<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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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:
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<PAGE> 2
ELECTRONIC DESIGNS, INC.
ONE RESEARCH DRIVE
WESTBOROUGH, MA 01581
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 25, 1998
------------------------
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders (the
"Annual Meeting") of Electronic Designs, Inc. (the "Company") will be held on
Wednesday, February 25, 1998, 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 2001 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, 1998.
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 7, 1998
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 13, 1998
- --------------------------------------------------------------------------------
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 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 25, 1998
January 13, 1998
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 1998 Annual Meeting of Shareholders of the Company to be held on
Wednesday, February 25, 1998, 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 13, 1998.
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, 1998; and (iii) to act upon any
other matters properly brought before them.
The Board of Directors has fixed the close of business on January 7, 1998
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 7,061,779 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. Assuming the presence of a
quorum, the two nominees receiving the greatest number of votes of the shares of
Common Stock represented and voting at the Annual Meeting will be elected
directors of the Company. 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 ratification of the appointment of the independent accountants
and the approval of such other matters properly brought before the shareholders
(other than the election of directors). 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
<PAGE> 4
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 MEETING, AS THE 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 1997 Annual Report, including financial statements for the
fiscal year ended September 30, 1997, 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 the former subsidiary 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.
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<PAGE> 5
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. The terms of the current Class II and III directors expire, respectively,
at the upcoming Annual Meeting and the 1999 Annual Meeting of Shareholders. At
the Company's 1997 Annual Meeting of Shareholders, the Class I directors were
elected to full three-year terms expiring at the 2000 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.
The terms of Frank D. Edwards and Thomas J. Toy expire as of the Annual
Meeting. The Board of Directors has nominated Mr. Edwards and Mr. Toy to remain
as directors (the "Nominees") until the 2001 Annual Meeting of Shareholders and
until their successors are duly elected and qualified or until such director's
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
The following table 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 20, 1997 unless otherwise specified.
YEAR OF
DIRECTOR EXPIRATION
NAME OF DIRECTOR AGE SINCE OF TERM
---------------- --- -------- ----------
Donald F. McGuinness............. 64 1995 1999
Frank D. Edwards................. 43 1995 1998
Norman T. Hall................... 44 1995 2000
Thomas A. Schultz................ 47 1986 2000
Thomas J. Toy.................... 42 1990 1998
NOMINEES FOR ELECTION AS DIRECTOR
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,
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<PAGE> 6
and planning functions. Prior to joining the Company, he was the Chief Financial
Officer and Secretary of Electronic Designs, Inc., a privately held
Massachusetts corporation acquired by the Company in October 1995 ("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. Mr. Edwards 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, Thermatrix, and UT Starcom,
Inc. 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.
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 worldwide 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 local area networking company
and a S&P 500 company listed on the New York Stock Exchange, and the board of
directors of Ibis Technology Corporation, a Nasdaq-listed semiconductor
materials company.
Norman T. Hall has been a director of the Company since October 1995. Dr.
Hall is a partner in Alliant Partners, 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 Alliant Partners, he was
a partner in Bentley Hall Von Gehr International (formerly Bentley Hall &
Company) and worked for Berkeley International Capital Corporation and Intel
Corporation. Dr. Hall was previously on the board of directors of EDI, 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 of Schultz, Lovato and
Co., a business management services company. Prior to that he was President,
Chief Executive Officer, and a director of Vista Technologies, Inc., a medical
services company. Mr. Schultz serves on the board of directors of Wanderlust
Interactive, Security Capital Corp., and Mailtrex Inc. Mr. Schultz received a
B.E.S. in Operations Research from Johns Hopkins University in 1972 and an
M.B.A. from Harvard Business School in 1975.
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
4
<PAGE> 7
Manager at Integrated Device Technology, Inc. and held marketing and operating
positions at Mostek. He is 39 years old and holds a B.B.A. in Marketing from
Baylor University.
Daniel R. Doyle is the Vice President and General Manager of Display
Products, and has overall responsibility for group operations. 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 40 years old and holds a B.S. in
finance and marketing from Lehigh University in Pennsylvania.
Frank Muscolino is Vice President and General Manager of the Federal
Products Division 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 49 years old
and holds a B.S. in chemistry from Clarkson University in New York.
BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors. The Company is managed by a five member Board of
Directors. The Board met nine times during fiscal 1997. 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 Thomas A. Schultz and Norman T. Hall. 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 met one
time during fiscal 1997.
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 Thomas J. Toy and Norman
T. Hall. Neither Mr. Toy nor Dr. Hall 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 four times during fiscal 1997.
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 (an "Outside Director") receives $250 per meeting for his
services as a director and is reimbursed for reasonable and necessary expenses
incurred in attending the meetings of the Board or any committee thereof.
Under the terms of the Company's 1987 Option Plan, as amended (the "Option
Plan"), each nonemployee director (a "Qualifying Director") is entitled to
receive upon election to the Board of Directors for each three years of service
an option to purchase 15,000 shares of Common Stock at an exercise price
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<PAGE> 8
equal to the fair market value per share at the date of grant and vesting in
three equal installments over three years. At the present, the Qualifying
Directors are Dr. Hall and Messrs. Schultz and Toy.
The Company will indemnify each director serving on the Board in connection
with his service as a director of the Company to the fullest extent allowed by
Delaware law, the Company's Certificate of Incorporation, and the Company's
By-Laws, as each may be amended from time to time.
EXECUTIVE COMPENSATION
The following table sets forth, for each of the Company's last two fiscal
years, the annual compensation awarded to the (i) person who served as the
Company's chief executive officer during fiscal 1997, and (ii) each of the four
other most highly compensated executive officers (other than the Company's chief
executive officer) who were serving as executive officers at the end of fiscal
1997 (the "Named Executive Officers"). None of the Named Executive Officers were
employed by the Company in fiscal year 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL -----------------------------
COMPENSATION AWARDS PAYOUTS
------------------------------------------------ ---------- ---------------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION
--------------------------- ---- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Donald F. McGuinness............... 1997 262,000 40,500 0 0 6,108(1)
Chairman of the Board, President, 1996 230,836 168,750 0 400,000 6,108(1)
and Chief Executive Officer
Frank D. Edwards................... 1997 161,600 20,900 0 30,000 0
Senior Vice President of Finance, 1996 147,627 95,250 0 150,000 0
Chief Financial Officer, and
Secretary
Kenneth K. Buckley................. 1997 149,600 15,640 0 20,000 0
Vice President and Director of 1996 137,901 60,750 0 90,000 0
Marketing and Sales for Memory
Products
Daniel R. Doyle.................... 1997 132,600 20,750 0 50,000 0
Vice President and General 1996 120,958 46,738 0 60,000 0
Manager for Display Products
Frank J. Muscolino................. 1997 121,266 17,670 0 40,000 0
Vice President and General 1996 114,236 46,266 0 60,000 0
Manager for Federal Products
</TABLE>
- ---------------
(1) Term Life Insurance for Mr. McGuinness; policy has no cash-surrender value.
6
<PAGE> 9
OPTION GRANTS IN FISCAL YEAR 1997
Option Grants in Fiscal Year 1997. The following table sets forth the
options granted with respect to the fiscal year ended September 30, 1997 to the
Company's Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#) YEAR(%) ($/SH) DATE
---- ---------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Frank D. Edwards(1)......................... 30,000 9.0 3.5625 08/13/02
Kenneth K. Buckley(1)....................... 20,000 6.0 3.5625 08/13/02
Daniel R. Doyle(2).......................... 30,000 9.0 3.5625 08/13/02
20,000 6.0 3.7500 11/18/01
Frank J. Muscolino(2)....................... 20,000 6.0 3.5625 08/13/02
20,000 6.0 3.7500 11/18/01
</TABLE>
- ---------------
(1) As of September 30, 1997, no options were immediately exercisable. The
options vest with respect to 10% of the shares six months from the date of
grant with the remainder vesting monthly over a five-year period.
(2) As of September 30, 1997, options to acquire 3,333 shares were immediately
exercisable. The options vested with respect to 10% of the shares six months
from the date of grant with the remainder vesting monthly over a five-year
period.
Option Exercises and Year-End Holdings. The following table sets forth the
aggregate number of options exercised in fiscal year 1997 and the value of
options held as of September 30, 1997 by the Company's Named Executive Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND
FISCAL YEAR-END 1997 OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY
SHARES OPTIONS AT FISCAL OPTIONS AT FISCAL
ACQUIRED ON YEAR-END(#) YEAR-END($)(1)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Donald F. McGuinness................ 0 0 425,171/29,629 730,931/38,888
Frank D. Edwards.................... 0 0 129,987/91,113 300,278/113,961
Kenneth K. Buckley.................. 0 0 138,207/31,113 337,001/23,961
Daniel R. Doyle..................... 0 0 111,246/45,334 291,221/48,126
Frank J. Muscolino.................. 0 0 75,626/35,334 132,088/36,876
</TABLE>
- ---------------
(1) Based on the closing price of the Common Stock as reported on the Nasdaq
Small-Cap Market on September 30, 1997 of $4.6875 per share.
7
<PAGE> 10
PRINCIPAL SHAREHOLDERS
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, and other executive
officers as of November 20, 1997, Company records, and filings as of December
19, 1997 received by the Company on Schedules 13D and 13G under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). All such information
reflects beneficial ownership as of November 20, 1997, as known by the Company.
<TABLE>
<CAPTION>
5% SHAREHOLDERS, NAMED
EXECUTIVE OFFICERS, DIRECTORS, AND NOMINEES; AMOUNT AND PERCENT
AND DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP NATURE OF BENEFICIAL OF CLASS
(NAME AND ADDRESS) OWNERSHIP(1) (2)
----------------------------------------------- -------------------- -----------
<S> <C> <C>
New York Life Insurance Company(3)............................ 1,862,660 26.08
51 Madison Avenue
New York, NY 10010
Thomas J. Toy(4).............................................. 655,477 9.22
Technology Funding Inc.
2000 Alameda de las Pulgas
San Mateo, CA 94403
Technology Funding Partners III, L.P.(5)...................... 645,477 9.10
2000 Alameda de las Pulgas
San Mateo, CA 94403
Donald F. McGuinness(6)....................................... 454,800 6.05
Thomas A. Schultz(7).......................................... 187,161 2.61
Frank D. Edwards(8)........................................... 163,711 2.27
Kenneth K. Buckley(9)......................................... 139,320 1.93
Daniel R. Doyle (10).......................................... 112,361 1.57
Frank Muscolino (11).......................................... 75,626 1.06
Norman T. Hall(12)............................................ 66,440 *
All current directors and executive
officers as a group (13).................................... 1,854,896 22.73
(eight persons)
</TABLE>
- ---------------
* 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.
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<PAGE> 11
(3) Includes 80,600 shares issuable upon exercise of warrants currently
exercisable or exercisable within 60 days after November 20, 1997.
(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"), which is a managing general
partner of TFP-3, and as such may be deemed the beneficial owner of such
shares. In addition, Mr. Toy has received an option currently exercisable
or exercisable within 60 days after November 20, 1997 for the purchase of
10,000 shares of Common Stock in connection with his service as a director.
Mr. Toy is a director of the Company.
(5) Includes 35,000 shares issuable upon exercise of warrants currently
exercisable or exercisable within 60 days after November 20, 1997. 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.
(6) Includes 454,800 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 20, 1997. Mr.
McGuinness is the Chairman of the Board, President, and Chief Executive
Officer of the Company.
(7) Includes 116,856 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 20, 1997. Mr.
Schultz is a director of the Company.
(8) Includes 159,616 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 20, 1997. 4,095
shares are held in a joint account with Mr. Edwards' wife, Carol Edwards.
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.
(9) Includes 110,913 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 20, 1997. Mr.
Buckley is Vice President and the Director of Sales and Marketing for
Memory Products.
(10) Includes 111,246 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 20, 1997. 1,448
shares are held in a joint account with Mr. Doyle's wife, Lynn Doyle. Mr.
Doyle is the Vice President and General Manager for Display Products.
(11) Includes 75,626 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 20, 1997. Mr.
Muscolino is the Vice President and General Manager for Federal Products
Division.
(12) Includes 26,440 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days after November 20, 1997. Dr. Hall
is a director of the Company.
(13) Includes 1,100,497 shares issuable upon exercise of warrants or options
currently exercisable or exercisable within 60 days after November 20,
1997.
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 original term of the agreement expired on September
30, 1997. The Company and Mr. McGuinness have elected to continue the term of
the agreement until September 30, 1998, pursuant to a provision thereof that
provides that the term of the agreement automatically extends from year to year
in one-year extensions unless at least 90 days prior to an anniversary
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of September 30 either party gives written notice to the other of such party's
intention not to extend the term of the agreement.
Effective as of December 1, 1997, the Company increased Mr. McGuinness'
base salary to $275,000 per year, which may be adjusted upwards from time to
time in the sole discretion of the Board of Directors of the Company. Mr.
McGuinness' options vest pro-rata over a period of 36 months commencing from the
date of grant.
Mr. McGuinness' employment under his employment 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 and certain fringe benefits for a period of 18
months. Mr. McGuinness will also be entitled to the above-described termination
benefits if he terminates his employment with cause.
In the event Mr. McGuinness is terminated by the Company without cause
under his employment agreement, Mr. McGuinness will receive deferred
compensation equal to his base salary and certain fringe benefits for a period
of 18 months. Additionally, in the event Mr. McGuinness elects to terminate his
own employment, the Company and Mr. McGuinness have agreed to engage in good
faith negotiations to agree on a reasonable amount of deferred compensation.
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. In the event the
Company experiences a change in control and certain terminating events occur
thereafter, the severance agreement requires the Company to pay Mr. McGuinness,
in lieu of the deferred compensation that would otherwise be payable to Mr.
McGuinness, 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.
Such terminating events include termination by the Company without sufficient
cause, or termination by Mr. McGuinness following certain changes initiated by
the Company.
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. In the event the Company experiences a
change in control and certain terminating events occur within two years of such
change in control, the severance agreement requires the Company 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) nine months of
continued life insurance and health and medical benefits. Such terminating
events include termination by the Company without sufficient cause, or
termination by Mr. Edwards following certain changes initiated by the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
New York Life Insurance Company
Effective November 30, 1996, the Company redeemed all outstanding shares of
its Series A Preferred Stock. Prior to this redemption, on November 18, 1996,
New York Life Insurance Company ("New York Life"), a significant shareholder,
converted all of its 206 shares of Series A Preferred Stock into 82,400 shares
of Common Stock.
Technology Funding Partners III, L.P.
On November 12, 1996, Technology Funding Partners III, L.P., a significant
shareholder and an affiliate of Mr. Toy, converted all of its 50 shares of
Series A Preferred Stock into 20,000 shares of Common Stock.
10
<PAGE> 13
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
Mr. Schultz, a director and the Company's former Chairman, Chief Executive
Officer and President, received an interest free $100,000 loan from the Company
on October 13, 1995 in connection with a $100,000 bonus payable to Mr. Schultz
on or about January 15, 1996. The note underlying this debt was due on demand
but in no event later than January 15, 1996. The note was satisfied in full.
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 and Edwards. 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, 1998, 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, 1997, 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.
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, 1997, all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than 10% beneficial
owners were satisfied with the following exceptions. New York Life and Thomas J.
Toy failed to file timely a Form 4 in connection with the conversion of shares
of the Company's Series A Preferred Stock. In connection with the issuance of
options to purchase shares of Common Stock under the Company's Option Plan,
Messrs. Edwards, Buckley, Doyle, and Muscolino failed to file a Form 4,
reporting the receipt of such options on an amendment to a Form 5, which
amendment was not filed on a timely basis.
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<PAGE> 14
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 1999 Annual Meeting of
Shareholders, it must be received at the principal executive offices of the
Company on or before September 11, 1998. 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.
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.
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, 1997 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.
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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 25, 1998
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 7, 1998 by the undersigned at the Annual Meeting of Shareholders to be
held on Wednesday, February 25, 1998 at 9:00 a.m., at the Westin Hotel, 70
Third Avenue, Waltham, Massachusetts, and at 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 PROPOSAL 2, AND WITH RESPECT TO
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
OR POSTPONEMENTS THEREOF, IN ACCORDANCE WITH THE DISCRETION OF EACH PROXY. 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)
<PAGE> 16
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<S> <C>
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE
FOR all nominees WITHHOLDING
listed at right (except AUTHORITY
as indicated to the to vote for all nominees
contrary below) listed at right FOR AGAINST ABSTAIN
1. Proposal to [ ] [ ] NOMINEES: Frank D. Edwards 2. Proposal to ratify the [ ] [ ] [ ]
elect the Thomas J. Toy appointment of Price
following Waterhouse LLP to serve as
directors of independent accountants for
the Company to serve until the 2001 Annual the Company for the fiscal
Meeting of Shareholders and until their year ending September 30,
respective successors are duly elected and 1998.
qualified or until their earlier resignation
or removal: 3. In their discretion, the Proxies are each
authorized to vote upon such other business as
Instruction: To withhold authority to vote for may properly come before the Annual Meeting and
any individual nominee, write that nominee's any adjournments or postponements thereof.
name in the space provided below.
The undersigned hereby acknowledge(s) receipt 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 _______________, 1998
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>
