SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______________)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
California Micro Devices Corporation
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / $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 transactions applies:
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(2) Aggregate number of securities to which transactions 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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(4) Date filed:
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May 20, 1997
[logo]
CALIFORNIA MICRO DEVICES CORPORATION
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders on
Friday, July 18, 1997 at 8:30 a.m., at the Holiday Inn San Jose North, 777
Bellew Drive, Milpitas, California.
The first item of business in this year's Shareholders Meeting is a proposal
to amend the Company's By-Laws to eliminate cumulative voting. I urge you to
vote YES on this proposal. A primary reason for introducing this proposal is
that approximately 16.69% of CMD's outstanding common stock is owned by Chan
Desaigoudar, the Company's former Chief Executive Officer and Chairman of the
Board. At the Company's Annual Meetings in August 1995 and July 1996, Mr.
Desaigoudar caused cumulative voting to be invoked and placed his personal
nominee on the Board of Directors, notwithstanding his minority ownership of the
Company's common stock.
Mr. Desaigoudar's employment with the Company was terminated by the Board of
Directors because of the financial scandal that rocked the Company in late 1994.
As has been reported by the Company, the 1994 financial scandal resulted in
investigations by the Securities and Exchange Commission and a class action
lawsuit, which was recently settled. In ordering a freeze of Mr. Desaigoudar's
CMD common stock (which he is still allowed to vote), the judge in the class
action lawsuit found a strong likelihood that the class would recover a
substantial judgment against Mr. Desaigoudar for violation of the securities
laws. This unusual action of the judge in freezing Mr. Desaigoudar's stock was
sustained on appeal.
Your Board believes that the elimination of cumulative voting will institute
majority rule voting and relatively diminish the future influence of Mr.
Desaigoudar on your Company.
The majority of the Board of Directors recommends that all shareholders vote
for the election of the nominated directors, and for the other proposals
presented in this Proxy Statement.
Whether or not you plan to attend the Annual Meeting, PLEASE MARK, SIGN, DATE
AND RETURN your proxy card in the enclosed envelope as soon as possible. This
will assure that your stock will be voted in accordance with the instructions
you have given in your proxy card in the event you are unable to attend. You
may, of course, attend the Annual Meeting and vote in person even if you have
previously sent in your proxy card. IT IS EXTREMELY IMPORTANT THAT EVERY
SHAREHOLDER VOTE. PLEASE SEND IN YOUR PROXY CARD.
Very truly yours,
/s/ Wade Meyercord
WADE MEYERCORD
Chairman of the Board
<PAGE>
CALIFORNIA MICRO DEVICES CORPORATION
215 TOPAZ STREET, MILPITAS, CA 95035
PHONE: (408) 263-3214
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of California Micro Devices Corporation
("CMD") will be held on Friday, July 18,1997, at 8:30 a.m., at the Holiday Inn
San Jose North, 777 Bellew Drive, Milpitas, California.
The items of business are:
1. Amendment to the bylaws to eliminate cumulative voting.
2. Election of six directors of the Company, to serve until the next annual
meeting of shareholders.
3. Ratification of the Appointment of Auditors.
4. Amendment of the 1995 Employee Stock Purchase Plan to increase from 250,000
to 300,000 the number of shares reserved for issuance thereunder.
5. Amendment of the 1995 Stock Option Plan amended as of July 26, 1996, to
increase from 2,020,000 to 2,370,000 the number of shares reserved for
issuance thereunder.
6. Amendment of the 1995 Non-Employee Directors' Stock Option Plan amended as of
July 26, 1996, to increase from 170,000 to 220,000 the number of shares
reserved for issuance thereunder.
7. Such other matters as may properly come before the meeting.
These items are more fully described in the following pages, which are hereby
made a part of this Notice.
Only shareholders of record at the close of business on May 20, 1997, will be
entitled to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign and return the enclosed proxy card as promptly as possible in the postage
prepaid envelope enclosed for that purpose. Any shareholder attending the
meeting may vote in person even if he or she returned a proxy.
Sincerely,
/s/ Scott Hover-Smoot
SCOTT HOVER-SMOOT
Secretary
Milpitas, California
May 20, 1997
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CALIFORNIA MICRO DEVICES CORPORATION
PROXY STATEMENT
I. GENERAL INFORMATION
This Proxy Statement, the accompanying proxy card (the "Proxy Card") and
California Micro Devices Corporation Annual Report on Form 10-K for the period
ended March 31, 1997 (the "Annual Report"), are being distributed to
shareholders commencing on or about June 3, 1997. Whether or not you expect to
attend the Company's 1997 Annual Meeting of Shareholders (the "Annual Meeting")
in person, the Board of Directors requests that you complete and return your
Proxy Card for use at the Annual Meeting and any adjournments thereof.
PROXY STATEMENT. This Proxy Statement consists of Sections I through VII, and
contains six proposals. These Sections are intended to be read and understood
together as one document. PLEASE CAREFULLY READ EACH SECTION.
WHO CAN ATTEND THE ANNUAL MEETING. Only shareholders of record of common
stock issued by California Micro Devices Corporation ("CMD" or the "Company") at
the close of business on May 20, 1997, the Record Date for the Annual Meeting,
are entitled to notice of and to vote at the Annual Meeting. Except as discussed
herein, such shareholders are entitled to one vote for each share on each matter
to be voted upon at the Annual Meeting.
QUORUM AT THE ANNUAL MEETING. As of the Record Date, CMD had issued and
outstanding 9,144,473 shares of voting Common Stock, not including 608,696
non-voting shares held in trust as part of the approved class action settlement.
The holders of a majority of the outstanding voting shares of Common Stock,
present in person or represented by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. The specific vote requirements
for the matters being submitted to a shareholders' vote at the Annual Meeting
are provided under "Approval of Proxy Statement Items," and the relevant
proposals.
SUBMISSION OF PROXY CARD. You are urged to sign and date the Proxy Card and
return it in the prepaid reply envelope provided for such purpose. THIS WILL IN
NO WAY AFFECT YOUR RIGHT TO ATTEND THE ANNUAL MEETING AND VOTE IN PERSON. A
shareholder giving a proxy has the right to revoke it at any time before it is
voted by giving notice of such revocation to the Secretary of the Company, by
attending the meeting and voting in person, or by returning a later dated proxy.
The number of shares designated on the Proxy Card represents the total number
of shares held in your name on the Record Date. If you receive more than one
proxy card in separate mailings it is an indication that your shares are
registered differently in more than one account. ALL Proxy Cards received by you
should be signed and mailed by you to ensure that all your shares are voted.
VOTING BY PROXY CARD. When you vote by Proxy Card, the following procedure
will apply:
If you intend to vote by Proxy Card, please cast your vote FOR or AGAINST any
proposal by marking the appropriate box. Sign your Proxy Card where indicated,
and return it in the enclosed prepaid envelope. When your Proxy Card is returned
properly marked and signed, the shares represented thereby will be voted in
accordance with your directions.
Signed proxies received by CMD on which no contrary instruction has been
given will be voted FOR Proposals 1 and 3 through 6 and FOR the nominees
recommended by the Board of Directors. IF YOU DO NOT VOTE FOR OR AGAINST A
PROPOSAL, AND YOU RETURN YOUR SIGNED PROXY CARD, YOU WILL HAVE VOTED FOR
PROPOSALS 1 AND 3 THROUGH 6 AND FOR THE NOMINEES RECOMMENDED. If you wish to
vote in accordance with the Board of Directors' recommendations, simply sign,
date and return your proxy card in the envelope provided.
As of the date of this Proxy Statement, the Board does not intend to present
any matter for action at the Annual Meeting other than the six proposals
mentioned above.
Copies of proxy solicitation material will be furnished to brokerage houses,
fiduciaries, and custodians (the "Named Holders") holding shares in their names
which are beneficially owned by others to forward to such beneficial owners. In
addition, the Company may reimburse such persons for their cost of forwarding
the
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solicitation material to such beneficial owners. Original solicitation of
proxies by mail may be supplemented, if deemed desirable or necessary, by one or
more of telephone, telegram, facsimile, or personal solicitation by directors,
officers, or employees of the Company or by solicitors retained by the Company.
No additional compensation will be paid to any Company employee, officer, or
director for such services. The Company reserves the right, if deemed desirable
or necessary, to retain a proxy solicitation firm to deliver soliciting
materials to Record Holders for distribution by them to their principals and to
assist the Company in collecting proxies from such holders. The costs of these
services, exclusive of out-of-pocket costs, is not expected to exceed $12,000.
Conduct of the Annual Meeting. The Annual Meeting will be conducted in
accordance with those procedures established by the Chairman of the Board of
Directors. For the purpose of assuring accurate recording of proceedings, the
Company may create an audio or audio video tape of the Annual Meeting.
The Annual Meeting will proceed in the same order as the Proposals set out
below. If the amendment to the By-Laws to eliminate cumulative voting is
approved, cumulative voting will not be available in the election of directors
at this meeting.
PROCEDURE FOR DIRECTOR NOMINATIONS BY SHAREHOLDERS. The By-Laws of the
Company require advance notification of the intent of any shareholder to
nominate a person for the position of Director of the Company. The By-Laws
require that the Company's Secretary must receive written notice of the intent
of any shareholder to nominate a person as a director of the Company not less
than thirty days before the date of the Annual Meeting. Pursuant to these
amended By-Laws, notice of the intent to nominate must be sent in writing to:
California Micro Devices Corporation, Attn.: Scott Hover-Smoot, Secretary, 215
Topaz Street, Milpitas, California 95035. Recommendations must be received by
8:30 AM Pacific Daylight Savings Time, June 18, 1997, and must be accompanied by
a statement from the nominee indicating his or her willingness to serve if
elected and disclosing his or her principal occupations or employment during the
past five years. Any nomination made of a person whose nominee has not complied
with this advance notification requirement will be disallowed, and no nomination
of such person shall be placed before the shareholders. The Company's nominees
for the position of director, included in this Proxy Statement, have already
complied with this requirement.
APPROVAL OF PROXY STATEMENT ITEMS. Only holders of shares of the Company's
Common Stock of record as at the close of business on May 20, 1997, (the "Record
Date") are entitled to vote at the Annual Meeting. Except as otherwise provided
for herein, each share of Common Stock is entitled to one vote on all matters to
be voted upon. Votes cast at the Annual Meeting will be counted by an inspector
of election, appointed by the Company. The presence, in person or by proxy duly
authorized, of the holders of a majority of the voting shares will constitute a
quorum for the transaction of business at the Annual Meeting and any
continuation or adjournment thereof. Broker non-votes (i.e. shares held by a
broker or nominee which are represented at the Annual Meeting, but with respect
to which such broker or nominee is not empowered to vote on a particular
proposal) will be counted in determining whether a quorum is present at the
Annual Meeting.
Proposal No. 1 must be approved by the vote of the holders of a majority of
the shares of the Company entitled to vote at the Annual Meeting. In determining
whether Proposal No. 1 has been approved, abstentions and broker non-votes are,
in effect, counted as votes against Proposal No. 1.
Cumulative voting will be available in the election of directors at the
Annual Meeting unless Proposal No. 1 relating to the elimination of cumulative
voting is approved. If Proposal No. 1 is approved, cumulative voting will not be
available in the election of directors at the Annual Meeting. Any shares not
voted (whether by abstention, broker non-votes or otherwise) will have no impact
on the election of directors, except to the extent that the failure to vote for
an individual results in another individual receiving a larger portion of votes.
Proposals 3 through 6 must be approved by the vote of the holders of a
majority of the votes of the shares of the Company represented in person or by
proxy and entitled to vote at the Annual Meeting. In determining whether such
proposals have been approved, abstentions and broker non-votes are not counted
as votes for or against the proposal.
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II. MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
ELIMINATION OF CUMULATIVE VOTING (PROPOSAL NO. 1)
YOUR BOARD RECOMMENDS A VOTE "FOR" THE ELIMINATION OF
CUMULATIVE VOTING BY AMENDING THE BY-LAWS
The California General Corporation Law now permits a California corporation
which is a "listed corporation" to provide, with the approval of its
shareholders, for majority rule voting in electing directors in lieu of
cumulative voting. The Company is deemed a "listed corporation" because its
shares are qualified for trading on the national market system on the National
Association of Securities Dealers Automated Quotation System and the Company has
at least 800 holders of its equity securities.
Prior to the change in the law in 1990, cumulative voting in electing
directors was mandatory for California corporations upon proper notice by any
shareholder of the Company. By permitting shareholders of California
corporations to provide for majority rule voting in electing directors, the new
law substantially conforms California corporate law with corporate laws of a
majority of other states (including Delaware, Illinois, Michigan, New Jersey,
New York, Ohio, Pennsylvania and Texas), which either provide that cumulative
voting is optional or make no provision for cumulative voting at all.
Cumulative voting in the election of directors may be invoked currently by
any shareholder of the Company who complies with statutory notice requirements.
Cumulative voting entitles shareholders to a number of votes per share of Common
Stock equal to the number of directors to be elected, and all nominees are voted
upon simultaneously. Holders of shares may cast all of their votes for a single
nominee or distribute them among two or more nominees.
As a consequence of cumulative voting, shareholders representing a relatively
small number of the voting shares have the power to nominate and elect one or
more directors. For example, if six directors are to be elected at an annual
meeting, shareholders holding as little as 14.29%, and in some cases less, of
the voting shares could nominate and elect one director by cumulating and
casting their six votes per share only for their single candidate. This is so
even if shareholders holding 85.71% of the voting shares are opposed to the
election of that candidate and cast their votes to elect six other director
candidates.
Without cumulative voting, a nominee can not be elected without relatively
wide support, because shareholders are entitled to only one vote per share with
the nominee receiving the greatest number of votes being elected. Consequently,
the holder or holders of a majority of the shares entitled to vote in the
election of directors will be able to elect all directors of the Company, and
holders of a substantial number of the shares, although less than a majority,
may not be able to directly elect their own directors. This means that the
elimination of cumulative voting will remove Mr. Desaigoudar's nominee from your
Board of Directors.
Your Board believes that the elimination of cumulative voting is advantageous
to the Company and its shareholders because each director of a publicly held
corporation has a duty to represent the interest of all shareholders, rather
than any specific shareholder or group of shareholders. Directors elected by a
minority shareholder or group of shareholders through cumulative voting may be
partisans of the particular interest group who elected them rather than
representatives of a majority of the shareholders. The election of directors who
view themselves as representing a particular minority constituency could
introduce an element of discord on the Board of Directors, impair the ability of
the directors to work effectively and discourage qualified independent
individuals from serving as directors. Providing for majority rule voting in the
election of directors by eliminating cumulative voting will help insure that
each director acts in the best interest of all shareholders.
A primary reason for introducing this proposal is that approximately 16.69%
of CMD's outstanding common stock is owned by Chan Desaigoudar, the Company's
former Chief Executive Officer and Chairman of the Board. See "Security
Ownership of Certain Beneficial Owners and Management." At the Company's Annual
Meetings in August 1995 and July 1996, Mr. Desaigoudar caused cumulative voting
to be invoked and placed his personal nominee on the Board of Directors,
notwithstanding his minority ownership of the Company's common stock.
Mr. Desaigoudar's employment with the Company was terminated by the Board of
Directors because of the financial scandal that rocked the Company in late 1994.
As has been reported by the Company, the 1994
3
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financial scandal resulted in investigations by the Securities and Exchange
Commission and a class action lawsuit, which was recently settled. In ordering a
freeze of Mr. Desaigoudar's CMD common stock (which he is still allowed to
vote), the judge in the class action lawsuit found a strong likelihood that the
class would recover a substantial judgment against Mr. Desaigoudar for violation
of the securities laws. This unusual action of the judge in freezing Mr.
Desaigoudar's stock was sustained on appeal.
Your Board believes that the elimination of cumulative voting will institute
majority rule voting and relatively diminish the future influence of Mr.
Desaigoudar on your Company.
At the Annual Meeting, the Company's shareholders will be asked to approve an
amendment revising Article III, Section 9 of the Company's By-Laws to read as
set forth in Appendix 1 hereto, which Amendment should be reviewed for the exact
wording of the proposed amendment.
Approval of the proposed amendment to the By-Laws may, under certain
circumstances, along with other measures that may be viewed as antitakeover
effects, discourage an unfriendly acquisition or business combination that might
result in a premium over the market price for the shares held by the
shareholder. In addition, it may render more difficult any attempt by a holder
or a group of holders of a significant number of voting shares, but less than a
majority, to monitor, change or influence the management or policies of the
Company.
The Board of Directors believes that this proposal is in the best interests
of the Company and its shareholders and recommends a vote "FOR" approval.
Approval of the proposal requires the affirmative vote of the holders of a
majority of the Company's outstanding shares of Common Stock entitled to vote at
the Annual Meeting.
ELECTION OF SIX DIRECTORS (PROPOSAL NO. 2)
YOUR BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF
DR. ANGEL JORDAN, JEFFREY KALB, WADE MEYERCORD, STUART SCHUBE, DR. JOHN SPRAGUE
AND DONALD WAITE AS DIRECTORS
Six directors are to be elected to serve until the next annual meeting of
shareholders and until the election and qualification of their successors. The
Company's By-Laws provide for not less than five nor more than nine Directors,
with the current number of directors fixed at six.
If Proposal No. 1 (Elimination of Cumulative Voting) is not approved,
shareholders voting for the election of directors may cumulate their votes and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which each shareholder's shares are
entitled, or may distribute their votes on the same principle among as many
candidates as they choose, provided that votes cannot be cast for more than the
total number of directors to be elected at the meeting. However, no shareholder
may cumulate votes until the candidate's name has been placed in nomination
prior to the voting and at least one shareholder at the meeting has given notice
of the intention to cumulate votes prior to the voting. If such notice is given,
every shareholder present, in person or by proxy at the meeting, may cumulate
votes. Unless otherwise instructed, proxy holders will vote the proxies received
by them for the six nominees named below. However, in the case of cumulative
voting, proxy holders may cumulate votes in the election of directors, and may
allocate the votes among one or more of the nominees as the proxy holders deem
appropriate.
Five of the six nominees are current directors of the Company: Dr. Angel
Jordan, Wade Meyercord, Stuart Schube, Dr. John Sprague, and Jeffrey Kalb. The
sixth nominee, Donald Waite, is Executive Vice President, Chief Administrative
Officer and Chief Financial Officer of Seagate Technology, Inc.
Brief biographies of the nominees are set out below. Additional information
regarding their stock ownership and compensation can be found below under
Sections III and IV.
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<TABLE>
The following table sets forth the names, ages, and principal occupations for
the periods indicated and other directorships of each of the current nominees at
the 1997 Annual Meeting.
<CAPTION>
PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS DIRECTOR
NAME AGE AND OTHER DIRECTORSHIPS SINCE
- --------------- ----- ---------------------------------------------------------------- ----------
<S> <C> <C> <C>
Angel G. Jordan 66 University Professor of Electrical & Computer Engineering at 1986
Carnegie-Mellon University since 1991; Provost from 1983
to 1991; Dean of Engineering from 1979 to 1983,
Carnegie-Mellon University.
Jeffrey C. Kalb 54 President and Chief Executive Officer of the Company since 1995
December 1994. President and Chief Operating Officer of MasPar
Computer Corporation (computer systems manufacturer), 1988 to
1993. Vice President of Digital Equipment Corporation (computer
systems manufacturer), 1983 to 1987.
Wade Meyercord 56 Chairman of the Board since October 1994. President, Meyercord & 1992
Associates, Inc. since 1987 (consulting firm). Chief Executive
Officer of Read-Rite Corp. (electronic data storage company),
1984 to 1987.
Stuart Schube 57 President, Acorn Ventures, Inc. (venture capital management 1986
company), and General Partner, the Genesis Fund, Ltd. (venture
capital management company) since 1986.
John L. Sprague 67 President, John L. Sprague Associates since 1987 (consulting 1996
firm). President and Chief Executive Officer, Sprague Electric
Company (electronics company), 1981 to 1987. Various other
executive management positions at Sprague Electric Company, 1959
to 1981. Director Allmerica Financial Corporation (insurance
company) since 1972; Director Aerovox Corporation (capacitor
company) since 1989; Director Sipex Corporation,
(semiconductor corporation) since 1972.
Donald Waite 64 Executive Vice President, Chief Administrative Officer and Chief New
Financial Officer, Seagate Technology, Inc., a manufacturer of Nominee
disc drives, tape drives and storage management software, since
1995. Joined Seagate in 1983 as Vice President of Finance and
Chief Financial Officer; promoted to Senior Vice President,
Finance in 1984. Director, CVC Equipment since 1995.
</TABLE>
There are no family relationships among any of the directors and officers.
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RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANT
(PROPOSAL NO. 3)
YOUR BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1998, and has further
directed that management submit the selection of independent auditors for
ratification by the shareholders at the Annual Meeting. Its representatives are
expected to be present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so, and will be available to respond to
appropriate questions.
During the Company's three most recent fiscal years and for the subsequent
interim periods, there were no disagreements or reportable events pursuant to
Item 304(a) (1) (iv) or (v) of Regulation S-K.
Shareholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's By-Laws or
otherwise. The Board of Directors is submitting the selection of Ernst & Young
LLP to the shareholders for ratification as a matter of good corporate practice.
In the event the shareholders fail to ratify the selection, the Board of
Directors will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Board of Directors in its discretion may direct the
appointment of a different independent accounting firm at any time during the
year if the Board of Directors determines that such a change could be in the
best interests of the Company and its shareholders.
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AMENDMENT OF THE 1995 EMPLOYEE STOCK PURCHASE PLAN
(PROXY STATEMENT ITEM NO. 4)
YOUR BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE 1995 EMPLOYEE STOCK PURCHASE PLAN
This amendment is to increase from 250,000 to 300,000 the number of shares
reserved for issuance under the previously approved 1995 Employee Stock Purchase
Plan (the "Purchase Plan"). The Purchase Plan was adopted by the Board of
Directors on February 10, 1995 and ratified by the Shareholders of the Company
at the 1995 Annual Meeting. Your Board recommends amending the Purchase Plan to
increase the number of shares of Common Stock reserved for issuance thereunder
by 50,000, to 300,000, to allow for the employees to continue to share in the
growth and prosperity of the Company by providing them with an opportunity to
purchase stock in the Company on favorable terms through payroll deductions. As
of March 31, 1997, 108,951 shares have been issued under the Purchase Plan.
At the Annual Meeting, the Shareholders are being requested to ratify the
amendment of the Purchase Plan. The affirmative vote of the holders of a
majority of the shares of the Company's Common Stock present, or represented and
entitled to vote at the Annual Meeting, will be required to ratify the adoption.
The Board of Directors believes that this Purchase Plan is necessary to enable
the Company to provide meaningful equity incentives to attract, motivate and
retain employees and recommends that the Shareholders vote for ratification of
this adoption. Proxies solicited by the Board will be voted for this proposal
unless shareholders specify otherwise in those proxies.
A summary of the principal provisions of the Purchase Plan is set forth
below.
PURPOSE. The purpose of the Purchase Plan is to attract and retain the best
available personnel, to provide additional incentives to the employees of the
Company and its subsidiaries, to promote the success of the Company's business
and to enable the employees to share in the growth and prosperity of the Company
by providing them with an opportunity to purchase stock in the Company on
favorable terms through payroll deductions.
ADMINISTRATION. The Purchase Plan is administered by a committee of the Board
of Directors formed pursuant to the Purchase Plan (the "Committee"). Members of
the Committee are ineligible to participate under the Purchase Plan. All
questions of interpretation of the Purchase Plan are determined in the sole
discretion of the Committee, and its determinations are final and binding upon
all participants.
ELIGIBILITY. Any person who is employed by the Company (or any of its
majority-owned subsidiaries) at least 20 hours per week and more than five
months in a calendar year is eligible to participate in the Purchase Plan,
provided that the employee is employed on the first day of an offering period
and subject to certain limitations imposed by section 423(b) of the Code. Based
upon the number of employees as of June 30, 1995, approximately 230 employees
will be eligible to participate in the Purchase Plan.
OFFERING DATES. The Purchase Plan is implemented by establishing option
periods. Option periods may be any period up to 27 months. The Board of
Directors may alter the duration of the option periods without shareholder
approval. The Company has commenced offerings pursuant to the Purchase Plan.
PURCHASE PRICE. The purchase price per share at which shares are sold under
the Purchase Plan is 85% of the lower of the fair market value of the Common
Stock (a) on the date an option is granted or (b) on the date of purchase. The
determination of the fair market value of the Common Stock on a grant date is
based upon the closing price listed on a stock exchange or on the Nasdaq
National Market System as of such date or the immediately preceding trading day,
if the applicable valuation date is not a trading day.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS. The purchase price of the
shares is accumulated by payroll deductions during the offering period. The
deductions may not exceed 15% of a participant's eligible compensation. Eligible
compensation is interpreted to mean total compensation, including bonuses and
commissions, but excluding special payments (such as moving expenses) and income
with respect to stock options or other stock purchases. Payroll deductions
generally commence on the first payday following the offering date, and continue
at the same rate until the last payday of the offering period unless sooner
terminated as provided in the Purchase Plan.
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PURCHASE OF STOCK; EXERCISE OF OPTION. The maximum number of shares placed
under option to a participant in an offering is that number determined by
dividing the amount of the participant's total payroll deductions which are
accumulated during the offering period (not to exceed an amount equal to 15% of
the participant's actual eligible compensation during the offering period) by
the lower of 85% of the fair market value of the Common Stock at the beginning
or end of the offering period, and subject to the further limitation that the
number of shares subject to any option granted to an employee shall not exceed
the maximum number of shares set by the Board of Directors prior to the
beginning of the offering period.
In no event shall an employee be entitled to accrue rights to purchase shares
under the Purchase Plan at a rate which exceeds $25,000 of the fair market value
of such stock (determined at the time the option is granted) for any calendar
year in which such option is outstanding at any time, and the maximum shares
subject to any option in any one calendar year shall in no event exceed 10,000.
WITHDRAWAL. A participant's interest in a given offering may be terminated in
whole, but not in part, by signing and delivering to the Company a notice of
withdrawal from the Purchase Plan. Such withdrawal may be elected at any time
prior to the end of the applicable option period. Any withdrawal by the
participant of accumulated payroll deductions for a given offering automatically
terminates the participant's participation in that offering. The failure to
remain in the continuous employ of the Company for at least 20 hours per week
during an offering period will be deemed to be a withdrawal from that offering.
In the event of withdrawal, payroll deductions will be returned to a
participant, without interest.
CAPITAL CHANGES. In the event any change is made in the Company's
capitalization, such as a stock split or stock dividend, which results in an
increase or decrease in the number of outstanding shares of Common Stock without
receipt of consideration by the Company, appropriate adjustments will be made by
the Board of Directors in the shares subject to purchase under the Purchase Plan
and in the purchase price per share.
NON-ASSIGNABILITY. No rights or accumulated payroll deductions of a
participant under the Purchase Plan may be pledged, assigned or transferred for
any reason and any such attempt may be treated by the Company as an election to
withdraw from the Purchase Plan.
AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may at any time
amend or terminate the Purchase Plan, except that such termination shall not
affect options previously granted nor may any amendment make any change in an
option granted prior thereto which adversely affects the rights of any
participant. No amendment may be made to the Purchase Plan without prior
approval of the shareholders of the Company if such amendment would increase the
number of shares reserved under the plan, materially modify the eligibility
requirements or materially increase the benefits which may accrue under the
plan.
FEDERAL TAX INFORMATION. The Purchase Plan, and the right of participants to
make purchases thereunder, is intended to qualify under the provisions of
Sections 421 and 423 of the Internal Revenue Code (the "Code"). Under these
provisions, no income will be taxable to a participant at the time of grant of
the option or purchase of shares. Upon disposition of the shares, the
participant will be subject to tax and the amount of the tax will depend upon
the holding period. If the shares are disposed of by the participant at least
two years after the date of option grant (the beginning of the Offering Period)
and at least one year after the date of option exercise (the date on which the
shares were purchased by the participant), the lesser of (a) the excess of the
fair market value of the shares at the time of such disposition over the option
price, or (b) the excess of the fair market value of the shares at the time the
option was granted over the option price (which option price will be computed as
of the grant date) will be treated as ordinary income, and any further gain will
be long-term capital gain. If the shares are disposed of by the participant
before two years after the date of option grant or one year after the date of
option exercise (a disqualifying disposition), the participant will be taxed in
the same manner as holders of nonstatutory options. (See discussion under the
1995 Stock Option Plan.) The Company is not entitled to a deduction for amounts
taxed as ordinary income to a participant except to the extent of ordinary
income reported by participants upon a disqualifying disposition of shares.
The foregoing is only a summary of the effect of federal income taxation upon
the participant and the Company with respect to shares purchased under the
Purchase Plan and 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.
8
<PAGE>
AMENDMENT OF THE 1995 EMPLOYEE STOCK OPTION PLAN
(PROPOSAL NO. 5)
YOUR BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE 1995 EMPLOYEE STOCK OPTION PLAN
This amendment is to increase, from 2,020,000 to 2,370,000, the number of
shares reserved for issuance under the previously approved 1995 Employee Stock
Option Plan. The Company's 1995 Stock Option Plan (the "1995 Plan") was adopted
by the Board on February 10, 1995 and ratified by the shareholders of the
Company at the 1995 Annual Meeting. Following shareholder approval on July 26,
1996, a total of 2,020,000 shares of Common Stock were approved for issuance
under the 1995 Plan. Your Board recommends amending the Plan to increase the
number of shares of Common Stock reserved for issuance thereunder by 350,000, to
2,370,000, to allow for the hiring of additional key employees and to retain
presently employed key employees. Of the Company's 2,020,000 authorized shares
of Common Stock, 1,914,315 shares were issued and outstanding as if March 31,
1997.
The affirmative vote of the holders of the majority of the Company's shares
present or represented by proxy and entitled to vote at the meeting will be
required to amend the 1995 Plan. The Board believes that this plan is necessary
to enable the Company to provide meaningful equity incentives to attract,
motivate, and retain officers and key employees and recommends that the
shareholders vote for ratification of this plan. Proxies solicited by the Board
will be voted for this proposal unless shareholders specify otherwise on those
proxies.
A summary of the principal provisions of the 1995 Plan is set forth below.
PURPOSES. The purpose of the Company's stock option plans is to attract and
retain talented key employees and to align their personal financial interests
with those of the Company's shareholders. Generally, options are granted with an
exercise price equal to the market price of the Common Stock on the date of
grant and generally vest over a four year period. This approach is designed to
focus key employees on sustainable growth of the Company and the creation of
shareholder value over the long term. Stock options are a major component of the
compensation package of executive management.
ADMINISTRATION. The 1995 Plan is administered by a committee of directors
(the "Committee"). The Committee and the Board have the authority to determine
the persons to whom options are granted, the number of shares covered by each
option, the type of option, the times at which an option may be exercised, the
exercise price, the method of payment, and certain other terms. The
interpretations and construction of any provision of the 1995 Plan is within the
sole discretion of the Committee, whose determination is final and binding.
Eligible employees are generally granted options upon commencement of employment
and are reconsidered for additional options periodically thereafter. In awarding
stock options the Committee and the Board consider individual performance,
overall contribution to the Company, retention, the number of unvested stock
options and the total number of stock options to be granted.
ELIGIBILITY. Options may be granted to any person, including officers and
consultants, employed by the Company or any of its subsidiaries or its
successors, but not to any person who, at the time of the grant, is a
nonemployee director of the Company. The Committee and the Board selects the
optionees and determines the number of shares to be subject to each option
granted under the 1995 Plan.
TERMS OF OPTIONS. Options granted under the 1995 Plan may be either Incentive
Stock Options ("ISOs") as defined in Section 422 of the Code, or nonstatutory
stock options and become exercisable in accordance with terms established at the
time of grant. Subject to the provisions of the 1995 Plan, all options granted
are exercisable on such terms and conditions as the Committee or the Board
determines. Each option is evidenced by a stock option agreement between the
Company and the optionee setting forth the terms and conditions of the option.
The term of an option granted under the 1995 Plan may not exceed ten years. The
maximum term of ISOs granted to holders of more than 10% of the outstanding
stock of the Company is five years. Each option becomes exercisable in
installments as approved by the Committee, and may be exercised on a cumulative
basis at any time before expiration. The Company's current standard form of
stock option agreement provides for the vesting of the shares subject to the
option over a four-year basis with one-quarter
9
<PAGE>
vesting one year following the date of grant and the remainder vesting on a
quarterly basis over the succeeding three-year period. The Company has however,
from time to time, granted options with vesting schedules that are different
from the standard vesting described above.
The exercise price for ISOs may not be less than 100% of the fair market
value of a share of the Company's common stock on the date of grant; the
exercise price for nonqualified options may be as low as 85% of fair market
value on that date. If the Optionee, at the time an ISO is granted, owns stock
possessing more than 10% of the total voting power of all classes of stock, the
exercise price may not be less than 110% of the fair market value on the date of
grant. The 1995 Plan permits the payment of the exercise price in cash or other
property acceptable to the Committee (including shares of the Company's stock).
The 1995 Plan provides that options are nonassignable and nontransferable,
other than by will or the laws of descent and distribution, and may be exercised
only by the employee while he or she is employed by the Company. Unless
otherwise determined by the Committee, options may be exercised only within
three months after termination of employment, or within 12 months following
termination of employment due to a permanent and total disability, or by the
employee's estate within 12 months after his or her death, provided that such
options were exercisable on the date of death or termination of employment.
CAPITAL CHANGES. The 1995 Plan provides for appropriate adjustments of the
number of shares subject to outstanding options, the exercise price thereof, and
the number of shares available for future grants, in the event the Company's
Common Stock is changed by reason of a subdivision or consolidation of shares,
stock split, or other similar corporate transaction. If the Company merges with
or into another corporation, and is not the surviving corporation, and each
outstanding option under the 1995 Plan is not assumed by the continuing or
surviving corporation, then the vesting of all unvested options shall be
accelerated and all options will become immediately exercisable.
AMENDMENT AND TERMINATION OF THE 1995 PLAN. The 1995 Plan terminates on
February 10, 2015, or the date when all shares subject to or which may become
subject to the 1995 Plan have been purchased under options granted under the
1995 Plan, whichever is earlier, and no further exercise of options may be made
after that date. However, all options granted under the 1995 Plan will remain in
effect until such options have been satisfied by the issuance of shares or
terminated in accordance with the 1995 Plan.
The Board may from time to time suspend, terminate, or amend the 1995 Plan in
any respect; provided, however, that the Board may not, without the consent of
the optionee, amend any outstanding option, or without the approval of the
shareholders, materially increase the benefits accruing to participants under
1995 Plan or materially modify the requirement as to eligibility for
participation in the 1995 Plan.
FEDERAL INCOME TAX INFORMATION. If an option granted under the 1995 Plan is
an ISO, 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 alternative minimum tax. The Company will not be allowed a deduction
for federal income tax purposes as a result of the exercise of an ISO regardless
of the applicability of the alternative minimum tax. Upon the sale or exchange
of the shares at least two years after grant of the option and one year after
exercise of the option, a gain will be treated as long-term capital gain. If
these holding periods are not satisfied, 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 an officer, director, or 10%
shareholder of the Company. The Company will be entitled to a deduction in the
same amount as the ordinary income recognized by the optionee. Any 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 if
the sale occurs more than one year after exercise of the option or as short-term
capital gain if the sale is made earlier. Under current law, the maximum
long-term capital gain tax rate for individuals is 28% while the maximum
ordinary income tax rate for individuals is 39.6%.
All options which do not qualify as ISOs are referred to as nonstatutory
options. An optionee will not recognize any taxable income at the time he or she
is granted a nonstatutory option. 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 price. In certain
circumstances, where the shares are subject to a substantial risk of forfeiture
when acquired, the date of taxation may be deferred unless the
10
<PAGE>
optionee files an election with the Internal Revenue Service under Section 83(b)
of the Code within 30 days after the date of exercise. The income recognized by
an optionee who is also an employee of the Company will be subject to tax
withholding by the Company by payment of cash or out of the current earnings
paid to the optionee. Upon resale of such shares by the optionee, any difference
between the sale 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. The Company will be entitled to a deduction in
the same amount as the ordinary income recognized by the optionee.
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, and does not purport to be complete. The foregoing does not
discuss the income tax laws of any municipality, state, or foreign country in
which an optionee may reside.
11
<PAGE>
AMENDMENT OF THE 1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(PROXY STATEMENT ITEM NO. 6)
YOUR BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE 1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
This amendment is to increase, from 170,000 to 220,000, the number of shares
reserved for issuance under the previously approved 1995 Non-Employee Directors'
Stock Option Plan. The 1995 Non-Employee Directors' Stock Option Plan (the
"Directors' Plan") was adopted by the Board of Directors on February 10, 1995
and ratified by the shareholders of the Company at the 1995 Annual Meeting. The
Directors' Plan is designed to provide non-employee directors with an equity
incentive through their proprietary interest in the Company and to encourage
them to continue to serve as directors of the Company. Upon the adoption of this
plan by the Board on February 10, 1995, each non-employee director received a
grant of 10,000 shares. Pursuant to shareholder approved amendment in 1996, a
total of 170,000 shares of Common Stock may be issued under the Directors' Plan.
The Board recommends amending the Directors' Plan to allow for an the issuance
of an additional 50,000 shares, so that the shares that may be issued under the
Directors' Plan total 220,000. Of the Company's 170,000 authorized shares of
Common Stock, 148,125 shares were issued and outstanding as if March 31, 1997.
The affirmative vote of the holders of the majority of the Company's shares
present or represented by proxy and entitled to vote at the meeting will be
required to ratify this plan. The Board believes that approval of this amendment
to the Directors' Plan is necessary to enable the Company to provide meaningful
equity incentives to attract, motivate and retain non-employee directors and
recommends that the shareholders vote for approval of the Directors' Plan.
Proxies solicited by the Board will be voted for this proposal unless
shareholders specify otherwise in those proxies.
A summary of the principal provisions of the Directors' Plan are set forth
below.
PURPOSE. The purpose of the Directors' Plan is to secure for the Company and
its shareholders the benefits of the incentive inherent in increased Common
Stock ownership by the members of the Board who are not employees of the Company
or any of its subsidiaries and align directors' interest with those of the
shareholders.
ADMINISTRATION. The Directors' Plan is designed to work automatically. A
director joining the Board for the first time receives an option for 15,000
shares. Each director reelected at an Annual Meeting is entitled to receive a
grant of 10,000 shares as of the date of the Annual Meeting. Where
administration is necessary, it will be provided by the Board of Directors, or
the Board may delegate the administration of the Plan to a committee of the
Board. The Board has not yet delegated the administration of this Plan. The
interpretation and construction of any provision of the Directors' Plan by the
plan's administrator is final and conclusive. Members of the Board receive no
additional compensation for their services in connection with the administration
of the Directors' Plan.
ELIGIBILITY. The Directors' Plan provides for the grant of nonstatutory stock
options to non-employee directors of the Company.
TERMS OF OPTIONS. Each option is evidenced by a stock option agreement
between the Company and the optionee setting forth the terms and conditions of
the option. The term of an option granted under the plan may not exceed ten
years. The option vests as to one-fourth of the shares at the end of the fourth
full calendar quarter following the date the option was granted, and as to
one-sixteenth of the shares at the end of each of the full calendar quarters
thereafter.
The exercise price for nonstatutory options granted under the Directors' Plan
shall be the fair market value of a share of the Company's Common Stock on the
date of grant. The Directors' Plan permits the payment of the exercise price in
cash, in exchange for other shares of the Company's stock, by promissory note or
other property acceptable to the Committee.
The Directors' Plan provides that options are nonassignable and
nontransferable, except pursuant to a qualified domestic relations order or by
will or the laws of descent and distribution, and may be exercised only
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<PAGE>
by the optionee. If the optionee ceases to be a Director for any reason other
than his or her death or disability, the optionee shall have the right to
exercise any option held at any time within six months after the date he or she
ceases to be a Director as to all or part of the shares that the optionee was
entitled to exercise at the date of such termination. In the event of the death
of an optionee, the option may be exercised at any time within five years after
death, but only to the extent that the option would have been exercisable at the
time of death. If an optionee is unable to continue his or her service as a
director of the Company as a result of his or her total and permanent
disability, the option may be exercised at any time within one year after the
date of his or her termination, but only to the extent he or she was entitled to
exercise it at the date of such termination.
CAPITAL CHANGES. The Directors' Plan provides for appropriate adjustments of
the number of shares subject to outstanding options, the exercise price thereof,
and the number of shares available for future grants, in the event the Company's
shares are changed by reason of a subdivision or consolidation of shares, stock
split, or other similar corporate transaction.
AMENDMENT AND TERMINATION OF THE DIRECTORS' PLAN. The Directors' Plan
terminates on February 10, 2015, or the date when all shares subject to, or
which may become subject to, the Directors' Plan have been purchased under
options granted under the Directors' Plan, whichever is earlier and no further
exercise of options may be made after that date. However, all options granted
under the Directors' Plan will remain in effect until such options have been
satisfied by the issuance of shares or terminated in accordance with the
Directors' Plan.
The Board may amend, alter, suspend or discontinue the Directors' Plan at any
time, but such amendment, alteration, suspension or discontinuation shall not
adversely affect any stock options then outstanding under the Directors' Plan,
without the optionee's consent. Shareholder approval is required for any
amendment to the Directors' Plan which would increase the number of shares
reserved under the Plan, materially modify the eligibility requirements or
materially increase the benefits which may accrue under the plan. Except as
otherwise may be required under applicable tax, securities or corporate law,
other amendments may be adopted solely with the approval of the Board.
FEDERAL INCOME TAX INFORMATION. Options granted under the Directors' Plan are
nonstatutory options. An optionee will not recognize any taxable income at the
time he or she is granted a nonstatutory option. 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 price.
Upon resale of such shares by the optionee, any difference between the sale
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. The Company will be entitled to a deduction in the same amount as
the ordinary income recognized by the optionee.
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 Directors' Plan and does not purport to be complete. Further, this
summary does not discuss the income tax effect of any municipality, state or
foreign country in which an optionee may reside.
13
<PAGE>
III. SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the Company's
current directors and executive officers:
NAME AGE POSITION
- ---------------------- ----- --------------------------------------------
Jeffrey C. Kalb(4) 54 President, Chief Executive Officer, Director
John E. Trewin 50 Vice President and Chief Financial Officer
Nick Bacile 49 Vice President of Marketing
Robert Filiault 54 Vice President of Sales
John Jorgensen 49 Vice President of Engineering
Scott Hover-Smoot 42 General Counsel and Corporate Secretary
Arieh Schifrin 58 Vice President, Operations
Angel G. Jordan(1)(2) 66 Director
Wade Meyercord(1)(4) 56 Chairman of the Board
Stuart Schube(1)(3)(4) 57 Director
John Sprague(1)(2)(3) 67 Director
David Schoon(2) 44 Director
- -------------
(1) Member of Special Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
(4) Member of Nominating Committee
Jeffrey C. Kalb has been President and Chief Executive Officer of the Company
since December 1994. He has been a director of the Company since September 1995.
He was President and Chief Operating Officer of MasPar Computer Corporation, a
computer systems manufacturer, from 1988 to 1993. He was Vice President with
Digital Equipment Corporation, a computer systems manufacturer, from 1983 to
1987.
John E. Trewin has been Vice President and Chief Financial Officer since
January 1995. He was Vice President and Chief Financial Officer of The O'Brien
Corporation, a coatings manufacturer, from 1990 to 1994 and Vice President and
Chief Financial Officer of Ampex Corporation, an electronics equipment and
magnetic recording media manufacturer, from 1986 to 1989.
Nick Bacile has been Vice President of Marketing since July 1996. He was Vice
President of Marketing and Research and Development for Dynacraft Leadframes at
National Semiconductor, Director of Marketing Discrete Division, Director North
American Business Center, Analog Product from 1990 to 1996.
Robert Filiault has been Vice President of Sales since August 1995. He was
Vice President of Sales for Burr-Brown Corporation for North America and Asia
Pacific area, a manufacturer of precision linear and mixed signal integrated
circuits, from 1991 to 1995, and held several positions with North American
Philips/Signetics from 1979 to 1991, including Director of Automotive Business
and President of Signetics Japan.
John Jorgensen has been Vice President of Engineering since November 1995. He
held several positions at National Semiconductor Corporation, including Director
of Corporate Business Development, Director of DSP Business Unit, and Director
of Advanced Networks Division from 1972 to 1995.
Arieh Schifrin has been Vice President, Operations since February 1995. He
was a management consultant for high technology companies from 1991 to 1995. He
was Executive Vice President for Catalyst Semiconductor, a semiconductor
company, from 1989 to 1991; Executive Vice President of Xicor, Inc., a
semiconductor manufacturing company, from 1980 to 1989; and Operations Manager
for Data General Corp., a computer company, from 1977 to 1980.
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<PAGE>
Scott Hover-Smoot has been Corporate Secretary and General Counsel since July
1994. He was Associate and Senior Associate at Berliner, Cohen, a law firm, from
1986 to 1994.
Angel G. Jordan has been a Director of the Company since 1986. Dr. Jordan is
a University Professor at Carnegie-Mellon University where has been Professor of
Electrical & Computer Engineering since 1966. He was Provost from 1983 to 1991,
Dean from 1979 to 1983.
Wade Meyercord is Chairman of the Board of Directors of the Company and has
served on the Board of Directors since 1992. Mr. Meyercord is also President of
Meyercord & Associates, a consulting company, since 1987. He was Chief Executive
Officer of Read-Rite Corp., an electronic data storage products company, from
1984 to 1987.
Stuart Schube has been a Director of the Company since 1986. He has been
President of Acorn Ventures, Inc., a venture capital management firm, and
General Partner of the Genesis Fund, Ltd., a venture capital investment company,
since 1986.
David Schoon has been a Director of the Company since September 1995. He is
President of Stock Portfolio Management, Inc., a financial consulting firm,
since 1992. He is a Chartered Financial Analyst and a Director of Sparton
Corporation, an electronic and electromechanical company.
John L. Sprague has been a Director of the Company since July 1996. Prior to
that time he was a Director of the Company from January 1994 until July 1995. He
has been President of John L. Sprague Associates, a consulting company, since
1987. He was President and Chief Executive Officer of Sprague Electric Company,
an electronics company, from 1981 to 1987.
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 31, 1997, by (i)
each person (or group of affiliated persons) who is known by the Company to own
beneficially 5% or more of the Company's Common Stock; (ii) each of the
Company's directors; (iii) the Named Executive Officers (as defined below under
"Executive Compensation"); and (iv) all directors and nominee and executive
officers as a group. Except as otherwise noted, the persons or entities in this
table have sole voting and investment power with respect to all the shares of
Common Stock beneficially owned by them.
SHARES BENEFICIALLY
BENEFICIAL OWNER(1) OWNED(2) PERCENT
- ------------------------------------- ------------------- ---------
Chan Desaigoudar(4) 1,625,850(4) 16.69%
490 Santa Rosa Drive
Los Gatos, CA 9503
Hitachi Metals, Ltd. 980,000 10.06%
2-1-2 Marunouchi Chiyod-ku,
Tokyo 100 Japan
Jeffrey C. Kalb(3) 242,456 2.49%
John E. Trewin(3) 57,591 *
Wade Meyercord(3) 54,675 *
Robert Filiault(3) 45,761 *
Stuart Schube(3) 45,625 *
Angel G. Jordan(3) 42,452 *
John Jorgensen(3) 28,125 *
Arieh Schifrin(3) 25,312 *
John Sprague(3) 9,375 *
David Schoon(3) 5,625 *
Directors and Executive Officers as a
group (12 persons) 571,997 5.87%
NOMINEE
- -------------
* Less than 1%.
(1) Based solely upon information furnished by such individuals or contained in
filings made by such beneficial owners with the Securities and Exchange
Commission.
(2) Includes shares subject to options exercisable within 60 days after March
31, 1997.
(3) 215 Topaz Street, Milpitas, California 95035.
(4) Based solely upon information furnished by such individuals or contained in
filings made by such beneficial owners with the Securities and Exchange
Commission excluding reference to Employer 401(k).
16
<PAGE>
IV. CORPORATE GOVERNANCE--OFFICERS AND DIRECTORS
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended March 31, 1997 ("fiscal 1997"), the Board of
Directors of the Company had a Special Committee, an Audit Committee, a
Compensation Committee, and a Nominating Committee. The Special Committee
consisted of Messrs. Jordan, Meyercord, Schube, and Sprague.
The Special Committee had all of the authority of the Board of Directors to
act on any matter except with respect to (i) the approval of any action for
which shareholder approval is required under the California Corporations Code;
(ii) the filling of vacancies on the Board of Directors or on any committee
thereof; (iii) the fixing of compensation for directors; (iv) the adoption,
amendment or repeal of any by-law; (v) the amendment or appeal of any resolution
of the Board of Directors which by its terms is not so amendable or repealable;
(vi) any distribution to shareholders except at a rate or within a price range
determined by the Board of Directors; and (vii) the appointment of other
committees of the Board of Directors or the members thereof. The Special
Committee held one meeting during fiscal 1997.
The Audit Committee oversees the Company's accounting and financial reporting
policies and internal controls, reviews annual audit reports and management
letters and makes recommendations to the Board of Directors regarding
appointment of independent auditors. The Audit Committee consisted of Stuart
Schube and John Sprague. That Audit Committee held four meetings during fiscal
1997.
The Compensation Committee's principal functions are to recommend to the
Board the compensation of officers of the Company, to oversee the administration
of the Company's stock option plans, and to perform such other duties regarding
compensation for employees and consultants as the Board may delegate from time
to time. In addition, the Committee reviews and approves recommendations
regarding changes in compensation of outside directors. See also "Compensation
Committee Report." The present Compensation Committee consists of Angel Jordan,
John Sprague and David Schoon. The Compensation Committee held six meetings
during fiscal 1997.
On April 19, 1996, the Board created a Nominating Committee for the purpose
of making recommendations to the Board of Directors regarding director nominees
to the Board. The Nominating Committee consists of Wade Meyercord, Stuart
Schube, and Jeff Kalb. The Nominating Committee held one meeting during fiscal
1997. The Nominating Committee will consider nominees proposed by the
shareholders. Any shareholder who wishes to recommend a prospective nominee for
the Board of Directors for the Nominating Committee's consideration may do so by
giving the candidate's name and qualifications in writing to the Secretary of
the Company, 215 Topaz Street, Milpitas, CA 95035.
During fiscal 1997, the Board of Directors held seven regular meetings and
one special meeting. Each director attended at least 80% of the meetings held
during fiscal 1997 which occurred on or after the initiation of their term as a
director. Each director who served on the Compensation Committee also attended
all of the Committee meetings held during fiscal 1997 which occurred on or after
the initiation of his term as a director. Each director who served on the Audit
Committee also attended all of the Committee meetings held during fiscal 1997
which occurred on or after the initiation of his term as a director.
DIRECTOR COMPENSATION
Directors are entitled to be paid, in addition to their out-of-pocket
expenses, $500 per month plus $1,000 for each Board Meeting, and $250 for each
conference call.
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EXECUTIVE COMPENSATION
The following table presents the reportable compensation for persons who held
the position of CEO and the top four executive officers who received
compensation above $100,000 during the fiscal year ended March 31, 1997 (the
"Named Executive Officers"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
--------------
SECURITIES ALL OTHER
ANNUAL COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) ($)(1)
- --------------------------- ------ ---------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Jeffrey C. Kalb(2) 1997 $268,615 $76,973 40,000 $3,003(1)
President and Chief 1996 $240,000 $72,000 None $5,145(1)
Executive Officer, Director
John E. Trewin(2) 1997 $158,846 $30,300 15,000 $3,631(1)
Vice President and 1996 $138,346 $39,696 15,000 $3,652(1)
Chief Financial Officer
Arieh Schifrin(2) 1997 $154,685 $30,300 15,000 $1,773(1)
Vice President, Operations 1996 $138,346 $35,563 15,000 $4,283(1)
Robert Filiault(2) 1997 $158,885 $29,014 10,000 $2,171
Vice President, Sales 1996 $116,394 $21,202 90,000 $2,471
John Jorgensen(2) 1997 $144,231 $29,625 15,000 $4,153
Vice President, 1996 $ 66,896 $12,088 75,000 None
Engineering
<FN>
- ---------------
(1) Company matching contributions to the 401k savings plan and group term life
insurance for 1997.
(2) Mr. Kalb joined the Company in December 1994. The Company does not have an
employment agreement with its Chief Executive Officer or any compensation
plan or arrangement with the Chief Executive Officer which results from the
resignation, retirement or other termination of employment or from a change
in control of the Company other than an agreement that if the Chief
Executive Officer is terminated by the Company without cause, he is entitled
to severance pay for nine months at the rate of $20,000 per month plus
continuation of employee benefits such as medical, dental and disability
coverage. Under the terms of their employment agreements, Messrs. Trewin,
Schifrin, Filiault and Jorgensen in case of termination without cause,
relocation of work location of more than 50 miles, material reduction in job
duties, or an involuntary reduction in compensation, are eligible to receive
six months severance pay and continuation of employee benefits.
</FN>
</TABLE>
18
<PAGE>
STOCK OPTION TABLES
The following table shows for each of the Named Executive Officers certain
information with respect to stock options granted during the last fiscal period.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
(TWELVE MONTHS ENDED MARCH 31, 1997)
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
FOR
INDIVIDUAL GRANTS OPTION TERM(1)
- ----------------------------------------------------------------------- ---------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- --------------- ------------ --------------- ------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
JEFFREY KALB 40,000 8.8% $8.500 4/1/06 $ 211,018 $553,165
JOHN JORGENSEN 15,000 3.3% $6.000 1/24/07 $ 56,601 $143,437
JOHN E. TREWIN 15,000 3.3% $5.875 7/26/06 $ 55,421 $140,449
ARIEH SCHIFRIN 15,000 3.3% $5.875 7/26/06 $ 55,421 $140,449
ROBERT FILIAULT 10,000 2.2% $7.500 10/18/06 $ 47,167 $119,531
<FN>
- ------------
(1) Potential realizable value is disclosed in response to SEC rules which
require such disclosure for illustration only. The values disclosed are not
intended to be, and should not be, interpreted by shareholders as
representations or projections of the future value of the Company's stock or
of the stock price.
</FN>
</TABLE>
The above options are exercisable over a four year period, with 25%
exercisable one year after date of grant and the balance exercisable in
quarterly installments thereafter.
The following table sets forth as to each of the Named Executive Officers,
certain information with respect to stock options exercised during the last
fiscal year (twelve months ended March 31, 1997) and unexercised options held as
of March 31, 1997.
<TABLE>
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTIONS VALUES
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES VALUE OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED FY-END (#) FY-END ($)
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------- ------------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey C. Kalb 10,000 $ 19,450 168,000 240,000 $578,760 $689,000
John E. Trewin 0 0 43,125 61,875 $129,188 $151,688
Arieh Schifrin 23,437 $123,981 19,688 61,875 $ 48,447 $151,688
John Jorgensen 0 0 23,437 66,563 $ 0 $ 20,625
Robert Filiault 0 0 37,750 66,250 $ 0 $ 0
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of outside directors appointed by the Board of Directors. The
Committee is responsible, on behalf of the Board, for reviewing and approving
compensation programs, policies, and plans designed to motivate personnel to
achieve Company objectives. One of the key responsibilities of the Committee is
to set the compensation
19
<PAGE>
annually of the Chief Executive Officer (the "CEO"), upon his evaluation by the
Board of Directors. Other responsibilities include: review and approve
recommendations from the CEO for the compensation of officers, other senior
managers, and key employees; review and approve recommendations regarding stock
option grants for specific employees as provided under existing Company plans;
review and approve the concept and design of management incentive plans and
programs for Company officers, other senior managers, and key employees. An
additional responsibility of the Committee is to review and approve
recommendations regarding changes in compensation of outside directors.
Compensation Philosophy. The Company believes that the management team it has
assembled is well suited to increasing shareholder value and contributing to the
long-term success of the Company, and the Committee intends to pursue a
compensation philosophy consistent with achieving those goals. In structuring
the Company's compensation programs, the Committee's goals are to align
compensation with the Company's business objectives and performance and to
attract, retain and reward executive officers and other key employees who
contribute to the long-term success of the Company. Consistent with these goals,
the Company's compensation programs include a mix of salary, bonus and stock
options. In particular, stock options are used to link executive incentives and
the creation of shareholder value.
Base Salary. The Committee annually reviews each executive officer's base
salary. When reviewing base salaries, the Committee considers individual and
corporate performance, levels of responsibility, prior experience, breadth of
knowledge and competitive pay practices. Consistent with the Company's current
size, the Committee believes current executive salaries are comparable to the
average salaries offered by competitive companies.
Bonus. The Company's bonus plan provides for bonuses to be awarded to key
employees based on specific goals achieved by the Company and the level of
contribution to achievement of the goals by the key employees. The bonus plan is
designed such that bonuses when combined with salaries create total compensation
which is comparable to the average compensation of companies against which the
Company competes in hiring and retaining key employees. Bonus awards depend on
the extent to which Company and individual performance objectives are achieved.
The Company's performance objectives include operating, strategic and financial
goals considered critical to the Company's short and long term goals.
Options. The purpose of the Company's stock option plans is to attract and
retain talented key employees and to align their personal financial interests
with those of the Company's shareholders. Options are generally granted with an
exercise price equal to the market price of the Common Stock on the date of
grant and generally vest over a four year period. This approach is designed to
focus key employees on sustainable growth of the Company and the creation of
shareholder value over the long term. Stock options are a major component of the
compensation package of executive management. Eligible employees are generally
granted options upon commencement of employment and are considered for
additional options periodically thereafter. In recommending stock options the
Committee considers individual performance, overall contribution to the Company,
retention, the number of unvested stock options and the total number of stock
options to be granted.
Section 162(m) of the Code imposes a limitations on the deductibility for
federal income tax purposes of compensation over $1 million paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million is not
subject to the limitation if it is "performance-based compensation" within the
meaning of the Code. The Committee believes that at the present time it is
unlikely that the compensation paid to any Named Executive Officer in a taxable
year which is subject to the deduction limit will exceed $1 million. Therefore,
the Compensation Committee has not yet established a policy for determining
which forms of incentive compensation awarded to its Named Executive Officers
shall be designed to qualify as "performance-based compensation." The
Compensation Committee intends to continue to evaluate the effects of the
statute and any fiscal Treasury regulations and to comply with Code Section
162(m) in the future to the extent consistent with the best interests of the
Company.
CEO Compensation. The Committee uses the same procedures described above in
setting the annual salary, bonus, and making recommendations regarding stock
option awards for the CEO. The CEO's salary is determined based on comparisons
with competitive companies as described above. The Committee believes that the
CEO's salary and bonus plan is comparable to the salaries offered to CEOs of
competitive
20
<PAGE>
companies. In recommending stock options, the Committee considers the CEO's
performance, overall contribution to the Company, retention, the number of
unvested options and the total number of options to be granted.
Conclusion. As a significant portion of the Company's compensation program is
linked to Company performance, the Committee believes that compensation is
closely tied to increases in long-term shareholder value.
The foregoing reports of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference the Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Company's Board of Directors
was at any time during the year ended March 31, 1997, or at any other time an
officer or employee of the Company. Currently, no executive officer of the
Company serves as a member of compensation committee.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Mr. Wade Meyercord, Chairman of the Board of Directors since October 27,
1994, has been actively involved in the management of the Company since that
date and has been compensated for his services to the extent that his efforts
have been over and above the normal duties of an outside director. Compensation
for these services totaled approximately $83,375 during the fiscal year ended
March 31, 1997.
21
<PAGE>
V. FIVE-YEAR STOCK PERFORMANCE GRAPH
The following graph compares the five-year cumulative total return on CMD
Common Stock, the Standard & Poor's 500 Index ("S&P"), and the S&P Electronics
(Semiconductors) Index (excluding CMD).
The graph assumes $100 was invested on March 31, 1993, in CMD Common Stock
and $100 was invested at that same time in each of the S&P indexes. The
comparison assumes that all dividends are reinvested. (CMD Common Stock has not
paid dividends.)
(The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T)
TOTAL SHAREHOLDER RETURNS
(Dividends Reinvested)
ANNUAL RETURN PERCENTAGE
Years Ending
Company/Index Mar 93 Mar 94 Mar 95 Mar 96 Mar 97
- --------------------------------------------------------------------------------
S&P 500 Index 15.23 1.47 15.57 32.10 19.82
Electronics(Semicndctr)-500 87.13 34.07 20.08 10.22 82.26
<TABLE>
<CAPTION>
INDEXED RETURNS
Years Ending
Base
Period
Company/Index Mar 92 Mar 93 Mar 94 Mar 95 Mar 96 Mar 97
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index 100 115.23 116.93 135.13 178.51 213.89
Electronics(Semicndctr)-500 100 187.13 250.88 301.26 332.04 605.17
</TABLE>
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
CMD STOCK PERFORMANCE
- --------------------------------------------------------------------------------
Company/Index Mar Mar Mar Mar Mar Mar
92 93 94 95 96 97
================================================================================
Closing Price 6.75 7.125 18.25 4.375 9.625 7.375
Annual Return % 5.45 156.14 (76.03) 120.00 (23.38)
Index Return 105 270 65 142 109
Pursuant to Securities and Exchange Commission regulations, this chart is not
"soliciting material", is not deemed filed with the Securities and Exchange
Commission, and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representation that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors, and greater than ten percent shareholders were complied
with, with the exception of Chan Desaigoudar.
22
<PAGE>
VI. OTHER BUSINESS
The Company knows of no other matters to be submitted at the Annual Meeting.
If any other matters are properly brought before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares they
represent in accordance with their judgment.
VII. SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented by such shareholders at
next year's Annual Meeting must be received by the Company at its principal
office no later than March 20, 1998, and must satisfy the conditions established
by the Securities and Exchange Commission for shareholder proposals to be
included in the Company's proxy statement for that meeting.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the period ended March
31, 1997, is being mailed with this proxy statement to shareholders entitled to
notice of the meeting. If exhibit copies are requested, a copying charge of
$0.20 per page will be made. Requests should be sent to Investor Relations,
California Micro Devices Corporation, 215 Topaz Street, Milpitas, California
95035-5430.
By Order of the Board of Directors
/s/ Scott Hover-Smoot
----------------------------
Scott Hover-Smoot, Secretary
Milpitas, California
23
<PAGE>
APPENDIX I
AMENDMENT TO
BY-LAWS OF CALIFORNIA MICRO DEVICES CORPORATION
RESOLVED, that the second paragraph of Article III, Section 9 of the By-Laws
of California Micro Devices Corporation is hereby amended in its entirety to
read as follows:
"The election of directors by the shareholders shall not be by cumulative
voting. At each election of directors, each shareholder entitled to vote may
vote all the shares held by that shareholder for each of the several nominees
for director up to the number of directors to be elected. The shareholder may
not cast more votes for any single nominee than the number of shares held by
that shareholder. This paragraph shall remain effective so long as the
corporation is a "listed corporation" within the meaning of Section 301.5(d)
of the California General Corporation Law."
24
<PAGE>
APPENDIX J
- --------------------------------------------------------------------------------
PROXY CALIFORNIA MICRO DEVICES CORPORATION PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
JULY 18, 1997
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of California Micro Devices Corporation ("CMD"),
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated May 20, 1997, and hereby appoints Wade Meyercord and
Stuart Schube, 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 Annual Meeting of Shareholders of CMD to be
held at the Holiday Inn San Jose North, 777 Bellew Drive, Milpitas, California
95035 on July 18, 1997 at 8:30 a.m. local time, and at any 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 matters set forth below,
including the right, subject to the outcome of item number one, in the case of
cumulative voting, to allocate the votes in the election of directors among one
or more of the nominees as the proxy holders deem appropriate.
(Continued, and to be signed on the other side)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
[X] Please mark
your votes
as this
2. To elect six (6) directors to serve until the next annual
meeting of shareholders and until the election and FOR AGAINST ABSTAIN
qualification of their successors. 1. To amend the bylaws of CMD to eliminate
WITHHOLD cumulative voting. [ ] [ ] [ ]
FOR FOR ALL
ELECTION OF DIRECTORS: 3. To ratify the selection of the firm of
NOMINEES: [ ] [ ] Ernst & Young, LLP, as independent [ ] [ ] [ ]
Dr. Angel Jordan, Jeffrey Kalb, auditors for the fiscal year ending
Wade Meyercord, Stuart Schube, March 31, 1998.
Dr. John Sprague, Donald Waite
4. To approve the amendment to the 1995 [ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote for any Employee Stock Purchase Plan.
individual nominee, write that nominee's name in the
space provided below. 5. To approve the amendment to the 1995 [ ] [ ] [ ]
Stock Option Plan.
____________________________________________________
6. To approve the amendment to the 1995 [ ] [ ] [ ]
Non-Employee Directors' Stock Option
Plan.
and, in their discretion, upon such other
matters which may properly come before the
meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF
NO CONTRARY DIRECTION IS INDICATED, WILL BE
VOTED IN FAVOR OF ALL OF THE MATTERS SET
FORTH HEREIN, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
Signature(s)_________________________________________________________________________ Dated _______________________ , 1997
This proxy should be marked, dated and signed by the shareholder(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.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
