<PAGE>
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 Section 240.14a-11(c) or
Section 240.14a-12
SILICON GRAPHICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[ L O G O ]
September 21, 1995
DEAR SILICON GRAPHICS STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders of
Silicon Graphics, Inc. to be held on Wednesday, November 1, 1995 at 2:00 p.m. at
the Company's headquarters, 2011 North Shoreline Boulevard, Mountain View,
California 94043-1389.
The Notice of Annual Meeting and Proxy Statement accompany this letter and
provide an outline of the business to be conducted at the meeting. In addition
to the matters to be voted on, there will be a report on the progress of the
Company and an opportunity for stockholders to ask questions.
We hope you will be able to join us. To ensure your representation at the
meeting, we urge you to return the enclosed proxy promptly. Your vote is very
important.
Sincerely,
[SIG] [SIG]
EDWARD R. MCCRACKEN THOMAS A. JERMOLUK
CHAIRMAN AND CHIEF PRESIDENT AND CHIEF
EXECUTIVE OFFICER OPERATING OFFICER
<PAGE>
SILICON GRAPHICS, INC.
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 1, 1995
TO THE STOCKHOLDERS OF SILICON GRAPHICS, INC.:
The Annual Meeting of Stockholders of SILICON GRAPHICS, INC. will take place
on Wednesday, November 1, 1995, at 2:00 p.m., local time, at the Company's
principal offices at 2011 North Shoreline Boulevard, Mountain View, California
94043-1389, for the following purposes:
1. To elect three Class III directors of the Company to serve for a
three-year term and to elect one Class II director to serve for an initial
term of two years.
2. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending June 30, 1996.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Proxy Statement accompanying this Notice describes these matters more
fully.
The close of business on September 5, 1995 is the record date for notice and
voting.
We invite all stockholders to attend the meeting in person. Even if you plan
to attend, please sign and return the enclosed proxy as promptly as possible in
the envelope provided. Any stockholder attending the meeting may vote in person
even if he or she has returned a proxy.
Sincerely,
[SIG]
William M. Kelly
SECRETARY
Mountain View, California
September 21, 1995
<PAGE>
SILICON GRAPHICS, INC.
------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
Silicon Graphics, Inc. is soliciting the enclosed proxy for use at the
Annual Meeting of Stockholders to be held on Wednesday, November 1, 1995, at
2:00 p.m., local time, or at any adjournment thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at the principal offices of the Company, 2011 North
Shoreline Boulevard, Mountain View, California 94043-1389. The Company's
telephone number at that location is 415-960-1980.
These proxy solicitation materials will be mailed on or about September 28,
1995 to all stockholders entitled to vote at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
At the record date, there were issued and outstanding 161,129,805 shares of
the Company's Common Stock, $0.001 par value, 17,500 shares of the Company's
Series A Preferred Stock, $0.001 par value, and one share of the Company's
Series E Preferred Stock, $0.001 par value. Each share of Common Stock is
entitled to one vote; each share of Series A Preferred Stock is entitled to 80
votes; and the outstanding share of the Company's Series E Preferred Stock is
entitled to 590,201 votes.
As of September 5, 1995, the following persons were known by the Company to
be the beneficial owners of more than 5% of any class of the Company's voting
securities:
<TABLE>
<CAPTION>
PERCENT
NUMBER OF SHARES OF TOTAL
CLASS OF BENEFICIALLY PERCENT VOTING
SECURITIES OWNED OF CLASS POWER
----------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
FMR Corporation (1) ..................................... Common Stock 18,425,300 11.44 11.30
82 Devonshire Street
Boston, MA 02109
NKK U.S.A. Corporation .................................. Series A 17,500 100.0 *
450 Park Avenue Preferred Stock
New York, NY 10022
Montreal Trust Company .................................. Series E 1 100.0 *
of Canada, as Trustee (2) Preferred Stock
151 Front Street West, Suite 605
Toronto, Ontario M5J 2N1
<FN>
- ------------------
* Less than 1%.
(1) As reported on a Schedule 13G/A dated February 13, 1995, these shares are
beneficially owned by various entities and individuals associated with the
Fidelity family of mutual funds, including 10,540,500 shares held by the
Fidelity Magellan Fund.
(2) See "Voting and Solicitation" for a description of the Series E Preferred
Stock.
</TABLE>
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company at its principal offices a written notice of revocation or a duly
executed proxy bearing a later date, or by attending the meeting and voting in
person.
VOTING AND SOLICITATION
The Company's certificate of incorporation provides for cumulative voting
for the election of directors. Stockholders may allocate among one or more
candidates within a specified class the number of votes equal to the number of
directors to be elected in that class multiplied by the number of shares or
equivalent shares of Common Stock held. However, no stockholder may cumulate
votes unless prior to the voting the candidate's name has been placed in
nomination and a stockholder has given notice at the meeting of the intention to
cumulate votes.
<PAGE>
On all other matters, each share of Common Stock has one vote, each share of
Series A Preferred Stock has 80 votes, and the Series E Preferred Stock has
590,201 votes. Except as otherwise required by law, the Series A and the Series
E Preferred Stock vote with the Common Stock as one class.
Montreal Trust Company of Canada holds the Series E Preferred Stock as
trustee under a voting trust for the benefit of holders of Exchangeable Shares
issued in connection with the Company's acquisition of Alias Research Inc. in
June 1995. Each holder of Exchangeable Shares (other than the Company and its
affiliates) will receive a proxy on which it can give Montreal Trust voting
instructions for a number of Series E Preferred Stock votes equal to the number
of Exchangeable Shares owned by that holder. Montreal Trust will only cast votes
for which it receives instructions.
The Company will pay the cost of soliciting proxies. The Company will pay
Georgeson & Company Inc., a proxy solicitation firm, a fee expected not to
exceed $9,000 for its services in the solicitation of proxies from brokers, bank
nominees and other institutional owners and will reimburse the firm for certain
out-of-pocket expenses expected not to exceed an additional $7,000. The Company
may also reimburse intermediaries for their expenses in forwarding solicitation
materials to beneficial owners. The Company's directors, officers and employees
may also solicit proxies, without additional compensation.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The quorum required for the transaction of business at the Annual Meeting is
a majority of the shares or equivalent shares of Common Stock outstanding on the
record date. All shares voted, whether "For" or "Against" or abstentions, will
count for purposes of establishing a quorum and, except as described below, for
determining the number of votes cast with respect to a matter.
In the absence of controlling precedent to the contrary, the Company intends
not to consider broker non-votes in determining whether the requisite majority
of votes cast has been obtained with respect to a particular matter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 1996
Annual Meeting must be received by the Company no later than May 24, 1996, in
order to be included in the proxy materials for that meeting.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR DIRECTOR
The Company's Board of Directors currently consists of nine persons, divided
into three classes serving staggered terms of office. Currently there are three
directors in Class I, two in Class II and four in Class III. Following the
Annual Meeting, at which three Class III directors and one Class II director are
to be elected, the Board will be comprised of three directors in each class.
Mark W. Perry, currently a Class III director, will not stand for re-election
when his term expires on November 1, 1995. Each director elected at the 1995
Annual Meeting of Stockholders will serve until the term of that director's
class expires, or until his or her successor has been duly elected and
qualified. The term of the Class II director elected at this meeting will expire
at the Annual Meeting of Stockholders in 1997 and the term of each Class III
director will expire at the Annual Meeting of Stockholders in 1998.
Unless otherwise instructed, the proxy holders will vote for the four
nominees named below. The three Class III director nominees currently are
directors of the Company; the Class II nominee, Robert A. Lutz, President and
Chief Operating Officer of Chrysler Corporation, has consented to serve as a
director if elected. In the unexpected event that any such nominee becomes
unavailable or declines to serve, the proxy holders will vote the proxies in
their discretion for any nominee designated by the Board to fill the vacancy. If
additional
2
<PAGE>
persons are nominated, the proxy holders intend to cumulate their votes if
necessary to elect as many of the nominees listed below as possible, and, in
such event, the specific nominees to be voted for will be determined by the
proxy holders.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---------------------------------- ---- --------------------------------------------------------------------------- --------
<S> <C> <C> <C>
Nominees for Class III Directors
- ----------------------------------
Allen F. Jacobson 68 Former Chairman of the Board and Chief Executive Officer, Minnesota Mining 1992
& Manufacturing Company (3M)
Thomas A. Jermoluk 39 President and Chief Operating Officer, Silicon Graphics, Inc. 1993
James G. Treybig 54 President and Chief Executive Officer, Tandem Computers Incorporated 1992
Nominee for Class II Director
- ----------------------------------
Robert A. Lutz 63 President and Chief Operating Officer, Chrysler Corporation --
Continuing Class I Directors
- ----------------------------------
C. Richard Kramlich 60 Managing General Partner, New Enterprise Associates (a venture capital 1984
firm)
Edward R. McCracken 51 Chairman and Chief Executive Officer, Silicon Graphics, Inc. 1984
Lucille Shapiro, Ph.D. 55 Professor and Chairman of the Department of Developmental Biology, Stanford 1993
University School of Medicine
Continuing Class II Directors
- ----------------------------------
Robert R. Bishop 52 Chairman, Silicon Graphics World Trade Corporation 1993
James A. McDivitt 66 Former Senior Vice President, Government Operations and International, 1987
Rockwell International Corporation
</TABLE>
Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five years.
There are no family relationships among directors or executive officers of the
Company.
Mr. Jacobson was the Chairman of the Board and Chief Executive Officer of 3M
Company until he retired on October 31, 1991. Mr. Jacobson remains a director of
3M Company and is also a director of Abbott Laboratories, Deluxe Corporation,
Mobil Corporation, Northern States Power Company, Potlatch Corporation,
Prudential Insurance Company of America, Sara Lee Corporation, U S WEST, Inc.
and Valmont Industries, Inc.
Mr. Jermoluk became an Executive Vice President of the Company in 1991, was
named Chief Operating Officer in 1992, and President in 1994. Mr. Jermoluk, who
joined the Company in 1986, was the Company's Vice President and General
Manager, Advanced Systems Division, from 1988 to 1991.
Mr. Lutz was elected President of Chrysler Corporation in February 1991,
having previously served as President of its Chrysler Motors subsidiary. He has
also served as Chief Operating Officer and a member of the Office of the
Chairman since January 1993. Mr. Lutz has been a member of Chrysler
Corporation's Board of Directors since 1986.
Mr. Kramlich is also a director of Ascend Communications, Chalone Inc.,
Macromedia, Neopath, Inc., Sierra Monitor Corporation, SyQuest Technology, Inc.
and Telebit Corporation.
3
<PAGE>
Mr. McCracken is also a director of National Semiconductor Corporation and
serves as Co-Chair of the National Information Infrastructure Advisory Council
and Co-Chairman of Joint Venture: Silicon Valley Network.
Mr. Perry has been the Chairman of ViewStar Corporation, a software company,
since August 1995, and served as its President and Chief Executive Officer from
June 1994 to August 1995. Mr. Perry served as the Vice Chairman of the Company
from April 1992 to November 1993 and has served as a consultant to the Company
since November 1993. Prior to April 1992, Mr. Perry held several positions with
the Company, most recently as Executive Vice President, a position he had held
since March 1988. Mr. Perry is also a director of Exabyte Corporation.
Mr. Bishop became the Chairman of the Board of Silicon Graphics World Trade
Corporation in July 1995. Prior to July 1995, Mr. Bishop served as President of
Silicon Graphics World Trade Corporation, a position he had held since July
1986.
Mr. McDivitt was Senior Vice President, Government Operations and
International, of Rockwell International Corporation until his retirement in
April 1995.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held four meetings during fiscal 1995.
The Board has an Audit Committee and a Compensation and Human Resources
Committee, which also performs the functions of a nominating committee.
The Audit Committee consists of three non-employee directors, Mr. Jacobson
(chair), Mr. Kramlich and Dr. Shapiro, and held ten meetings during fiscal 1995.
It recommends engagement of, and approves the services performed by, the
Company's independent auditors. The Committee also is responsible for reviewing
and evaluating the Company's accounting principles and its system of internal
accounting controls.
The Compensation and Human Resources Committee consists of two non-employee
directors, Mr. McDivitt (chair) and Mr. Kramlich, and held six meetings during
fiscal 1995. During fiscal 1995, the Committee's responsibilities included
recommending, subject to the Board's approval, executive compensation, including
stock option grants; administering the Company's stock incentive plans;
approving employee stock option grants; identifying and evaluating candidates to
fill vacancies on the Board and making recommendations regarding the size and
composition of the Board. Candidates for director suggested by stockholders will
be considered by the Committee. Such suggestions should include the candidate's
name and qualifications and may be submitted in writing to the Corporate
Secretary, Silicon Graphics, Inc., 2011 North Shoreline Boulevard, Mountain
View, CA 94043-1389.
No director attended fewer than 75% of the aggregate number of meetings of
the Board of Directors and meetings of the Committees of the Board on which he
or she served, except that Mr. Treybig attended two of the four meetings of the
Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between the Company's Board of Directors
or Compensation and Human Resources Committee (consisting of Mr. McDivitt and
Mr. Kramlich) and the board of directors or compensation committee of any other
company, nor has any such interlocking relationship existed in the past.
DIRECTOR COMPENSATION
Employee directors are not compensated for their service on the Board of
Directors.
Each non-employee director receives a fee of $5,000 per quarter and $1,000
for each Board and committee meeting attended. The chair of each committee
receives an additional $1,000 for each committee meeting attended.
Under the Directors' Stock Option Plan, each non-employee director is
automatically granted an option to purchase 30,000 shares of Common Stock on the
date on which he or she first becomes a director. In addition, on the date of
the annual stockholders meeting in each year, each non-employee director
receives an option to purchase an additional 10,000 shares of Common Stock. On
November 1, 1994, Mr. Jacobson, Mr. Kramlich,
4
<PAGE>
Mr. McDivitt, Dr. Shapiro and Mr. Treybig each were automatically granted
options to purchase 10,000 shares at an exercise price of $30.375 per share. By
agreement with the Company, Mr. Perry has waived the grant of stock options
under the plan.
All options under the directors' plan are granted at the fair market value
of the Common Stock on the date of grant. Options become exercisable in
installments on the first three anniversary dates following the date of grant,
so long as the optionee remains a director.
PROPOSAL NO. 2 -- RATIFICATION OF
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending June 30, 1996. In the event of a majority vote against
approval, the Board will reconsider its selection, and in any event is entitled
to change auditors at a later date. Ernst & Young LLP has audited the Company's
financial statements since the fiscal year ended June 30, 1982. Representatives
of Ernst & Young LLP are expected to be present at the meeting with the
opportunity to make a statement, and to be available to respond to appropriate
questions.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE APPOINTMENT OF ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 1996.
OTHER INFORMATION
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of September 5, 1995 by each director or nominee for director, by
each of the executive officers named in the table under "Executive Officer
Compensation" below, and by all directors, nominees and executive officers as a
group:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES PERCENT OF TOTAL
BENEFICIALLY COMMON VOTING
NAME OWNED(1) STOCK POWER
- -------------------------------------------------------------------------------- ------------ ---------- ----------
<S> <C> <C> <C>
Robert R. Bishop................................................................ 3,771,074 2% 2%
Allen F. Jacobson............................................................... 52,100 * *
Thomas A. Jermoluk.............................................................. 441,680 * *
C. Richard Kramlich............................................................. 94,132 * *
Robert A. Lutz.................................................................. -- * *
Edward R. McCracken............................................................. 2,293,382 1% 1%
James A. McDivitt............................................................... 168,104 * *
Mark W. Perry (2)............................................................... 69,927 * *
Lucille Shapiro, Ph.D........................................................... 20,000 * *
James G. Treybig................................................................ 50,100 * *
Gary L. Lauer................................................................... 188,722 * *
Teruyasu Sekimoto............................................................... 108,722 * *
All executive officers and directors as a group (23 persons).................... 9,808,247 6% 6%
<FN>
- ------------------
* Less than 1%.
(1) Unless otherwise indicated, the persons named have sole voting and
investment power over the shares shown as being beneficially owned by them,
subject to community property laws, where applicable. The table includes
the following shares issuable on exercise of options or other convertible
securities that were exercisable on September 5, 1995, or within 60 days
thereafter: Mr. Bishop, 30 shares; Mr. Jacobson, 50,100 shares; Mr.
Jermoluk, 431,930 shares; Mr. Kramlich, 40,100 shares; Mr. McCracken,
1,920,646 shares; Mr. McDivitt, 40,100 shares; Mr. Perry, 32,212 shares;
Dr. Shapiro, 20,000 shares; Mr. Treybig, 50,100 shares; Mr. Lauer, 185,630
shares; Mr. Sekimoto, 106,230 shares; and all directors and executive
officers as a group, 5,306,272 shares.
(2) Includes an aggregate of 15,070 shares held in the name of Mr. Perry's wife
as to which he may be deemed to have shared voting and investment power.
</TABLE>
5
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and equity compensation for the
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company (determined at the end of the fiscal year) for
the three fiscal years ended June 30, 1995.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
FISCAL ------------------ ------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- ---------------------------------------- ------ -------- -------- ------------
<S> <C> <C> <C> <C>
Edward R. McCracken,.................... 1995 $754,884 $690,787 200,100
Chairman and Chief 1994 699,500 556,875 200,000
Executive Officer 1993 636,043 310,000 200,000
Thomas A. Jermoluk,..................... 1995 $648,784 $602,213 300,100
President and Chief 1994 504,082 407,087 160,000
Operating Officer 1993 413,422 210,250 200,000
Robert R. Bishop,....................... 1995 $374,368 $481,404 100
Chairman, Silicon Graphics 1994 320,884 295,429 --
World Trade Corporation(2) 1993 319,210 215,954 --
Gary L. Lauer,.......................... 1995 $299,575 $377,232 100,100
Executive Vice President, 1994 243,178 295,119 100,000
Worldwide Field Operations 1993 209,262 163,700 100,000
Teruyasu Sekimoto,...................... 1995 $478,637 $300,136 50,100
Senior Vice President, 1994 380,426 76,896 40,000
East Asia(2) 1993 314,917 43,119 60,000
<FN>
- ------------------
(1) The Company has no pension, retirement, annuity or similar benefit plan.
(2) The cash compensation for Mr. Bishop is determined in Swiss Francs and for
Mr. Sekimoto in Japanese Yen. The dollar amounts shown are based on the
exchange rates at the times of payment.
</TABLE>
6
<PAGE>
OPTION GRANTS IN FISCAL 1995
The following table provides details regarding all stock options granted to
the named executive officers in fiscal 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
- ------------------------------------------------------------------------------------------ VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION ------------------------
NAME GRANTED YEAR ($/SHARE) DATE 5% 10%
- ---------------------------------------- ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Edward R. McCracken..................... 200,000 3.1% $ 30.375 11/01/04 $ 3,820,535 $ 9,681,985
100 * 24.00 08/02/04 1,509 3,825
Thomas A. Jermoluk...................... 300,000 4.6% 15.1875 11/01/04 10,287,052 19,079,228
100 * 24.00 08/02/04 1,509 3,825
Robert R. Bishop........................ 100 * 24.00 08/02/04 1,509 3,825
Gary L. Lauer........................... 100,000 1.5% 32.75 01/18/05 2,059,630 5,219,507
100 * 24.00 08/02/04 1,509 3,825
Teruyasu Sekimoto....................... 50,000 * 32.75 01/18/05 1,029,815 2,609,753
100 * 24.00 08/02/04 1,509 3,825
<FN>
- ------------------
* Less than 1%.
(1) The options in this table, other than those granted to Mr. Jermoluk in
November 1994, were granted under the 1993 Long-Term Incentive Stock Plan
and have exercise prices equal to the fair market value on the date of
grant. The options granted to Mr. Jermoluk in November 1994 were granted
under the 1985 Plan and have an exercise price of 50% of the fair market
value on the date of grant. See the Report of the Compensation and Human
Resources Committee. The options become exercisable at a rate of 2% per
month over a period of fifty months and expire ten years from the date of
grant. The 100 share options granted in August 1994 were granted to all
employees of the Company in recognition of its financial performance in
fiscal 1994.
(2) Potential realizable value assumes that the stock price increases from the
date of grant until the end of the option term (10 years) at the annual
rate specified (5% and 10%). The 5% and 10% assumed annual rates of
appreciation are mandated by SEC rules and do not represent the Company's
estimate or projection of the future Common Stock price. The Company does
not believe that this method accurately illustrates the potential value of
a stock option.
</TABLE>
OPTION EXERCISES IN FISCAL 1995 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT JUNE 30, 1995 JUNE 30, 1995(2)
ON VALUE --------------------------- --------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. McCracken..................... -- -- 1,836,636 460,080 $60,452,821 $ 8,418,769
Thomas A. Jermoluk...................... 100,000 $ 1,872,163 349,120 504,480 9,503,783 12,200,069
Robert R. Bishop........................ -- -- 20 80 318 1,270
Gary L. Lauer........................... 32,800 794,550 155,220 212,880 3,713,803 3,355,657
Teruyasu Sekimoto....................... 26,000 653,624 92,500 113,200 2,317,516 1,929,895
<FN>
- ------------------
(1) Reflects the difference between the closing market price on the date of
exercise and the option exercise price and may not represent amounts
actually realized by the named individuals.
(2) The amounts in this column reflect the difference between the closing
market price of the Common Stock on June 30, 1995, which was $39.875, and
the option exercise price. The actual value of unexercised options
fluctuates with the market price of the Common Stock.
</TABLE>
7
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act 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 on Form 3 and
changes in ownership on Forms 4 or 5 with the SEC and the New York Stock
Exchange, and to give the Company copies of these filings. Based on the written
representations of its directors and officers and a review of the copies of such
forms furnished to the Company during the fiscal year ended June 30, 1995, the
Company believes that its officers, directors and ten percent stockholders
complied with all Section 16(a) filing requirements.
CERTAIN TRANSACTIONS
NKK U.S.A. Corporation, a wholly-owned subsidiary of NKK Corporation, holds
all of the Company's outstanding Series A Preferred Stock, which it purchased in
1990. The Series A Preferred Stock carries a 3% cumulative annual dividend and
is convertible into Common Stock. During fiscal 1995 NKK converted half of its
shares into Common Stock and sold such shares in the open market; it continues
to hold the balance of its Series A Preferred Shares, with an aggregate
liquidation preference of $17,500,000. NKK is a distributor and value-added
reseller of the Company's products in Japan. During the fiscal year ended June
30, 1995, NKK purchased approximately $26,244,000 in products from the Company.
The Company believes that the terms of its transactions with NKK are no more
favorable to either party than would be available from an unaffiliated party.
James G. Treybig, a current director of the Company, is the President and
Chief Executive Officer of Tandem Computers Incorporated, an OEM distributor of
the Company's products. During the year ended June 30, 1995, the Company
recognized revenue of approximately $55,156,000 from Tandem, primarily from
system sales and related software and technology licenses. The Company believes
that the terms of its transactions with Tandem are no more favorable to either
party than would be available from an unaffiliated party.
Robert A. Lutz, a nominee for election as a director of the Company, is the
President and Chief Operating Officer of Chrysler Corporation, which buys the
Company's products in the ordinary course of its business.
The Company has entered into employment continuation agreements with its
executive officers with the goal of encouraging the continued employment of key
executives in the event of a potential change in control of the Company. Under
the agreements, each executive officer (i) is entitled to a termination payment
equal to two years of his or her compensation if employment with the Company is
terminated within twenty-four months after such a change in control and (ii) is
granted full vesting of options effective after such a change in control.
In February 1995 the Company entered into an employment agreement with
Thomas A. Jermoluk, its President and Chief Operating Officer. The Report of the
Compensation and Human Resources Committee contains a description of that
agreement.
In February 1995, Javaid Aziz joined the Company as its Senior Vice
President, Europe. In the event that the Company terminates Mr. Aziz's
employment before February 1998, he will receive a severance payment equal to
two years base salary. After February 1998, this severance payment will equal
one year's base salary.
In July 1995, the Company entered into an agreement with Robert K. Burgess,
the President of the Company's Alias--Wavefront subsidiary. In the event that
the Company terminates Mr. Burgess' employment before June 30, 1996, other than
for "cause" as defined in the employment continuation agreements described
above, he will receive a severance payment equal to two years' target
compensation. After June 30, 1996, this severance payment will equal one year's
target compensation. In connection with the Company's merger with Alias Research
Inc. in June 1995, the Company also assumed a demand debenture convertible into
shares of the Company's Common Stock at a conversion price of approximately
$8.06. Alias originally issued the debenture to Mr. Burgess in February 1993 and
made him a loan in the principal amount of $400,000 to purchase the debenture.
The loan and the debenture both bear interest at a rate of 8% per annum,
calculated semi-annually and payable in arrears. The loan is payable on demand
and is secured by the debenture. Both the loan and the debenture were
outstanding at August 31, 1995.
8
<PAGE>
In May 1995, Tom Whiteside, President of the Company's subsidiary, MIPS
Technologies, Inc., resigned his position and at that time repaid in full a
relocation loan from the Company in the amount of $166,667. The largest
principal amount outstanding to Mr. Whiteside during fiscal 1995 was $212,500.
In May 1995, the Company made a residential loan to Gary L. Lauer, its
Executive Vice President. The loan bears interest at the rate of 7.12% annually
and is secured by a second mortgage and Mr. Lauer's options to purchase Common
Stock. The loan is due in full on the earliest of the fifth anniversary, the
date Mr. Lauer leaves the Company's employ or the date on which the residence
securing the loan is sold. Payments of principal are to be made in connection
with the sale of shares of the Company's Common Stock. The largest principal
amount outstanding to Mr. Lauer during fiscal 1995 was $1,000,000, of which
$500,000 was outstanding as of August 31, 1995.
In November 1993, Mark W. Perry, a director of the Company, resigned his
position as an officer and employee of the Company. The Company has retained Mr.
Perry as a consultant through October 31, 1995, during which term Mr. Perry's
medical and life insurance benefits continue in effect and his stock options
continue to vest and to be exercisable in accordance with their terms.
REPORT OF THE COMPENSATION
AND HUMAN RESOURCES COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation and Human Resources Committee of the Board of Directors
recommends, subject to the Board's approval, executive compensation and stock
option grants to the Chief Executive Officer. The Committee administers the
Company's stock incentive plans and approves stock option grants for all other
employees. The Committee is currently composed of two independent, non-employee
directors who have no interlocking relationships as defined by the SEC.
COMPENSATION PHILOSOPHY
The Company operates in the highly competitive and rapidly changing high
technology industry. The goals of the Company's compensation program are to
align compensation with the Company's overall business objectives and
performance, to foster teamwork and to enable the Company to attract, retain and
reward employees who contribute to its long-term success. The Committee also
seeks to establish compensation policies that allow the Company flexibility to
respond to changes in its business environment.
COMPENSATION COMPONENTS
Compensation for the Company's executive officers generally consists of
salary, annual incentive and stock option awards. The Committee assesses the
past performance and anticipated future contribution of each executive officer
in establishing the total amount and mix of each element of compensation.
SALARY. The salaries of the executive officers, including the Chief
Executive Officer, are determined annually by the Committee with reference to
several surveys of salaries paid to executives with similar responsibilities at
comparable companies, primarily in the high technology industry. The peer group
for each executive officer is composed of executives whose responsibilities are
similar in scope and content. The Company seeks to set executive compensation
levels that are competitive with the average levels of peer group compensation.
ANNUAL INCENTIVE. The Committee annually reviews and approves an executive
incentive plan. A target, expressed as a percentage of salary, is established
for each officer, based on the scope of his or her responsibility. For fiscal
1995, the targets for executive officers ranged from 35% to 55% of salary. The
actual payment amount is computed as a percentage of that target, based on the
Company's performance in achieving specified objectives. The fiscal 1995 plan
contained a matrix based upon revenue growth and operating margin, reflecting a
range of 33% to 200% of target. Because of the Company's strong financial
performance in fiscal 1995, incentive payments were at 175% of target.
9
<PAGE>
An additional bonus of up to 10% of salary also may be awarded in the
discretion of the Chief Executive Officer to recognize the contributions and
efforts of individual executive officers. No such additional bonuses were
awarded to executive officers in fiscal 1995.
STOCK OPTIONS. Stock option awards are designed to align the interests of
executives with the long-term interests of the stockholders. The Committee
approves option grants subject to vesting periods (usually 50 months) to retain
executives and encourage sustained contributions. The exercise price of most
options is the market price on the date of grant.
The Company is subject to Section 162(m) of the U.S. Internal Revenue Code,
adopted in 1993, which limits the deductibility of certain compensation payments
to its executive officers. The Company does not have a policy requiring the
Committee to qualify all compensation for deductibility under this provision.
The Committee's current view is that any non-deductible amounts will be
immaterial to the Company's financial or tax position, and that the Company
derives substantial benefits from the flexibility provided by the current
system, in which the selection and quantification of performance targets are
modified from year to year to reflect changing conditions. However, the
Committee considers the net cost to the Company in making all compensation
decisions and will continue to evaluate the impact of this provision on its
compensation programs. The Company believes that any compensation expense
incurred in connection with the exercise of stock options granted under its 1993
Long-Term Incentive Stock Plan will continue to be deductible as
performance-based compensation.
COMPENSATION OF CHIEF EXECUTIVE OFFICER AND PRESIDENT
Mr. McCracken's and Mr. Jermoluk's salaries, annual incentive and stock
option grants for fiscal 1995 reflect the Committee's evaluation of their
overall leadership of the Company and their contribution to stockholder value.
The Committee considered, among other factors, the accelerating year-to-year
growth rates of both revenues and profitability at levels above industry
averages for fiscal 1995, the Company's increasing market share in key segments,
the creation of several new ventures to exploit important developing markets,
and the strategic management of the Company's research and development program
as a foundation for product innovation.
In January 1995, the Committee reviewed Mr. McCracken's and Mr. Jermoluk's
salaries, considering the Company's interim financial results as compared to
industry averages, their individual performances and their salary levels
relative to those for comparable positions, primarily in the high technology
industry. Based on this review, the Committee increased Mr. McCracken's
annualized salary from $700,000 to $735,000, and Mr. Jermoluk's from $550,000 to
$675,000, effective January 1, 1995.
In November 1994, Mr. McCracken was granted an option under the 1993
Long-Term Incentive Stock Plan to purchase 200,000 shares of the Company's
Common Stock at the market price on that date. The Board also granted to Mr.
Jermoluk a non-qualified stock option under the Company's 1985 Incentive Stock
Program to purchase 300,000 shares of the Company's Common Stock at $15.1875 per
share, or 50% of the fair market value of the Common Stock on the date of grant.
The discount element of this stock option is being recorded as an expense over
the 50-month vesting schedule. In fiscal 1995 this expense was $729,000. The
Committee based these grants on an evaluation of Mr. McCracken's and Mr.
Jermoluk's overall leadership of the Company, the number of unvested options
held by them, and competitive data for comparable positions within the high
technology industry.
EMPLOYMENT CONTRACT
In February 1995, the Company entered into an employment contract with Mr.
Jermoluk. Mr. Jermoluk joined the Company in 1986, and since then has assumed
steadily increasing responsibilities. He became the Company's Chief Operating
Officer in 1992 and President in January 1994. The contract was unanimously
recommended by the Committee and unanimously approved by the Board of Directors,
with management members abstaining. The Committee and Board believe that the
contract provides strong retention incentives as well as strong incentives for
Mr. Jermoluk to continue to play an important role in the Company's long-term
success.
10
<PAGE>
Under the agreement, Mr. Jermoluk agreed to continue to serve the Company
through at least June 30, 1999, with his compensation determined annually by the
Board or the Committee, provided that for the period from July 1, 1994 to June
30, 1999 such compensation will average not less than $1 million per year (the
"Target Compensation"). If the aggregate value of other consideration received
by Mr. Jermoluk during this period is less than $10 million, he will be paid the
difference provided that he is still employed by the Company at that time. Such
other consideration will include any salary, bonus or other payments in excess
of the Target Compensation, and the value of stock options and restricted stock
that vest during the period. Based on the current market price of the Common
Stock the value of this other consideration is greater than $10 million, so the
Company is not recording compensation expense in respect of this provision. Such
an expense might be required in the event of a substantial reduction in the
market price of the Common Stock.
In approving these arrangements the Board took into consideration the
financial impacts described above. The Board also recognized that any payments
made pursuant to this provision, as well as any compensation expense associated
with stock options granted at less than fair market value, would not be
deductible to the Company for federal income tax purposes to the extent that Mr.
Jermoluk's compensation for any fiscal year exceeded $1 million. The Board
considered, however, that these factors were outweighed by the value to the
Company of a contractual commitment for Mr. Jermoluk's future services. In
addition, the Board anticipates, although of course it cannot assure, that the
long-term value of Mr. Jermoluk's equity incentives will obviate the need to
make a supplemental payment at the end of the period.
COMPENSATION AND
HUMAN RESOURCES COMMITTEE
James A. McDivitt, CHAIRMAN
C. Richard Kramlich
11
<PAGE>
COMPANY STOCK PRICE PERFORMANCE GRAPH
In accordance with SEC rules, the Company is required to present a table
showing a line-graph presentation comparing cumulative, five-year returns on an
indexed basis with a broad equity market index and either a nationally
recognized industry standard or an index of peer companies selected by the
Company. The Company has selected the S&P 500 Index for the broad equity index
and the Hambrecht & Quist ("H&Q") Technology Index as an industry standard for
the five fiscal year period commencing June 30, 1990 and ending June 30, 1995.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SILICON GRAPHICS,
INC. H&Q TECHNOLOGY S&P 500 STOCK INDEX
<S> <C> <C> <C>
Jun-90 100 100 100
Sep-90 70.00 72.34 85.48
Dec-90 72.00 81.59 92.24
Mar-91 106.33 105.88 104.80
Jun-91 75.67 100.60 108.67
Sep-91 113.67 104.85 108.33
Dec-91 120.67 120.62 116.50
Mar-92 110.00 124.63 112.76
Jun-92 89.33 114.31 114.00
Sep-92 100.00 119.18 116.70
Dec-92 152.67 138.75 121.70
Mar-93 152.00 136.72 126.16
Jun-93 199.33 139.66 125.84
Sep-93 229.33 142.15 128.19
Dec-93 264.00 151.41 130.29
Mar-94 257.33 152.78 124.51
Jun-94 236.00 141.70 124.09
Sep-94 274.67 161.66 129.24
Dec-94 332.33 175.74 128.28
Mar-95 377.33 195.60 139.86
Jun-95 425.33 237.29 152.16
</TABLE>
- ------------------
* Assumes $100 invested on June 30, 1990 in the Company's Common Stock, the S&P
500 Stock Index and the H&Q Technology Index, with reinvestment of dividends.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the shares they represent as
the Company or Management may recommend.
Dated: September 21, 1995 BY ORDER OF THE BOARD OF DIRECTORS
[SIG]
William M. Kelly
SECRETARY
12
<PAGE>
[FRONT]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SILICON GRAPHICS, INC.
1995 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Silicon Graphics, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated September 21, 1995, and hereby
appoints Edward R. McCracken and William M. Kelly, or either 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 1995 Annual
Meeting of Stockholders of Silicon Graphics, Inc. to be held on November 1,
1995, at 2:00 p.m. local time, at the Company's principal offices, 2011 North
Shoreline Boulevard, Mountain View, California, and at any adjournment(s)
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.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
<PAGE>
[BACK]
[X] Please mark votes as in this example.
1. ELECTION OF DIRECTORS
Nominees for Class III directors: Allen F. Jacobson, Thomas A. Jermoluk,
James G. Treybig. Nominee for Class II director: Robert A. Lutz.
FOR WITHHELD
[__] [__]
[__]
---------------------------------------------
For all nominees except as noted above
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY
FOR AGAINST WITHHELD
[__] [__] [__]
In their discretion, the proxies are authorized to vote upon such other
matter or matters which may properly come before the meeting and any
adjournment(s) thereof.
Signature: Date:
-------------------------- ---------------
Signature Date:
-------------------------- ---------------
(This Proxy should be marked, dated, signed by the stockholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
[__] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
<PAGE>
INSTRUCTION TO TRUSTEE
SILICON GRAPHICS, INC. ANNUAL MEETING
TO: Montreal Trust Company of Canada, as Trustee
The undersigned holder of Exchangeable Non-Voting Shares of Silicon
Graphics Canada Limited hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement dated September 21, 1995 of
Silicon Graphics, Inc. ("SGI"). I hereby direct you, as Trustee under the
Voting Trust and Exchange Agreement relating to the Exchangeable Shares, to
cast as I have indicated on the reverse side the number of Series E
Preferred Stock votes (the "Directed Votes") that I am entitled as a holder
of Exchangeable Shares to direct you to vote at the SGI 1995 Annual Meeting
of Stockholders to be held on November 1, 1995 at 2:00 p.m. local time
at the principal offices of SGI, 2011 North Shoreline Boulevard, Mountain
View, California, and at any adjournment(s) thereof. You may cast my Directed
Votes in person or by proxy unless I have requested on the reverse side that
you deliver a proxy for such votes to me or my specified representative.
Unless I have so requested a proxy for my Directed Votes, you may vote
according to your discretion (or that of your proxy holder) on any other
matter that may properly come before the meeting.
The Directed Votes will be cast as indicated on the reverse side, or if
no contrary direction is indicated, will be voted FOR the election of
directors and FOR the ratification of the appointment of Ernst & Young LLP
as independent auditors, and as said proxies deem advisable on such other
matters as may properly come before the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
/X/ Please mark votes as in this example.
1. ELECTION OF DIRECTORS. Nominees for Class III Directors: Allen F.
Jacobson, Thomas A. Jermoluk and James G. Treybig. Nominee for Class II
director: Robert A. Lutz
/ / FOR / / WITHHELD / /-------------------------
For all nominees except as noted above.
2. Proposal to ratify the appointment of Ernst & Young LLP as the
independent auditors of the Company.
/ / FOR / / WITHHELD / / ABSTAIN
/ / Check this box only to request a proxy for your Directed Votes. A proxy
is necessary only if you wish to appear at the meeting in person to cast your
Directed Votes or if you want to authorize a specific person other than the
Trustee (or its proxy) to cast your Directed Votes. You must provide the
name, mailing address and phone number of the person to be authorized to cast
your Directed Votes, even if you are requesting the proxy for your own use:
.
- ---------------------------------
(This Instruction to Trustee should be marked, dated and signed by the
stockholder or his attorney authorized in writing, or, if the stockholder is
a corporation, by any officer or attorney thereof duly authorized, and the
corporate seal affixed.)
Signature:----------------------------- Date:-----------------------
Signature:----------------------------- Date:-----------------------
<PAGE>
NOTICE
TO:
ALL HOLDERS OF NON-VOTING EXCHANGEABLE SHARES IN THE
CAPITAL OF SILICON GRAPHICS CANADA LIMITED RESIDENT IN
CANADA
==============================================================================
Enclosed with this Notice, as required by an order dated June 13, 1995 of
the Ontario Securities Commission and an order dated May 30, 1995 of the
Manitoba Securities Commission (collectively the "Orders"), are proxy
materials relating to Silicon Graphics, Inc. ("SGI"), the parent company of
Silicon Graphics Canada Limited (the "Corporation"), and SGI's upcoming
annual meeting of stockholders to be held on November 1, 1995 (the
"Meeting") in partial satisfaction of SGI's obligation pursuant to the
Orders to provide holders of the Corporation's non-voting exchangeable shares
(the "Exchangeable Shares") with a copy of all disclosure material furnished
to holder of SGI's common shares resident in the United States. Materials
relating to SGI are being sent to you because, as a holder of Exchangeable
Shares, you have in essence a participatory interest in SGI rather than the
Corporation, as described more fully below, and as a result, certain
disclosure required to be provided in respect of the Corporation under
applicable Canadian securities legislation would not be meaningful or
relevant to you.
ECONOMIC EQUIVALENCY OF EXCHANGEABLE SHARES AND SGI COMMON SHARES
The Exchangeable Shares have been structured so as to provide holders with
dividend rights that are, as nearly as possible, the equivalent of those
attaching to SGI's common shares. As a holder of Exchangeable Shares, you are
entitled to a dividend from the Corporation payable at the same time as, and
in the Canadian dollar equivalent of, each dividend paid by SGI on an SGI
common share. Further, dividends on the SGI common shares may not be declared
or paid unless the Corporation has sufficient resources available to pay
simultaneous and equivalent dividends on the Exchangeable Shares and the
Corporation simultaneously declares or pays, as the case may be, such
equivalent dividends. In addition, without the prior approval of holders of
Exchangeable Shares as evidenced by not less than two-thirds of the votes
cast at a meeting of such holders at which the holders of at least 50 per
cent of the outstanding Exchangeable Shares at that time are present or
represented by proxy, actions such as distributions of stock dividends,
options, rights and warrants for the purchase of securities or other assets
(other than cash dividends in the ordinary course), reclassifications,
reorganizations and other changes cannot be taken with respect to the SGI
common shares generally without the same or an economically equivalent action
being taken with respect to the Exchangeable Shares.
<PAGE>
RIGHT TO DIRECT VOTING AT MEETINGS OF SGI STOCKHOLDERS
As a holder of Exchangeable Shares, you are entitled, with respect to all
meetings of SGI stockholders at which holders of common shares of SGI are
entitled to vote, to direct Montreal Trust Company of Canada ("Montreal
Trust") to cast one vote for each Exchangeable Share that you own of record
on the record date established for such meetings. However, failure to provide
Montreal Trust with voting instructions will result in no votes being cast on
your behalf.
Please note that in order for your voting instructions relating to matters
that will be considered at the Meeting to be binding on Montreal Trust, the
enclosed Instruction to Trustee must be completed, signed and received by
Montreal Trust by no later than 5:00 p.m. (Toronto time) on October 30,
1995. The Instruction to Trustee should be forwarded to the following address:
Montreal Trust Company of Canada
Corporate Trust Services
151 Front Street West, Suite 605
Toronto, Ontario
M5J 2N1
Attn: Shelly Bloomberg
A holder of Exchangeable Shares who has delivered a duly completed and signed
Instruction to Trustee to Montreal Trust may revoke or amend that Instruction
by delivering to Montreal Trust an instrument in writing executed by the
holder or by his attorney authorized in writing or, if the holder is a
corporation, under its corporate seal or by an officer or attorney thereof
duly authorized. However, in order for the written revocation or amendment to
be effective, it must be received by Montreal Trust at the address set out
above at or prior to 5:00 p.m. (Toronto time) on October 30, 1995.
