<PAGE> 1
SCHEDULE 14A INFORMATION
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
[ ] 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 Rule 14a-11(c) or Rule 14a-12
---------------
LOGIC DEVICES INCORPORATED
(Exact name of registrant as specified in its charter)
---------------
N/A
---------------
(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 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 offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the former schedule and the date of its filing.
<PAGE> 2
LOGIC DEVICES INCORPORATED
1320 ORLEANS DRIVE
SUNNYVALE, CA 94089
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 31, 1999
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 March 31, 1999 at 8:00 a.m., local time, for the following
purposes:
1. To elect a Board of Directors; and
2. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on February 16, 1999, 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
January 28, 1999
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
MARCH 31, 1999
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 February 16, 1999 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 February 18, 1999.
THE MEETING
On January 28, 1999, there were issued and outstanding 6,632,388 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. 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."
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<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" (including if a shareholder properly gives
notice of intention to cumulate, 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.
The cost of soliciting proxies will be borne by the Company. 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 therefore, by personal interview, mail, telephone or
telegram. The Company will also request brokers, custodians, nominees 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, custodians,
nominees and other fiduciaries and will reimburse such persons for their
reasonable out-of-pocket expenses.
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<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.
The Board of Directors recommends a vote FOR all of the nominees.
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS
The following information is furnished with respect to each nominee:
<TABLE>
<CAPTION>
YEAR
FIRST PRINCIPAL OCCUPATION
NOMINEE AGE ELECTED OTHER DIRECTORSHIPS (1)
- ------- --- ------- -----------------------
<C> <C> <C> <S>
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., 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.
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 68 1983 Mr. Kanter has served as a director of the Company since
1983. He is Chief Executive Officer of Walnut Capital Corp.,
a 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 First Health Group
Corp., Scientific Measurement Systems, Inc., and Walnut
Financial Services, Inc.
Albert Morrison, Jr. 61 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. He is a member of the Board of Directors
of Walnut Financial Services, Inc. and Heico Corporation and
a Trustee of the Greater Miami Chamber of Commerce.
Bruce B. Lusignan 62 1996 Dr. Lusignan has served as a director since 1996. He received
his BSME, MS in Engineering Science, and Ph.D. in Electrical
Engineering from Stanford University where he has conducted
active research programs for over 34 years. He directs the
Stanford University Communications Satellite Planning Center
which is actively involved in bringing modern
telecommunications and educational services to developing
nations. He also directs the Center for International
Cooperation in Space, through which he has presented papers
in Japan, Russian and Vienna. He is a consultant to many
world governments on telecommunications planning; to
corporations on technical evaluations; and to local
governments on environmental impact studies.
</TABLE>
5
<PAGE> 6
- ------------
(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 Messrs. Farkas, Kanter and Morrison, and
the members of the Compensation Committee are Messrs. Farkas, Volz and 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 1998 (which
began January 1, 1998 and ended September 30, 1998). 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 1998. 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 three meetings during fiscal 1998. All members of the Board
attended each of the meetings during the year, two of which were held in person
and one of which was held by conference telephone call.
6
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 28, 1999, certain information
concerning the beneficial ownership of Common 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 11.3%
1139 Delaware Street
Denver, CO 80204
BRT Partnership(4) 574,801 8.7%
120 South Riverside Drive, Suite 1420
Chicago, Illinois 60606
Windy City, Inc. (5) 500,000 7.5%
8000 Towers Crescent Drive, Suite 1070
Vienna, VA 22182
DIRECTORS:
Howard L. Farkas 185,000(6)(7)(8) 2.8%
6601 East Progress Avenue
Englewood, CO 80111
William J. Volz 632,664(7) 9.3%
1320 Orleans Drive
Sunnyvale, CA 94089
Albert Morrison, Jr. 30,877(8)(9) 0.5%
1001 Brickell Bay Drive, Ninth Floor
Miami, FL 33131
Burton W. Kanter 100,877(7)(8)(10) 1.5%
2 North LaSalle Street, Twenty Second Floor
Chicago, IL 60602
Bruce B. Lusignan 10,000(8) 0.0%
Communications Satellite Planning Center
Stanford University
Stanford, CA 94305
NON-DIRECTOR EXECUTIVE OFFICERS:
William Jackson 27,500(11) 0.4%
1320 Orleans Drive
Sunnyvale, CA 94089
Mary C. deRegt 5,000(12) 0.1%
1320 Orleans Drive
Sunnyvale, CA 94089
Michael S. Andrews 15,625(13) 0.2%
1320 Orleans Drive
Sunnyvale, CA 94089
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (8 PERSONS) 1,007,543(6)(9)(14) 14.3%
</TABLE>
7
<PAGE> 8
- ----------
(1) Assumes the exercise of any warrants or options held by such person which
are exercisable as of the date of this Proxy Statement or within 60 days
thereafter, but not the exercise of any other person's warrants or
options.
(2) Assumes 6,632,388 shares of Common Stock outstanding as of January 28,
1999.
(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, the sole partners of which 25 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 189 shares of Windy City's Class A, Series A
Preferred Stock and all of the outstanding common stock of Windy City,
Inc. BRT Partnership may therefore be deemed to control Windy City, Inc.
(6) Consists in part 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.
(7) Such beneficial share ownership includes options for Common Stock obtained
from special one-time option grants of 75,000 shares to each of Mr. Farkas
and Mr. Kanter and 200,000 shares to Mr. Volz pursuant to the Logic
Devices Incorporated 1998 Director Stock Incentive Plan (the "1998
Director Stock Incentive Plan"). See "Compensation of Executive Officers
and Directors - Compensation of Directors".
(8) Such beneficial share ownership includes options for 10,000 shares of
Common Stock granted under the 1998 Director Stock Incentive Plan. See
"Compensation of Executive Officers and Directors - Compensation of
Directors".
(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 the number of shares underlying
granted options for Common Stock which are currently exercisable. Mr.
Jackson has also been granted options for an additional 27,500 shares of
Common Stock which are not currently exercisable and will not become
exercisable within 60 days from the date of this Proxy Statement.
(12) Such beneficial share ownership reflects the number of shares underlying
granted options for Common Stock which are currently exercisable. Ms.
deRegt has also been granted options for an additional 15,000 shares of
Common Stock which are not currently exercisable and will not become
exercisable within 60 days from the date of this Proxy Statement.
(13) Such beneficial share ownership reflects the number of shares underlying
granted options for Common Stock which are currently exercisable. Mr.
Andrews has also been granted options for an additional 18,750 shares of
Common Stock which are not currently exercisable and will not become
exercisable within 60 days from the date of this Proxy Statement.
(14) Such beneficial share ownership includes the ownership reported at
footnotes 3-13.
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 fiscal 1998, 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 Mr.
Andrews did not timely file a Form 3 when he was elected Chief Technical Officer
in March 1997 (he filed the Form 3 in December 1997) and Mr. Volz did not timely
file a Form 4 reflecting purchases of the Company's Common Stock in December
1997 and January 1998 (he filed a Form 4 disclosing such purchases in April
1998). In addition, Forms 5 with respect to option grants discussed under
"Compensation of Executive Officers Compensation of Directors" and option grants
to Mr. Jackson, Ms. deRegt and Mr. Andrews of which were previously due no later
than February 14, 1999 became due November 14, 1998 when the Company changed its
fiscal year end to September 30. These Forms 5 have not been filed as of the
date of this proxy statement.
8
<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 September 30,
1998, to the Company's most highly paid executive officers serving at the end of
fiscal 1998 whose total annual salary and bonus exceeded $100,000 for the twelve
months ended September 30, 1998:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION OTHER AWARDS
---------------------- ANNUAL COMPENSATION (NO. OF SHARES
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($) ($) UNDERLYING OPTIONS)
- --------------------------- ---- ------------- --------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
William J. Volz.......................... 1998 112,074 -- -- 200,000
President and Chief Executive Officer 1997 125,252 -- -- --
1996 110,374 -- -- --
William Jackson.......................... 1998 123,927 -- 8,849(3) 15,000
Chief Operating Officer 1997 122,003 -- -- 25,000
1996 96,486 -- -- 15,000
Michael S. Andrews(2).................... 1998 128,960 -- 4,200(4) 12,500
Chief Technical Officer 1997 135,000 -- 4,200(4) 25,000
</TABLE>
- ------------------------
(1) On September 22, 1998, Logic Devices Incorporated changed its fiscal year
end from December 31 to September 30, effective immediately. The salaries
listed above represent annual compensation for the period from October 1,
1997 through September 30, 1998. Therefore, the three months of salary for
the period from October 1, 1997 - December 31, 1997 appear in both the 1997
and 1998 annual compensation amounts.
(2) Mr. Andrews was not employed by the Company during 1996.
(3) Consists of compensation paid in 1998 in lieu of vacation not taken.
(4) Consists of automobile allowances of $4,200 for 1998 and 1997.
STOCK OPTIONS
The following table sets forth information concerning the options for Common
Stock granted under the 1996 Logic Devices Incorporated Stock Incentive Plan and
1998 Director Stock Incentive Plan during the twelve months ended September 30,
1998 to the named Executive Officers. The table also sets forth hypothetical
gains or potential "option spreads" for those options at the end of their
respective five-or ten-year terms. These potential realizable values are based
on the assumption that the market price of the Company's common stock would
appreciate at a rate of five percent (5%) and ten percent (10%), compounded
annually, from the date the option was granted to the last day of the full
option term. The actual value realized upon the exercise of these options, if
any, will be dependent upon the future performance of the Company's common stock
and overall market conditions. During the twelve months ended September 30,
1998, no stock appreciation rights were granted to the named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN TWELVE MONTHS
ENDED SEPTEMBER 30, 1998 POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK OPTION
OPTIONS OPTIONS EXERCISE APPRECIATION FOR
GRANTED GRANTED TO PRICE OPTION TERM
(NO. OF EMPLOYEES IN PER EXPIRATION ---------------------
NAME SHARES) PERIOD SHARES($) DATE 5%($) 10%($)
- ------------------- ------- ------------ --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
William J. Volz............... 200,000 46.0% 2.813 June 2003 155,277 343,186
William L. Jackson............ 15,000 0.4% 3.188 April 2008 30,079 76,225
Mary C. deRegt................ 20,000 0.5% 3.188 April 2008 40,105 101,633
Michael S. Andrews............ 12,500 0.3% 3.188 April 2008 25,066 63,521
</TABLE>
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<PAGE> 10
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information related to the number of exercisable
and unexercisable options for Common Stock held by the named Executive Officers
at September 30, 1998. At such date, no options held by the named Executive
Officers were "in-the-money". "In-the-money" options would be options whose
exercise price was less than the market price of the common stock at September
30, 1998. None of the named Executive Officers exercised any of his or her
options during the twelve months ended September 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED OPTIONS
AT FISCAL YEAR-END
(NO. OF SHARES)
---------------------------
NAME EXERCISABLE UNEXERCISABLE
- ----------------- ----------- -------------
<S> <C> <C>
William J. Volz............................. 200,000 --
William L. Jackson.......................... 27,500 27,500
Mary C. deRegt.............................. 5,000 15,000
Michael S. Andrews.......................... 15,625 18,750
</TABLE>
COMPENSATION OF DIRECTORS
Directors did not receive any cash compensation during the twelve months
ended September 30, 1998 or the previous twelve fiscal years for either their
services as directors or for their services on the various Board committees. The
three current non-employee directors, Messrs. Farkas, Kanter and Morrison, 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). The warrant issued
to Mr. Kanter was transferred by him after the 1995 fiscal year end and is
currently outstanding.
During 1996, the Company extended loans to Mr. Farkas and Mr. Morrison to
purchase an aggregate of 120,000 shares of Common Stock at the warrant exercise
price of $2.5625. These loans were evidenced by a promissory note from Mr.
Farkas in the principal amount of $256,250 and a promissory note from Mr.
Morrison in the principal amount of $51,250. The notes accrued interest at the
reference rate of the Company's primary commercial lender plus 2% and matured
July 1998. As of September 30, 1998, these notes were renegotiated to mature on
the earlier of July 24, 1999 or upon sale of the shares purchased with the
notes. Mr. Farkas and Mr. Morrison have agreed to sell their respective shares
if the market price of the Common Stock equals or exceeds $3.25 per share. The
rate of interest on the renegotiated promissory notes is once again the
reference rate of the Company's primary commercial lender plus two percent. The
aggregate amounts of the indebtedness, including accrued interest, as of the
date of this Proxy Statement are approximately $318,000 for Mr. Farkas and
$64,000 for Mr. Morrison, which amounts are the largest aggregate amount
outstanding under such arrangement since January 1, 1998. The indebtedness of
Messrs. Farkas and Morrison is secured by the 120,000 shares of Common Stock
that were acquired by them upon the exercise of their warrants.
Under the Company's 1998 Director Stock Incentive Plan, each individual who
is elected and continues to serve as a non-employee Board member receives
automatic option grants, each for 10,000 shares of Common Stock, at annual
intervals over his period of continued Board service, beginning with the first
annual Stockholders 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 10 years. Each 10,000 share option will be immediately
exercisable for all the option shares. Each of Messrs. Farkas, Kanter, Morrison
and Lusignan received an option to purchase 10,000 shares of Common Stock at an
exercise price of $2.813 on June 18, 1998 following his reelection as a member
of the Board by the stockholders of the Company on such date. In addition,
special one-time grants were made to Mr. Volz of options to purchase 200,000
shares and to each of Messrs. Farkas and Kanter of options to purchase 75,000
shares. All options granted in the special one-time grants have an exercise
price of $2.813 and have a term of five years.
10
<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
Messrs. Farkas, Volz and Kanter served as members of the Compensation
Committee of the Company's Board of Directors during the fiscal year ended
September 30, 1998. 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." Mr. Volz is eligible to
receive stock under the Company's 1996 Stock Incentive Plan and the Logic
Devices Incorporated Incentive and Non-Qualified Stock Option Plan (collectively
the "Stock Incentive Plans"). Mr. Farkas and Mr. Karter have received and will
receive options for Common Stock under the Company's 1998 Director Stock
Incentive Plan pursuant to its automatic grant provisions if reelected as
directors. See "Compensation of Executive Officers and Directors Compensation of
Directors". 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 Plans.
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 the period 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 one long-term
stock-based incentive compensation program, consisting of the Stock Incentive
Plans, in place for which each of the Company's executive officers have been
eligible to participate.
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<PAGE> 12
Under the Stock Incentive Plans, 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 Stock Incentive Plans. The
options granted to executive officers under the Stock Incentive Plans for the
Company's fiscal years 1996 to 1998 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 Logic Devices
Incorporated Employee Stock Ownership Plan (which has been terminated) and the
Stock Incentive Plans, but Mr. Volz has elected not to receive any option grants
under the Stock Incentive Plans. He did receive a special one-time option grant
of 200,000 shares under the 1998 Director Stock Incentive Plan but, as long as
he is an employee of the Company, is not eligible to receive annual option
grants under the 1998 Director Stock Incentive Plan upon reelection to 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
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COMPANY PERFORMANCE GRAPH
COMPARISON OF 57 MONTH 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, 1993 and ending September 30, 1998. The graph
and table assume that $100 was invested on December 31, 1993 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.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Elec. Components Stock Index $ 100 $ 110 $ 183 $ 316 $ 332 $ 353
---------------------------------------------------------------------------------
S&P 500 $ 100 $ 101 $ 139 $ 171 $ 229 $ 242
---------------------------------------------------------------------------------
LOGC $ 100 $ 41 $ 113 $ 34 $ 42 $ 27
---------------------------------------------------------------------------------
</TABLE>
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has 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, to the knowledge of the Company any of their
affiliates in which the amount invested exceeded $60,000 and no such
transactions are currently contemplated. 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."
On September 30, 1998, the Company sold 510,638 newly issued shares of
Common Stock for $1 15/32 per share or $750,000 in the aggregate in equal
amounts to Mr. Volz and BRT Partnership. The per share sale price equals the
closing price for the Company's Common Stock on September 17, 1998, the date on
which the parties entered into an agreement to effect such sale. The sale was
not registered under the Securities Act of 1933 in reliance on an exemption from
the registration requirements thereof under Section 4(2) of such act and the
rules promulgated thereunder and on other exemptions. At the time of the sale,
the Company entered into an agreement to register resales of such shares in the
future but to date has not filed a registration statement covering such resales.
No broker-dealers or underwriters were used to effect such sale and no brokerage
commissions or underwriting discounts were paid in connection therewith.
Any future transactions with the Company's officers, directors or principal
shareholders, or any of their known 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 BDO Seidman LLP, the successor by merger to Meredith, Cardozo,
Lanz & Chiu LLP, was the Company's principal independent public accountants for
the fiscal year ended September 30, 1998. A representative of BDO Seidman 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. The Company has not selected, and the Audit Committee of the Board of
Directors has not recommended for selection, a firm of independent public
accountants for the Company's fiscal year ending September 30, 1999. BDO Seidman
LLP has not declined to stand for reelection, its audit opinion for fiscal 1998
was not adverse, did not contain a disclaimer of opinion and was not modified as
to uncertainty, audit scope or accounting principles. The Company is not aware
of any disagreements between it and BDO Seidman LLP which may have resulted in
any of the foregoing. Rather, the Audit Committee is currently assessing what
firm of independent public accountants can best serve the Company during its
current fiscal year based upon cost, responsiveness, familiarity with the
semiconductor industry and other factors that the Audit Committee may deem
relevant.
2000 ANNUAL MEETING OF SHAREHOLDERS
Any proposals of shareholders intended to be personally presented at the
2000 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 September 30, 1999. 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
January 28, 1999
Sunnyvale, California
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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 February 16,
1999, at the Annual Meeting of Shareholders to be held at the offices of Logic
Devices Incorporated, 1320 Orleans Drive, Sunnyvale, California 94089 at 8:00
A.M., Local time, on Wednesday, March 31, 1999, or any adjournment thereof, as
follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS:
FOR ALL NOMINEES CUMULATE my votes as follows WITHHOLD my vote for
listed (except as marked (insert percentage of vote for each nominee). for all nominees to the left
to the contrary) ___________ Howard L.Farkas
___________ Burton W. Kanter
___________ Albert Morrison, Jr.
___________ William J. Volz
___________ Bruce B. Lusignan
</TABLE>
(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. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
(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.
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:________________________, 1999
PLEASE MARK, SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
------------------------------------
Signature
------------------------------------
Signature if held jointly
