SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
---------------
LOGIC DEVICES INCORPORATED
(Exact name of registrant as specified in its charter)
---------------
N/A
---------------
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14-a-6 (i)(4) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the former schedule and the date of its filing.
LOGIC DEVICES INCORPORATED
1320 ORLEANS DRIVE
SUNNYVALE, CA 94089
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 12, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Logic
Devices Incorporated, a California corporation (the "Company"), will be held at
the offices of Logic Devices Incorporated, 1320 Orleans Drive, Sunnyvale,
California 94089, on March 12, 2002 at 11:00 a.m., local time, for the following
purposes:
1. To elect a Board of Directors; and
2. To transact such other business as may properly come before
the meeting.
Shareholders of record at the close of business on January 28, 2002, are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors,
/s/ Kimiko Lauris
--------------------------
Kimiko Lauris
Secretary
Sunnyvale, California
January 28, 2002
THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL SHAREHOLDERS TO
ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN
THE ACCOMPANYING REPLY ENVELOPE. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON.
LOGIC DEVICES INCORPORATED
1320 ORLEANS DRIVE
SUNNYVALE, CA 94089
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 12, 2002
INTRODUCTION
The accompanying Proxy is solicited by the Board of Directors (the "Board")
of Logic Devices Incorporated, a California corporation (the "Company"), for use
at the Annual Meeting of Shareholders of the Company to be held on the date, at
the time and place and for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders and at any adjournments thereof. The Company's
principal executive offices are located at 1320 Orleans Drive, Sunnyvale,
California 94089, and its telephone number is (408) 542-5400. Shareholders of
record at the close of business on January 28, 2002 are entitled to notice of
and to vote at the meeting. This Proxy Statement and the accompanying Proxy are
being mailed to shareholders on or about February 8, 2002.
THE MEETING
On January 28, 2002, there were issued and outstanding 6,849,638 shares of
common stock, no par value ("Common Stock"), held by approximately 3,500 holders
of record. Each share of Common Stock entitles the holder thereof to one vote on
all matters submitted to a vote of shareholders, except for the election of
directors in which holders of Common Stock may cumulate their votes.
The presence in person or by proxy of the holders of a majority of the
Company's outstanding shares of Common Stock will constitute a quorum. The
affirmative vote of a majority of the outstanding shares of Common Stock
represented and voting at the meeting, in person or by proxy, (which shares
voting affirmatively also constitute at least a majority of the required quorum)
will be necessary for the taking of all action that may properly come before the
meeting. Abstentions are considered present at the Annual Meeting and counted in
determining whether a quorum is present. Shares represented by broker non-votes
will be considered present at the Annual Meeting and will be counted in
determining whether a quorum is present. With respect to all matters,
abstentions and broker non-votes will not be counted in determining the number
of shares voted for or against any proposal.
Shareholders are permitted to vote cumulatively in the election of
directors, and the candidates receiving the highest number of affirmative votes
will be elected. Cumulative voting entitles each shareholder to cast a number of
votes equal to the number of directors to be elected multiplied by the number of
shares owned by such shareholder and permits each shareholder to cumulate such
votes for one candidate or distribute such votes among the candidates in such
proportion as the shareholder may determine. In order to vote cumulatively, a
shareholder must give notice of his intention to cumulate votes by proxy or at
the meeting, and all candidates must be placed in nomination prior to the
voting. After any shareholder has properly given such notice, every shareholder
will be entitled to cumulate his votes in the election of directors.
The named proxies do not intend to give notice of their intention to
cumulate their votes, but they may elect to do so in the event of a contested
election or any other unexpected circumstances. Discretionary authority to
cumulate votes is being solicited hereby, including the authority to cumulate
votes for all or fewer than all of the nominees, in the discretion of the
persons named as proxies. See "Election of Directors."
1
PROXIES AND PROXY SOLICITATION
All shares of Common Stock represented by properly executed proxies will be
voted at the meeting in accordance with the directions marked on the proxies,
unless such proxies previously have been revoked. If no directions are
indicated, the proxies will be voted for the election of each nominee named
below under "Election of Directors" (including if a shareholder properly gives
notice of intention to cumulate, in such cumulative proportions as the proxies
determine) in their sole discretion. If any other matters are properly presented
at the meeting for action, which is not presently anticipated, the proxy holders
will vote the proxies (which confer discretionary authority upon such holders to
vote on such matters) in accordance with their best judgment. Each proxy
executed and returned by a shareholder may be revoked at any time before it is
voted by timely submission of written notice of revocation or by submission of a
duly executed proxy bearing a later date (in either case directed to the
Secretary of the Company), or if a shareholder is present at the meeting, he may
elect to vote his shares personally.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, certain directors, officers and other employees of the
Company, not specially employed for this purpose, may solicit proxies, without
additional remuneration therefor, by personal interview, mail, telephone or
telegram. The Company will also request brokers, custodians, nominees and other
fiduciaries to forward proxy soliciting material to the beneficial owners of
shares of Common Stock which are held of record by such brokers, custodians,
nominees and other fiduciaries and will reimburse such persons for their
reasonable out-of-pocket expenses.
2
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
At the meeting, a Board of five Directors is to be elected. See "Election
of Directors--Information Concerning Nominees for Election as Directors." Each
director elected at the meeting will hold office until the next annual meeting
of shareholders of the Company or until his respective successor is duly elected
and qualified. See "The Meeting."
The Board has nominated and it is the intention of the persons named as
proxies in the enclosed proxy, unless otherwise instructed, to vote for the
election of the nominees named below, each of which has consented to serve as a
director if elected. All of the nominees have previously served as directors of
the Company. The proxies solicited hereby will not be voted for a greater number
of persons than the number of nominees named.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES.
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS
The following information is furnished with respect to each nominee:
YEAR FIRST
NOMINEE AGE ELECTED PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS (1)
- ------- --- ------- ------------------------------------------------
Howard L. Farkas 77 1983 Mr. Farkas is Chairman of the Board of the Company and has
been a director since 1983. Mr. Farkas is the owner and managing broker
of Windsor Gardens Realty, Inc., a residential real estate brokerage
company, which he co-founded in 1964. He also serves as President of
Farkas Group, Inc., a company that provides management services to
various business interests. He serves as a director of Synthetech, Inc.,
a public chemical research and manufacturing company whose products are
used extensively in new drug research, Union Bank & Trust, Northwestern
Engineering Company, U.S. Nursing Corporation, NDG Corporation, and Ivory
LLC and Aragorn LLC, which are in the gas and oil exploration and
development business.
William J. Volz 54 1983 Mr. Volz is a founder of the Company and has been a director
since its inception. Mr. Volz has been President and principal operating
officer of the Company since December 1987. He served as the Company's
Vice President of Engineering from August 1983 to December 1987.
Albert Morrison, Jr. 65 1983 Mr. Morrison has served as a director of the Company since 1983
and has been Chairman of Morrison Brown Argiz & Company, P.C., a
certified public accounting firm in Miami, Florida, since 1969. He is a
member of the Board of Directors of Heico Corporation, a member of the
Board of Directors for Florida International University, and Chairman of
the Miami-Dade County Industrial Development Authority.
Fredric J. Harris 61 1999 Mr. Harris joined the Board of Directors in 1999. He holds
the CUBIC Signal Processing Chair of the Communication Systems and Signal
Processing Institute at San Diego State University, where he has taught
since 1967. He holds a number of patents on digital receiver and digital
signal processing ("DSP") technology and lectures throughout the world on
DSP applications. He consults for organizations requiring
high-performance DSP systems and is a senior member of the Institute of
Electrical and Electronic Engineers.
3
Joel S. Kanter 45 - Mr. Kanter is a new nominee to the Board of Directors. Since
1986, he has served as President and Director of Windy City, Inc., a
privately held firm specializing in public and private equity
investments. He also serves as a director for Encore Medical Corporation,
a publicly-traded manufacturer of implant devices; Greystone Medical
Group, Inc., a development stage pharmaceutical company; I-Flow
Corporation, a publicly-traded manufacturer of home infusion pumps; Magna
Labs, Inc., a publicly-traded development stage medical device company;
and Mariner Post Acute Network, Inc., a publicly-traded leading provider
of skilled nursing care.
- --------------
(1) Only directorships of issuers with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to
the requirements of Section 15(d) of that Act or directorships of issuers
registered as investment companies under the Investment Company Act of 1940
are required to be listed in the above table.
BOARD AND COMMITTEE MEETINGS
It is with deep sorrow that we announce the passing of Mr. Burt Kanter, a
member of the Board of Directors since 1983 and an initial investor in the
Company. In October 2001, Mr. Kanter lost his valiant battle with cancer. During
fiscal 2001, Mr. Kanter was unavailable to attend some meetings due to his
illness. He was a member of the Audit and Compensation Committees.
The Board has an Audit Committee and a Compensation Committee. Presently,
the members of the Audit Committee are Messrs. Farkas and Morrison, and the
members of the Compensation Committee are Messrs. Farkas and Volz. Upon election
to the Board, Mr. Joel S. Kanter will become a member of both these committees,
in replacement of Mr. Burt Kanter.
The functions of the Audit Committee include reviewing the independence of
the Company's independent auditors, recommending to the Board the engagement and
discharge of independent auditors, reviewing with the independent auditors the
plan and results of auditing engagements, reviewing the scope and adequacy of
internal accounting controls, and directing and supervising special
investigations. The Audit Committee held two meetings during fiscal 2001. All
members of the Audit Committee were present, except Mr. Kanter.
The functions of the Compensation Committee include reviewing and making
recommendations to the Board with respect to the compensation of officers and
other employees of the Company and establishing employee benefit programs. The
Compensation Committee held one meeting during fiscal 2001. All members of the
Compensation Committee were present at the meeting, except Mr. Kanter.
The Board has not designated a Nominating Committee; rather, the Board, as
a whole, performs the functions that would otherwise be delegated to such a
committee. In recommending Board candidates, the Board seeks individuals of
proven judgment and competence and considers such factors as anticipated
participation in Board actions, education, geographic location, and special
talents or attributes. Shareholders who wish to suggest qualified candidates
should write to the Board stating, in detail, the qualifications of such persons
for consideration.
The Board held three meetings during fiscal 2001. Messrs. Farkas, Volz and
Morrison attended all meetings, while Messrs. Kanter and Harris missed two
meetings.
EXECUTIVE OFFICERS
The following is a list of the executive officers of the Company as of
January 28, 2002:
Name Age Position(s) held with the Company
---- --- ---------------------------------
William J. Volz 54 President
Director
Kimiko Lauris 31 Chief Financial Officer
Secretary
4
John A. Eldon 51 Chief Technical Officer
Dennis Gross 47 Vice President of Sales
Mr. Volz is a founder of the Company and has been a director since its
inception. Mr. Volz has been President and principal operating officer of the
Company since December 1987. He served as the Company's Vice President of
Engineering from August 1983 to December 1987.
Ms. Lauris joined the Company in 1999 as Chief Financial Officer. Ms.
Lauris is a Certified Public Accountant, with a Masters of Business
Administration from the University of California, Irvine. Prior to joining the
Company, she was General Accounting Manager at ArthroCare Corporation, an Audit
Manager at BDO Seidman, LLP, and an In-Charge Accountant with the Office of the
California State Auditor.
Mr. Eldon joined the Company in 1999 and was appointed Chief Technical
Officer in 2000. Mr. Eldon continues to teach classes at University of
California, San Diego and holds patents in video decoding and high-frequency
radio voice communications. In addition, he has published over 35 articles
covering various signal processing chips, has edited the IEEE VLSI Signal
Processing Journal, and has served on the IEEE's floating point arithmetic,
MPEG, and Verilog HDL standards committees. Prior to joining the Company, Mr.
Eldon held positions with Fairchild Semiconductor and TRW LSI Products.
Mr. Gross joined the Company in 1994 and was appointed Vice President of
Sales in November 1999. For the five prior years, he served as European Sales
Director, in which time Europe was the Company's fastest growing sales region.
Prior to joining the Company, Mr. Gross was with Raytheon Corporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 28, 2002, certain information
concerning the beneficial ownership of Common Stock by each shareholder known by
the Company to be the beneficial owner of more than 5%, by each director, by
each non-director executive officer, and by all executive officers and directors
as a group. The persons named in the table have sole voting and investment power
with respect to the shares owned by them subject to community property laws
where applicable and the information contained in the footnotes to this table.
BENEFICIAL
SHARE PERCENTAGE
NAME AND ADDRESS OWNERSHIP(1) OWNERSHIP(2)
- ------------------------------- ------------ ------------
5% SHAREHOLDERS:
S.A. Hellerstein
Trustee of the Farkas Trusts(3) 624,305 9.1%
1139 Delaware Street
Denver, CO 80204
Chicago Investments, Inc.(4) 529,319 7.7%
934 North Main Street
Sheridan, WY 82801
Dimensional Fund Advisors, Inc. 412,200(5) 6.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
DIRECTORS AND NOMINEES:
Howard L. Farkas 240,000(6)(7)(8) 3.5%
6601 East Progress Avenue
Englewood, CO 80111
William J. Volz 439,484(6) 6.4%
1320 Orleans Drive
Sunnyvale, CA 94089
Albert Morrison, Jr. 40,877(7) 0.6%
1001 Brickell Bay Drive, Ninth Floor
Miami, FL 33131
5
Joel S. Kanter -(9) 0.0%
8000 Towers Crescent Drive
Vienna, VA 22182
Fredric J. Harris 45,000(10) 0.7%
Electrical and Computer Engineering Department
San Diego State University
5500 Campanile Drive
San Diego, CA 92182-1309
NON-DIRECTOR EXECUTIVE OFFICERS:
Kimiko Lauris 31,250(11) 0.5%
1320 Orleans Drive
Sunnyvale, CA 94089
John A. Eldon 25,000(12) 0.4%
11772 Sorrento Valley Road, Suite 112
San Diego, CA 92121
Dennis Gross 81,250(13) 1.2%
38b Market Place
Warminster, Wiltshire
BA12 9NP United Kingdom
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (8 PERSONS) 902,861(14) 13.2%
- ------------------------
(1) Assumes the exercise of any warrants or options held by such person which
are exercisable as of the date of this Proxy Statement or within 60 days
thereafter, but not the exercise of any other person's warrants or options.
(2) Assumes 6,849,638 shares of Common Stock outstanding as of
January 28, 2002.
(3) Consists of 15 irrevocable trusts administered by Mr. Hellerstein, an
independent trustee, the beneficiaries of which consist of Mr. Farkas and
members of his family.
(4) A Delaware corporation, whose directors and officers include Kanter family
members, but exclude Mr. Joel Kanter.
(5) This information is based solely on the Schedule 13G filed by
Dimensional Fund Advisors, Inc. on February 2, 2001.
(6) Such beneficial share ownership includes options for Common Stock obtained
from special one-time option grants of 75,000 shares to Mr. Farkas and
200,000 shares to Mr. Volz, pursuant to the Logic Devices Incorporated 1998
Director Stock Incentive Plan (the "1998 Director Stock Incentive Plan").
See "Compensation of Executive Officers and Directors - Compensation of
Directors."
(7) Such beneficial share ownership includes options for 40,000 shares of
Common Stock granted under the 1998 Director Stock Incentive Plan. See
"Compensation of Executive Officers and Directors - Compensation of
Directors."
(8) Mr. Farkas disclaims any beneficial ownership of the shares held by Mr.
Hellerstein, as trustee of the Farkas Trusts.
(9) Mr. Joel Kanter disclaims any beneficial ownership of the shares held by
Chicago Investments, Inc.
(10) Such beneficial ownership includes options for 25,000 shares of Common
Stock granted to Mr. Harris at the time he accepted appointment to the
Board, and options for 20,000 shares of Common Stock granted under the 1998
Director Stock Incentive Plan. See "Compensation of Executive Officers and
Directors - Compensation of Directors."
(11) Such beneficial share ownership reflects the number of shares underlying
granted options for Common Stock that are currently exercisable. Ms. Lauris
has also been granted options for an additional 23,750 shares of Common
Stock, which are not currently exercisable and will not become exercisable
within 60 days from the date of this Proxy Statement.
(12) Such beneficial share ownership reflects the number of shares underlying
granted options for Common Stock that are currently exercisable. Mr. Eldon
has also been granted options for an additional 20,000 shares of Common
Stock, which are not currently exercisable and will not become exercisable
within 60 days from the date of this Proxy Statement.
(13) Such beneficial share ownership reflects the number of shares underlying
granted options for Common Stock that are currently exercisable. Mr. Gross
has also been granted options for an additional 28,750 shares of Common
Stock, which are not currently exercisable and will not become exercisable
within 60 days from the date of this Proxy Statement.
(14) Such beneficial share ownership includes the ownership reported at
footnotes 6 - 13.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon review of Forms 3 and 4 and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e) during fiscal 2000 and Form 5 and
amendments thereto furnished to the Company with respect to fiscal 2001, the
Company is not aware of any directors, officers, or beneficial owners of more
than 10% of the shares of the Company's Common Stock who failed to file on a
timely basis, as disclosed in the above Forms, reports required by Section 16(a)
of the Exchange Act during the most recent fiscal year or prior fiscal year,
except as has previously been reported by the Company.
6
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
Furnished below is information with respect to compensation paid or accrued
for services in all capacities during the Company's fiscal year ended September
30, 2001, to the Company's most highly paid executive officers serving at the
end of fiscal 2001 whose total annual salary and bonus exceeded $100,000 (the
"Named Executive Officers") for the Company's fiscal year ended September 30,
2001:
LONG-TERM
COMPENSATION
OTHER ANNUAL AWARDS
ANNUAL COMPENSATION COMPENSATION (NO. OF SHARES
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($) ($) UNDERLYING OPTIONS)
- --------------------------- ---- ------------- --------- ------------ -------------------
William J. Volz.................. 2001 160,600 - - -
President and
Chief Executive Officer 2000 120,611 - - -
1999 98,921 - - -
Kimiko Lauris 2001 97,100 5,000 - 40,000
Chief Financial Officer and
Secretary 2000 75,400 5,000 - 15,000
John A. Eldon 2001 121,000 - - 30,000
Chief Technical Officer 2000 102,600 - - 20,000
- ------------------------
(1) The Company changed its fiscal year end from December 31 to September 30,
effective beginning its 1998 fiscal year, and changed its fiscal year end
from a 12-month year ended September 30 to a year comprised of 52 weeks of
seven days each, beginning on Monday and ending on Sunday, effective
beginning its 1999 fiscal year. Therefore, the salaries listed above
represent compensation for the following fiscal periods of the Company: for
2001, the fiscal year beginning October 2, 2000 and ending September 30,
2001; for 2000, the fiscal year beginning October 4, 1999 and ending
October 1, 2000; and for 1999, the fiscal year beginning October 1, 1998
and ending October 3, 1999.
STOCK OPTIONS
No stock options were granted to the Named Executive Officers under the
Company's 1998 Director Stock Incentive Plan. The following table sets forth
information concerning the options for Common Stock granted to the Named
Executive Officers under the 1996 LOGIC Devices Incorporated Stock Incentive
Plan during the fiscal year ended September 30, 2001. The table also sets forth
hypothetical gains or potential "option spreads" for those options at the end of
their respective ten-year terms. These potential realizable values are based on
the assumption that the market price of the Company's common stock would
appreciate at a rate of five percent (5%) and ten percent (10%), compounded
annually, from the date the option was granted to the last day of the full
option term. The actual value realized upon the exercise of these options, if
any, will be dependent upon the future performance of the Company's common stock
and overall market conditions.
Potential Realizable
Value at Assumed
Annual Rates
% of Total of Stock Price
Options Options Appreciation for
Granted Granted to Exercise Term Expiration
(No. of Employees Price per Grant --------------------
Shares) in Period Share Date 5%($) 10%($)
---------- ------------- --------- --------- --------- ---------
William J. Volz - - - - - -
Kimiko Lauris 40,000 16.8% $ 1.9375 10/03/00 46,739 123,515
John A. Eldon 30,000 12.6% $ 1.9375 10/03/00 36,554 92,636
7
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information related to the number of stock options
exercised during fiscal 2001, the number of exercisable and unexercisable
options held at September 30, 2001, and the year-end value of in-the-money
exercisable and unexercisable options held at September 30, 2001, for the Named
Executive Officers.
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR-END YEAR-END (MARKET PRICE OF SHARES
SHARES (NUMBER OF SHARES) LESS EXERCISE PRICE)($)(2)(3)
ACQUIRED ON VALUE --------------------------- -----------------------------
EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------ ----------- ------------- ----------- -------------
William J. Volz - - 200,000 - - -
Kimiko Lauris - - 17,500 37,500 - -
John A. Eldon - $ - 12,500 32,500 - -
- ------------------------
(1) The "value realized" represents the difference between the exercise price
and the market price of the option shares on the date the option was
exercised. The value realized was determined without considering any taxes
that may have been owed.
(2) "In-the-money" options are options whose exercise price was less than the
market price of the common stock at September 30, 2001.
(3) Assuming a stock price of $0.96 per share, which was the closing price of a
share of the Company's common stock reported on the NASDAQ National Market
System on September 28, 2001 (the last trading day of fiscal year ended
September 30, 2001).
COMPENSATION OF DIRECTORS
Directors did not receive any cash compensation during the fiscal year
ended September 30, 2001 or the previous 15 fiscal years for either their
services as directors or for their services on the various Board committees.
Under the Company's 1998 Director Stock Incentive Plan, each individual who
is elected and continues to serve as a non-employee director receives automatic
annual option grants for 10,000 shares of Common Stock, beginning with the first
Annual Shareholders Meeting following his initial election or appointment to the
Board. Each of these options will have an exercise price per share equal to the
fair market value of the Company's Common Stock on the automatic grant date and
has a maximum term of 10 years. Each option will be immediately exercisable for
all the 10,000 shares. Each of Messrs. Farkas, Burt Kanter, Morrison, and Harris
received an option to purchase 10,000 shares of Common Stock on March 6, 2001,
following his reelection as a member of the Board by the shareholders of the
Company on such date. These options have an exercise price of $1.4375 and have a
term of five years.
EMPLOYMENT CONTRACTS
The Company currently has no employment agreements with any of its
employees. None of the Company's executive officers have employment or severance
arrangements with the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Farkas, Burt Kanter and Volz served as members of the Compensation
Committee of the Company's Board of Directors during the fiscal year ended
September 30, 2001. Mr. Volz was, and currently is, the Company's President and
Chief Executive Officer. Mr. Volz is eligible to receive stock under the Stock
Incentive Plans. Mr. Farkas has received, and will receive, options for Common
Stock under the Company's 1998 Director Stock Incentive Plan, pursuant to its
automatic grant provisions, if reelected as director. See "Compensation of
Executive Officers and Directors - Compensation of Directors." Mr. Volz does not
vote on committee matters regarding his salary or option grants, and has not
received any option grants under the Stock Incentive Plans.
8
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors administers the
Company's executive compensation program. The Compensation Committee has
responsibility for executive compensation matters, including: review and
approval of base salaries, approval of individual bonuses and bonus programs for
executive officers, administration of certain employee benefit programs, and
review and approval of stock option grants to all employees, including the
executive officers of the Company.
OVERVIEW
The overall policy of the Committee is to offer the Company's executive
officers competitive compensation opportunities, based upon their personal
performance, the financial performance of the Company, and their contribution to
that performance. Each executive officer's compensation package is generally
comprised of three elements: (i) base salary, which is determined on the basis
of the individual's position and responsibilities with the Company, the level of
the individual's performance, and the financial performance of the Company; (ii)
incentive performance awards payable in cash and tied to the achievement of
performance goals; and (iii) long-term stock-based incentive awards designed to
strengthen the mutuality of interest between the executive officers and the
Company's shareholders.
COMPONENTS OF EXECUTIVE COMPENSATION
Several important factors considered in establishing the components of each
executive officer's compensation package are summarized below. Additional
factors were taken into account to a lesser degree. The Committee may, at its
discretion, apply entirely different factors, such as different measures of
financial performance, for future fiscal years.
Base Salary. The base salary for each officer is set primarily on the basis
of personal performance and internal comparability considerations and, to a
lesser extent, on the financial performance of the Company. Because of the
Company's financial performance over the past five fiscal years, the base salary
levels of the executive officers have not increased significantly above the
levels in effect for them for fiscal year 1996.
Cash Incentive Compensation. The Company has no regular established Cash
Incentive Compensation program for its executive officers. The Compensation
Committee does review the possibility of cash incentives for executive officers
based on the performance of the specific officer and on the financial
performance of the Company.
Long-term Stock-Based Incentive Compensation. The Company has two long-term
stock-based incentive compensation programs, consisting of the Stock Incentive
Plans, for which each of the Company's executive officers have been eligible to
participate.
Under the Stock Incentive Plans, the Compensation Committee periodically
approves grants of common stock options to the executive officers. The grants
are designed to align the interest of each executive officer with those of the
shareholders, and to provide each individual with a significant incentive to
manage the Company from the perspective of an owner with an equity stake in the
business. Generally, each grant allows the officer to acquire shares of the
Company's Common Stock at a fixed price per share (the market price on the grant
date) over a specified period of time (up to 10 years), thus providing a return
to the executive officer only if the market price of the shares appreciates over
the option term and the officer continues in the Company's employ. The size of
the option grant to each executive officer is designed to create a meaningful
opportunity for stock ownership and is based upon the executive officer's
current position with the Company, internal comparability with option grants
made to other Company executives, the current level of ownership in relation to
other executive officers, the executive officer's current level of performance,
and the executive officer's potential for future responsibility and promotion
over the option term. The Compensation Committee also takes into account the
number of vested and unvested options held by the executive officer to maintain
an appropriate level of equity incentive for that individual. The Compensation
Committee does not adhere to any specific guidelines as to the relative option
holding of the Company's executive officers under the Stock Incentive Plans. The
options granted to the Named Executive Officers under the Stock Incentive Plans,
for the Company's fiscal years 1999 to 2001 are included in the Summary
Compensation Table as Long-term Compensation Awards.
9
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Volz is currently the Company's President and Chief Executive Officer,
as well as a member of the Compensation Committee. There is no employment or
severance agreement between Mr. Volz and the Company. The Compensation Committee
determines the Chief Executive Officer's compensation in the same manner as
described above for all executives. In setting the base salary and cash
incentive levels for the Chief Executive Officer, the Compensation Committee
(Mr. Volz excuses himself from the discussion) reviews comparative information
reflecting recent compensation data for the industry. Mr. Volz's base salary has
been set accordingly, and Mr. Volz has not received any cash incentive
compensation. Mr. Volz has been eligible to receive stock under both the Logic
Devices Incorporated Employee Stock Ownership Plan (which has been terminated)
and the Stock Incentive Plans, but Mr. Volz has elected not to receive any
option grants under the Stock Incentive Plans. He did receive a special,
one-time option grant of 200,000 shares under the 1998 Director Stock Incentive
Plan. However, as long as he is an employee of the Company, Mr. Volz is not
eligible to receive annual automatic option grants, upon reelection to the Board
of Directors, under the 1998 Director Stock Incentive Plan.
With respect to matters related to all elements of compensation, the
Compensation Committee submits this report.
William J. Volz
Howard L. Farkas
REPORT OF THE AUDIT COMMITTEE
The incorporation by reference of this proxy statement into any document or
registration statement filed with the Securities and Exchange Commission by the
Company shall not be deemed to include the following report and related
information, unless such report is specifically stated to be incorporated by
reference into such document.
The Audit Committee assists the Board in carrying out its oversight
responsibilities for the Company's financial reporting process, audit process,
and internal controls. The Audit Committee also reviews the audited financial
statements and recommends to the Board that they be included in the Company's
annual report on Form 10-K. The Committee is comprised solely of directors, who
are independent as required by Nasdaq listing standards.
The Audit Committee has reviewed and discussed the audited financial statements
of the Company for the fiscal year ended September 30, 2001 with the Company's
management. The Audit Committee has discussed with Hood & Strong LLP, the
Company's independent certified public accountants for the year ended September
30, 2001, the matters required to be discussed by Statement of Auditing
Standards No. 61, Communication with Audit Committee.
The Audit Committee has also received the written disclosures and the letter
from Hood & Strong LLP required by Independence Standards Board Standard No. 1,
Independence Discussion with Audit Committees, and the Audit Committee has
discussed the independence of Hood & Strong LLP with that firm. The Audit
Committee reviewed non-audit services provided by its independent accountants
for the last fiscal year, and determined that those services did not impair the
accountants' independence. The Audit Committee is also responsible for handling
disagreements with the Company's independent accountants or the termination of
their engagement. There were no disagreements during the last fiscal year.
Based on the Audit Committee's review and discussions noted above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2001, for filing with the Securities and
Exchange Commission.
The Board of Directors has adopted a written charter for the Audit Committee.
Howard L. Farkas
Al Morrison, Jr.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the beginning of its last fiscal year, the Company has engaged in no
transactions or series of similar transactions with any of its officers,
directors or principal shareholders, or, to the knowledge of the Company, with
any of their affiliates in which the amount invested exceeded $60,000. Also, no
such transactions are currently contemplated.
Any future transactions with the Company's officers, directors or principal
shareholders, or any of their known affiliates, will be on terms the Board of
Directors believes to be no less favorable to the Company than those that could
be obtained from an unrelated third party in an arms-length transaction.
11
COMPANY PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG LOGC, THE S&P 500 INDEX AND
THE NASDAQ ELECTRONIC COMPONENTS STOCK INDEX
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock against the cumulative total return of the
NASDAQ Electronic Components Stock Index and S&P 500 Index for the period of
five years commencing September 30, 1996 and ending September 30, 2001. The
graph and table assume that $100 was invested on September 30, 1996 in each of
the Company's Common Stock, the NASDAQ Electronics Components Index, and the S&P
500 Index, and that all dividends were reinvested.
1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ------ ------
LOGIC Devices Incorporated 100.00 83.87 45.16 70.97 50.01 24.77
S & P 500 100.00 140.45 153.15 195.74 221.74 162.71
Nasdaq Electronic Components 100.00 175.88 140.02 284.57 500.48 140.88
12
ACCOUNTANTS
The firm of Hood & Strong LLP was the Company's independent public
accountants for the fiscal year ended October 1, 2000. The Company has selected,
and the Audit Committee of the Board of Directors has approved the selection of
Hood &Strong LLP as its independent public accountants for the fiscal year ended
September 29, 2002.A representative of Hood & Strong LLP is expected to attend
the meeting, where he will have the opportunity to make a statement if he so
desires, and will be available to respond to appropriate questions.
The firm of BDO Seidman, LLP was the Company's independent public
accountants for the fiscal year ended October 1, 2000. On December 19, 2000, the
Company notified BDO that it had elected to change accounting firms, and engaged
Hood & Strong LLP on December 20, 2000. The reason for the change concerned fee
increases. There were no disagreements with BDO, whether resolved or unresolved,
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure that, if not resolved to BDO's
satisfaction, would have caused BDO to make reference to the subject matter of
the disagreement in connection with its report for either of the Company's two
most recent fiscal years (2000 and 1999). In addition, neither the Company nor
anyone acting on its behalf, consulted Hood & Strong LLP regarding the
application of accounting principles to a specific completed or contemplated
transaction or type of audit opinions that might be rendered on the Company's
financial statements, whereby either written or oral advice was provided that
was an important factor considered by the Company in reaching a decision as to
the accounting, auditing, or financial reporting issue.
AUDIT FEES
The aggregate fees billed by Hood & Strong LLP in connection with the audit
of the Company's 2001 consolidated financial statements and the reviews of the
consolidated financial statements included in the Company's forms 10-Q for 2001
were approximately $65,600, including expenses.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not utilize the services of Hood & Strong LLP in the design
or implementation of its financial information systems during fiscal 2001.
ALL OTHER FEES
The aggregate fees billed by Hood & Strong LLP in connection with the
preparation of the Company's tax returns and general accounting and tax advice
provided to the Company for fiscal 2001 were approximately $27,100, including
expenses. The Audit Committee considers the provision of such services to be
compatible with maintaining Hood & Strong LLP's independence.
2003 ANNUAL MEETING OF SHAREHOLDERS
Any proposals of shareholders, intended to be personally presented at the
2003 Annual Meeting of Shareholders, must be received by the Secretary of the
Company for inclusion in the Company's Proxy Statement and form of Proxy no
later than October 14, 2002. Any such proposals will be subject to the proxy
rules adopted under the Securities Exchange Act of 1934, as amended.
By order of the Board of Directors
/s/ Kimiko Lauris
------------------------
Kimiko Lauris
Secretary
January 28, 2002
Sunnyvale, California
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LOGIC DEVICES INCORPORATED
This Proxy Is Solicited on Behalf of the Board of Directors
Howard L. Farkas, Joel S. Kanter, Albert Morrison, Jr., William J. Volz,
Frederic J. Harris and each of them, are hereby constituted and appointed the
lawful attorneys and proxies of the undersigned, with full power of
substitution, to vote and act as proxy with respect to all shares of common
stock, no par value, of LOGIC DEVICES INCORPORATED standing in the name of the
undersigned on the books of the company at the close of business on January 28,
2002, at the Annual Meeting of Shareholders to be held at the offices of Logic
Devices Incorporated, 1320 Orleans Drive, Sunnyvale, California 94089 at 10:00
A.M., Local time, on Tuesday, March 12, 2002, or any adjournment thereof, as
follows:
1. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES [ ] CUMULATE my votes as [ ] WITHHOLD my vote
listed (except as follows (insert for all nominees
marked to the percentage of vote to the left
contrary) foreach nominee).
___________Howard L.Farkas
___________Joel S. Kanter
___________Albert Morrison, Jr.
___________William J. Volz
___________Fredric J. Harris
(INSTRUCTION: To withhold authority to vote, cumulatively or otherwise, for
any individual nominee, strike a line through the nominee's name listed
under the cumulative box above.)
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE LISTED NOMINEES, (EXCEPT AS MARKED TO THE CONTRARY) INCLUDING CUMULATIVELY
FOR ALL OR FEWER THAN ALL OF THE NOMINEES IN THE SOLE DISCRETION OF THE PROXIES.
Please sign proxy as name appears thereon. Joint owners should each sign
personally. Trustees and others signing in a representative capacity should
indicate the capacity in which they sign.
Dated:_______________________________, 2002
PLEASE MARK, SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
-----------------------------------------
Signature
-----------------------------------------
Signature if held jointly
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