<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:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CKS GROUP, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
_
<PAGE> 2
PRELIMINARY COPY
CKS GROUP, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
DECEMBER , 1996
TO THE STOCKHOLDERS OF CKS GROUP, INC.:
NOTICE IS HEREBY GIVEN that the Special Meeting of Stockholders of CKS
Group, Inc., a Delaware corporation (the "Company"), will be held on Tuesday,
December 17, 1996, at 10:00 a.m., local time, at the executive offices of the
Company located at 10441, Bandley Drive, Cupertino, CA 95014, phone no. (408)
366-5100. The purpose of the meeting shall be to approve an amendment to the
Company's 1995 Stock Plan (the "Stock Plan") to increase the number of shares of
Common Stock available for grant thereunder by 1,600,000 shares, and to effect
certain other changes to the Stock Plan described in the Proxy Statement
accompanying this notice.
Only stockholders of record at the close of business on November 19, 1996
are entitled to notice of, and to vote at, the meeting and any adjournment
thereof.
All stockholders are cordially invited to attend the meeting in person.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE
POSTAGE PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. You may revoke your proxy at
any time before it has been voted, and if you attend the meeting you may vote in
person even if you have previously return your proxy card. Your prompt
cooperation will be greatly appreciated.
Sincerely,
Carlton H. Baab
Executive Vice President and
Chief Financial Officer
Cupertino, California
December , 1996.
<PAGE> 3
PRELIMINARY COPY
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of CKS Group, Inc., a Delaware
corporation (the "Company") for use at the Special Meeting of Stockholders (the
"Special Meeting") to be held on December 17, 1996 at 10:00 a.m. local time, or
at any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Special Meeting of Stockholders. The Special Meeting will
be held at the Company's executive offices located at 10441 Bandley Drive,
Cupertino, California 95014 (phone no. (408) 366-5100).
These proxy solicitation materials were mailed on or about December ,
1996 to all stockholders entitled to vote at the meeting.
RECORD DATE AND OUTSTANDING SHARES
Stockholders of record at the close of business on November 19, 1996 (the
"Record Date") are entitled to notice of and to vote at the Special Meeting.
At the Record Date, shares of the Company's Common Stock, $0.001
par value, were outstanding and held by approximately stockholders of
record. The only persons known by the Company to be the beneficial owners of
more than 5% of the Company's Common Stock as of the Record Date were The
Interpublic Group of Companies, Inc., William T. Cleary, Mark D. Kvamme and
Thomas K. Suiter.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
The cost of this solicitation will be borne by the Company. The Company
will reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners in accordance with applicable regulations. Proxies may also be
solicited by certain of the Company's directors, officers and regular employees,
without additional compensation, personally or by telephone, electronic mail or
facsimile.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR," "AGAINST" or "WITHHELD FROM" a matter are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as shares "represented and voting" at the Special Meeting
(the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both the presence or absence of a
quorum for the transaction of business and the total number of Votes Cast with
respect to a particular matter. In the absence of controlling precedent to the
contrary, the Company intends to treat abstentions in this manner. However,
because directors are elected by a plurality vote, abstentions in the election
of directors have no import once a quorum exists. In a 1988 Delaware case,
Berlin v. Emerald
<PAGE> 4
Partners, the Delaware Supreme Court held that, while broker non-votes may be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, broker non-votes should not be counted for purposes of
determining the number of Votes Cast with respect to the particular proposal on
which the broker has expressly not voted. Broker non-votes with respect to
proposals set forth in this Proxy Statement will therefore not be considered
"Votes Cast" and, accordingly, will not affect the determination as to whether
the requisite majority of Votes Cast has been obtained with respect to a
particular matter.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date, or by attending the meeting and voting in person. This Proxy Statement and
form of proxy were first sent or given to stockholders on or about December ,
1996, together with the Notice of Special Meeting of Stockholders.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's next Annual Meeting of Stockholders must
be received by the Company no later than December 5, 1996 in order to be
considered for possible inclusion in the Company's proxy statement and form of
proxy relating to that meeting.
PROPOSAL TO
AMEND 1995 STOCK PLAN
The Company's Board of Directors and stockholders have previously adopted
and approved the Company's 1995 Stock Plan (the "Stock Plan") and have reserved
an aggregate of 1,000,000 shares of the Common Stock of the Company for issuance
thereunder. In October 1996, in addition to making certain changes to the Stock
Plan designed to take advantage of greater administrative flexibility afforded
by new rules adopted by the Securities and Exchange Commission, the Board of
Directors approved an amendment (the "Amendment") to the Stock Plan in order to
(1) increase the number of shares reserved for issuance thereunder by 1,600,000
shares to a total of 2,600,000 shares, (2) increase the number of shares that
may be subject to options or stock purchase rights granted to any individual in
any fiscal year to 300,000 shares of Common Stock and the number of shares
subject to options or stock purchase rights granted to an individual upon
commencement of service to the Company to 200,000 shares of Common Stock, and
(3) to permit the Company to grant options and stock purchase rights to
nonemployee ("outside") directors of the Company. The Board of Directors
believes that the increase in the number of shares reserved for issuance under
the Stock Plan is necessary due to the fact that options to purchase
of the 1,000,000 shares originally reserved for issuance under the Stock Plan
were already outstanding as of October 31, 1996, and the Board contemplates
issuing additional options in the future in order to attract and retain
employees. The Board of Directors further believes that the proposed increase in
number of shares which may be granted to a recipient in a fiscal year and in
connection with commencement of service to the Company is necessary in order to
enhance the Company's ability to attract the best available management and
creative talent to support the Company's growth strategy. Finally, the Board of
Directors has concluded that amending the Stock Plan to allow the Company to
grant options and stock purchase rights to outside directors will aid the
Company's efforts to recruit highly qualified individuals to serve on the Board
of Directors and align their interests with those of the stockholders.
At the Special Meeting, the stockholders are being asked to ratify and
approve the Amendment to the Stock Plan.
PURPOSES OF THE PLAN
The purposes of the Stock Plan are (i) to attract and retain the best
available personnel for positions of substantial responsibility, (ii) to provide
additional incentive to employees, consultants and directors of the Company and
(iii) to promote the success of the Company's business.
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DESCRIPTION OF PLAN
The Stock Plan provides for the grant to employees of the Company
(including officers and employee directors) of incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and for the grant of nonstatutory stock options and stock purchase
rights ("Rights") to employees, directors (including outside directors) and
consultants of the Company. The Stock Plan is administered by the Board of
Directors or a Committee of the Board of Directors (the "Administrator"), which
selects the grant recipients, determines the number of shares to be subject to
each option or Right and determines the exercise price of each option or Right.
The exercise price of all incentive stock options granted under the Stock Plan
must be at least equal to the fair market value of the Common Stock on the date
of grant. The exercise price of all nonstatutory stock options granted under the
Stock Plan shall be determined by the Administrator. With respect to any
participant who owns stock possessing more than 10% of the voting power of all
classes of stock of the Company the exercise price of any incentive stock option
granted must equal at least 110% of the fair market value on the grant date and
the maximum term of the option must not exceed five years. The term of all other
options granted under the Stock Plan may not exceed ten years.
In the event of certain changes in control of the Company, the Stock Plan
requires that each outstanding option be assumed or an equivalent option
substituted by the successor corporation; provided, however, that the
Administrator may, in lieu of such assumption or substitution, provide for the
optionee to have the right to exercise the option or Right as to all or a
portion of the stock subject thereto, including shares which would not otherwise
be exercisable. Unless terminated sooner, the Stock Plan will terminate ten
years from its effective date. The Board has authority to amend or terminate the
Stock Plan, provided no such action would impair the rights of the holder of any
outstanding options without the written consent of such holder.
CERTAIN GRANT LIMITS
Under Section 162(m) of the Code, the allowable deduction for compensation
paid or accrued with respect to the chief executive officer and each of the four
most highly compensated employees of a publicly-held corporation is limited to
no more than $1,000,000 per fiscal year. For purposes of Section 162(m), any
compensation expense attributable to stock options is subject to this limitation
unless, among other things, the plan under which the options are granted
includes a limit on the number of shares with respect to which options may be
granted to any one employee in a specified period. Such a potential compensation
expense deduction could arise, for example, upon the exercise by one of these
executives of a nonstatutory option, i.e., an option that is not an incentive
stock option qualifying for favorable tax treatment.
In order to qualify compensation resulting from options granted under the
Company's Stock Plan as "performance-based" and thereby to exclude such
compensation from the $1,000,000 limit on deductibility, the Stock Plan limits
the number of options that may be granted to employees in a fiscal year. The
Stock Plan, as proposed to be amended, provides that no employee may be granted,
in any fiscal year of the Company, options or stock purchase rights to acquire
in the aggregate more than 300,000 shares of Common Stock, provided that an
employee may receive an additional grant of an option or right to acquire up to
200,000 in connection with commencement of his or her service to the Company.
The foregoing limitation adjusts proportionately in connection with any change
in capitalization. The purpose of this provision is solely to preserve the
Company's ability to deduct compensation expense related to stock options.
TAX INFORMATION
Options granted under the Stock Plan may be either "incentive stock
options," as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or nonstatutory stock options.
If an option granted under the Stock Plan is an incentive stock option, the
optionee will recognize no income upon grant of the option and incur no tax
liability due to the exercise of the option unless the optionee is subject to
the alternative minimum tax. The Company will not be allowed a deduction for
federal income tax purposes as a result of the exercise of an incentive stock
option regardless of the applicability of the alternative minimum tax. Upon sale
or exchange of the shares at least two years after grant of the option and one
year after the exercise of the option any gain will be treated as long-term
capital gain. If these holding
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periods are not satisfied at the time of sale, the optionee will recognize
ordinary income equal to the difference between the exercise price and the lower
of the fair market value of the stock at the date of the option exercise or the
sale price of the stock. A different rule for measuring ordinary income upon
such a premature disposition may apply if the optionee is also an officer,
director or 10% stockholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any such gain recognized on such a premature disposition of the shares in excess
of the amount treated as ordinary income will be characterized as long-term
capital gain.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income at the time the nonstatutory option is granted. However, upon its
exercise, the optionee will recognize ordinary income for tax purposes measured
by the excess, if any, of the then fair market value of the shares over the
exercise process. A different rule for measuring ordinary income upon option
exercise may apply if the optionee is also an officer, director, or 10%
stockholder of the Company. The income recognized by any optionee who is also an
employee of the Company will be subject to tax withholding by the Company. Upon
resale of such shares by the optionee, any difference between the sales price
and the exercise price, to the extent not recognized as ordinary income as
provided above, will be treated as capital gain or loss.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the 1995 Plan, does not purport to be complete, and does not
discuss the income tax laws of any municipality, state or foreign country in
which an optionee may reside.
PARTICIPATION IN THE STOCK PLAN
The grant of options and stock purchase rights under the Stock Plan to
employees, including the executive officers and directors of the Company, is
subject to the discretion of the Administrator. As of the date of this Proxy
Statement, there has been no determination by the Board of Directors or its
committee with respect to future awards under the Stock Plan. Accordingly,
future awards are not determinable. During the fiscal year ended November 30,
1995 (the "Last Fiscal Year"), no options or stock purchase rights were granted
to any executive officer or director of the Company, except that (1) in June,
1995, Alexandre Balkanski, a director of the Company, was granted an option to
20,000 shares of Common Stock pursuant to the Company's 1995 Series B Common
Stock Plan (the "Series B Plan") at an exercise price of $0.50 per share, and
(2) in July, 1995, Carlton H. Baab, the Company's Executive Vice President and
Chief Financial Officer, was granted an option to purchase 40,000 shares of
Common Stock pursuant to the Series B Plan at an exercise price of $1.00 per
share. The exercise price of such options equaled the fair market value of the
Common Stock on the date of grant, as determined by the Board of Directors.
During the Last Fiscal Year, non-executive officer employees were granted
options to purchase an aggregate of 675,822 shares of Common Stock pursuant to
the Company's Series B Common Stock Plan, at exercise prices ranging from $0.50
to $9.00. No further shares are subject to grants under the 1995 Series B Common
Stock Plan.
VOTE REQUIRED; RECOMMENDATION
Approval of the Amendment of the Stock Plan requires the affirmative vote
of a majority of shares of Common Stock voting at the Special Meeting. THE BOARD
OF DIRECTORS RECOMMENDS VOTING "FOR" THE APPROVAL OF THE AMENDMENT OF THE STOCK
PLAN.
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EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth information concerning the compensation
received for services rendered to the Company during fiscal 1995 by the Chief
Executive Officer of the Company and each person who was an executive officer of
the Company during fiscal 1995 and whose total compensation in fiscal 1995
equaled or exceeded $100,000 ("Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY BONUS COMPENSATION COMPENSATION
- ---------------------------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Mark D. Kvamme................................ $165,000 $116,370 $3,236(1) $1,268(5)
Chief Executive Officer
Thomas K. Suiter.............................. 165,000 74,517 2,668(2) --
President, CKS Partners
William T. Cleary............................. 165,000 54,390 3,216(3) 1,777(5)
Founder
Carlton H. Baab............................... 137,600 75,774 7,464(4) 2,665(5)
Chief Financial Officer, Executive
Vice President and Secretary
</TABLE>
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(1) Consisted of $2,750 in automobile allowance and $486 in life insurance
premiums paid by the Company.
(2) Consisted of $1,750 in automobile allowance and $918 in life insurance
premiums paid by the Company.
(3) Consisted of $1,650 in automobile allowance and $1,566 in life insurance
premiums paid by the Company.
(4) Consisted of $7,200 in automobile allowance and $264 in life insurance
premiums paid by the Company.
(5) Consisted of forgiveness of interest due on loans payable to the Company.
OPTION GRANTS IN FISCAL 1995
The following table sets forth information as to the option granted to
Carlton H. Baab for the year ended November 30, 1995. No other options were
granted in 1995 to any Named Executive Officer.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATE OF
SECURITIES OPTIONS STOCK
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OPTION TERM(3)
GRANTED IN FISCAL PRICE PER EXPIRATION -------------------
NAME (#)(1) YEAR SHARE(2) DATE 5% 10%
- ----------------------------------- ---------- ---------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Carlton H. Baab.................... 40,000 6.17% $1.00 07/28/05 $25,156 $63,750
</TABLE>
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(1) These options to purchase shares of Series B Common Stock were granted under
the 1995 Series B Common Stock Plan and provide for vesting as to 25% of
the underlying Common Stock one year after the date of grant then ratably
over 36 months thereafter. The Company's Series B Common Stock converted
into Common Stock in connection with the Company's initial public offering
in December 1995.
(2) Options were granted at an exercise price equal to 100% of the fair market
value of the Company's Series B Common Stock on the date of grant, as
determined by the Board of Directors.
(3) This column shows the hypothetical gains or option spreads of the option
granted based on assumed annual compound stock appreciation rates of 5% and
10% over the full ten-year term of the option. The assumed rates of
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
future Common Stock prices.
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AGGREGATE OPTION EXERCISES IN FISCAL 1995 AND
FISCAL YEAR-END VALUES
No options were exercised during fiscal 1995 by the Named Executive
Officers. The following table sets forth the number and value of exercisable and
unexercisable options held at November 30, 1995 by Carlton H. Baab, the only
Named Executive Officer who held options to purchase shares of the Company's
capital stock as of such date.
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT NOVEMBER 30,
NOVEMBER 30, 1995 1995(1)
--------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Carlton H. Baab................................ 0 40,000 $0 $ 640,000
</TABLE>
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(1) Calculated by determining the difference between the deemed fair market
value of the securities on November 30, 1995 underlying the options (based
on the initial public offering price of $17.00 per share) and the exercise
price.
BENEFIT PLANS
1995 Stock Plan
The 1995 Stock Plan of the Company (the "Stock Plan") provides for the
grant of stock options and stock purchase rights to employees, officers,
directors and consultants of the Company and its subsidiaries. Under the Stock
Plan, the Company may grant options that are intended to qualify as incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), options not intended to qualify as incentive
stock options and rights to purchase restricted stock. Incentive stock options
may only be granted to employees of the Company and its subsidiaries. All
incentive stock options granted under the Stock Plan must be granted by
September 2005. As of August 31, 1996, options to purchase 527,250 shares of
Common Stock were outstanding under to the Stock Plan and options to purchase
472,750 shares of Common Stock were available for future grant under the Stock
Plan. The Stock Plan was approved by the Board of Directors in October 1995 and
approved by the stockholders of Company in November 1995. An amendment to the
Stock Plan increasing the number of shares of Common Stock available for
issuance thereunder by 1,600,000 shares was approved by the Board of Directors
in October 1996 and by the Company's stockholders in December 1996.
The Stock Plan is administered by the Board of Directors or a committee
thereof. Subject to the provisions of the Stock Plan, the Board or committee has
the authority to select the persons to whom awards are granted and determine the
terms of each award, including (i) the number of shares of Common Stock covered
by the award, (ii) when the award becomes exercisable, (iii) the exercise price
of the award and (iv) the duration of the option (which may not exceed 10
years). Generally options vest over four years and must be exercised within 10
years. All options are non-transferable other than by will or the laws of
descent and distribution.
The Stock Plan provides that, in the event of a merger of the Company with
or into another corporation, the sale of more than 50% of the Company's voting
stock, a sale of substantially all of the Company's assets or a liquidation or
dissolution of the Company ("Transfer of Control"), the acquiring or successor
corporation may assume or substitute substantially equivalent awards for the
awards outstanding. To the extent awards are not assumed or substituted for,
they will vest in full prior to the Transfer of Control. To the extent options
are not assumed, substituted for or exercised prior to the Transfer of Control,
they will terminate.
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1995 Employee Stock Purchase Plan
The Company's 1995 Employee Stock Purchase Plan (the "Purchase Plan")
provides for the purchase by eligible employees of shares of the Company's
Common Stock. The Purchase Plan was adopted by the Board of Directors in October
1995 and approved by the stockholders in November 1995. A total of 300,000
shares of Common Stock have been reserved for issuance under the Purchase Plan.
The Purchase Plan, which is intended to qualify under Section 423 of the Code,
is administered by the Board of Directors or by a committee appointed by the
Board. Employees (including officers and employee directors) of the Company or
any subsidiary of the Company designated by the Board for participation in the
Purchase Plan are eligible to participate in the Purchase Plan if they are
customarily employed for more than 20 hours per week and more than five months
per year. The Purchase Plan is implemented during concurrent 24-month offering
periods, each of which is divided into four consecutive six month purchase
periods, subject to change by the Board of Directors. Offering periods generally
begin on January 1 and July 1 of each year. The initial offering period
commenced at the time of the Company's initial public offering and will end on
November 30, 1997. The Purchase Plan permits eligible employees to purchase
Common Stock through payroll deductions, which may not exceed 15% of an
employee's compensation. Shares are purchased on the last day of each purchase
period. The price at which stock may be purchased under the Purchase Plan is
equal to 85% of the lower of the fair market value of the Company's Common Stock
on the first day of the offering period or the last day of the purchase period.
Employees may end their participation in the offering at any time during the
offering period, and participation ends automatically on termination of
employment with the Company. In addition, participants generally may not
purchase stock having a value (measured at the beginning of the offering period)
greater than $12,500 in any purchase period, except the first offering period,
during which an employee may purchase stock having a value of up to $25,000.
DIRECTORS' COMPENSATION; DIRECTORS' OPTION PLAN
Directors who are not employees of the Company receive compensation for
their services as directors at a rate of $1,000 per year and $2,500 per Board
meeting attended. Nonemployee directors are also eligible to participate in the
Company's 1995 Directors' Option Plan (the "Directors' Option Plan").
The Directors' Option Plan was adopted by the Board of Directors in October
1995 was approved by the stockholders of the Company in November 1995. A total
of 100,000 shares of Common Stock has been reserved for issuance under the
Directors' Option Plan. The Directors' Option Plan provides for the grant of
nonstatutory stock options to nonemployee directors of the Company. The
Directors' Option Plan is designed to work automatically, without
administration; however, to the extent administration is necessary, it will be
provided by the Board of Directors.
The Directors' Option Plan provides that each nonemployee director shall be
granted an option to purchase 20,000 shares of Common Stock (the "First Option")
on the date on which the optionee first becomes a director of the Company.
Thereafter each nonemployee director will be granted an option to purchase 5,000
shares of Common Stock (a "Subsequent Option") each year following announcement
of the Company's operating results for the previous fiscal year.
The Directors' Option Plan sets neither a maximum nor a minimum number of
shares subject to options that may be granted to any one nonemployee director,
but does stipulate the number of shares that may be included in any grant and
the method of making a grant. No option granted under the Directors' Option Plan
is transferable by the optionee other than by will or the laws of descent and
distribution, and each option is exercisable, during the lifetime of the
optionee, only by such optionee. The Directors' Option Plan provides that each
Option will become exercisable as to 25% of the shares subject to such Option on
each anniversary of the date of grant of such Option. The exercise price of all
Options granted under the Directors' Option Plan will be equal to the fair
market value of a share of the Company's Common Stock on the date of grant of
the Option. Options granted under the Directors' Option Plan have a term of 10
years.
In the event of a merger of the Company with or into another corporation or
a sale of substantially all of the Company's assets, each option would be
assumed or an equivalent option substituted by the successor corporation. The
Directors' Option Plan will terminate in October 2005. The Board of Directors
may amend or
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terminate the Directors' Option Plan, provided, however, that no such action may
adversely affect any outstanding option and provided further that the provisions
affecting the grant and terms of options may not be amended more than once
during any six-month period. As of October 31, 1996, 35,000 options have been
granted under the Directors' Option Plan. Executive officers of the Company are
not eligible to participate in the Directors' Option Plan.
Executive Bonus Program
Certain officers and employees of the Company are eligible to receive
quarterly bonus compensation under an Executive Bonus Program maintained by the
Company. Bonus compensation payments under the Executive Bonus Program are based
on attainment of sales revenue and profitability targets during the fiscal year
to date, and are keyed to each eligible employee's base salary. For most
eligible employees, bonus payments are based on performance of both the Company
as a whole and the individual employee's operating division. Bonus payments
under the Executive Bonus Program totaled approximately $396,000 in the fiscal
year ended November 30, 1995 and approximately $ was accrued by the
Company under the Executive Bonus Program for the first nine months of fiscal
1996. Payments under the Executive Bonus Program are nondiscretionary, although
the Board may approve additional discretionary bonuses under such Program. The
Board of Directors approved a total of $152,050 in discretionary bonuses in
fiscal 1995. The financial performance targets on which bonus payments are based
are set on an annual basis by the Company's Chief Executive Officer and approved
by the Compensation Committee of the Board of Directors.
Employee Bonus Program
The Company's Board of Directors regularly awards bonus compensation
payments to full-time employees of the Company under an informal Employee Bonus
Program. Such bonus payments have been awarded from time to time since inception
of the Employee Bonus Program in 1993. Any bonus payments under the Employee
Bonus Program are made at the sole discretion of the Board of Directors, which
may discontinue the Program at any time. Total payments under the Employee Bonus
Program equaled approximately 15% of the Company's pretax operating income
during the 1994 and 1995 fiscal years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of CKS consists of
Messrs. Lamond and Linsky. Mr. Lamond is the father-in-law of Mark D. Kvamme,
the Company's Chairman and Chief Executive Officer. Mr. Linsky is a Senior Vice
President of The Interpublic Group of Companies, Inc. ("IPG"), a holder of more
than 5% of the Company's capital stock.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
As permitted by the Delaware General Corporation Law, the Company has
included in its Certificate of Incorporation a provision to eliminate the
personal liability of its directors for monetary damages for breach or alleged
breach of their fiduciary duties as directors, subject to certain exceptions. In
addition, the Bylaws of the Company provide that the Company is required to
indemnify its officers and directors under certain circumstances, including
those circumstances in which indemnification would otherwise be discretionary,
and the Company is required to advance expenses to its officers and directors as
incurred in connection with proceedings against them for which they may be
indemnified. The Company has entered into indemnification agreements with its
officers and directors containing provisions that are in some respects broader
than the specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements require the Company, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as directors or officers
(other than liabilities arising from willful misconduct of a culpable nature),
to advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified, and to obtain directors' and officers'
insurance if available on reasonable terms. At present, the Company is not aware
of any pending or threatened litigation or proceeding involving a director,
officer, employee or agent of the Company in which indemnification would be
required or permitted. The Company believes that its charter provisions and
indemnification agreements are necessary to attract and retain qualified persons
as directors and officers.
8
<PAGE> 11
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock of
the Company as of October 31, 1996 of (i) each person known by the Company to
beneficially own more than 5% of the Company's Common Stock, (ii) each director
of the Company, (iii) each of the Named Executive Officers, and (iv) all
directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF CKS COMMON
STOCK
BENEFICIALLY OWNED(1)
----------------------
PERCENT
NAME OF BENEFICIAL OWNER NUMBER OF TOTAL
- ------------------------------------------------------------------------ --------- --------
<S> <C> <C>
The Interpublic Group of Companies, Inc.(2)............................. 2,471,515 18.8%
1271 Avenue of the Americas
New York, NY 10020
Mark D. Kvamme(3)....................................................... 1,843,293 14.0
10441 Bandley Drive
Cupertino, CA 95014
Thomas K. Suiter(4)..................................................... 1,468,503 11.2
10441 Bandley Drive
Cupertino, CA 95014
William T. Cleary....................................................... 1,006,161 7.64
10441 Bandley Drive
Cupertino, CA 95014
Carlton H. Baab(5)...................................................... 64,896 *
Pierre R. Lamond(6)..................................................... 280,978 2.1
Alexandre Balkanski(7).................................................. 7,500 *
Barry R. Linsky(8)...................................................... 2,500 *
Michael B. Slade........................................................ -- *
All Executive Officers and Directors as a Group (7 persons)(5)(7)....... 3,667,670 27.7
</TABLE>
- ---------------
* Less than 1%.
(1) Except pursuant to applicable community property laws or as indicated in the
footnotes to this table, to the Company's knowledge, each stockholder
identified in the table possesses sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by such
stockholder.
(2) Includes 259,470 shares held by each of Ammirati & Puris/Lintas, Inc.
("Ammirati") and Scali, McCabe, Sloves, Inc. ("Scali"). Ammirati and Scali
are wholly-owned subsidiaries of IPG. Also includes 2,500 shares held by
each of Mr. Barry R. Linsky, who is a director of the Company and an officer
of IPG, and Mr. Richard Villante, who is an officer of IPG.
(3) Includes 158,888 shares held by trusts for the benefit of Mr. Kvamme's
children.
(4) Includes 200,000 shares held by trusts for the benefit of Mr. Suiter's
children.
(5) Includes options to purchase 14,167 shares exercisable within 60 days of
October 31, 1996.
(6) Includes 275,478 shares held by the Pierre R. and Christine E. Lamond Trust
dated 11/22/85. Also includes 5,500 shares held by David Lamond, Pierre R.
Lamond's son, as to which Pierre R. Lamond disclaims beneficial ownership.
(7) Represents options to purchase 7,500 shares exercisable within 60 days of
October 31, 1996.
(8) Does not include 2,466,515 shares held by IPG, of which Mr. Linsky is Senior
Vice President, Planning and Business Development.
9
<PAGE> 12
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: December , 1996
10
<PAGE> 13
PRELIMINARY COPY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CKS GROUP, INC.
1996 SPECIAL MEETING OF STOCKHOLDERS
DECEMBER __, 1996
The undersigned stockholder of CKS GROUP, INC., a Delaware corporation,
hereby acknowledges receipt of the Notice of Special Meeting of Stockholders and
Proxy Statement, each dated December ___, and hereby appoints Mark D. Kvamme and
Carlton H. Baab, and each of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 1996 Special Meeting of Stockholders of CKS
GROUP, INC. to be held on December 17, 1996 at 10:00 a.m. local time, at the
Company's offices at 10441 Bandley Drive, Cupertino, California 95014 and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matter set forth below:
TO AMEND THE COMPANY'S 1995 STOCK PLAN AND INCREASE THE NUMBER
OF SHARES RESERVED FOR GRANT THEREUNDER:
/ / FOR / / AGAINST / / ABSTAIN
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE AMENDMENT PROPOSAL SET FORTH ABOVE AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: __________________, 1996
_______________________________
Signature
_______________________________
Signature
(This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
