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>
LOGIC DEVICES INCORPORATED
1320 Orleans Drive
Sunnyvale, CA 94089
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 4, 2000
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 April 4, 2000 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, 2000, are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors,
Kimiko Lauris
Secretary
Sunnyvale, California
January 28, 2000
THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL SHAREHOLDERS TO
ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN
THE ACCOMPANYING REPLY ENVELOPE. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON.
<PAGE>
LOGIC DEVICES INCORPORATED
1320 Orleans Drive
Sunnyvale, CA 94089
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
April 4, 2000
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, 2000 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 21, 2000.
THE MEETING
On January 28, 2000, there were issued and outstanding 6,650,488 shares of
common stock, no par value ("Common Stock"), held by approximately 3,700 holders
of record. Each share of Common Stock entitles the holder thereof to one vote on
all matters submitted to a vote of shareholders, except for the election of
directors in which holders of Common Stock may cumulate their votes.
The presence in person or by proxy of the holders of a majority of the
Company's outstanding shares of Common Stock will constitute a quorum. The
affirmative vote of a majority of the outstanding shares of Common Stock
represented and voting at the meeting, in person or by proxy, (which shares
voting affirmatively also constitute at least a majority of the 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."
1
<PAGE>
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.
2
<PAGE>
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 which 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:
Year First Principal Occupation and
Nominee Age Elected Other Directorships (1)
- -------------------- ---- ----------- --------------------------------------
Howard L. Farkas 75 1983 Mr. Farkas is Chairman of the Board
of the Company and has been a director
since 1983. Mr. Farkas is the owner
and managing broker of Windsor Gardens
Realty, Inc., a residential real
estate brokerage company, which he
co-founded in 1964. He also serves as
President of Farkas Group, Inc., a
company that manages various business
holdings of the Farkas Family Trusts.
He serves as a director of Synthetech,
Inc., a chemical research and
manufacturing company whose products
are used extensively in new drug
research, Union Bank & Trust Company,
Northwestern Engineering Company, U.S.
Nursing Corporation, and Ivory LLC and
Aragorn LLC, which are in the gas and
oil exploration and development
business.
William J. Volz 52 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 69 1983 Mr. Kanter has served as a director
of the Company since 1983. 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 THCG, Inc.
Albert Morrison, Jr. 63 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 Heico
Corporation and a Trustee of the
Greater Miami Chamber of Commerce.
3
<PAGE>
Fredric J. Harris 59 1999 Mr. Harris joined the Board of
Directors in 1999. He holds the CUBIC
Signal Processing Chair of the
Communication Systems and Signal
Processing Institute at San Diego
State University, where he has taught
since 1967. He holds a number of
patents on digital receiver and
digital signal processing ("DSP")
technology and lectures throughout the
world on DSP applications. He consults
for organizations requiring
high-performance DSP systems and is a
senior member of the Institute of
Electrical and Electronic Engineers.
- ----------
(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 required to be 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 1999. All
members of the Audit Committee were present.
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 1999. 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 that would otherwise be delegated to such a
committee. In recommending Board candidates, the Board seeks individuals of
proven judgment 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 1999. All members of the Board
attended each of the meetings during the year, one of which was held in person
and three of which were held by conference telephone call.
EXECUTIVE OFFICERS
The following is a list of the executive officers of the Company as of
January 28, 2000:
Name Age Position(s) held with the Company
---- --- ---------------------------------
William J. Volz 52 President
Director
Kimiko Lauris 29 Chief Financial Officer
Secretary
William L. Jackson 51 Senior Vice President
Chief Operating Officer
Michael S. Andrews 37 Chief Technical Officer
Dennis Gross 45 Vice President of Sales
Timothy J. Flaherty 39 Vice President of Marketing
4
<PAGE>
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.
Ms. Lauris joined the Company in 1999 as Chief Financial Officer. Ms.
Lauris is a Certified Public Accountant, with a Bachelor's of Science degree in
Accounting and a Masters of Business Administration from University of
California, Irvine. Prior to joining the Company, she was General Accounting
Manager at ArthroCare Corporation, an Audit Manager at BDO Seidman, LLP, an
In-Charge Accountant with the Office of the California State Auditor, and a
Staff Accountant with Burnett, Umphress + Kilgour, CPAs.
Mr. Jackson joined the Company in 1990. Before joining the Company, Mr.
Jackson held various engineering and management positions at Advanced Micro
Devices ("AMD") and Monolithic Memories Inc. ("MMI"). Prior to AMD and MMI, he
was employed by Raytheon Corporation, Litronix Corporation, and Western
Electric. Mr. Jackson was appointed Chief Operating Officer in 1998.
Mr. Andrews joined the Company in 1996 and was appointed Chief Technical
Officer in 1997. He is an adjunct professor with San Diego State University,
where he has taught courses in DSP and video processing. Before joining the
Company, Mr. Andrews held positions with Star Semiconductor Corporation and
Texas Instruments, Inc. During his time with Texas Instruments, Inc., he served
on various Telecommunications Industry Association directed technical committees
developing 2nd and 3rd generation digital cellular systems.
Mr. Gross joined the Company in 1994 and was appointed Vice President of
Sales in November 1999. For the past five years, he has served as European Sales
Director, in which time Europe has been the Company's fastest growing sales
region. Prior to joining the Company, Mr. Gross was with Raytheon Corporation.
Mr. Flaherty joined the Company in 1986 and was appointed Vice President of
Marketing in June 1999. He earned a Bachelor's of Science degree in Electrical
Engineering from Santa Clara University in 1982. Prior to joining the Company,
he was with AMD for four years.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 28, 2000, 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(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) 499,801 7.5%
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 95,000(6)(7)(8) 1.4%
6601 East Progress Avenue
Englewood, CO 80111
William J. Volz 635,564(6) 9.6%
1320 Orleans Drive
Sunnyvale, CA 94089
Albert Morrison, Jr. 20,877(7) 0.3%
1001 Brickell Bay Drive, Ninth Floor
Miami, FL 33131
Burton W. Kanter 110,877(6)(7)(9) 1.7%
2 North LaSalle Street, Twenty Second Floor
Chicago, IL 60602
Bruce B. Lusignan 20,000(7) 0.3%
Communications Satellite Planning Center
Stanford University
Stanford, CA 94305
Fredric J. Harris 25,000(10) 0.4%
Electrical and Computer Engineering Department
San Diego State University
5500 Campanile Drive
San Diego, CA 92182-1309
Non-Director Executive Officers:
William L. Jackson 32,400(11) 0.5%
1320 Orleans Drive
Sunnyvale, CA 94089
Michael S. Andrews 27,500(12) 0.4%
1320 Orleans Drive
Sunnyvale, CA 94089
Timothy Flaherty 13,125(13) 0.2%
1320 Orleans Drive
Sunnyvale, CA 94089
Dennis Gross 35,000(14) 0.5%
Weymouth Cottage
R/O Weymouth Street
Warminster, Wiltshire
BA12 9NP United Kingdom
Kimiko Lauris 3,750(15) 0.1%
1320 Orleans Drive
Sunnyvale, CA 94089
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (11 PERSONS) 1,016,093(16) 15.3%
</TABLE>
6
<PAGE>
- ----------
(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 6,650,488 shares of Common Stock outstanding as of
January 28, 2000.
(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 are 25 separate
and individual trusts commonly and collectively known as the Bea Ritch
Trusts, administered by Mr. Soloman A. Weisgal, an independent trustee, for
the benefit of various members of Mr. Kanter's extended family, but
excluding Mr. Kanter.
(5) The BRT Partnership owns 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) 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."
(7) Such beneficial share ownership includes options for 20,000 shares of
Common Stock granted under the 1998 Director Stock Incentive Plan. See
"Compensation of Executive Officers and Directors - Compensation of
Directors."
(8) Mr. Farkas disclaims any beneficial ownership of the shares held by Mr.
Hellerstein, as trustee of the Farkas Trusts.
(9) Mr. Kanter disclaims any beneficial ownership of the shares held by BRT
Partnership and Windy City, Inc.
(10) Such beneficial ownership includes options of 25,000 shares of Common Stock
granted to him at the time he accepted appointment to the Board. See
"Compensation of Executive Officers and Directors - Compensation of
Directors."
(11) Such beneficial share ownership reflects the number of shares underlying
granted options for Common Stock that are currently exercisable. Mr.
Jackson has also been granted options for an additional 32,500 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 that are currently exercisable. Mr.
Andrews has also been granted options for an additional 20,000 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 that are currently exercisable. Mr.
Flaherty has also been granted options for an additional 11,375 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 reflects the number of shares underlying
granted options for Common Stock that are currently exercisable. Mr. Gross
has also been granted options for an additional 25,000 shares of Common
Stock, which are not currently exercisable and will not become exercisable
within 60 days from the date of this Proxy Statement.
(15) Such beneficial share ownership reflects the number of shares underlying
granted options for Common Stock that are currently exercisable. Ms. Lauris
has also been granted options for an additional 11,250 shares of Common
Stock, which are not currently exercisable and will not become exercisable
within 60 days from the date of this Proxy Statement.
(16) Such beneficial share ownership includes the ownership reported at
footnotes 3 - 15.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon review of Forms 3 and 4 and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e) during fiscal 1999 and Form 5 and
amendments thereto furnished to the Company with respect to fiscal 1999, the
Company is not aware of any directors, officers, or beneficial owners 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 as has previously been reported by the Company, and that Mr. Harris has
not filed a Form 3 for his appointment to the Board in September 1999, Mr.
Flaherty has not filed a Form 3 for his promotion to Vice President of Marketing
in June 1999, and Mr. Gross has not filed a Form 3 for his promotion to Vice
President of Sales in November 1999.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
Furnished below is information with respect to compensation paid or accrued
for services in all capacities during the Company's fiscal year ended October 3,
1999, to the Company's most highly paid executive officers serving at the end of
fiscal 1999 whose total annual salary and bonus exceeded $100,000 (the "Named
Executive Officers") for the Company's fiscal year ended October 3, 1999:
<TABLE>
<CAPTION>
Long-term
Compensation
Other Annual Awards
Annual Compensation Compensation (No. of Shares
Name and Principal Position Year Salary ($)(1) Bonus ($) ($) Underlying Options)
- --------------------------- ---- ------------- --------- ------------ --------------------
<S> <C> <C>
William J. Volz.................. 1999 98,921 - - -
President and 1998 80,638 - - 200,000
Chief Executive Officer 1997 125,252 - - -
1996 111,335 - - -
William L. Jackson............... 1999 109,003 - - 25,000
Senior Vice President and 1998(4) 81,522 - 8,849(2) 15,000
Chief Operating Officer 1997(4) 109,131 - 12,871(2) 25,000
1996(4) 97,006 - - -
Michael S. Andrews............... 1999 131,385 - 4,200(3) 10,000
Chief Technical Officer 1998 95,000 - 3,150(3) 12,500
1997(4) 135,000 - 4,200(3) 25,000
1996(4) 95,000 - 4,200(3) -
Timothy J. Flaherty.............. 1999(4) 102,949 - - 10,000
Vice President of Marketing 1998(4) 73,462 - - 4,000
1997(4) 100,097 - 859(2) 7,500
1996(4) 93,080 - - -
</TABLE>
- ----------
(1) The Company changed its fiscal year end from December 31 to September 30,
effective beginning its 1998 fiscal year, and changed its fiscal year end
from a 12-month year ended September 30 to a year comprised of 52 weeks of
seven days each, beginning on Monday and ending on Sunday, effective
beginning its 1999 fiscal year. Therefore, the salaries listed above
represent compensation for the following fiscal periods of the Company: for
1999, the year beginning October 1, 1998 and ending October 3, 1999; for
1998, the period beginning January 1, 1998 and ending September 30, 1998;
for 1997, the year beginning January 1, 1997 and ending December 31, 1997;
and for 1996, the year beginning January 1, 1996 and ending December 31,
1996.
(2) Consists of compensation paid in lieu of vacation not taken.
(3) Consists of automobile allowances.
(4) The amounts reported include amounts paid to the executive prior to the
time that he became an executive officer of the Company.
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 fiscal year ended October
3, 1999 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 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 fiscal year ended October 3, 1999, no stock
appreciation rights were granted to the Named Executive Officers.
8
<PAGE>
<TABLE>
<CAPTION>
Option Grants in Fiscal Year
Ended October 3, 1999 Potential Realizable
Individual Grants Value at Assumed
------------------------------------------ Annual Rates
% of Total of Stock Price
Options Options Appreciation for
Granted Granted to Exercise Option Term
(No. of Employees Price Per Expiration ----------------------
Name Shares) in Period Share ($) Date 5% ($) 10% ($)
- ----------------------- ------- --------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
William J. Volz - - - - - -
William L. Jackson 25,000 10.5% 3.25 June 2009 51,098 129,492
Michael S. Andrews 10,000 4.2% 3.25 June 2009 20,439 51,797
Timothy J. Flaherty(1) 10,000 4.2% 3.25 June 2009 20,439 51,797
</TABLE>
- ----------
(1) The options were granted to Mr. Flaherty prior to his becoming an executive
officer of the Company.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information related to the number of stock options
exercised during fiscal 1999, the number of exercisable and unexercisable
options held at October 3, 1999, and the year-end value of in-the-money
exercisable and unexercisable options held at October 3, 1999.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options at Fiscal
Options at Fiscal Year-End Year-End (Market Price of Shares
Shares (Number of Shares) Less Exercise Price) ($) (2) (3)
Acquired on Value ----------------------------- --------------------------------
Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
-------- ------------ ------------ -------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William J. Volz - - 200,000 - 36,000 -
William L. Jackson 15,100 18,810 32,400 17,500 5,469 5,469
Michael S. Andrews - - 27,500 20,000 16,406 5,469
Timothy J. Flaherty - - 10,125 11,375 4,922 1,641
</TABLE>
- ----------
(1) The "value realized" represents the difference between the exercise price
and the market price of the option shares on the date the option was
exercised. The value realized was determined without considering any taxes
that 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 October 3, 1999.
(3) Assuming a stock price of $3.00 per share, which was the closing price of a
share of the Company's common stock reported on the NASDAQ National Market
System on October 1, 1999 (the last trading day of fiscal year ended
October 3, 1999).
COMPENSATION OF DIRECTORS
Directors did not receive any cash compensation during the fiscal year
ended October 3, 1999 or the previous 13 fiscal years for either their services
as directors or for their services on the various Board committees. Although Mr.
Lusignan did receive an aggregate of $18,000 in fiscal 1999 in consideration for
consulting services he provided to the Company. On February 15, 1995, three
current non-employee directors, Messrs. Farkas, Kanter, and Morrison, were
granted 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
at an exercise price of $1.48675 (the last transaction price on September 17,
1998) and expires February 15, 2000.
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. 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 evidenced these loans. The notes accrued interest at the reference rate
of the Company's primary commercial lender plus 2%, and originally matured July
1998. The non-employee director loans were extended for a one-year period ended
July 1999. As part of the loan extension agreement, the terms of the loans were
changed to increase the interest rate by 2% and to require the borrowers to sell
their shares consistent with existing market conditions, and to repay their
loans at any time when the offer price for the underlying shares reached $3.25.
These loans were repaid in June 1999.
Under the Company's 1998 Director Stock Incentive Plan, each individual who
is elected and continues to serve as a non-employee director receives automatic
annual option grants for 10,000 shares of Common Stock, beginning with 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
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fair market value of the Company's Common Stock on the automatic grant date and
has a maximum term of 10 years. Each option will be immediately exercisable for
all the 10,000 shares. Each of Messrs. Farkas, Kanter, Morrison, and Lusignan
received an option to purchase 10,000 shares of Common Stock on March 31, 1999,
following his reelection as a member of the Board by the shareholders of the
Company on such date. These options have an exercise price of $2.88 and have a
term of five years.
Mr. Harris received an option to purchase 25,000 shares of Common Stock, at
an exercise price of $2.75, upon his appointment to the Board on September 15,
1999.
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
October 3, 1999. 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. Mr. Farkas repaid this loan in June
1999. 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. Kanter 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 Stock Incentive Plans.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the
Company's executive compensation program. The Compensation Committee has
responsibility for executive compensation matters, including: review and
approval of base salaries, approval of 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 overall 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
their 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, at 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 three fiscal years, the base
salary levels of the executive officers have not increased significantly above
the levels in effect for them for fiscal year 1996.
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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.
Long-term Stock-Based Incentive Compensation. The Company has one long-term
stock-based incentive compensation program, consisting of the Stock Incentive
Plans, for which each of the Company's executive officers have been eligible to
participate.
Under the Stock Incentive Plans, the Compensation Committee periodically
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 to provide each individual with a significant incentive to
manage the Company from the perspective of an owner with an equity stake in the
business. Generally, each grant 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 to maintain
an appropriate level of equity incentive for that individual. The Compensation
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 1999 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's 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. However, as long
as he is an employee of the Company, Mr. Volz is not eligible to receive annual
automatic option grants, upon reelection to the Board of Directors, under the
1998 Director Stock Incentive Plan.
With respect to matters related to all elements of compensation, the
Compensation Committee submits this report.
William J. Volz
Howard L. Farkas
Burton W. Kanter
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COMPANY PERFORMANCE GRAPH
COMPARISON OF 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 shareholder
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, 1994 and ending October 3, 1999. The graph
and table assume that $100 was invested on December 31, 1994 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>
- --------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Elec. Components Stock Index $ 100 $ 199 $ 202 $ 411 $ 283 $ 722
- --------------------------------------------------------------------------------------------------------------
S&P 500 $ 100 $ 130 $ 156 $ 219 $ 239 $ 306
- --------------------------------------------------------------------------------------------------------------
LOGC $ 100 $ 286 $ 111 $ 93 $ 50 $ 79
- --------------------------------------------------------------------------------------------------------------
</TABLE>
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the beginning of its last fiscal year, the Company has engaged in no
transactions or series of similar transactions with any of its officers,
directors or principal shareholders, or, to the knowledge of the Company, with
any of their affiliates in which the amount invested exceeded $60,000. Also, 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 for which payment was made during fiscal year 1999, 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 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 was the Company's principal independent public
accountants for the fiscal year ended October 3, 1999. 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 October 1,
2000. BDO Seidman, LLP has not declined to stand for reelection, and its audit
opinion for fiscal 1999 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 that 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.
2001 ANNUAL MEETING OF SHAREHOLDERS
Any proposals of shareholders, intended to be personally presented at the
2001 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, 2000. 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
Kimiko Lauris
Secretary
January 28, 2000
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,
Frederic J. Harris 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,
2000, 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 Tuesday, April 4, 2000, or any adjournment thereof, as
follows:
1. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES [ ] CUMULATE my votes as [ ] WITHHOLD my vote
listed (except as follows (insert for all nominees
marked to the percentage of vote to the left
contrary) foreach nominee).
___________Howard L.Farkas
___________Burton W. Kanter
___________Albert Morrison, Jr.
___________William J. Volz
___________Fredric J. Harris
(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:_______________________________, 2000
PLEASE MARK, SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
-----------------------------------------
Signature
-----------------------------------------
Signature if held jointly
