(3)
ACQUIRED ON VALUE -------------------------- -----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Volz ....... -- -- -- -- -- --
William Jackson ....... -- -- 17,500 22,500 3,906 11,719
Todd J. Ashford ....... -- -- 5,250 1,750 -- --
Michael S. Andrews .... -- -- 6,250 18,750 3,906 11,719
</TABLE>
- ------
(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 31, 1997.
(3) Assuming a stock price of $2.750 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 31, 1997.
COMPENSATION OF DIRECTORS
Directors did not receive any cash compensation during 1997 or the previous
eleven years for either their services as directors or for their services on the
various Board committees. 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, Mr.
Farkas and Mr. Morrison, to purchase 120,000 shares of Common Stock at the
warrant exercise price of $2.5625. The note to Mr. Farkas is in the principal
amount of $256,250 and the note to Mr. Morrison is in the principal amount of
$51,250. The notes mature July 1998, accrue interest at the reference rate of
the Company's primary commercial lender plus 2% and are secured by the shares of
Common Stock acquired upon exercise of the warrants. The warrant issued to Mr.
Kanter was transferred by him after the 1995 fiscal year end and is currently
outstanding.
Under the Company's 1998 Director Stock Incentive Plan (the "Director Plan")
which is being submitted to the shareholders for approval, each individual who
is elected and continues to serve as a non-employee Board member will receive
automatic option grants, each for 10,000 shares, at annual intervals over his
period of continued Board service, beginning with the 1998 Annual Meeting for
each of the current non-employee directors, if the Director Plan is approved and
if he is re-elected to the Board. Each non-employee director who is initially
elected or appointed after approval of the Director Plan will be eligible for
automatic option grants upon his re-election to the Board at the first annual
Shareholders Meeting following his initial election or appointment to the Board.
Each of these options will have an exercise price per share equal to the fair
market value of the Company's Common Stock on the automatic grant date and has a
maximum term of five years. Each 10,000 share option will be immediately
exercisable for all the option shares.
The Director Plan also provides for special one-time option grants to
certain Board members. If the Director Plan is approved, then the following
special one-time option grants will be made on the date of the 1998 Annual
Meeting: a 75,000 share option grant to Howard Farkas, the Company's Chairman of
the Board, a 75,000 share option grant to Burton Kanter and a 200,000 shares
option grant to William Volz, the Company's President. In accordance with the
terms of the Director Plan, each option grant will have an exercise price equal
to the fair market value of the Company's Common Stock on the date of grant and
will have a maximum term of five years. Each such option will be immediately
exercisable for all the option shares. These special one-time grants to Mr.
Farkas and Mr. Kanter will be in addition to the annual automatic option grant
for 10,000 shares they will each receive under the other provisions of the
Director Plan upon their re-election to the Board. Mr. Volz will not be eligible
for these automatic option grants while he is an employee of the Company. The
Board of Directors believes that the special one-time option grants to be made
pursuant to the Director Plan provide appropriate compensation for the time and
effort contributed by Mr. Farkas and Mr. Kanter to the Company over the past
three years and for the services of Mr. Volz over the past ten years. Both Mr.
Farkas and Mr. Kanter have spent considerable time and effort assisting Company
management in addressing the various issues faced by the Company over the past
three years, and Mr. Volz has received no stock option grants from the Company
over the last ten years.
No other compensation is paid to directors of the Company in respect of
their services as directors.
8
<PAGE> 11
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, 1997. Mr. Volz was and currently is the Company's
President and Chief Executive Officer. Mr. Farkas and Mr. Kanter each received
warrants to purchase 100,000 shares of the Company's Common Stock during the
fiscal year ended December 31, 1995. Mr. Farkas exercised his warrants during
1996 through the extension of a loan from the company. See "Compensation of
Executive Officers and Directors - Compensation of Directors." Each of them is
eligible to receive awards under the Company's 1996 Stock Incentive Plan and
Mr. Volz is eligible to receive option grants under the Company's 1990 Incentive
and Non-qualified Stock Option Plan, if the Director Plan is approved, each of
them will receive special one-time option grants and Mr. Farkas and Mr. Kanter,
as non-employee members of the Board, will receive automatic annual option
grants. See "Proposal No. 2: Approval of 1998 Director 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 1996 Stock Incentive
Plan or the 1990 Incentive and Non-qualified Stock Option Plan.
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 significantly above the
levels in effect for them for the 1995 fiscal year. There was one exception to
this policy: the salary for Mr. Jackson was increased during 1997 to take
into account his added responsibilities.
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.
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: a) the Logic
Devices Incorporated Employee Stock Ownership Plan (the "ESOP"), and b) the
Logic Devices Incorporated Incentive and Non-qualified Stock Option Plan (the
"Option Plan") and the 1990 Stock Incentive Plan (together with the Option Plan,
the "Stock Incentive Plans"). No shares remained available under the Option Plan
in 1997 so the shareholders approved the 1996 Stock Incentive Plan at last
year's annual meeting.
9
<PAGE> 12
The ESOP was 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 was 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 distributions of additional shares made to executive
officers after 1994 under the ESOP.
Under the Stock Incentive Plans, the Compensation Committee from time to
time approves grants 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 Stock Incentive Plans. The
options granted to executive officers under the Stock Incentive Plans for the
years 1995 to 1997 are included in the Summary Compensation Table as Long-Term
Compensation Awards.
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 Stock
Incentive Plans, but Mr. Volz has elected not to receive any option grants under
the Stock Incentive Plans. If the Director Plan is approved by the shareholders,
he will receive a special one-time stock option grant under the Director Plan
but, as an employee, will not be eligible to receive automatic annual grants
which will be received by the non-employee members of the Board of Directors.
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
10
<PAGE> 13
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 and S&P 500 Index for the period of
five years commencing December 31, 1992 and ending December 31, 1997. The graph
and table assume that $100 was invested on December 31, 1992 in each of the
Company's Common Stock, the NASDAQ Electronics Components Index and the S&P 500
Index and that all dividends were reinvested.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Elec. Components Stock Index $100 $215 $237 $393 $679 $456
S&P 500 $100 $112 $110 $148 $178 $252
LOGC $100 $173 $ 98 $305 $ 80 $129
</TABLE>
11
<PAGE> 14
PROPOSAL NO. 2:
APPROVAL OF 1998 DIRECTOR STOCK INCENTIVE PLAN
The shareholders are being asked to vote on a proposal to approve the 1998
Director Stock Incentive Plan (the "Director Plan"). The terms and provisions of
the Director Plan are described more fully below by the Company. The
description, however, is not intended to be a complete summary of all the terms
of the Director Plan. A copy of the Director Plan will be furnished by the
Company to any shareholder upon written request to the Corporate Secretary: 1320
Orleans Drive, Sunnyvale, CA 94089, (408) 542-5400.
PURPOSE
The purposes of the Director Plan are to make service on the Board more
attractive to present and prospective non-employee Board members, since the
continued service of qualified non-employee directors is considered essential to
the management, growth and sustained financial success of the Company and to
make specified one-time option grants to specific Board Members for their many
contributions to the Company to date.
ELIGIBILITY
Each non-employee Board member will be eligible to receive automatic
option grants under the Director Plan. As of the date of this Proxy Statement,
four of the Company's Board members were eligible to receive automatic option
grants under the Director Plan. Mr. Volz will be eligible to receive the
one-time option grant discussed under "Special Option Grants" below, but not the
automatic option grants as long as he is an employee of the Company.
AUTOMATIC OPTION GRANTS
Under the Director Plan, each individual who is elected or appointed to
the Board as a non-employee Board member will be eligible to receive automatic
10,000 share grants at each Annual Shareholders Meeting at which he is
re-elected to the Board, beginning with the 1998 Annual Meeting, if the Director
Plan is approved. Each non-employee director who is initially elected or
appointed after approval of the Director Plan will be eligible for automatic
option grants upon his re-election to the Board at the first Annual Meeting
following the date of his initial election or appointment to the Board.
SPECIAL OPTION GRANTS
The Director Plan also provides for special one-time option grants of
75,000 shares to each of Mr. Howard Farkas, the Company's Chairman of the Board,
Mr. Burton Kanter and 200,000 shares to Mr. William Volz, the Company's
President. Each grant will be made on the date of the 1998 Annual Meeting,
provided the Director Plan is approved by the shareholders. In accordance with
the terms of the Director Plan, each option grant will have an exercise price
equal to the fair market value of the Company's Common Stock on the date of
grant and will have a maximum term of five years. Each option will be
immediately exercisable for all the option shares.
The Board of Directors believes that the special one-time share option
grants to be made pursuant to the Director Plan provides appropriate
compensation for the time and effort contributed by Mr. Farkas and Mr. Kanter to
the Company over the past three years and for the services of Mr.. Volz over the
past ten years. Both Mr. Farkas and Mr. Kanter spent considerable time and
effort assisting the Company management in addressing the various issues faced
over the past three years by the Company, and Mr. Volz has received no option
grants from the Company over the past ten years. These special one-time option
grants will be in addition, if the Director Plan is approved, to the 10,000
share option grants to be made to Mr. Farkas and Mr. Kanter under the Director
Plan upon their re-election to the Board at the 1998 Annual Meeting. Mr. Volz
will not be eligible for the automatic option grants as long as he is an
employee of the Company.
12
<PAGE> 15
PRICE AND EXERCISABILITY
The option price per share will be 100% of the fair market value of the
Common Stock on the grant date, and no option may be outstanding for more than a
5-year term. Granted options will be immediately exercisable.
Upon exercise of the option, the option price for the purchased shares
will be immediately payable: a) in cash or cash equivalents, b) by offsetting
any other amounts owed to the holder by the Company, c) in shares of Common
Stock valued at fair market value on the date of exercise, d) on a "net
issuance" basis or e) any combination of the foregoing. "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 options are being
exercised. The effect of such issuance is 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 option is exercised and will in essence surrender the remaining one-third to
the Company in payment of the exercise price.
SECURITIES SUBJECT TO PLAN
The total number of shares of Common Stock issuable over the term of the
Director Plan may not exceed 550,000 shares.(1) Such shares will be made
available either from the Company's authorized but unissued Common Stock or from
Common Stock reacquired by the Company.
If any option granted under the Director Plan expires or terminates
unexercised prior to exercise in full, then the number of shares for which such
option is not exercised may be made the subject of subsequent grants under the
Director Plan.
CHANGES IN CAPITALIZATION
In the event any change is made to the Common Stock issuable under the
Director Plan by reason of any stock split, stock dividend, combination of
shares, exchange of shares or other change in the corporate structure of the
Company effected without receipt of consideration, appropriate adjustments will
be made to (i) the aggregate number and/or class of shares of Common Stock
available for issuance under the Director Plan, (ii) the number of shares of
Common Stock to be made the subject of each subsequent automatic grant and (iii)
the number and/or class of shares of Common Stock purchasable under each
outstanding option and the exercise price payable per share so that no dilution
or enlargement of benefits will occur under such option.
VALUATION
For purposes of establishing the option price and for all other valuation
purposes under the Director Plan, the fair market value per share of Common
Stock on any relevant date is to be determined in accordance with the following
rules:
(i) If the Common Stock is not at the time listed or admitted
to trading on any stock exchange but is traded on the
NASDAQ National Market, then the fair market value will be
deemed equal to the closing selling price per share of
Common Stock on the NASDAQ National Market on the date in
question.
(ii) If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the fair
market value will be the closing selling price per share of
Common Stock on the date in question on the securities
exchange serving as the primary market for the Common
Stock, as such price is officially quoted on such exchange.
As of April 7, 1998, the fair market value per share of the Company's common
stock was $3.188 per share, based on the closing selling price per share on such
date on the NASDAQ National Market.
- ----------
(1) This number is subject to adjustment in the event of certain
changes to the capitalization of the Company. See "Changes in
Capitalization" below.
13
<PAGE> 16
TERM OF THE PLAN
The Director Plan will terminate upon the earlier of June 16, 2008 or the
date all shares available for issuance under the Director Plan are issued or
cancelled pursuant to the exercise or cancellation of options granted under the
Director Plan. Any options outstanding at the time of the termination of the
Director Plan will remain in force in accordance with the provisions of the
instruments evidencing such grants.
TRANSFERABILITY
The stock option grants will generally be transferable subject to
applicable securities laws. The options as well as the shares of Common Stock
issuable upon exercise of the options 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 Board of Directors may, in its discretion, elect to make certain
options granted under the Director Plan non-transferable or limit
transferability to transfers under the laws of descent and distribution and/or
intra-family transfers in order to allow grantees to facilitate estate planning
transactions or divorce settlements. However, such restrictions on
transferability for options granted under the Director Plan are not currently
contemplated.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS GRANTED UNDER THE DIRECTOR PLAN
Options granted under the Director Plan are nonstatutory options which are
not intended to satisfy the requirements of Section 422 of the Internal Revenue
Code. The tax treatment of a nonstatutory option is summarized below.
No taxable income is recognized by an optionee upon the grant of a
nonstatutory option. The optionee will in general recognize ordinary income in
the year in which the option is exercised equal to the excess of the fair market
value of the purchased shares at the date of exercise over the exercise price.
However, special provisions of the Internal Revenue Code apply to the
acquisition of shares under a nonstatutory option if the purchased shares are
subject to substantial risk of forfeiture such as the short-swing profit
restrictions of the Federal securities laws. These special provisions may be
summarized as follows:
If the shares acquired upon exercise of the nonstatutory option are
subject to substantial risk of forfeiture, the optionee will not recognize any
taxable income at the time of exercise but will have to report as ordinary
income, as and when the repurchase right or the risk of forfeiture lapses, an
amount equal to the difference between the fair market value of the shares on
the date the repurchase right or risk of forfeiture lapses and the option price
paid for the shares.
The optionee may, however, elect under Section 83(b) of the Internal
Revenue Code to include as ordinary income in the year of exercise of the
nonstatutory option an amount equal to the difference between the fair market
value of the purchased shares on the date of exercise (determined as if the
shares were not subject to the Company's repurchase right or other substantial
risk of forfeiture) and the option price paid for the shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right or risk of forfeiture lapses.
The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee in connection with the
exercise of the nonstatutory option. The deduction will in general be allowed
for the taxable year of the Company which includes the last day of the calendar
year in which such ordinary income is recognized by the optionee.
ACCOUNTING TREATMENT
Option grants with exercise prices not less than the fair market value of
the option shares on the grant date will not result in any charge to the
Company's reported earnings. However, the Company must disclose, in footnotes to
the Company's financial statements, the impact those options would have had upon
the Company's reported earnings were the value of those options at the time of
grant treated as compensation expense. In addition, the number of outstanding
options may be a factor in determining the Company's earnings per share on a
fully-diluted basis.
14
<PAGE> 17
SHAREHOLDER APPROVAL
The affirmative vote of a majority of the Company's 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 required
quorum) is required for the approval of the Director Plan. The shares owned by
the directors will not be voted with respect to the Director Plan. The Board
believes that the Director Plan will make service on the Board more attractive
to present and prospective non-employees and that the one-time automatic share
option grants provide appropriate compensation for the time and effort
contributed by Mr. Farkas and Mr. Kanter to the Company over the past three
years and for the services of Mr. Volz over the past ten years. ACCORDINGLY, THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. If the shareholders do
not approve the proposal, then neither the special one-time option grants nor
the automatic option grants will be made. However, the directors remain eligible
for grants under the Company's 1996 Stock Incentive Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company engaged in no transactions or series of similar transactions
since the beginning of its last fiscal year with any of its officers, directors
or principal shareholders, or any of their affiliates in which the amount
invested exceeded $60,000 and no such transactions are currently contemplated
other than as described under Proposal No. 2 - Approval of 1998 Director Stock
Incentive Plan. There was outstanding indebtedness to the Company from two of
its non-employee directors during the last fiscal year, and the terms and
circumstances of the indebtedness is discussed under "Compensation of Executive
Officers and Directors Compensation of Directors."
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.
ACCOUNTANTS
The firm of Meredith, Cardozo, Lanz & Chiu LLP was the Company's principal
accountants for the fiscal year ended December 31, 1997 and has been selected to
examine the financial statements of the Company for 1998. A representative of
Meredith, Cardozo, Lanz & Chiu 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.
1999 ANNUAL MEETING OF SHAREHOLDERS
Any proposals of shareholders intended to be personally presented at the
1999 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, 1998. 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
Mary C. deRegt, Secretary
April 29, 1998
Sunnyvale, California
<PAGE> 18
LOGIC DEVICES INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Howard L. Farkas, Burton W. Kanter, Albert Morrison, Jr., William J. Volz,
Bruce B. Lusignan and each of them, are hereby constituted and appointed the
lawful attorneys and proxies of the undersigned, with full power of
substitution, to vote and act as proxy with respect to all shares of common
stock, no par value, of LOGIC DEVICES INCORPORATED standing in the name of the
undersigned on the books of the company at the close of business on May 13,
1998, at the Annual Meeting of Shareholders to be held at the offices of Logic
Devices Incorporated, 1320 Orleans Drive, Sunnyvale, California 94089 at 2:00
P.M., Local time, on Tuesday, June 16, 1998, or any adjournment thereof, as
follows:
1. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES [ ] CUMULATE my votes [ ] WITHHOLD my vote
listed (except as as follows (insert for all nominees
marked to the percentage of vote to the left
contrary) for each nominee).
_______ Howard L. Farkas
_______ Burton W. Kanter
_______ Albert Morrison, Jr.
_______ William J. Volz
_______ Bruce B. Lusignan
(INSTRUCTION: To withhold authority to vote, cumulatively or otherwise,
for any individual nominee, strike a line through the nominee's name listed
under the cumulative box above.)
2. Approval of 1998 Director Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
(To be signed on reverse side)
<PAGE> 19
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE LISTED NOMINEES, (EXCEPT AS MARKED TO THE CONTRARY) INCLUDING CUMULATIVELY
FOR ALL OR FEWER THAN ALL OF THE NOMINEES IN THE SOLE DISCRETION OF THE PROXIES
AND FOR THE APPROVAL OF THE 1998 DIRECTOR STOCK INCENTIVE PLAN.
Please sign proxy as name appears thereon. Joint owners should each sign
personally. Trustees and others signing in a representative capacity should
indicate the capacity in which they sign.
Dated: , 1998
------------------------
PLEASE MARK, SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
--------------------------------------
Signature
--------------------------------------
Signature if held jointly
