<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>
<C> <S> <C> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Compression Labs, Incorporated
- --------------------------------------------------------------------------------
(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)
<TABLE>
<C> <S>
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(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:
Common Stock
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2. Aggregate number of securities to which transaction applies:
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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):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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/ / 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:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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</TABLE>
<PAGE> 2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1996
TO THE STOCKHOLDERS OF
COMPRESSION LABS, INCORPORATED
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Compression Labs, Incorporated (the "Company"), a Delaware corporation, will be
held on Thursday, May 23, 1996 at 1:00 p.m. local time at the Red Lion Hotel,
2050 Gateway Place, San Jose, California 95110, for the following purposes:
1. To elect two (2) directors to hold office until the 1999 Annual Meeting.
2. To approve an amendment to each of the Company's 1980 Stock Option Plan,
1984 Supplemental Stock Option Plan and 1984 Employee Stock Purchase
Plan that will increase the aggregate number of shares reserved under
such plans by 600,000 shares.
3. To approve an amendment to the Company's 1992 Non-Employee Directors'
Stock Option Plan that will increase the aggregate number of shares
reserved under the plan by 60,000 shares.
4. To ratify the selection of KPMG Peat Marwick LLP as independent auditors
of the Company for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 4, 1996 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT
THE MEETING. A POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE. EVEN IF
YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN A LEGAL PROXY FROM YOUR BROKER, BANK OR OTHER NOMINEE.
By Order of the Board of Directors
T. GARY TRIMM,
President and
Chief Executive Officer
San Jose, California
April 11, 1996
<PAGE> 3
COMPRESSION LABS, INCORPORATED
2860 JUNCTION AVENUE
SAN JOSE, CALIFORNIA 95134
------------------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Compression Labs, Incorporated, a Delaware corporation (the "Company"), for use
at the Annual Meeting of Stockholders to be held on May 23, 1996 at 1:00 p.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth therein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Red Lion Hotel, 2050
Gateway Place, San Jose, California 95110. The Company intends to mail this
proxy statement and accompanying proxy card on or about April 11, 1996 to all
stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
material will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. In addition, the Company may
reimburse persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by one or more of telephone,
telegram or personal solicitation by directors, officers or other regular
employees of the Company or, at the Company's request, D.F. King & Co., Inc. No
additional compensation will be paid to directors, officers or other regular
employees for any such services. D.F. King & Co., Inc. has been retained to
assist in soliciting proxies in favor of the proposals set forth herein and will
receive a fee estimated to be approximately $6,500 for its services plus
reasonable expenses incurred.
VOTING
Only holders of record of Common Stock at the close of business on April 4,
1996 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on April 4, 1996, the Company had issued and outstanding
15,500,396 shares of Common Stock. Each holder of record on such date will be
entitled to one vote for each share of Common Stock held.
The required quorum for the meeting, which must be represented in person or
by proxy, is a majority of the outstanding shares of Common Stock on the record
date. All votes will be tabulated by the inspectors of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose of determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 2860
Junction Avenue, San Jose, California 95134, a written notice of revocation or a
duly executed proxy bearing a later date, or by attending the meeting and voting
in person. Attendance at the meeting will not, by itself, revoke a proxy.
<PAGE> 4
PROPOSAL 1
NOMINATION AND ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides that the Board
of Directors is divided into three classes, each class consisting, as nearly as
possible, of one-third of the total number of directors, with each class having
a three-year term. Each director serves for a term ending on the date of the
third annual meeting of stockholders following the annual meeting at which the
director is elected, or until his earlier death, resignation or removal. In the
event of a vacancy on the Board of Directors, unless the Board of Directors
otherwise determines, the Restated Certificate of Incorporation permits the
remaining members of the Board of Directors or the holders of a majority of the
outstanding shares of the Company entitled to vote on the election of directors
to fill such vacancy, and the director so chosen shall hold office for the
remainder of the full term of the class of directors in which the vacancy
occurred and until such director's successor is elected and qualified, or until
his earlier death, resignation or removal.
The Board of Directors is presently comprised of five members. Robert J.
Casale and T. Gary Trimm are the two directors in the class whose term of office
expires in 1996.
Mr. Casale and Mr. Trimm are the two nominees for election to the class of
directors to be elected at the Annual Meeting. Each is currently a director of
the Company. Mr. Casale was previously elected by the stockholders, and Mr.
Trimm was elected by the Board of Directors to fill the vacancy left by John E.
Tyson, who resigned as President, Chief Executive Officer and Chairman of the
Board effective February 1996. Dr. Arthur G. Anderson was elected Chairman of
the Board effective February 1996. If elected at the Annual Meeting, each
nominee would serve until the 1999 annual meeting and until his successor is
elected and qualified, or until his death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. It is the intention of
the persons named in the enclosed proxy, unless authorization to do so is
withheld, to vote the proxies received by them for the election of the nominees
named below. If prior to the Annual Meeting either of the nominees should become
unavailable for election, an event which is not now anticipated by the Board of
Directors, the proxies will be voted for the election of such substitute
nominees as the Board of Directors may propose. Each person nominated for
election has agreed to serve if elected and management has no reason to believe
that such nominees will be unable to serve.
Set forth below is biographical information for the persons nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE CLASS
-------------------------------------------------------------- --- -------- -----
<S> <C> <C> <C>
Dr. Arthur G. Anderson(1)(2).................................. 69 1984 III
Robert J. Casale(1)(2)........................................ 57 1986 II
Robert B. Liepold(1)(2)....................................... 70 1988 III
T. Gary Trimm................................................. 48 1996 II
David A. Wegmann(1)(2)........................................ 49 1981 I
</TABLE>
- ---------------
(1) Member of the Audit Committee. Mr. Liepold was elected to the Audit
Committee in February 1996.
(2) Member of the Compensation Committee. Mr. Wegmann was elected to the
Compensation Committee in February 1996.
2
<PAGE> 5
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 1999 ANNUAL
MEETING -- CLASS II DIRECTORS
ROBERT J. CASALE
Mr. Casale has served as a member of the Board of Directors since October
1986. He is currently Group President of the Brokerage Information Services
Group of Automatic Data Processing, Inc., a provider of computer and data
processing services. From 1986 to 1987 he served as Managing Director for the
Mergers and Acquisitions Division of Kidder Peabody & Co., Incorporated, a
securities brokerage and investment banking firm. Mr. Casale is also a director
of Provident Mutual Life Insurance Co., Tricord Systems, Inc., and Quantum
Corporation.
T. GARY TRIMM
Mr. Trimm has been President, Chief Executive Officer and a member of the
Board of Directors since February 1996 and Principal Financial Officer since
April 1996. From February 1995 to February 1996, he was Senior Vice President
and President, Broadcast Products Group of the Company. From March 1994 to
February 1995, he was President of the North American Division of
Scientific-Atlanta, Inc. ("S-A"), which supplies advanced analog and digital
video systems to the cable and telephone industry. From January 1990 to March
1994, he held the position of President of the Subscriber Systems Division at
S-A, where he had general management responsibility for S-A's analog and digital
settop business. From April 1988 to March 1990, Mr. Trimm held other senior
management positions at S-A, including President of the Spectral Dynamics
Division.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF THE NAMED NOMINEES.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1997 ANNUAL MEETING -- CLASS III
DIRECTORS
Dr. ARTHUR G. ANDERSON
Dr. Anderson has served as a member of the Board of Directors of the
Company since August 1984 and is currently serving as Chairman of the Board. He
is a consultant on science and engineering management and a member of the
National Academy of Engineering. Dr. Anderson held various positions with
International Business Machines Corporation ("IBM") from 1951 to June 1984,
including IBM Director of Research, General Products Division President, Group
Executive and IBM Vice President. He retired from IBM in June 1984.
ROBERT B. LIEPOLD
Mr. Liepold has served as a member of the Board of Directors of the Company
since May 1988. Since 1984, he has served as President of Robert B. Liepold,
Inc., an advisor to senior corporate management for strategic planning,
marketing and organization.
DIRECTOR CONTINUING IN OFFICE UNTIL THE 1998 ANNUAL MEETING -- CLASS I DIRECTOR
DAVID A. WEGMANN
Mr. Wegmann has served as a member of the Board of Directors of the Company
since May 1981. He has been a private investor since 1988. Prior to that, he was
a Vice President of Citicorp Venture Capital Ltd. Mr. Wegmann is also a director
of MMI Medical, Inc. and Plantronics, Inc.
3
<PAGE> 6
BOARD COMMITTEES AND MEETINGS
During the year ended December 31, 1995, the Board of Directors held nine
meetings. The Board has standing Audit and Compensation Committees. The Board
has no standing nominating committee or any committee performing the functions
of such committee.
The Audit Committee recommends the engagement of the Company's independent
auditors, reviews and approves services performed by such auditors, reviews and
evaluates the Company's accounting system and its system of internal controls
and performs other related duties delegated to such committee by the Board.
During 1995, the Audit Committee consisted of three non-employee directors: Dr.
Anderson and Messrs. Casale and Wegmann. The Audit Committee met two times
during fiscal year 1995.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. During 1995, the Compensation Committee consisted of three
non-employee directors: Dr. Anderson and Messrs. Casale and Liepold. The
Compensation Committee met nine times during fiscal year 1995.
During the year ended December 31, 1995, each director attended at least
75% of the aggregate of the meetings of the Board and of the committees on which
he served, held during the period for which he was a director or committee
member, respectively.
4
<PAGE> 7
MANAGEMENT
Set forth below is information regarding executive officers who are not
also directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- ------------------------------------------
<S> <C> <C>
Dr. Wen H. Chen.................... 57 Senior Vice President, Research and Chief
Scientist
Ted S. Augustine................... 55 Vice President, Worldwide Sales,
Videoconferencing Products
James D. Lakin..................... 52 Vice President, Sales and Marketing,
Broadcast Products
Anthony Pilarinos.................. 45 Vice President, Engineering,
Videoconferencing Products
Steven E. Richardson............... 44 Vice President, Marketing,
Videoconferencing Products
Paul P. Romeo...................... 47 Vice President, Operations,
Videoconferencing Products
Michael E. Seifert................. 37 Vice President, Finance and Chief
Accounting Officer
</TABLE>
Dr. Chen has been Senior Vice President, Research and Chief Scientist of
the Company since September 1989.
Mr. Augustine has been Vice President, Worldwide Sales, Videoconferencing
Products of the Company since December 1993. From January 1987 to December 1993
he was Vice President, North American Sales, Videoconferencing Products.
Mr. Lakin has been Vice President, Sales and Marketing, Broadcast Products
of the Company since September 1991. From March 1991 to September 1991, he was
the Company's Eastern Region Sales Director for Business Television.
Mr. Pilarinos has been Vice President, Engineering, Videoconferencing
Products of the Company since August 1993. Prior to joining the Company, from
1974 to 1993, he held various positions in the Engineering, Marketing and
Manufacturing Departments at Hewlett-Packard Co., most recently as Research and
Development Manager, Workstation Graphics and Multimedia Technology Lab since
1989.
Mr. Richardson has been Vice President, Marketing, Videoconferencing
Products of the Company since March 1996 and was Vice President, Product
Marketing of the Company from June 1993 until March 1996. Mr. Richardson joined
the Company in December 1987, serving as Director, Technical Marketing from
December 1987 to February 1992 and as Executive Director, Technical Marketing,
Videoconferencing Products from February 1992 to June 1993.
Mr. Romeo has been Vice President, Operations, Videoconferencing Products
of the Company since September 1991. From January 1989 until September 1991, he
was the Company's Executive Director of Manufacturing.
Mr. Seifert has been Vice President, Finance and Chief Accounting Officer
of the Company since April 1996. From October 1993 until April 1996, he was the
Company's Corporate Controller. Prior to joining the Company, from September
1990 to October 1993, he was Corporate Controller of Sierra Semiconductor
Corporation. Mr. Seifert is a licensed Certified Public Accountant in the state
of California.
5
<PAGE> 8
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE 1980 STOCK OPTION
PLAN, THE 1984 SUPPLEMENTAL STOCK OPTION PLAN
AND THE 1984 EMPLOYEE STOCK PURCHASE PLAN
On March 26, 1996, the Company's Board of Directors adopted an amendment,
subject to stockholder approval, to increase the number of shares reserved for
issuance on a combined basis under the 1980 Stock Option Plan and the 1984
Supplemental Stock Option Plan (the "Option Plans") and the 1984 Employee Stock
Purchase Plan (the "Purchase Plan") (the Option Plans and the Purchase Plan
collectively, the "Plans") by 600,000 shares, from 7,400,000 to 8,000,000
shares. At March 27, 1996, options (net of canceled or expired options) covering
an aggregate of 6,279,200 shares of the Company's Common Stock had been granted
under the Option Plans, an aggregate of 624,560 shares of the Company's Common
Stock had been purchased under the Purchase Plan, and 496,240 shares (plus any
shares that might in the future be returned to the plans as a result of
cancellations or expiration of options) remained available for future grant or
purchase under the Plans. A general description of the Plans is set forth below.
Stockholders are requested in this Proposal 2 to approve the Plans, as
amended. The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote will be required to
approve the Plans, as amended.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
THE OPTION PLANS
GENERAL
The Option Plans provide a means by which selected officers and employees
of and, in the case of the 1984 Supplemental Stock Option Plan (the
"Supplemental Plan"), consultants and directors to the Company and its
affiliates can be given an opportunity to purchase stock in the Company, thus
assisting the Company to retain the services of employees holding key positions,
to secure and retain the services of persons capable of filling such positions
and to provide incentives for such persons to exert maximum efforts for the
success of the Company. The stock options granted under the 1980 Stock Option
Plan (the "ISO Plan") are intended to be eligible for the tax treatment accorded
"incentive stock options" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"); options granted under the Supplemental Plan are
not so intended. A total of 7,400,000 shares of the Company's Common Stock have
previously been authorized for issuance under the Plans on a combined basis.
During the year ended December 31, 1995, Messrs. Trimm, Chen, Augustine,
Lakin, Tyson and Silver, all executive officers as a group, and all employees as
a group (excluding such executive officers) were granted options exercisable for
250,000, 10,000, 7,000, 15,000, 50,000, 25,000, 467,000 and 471,510 shares,
respectively, under the Option Plans at exercise prices ranging from $7.19 to
$10.25 per share.
ADMINISTRATION
The Option Plans are administered by the Board of Directors of the Company.
The Board has the power to construe and interpret the Option Plans and, subject
to the provisions of the Option Plans, to determine the persons to whom and the
dates on which options will be granted, the number of shares to be subject to
each option, the time or times during the term of each option within which all
or a portion of such option may be exercised, the exercise price, the type of
consideration and other terms of the option. The Board of Directors has the
power, which it has exercised, to delegate administration of the Option Plans to
a committee composed of not fewer than three disinterested members of the Board.
The Board may abolish any such committee at any time and revest in the Board the
administration of the Option Plans. The Board of Directors has delegated its
administrative functions over the Options Plans to the Compensation Committee.
6
<PAGE> 9
ELIGIBILITY
Incentive stock options may be granted under the ISO Plan only to selected
key employees (including officers) of the Company and its affiliates. Options
may be granted to directors of the Company under the ISO Plan only if such
directors are also key employees of the Company or any of its affiliates.
Nonstatutory stock options may be granted under the Supplemental Plan only to
key employees (including officers) of, directors of, or consultants to the
Company or its affiliates. Mr. Trimm, President, Chief Executive Officer and a
director of the Company, has been expressly declared eligible to participate by
required action of the Board.
No option may be granted under the ISO Plan to any person who, at the time
of the grant, owns (or is deemed to own) stock possessing more than ten percent
(10%) of the total combined voting power of the Company or any affiliate of the
Company, unless the option exercise price is at least one hundred ten percent
(110%) of the fair market value of the stock subject to the option on the date
of grant, and the term of the option does not exceed five years from the date of
grant. For options granted under the ISO Plan after 1986, the aggregate fair
market value, determined at the time of grant, of the shares of Common Stock
with respect to which such options are exercisable for the first time by an
optionee during any calendar year (under all such plans of the Company and its
affiliates) may not exceed $100,000.
No director may be granted an option under either of the Option Plans
unless: (i) the number of shares subject to the option; (ii) the number of
shares acquired by such director under the Option Plans and the Purchase Plans;
and (iii) the aggregate number of shares held by such director subject to
outstanding options granted under the Plans does not exceed 20% of the total
aggregate number of shares reserved for issuance under the Plans.
Each of the Option Plans imposes a per-employee, per-calendar-year option
grant limitation equal to 400,000 shares of Common Stock. The purpose of these
limitations is to ensure that the Company generally will continue to be able to
deduct for tax purposes the compensation attributable to the exercise of options
granted under the Option Plans. As of March 27, 1996, approximately 534 officers
and employees were eligible to participate in the Option Plans.
STOCK SUBJECT TO THE OPTION PLANS
If options granted under the Option Plans expire or otherwise terminate
without being exercised, the Common Stock not purchased pursuant to such options
again becomes available for issuance under the Plans.
TERMS OF OPTIONS
The following is a description of the permissible terms of options under
the Option Plans. Individual option grants may be more restrictive as to any or
all of the permissible terms described below.
Exercise Price; Payment. The exercise price of incentive stock options
under the ISO Plan may not be less than the fair market value of the Common
Stock subject to the option on the date of the option grant, and in some cases
(see "Eligibility" above), may not be less than 110% of such fair market value.
The exercise price of nonstatutory options under the Supplemental Plan may not
be less than 85% of the fair market value of the Common Stock subject to the
option on the date of the option grant. At March 27, 1996, the closing price of
the Company's Common Stock as reported on the Nasdaq National Market was $5.875
per share. The exercise price of options granted under the Option Plans must be
paid either: (i) in cash at the time the option is exercised; (ii) by delivery
of other Common Stock of the Company; (iii) pursuant to a deferred payment
arrangement; or (iv) in any other form of legal consideration acceptable to the
Board.
Option Repricing. In the event of a decline in the value of the Company's
Common Stock, the Board has the authority to offer employees the opportunity to
replace outstanding higher priced options, whether incentive or nonstatutory,
with new lower priced options.
Option Exercise. Options granted under the Option Plans may become
exercisable in cumulative increments ("vest") as determined by the Board. Shares
covered by currently outstanding options under the Option Plans typically vest
in eight equal semiannual installments during optionee's employment or services
as
7
<PAGE> 10
a consultant. Shares covered by options granted in the future under the Option
Plans may be subject to different vesting terms. The Board has the power to
accelerate the time during which an option may be exercised. In addition,
options granted under the Option Plans may permit exercise prior to vesting, but
in such event the optionee will be required to enter into an early exercise
stock purchase agreement that allows the Company to repurchase shares not yet
vested at their exercise price should the optionee leave the employ of the
Company before vesting.
Term. The maximum term of options under the Option Plans is 10 years,
except that in certain cases (see "Eligibility") the maximum term is five years.
In general, options under the Option Plans terminate three months after the
optionee ceases to be employed by the Company or any affiliate of the Company,
unless: (i) the termination of employment is due to such person's permanent and
total disability (as defined in the Code), in which case the option may, but
need not, provide that it may be exercised at any time within one year of such
termination; (ii) the optionee dies while employed by the Company or any
affiliate of the Company, or within three months after termination of such
employment, in which case, the option may, but need not, provide that it may be
exercised (to the extent the option was exercisable at the time of the
optionee's death) within 18 months of the optionee's death by the person or
persons to whom the rights to such option pass by will or by the laws of descent
and distribution; or (iii) the option by its terms specifically provides
otherwise. Individual options by their terms may provide for exercise within a
longer period of time following termination of employment or the consulting
relationship. The option term may also be extended in the event that exercise of
the option within these periods is prohibited for specified reasons.
ADJUSTMENT PROVISION
If there is any change in the stock subject to the Option Plans or subject
to any option granted under the Option Plans (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure, or otherwise), the Option Plans and
options outstanding thereunder will be appropriately adjusted as to the class
and the maximum number of shares subject to such plan and the class, number of
shares and price per share of stock subject to such outstanding options.
EFFECTS OF CERTAIN CORPORATE EVENTS
The Option Plans provide that, in the event of a dissolution or liquidation
of the Company, specified type of merger or other corporate reorganization, to
the extent permitted by law, any surviving corporation will be required to
either assume options outstanding under the Option Plans or substitute similar
options for those outstanding under such plans. In addition, under the ISO Plan,
such outstanding options may continue in full force and effect. In the event
that any surviving corporation declines to assume or continue options
outstanding under the Option Plans, or to substitute similar options, then the
time during which such options may be exercised will be accelerated and the
options terminated if not exercised during such time. The acceleration of an
option in the event of an acquisition or similar corporate event may be viewed
as an antitakeover provision, which may have the effect of discouraging a
proposal to acquire or otherwise obtain control of the Company.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Option Plans without stockholder
approval or ratification at any time or from time to time. Unless sooner
terminated, the ISO Plan and the Supplemental Plan will terminate in December
1999.
The Board may also amend the Option Plans at any time or from time to time.
However, no amendment will be effective unless approved by the stockholders of
the Company within 12 months before or after its adoption by the Board if the
amendment would: (i) increase the number of shares reserved for issuance under
the Option Plans; or (ii) materially modify the requirements as to eligibility
for participation in the Option Plans; or (iii) materially increase the benefits
accruing to participants under the Option Plans. The ISO Plan expressly
contemplates that the Board may adopt amendments in any respect to provide
optionees with the maximum benefits under the Code relating to incentive stock
options or to bring the ISO Plan into compliance
8
<PAGE> 11
with the Code. The Board may submit any other amendments to the Option Plans for
stockholder approval, including, but not limited to, amendments intended to
satisfy the requirements of Section 162(m) of the Code relating to the exclusion
of performance-based compensation from the limitation on the deductibility of
compensation paid to certain employees.
RESTRICTIONS ON TRANSFER
Under the Option Plans, an option may not be transferred by the optionee
otherwise than by will or by the laws of descent and distribution and, during
the lifetime of an optionee, may be exercised only by the optionee.
FEDERAL INCOME TAX INFORMATION
The following 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 Option Plans, does not purport to be complete, and does not
discuss the income tax laws of any state or foreign country in which an optionee
may reside.
Incentive Stock Options. Incentive stock options under the ISO Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionee or
the Company by reason of the grant or exercise of an incentive stock option.
However, for the optionee, the exercise of an incentive stock option may result
in the imposition of or an increase in liability for the optionee's alternative
minimum tax.
If an optionee holds stock acquired through exercise of an incentive stock
option for more than two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
optionee upon the exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of the disposition the optionee
will realize taxable ordinary income equal to the lesser of (i) the excess of
the stock's fair market value on the date of exercise over the exercise price,
or (ii) the optionee's actual gain, if any, on the purchase and sale. The
optionee's additional gain, or any loss, upon the disqualifying disposition will
be a capital gain or loss which will be long-term or short-term depending on
whether the stock was held for more than one year. Long-term capital gains
currently are generally subject to lower tax rates than ordinary income. The
maximum capital gains rate for federal income tax purposes is currently 28%
while the maximum ordinary income rate is effectively 39.6% at the present time.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended, (the "1934 Act").
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
Nonstatutory Stock Options. Nonstatutory stock options granted under the
Supplemental Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionee or the Company by reason of
the grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code, and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionee. Upon disposition of the stock, the optionee will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any amount recognized
as ordinary income upon exercise of the option. Such gain or loss will be long-
or short-term depending on whether the stock was held for more than one year.
Slightly different rules
9
<PAGE> 12
apply to optionees who acquire stock subject to certain repurchase options or
who are subject to Section 16(b) of the 1934 Act.
Potential Limitation on Company Deductions. As part of the Omnibus Budget
Reconciliation Act of 1993, the U.S. Congress amended the Code to add Section
162(m) which denies a deduction to any publicly held corporation for
compensation paid to certain employees in a taxable year to the extent that
compensation exceeds $1 million for a covered employee. It is possible that
compensation attributable to stock options, when combined with all other types
of compensation received by a covered employee from the Company, may cause this
limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Code Section 162(m),
compensation attributable to stock options will qualify as performance-based
compensation, provided that the option is granted by a compensation committee
comprised solely of "outside directors" and either: (i) the option plan contains
a per-employee limitation on the number of shares for which options may be
granted during a specified period, the per-employee limitation is approved by
the stockholders, and the exercise price of the option is no less than the fair
market value of the stock on the date of grant; or (ii) the option is granted
(or exercisable) only upon the achievement (as certified in writing by the
compensation committee) of an objective performance goal established by the
compensation committee while the outcome is substantially uncertain, and the
option is approved by stockholders.
THE 1984 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The Purchase Plan provides a means by which employees of the Company and
its affiliates can be given an opportunity to purchase Common Stock of the
Company through payroll deductions, thus assisting the Company to retain the
services of its employees, and providing incentives for such persons to exert
maximum efforts for the success of the Company. A total of 7,400,000 shares of
the Company's Common Stock have previously been authorized for issuance under
the Plans, on a combined basis. As of March 27, 1996, a total of 496,240 shares
were available for future grant or purchase under the Plans (plus any shares
that might in the future be returned to the Plans as a result of cancellation or
expiration of options).
During the year ended December 31, 1995, Messrs. Trimm, Chen, Augustine,
Lakin, Tyson and Silver, all executive officers as a group, and all employees as
a group (excluding such executive officers) purchased 0, 402, 416, 0, 366, 0,
6,536 and 93,011 shares, respectively, under the 1984 Employee Stock Purchase
Plan at purchase prices ranging from $5.31 to $8.29 per share.
ADMINISTRATION
The Purchase Plan is administered by the Board of Directors, which has the
final power to construe and interpret the Purchase Plan and the rights granted
under it. The Board has the power, subject to the provisions of the Purchase
Plan, to determine when and how rights to purchase Common Stock of the Company
will be granted, the provisions of each offering of such rights (which need not
be identical), and whether any parent or subsidiary of the Company shall be
eligible to participate in such plan. The Board has the power, which it has
exercised, to delegate administration of such plan to a committee of Board
members. The Board may abolish any such committee at any time and revest in the
Board the administration of the Purchase Plan. The Board has delegated its
administrative functions over the Purchase Plan to the Compensation Committee.
GRANT OF RIGHTS; OFFERINGS
The Board has the power to grant rights to purchase stock of the Company
under the Purchase Plan to eligible employees (an "Offering") on a date or dates
selected by the Board (the "Offering Date(s)"). Each Offering will be in the
form and contain terms and conditions established by the Board, subject to the
required provisions of the Purchase Plan which are described in this proxy
statement. The provisions of separate
10
<PAGE> 13
Offerings need not be identical. The Board has currently authorized continuous
Offerings coinciding with the Company's fiscal quarters. The Offering Date for
each such Offering is the first day of the applicable fiscal quarter. The limit
on the aggregate number of shares of Common Stock available for purchase under
the Purchase Plan per calendar quarter is set from time to time at the
discretion of the Board of Directors. If the quarterly limit is exceeded, the
Board will make a pro rata allocation of shares available in a uniform and
equitable manner.
ELIGIBILITY
Any person who is customarily employed by the Company or its affiliates
(subject to certain minimum requirements) on an Offering Date is eligible to
participate in the Purchase Plan.
No employee is eligible for the Purchase Plan if, immediately after those
rights are granted, the employee would own or be deemed to own stock of the
Company possessing five percent (5%) or more of the total combined voting power
or value of stock of the Company or any affiliate of the Company. No rights may
be granted that would permit an employee to purchase stock with a fair market
value in excess of $25,000 (determined at the time the rights are granted) under
all employee stock purchase plans of the Company in any calendar year. As of
March 27, 1996, approximately 534 employees of the Company were eligible to
participate in the Purchase Plan.
TERMS OF RIGHTS
In order to participate in the Purchase Plan, an eligible employee must
authorize payroll deductions of up to a maximum of fifteen percent (15%) of a
participant's total compensation. In connection with each Offering, the Board of
Directors specifies the maximum number of shares any employee may be granted the
right to purchase and the maximum aggregate number of shares which may be
purchased by all participants pursuant to the Offering, within the limits
prescribed by the Purchase Plan. The purchase price of stock acquired pursuant
to rights granted under the Purchase Plan will not be less than eighty-five
percent (85%) of the lower of: (i) the fair market value of a share of Common
Stock on the date of commencement of the Offering; or (ii) the fair market value
of a share of Common Stock on the last day of the Offering period.
ADJUSTMENT PROVISIONS
If there is any change in the stock subject to the Purchase Plan (through
merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure or
otherwise), the Purchase Plan will be appropriately adjusted as to the class and
the maximum number of shares subject to the Purchase Plan and the class, number
of shares and price per share of stock subject to outstanding rights.
DURATION, AMENDMENT AND TERMINATION
The Board of Directors may suspend or terminate the Purchase Plan without
stockholder approval or ratification at any time. Unless sooner terminated, the
Purchase Plan will terminate in December 1999.
The Board may also amend the Purchase Plan at any time. However, no
amendment will be effective unless approved by the stockholders of the Company
within 12 months of its adoption by the Board, if the amendment would: (i)
increase the number of shares of Common Stock reserved for issuance under the
Purchase Plan; (ii) modify the requirements relating to eligibility for
participation in the Purchase Plan; or (iii) modify any other provision of the
Purchase Plan in any other way, if such modification requires stockholder
approval in order for the Purchase Plan to obtain employee stock purchase
treatment under Section 423 of the Code or to comply with the requirements of
Rule 16b-3 under the 1934 Act.
FEDERAL INCOME TAX CONSEQUENCES OF RIGHTS UNDER THE PURCHASE PLAN
The following is only a summary of the effect of federal income taxation
upon a participant and the Company with respect to purchase and sale of shares
under the Purchase Plan, does not purport to be
11
<PAGE> 14
complete, and does not discuss the income tax laws of any state or foreign
country in which a participant may reside.
Rights granted under the Purchase Plan are intended to qualify for
favorable federal income tax treatment associated with rights granted under an
employee stock purchase plan which qualifies under provisions of Section 423 of
the Code.
A participant will be taxed on amounts withheld for the purchase of shares
as if such amounts were actually received. Other than this, no income will be
taxable to a participant until disposition of the shares acquired, and the
method of taxation will depend upon the holding period of the purchased shares.
If the stock is disposed of more than two years after the beginning of the
offering period and more than one year after the stock is transferred to the
participant, then the lesser of: (i) the excess of the fair market value of the
stock at the time of such disposition over the exercise price; or (ii) the
excess of the fair market value of the stock as of the beginning of the offering
period over the exercise price (determined as of the beginning of the offering
period) will be treated as ordinary income. Any further gain or any loss will be
taxed as a long-term capital gain or loss. Capital gains currently are generally
subject to lower tax rates than ordinary income. The maximum capital gains rate
for federal income tax purposes is 28% while the maximum ordinary rate is
effectively 39.6% at the present time.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of the
stock on the exercise date over the exercise price will be treated as ordinary
income at the time of such disposition, and the Company may, in the future, be
required to withhold income taxes relating to such ordinary income from other
payments made to the participant. The balance of any gain will be treated as
capital gain. Even if the stock is later disposed of for less than its fair
market value on the exercise date, the same amount of ordinary income is
attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such exercise date. Any capital gain or loss will be long- or short-term
depending on whether the stock has been held for more than one year.
There are no federal income tax consequences to the Company by reason of
the grant or exercise of rights under the Purchase Plan. The Company is entitled
to a deduction to the extent amounts are taxed as ordinary income to a
participant by reason of a disposition before the expiration of the holding
periods described above (subject to the requirement of reasonableness, the
provisions of Section 162(m) of the Code and the satisfaction of a tax reporting
obligation).
12
<PAGE> 15
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE 1992
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
On March 26, 1996, the Company's Board of Directors adopted an amendment,
subject to stockholder approval, to increase the number of shares reserved for
issuance under the 1992 Non-Employee Director's Stock Option Plan (the
"Directors' Plan") by 60,000 shares, from 108,000 to 168,000 shares. At March
27, 1996, options (net of canceled or expired options) covering an aggregate of
108,000 shares of the Company's Common Stock had been granted under the
Directors' plan and no shares (other than any shares that might in the future be
returned to the Directors' Plan as a result of cancellations or expiration of
options) remained available for future grant under the Directors' Plan. A
general description of the Directors' Plan is set forth below.
Stockholders are requested in this Proposal 3 to approve the Directors'
Plan, as amended. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote will be
required to approve the Directors' Plan, as amended.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
THE DIRECTORS' PLAN
GENERAL
The Directors' Plan provides for the grant of nonqualified stock options.
Nonqualified stock options granted under the Directors' Plan are intended not to
qualify as "incentive stock options" within the meaning of Section 422 of the
Code. See "Federal Income Tax Information" for a discussion of the tax treatment
of nonqualified stock options. A total of 108,000 shares of the Company's Common
Stock have previously been authorized for issuance under the Directors' Plan.
Pursuant to the Directors' Plan, options to purchase 4,500 shares of the
Company's Common Stock, representing a pro rata allocation of the shares then
remaining available for grant under the Directors' Plan, at an exercise price of
$9.75 per share, were granted in May 1995 to each of Dr. Anderson and Messrs.
Casale, Liepold and Wegmann.
ADMINISTRATION
The Directors' Plan is administered by the Board, unless the Board
delegates administration to a committee composed of not fewer than three members
of the Board. As used herein with respect to the Directors' Plan, the term
"Board" refers to any committee to which the Board delegates administrative
authority with respect to the Directors' Plan, as well as to the Board of
Directors itself. Subject to the provisions of the Directors' Plan, the Board
has the power to construe and interpret the Directors' Plan and options granted
under it, to establish, amend and revoke rules and regulations for its
administration, to amend the Directors' Plan, and to generally exercise such
powers and to perform such acts as the Board deems necessary or expedient to
promote the best interests of the Company.
ELIGIBILITY
Options may be granted under the Directors' Plan only to Non-Employee
Directors of the Company. A "Non-Employee Director" is defined in the Directors'
Plan as a director of the Company who is not otherwise an employee of the
Company or of any affiliate of the Company. The term "affiliate" as used in the
Directors' Plan means any parent or subsidiary corporation of the Company as
those terms are defined in the Code. Four of the Company's five current
directors (all except Mr. Trimm) are eligible to participate in the Directors'
Plan.
13
<PAGE> 16
Options granted under the Directors' Plan are non-discretionary. Pursuant
to the terms of the Directors' Plan, a Non-Employee Director will automatically
be granted an option to purchase 6,000 shares of Common Stock (subject to
adjustment as provided in the Directors' Plan) upon the date of his or her
election to the Board, and in May 1992 each person that was serving as a
Non-Employee Director on the date the Directors' Plan was adopted by the
stockholders was granted an option to purchase 6,000 shares of Common Stock.
Each Non-Employee Director thereafter will be granted automatically an option to
purchase 6,000 shares of Common Stock (subject to adjustment as provided in the
Directors' Plan) upon each anniversary of his or her initial grant under the
Directors' Plan, provided that such person is then a Non-Employee Director.
TERMS OF OPTIONS
Each option under the Directors' Plan is subject to the following terms and
conditions:
Exercise Price; Payment. The exercise price of each option granted under
the Directors' Plan is equal to the fair market value of the Common Stock
subject to such option on the date such option is granted. The exercise price of
options granted under the Directors' Plan must be paid either: (i) in cash at
the time the option is exercised, (ii) by delivery to the Company of shares of
Common Stock of the Company or (iii) by a combination of such methods of
payment.
Option Vesting. Options granted under the Directors' Plan vest with
respect to each optionee in six equal bi-annual installments commencing on the
date six months after the date of grant of the option, provided that the
optionee has, during the entire six-month period prior to such vesting date,
continuously served as a Non-Employee Director or as an employee of or
consultant to the Company or any affiliate of the Company.
Termination of Options. No option granted under the Directors' Plan is
exercisable after the expiration of ten years from the date the option was
granted.
Nontransferability of Options. Options granted under the Directors' Plan
are not transferable except by will or by the laws of descent and distribution,
and are exercisable during the lifetime of the person to whom the option is
granted only by such person or by his or her guardian or legal representative.
ADJUSTMENT PROVISIONS
If there is any change in the stock subject to the Directors' Plan or
subject to any option granted under the Directors' Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise), the
Directors' Plan and options outstanding will be appropriately adjusted as to the
class and maximum number of shares subject to the Directors' Plan and the class,
number of shares and price per share of stock subject to such outstanding
options.
EFFECT OF CERTAIN CORPORATE EVENTS
The Directors' Plan provides that in the event of a dissolution or
liquidation of the Company, specified type of merger or other corporate
reorganization, then, to the extent permitted by applicable law: (i) the time
during which such options may be exercised will be automatically accelerated and
such options will be exercisable in their entirety immediately prior to such
event; (ii) any surviving corporation may elect to assume such options
outstanding under the Directors' Plan or may substitute similar options for
those outstanding under the Directors' Plan; and (iii) any options outstanding
hereunder will terminate if not exercised or assumed prior to such event.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Directors' Plan at any time. Unless
sooner terminated, the Directors' Plan will terminate on March 31, 2002.
The Board may also amend the Directors' Plan at any time and from time to
time; provided, however, that the Board may not amend the Directors' Plan more
than once every six months with respect to the
14
<PAGE> 17
provisions of the Directors' Plan which relate to the amount, price and timing
of grants, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder. In
addition, no amendment will be effective unless approved by the stockholders of
the Company within twelve months before or after the adoption of the amendment,
where the amendment would: (i) increase the number of shares reserved for
options under the Directors' Plan; (ii) modify the requirements as to
eligibility for participation in the Directors' Plan (to the extent such
modification requires stockholder approval in order for the Directors' Plan to
comply with the requirements of Rule 16b-3 under the 1934 Act); or (iii) modify
the Directors' Plan in any other way if such modification requires stockholder
approval in order for the Directors' Plan to comply with the requirements of
Rule 16b-3 under the 1934 Act or Section 162(m) of the Code.
FEDERAL INCOME TAX INFORMATION
The following 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 Directors' Plan, does not purport to be complete, and does not
discuss the income tax laws of any state or foreign country in which an optionee
may reside.
Stock options granted under the Directors' Plan are subject to federal
income tax treatment pursuant to rules governing options that are not incentive
stock options. Options granted under the Directors' Plan (referred to herein as
"nonqualified stock options") generally have the following federal income tax
consequences:
Options granted under the Directors' Plan are nonstatutory options. There
are no tax consequences to the optionee or the Company by reason of the grant of
a nonstatutory option. However, upon exercise of a nonstatutory option, the
optionee will recognize ordinary income for tax purposes measured by the excess
of the then fair market value of the shares over the option price. Because the
optionee is a director of the Company, under existing laws the date of taxation
(and the date of measurement of taxable ordinary income) may in some instances
be deferred unless the optionee files an election under Section 83(b) of the
Code. The filing of a Section 83(b) election with respect to the exercise of an
option will affect the time of taxation and the amount of income recognized at
each such time. At the time the optionee recognizes ordinary income due to the
exercise of the option, the Company will generally be entitled to a business
expense deduction equal to the taxable ordinary income realized by the optionee.
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, and will qualify for
long-term capital gain or loss treatment if the shares have been held for more
than one year.
15
<PAGE> 18
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the Company's
independent auditors for the year ending December 31, 1996, and has further
directed that management submit the selection of independent auditors for
ratification by the stockholders at the Annual Meeting. KPMG Peat Marwick LLP
and its predecessor have audited the Company's financial statements since 1981.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of KPMG Peat Marwick LLP as the
Company's independent auditors is not required by the Company's By-Laws or
otherwise. However, the Board is submitting the selection of KPMG Peat Marwick
LLP to the stockholders for ratification as a matter of good corporate practice.
In the event the stockholders fail to ratify the selection, the Board will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Board in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the Board feels that
such a change would be in the best interests of the Company and its
stockholders. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the Annual
Meeting will be required to ratify the selection of KPMG Peat Marwick LLP.
Abstentions will be counted toward total shares voted; broker non-votes will not
be counted toward the total.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 4.
16
<PAGE> 19
SECURITY OWNERSHIP OF OFFICERS, DIRECTORS AND
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of the Company's class of voting securities as of March 1, 1996 by (i) all those
known by the Company to be beneficial owners of more than 5% of its voting
securities, (ii) all directors and nominees, (iii) each of the persons
identified in the compensation table below under the heading "Compensation of
Executive Officers" and (iv) all officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
BENEFICIAL APPROXIMATE
DIRECTORS, NOMINEES, OFFICERS, OWNERSHIP OF PERCENT
AND 5% STOCKHOLDERS COMMON STOCK(1) OF CLASS(1)
------------------------------------------------------ --------------- -----------
<S> <C> <C>
Entities Affiliated With.............................. 1,767,100 11.4%
Loomis, Sayles & Company, L.P.(2)
One Financial Center
Boston, MA 02111
Thomson Consumer Electronics S.A.(3).................. 883,599 5.7%
9, place de Vosges, La Defense 5
Courbevoie, Cedex 66
92050 Paris La Defense, France
TCW Group, Inc.(4).................................... 839,300 5.4%
865 South Figueroa Street
Los Angeles, CA 90017
Ted S. Augustine...................................... 112,635 *
Dr. Arthur G. Anderson(5)............................. 104,450 *
Robert J. Casale(5)................................... 86,250 *
Dr. Wen H. Chen(5).................................... 242,367 1.5%
James D. Lakin(5)..................................... 75,313 *
Robert B. Liepold(5).................................. 79,750 *
Robert A. Silver...................................... 0 *
John E. Tyson(5)...................................... 317,699 2.0%
T. Gary Trimm(5)...................................... 107,143 *
David A. Wegmann(5)................................... 86,750 *
All officers and directors as a group (14
persons)(5)......................................... 1,592,086 9.4%
</TABLE>
- ---------------
* Less than 1%
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
15,499,654 shares of Common Stock outstanding on March 1, 1996, adjusted as
required by rules promulgated by the SEC.
(2) Loomis, Sayles & Company, L.P. ("Loomis Sayles") is an investment advisor
registered under the Investment Advisers Act of 1940 and may be deemed to be
the beneficial owner of the shares. Loomis Sayles shares investment
authority of such shares and has sole voting authority with respect to
984,300 of such shares based on an amended Schedule 13G filing with the SEC
containing share ownership information as of February 13, 1996.
(3) Based on an amended Schedule 13D filing with the SEC containing share
ownership information as of March 2, 1994.
(4) Based on a Schedule 13G filing with the SEC containing share ownership
information as of February 12, 1996.
17
<PAGE> 20
(5) Includes shares that certain executive officers and directors of the Company
have the right to acquire within 60 days after March 1, 1996 pursuant to
exercise of outstanding options as follows: Ted S. Augustine, 110,438
shares; Dr. Arthur G. Anderson, 78,500 shares; Robert J. Casale, 84,750
shares; Dr. Wen H. Chen, 238,626 shares; James D. Lakin, 75,313 shares;
Robert B. Liepold, 79,750 shares; Robert A. Silver, 0 shares; John E. Tyson,
280,250 shares; T. Gary Trimm, 107,143 shares; David A. Wegmann, 84,750
shares; and all executive officers and directors as a group, 1,502,184
shares.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), requires the Company's directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and certain written representations that no
other reports were required, during the fiscal year ended December 31, 1995, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that one
report, covering one transaction, was filed late by Mr. Silver.
18
<PAGE> 21
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Company pays non-management members of the Board of Directors fees
consisting of $5,000 annually plus $750 for each Board of Directors meeting and
for each Audit and Compensation Committee meeting attended. In addition; in
1996, the Board of Directors established an Executive Committee consisting of
Dr. Anderson and Messrs. Liepold, Trimm and Wegmann. Directors will receive $750
for each Executive Committee meeting attended. Directors are also eligible for
reimbursement in accordance with Company policy for their expenses incurred in
connection with attending meetings of the Board of Directors and the Audit and
Compensation Committees.
Each Non-Employee Director (a person that is elected as a director of the
Company or an affiliate of the Company and who is not otherwise employed by the
Company or an affiliate of the Company) of the Company also receives stock
option grants under the Directors' Plan. Only Non-Employee Directors of the
Company or an affiliate of the Company (as defined in the Code) are eligible to
receive options under the Directors' Plan. Options granted under the Directors'
Plan are intended by the Company not to qualify as incentive stock options under
the Code.
Pursuant to the Directors' Plan, an option to purchase 4,500 shares of the
Company's Common Stock, representing a pro rata allocation of the shares then
available for grant under the Directors' Plan, at an exercise price of $9.75 per
share was granted in May 1995 to each of Dr. Anderson and Messrs. Casale,
Liepold and Wegmann.
For a description of the Directors' Plan, see "APPROVAL OF AMENDMENT TO THE
1992 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN."
19
<PAGE> 22
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the fiscal years ending December 31, 1995,
1994 and 1993, compensation paid by the Company, including salary, bonuses,
stock options, and certain other compensation, to its Chief Executive Officer
and each of its four other most highly compensated executive officers at
December 31, 1995, and one former executive officer who departed from the
Company during fiscal year 1995 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
-------------------------- SECURITIES
BONUS AND UNDERLYING ALL OTHER
SALARY COMMISSIONS(1) OPTIONS(2) COMPENSATION(3)
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- ------------------------------ ---- ------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
T. Gary Trimm................. 1995 201,924 150,000 250,000 --
President, Chief Executive 1994 -- -- -- --
Officer and Director(4) 1993 -- -- -- --
Dr. Wen H. Chen............... 1995 197,370 -- 10,000 7,591
Senior Vice President, 1994 198,775 -- 15,000 11,387
Research and Chief Scientist 1993 182,891 -- 27,500 15,815
Ted S. Augustine.............. 1995 156,000 29,796 7,000 12,000
Vice President, Worldwide 1994 156,767 14,016 7,500 --
Sales, Videoconferencing 1993 162,020 -- 26,500 --
Products
James D. Lakin................ 1995 151,956 37,248 15,000 --
Vice President, Sales and 1994 147,194 47,097 7,500 --
Marketing, Broadcast 1993 134,781 -- 10,000 --
Products
John E. Tyson................. 1995 280,000 -- 50,000 30,962
Former President, Chief 1994 244,500 -- 40,000 95,442
Executive Officer and 1993 206,813 -- 35,000 --
Chairman of the Board(5)
Robert A. Silver.............. 1995 150,000 52,618 25,000 1,498
Former Vice President, 1994 100,962 10,000 50,000 --
Marketing, Videoconferencing 1993 -- -- -- --
Products(6)
</TABLE>
- ---------------
(1) Amounts shown for 1995 consist of a bonus to Mr. Trimm of $150,000 and
commissions to Messrs. Augustine, Lakin and Silver of $29,796, $37,248 and
$52,618, respectively. Amounts shown for 1994 consist of a commission to Mr.
Augustine of $14,016, a bonus of $25,000 and a commission of $22,097 to Mr.
Lakin and a bonus of $10,000 to Mr. Silver.
(2) The Company has no stock appreciation rights (SARs).
(3) Amounts shown for 1995 consist of payments to Messrs. Chen, Augustine and
Tyson of $7,591, $12,000 and $30,962, respectively, in lieu of accrued and
unused paid time off. As of December 31, 1995, Mr. Silver was owed $1,498 in
lieu of accrued and unused paid time off. Amounts shown for 1994 consist of
payments to Messrs. Chen and Tyson of $11,387 and $95,442, respectively, in
lieu of accrued and unused paid time off. Amount shown for 1993 consists of
a payment to Mr. Chen of $15,815 in lieu of accrued and unused paid time
off.
(4) Mr. Trimm joined the Company in February 1995 as President, Broadcast
Products. Since February 1996, Mr. Trimm has been President, Chief Executive
Officer and a member of the Board of Directors.
20
<PAGE> 23
(5) Mr. Tyson resigned as President, Chief Executive Officer and Chairman of the
Board in February 1996. Mr. Tyson has currently entered into a consulting
relationship with the Company, at a rate that approximates Mr. Tyson's 1995
base annual salary, that will continue through February 1998. As part of the
separation and consulting agreement, Mr. Tyson's stock options will continue
to vest during the consulting period and will become fully vested in August
1996. In addition, the Company has agreed to permit Mr. Tyson to exercise
his stock options, except for certain stock options granted in 1988 and
1989, no later than the end of their full ten-year term, or March 1, 2001,
whichever occurs first.
(6) Mr. Silver resigned as Vice President, Marketing, Videoconferencing Products
in December 1995. As part of a separation agreement entered into with the
Company, Mr. Silver will continue to receive salary and benefits through May
1996.
STOCK OPTION GRANTS AND EXERCISES
The following tables show for the fiscal year ended December 31, 1995
certain information regarding options granted to, exercised by and held at year
end by the Named Executive Officers:
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF % OF OF
SECURITIES TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(3)
GRANTED EMPLOYEES PRICE EXPIRATION -----------------------
NAME (#)(1) IN 1995(2) ($/SH) DATE 5% ($) 10% ($)
- ----------------------- ---------- ------------ -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
T. Gary Trimm.......... 250,000 26.6% 7.250 02/15/05 1,139,872 2,888,658
Dr. Wen H. Chen........ 10,000 1.1% 8.313 09/12/05 52,280 132,488
Ted S. Augustine....... 7,000 .8% 8.313 09/12/05 36,596 92,741
James D. Lakin......... 15,000 1.6% 10.250 07/25/05 96,693 245,038
John E. Tyson.......... 50,000 5.3% 10.250 07/25/05 322,309 816,793
Robert A. Silver(4).... 25,000 2.7% 9.445 04/02/05 148,498 376,322
</TABLE>
- ---------------
(1) Options generally vest in equal installments every six months over a
four-year period beginning on the date six months after the date of grant.
The options will fully vest upon a change of control, as defined in the
Company's option plans, unless the acquiring company assumes the options or
substitutes similar options. The Board of Directors may reprice the options
under the terms of the Company's option plans.
(2) Based on options exercisable for 938,510 shares granted in 1995.
(3) The potential realizable value is calculated based on the term of the option
at its time of grant (10 years). It is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price. No gain to the optionee is possible unless the stock price increases
over the option term.
(4) As of December 31, 1995, 21,875 of the 25,000 options granted to Mr. Silver
in 1995 have lapsed due to his resignation. As of March 1, 1996, the
remaining 3,125 options granted in 1995 were unexercised and have also
lapsed.
21
<PAGE> 24
AGGREGATED OPTION EXERCISES IN 1995 AND DECEMBER 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, DECEMBER 31,
ACQUIRED ON 1995(#) 1995($)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE(2)
- --------------------------------- ----------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
T. Gary Trimm.................... -0 - -0 - 78,571/171,429 0/0
Dr. Wen H. Chen.................. -0 - -0 - 237,376/30,624 74,500/0
Ted S. Augustine................. -0 - -0 - 109,563/24,999 1,367/0
James D. Lakin................... - 0 - -0 - 73,438/24,062 0/0
John E. Tyson.................... -0 - -0 - 274,000/90,000 178,750/0
Robert A. Silver(3).............. -0 - -0 - 21,875/0 0/0
</TABLE>
- ---------------
(1) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price and does not
necessarily indicate that the optionee sold such stock.
(2) Based on the closing price on December 29, 1995 of the Common Stock on the
Nasdaq National Market of $6.25 per share.
(3) The number of securities underlying unexercised options at December 31, 1995
does not include 53,125 options that have lapsed due to Mr. Silver's
resignation. As of March 1, 1996, the remaining 21,875 options were
unexercised and have also lapsed.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION (1)
During 1995, the Compensation Committee of the Board of Directors (the
"Committee") consisted of Dr. Anderson and Messrs. Liepold and Casale. The
Committee is responsible for setting and administering the Company's policies
governing employee compensation. The Committee evaluates the performance of
management and determines compensation policies and levels. The full Board of
Directors, with the exception of Mr. Trimm, reviews the Committee's
recommendations regarding the compensation of executive officers.
The Company's executive compensation programs are designed to attract and
retain executives capable of leading the Company to meet its business objectives
and to motivate them to enhance long-term stockholder value. Annual compensation
for the Company's executive officers consists of three elements: cash salary,
cash bonus and equity incentives. In addition, executive officers responsible
for sales and marketing functions are eligible to participate in sales incentive
programs.
Compensation Philosophy
The Company's compensation program is based on the following principles:
- Compensation programs should be competitive to help attract and retain
the best people in the industry.
- Compensation programs should reflect and promote the Company's values and
reward individuals for outstanding contributions to the Company's
success.
- Compensation programs should be understandable to employees and should be
administered with fairness.
- Compensation programs should provide a variable element that reflects
both the Company's and the individual's performance.
- ---------------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933, as amended (the "1933 Act")
or the 1934 Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
22
<PAGE> 25
The Company has amended its option plans so that compensation attributable
to stock options will qualify as performance-based compensation under Treasury
Regulations issued under Internal Revenue Code Section 162(m). Therefore,
compensation expense associated with such options will not be subject to the
limitation under Section 162(m) on the deductibility of certain compensation
that might otherwise be deemed "excess," and therefore non-deductible.
Cash Compensation
Base Salary. The Committee generally reviews compensation levels for all
employees, including executive officers, and establishes new levels in the first
half of each year. The Compensation Committee conducted its annual review of
executive officers' salaries at its meeting in September 1995.
Base salaries for executive officers are determined with reference to a
benchmark salary range established for each executive position. These ranges are
determined annually by evaluating the duties and responsibilities of each
position and benchmarking each position description against the job categories
published in a salary survey of U.S.-based high technology companies conducted
by a nationally recognized compensation consultant. The companies included in
this salary survey vary somewhat from year to year, and thus do not correspond
exactly with companies included in either of the indices shown in the
performance measurement comparison. Generally, the Company targets the control
point for executive base salary ranges at approximately the 60th percentile for
U.S.-based high technology companies of comparable size.
In determining whether to adjust the base salary of an executive, the
Committee takes into account individual performance, performance of the
organization directed by that executive and the position of the executive's
compensation in relation to the established salary range determined as described
above. The Company does not attempt to assign a weight to any particular factor
or factors. Based on these factors, the Company did not increase the base salary
of its Named Executive Officers in 1995.
Variable Compensation. Variable compensation consists of sales incentive
awards that are available to sales and marketing executives, and a cash bonus
plan in which all employees at director-level and above participate if they are
not eligible for sales incentive awards.
The Company's sales incentive plans are normally tied to actual sales
performance compared to sales targets. In general, sales targets are set at
levels greater than or equal to the Company's internal revenue targets, and the
variable cash payoff from these plans is designed to be competitive with the
variable cash compensation for sales executives of other high technology
companies of similar size, as determined using published national survey data
such as that described above. Three Named Executive Officers received
compensation under sales incentive plans in 1995.
The bonus plan for 1995 was based on achieving specified percentages of the
profits forecasted for the Videoconferencing Products Division, the Broadcast
Products Division, and for the Company as a whole in the Company's internal
business plan, adopted at the beginning of the year. Profits were defined as
operating income for each division and pre-tax income for the company as a
whole. The bonus plan specified that no accrual of bonus was to occur until the
bonus-generating organization (either of the two divisions or the Company as a
whole) achieved a minimum specified percentage of its planned profit. Had the
minimum threshold of profitability been reached for any bonus-generating
organization, thereafter, bonus would have accrued at a rate such that the
target average bonus level would be achieved when the bonus-generating
organization achieved its planned profitability. Target average bonus levels
were set in light of the variable pay component determined from the above
mentioned salary surveys.
Half of any bonus amounts accrued would have been guaranteed to each bonus
plan participant pro rata as a percentage of base compensation, with the other
half awarded based upon individual achievement of objectives. For 1995, no bonus
amounts were accrued or paid because the minimum thresholds of planned
performance were not achieved.
23
<PAGE> 26
Equity Incentives
The Company uses its stock option program and employee stock purchase plan
to further align the interests of stockholders and employees by creating common
incentives related to the possession by employees of a substantial economic
interest in the long-term appreciation of the Company's Common Stock. In
general, all employees are eligible to participate in the Company's stock option
program and in the stock purchase plan. New options are generally granted not
more frequently than annually to existing members of management to provide a
continuing financial incentive. The size of an option grant is related to (i)
the officer's level, e.g., a Senior Vice President would generally be eligible
for a larger grant than a Vice President, who would be eligible for a larger
grant than a director-level employee, (ii) the number of shares already owned by
such executive, (iii) the number of shares of previously granted options which
are unvested, and (iv) such employee's overall contribution level. The relative
weight given to each of the foregoing factors may vary significantly depending
on individual circumstances. Significant grants are also made to new officers
upon joining the Company. The Company uses vesting periods (generally four
years) to encourage employees to continue in the employ of the Company.
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1.0 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1.0 million may
be deducted if it is "performance-based compensation" within the meaning of the
Code. The Compensation Committee believes that at the present time it is quite
unlikely that the compensation paid to any Named Executive Officer in a taxable
year which is subject to the deduction limit will exceed $1.0 million. However,
the Compensation Committee has determined that stock awards granted under the
Company's Option Plans with an exercise price at least equal to the fair market
value of the Company's Common Stock on the date of grant shall be treated as
"performance-based compensation."
Compensation of Chief Executive Officer
The Committee uses the same philosophy and procedures described above with
respect to the other executive officers in setting the cash compensation and
equity incentives for the Chief Executive Officer.
The Committee reviewed Mr. Tyson's 1995 performance based upon the
Company's financial performance in terms of revenue and operating results, as
well as the complexity of managing a high technology, multinational company
doing business in markets undergoing rapid change. The Committee noted that Mr.
Tyson's 1994 base salary was well below the targeted 60th percentile for Chief
Executive Officers of U.S.-based high technology companies of comparable size
and that Mr. Tyson had received a significant increase in base salary in
mid-1994. Based on these considerations, the Committee decided that Mr. Tyson's
salary should remain at 1994 levels.
Mr. Tyson was a participant in the Company's 1995 Bonus Plan as described
above. No bonus amounts were accrued for 1995 as a result of failure to reach
the minimum specified level of profitability required under the plan. As a
result, no bonus was paid to Mr. Tyson for 1995.
Mr. Tyson received a grant of an option to purchase 50,000 shares of Common
Stock in 1995 based on his position as Chief Executive Officer, the desire to
provide him with a continued economic interest in the long term appreciation of
the Company's Common Stock and the other equity incentives held by him, in
descending order of importance.
Dr. Arthur G. Anderson, Chairman
Robert J. Casale
Robert B. Liepold
24
<PAGE> 27
PERFORMANCE MEASUREMENT COMPARISON (1)
The following chart shows total stockholder return of the Standard & Poors
500, the H&Q Technology Index and for the Company:
COMPARISON OF FIVE YEAR TOTAL CUMULATIVE RETURN ON INVESTMENT (2)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) H & Q S & P CLI
<S> <C> <C> <C>
12/31/90 ........................ 100.00 100.00 100.00
12/31/91 ........................ 147.83 130.47 221.11
12/31/92 ........................ 170.04 140.41 111.11
12/31/93 ........................ 185.56 154.56 108.89
12/31/94 ........................ 215.39 156.60 71.11
12/31/95 ........................ 323.40 215.45 55.56
</TABLE>
- ---------------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the 1933 Act or the 1934 Act whether made before or
after the date hereof and irrespective of any general incorporation language
in any such filing.
(2) The total return on investment (change in year end stock price plus
reinvested dividends) for the Company, the S&P 500 Stock Index and the H&Q
Technology Index, based on December 31, 1990 = 100.
25
<PAGE> 28
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented by such
stockholders at the Company's 1997 Annual Meeting of Stockholders must be
received by the Company no later than December 5, 1996 in order to be included
in the proxy statement and proxy relating to that Annual Meeting.
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
However, if any other matters are properly presented to the meeting in
accordance with the Company's Bylaws, it is the intention of the persons named
in the accompanying proxy to vote in respect thereof in accordance with their
best judgment.
The Board of Directors hopes that stockholders will attend the meeting.
Whether or not you plan to attend, you are urged to complete, sign and return
the enclosed proxy in the accompanying envelope. A prompt response will greatly
facilitate arrangements for the meeting, and your cooperation will be
appreciated. Stockholders who attend the meeting may vote their shares
personally even though they have sent in their proxies.
By Order of the Board of Directors
T. GARY TRIMM
President and Chief Executive Officer
April 11, 1996
26
