<PAGE> 1
SCHEDULE 14A INFORMATION
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 14a-11(c) or Rule 14a-12
Electronic Designs, Inc.
(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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
- - --------------------------------------------------------------------------------
<PAGE> 2
ELECTRONIC DESIGNS, INC.
ONE RESEARCH DRIVE
WESTBOROUGH, MA 01581
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 26, 1997
------------------------
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders (the
"Annual Meeting") of Electronic Designs, Inc. (the "Company") will be held on
Wednesday, February 26, 1997 at 9:00 a.m. at the Westin Hotel at 70 Third
Avenue, Waltham, Massachusetts, for the following purposes:
1. To elect two directors of the Company to serve until the 2000 Annual
Meeting of Shareholders and until their respective successors are duly
elected and qualified or until their earlier resignation or removal.
2. To act upon a proposal to ratify the appointment of Price Waterhouse
LLP to serve as independent accountants for the Company for the fiscal
year ending September 30, 1997.
3. To transact such other business that may properly be brought before the
Annual Meeting and at any adjournments thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on January 6, 1997
as the record date for determining the shareholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only shareholders of record of the Company's common stock, $.01 par value per
share (the "Common Stock"), at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting and at any adjournments
or postponements thereof.
You are requested to complete, sign, and date the enclosed Proxy Card,
which is being solicited by the Board of Directors, and to mail it promptly in
the enclosed postage-prepaid envelope. Any proxy may be revoked by a writing
delivered to the Company stating that the proxy is revoked or by delivery of a
later dated proxy. Shareholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors,
FRANK D. EDWARDS
Secretary
Westborough, MA
January 10, 1997
- - --------------------------------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID
ENVELOPE PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF
YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
- - --------------------------------------------------------------------------------
<PAGE> 3
ELECTRONIC DESIGNS, INC.
ONE RESEARCH DRIVE
WESTBOROUGH, MA 01581
------------------------
PROXY STATEMENT
------------------------
FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 26, 1997
January 10, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Electronic Designs, Inc. (the "Company")
for use at the 1997 Annual Meeting of Shareholders of the Company to be held on
Wednesday, February 26, 1997, and at any adjournments or postponements thereof
(the "Annual Meeting"). This Proxy Statement and the accompanying Notice of
Annual Meeting and Proxy Card were first mailed to shareholders on or about
January 10, 1997.
At the Annual Meeting, shareholders will be asked to vote upon (i) the
election of two directors of the Company; (ii) the proposal to ratify the
appointment of Price Waterhouse LLP to serve as independent accountants for the
Company for the fiscal year ending September 30, 1997; and (iii) any other
matters properly brought before them.
The Board of Directors has fixed the close of business on January 6, 1997
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting (the "Record Date") and at any adjournments or
postponements thereof. Only shareholders of record of the Company's common
stock, $.01 par value per share (the "Common Stock"), at the close of business
on the Record Date will be entitled to notice of and to vote at the Annual
Meeting. Holders of Common Stock outstanding as of the close of business on the
Record Date will be entitled to one vote for each share held by them. As of the
Record Date, there were 7,071,096 shares of Common Stock outstanding and
entitled to vote at the Annual Meeting.
The presence, in person or by proxy, of holders of a majority of the shares
of Common Stock entitled to vote is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. The affirmative vote of a
majority of the shares of Common Stock represented and voting at the Annual
Meeting (which shares voting affirmatively also constitute at least a majority
of the required quorum) is required for the election of directors, the
ratification of the appointment of the independent accountants, and such other
matters properly brought before the shareholders. The Company will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as not voting for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
If a broker indicates on the enclosed proxy or its substitute that it does not
have discretionary authority as to certain shares to vote on a particular matter
("broker nonvotes"), those shares will be treated as abstentions with respect to
that matter.
SHAREHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE, AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE
VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING
AS DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED BUT NOT
MARKED AS TO A PARTICULAR ITEM, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE
TWO NOMINEES FOR DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, FOR THE
RATIFICATION OF THE APPOINTMENT OF THE DESIGNATED INDEPENDENT ACCOUNTANTS, AND
AS THE PROXY HOLDERS DEEM ADVISABLE ON OTHER MATTERS THAT MAY COME BEFORE THE
ANNUAL MEETING, AS THE
<PAGE> 4
CASE MAY BE WITH RESPECT TO THE ITEM NOT MARKED. IT IS NOT ANTICIPATED THAT ANY
MATTERS OTHER THAN THOSE SET FORTH IN THIS PROXY STATEMENT WILL BE PRESENTED AT
THE ANNUAL MEETING. IF OTHER MATTERS ARE PRESENTED, PROXIES WILL BE VOTED IN
ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers, and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms, and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
REVOCABILITY OF PROXIES
A shareholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above; by filing a duly executed proxy
bearing a later date; or by appearing in person and voting by ballot at the
Annual Meeting. Any shareholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a shareholder at the Annual
Meeting will not constitute revocation of a previously given proxy. Please note,
however, that if a shareholder's shares are held of record by a broker, bank, or
other nominee and that shareholder wishes to vote at the Annual Meeting, the
shareholder must bring to the Annual Meeting a letter from the broker, bank, or
other nominee confirming that shareholder's beneficial ownership of the shares.
The Company's 1996 Annual Report, including financial statements for the
fiscal year ended September 30, 1996, is being mailed to shareholders
concurrently with this Proxy Statement.
PRIOR REORGANIZATION OF THE COMPANY
Effective March 6, 1996, Crystallume, a California corporation, merged into
a wholly owned subsidiary, Electronic Designs, Inc., a Delaware corporation,
with Electronic Designs, Inc. as the sole surviving corporation (the "Merger").
Unless otherwise specified or required by the context, the Company means
Crystallume prior to the Merger, and Electronic Designs, Inc. subsequent to the
Merger.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of five members and is
divided into three classes. Each member of each class is nominated for election
to a three-year term; however, in connection with the Merger, the terms of the
three classes were initially staggered so the two Class I directors were elected
to serve a one-year term, the two Class II directors were elected to serve a
two-year term, and the Class III director was elected to serve a three-year
term. Accordingly, the terms of the current Class I, II, and III directors
expire, respectively, at the upcoming Annual Meeting, the 1998 Annual Meeting of
Shareholders, and the 1999 Annual Meeting of Shareholders. Each director will
serve until the expiration of his term and until his successor is duly elected
and qualified or until such director's earlier resignation or removal. Norman T.
Hall and Thomas A. Schultz are the Class I directors; Frank D. Edwards and
Thomas J. Toy are the Class II directors; and Donald F. McGuinness is the Class
III director.
2
<PAGE> 5
The terms of Norman T. Hall and Thomas A. Schultz expire as of the Annual
Meeting. The Board of Directors has nominated Dr. Hall and Mr. Schultz to remain
as directors (the "Nominees") until the 2000 Annual Meeting of Shareholders and
until their successors are duly elected and qualified or until such directors'
earlier resignation or removal. The Board of Directors anticipates that each of
the Nominees will serve, if elected, as a director. However, if either person
nominated by the Board of Directors, or both, is or are unable to accept
election, the proxies will be voted for the election of such other person or
persons as the Board of Directors may recommend. Shares represented by the
accompanying proxy will be voted for the election of the two Nominees
recommended by the Board of Directors unless the proxy is marked in such a
manner as to withhold authority to so vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE FOR EACH OF THE NOMINEES.
INFORMATION REGARDING NOMINEES, DIRECTORS, AND EXECUTIVE OFFICERS
<TABLE>
The following tables and biographical descriptions set forth certain
information with respect to the two Nominees, the directors whose terms do not
expire at the Annual Meeting, and the executive officers who are not directors,
based on information furnished to the Company by each Nominee, director, and
executive officer. There is no family relationship between any Nominee,
director, or executive officer of the Company. The following information is as
of November 15, 1996, unless otherwise specified.
<CAPTION>
YEAR OF
DIRECTOR EXPIRATION
NAME OF DIRECTOR AGE SINCE OF TERM
---------------- --- -------- ----------
<S> <C> <C> <C>
Donald F. McGuinness 64 1995 1999
Frank D. Edwards 42 1995 1998
Norman T. Hall 43 1995 1997
Thomas A. Schultz 46 1986 1997
Thomas J. Toy 41 1990 1998
</TABLE>
NOMINEES FOR ELECTION AS DIRECTOR
Norman T. Hall has been a director of the Company since October, 1995. Dr.
Hall is a partner in Bentley Hall Von Gehr International (formerly Bentley Hall
& Company), an investment banking firm specializing in mergers, acquisitions,
and divestitures, as well as private debt and equity financings for growth or
acquisition. Prior to joining Bentley Hall Von Gehr International, he worked for
Berkeley International Capital Corporation and Intel Corporation. Dr. Hall was
previously on the Board of Directors of Electronic Designs, Inc. ("EDI"), a
privately held Massachusetts corporation acquired by the Company in October,
1995, and is currently on the Board of Directors of Atmel Corporation. Dr. Hall
received his J.D. and M.B.A. from Golden Gate University, Ph.D. and M.S. from
the University of Hawaii, and S.Sc. from the University of Alberta. He is a
member of the State Bar of California.
Thomas A. Schultz has been a director of the Company since February, 1986,
and served as Chairman of the Board and Chief Executive Officer until October,
1995. Prior to joining the Company in 1986, Mr. Schultz served as a Corporate
Vice President of Dole Food Co. (formerly Castle and Cooke, Inc.), a consumer
foods company. Currently, Mr. Schultz is the President, Chief Executive Officer,
and a director of Vista Technologies, Inc., a medical services company. Mr.
Schultz received a B.E.S. in Operations Research from John Hopkins University in
1972 and an M.B.A. from Harvard Business School in 1975.
3
<PAGE> 6
DIRECTORS WITH NONEXPIRING TERMS
Donald F. McGuinness has been the full-time Chairman of the Board,
President, and Chief Executive Officer of the Company since October, 1995. Prior
to joining the Company, he was Chairman of the Board, President and Chief
Executive Officer of EDI, where he was employed for eight years. Prior to his
tenure at EDI, he spent 17 years with Sprague Electric Company in various
management positions, most recently as Chief Operating Officer, with
responsibility for world-wide manufacturing, engineering, and marketing of all
products, including acquisitions, joint ventures, and corporate partnerships and
divestitures. He spent nine years with Texas Instruments Incorporated and four
years with Westinghouse Electric Corporation. Mr. McGuinness also serves on the
Board of Directors of Cabletron Systems, Inc., a New York Stock Exchange local
area networking company and a S&P 500 company, and the Board of Directors of
Ibis Technology Corporation.
Frank D. Edwards has been the Senior Vice President of Finance, Chief
Financial Officer, and Secretary of the Company since October, 1995, and is
responsible for the Memory Group's manufacturing, materials, and planning
functions. Prior to joining the Company, he was the Chief Financial Officer and
Secretary of EDI, where he also had responsibility for the Memory Group's
manufacturing, materials, and planning functions. Mr. Edwards joined EDI in 1986
as controller. Prior to joining EDI, he was an Audit Manager at Price Waterhouse
LLP and spent six years in the Boston and Montreal offices. He is a member of
the Canadian Institute of Chartered Accountants and holds a Bachelor of Commerce
from Concordia University in Montreal and a diploma in public accounting from
McGill University.
Thomas J. Toy has been a director of the Company since May, 1990. Mr. Toy
currently serves as Group Vice President of Technology Funding Inc. and is a
partner of Technology Funding Ltd. He has been employed by Technology Funding
Inc. since January, 1987. Mr. Toy also serves on the Board of Directors of
Physiometrix, Inc., SRG Holdings, KOR Electronics, and Thermatrix. Mr. Toy
received a B.A. in political science in 1977 and an M.M. in Finance, Marketing,
and General Management in 1979 from Northwestern University.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Kenneth K. Buckley is the Vice President and Director of Sales and
Marketing for Memory Products and has overall responsibility for the Company's
Memory Group's marketing activities as well as U.S. Sales. Mr. Buckley joined
EDI in 1989 as Director of Marketing. Prior to joining EDI, Mr. Buckley was
Marketing Manager at Integrated Device Technology, Inc. and held marketing and
operating positions at Mostek. He is 38 and holds a B.B.A. in Marketing from
Baylor University.
Daniel R. Doyle is the Vice President of Display Products. He became Vice
President in November, 1996, and is responsible for overseeing the sales,
marketing, and business development activities for the display products group.
Mr. Doyle joined EDI in 1986 as western area sales manager. Prior to his present
position, Mr. Doyle directed EDI's marketing and business development functions
for memory products. Before joining EDI, Mr. Doyle held marketing management
positions at Intel Corporation and Motorola Inc. He is 39 and holds a B.S. in
finance and marketing from Lehigh University in Pennsylvania.
John A. Herb is the Vice President and General Manager for Diamond
Products. He assumed responsibility for the Company's diamond products
operations in November, 1995. Dr. Herb most recently served as Vice President of
Product Development and has been employed by the Company since 1988. Prior to
joining the Company, Dr. Herb was Manager of Device Research and Development at
Litton Electron Devices (a Gould Microwave Products Division until acquired by
Litton) where he was employed from June, 1983 to February, 1988. Dr. Herb is 50.
He received his B.S. in Physics from Miami University in 1968, and his M.S. and
Ph.D. in Physics from the University of Washington in 1969 and 1974,
respectively.
4
<PAGE> 7
Frank Muscolino is the Vice President and General Manager of Displays. He
became Vice President in November, 1996, and is general manager of display
products with overall responsibility for group operations. Mr. Muscolino joined
EDI in August, 1988 as director of manufacturing and served in that position
until May, 1994. Prior to joining EDI, Mr. Muscolino held several management
positions at Xicor, Inc. and at Intel Corporation. He is 48 and holds a B.S. in
chemistry from Clarkson University in New York.
Richard Sawers is the Vice President of European Sales and Marketing and
Managing Director, E.D. Electronics Ltd. He became Vice President in November,
1996, and is responsible for the Company's European sales and marketing
activities. Mr. Sawers also holds the position of Managing Director of the
Company's United Kingdom subsidiary. He joined EDI in October, 1983 as product
managing director. Prior to joining EDI, Mr. Sawers held sales and marketing
management positions with Hitachi Electronic Components Ltd. U.K. and with
Jermyn, a U.K. distributor. Mr. Sawers is 40. He holds an HNC (U.K. equivalent
of B.S.E.E.) and completed a four-year apprenticeship with Phillips Co.
BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors. The Company is managed by a five-member Board of
Directors. The Board met ten times during fiscal 1996. Each of the directors
attended at least 75% of the total number of meetings of the Board of Directors
and meetings of the committees of the Board of Directors that he was eligible to
attend.
Audit Committee. The Board has established an Audit Committee consisting
of Norman T. Hall and Thomas J. Toy. The Audit Committee meets with the
Company's independent auditors to review the adequacy of the Company's internal
control systems and financial reporting procedures; reviews the general scope of
the Company's annual audit and the fees charged by the independent auditors;
reviews and monitors the performance of nonaudit services by the Company's
auditors; reviews the fairness of any proposed transaction between any officer,
director, or affiliate of the Company, and the Company and after such review,
makes recommendations to the full Board of Directors; and performs such other
functions as may be required by any stock exchange or over-the-counter market
upon which the Company's securities may be listed. The Audit Committee did not
meet during fiscal 1996.
Compensation Committee. The Company's Board of Directors has established a
Compensation Committee to determine compensation for the Company's executive
officers. The members of the Compensation Committee are Norman T. Hall and
Thomas J. Toy. Neither Dr. Hall nor Mr. Toy has served as an officer of the
Company. The Compensation Committee recommends compensation for officers and
employees of the Company and grants options and stock awards under the Company's
employee benefits plans. The Compensation Committee met six times during fiscal
1996.
The Board of Directors does not have a standing nominating committee or a
committee performing similar functions. The full Board of Directors performs the
function of such a committee.
DIRECTOR COMPENSATION
Each director of the Company who is not otherwise an employee, consultant,
or independent contractor of the Company or a parent, subsidiary, or affiliate
of the Company and who does not represent a venture capital shareholder of the
Company ("Outside Director") receives $250 per meeting for his services as a
director and is reimbursed for reasonable and necessary expenses incurred in
attending the meetings of the Board or any committee thereof.
In fiscal 1996, the Board of Directors voted to amend the Company's 1987
Option Plan (the "Option Plan"), subject to shareholder approval, to provide for
options to be granted, upon election to the Board of Directors, to nonemployee
directors (a "Qualifying Director"), with each Qualifying Director receiving for
each three years of service an option to purchase 15,000 shares of Common Stock
at an exercise price equal to
5
<PAGE> 8
the fair market value per share at the date of grant and vesting in three equal
installments over three years. At the 1996 Annual Meeting of Shareholders, the
shareholders approved this amendment to the Option Plan. At present, the
Qualifying Directors are Dr. Hall and Messrs. Schultz and Toy.
The Company will indemnify each director serving on the Board in connection
with his service as a director of the Company to the fullest extent allowed by
Delaware law, the Company's Certificate of Incorporation, and the Company's
By-Laws, as amended from time to time.
EXECUTIVE COMPENSATION
<TABLE>
Summary Compensation. The following table sets forth, for each of the
Company's last three fiscal years, the annual compensation awarded to the (i)
two persons who served as the Company's chief executive officer during fiscal
1996, and (ii) each of the three other most highly compensated executive
officers who were serving as executive officers at the end of fiscal 1996 (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL ------------------------------
COMPENSATION AWARDS PAYOUTS
------------------------------------------- ------ -------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
--------------------------- ---- ---------- ------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Donald F. McGuinness............ 1996 230,836 168,750 0 400,000 6,108(1)
Chairman of the Board,
President, and Chief
Executive Officer
Frank D. Edwards................ 1996 147,627 95,250 0 150,000 0
Senior Vice President of
Finance, Chief Financial
Officer, and Secretary
Kenneth K. Buckley.............. 1996 137,901 60,750 0 90,000 0
Vice President and Director
of Marketing and Sales for
Memory Products
John A. Herb.................... 1996 112,587 29,000 0 14,000 0
Vice President and General 1995 104,802 1,000 0 17,145 0
Manager for Diamond Products 1994 98,819 0 0 0 0
Thomas A. Schultz(2)............ 1996 56,333(3) 0 0 15,000(4) 197,068(5)
Former Chairman of the Board 1995 190,963 25,000 141,666(6) 16,859 3,289(7)
and Chief Executive Officer 1994 180,000 50,000 0 95,000 0
<FN>
- - ---------------
(1) Term Life Insurance for Mr. McGuinness; policy has no cash-surrender value.
(2) Effective October 10, 1995, Mr. Schultz resigned as Chairman of the Board,
President, and Chief Executive Officer. See "Employment and Severance
Agreements."
(3) Includes $1,500 received in connection with services rendered as a director.
(4) Represents an option received in connection with services rendered as a
director.
(5) Includes a $188,000 lump sum severance payment and $9,068 worth of employee
benefits pursuant to a Severance Agreement, dated October 10, 1995, by and
between the Company and Mr. Schultz. See "Employment and Severance
Agreements."
(6) Pursuant to the terms of the Severance Agreement referenced in footnote (5),
the Company reimbursed Mr. Schultz for likely federal and state taxes that
would be owed by Mr. Schultz as a result of the
</TABLE>
6
<PAGE> 9
Company's agreement to forgive, together with all related accrued interest,
on January 15, 1996, a loan the Company made to Mr. Schultz under an
agreement and related promissory note, dated July 16, 1991, in the principal
amount of $25,000. In addition, pursuant to his Severance Agreement, Mr.
Schultz received a $100,000 bonus in connection with the acquisition of EDI.
See "Certain Relationships and Related Transactions."
(7) Long Term Disability Insurance for Mr. Schultz.
<TABLE>
Option Grants in Fiscal Year 1996. The following table sets forth the
options granted with respect to the fiscal year ended September 30, 1996, to the
Company's Named Executive Officers.
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#)(1) YEAR(%) ($/SH) DATE
---- ---------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Donald F. McGuinness......................... 400,000(2) 34.2 3.375 11/29/00
Frank D. Edwards............................. 150,000(3) 12.8 3.375 11/29/00
Kenneth K. Buckley........................... 90,000(4) 7.7 3.375 11/29/00
John A. Herb................................. 14,000(5) 1.2 4.453 06/06/01
Thomas A. Schultz............................ 15,000(6) 1.3 3.750 01/16/06
<FN>
- - ---------------
(1) Shares issued upon exercise of unvested options will be subject to
repurchase until they become vested.
(2) As of September 30, 1996, 340,742 shares were immediately issuable upon
exercise of the options with an additional 29,629 shares becoming issuable
upon each of January 1, 1997, and January 1, 1998. Options vest monthly over
three years beginning October 10, 1995.
(3) As of September 30, 1996, 59,258 shares were immediately issuable upon
exercise of the options with 29,629 additional shares, or fewer as the case
may require, becoming exercisable on January 1 of each subsequent year until
and including 2000. The options vested with respect to 10% of the shares on
April 10, 1996, with the remainder vesting over a five-year period at a rate
of 1/60th per month thereafter.
(4) As of September 30, 1996, 59,258 shares were immediately issuable upon
exercise of the options with an additional 29,629 shares, or fewer as the
case may require, becoming issuable on January 1, 1997, and January 1, 1998.
The options vested with respect to 10% of the shares on April 10, 1996, with
the remainder vesting over a five-year period at a rate of 1/60th per month
thereafter.
(5) As of September 30, 1996, all 14,000 shares were immediately issuable upon
exercise of the options. The options vested with respect to 10% of the
shares on December 6, 1996, with the remainder vesting over a five-year
period at a rate of 1/60th per month thereafter.
(6) As of September 30, 1996, no shares were immediately issuable upon exercise
of the options. 5,000 shares become exercisable each year, over a three-year
period, on the anniversary of the Grant Date. The option was fully vested as
of the Grant Date.
</TABLE>
7
<PAGE> 10
<TABLE>
Option Exercises and Year-End Holdings. The following table sets forth the
aggregate number of options exercised in fiscal year 1996 and the value of
options held as of September 30, 1996 by the Company's Named Executive Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND
FISCAL YEAR-END 1996 OPTION VALUES
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL OPTIONS AT FISCAL
ACQUIRED ON YEAR-END YEAR-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE (#) UNEXERCISABLE($)(1)
---- ----------- ------------ ---------------------- -------------------
<S> <C> <C> <C> <C>
Donald F. McGuinness 0 0 395,542/59,258 914,535/111,109
Frank D. Edwards 0 0 100,358/90,742 317,842/170,141
Kenneth K. Buckley 0 0 108,578/30,742 359,188/57,641
John A. Herb 13,717 49,120 31,145/0 39,874/0
Thomas A. Schultz 25,991 91,782 111,859/15,000 179,039/22,500
<FN>
- - ---------------
(1) Based on the closing price of the Common Stock as reported on the Nasdaq Small-Cap Market on
September 30, 1996 of $5.25 per share less the option exercise price.
</TABLE>
BENEFICIAL OWNERSHIP OF VOTING STOCK
<TABLE>
The following table sets forth the beneficial ownership of the Company's
Common Stock as to (i) each person who is known by the Company to beneficially
own more than five percent of the Company's Common Stock, (ii) each of the
Company's directors and Nominees, (iii) each of the Named Executive Officers,
and (iv) all directors and executive officers as a group, based on
representations of directors of the Company, Nominees, Named Executive Officers,
and other executive officers as of November 15, 1996 (unless otherwise
indicated), Company records, and filings as of December 17, 1996 received by the
Company on Schedules 13D and 13G under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). All such information was provided by the
shareholders listed (unless otherwise indicated) and reflects their beneficial
ownership known by the Company.
<CAPTION>
5% SHAREHOLDERS, NAMED
EXECUTIVE OFFICERS, DIRECTORS, AND NOMINEES; AMOUNT AND
AND DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP NATURE OF BENEFICIAL PERCENT
(NAME AND ADDRESS) OWNERSHIP(1) OF CLASS (2)
----------------------------------------------- -------------------- ------------
<S> <C> <C>
New York Life Insurance Company(3).......................... 1,862,660 27.68
51 Madison Avenue
New York, NY 10010
Thomas J. Toy(4)............................................ 630,447 9.52
Technology Funding Inc.
2000 Alameda de las Pulgas
San Mateo, CA 94403
Technology Funding Partners III, L.P. (5)................... 625,447 9.45
2000 Alameda de las Pulgas
San Mateo, CA 94403
Donald F. McGuinness(6)..................................... 425,171 6.09
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
5% SHAREHOLDERS, NAMED
EXECUTIVE OFFICERS, DIRECTORS, AND NOMINEES; AMOUNT AND
AND DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP NATURE OF BENEFICIAL PERCENT
(NAME AND ADDRESS) OWNERSHIP(1) OF CLASS (2)
----------------------------------------------- -------------------- ------------
<S> <C> <C>
Dickinson Holding Corp.(7).................................. 351,000 5.24
405 Sixth Avenue
P.O. Box 9111
Des Moines, IA 50306-9111
Thomas A. Schultz(8)........................................ 205,562 3.08
Kenneth K. Buckley(9)....................................... 138,207 2.06
Frank D. Edwards(10)........................................ 129,987 1.94
Norman T. Hall(11).......................................... 61,440 *
John A. Herb(12)............................................ 44,531 *
All current directors and executive
officers as a group(13)................................... 1,868,473 24.23
(ten persons)
<FN>
- - ---------------
* Less than 1%.
(1) Unless otherwise noted, the Company believes that all persons named in the
table above have sole voting and investment power with respect to all
shares of Common Stock, as converted and adjusted, that are beneficially
owned by them, subject to the information contained in the footnotes below
and community property laws where applicable. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days upon the exercise of options or warrants or the conversion of
convertible securities.
(2) Each owner's percentage ownership is determined by assuming that options,
warrants and other convertible securities that are held by such person (but
not those held by any other person) and that are exercisable or convertible
within 60 days have been exercised or converted.
(3) Includes 80,600 shares issuable upon exercise of warrants currently
exercisable or exercisable within 60 days after November 15, 1996, and 206
shares of Series A Convertible Preferred Stock (the "Series A Preferred
Stock") convertible into 82,400 shares of Common Stock within 60 days after
November 15, 1996. All 206 shares of Series A Preferred Stock were
converted on November 18, 1996.
(4) Represents in part the shares owned by Technology Funding Partners III,
L.P. ("TFP-3") referenced in footnote (5) below. Mr. Toy is a Group Vice
President of Technology Funding Inc. ("TFI"), and as such may be deemed the
beneficial owner of such shares. Mr. Toy shares voting and investment power
with the other members of a Commitment Committee. In addition, Mr. Toy has
received options currently exercisable or exercisable within 60 days after
November 15, 1996 for the purchase of 5,000 shares in connection with his
service as a director.
(5) Includes 35,000 shares issuable upon exercise of warrants currently
exercisable or exercisable within 60 days after November 15, 1996, and 50
shares of Series A Preferred Stock convertible into 20,000 shares of Common
Stock within 60 days after November 15, 1996. All 50 shares of Series A
Preferred Stock were converted on November 18, 1996. TFI and Technology
Funding Ltd. ("TFL") are the managing general partners of TFP-3. The
following individuals are executive officers of TFI and/or general partners
of TFL, and as such may be deemed beneficial owners of the shares of Common
Stock held by TFP-3 described in the table: Charles R. Kokesh, Peter F.
Bernardoni, Gregory T. George, and Thomas J. Toy.
</TABLE>
9
<PAGE> 12
(6) Includes 425,171 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 15, 1996. Mr.
McGuinness is the Chairman of the Board, President, and Chief Executive
Officer of the Company.
(7) Includes 10,000 shares issuable upon exercise of warrants currently
exercisable or exercisable within 60 days after November 15, 1996. Also
includes 131,000 shares issuable upon exercise of warrants currently
exercisable or exercisable within 60 days after November 15, 1996 that are
owned by Dickinson & Co., an investment banking firm and wholly owned
subsidiary of Dickinson Holding Corp.
(8) Includes 111,859 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 15, 1996. Mr.
Schultz is a director of the Company.
(9) Includes 138,207 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 15, 1996. Mr.
Buckley is Vice President and the Director of Sales and Marketing for
Memory Products.
(10) Includes 129,987 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 15, 1996. Mr.
Edwards is the Senior Vice President of Finance, Chief Financial Officer,
and Secretary of the Company. He also serves as a director of the Company.
(11) Includes 16,440 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 15, 1996. In
addition, in connection with his service as a director of the Company, Dr.
Hall received options currently exercisable or exercisable within 60 days
after November 15, 1996 for the purchase of 5,000 shares.
(12) Includes 31,145 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 15, 1996. 13,386
shares are held in a joint account with Dr. Herb's wife, Elizabeth A. Herb.
Dr. Herb is the Vice President and General Manager for Diamond Products.
(13) Includes 1,150,678 shares issuable upon exercise of warrants or options or
conversion of Series A Preferred Stock that are exercisable or convertible
within 60 days after November 15, 1996.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Donald F. McGuinness. The Company entered into an employment agreement,
dated as of October 10, 1995, with Mr. McGuinness, under which the Company
agreed to employ Mr. McGuinness as its Chairman of the Board, President, and
Chief Executive Officer. The agreement has an original term of two years, with
such term terminating on September 30, 1997. The term of the agreement may
automatically be extended from year to year in one year extensions unless at
least 90 days prior to an anniversary of September 30 either party gives written
notice to the other of such party's intention not to extend the term of the
agreement.
As compensation for services performed under and during the term of the
agreement, the Company is to pay Mr. McGuinness a base salary at the rate of
$225,000 per year, which may be adjusted upwards from time to time in the sole
discretion of the Board of Directors of the Company. The Company agreed that Mr.
McGuinness' options will vest pro-rata over a period of 36 months commencing on
October 30, 1995.
Mr. McGuinness' employment under the agreement may be terminated without
cause by a vote of two-thirds of the members of the Board of Directors of the
Company and a written notice to Mr. McGuinness. In the event of such
termination, Mr. McGuinness will receive certain benefits, including continued
receipt of his base salary for a period equal to 39 months less the number of
months that lapsed from October 10, 1995, until the date of such termination,
subject in all events to a minimum payment period of 18 months. Mr. McGuinness
will also be entitled to the above-described termination benefits if he
terminates his employment with cause.
10
<PAGE> 13
In connection with the acquisition of EDI, the Company also assumed an
executive severance agreement, dated as of December 21, 1994, and amended on
October 10, 1995, by and between Mr. McGuinness and EDI. Under the terms of the
agreement, Mr. McGuinness is to receive (i) a lump sum payment in the amount of
one and one-half (1.5) times his highest annual base salary received from the
Company during any calendar year, and (ii) varying periods of continued life
insurance and health and medical benefits in the event that the Company
experiences a change in control and certain terminating events occur within two
years of such change in control. Such terminating events include termination by
the Company without sufficient cause, or termination by Mr. McGuinness following
certain changes initiated by the Company.
Thomas A. Schultz. Under the terms of a severance agreement, dated October
10, 1995, between the Company and Mr. Schultz, Mr. Schultz continued as a
nonofficer employee of the Company and as an adviser to Mr. McGuinness through
January 15, 1996 (the "Termination Date"), during which period he remained on
the regular payroll and continued to receive his base salary and benefits. On or
about the Termination Date, Mr. Schultz received a bonus of $100,000 and the
Company delivered to Mr. Schultz a final paycheck for all salary then due. In
addition, Mr. Schultz received a lump sum severance payment equal to 12 months
base salary ($188,000), less all normal deductions. The Company continued to
provide Mr. Schultz with certain employment benefits at the Company's cost
through December 31, 1996. Moreover, an outstanding loan that the Company made
to Mr. Schultz under an agreement, dated July 16, 1991, in the principal amount
of $25,000 and the related promissory note were forgiven, together with accrued
interest, on the Termination Date, and the Company paid $16,666 to cover the
federal and state income taxes on the loan forgiveness.
Frank D. Edwards. In connection with the acquisition of EDI, the Company
agreed to assume an executive severance agreement, dated as of December 21,
1994, by and between Mr. Edwards and EDI. Under the terms of the severance
agreement, the Company is to provide (i) payments in the amount of three-
quarters (.75) of his highest annual base salary received from the Company
during any calendar year, and (ii) varying periods of continued life insurance
and health and medical benefits in the event the Company experiences a change in
control and certain terminating events occur within two years of such change and
control. Such terminating events include termination by the Company without
sufficient cause, or termination by Mr. Edwards following certain changes
initiated by the Company.
John A. Herb. On October 11, 1995, the Company entered into a severance
agreement with Dr. Herb. In the event of certain terminating events, including
the Company's decision to terminate Dr. Herb without cause or his resignation
from the Company subsequent to the occurrence of certain events constituting a
constructive discharge, prior to October 10, 1996, the Company would have paid
Dr. Herb salary continuation equal to one month's salary for each year he was
then employed by the Company or six months, whichever was greater, based on his
base salary on October 11, 1995 (or then current base salary, whichever was
greater), less the usual and customary withholdings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
New York Life Insurance Company
The Company issued a convertible secured note to New York Life Insurance
Company ("New York Life"), a significant shareholder, in September, 1994, in the
principal amount of $1,035,000. The note had a 36-month term and earned 15%
interest. On October 6, 1995, in connection with the acquisition of EDI, New
York Life received 414,000 shares of Common Stock in exchange for repayment of
$1,035,000 of principal of the convertible debt. Prior to the acquisition of
EDI, New York Life received 156 units (each unit consisting of one share of
Series A Preferred Stock, one warrant to purchase 100 shares of Common Stock at
an exercise price of $3.25 per share, and 100 shares of Common Stock (a "Unit"))
in exchange for $156,000 of accrued interest on the convertible debt.
11
<PAGE> 14
In connection with the Company's private placement of Units to finance
expenses associated with the market introduction of an initial product, an
expansion in production capacity, and working capital (the "Unit Private
Placement"), New York Life purchased 50 Units for $50,000.
On August 10, 1995, the Company issued a convertible secured note to New
York Life in the principal amount of $600,000. This note was a bridge loan to
help finance the earnest money deposit and transaction fees related to the
Company's acquisition of EDI. The note was due on demand but in no event later
than August 10, 1996, and earned 10% interest. In consideration of the bridge
loan, New York Life received warrants to purchase 60,000 shares of Common Stock
at an exercise price of $2.00 per share. On October 6, 1995, the Company issued
245,858 shares of Common Stock as repayment of $614,646 of accrued interest and
principal due under the bridge loan.
Effective November 30, 1996, the Company redeemed all outstanding shares of
Series A Preferred Stock. Prior to this redemption, on November 18, 1996, New
York Life converted all 206 shares of Series A Preferred Stock into 82,400
shares of Common Stock.
Dickinson Holding Corp.
In connection with the Company's Unit Private Placement, Dickinson & Co.,
an investment banking firm and wholly owned subsidiary of Dickinson Holding
Corp., a significant shareholder, served as the managing placement agent. In
exchange for such services, Dickinson & Co. received 40,000 shares of Common
Stock and $382,900 as a placement fee.
On September 27, 1995, as part of a private placement of Common Stock (the
"Common Stock Private Placement"), the Company entered into an agreement with
Dickinson Holding Corp. and Dickinson & Co. under which Dickinson Holding Corp.
acquired an option to purchase up to 1,000,000 shares of Common Stock at $2.50
per share and promised to purchase no less than 500,000 shares of Common Stock
at $2.50 per share, and the Company agreed to pay a placement fee to Dickinson &
Co. equal to 10% of the purchase price of the shares. This agreement was
subsequently amended four times stretching out the period of time during which
Dickinson Holding Corp. could purchase such shares and reducing the minimum
purchase requirement to 350,000 shares. Dickinson Holding Corp. eventually
purchased 480,000 shares of Common Stock under the terms of this agreement which
expired on December 13, 1995.
In addition, in connection with the Company's Unit Private Placement,
Dickinson Holding Corp. purchased 100 Units for $100,000. All 100 shares of the
Series A Preferred Stock were converted into 40,000 shares of Common Stock on
June 7, 1996.
Technology Funding Partners III, L.P.
The Company issued convertible secured notes to Technology Funding Partners
III, L.P., a significant shareholder, in the principal amounts of $200,000 and
$100,000 on August 10, 1995, and August 28, 1995, respectively, to provide
bridge financing for the earnest money deposit and transaction fees related to
the acquisition of EDI. These notes were due on demand but no later than one
year from issuance and earned 10% interest. In consideration of these bridge
loans, Technology Funding Partners III, L.P. received warrants to purchase
30,000 shares of Common Stock at an exercise price of $2.00 per share. On
October 10, 1995, the Company issued 121,867 shares of Common Stock to
Technology Funding Partners III, L.P. as repayment of $304,667 of accrued
interest and principal due under the bridge loans.
In connection with the Company's Unit Private Placement, Technology Funding
Partners III, L.P. purchased 50 Units for $50,000. In addition, Technology
Funding Partners III, L.P. participated in the Common Stock Private Placement by
purchasing 120,000 shares of Common Stock at a price of $2.50 per
12
<PAGE> 15
share. Technology Funding Partners III, L.P. converted all 50 shares of Series A
Preferred Stock into 20,000 shares of Common Stock on November 12, 1996.
Donald F. McGuinness
The Company issued an unsecured $250,000 note to Donald F. McGuinness, the
Chairman of the Board, President, and Chief Executive Officer, in connection
with the Company's acquisition of EDI. This note was issued in partial payment
for Mr. McGuinness' EDI stock that was acquired by the Company on October 10,
1995. The note earned 7% interest and was repaid with interest, when due, on
January 1, 1996.
Thomas A. Schultz
Thomas A. Schultz, a director and former Chief Executive Officer, received
an interest free $100,000 loan from the Company on October 13, 1995 in
connection with a $100,000 bonus related to the acquisition of EDI that the
Company owed him. The note underlying this debt to the Company was due on demand
but in no event later than January 15, 1996. The note was satisfied in full. See
"Employment and Severance Agreements."
Norman T. Hall
The Company sold 40,000 shares of Common Stock at a price of $2.50 per
share to Dr. Hall, a director, in connection with the Common Stock Private
Placement. Moreover, in connection with the acquisition of EDI, Bentley Hall &
Company (now Bentley Hall Von Gehr International), an investment banking firm of
which Dr. Hall is a principal, received an investment banking fee of $270,000.
The Company is a party to an employment agreement with Mr. McGuinness.
Moreover, the Company has entered into or assumed severance agreements with
Messrs. McGuinness, Schultz, and Edwards, and Dr. Herb. See "Employment and
Severance Agreements."
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
accountants, to serve as independent accountants for the Company for the fiscal
year ending September 30, 1997, and recommends that the shareholders vote for
ratification of such appointment. Price Waterhouse LLP served as the independent
accountants for the fiscal years ending September 30, 1996, and September 30,
1995. In the event of a negative vote on such ratification, the Board of
Directors will reconsider its selection. Representatives of Price Waterhouse LLP
are expected to be present at the meeting, will have the opportunity to make a
statement if they desire to do so, and are also expected to be available to
respond to appropriate questions.
On October 10, 1995, the Company completed its acquisition of EDI, whose
independent accountants were Price Waterhouse LLP. Upon due consideration of its
then current independent accountants, Arthur Andersen LLP, and Price Waterhouse
LLP, the Company, with the approval of the Company's Board of Directors,
selected Price Waterhouse LLP to serve as its new independent accountants.
Accordingly, on October 26, 1995, the Company dismissed Arthur Andersen LLP.
Arthur Andersen LLP's report on the financial statements for the year ended
September 30, 1994 contains no adverse opinion or disclaimer of opinion and was
not qualified or modified as to uncertainty, audit scope, or accounting
principles. In connection with its audits for the years ended September 30,
1993, and 1994, and through October 26, 1995, there were no disagreements with
Arthur Andersen LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
13
<PAGE> 16
disagreements if not resolved to the satisfaction of Arthur Andersen LLP would
have caused it to make reference thereto in its reports on the financial
statements for such years or period.
The information described above regarding the Company's decision to dismiss
Arthur Andersen LLP as its independent accountants and select Price Waterhouse
LLP as its new independent accountants, along with a letter from Arthur Andersen
LLP stating that it agrees with the above information regarding the Company's
change in accountants, was fully disclosed in a Form 8-K filed with the SEC on
November 2, 1995.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF PRICE
WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors, and persons who are beneficial owners of more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC").
Officers, directors and greater than 10% beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on review of the copies of such reports furnished to the
Company, and written representations that no other reports were required during
the fiscal year ended September 30, 1996, all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than 10% beneficial
owners were satisfied.
SHAREHOLDER PROPOSALS
For a proposal of a shareholder (including director nominations) submitted
pursuant to Exchange Act Rule 14a-8 to be included in the Company's proxy
statement and form of proxy for the Company's 1998 Annual Meeting of
Shareholders, it must be received at the principal executive offices of the
Company on or before September 12, 1997. Such a proposal must also comply with
the requirements as to form and substance established by the SEC for such a
proposal to be included in the proxy statement.
For a proposal of a shareholder (including director nominations) to be
presented to the Company's 1998 Annual Meeting of Shareholders, other than a
shareholder proposal submitted pursuant to Exchange Act Rule 14a-8, a
shareholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not less than 75 days nor more than
120 days prior to the anniversary date of the immediately preceding annual
meeting of shareholders (the "Anniversary Date"); provided, however, that in the
event the annual meeting is scheduled to be held on a date more than 30 days
before the Anniversary Date or more than 60 days after the Anniversary Date,
notice by the shareholder to be timely must be delivered not later than the
close of business on the later of (i) the 75th day prior to the scheduled date
of such annual meeting or (ii) the 15th day following the day on which public
announcement of the date of such annual meeting is first made by the Company.
Such a proposal must also comply with the requirements as to form set forth in
the Company's By-Laws. Any such proposal should be mailed to: Electronic
Designs, Inc., One Research Drive, Westborough, Massachusetts 01581, Attention:
Secretary.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
14
<PAGE> 17
SHAREHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO,
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1996 BY WRITING TO THE INVESTOR RELATIONS DEPARTMENT, ELECTRONIC
DESIGNS, INC., ONE RESEARCH DRIVE, WESTBOROUGH, MASSACHUSETTS 01581.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY IN THE ACCOMPANYING POSTAGE-PREPAID ENVELOPE.
15
<PAGE> 18
APPENDIX
--------
Form of Proxy
- - --------------------------------------------------------------------------------
REVOCABLE PROXY/VOTING INSTRUCTION CARD
ELECTRONIC DESIGNS, INC.
ONE RESEARCH DRIVE, WESTBOROUGH, MASSACHUSETTS 01581
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 26, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder(s) of Electronic Designs, Inc. (the "Company")
hereby constitutes and appoints Donald F. McGuinness and Frank D. Edwards, and
each of them, as Proxies of the undersigned, with full power of substitution,
and authorizes each of them to represent and to vote as designated on the
reverse all of the shares of Common Stock of the Company held of record on
January 6, 1997 by the undersigned at the Annual Meeting of Shareholders to be
held on Wednesday, February 26, 1997 at 9:00 a.m., at the Westin Hotel, 70 Third
Avenue, Waltham, Massachusetts, and at any adjournments or postponements
thereof.
Please COMPLETE, SIGN and DATE the proxy and return it to the Company by
hand or by mail. If you attend the Annual Meeting in person, you may withdraw
the proxy and vote personally on each matter brought before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF THIS PROXY IS SIGNED AND NO
SPECIFIED DIRECTION IS MADE AS TO ANY OR ALL OF THE PROPOSALS, THE PROXY WILL BE
VOTED FOR EACH NOMINEE IN PROPOSAL 1, AND FOR PROPOSALS 2 AND 3, AND THE PROXIES
ARE EACH AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. A
SHAREHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
(CONTINUED, AND TO BE SIGNED AND DATED, ON REVERSE SIDE)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<CAPTION>
FOR all nominees WITHHOLDING
listed at right (except AUTHORITY NOMINEES: Norman T. Hall
as indicated to the to vote for all nominees Thomas A. Schultz
contrary below) listed at right
<S> <C> <C>
1. Proposal to elect the following
directors of the Company to serve [ ] [ ]
until the 2000 Annual Meeting of
Shareholders and until their respective successors are duly elected and
qualified or until their earlier resignation or removal:
Instruction: To withhold authority to vote for any Individual nominee, write
that nominee's name in the space provide below.
- - ------------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment of Price
Waterhouse LLP to serve as Independent accountants [ ] [ ] [ ]
for the Company for the fiscal year ending September
30, 1997.
3. In their discretion, the Proxies are each authorized to vote upon such other
business as may properly come before the Annual Meeting and any adjournments
or postponements thereof.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Shareholders and the Proxy Statement with respect
thereof and hereby revoke(s) any proxy or proxies heretofore given. This proxy
may be revoked at any time before it is exercised.
Mark here for address change and note such corrections to the left. [ ]
I PLAN TO ATTEND THE MEETING [ ]
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
Signature of Shareholder_____________________ Signature of Shareholder_____________________ DATED__________, 1997
IF HELD JOINTLY
NOTE: Please date this proxy and sign your name exactly as shown. When there is more than one holder, each should
sign. When signing as an attorney, administrator, executor, guardian or trustee, please add your full title
as such. If executed by a corporation, the proxy should be signed by a duly authorized person, stating his
or her title or authority.
</TABLE>
- - --------------------------------------------------------------------------------
