ACTEL CORP
DEF 14A, 1997-04-07
PRINTED CIRCUIT BOARDS
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                                [GRAPHIC OMITTED]

                                ACTEL CORPORATION

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                            To be held on May 2, 1997

TO THE SHAREHOLDERS:

     NOTICE IS HEREBY  GIVEN that the Annual  Meeting of  Shareholders  of Actel
Corporation,  a California  corporation (the "Company"),  will be held on May 2,
1997,  at 9:00 a.m.,  local  time,  at the  principal  executive  offices of the
Company, located at 955 East Arques Avenue, Sunnyvale, California 94086, for the
following purposes:

          1. To elect  directors  to serve  until  the next  Annual  Meeting  of
     Shareholders and until their successors are elected.

          2.   To approve a change in the Company's state of incorporation  from
     California to Nevada.

          3. To  approve an  amendment  to the  Company's  1993  Employee  Stock
     Purchase Plan  increasing the number of shares of Common Stock reserved for
     issuance under such Plan by 250,000.

          4. To approve an  amendment to the  Company's  1993  Directors'  Stock
     Option Plan  increasing  the number of shares of Common Stock  reserved for
     issuance under such Plan by 90,000.

          5. To ratify  the  appointment  of Ernst & Young LLP as the  Company's
     independent auditors for the fiscal year ending December 28, 1997.

          6.   To transact  such other  business as may properly come before the
     Annual Meeting or any adjournments thereof.

     Only shareholders of record at the close of business on March 12, 1997, are
entitled to notice of and to vote at the Annual Meeting.

     All  shareholders  are  cordially  invited to attend the Annual  Meeting in
person.  However, to assure your  representation at the Annual Meeting,  you are
urged to sign and return the  enclosed  Proxy as  promptly  as  possible  in the
postage-prepaid,   self-addressed   envelope  enclosed  for  that  purpose.  Any
shareholder  attending  the  Annual  Meeting  may  vote in  person  even if such
shareholder has returned a proxy.

                                              BY ORDER OF THE BOARD OF DIRECTORS

                                              David L. Van De Hey
                                              Secretary

Sunnyvale, California
March 28, 1997



                                ACTEL CORPORATION

                     --------------------------------------

                               PROXY STATEMENT FOR

                       1997 ANNUAL MEETING OF SHAREHOLDERS


     The  enclosed  Proxy is  solicited  on behalf of the Board of  Directors of
Actel  Corporation,  a California  corporation (the  "Company"),  for use at the
Annual Meeting of Shareholders to be held on Friday,  May 2, 1997, at 9:00 a.m.,
local time, and at any adjournments  thereof,  for the purposes set forth herein
and in the  accompanying  Notice of Annual Meeting of  Shareholders.  The Annual
Meeting will be held at the principal  executive  offices of the Company,  which
are  located  at 955  East  Arques  Avenue,  Sunnyvale,  California  94086.  The
Company's telephone number at that address is (408) 739-1010.

     These proxy solicitation  materials were mailed on or about April 2, 1997,
to all shareholders entitled to vote at the Annual Meeting.


                 INFORMATION CONCERNING SOLICITATION AND VOTING

Record Date

     Holders of record of the Company's Common Stock at the close of business on
March 12, 1997 (the "Record Date"), are entitled to notice of and to vote at the
Annual Meeting.  At the Record Date,  20,809,866  shares of the Company's Common
Stock were issued and outstanding.

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 (i)  delivering  to the Secretary of the
Company a written  notice of revocation or a duly executed proxy bearing a later
date or (ii) attending the Annual Meeting and voting in person.

Voting and Solicitation

     Each shareholder voting for the election of directors  (Proposal No. 1) may
cumulate the  shareholder's  votes and (i) give one  candidate a number of votes
equal to the  number of  directors  to be  elected  multiplied  by the number of
shares that the  shareholder  is entitled  to vote or (ii)  distribute  the same
total  number of votes  among as many  candidates  as the  shareholder  chooses,
provided  that votes cannot be cast for more than five  directors.  However,  no
shareholder  shall be entitled to cumulate  votes unless the  candidates'  names
have been placed in nomination prior to the voting and the  shareholder,  or any
other  shareholder,  has given notice at the Annual  Meeting to the Inspector of
Elections  prior to the voting of the  intention to cumulate  the  shareholder's
votes. In the event that cumulative voting is invoked,  the proxy holders intend
to vote  all  proxies  received  by them in such a  manner  as will  ensure  the
election of 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.
On all other  matters,  each  shareholder is entitled to one vote for each share
held.

     This solicitation of proxies is made by the Company,  and all related costs
will be borne by the Company.  In addition,  the Company may reimburse brokerage
firms and  other  persons  representing  beneficial  owners of shares  for their
expenses in forwarding solicitation material to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telefacsimile,
or  personal  solicitation,  without  payment  of  additional  compensation,  by
directors, officers, or regular employees of the Company.

Required Vote

     The quorum  required  to  conduct  business  at the  Annual  Meeting or any
adjournments  thereof is a majority  of the  shares of Common  Stock  issued and
outstanding  on the Record  Date.  If a quorum is present,  the five  candidates
receiving the highest  number of affirmative  votes shall be elected  directors;
votes against any candidate and votes withheld  shall have no legal effect.  The
affirmative  vote of a majority of the shares "entitled to vote" (whether or not
represented at the Annual  Meeting) shall be required to approve  Proposal No. 2
(Reincorporation  into Nevada). The affirmative vote of a majority of the shares
represented  at the Annual  Meeting and  "entitled to vote" shall be required to
approve  Proposals No. 3 (Approval of Amendment to 1993 Employee  Stock Purchase
Plan) and No. 4 (Approval of Amendment to 1993 Directors' Stock Option Plan). On
all other proposals set forth herein,  the  affirmative  vote of the majority of
the shares  represented  at the Annual  Meeting and "voting" shall be the act of
the shareholders.

         Although there is no definitive  statutory or case law in California as
to the proper treatment of abstentions and broker nonvotes, the Company believes
that both  abstentions  and broker  nonvotes  should be counted for  purposes of
determining the presence or absence of a quorum for the transaction of business.
The Company also believes that neither abstentions nor broker nonvotes should be
counted for purposes of determining  the total number of shares  represented and
"voting" on each matter  submitted  to a vote of the  shareholders.  The Company
further  believes that abstentions  should be counted,  but that broker nonvotes
should not be counted,  for purposes of  determining  the total number of shares
represented and "entitled to vote" on any matter.  In the absence of controlling
precedent to the contrary,  the Company intends to treat  abstentions and broker
nonvotes in the manner described in this paragraph.

Deadline for Receipt of Shareholder Proposals

     Proposals of  shareholders of the Company that are intended to be presented
by such  shareholders at the Company's 1998 Annual Meeting of Shareholders  must
be  received  by the  Company no later  than  December  1, 1997,  in order to be
considered  for inclusion in the proxy  statement and form of proxy  relating to
that meeting.

Share Ownership

     The following table sets forth certain information regarding the beneficial
ownership  of the  Company's  Common  Stock by each  person  who is known to the
Company to have owned  beneficially  more than five  percent of the  outstanding
shares of the Company's Common Stock as of the Record Date:
<TABLE>
<CAPTION>
                                                                   Amount and Nature of
             Name and Address of Beneficial Owner                  Beneficial Ownership     Percent of Class (1)
- ---------------------------------------------------------------   -----------------------  -----------------------

<S>                                                                    <C>                            <C>
FMR Corp....................................................           1,389,200 (2)                  6.7%
     80 Devonshire Street
     Boston, Massachusetts  02109

Putnam Investments, Inc.....................................           1,908,720 (3)                  9.2%
     One Post Office Square
     Boston, Massachusetts  02109

RCM Capital Management, L.L.C...............................           1,168,300 (4)                  5.6%
     Four Embarcadero Center, Suite 2900
     San Francisco, California  94111

Texas Instruments Incorporated..............................           2,631,578 (5)                  12.6%
     13500 North Central Expressway
     Dallas, Texas  75243

- ---------------------------------------

<FN>
(1)      Calculated as a percentage of shares of Common Stock  outstanding as of
         the Record Date.

(2)      As reported by the beneficial  owner as of February 28, 1997, FMR Corp.
         had sole voting power with respect to 73,300 shares of Common Stock and
         sole  dispositive  power with  respect  to all  shares of Common  Stock
         beneficially  owned. This number includes 1,315,900 shares beneficially
         owned  by  Fidelity  Management  &  Research   Corporation   ("Fidelity
         Management")  as a result  of its  serving  as  investment  adviser  to
         various  investment   companies  registered  under  Section  8  of  the
         Investment  Company  Act of 1940 and serving as  investment  adviser to
         certain  other funds that are  generally  offered to limited  groups of
         investors;  and 73,300 shares beneficially owned by Fidelity Management
         Trust Company  ("Fidelity Trust") as a result of its serving as trustee
         or managing agent for various private  investment  accounts,  primarily
         employee  benefit plans,  and serving as investment  adviser to certain
         other funds that are generally  offered to limited groups of investors.
         The ownership of one investment  company,  Fidelity Select  Electronics
         Portfolio,  amounted to 987,000 shares of Common Stock.  As reported by
         the  beneficial  owner in a Schedule 13G filed with the  Securities and
         Exchange  Commission  ("SEC") and dated  February  14,  1997,  Fidelity
         Management  and Fidelity  Trust are  wholly-owned  subsidiaries  of FMR
         Corp. Edward C. Johnson 3d owns 12.0% and Abigail P. Johnson owns 24.5%
         of the aggregate  outstanding  voting stock of FMR Corp.  Through their
         ownership  of voting  common  stock and  execution  of a  shareholders'
         voting  agreement,  members of the Johnson family may be deemed,  under
         the  Investment  Company Act of 1940, to form a controlling  group with
         respect to FMR Corp.,  which controls Fidelity  Management and Fidelity
         Trust.  In  addition,  Mr.  Johnson  is  Chairman  of  FMR  Corp.  As a
         consequence  of  his  control  of  FMR  Corp.,  Mr.  Johnson  has  sole
         dispositive  power  over the  shares  owned  beneficially  by  Fidelity
         Management,  and sole  voting  and  dispositive  power  over the shares
         beneficially owned by Fidelity Trust.

(3)      As reported by the  beneficial  owners as of February  28,  1997,  in a
         Schedule  13G  filed  with  the SEC and  dated  March 7,  1997,  Putnam
         Investments,  Inc.  ("PI") had  shared  voting  power  with  respect to
         271,800  shares  of Common  Stock and  shared  dispositive  power  with
         respect to all of the shares of Common Stock beneficially owned; Putnam
         Investments Management,  Inc. ("PIM") had shared dispositive power with
         respect to 1,579,120  shares of Common Stock;  and The Putnam  Advisory
         Company,  Inc.  ("PAC") had shared voting power with respect to 271,800
         shares of Common  Stock and shared  dispositive  power with  respect to
         329,600 shares of Common Stock.  PIM and PAC are registered  investment
         advisers  and  wholly-owned  subsidiaries  of PI. PI is a  wholly-owned
         subsidiary of Marsh & McLennan Companies, Inc.

 (4)     As  reported by the  beneficial  owner as of December  31,  1996,  in a
         Schedule  13G filed with the SEC and dated  February  3, 1997,  the RCM
         Capital  Management,  L.L.C. ("RCM Capital") had sole voting power with
         respect to 1,033,300  shares of Common Stock,  sole  dispositive  power
         with  respect  to  1,133,300   shares  of  Common  Stock,   and  shared
         dispositive  power with respect to 55,000 shares of Common  Stock.  RCM
         Limited  L.P. is the  Managing  Agent of RCM  Capital,  and RCM General
         Corporation  is the General  Partner of RCM Limited L.P. RCM Capital is
         an investment  adviser  registered  under Section 203 of the Investment
         Advisers Act of 1940. As reported by Dresdner Bank AG ("Dresdner") in a
         Schedule 13G filed with the SEC and dated February 7, 1997, RCM Capital
         is a  wholly-owned  subsidiary of Dresdner,  an  international  banking
         organization headquartered in Frankfurt, Germany.

(5)      On March  31,  1995,  the  Company  completed  its  acquisition  of the
         antifuse field  programmable  gate array business of Texas  Instruments
         Incorporated  ("TI").  As part of the  consideration  for the  business
         acquired,  the  Company  issued  to TI  1,000,000  shares  of  Series A
         Preferred Stock,  which was convertible into 2,631,578 shares of Common
         Stock.  TI converted the Preferred Stock into Common Stock on March 12,
         1997.
</FN>
</TABLE>


                     PROPOSAL NO. 1 -- ELECTION OF DIRECTORS

Nominees

     A board of five  directors is to be elected at the Annual  Meeting.  Unless
otherwise  instructed,  the proxy holders will vote the proxies received by them
for the Company's  nominees named below. If any nominee of the Company is unable
or  declines  to serve as a  director  at the time of the  Annual  Meeting,  the
proxies  will be voted for any  nominee who shall be  designated  by the present
Board of Directors to fill the vacancy.  The Company is not aware of any nominee
who will be unable or will decline to serve as a director. The term of office of
each person  elected as a director will continue  until the next Annual  Meeting
and until a successor has been elected.

     The Board of Directors recommends that shareholders vote "FOR" the nominees
listed below:
<TABLE>
<CAPTION>
                                                                                                          Director
          Name of Nominee              Age                      Principal Occupation                        Since
- ------------------------------------- -----  -----------------------------------------------------------  ----------

<S>                                    <C>                                                                   <C>
John C. East.......................    52    President and Chief Executive Officer of the Company            1988

Keith B. Geeslin (1)...............    44    General Partner, Sprout Group                                   1990

Jos C. Henkens (1)(2)..............    44    General Partner, Advanced Technology Ventures                   1988

Frederic N. Schwettmann (2)........    57    President and Chief Operating Officer,                          1990
                                                Read-Rite Corporation

Robert G. Spencer (2)..............    53    Principal, The Spencer Group                                    1989

- ---------------------------------------

<FN>
(1)       Member of Audit Committee.

(2)       Member of Compensation Committee.
</FN>
</TABLE>

     Mr. East has served as President,  Chief Executive Officer,  and a director
of the Company  since  December  1988.  Mr. East also serves,  at the  Company's
request, as a director of Adaptec, Inc. and a private company.

     Mr.  Geeslin has been a director of the  Company  since March 1990.  He has
been a general  partner  of Sprout  Group,  the  venture  capital  affiliate  of
Donaldson,  Lufkin & Jenrette Securities  Corporation,  for the past five years.
Mr. Geeslin also serves as a director of SDL  Incorporated  and various  private
companies.

     Mr.  Henkens has been a director of the Company  since April 1988.  He also
served as a director of the Company from October 1985 to July 1986.  Mr. Henkens
has been a general partner of Advanced  Technology  Ventures,  a venture capital
firm, for the past ten years.  Mr. Henkens also serves as a director of Credence
Systems Corporation, ParcPlace-Digitalk, Inc., and various private companies.

     Mr. Schwettmann has been a director of the Company since April 1990. He has
been  President,   Chief  Operating   Officer,   and  a  director  of  Read-Rite
Corporation,  the leading  independent  supplier of thin-film magnetic recording
heads for Winchester  disk drives,  since May 1993.  From June 1990 to May 1993,
Mr. Schwettmann served on the Company's Board of Directors as the representative
of Hewlett-Packard  Company,  where he was Vice President and General Manager of
the Circuit Technologies Group. Mr. Schwettmann also serves as a director of SDL
Incorporated.

     Mr.  Spencer has been a director of the Company since February 1989. He has
been the principal of The Spencer  Group,  a consulting  firm, for the past five
years.

     There is no family  relationship  between any director or executive officer
of the Company and any other director or executive officer of the Company.

Board Meetings and Committees

     During the Company's  1996 fiscal year,  which ended December 29, 1996, the
Board of Directors  held five meetings,  the Board's Audit  Committee held three
meetings,  and the Board's Compensation Committee held six meetings. No director
attended  fewer  than 75% of the  aggregate  of (i) the  number of  meetings  of
regularly  scheduled and special meetings of the Board of Directors and (ii) the
total  number of meetings  held by all  committees  of the Board of Directors on
which he served.

     The Audit  Committee,  which  currently  consists  of Messrs.  Geeslin  and
Henkens,  reviews the results and scope of the audit and other services provided
by  the  Company's  independent  auditors.  The  Compensation  Committee,  which
currently  consists  of Messrs.  Henkens,  Schwettmann,  and  Spencer,  approves
salary, benefit, and incentive compensation matters. The Board of Directors does
not have a nominating  committee or a committee  performing  the  functions of a
nominating committee.

Director Compensation

     Cash Compensation

     Since the Company's initial public offering in 1993,  directors who are not
employees of the Company receive compensation for their services as directors at
the rate of $1,500 per Board meeting  attended and $1,000 per committee  meeting
attended.  In addition,  directors are reimbursed  for reasonable  out-of-pocket
expenses  incurred  in the  performance  of  their  duties.  Beginning  in 1996,
nonemployee directors also receive an annual retainer of $12,000.

     1993 Directors' Stock Option Plan

     The  Company's  1993  Directors'  Stock Option Plan (the  "Director  Plan")
provides for the grant of nonstatutory stock options to nonemployee directors of
the  Company.  Four  of  the  Company's  directors  (Messrs.  Geeslin,  Henkens,
Schwettmann,  and Spencer) are currently eligible to receive option grants under
the Director  Plan. For a summary of the material terms of the Director Plan, as
well as disclosure  regarding the approximate dollar value and number of options
to purchase  shares that were allocated to directors  under the Director Plan in
the last fiscal  year,  see  "PROPOSAL  NO. 4 -- APPROVAL OF  AMENDMENT  TO 1993
DIRECTORS' STOCK OPTION PLAN."


                  PROPOSAL NO. 2 -- REINCORPORATION INTO NEVADA

Introduction

     For the reasons set forth below,  the Board of  Directors  believe that the
best  interests of the Company and its  shareholders  will be served by changing
the state of  incorporation  of the  Company  from  California  to  Nevada  (the
"Proposed  Reincorporation").  Shareholders  are  urged  to read  carefully  the
following sections of this Proxy Statement, including the exhibit, before voting
on  the  Proposed   Reincorporation.   In  this   discussion   of  the  Proposed
Reincorporation,  the term "Actel California" refers to the existing  California
corporation  and the term "Actel  Nevada"  refers to the new Nevada  corporation
that is the proposed successor to Actel California.

     The change in the state of  incorporation of the Company from California to
Nevada will be effected by the Agreement and Plan of Merger by and between Actel
California  and Actel  Nevada,  a copy of which is attached  hereto as Exhibit A
(the "Merger  Agreement").  Pursuant to the Merger  Agreement,  Actel California
will merge with and into  Actel  Nevada,  and Actel  Nevada,  under its  current
Articles of  Incorporation,  will  continue as the surviving  corporation.  Each
outstanding  share  of Actel  California  Common  Stock  will  automatically  be
converted into one share of Actel Nevada Common Stock upon the effective date of
the merger.  Shareholders of Actel California will have no dissenters' rights of
appraisal  with  respect  to  the  Proposed  Reincorporation.  See  "Significant
Differences  Between the  Corporation  Laws of California and Nevada - Appraisal
Rights."

Principal Reasons for the Proposed Reincorporation

     Nevada follows a policy of encouraging  incorporation in that state and, in
furtherance of that policy, has adopted  comprehensive,  flexible corporate laws
responsive to the legal and business needs of  corporations  organized under its
laws. These laws include provisions that, in the judgment of the Company's Board
of  Directors,  will allow the Company to better  protect the  interests  of its
shareholders in situations involving a potential change in corporate control. In
addition,   although  many   California   corporations   have  in  recent  years
reincorporated  in Delaware,  the cost of  maintaining a corporation as a Nevada
corporation is significantly  less than for a Delaware  corporation,  and Nevada
law provides much of the same flexibility as Delaware.  Other  corporations have
also  initially   chosen  Nevada  for  their  state  of  incorporation  or  have
subsequently  changed their corporate  domicile to Nevada in a manner similar to
that proposed by the Company.

Antitakeover Implications

     Nevada, like many other states,  permits a corporation to adopt a number of
measures through amendment of the corporate charter or bylaws or otherwise,  and
provides  default  legal  provisions  that  apply  unless  the  corporation  has
affirmatively   chosen  to  opt  out,   designed   to  reduce  a   corporation's
vulnerability to unsolicited takeover attempts. The Proposed  Reincorporation is
not being  proposed in order to prevent  such a change in control,  nor is it in
response  to any  present  attempt  known to the Board of  Directors  to acquire
control of the Company, obtain representation on the Board of Directors, or take
significant action that affects the Company.

     In the  discharge of its fiduciary  obligations  to its  shareholders,  the
Board of  Directors  has  evaluated  the  Company's  vulnerability  to potential
unsolicited bidders. In the course of such evaluation, the Board of Directors of
the Company has  considered  or may  consider  in the future  certain  defensive
strategies  designed  to  enhance  the  Board's  ability  to  negotiate  with an
unsolicited  bidder.  These  strategies  include,  but are not  limited  to, the
adoption of a shareholder rights plan,  severance  agreements for its management
and key  employees  that become  effective  upon the  occurrence  of a change in
control of the Company, and the authorization of preferred stock, the rights and
preferences of which are determined by the Board of Directors.

     Certain effects of the Proposed  Reincorporation  may be considered to have
antitakeover  implications  simply by virtue of the  Company  being  subject  to
Nevada  law.  For  example,  Sections  78.411 to 78.444  of the  Nevada  General
Corporation  Law,  from which Actel Nevada does not intend to opt out,  restrict
certain "combinations" with "interested  stockholders" for three years following
the date that a person  becomes an interested  stockholder,  unless the Board of
Directors has approved  either the business  combination  or the  transaction by
which the interested  stockholder became an interested  stockholder prior to the
time such person became an interested person.  Even after the three year period,
such  combinations  are  restricted  unless  certain  tests  are  satisfied.  In
responding to an unsolicited  bidder,  the Nevada General  Corporation  Law also
authorizes  directors to consider not only the  interests of  stockholders,  but
also the interests of employees, suppliers, creditors, customers, the economy of
the state and nation, the interests of the community and society in general, and
the  long-term  as well  as  short-term  interests  of the  corporation  and its
stockholders,  including the possibility that these interests may be best served
by the continued independence of the corporation.  For a discussion of these and
other  differences  between the laws of California and Nevada,  see "Significant
Differences Between the Corporation Laws of California and Nevada" below.

     The Board of Directors  believes that unsolicited  takeover attempts may be
unfair or disadvantageous to the Company and its shareholders because:

          (a)  a  nonnegotiated  takeover bid may be timed to take  advantage of
     temporarily depressed stock prices;

          (b)  a  nonnegotiated  takeover  bid may be designed to  foreclose  or
     minimize the possibility of more favorable competing bids; or

          (c) a nonnegotiated takeover bid may involve the acquisition of only a
     controlling   interest  in  the  Company's  stock,  without  affording  all
     shareholders the opportunity to receive the same economic benefits.

     By contrast,  in a transaction  in which an acquiror must negotiate with an
independent  board of  directors,  the board can and should take  account of the
underlying and long-term  values of assets,  the  possibilities  for alternative
transactions  on more  favorable  terms,  possible  advantages  from a  tax-free
reorganization, anticipated favorable developments in the corporation's business
not yet  reflected  in the  stock  price,  and  equality  of  treatment  for all
shareholders.

     Despite  the  belief  of the  Board  of  Directors  as to the  benefits  to
shareholders   of  the   Proposed   Reincorporation,   such   proposal   may  be
disadvantageous  to the extent that it has the effect of  discouraging  a future
takeover  attempt  that is not approved by the Board of  Directors,  but which a
majority of the  shareholders may deem to be in their best interests or in which
shareholders  may  receive  a  substantial  premium  for their  shares  over the
then-current  market value or over their cost basis in such shares.  As a result
of such effects of the Proposed Reincorporation,  shareholders who might wish to
participate in a tender offer may not have an opportunity to do so. In addition,
to the extent that such  provisions  enable the Board of  Directors  to resist a
takeover  or a  change  in  control  of the  Company,  they  could  make it more
difficult to change the existing Board of Directors and management.

No Change in the Board Members,  Business,  Management, or Location of Principal
Facilities of the Company; Certain Changes to Name and to Employee Plans

     The Proposed  Reincorporation will effect a change in the legal domicile of
the Company and other changes of a legal nature,  certain of which are described
in this Proxy  Statement.  The Proposed  Reincorporation  will not result in any
change in the  business,  management,  fiscal year,  assets or  liabilities,  or
location of the principal  facilities of the Company. The five directors who are
currently  the directors of Actel  California  will continue as the directors of
Actel Nevada.  All employee benefit and stock option plans of Actel  California,
including the 1986 Incentive Stock Option Plan, the 1993 Employee Stock Purchase
Plan,  the  1993  Directors'  Stock  Option  Plan,  and the  1995  Employee  and
Consultant  Stock Plan,  will be continued by Actel Nevada and each  outstanding
option to  purchase  shares of Actel  California  stock  will  automatically  be
converted  into an option to  purchase an  equivalent  number of shares of Actel
Nevada stock on the same terms and subject to the same  conditions.  The name of
the Company will remain Actel Corporation.

The Charter and Bylaws of Actel California and Actel Nevada

     The provisions of the Actel Nevada Articles of Incorporation are similar to
those of the Actel California  Articles of  Incorporation in most respects.  The
material   changes  that  have  been  made  in  the  Actel  Nevada  Articles  of
Incorporation  as compared with the Actel  California  Articles of Incorporation
are described below in this section or under  "Significant  Differences  Between
the Corporation Laws of California and Nevada."

     Authorized Stock

     The Articles of  Incorporation  of Actel  California  authorize  35,000,000
shares  of  capital  stock,  $.01 par  value,  of which  30,000,000  shares  are
designated Common Stock and 5,000,000 shares are designated Preferred Stock. The
Articles of Incorporation of Actel Nevada authorize 60,000,000 shares of capital
stock,  $.001 par value, of which 55,000,000  shares are designated Common Stock
and 5,000,000 shares are designated Preferred Stock.

     Monetary Liability of Directors

     The Articles of  Incorporation  of Actel  California  and Actel Nevada both
provide for the  elimination  or  limitation of personal  monetary  liability of
directors to the fullest extent permissible under the laws of each corporation's
respective  state  of  incorporation.  The laws of  Nevada  and  Actel  Nevada's
Articles of  Incorporation  also permit the  elimination  or  limitation  of the
liability of officers of the Company.  Nevada permits liability to be limited to
a greater extent than does California law. See "Significant  Differences Between
the Corporation Laws of California and Nevada" below.

     Indemnification

     The   indemnification   provisions  of  Actel   California's   Articles  of
Incorporation and Bylaws are  substantially  similar to those of the Articles of
Incorporation and Bylaws of Actel Nevada, though Actel Nevada has placed certain
of these provisions in the Articles of Incorporation  rather than in the Bylaws.
These  provisions in Actel  Nevada's  Articles of  Incorporation  state that the
Company shall  indemnify  directors and officers in connection  with any action,
suit, or proceeding to the fullest extent permitted by law for acts as directors
or  officers  (of Actel  Nevada or of a  predecessor  to Actel  Nevada,  or as a
director,  officer,  employee,  or agent of another enterprise at the request of
the  Company),  and that the Company shall advance the expenses of directors and
officers in advance of the final disposition of any action,  suit, or proceeding
upon  receipt of an  undertaking  by the director or officer to repay the amount
advanced if a court  ultimately  determines  that the director or officer is not
entitled to  indemnification.  Similar  provisions  also appear in the Bylaws of
both Actel California and Actel Nevada.

     While the  Bylaws of both  Actel  California  and Actel  Nevada  permit the
Company to obtain  insurance on behalf of directors,  officers,  employees,  and
agents,  Actel Nevada's  Bylaws also permit the Company to make other  financial
arrangements  on behalf  of any such  person  for any  liabilities  or  expenses
incurred in such capacity. See "Significant  Differences Between the Corporation
Laws of California and Nevada" below.

Significant Differences Between the Corporation Laws of California and Nevada

     The  General  Corporation  Laws of  California  and  Nevada  differ in many
respects.  It is not  practical  to  summarize  all  differences  in this  Proxy
Statement, but the principal differences that could materially affect the rights
of shareholders are discussed below.

     Size of the Board of Directors

     Under  California law,  changes in the number of directors or, if set forth
in the articles of incorporation or bylaws, the range in the number of directors
must in general be  approved by a majority of the  outstanding  shares,  but the
board of directors may fix the exact number of directors  within a stated range,
if authorized.  Nevada law permits not only the  stockholders but also the board
of directors  acting  independently of the stockholders to change the authorized
number,  or the range,  of  directors  by  amendment  to the bylaws,  unless the
directors  are not  authorized to amend the bylaws or the number of directors is
fixed in the articles of incorporation  (in which case a change in the number of
directors  may be made  only  by  amendment  to the  articles  of  incorporation
following  approval  of  such  change  by the  stockholders).  The  Articles  of
Incorporation  of Actel Nevada provide that the number of directors  shall be as
specified  in the Bylaws.  The ability of the Board of  Directors,  under Nevada
law, to alter the size of the Board  without  stockholder  approval  enables the
Company to respond quickly to a potential opportunity to attract the services of
a qualified director or to eliminate a vacancy for which a suitable candidate is
not available.  If the Proposed  Reincorporation is approved, the five directors
of Actel California will continue as directors of Actel Nevada and the Bylaws of
Actel Nevada will initially provide for a five member Board of Directors.

     Cumulative Voting

     California law generally  provides that if any shareholder has given notice
of his or her  intention to cumulate  votes for the election of  directors,  any
other  shareholder  of the  corporation  is also entitled to cumulate his or her
votes at such election.

     Under Nevada law, cumulative voting is not mandatory, and cumulative voting
rights  must  be  provided  in a  corporation's  articles  of  incorporation  if
stockholders  are to be entitled to cumulative  voting  rights.  The Articles of
Incorporation of Actel Nevada do not provide for cumulative voting.

     California  law  permits  a  corporation  that  is  listed  on  a  national
securities exchange,  or that is listed on the Nasdaq National Market and has at
least 800 stockholders as of the record date for the  corporation's  most recent
annual  meeting of  shareholders,  to amend its  articles or bylaws to eliminate
cumulative  voting by approval of the board of directors and of the  outstanding
shares  voting  together  as a class.  Actel  California's  current  Articles of
Incorporation have eliminated cumulative voting.

     Power to Call Special Shareholders' Meetings

     Under  California law, a special  meeting of shareholders  may be called by
(a) the board of directors,  (b) the chairman of the board,  (c) the  president,
(d) the  holders  of shares  entitled  to cast not less than ten  percent of the
votes at such meeting,  or (e) such additional  persons as are authorized by the
articles of incorporation or the bylaws.  Under Nevada law, a special meeting of
stockholders may be called as set forth in the bylaws.  Although permitted to do
so, the Bylaws of Actel Nevada do not  eliminate  the right of  stockholders  to
call a special meeting of stockholders;  instead, the Bylaws authorize the Board
of  Directors,  the  President,  or the  holders of at least ten  percent of the
outstanding  capital stock to call a special meeting of stockholders.  Following
the  Proposed  Reincorporation,  the Board of  Directors  of Actel  Nevada could
(although  it has no  current  intention  to do so) amend the Bylaws to limit or
eliminate the right of stockholders  to call a special meeting of  stockholders.
The right of the  stockholders to call a special meeting is not set forth in the
Articles  of  Incorporation  of  Actel  Nevada,  which  may be  amended  only by
stockholder vote or written consent,  and therefore such right may be limited or
eliminated  by  amendment  of the  Bylaws  by the Board of  Directors.  Any such
limitation could make it more difficult for stockholders to initiate action that
is opposed by the Board of  Directors.  Such action on the part of  stockholders
could  include  the  removal  of  an  incumbent  director,  the  election  of  a
stockholder  nominee as a director,  or the  implementation  of a rule requiring
stockholder ratification of specific defensive strategies that have been adopted
by the Board of Directors with respect to unsolicited takeover bids. The ability
of the Board of Directors  under  Nevada law to limit or eliminate  the right of
stockholders  to  initiate  action  at  stockholder  meetings  may  make it more
difficult to change the existing Board of Directors and management.

     Elimination of Actions by Written Consent of Shareholders

     Under  California  and Nevada  law,  shareholders  may execute an action by
written  consent in lieu of a  shareholder  meeting.  While Nevada law permits a
corporation  to  eliminate  such  actions by written  consent in its articles of
incorporation  or  bylaws,  the  Articles  and  Bylaws  of Actel  Nevada  do not
currently prohibit actions by written consent of the stockholders,  although the
Board of Directors  could amend the Bylaws in this  respect.  The ability of the
Board  of  Directors  under  Nevada  law to  limit  or  eliminate  the  right of
stockholders to initiate action by written consent may make it more difficult to
change the existing Board of Directors and management.

     Business Combinations

     In the last  several  years,  a number of states,  including  Nevada,  have
adopted  special laws designed to make certain kinds of  "unfriendly"  corporate
takeovers,  or other transactions involving a corporation and one or more of its
significant stockholders, more difficult.

     Sections 78.411 to 78.444 of the Nevada General  Corporation Law prohibit a
Nevada  corporation  from  engaging  in  a  "combination"  with  an  "interested
stockholder"  for three years  following  the date that such  person  becomes an
interested  stockholder and place certain restrictions on such combinations even
after the  expiration of the  three-year  period.  With certain  exceptions,  an
interested  stockholder  is a  person  or  group  that  owns  10% or more of the
corporation's  outstanding  voting power  (including stock with respect to which
the person has voting  rights  and any rights to acquire  stock  pursuant  to an
option, warrant,  agreement,  arrangement, or understanding or upon the exercise
of  conversion  or  exchange  rights) or is an  affiliate  or  associate  of the
corporation  and was the owner of 10% or more of such  voting  stock at any time
within the previous three years.

     For  purposes  of  Sections  78.411 to 78.444,  the term  "combination"  is
defined broadly to include mergers of the corporation or its  subsidiaries  with
the  interested  stockholder;  sales or  other  dispositions  to the  interested
stockholder  of assets of the  corporation  or a  subsidiary  equal to 5% of the
aggregate  value of all assets of the  corporation,  equal to 5% of the value of
all  outstanding  shares  of  the  corporation,   or  representing  10%  of  the
corporation's  earning  power or net  income;  the  issuance  or transfer by the
corporation  or a  subsidiary  of  shares  equal  to  5% of  the  value  of  all
outstanding  shares of the  corporation  to the interested  stockholder  (except
under the exercise of warrants or rights to purchase  shares offered or in a pro
rata  distribution);  the adoption of any plan of liquidation of the corporation
proposed  by or under any  agreement,  arrangement,  or  understanding  with the
interested stockholder;  any reclassification,  recapitalization,  merger of the
corporation  with any of its  subsidiaries,  or other  transaction  that has the
effect of increasing the proportionate  ownership of the interested stockholder;
or  receipt  by  the  interested   stockholder  (except   proportionately  as  a
stockholder),  directly  or  indirectly,  of any  loans,  advances,  guarantees,
pledges, or other financial  assistance or tax advantages provided by or through
the corporation.  These  prohibitions also apply to affiliates and associates of
the interested stockholder.

     The  three-year  moratorium  imposed on business  combinations  by Sections
78.411 to 78.444 does not apply if, prior to the date on which such  stockholder
becomes an interested  stockholder,  the board of directors  approves either the
business  combination or the transaction that resulted in the person becoming an
interested stockholder.

     Even  after  expiration  of  the  three-year   period,  the  moratorium  on
combinations continues to apply unless one of the following requirements is met:
(i)  prior  to  the  date  on  which  such  stockholder  becomes  an  interested
stockholder the board of directors  approves either the business  combination or
the transaction that resulted in the person becoming an interested  stockholder;
(ii)  the  combination  is  approved  by a  majority  of the  voting  power  not
beneficially owned by the interested stockholder or its affiliates or associates
at a meeting called for that purpose; or (iii) the combination satisfies certain
provisions concerning fair price.

     Sections 78.411 to 78.444 only apply to Nevada  corporations  that have 200
or  more  stockholders  and,  unless  the  articles  of  incorporation   provide
otherwise,  have a class of voting  shares  registered  under  Section 12 of the
Securities  Exchange  Act of 1934 (as the Common  Stock of Actel Nevada would be
upon consummation of the Reincorporation). A Nevada corporation may elect not to
be  governed  by  Sections  78.411  to  78.444 by a  provision  in its  original
certificate of  incorporation or an amendment  thereto,  which amendment must be
approved by a majority of the outstanding voting power,  although such amendment
is not effective  until 18 months after the vote.  Actel Nevada has not elected,
and does not intend to elect,  not to be governed by these Sections;  therefore,
Sections 78.411 to 78.444 will apply to Actel Nevada.

     Sections  78.411 to 78.444  should  encourage  any  potential  acquiror  to
negotiate  with the Company's  Board of Directors.  These Sections also have the
effect of limiting the ability of a potential  acquiror to make a two-tiered bid
for the Company in which stockholders  would be treated unequally.  Shareholders
should note that the  application  of these  Sections to the Company will confer
upon the Board the power to reject a proposed business combination,  even though
a potential  acquiror may be offering a  substantial  premium for the  Company's
shares over the then-current market price. These Sections should also discourage
certain potential acquirors unwilling to comply with their provisions.

     Control Shares

     Nevada law further  seeks to impede  "unfriendly"  corporate  takeovers  by
providing in Sections  78.378 to 78.3793 of the Nevada General  Corporation  Law
that an  "acquiring  person"  shall only obtain  voting  rights in the  "control
shares"   purchased  by  such  person  to  the  extent  approved  by  the  other
stockholders at a meeting.  With certain exceptions,  an acquiring person is one
who acquires or offers to acquire a "controlling  interest" in the  corporation,
defined as one-fifth or more of the voting  power.  Control  shares  include not
only  shares  acquired  or  offered  to  be  acquired  in  connection  with  the
acquisition  of a  controlling  interest,  but also all shares  acquired  by the
acquiring  person within the preceding 90 days.  The statute covers not only the
acquiring  person but also any persons acting in association  with the acquiring
person. California does not have a control shares statute.

     Under Sections 78.378 to 78.3793,  a Nevada corporation may, if so provided
in the articles of  incorporation  or bylaws of the corporation in effect on the
tenth day following acquisition of a controlling  interest,  call for redemption
of not less than all of the  control  shares at the  average  price paid for the
control  shares if (i) the  acquiring  person  has not  delivered  an  offeror's
statement to the  corporation  within ten days after  acquisition of the control
shares or (ii) the other  stockholders  do not accord full voting  rights to the
control shares.

     Unless  otherwise  provided in the articles of  incorporation  or bylaws in
effect on the tenth day following  acquisition of a controlling interest, if the
control  shares are accorded  full voting  rights and the  acquiring  person has
acquired a majority of the voting power,  then any stockholder of record who did
not vote in favor of  authorizing  such  voting  rights  is  entitled  to demand
payment for the fair value of such stockholder's shares.

     Sections 78.378 to 78.3793 apply only to Nevada  corporations that (i) have
200 or more  stockholders,  at least 100 of whom are  stockholders of record and
are  resident in Nevada,  and (ii) do business in Nevada  directly or through an
affiliated corporation.  A corporation may elect to opt out of the provisions of
Sections  78.378 to 78.3793 if, before an acquisition of a controlling  interest
is made,  the  articles  of  incorporation  or bylaws in effect on the tenth day
following  the  acquisition  of a  controlling  interest by an acquiring  person
provide  that  these  Sections  do not  apply.  Although  Actel  Nevada  has not
currently elected to opt out of Sections 78.378 to 78.3793, the Company does not
currently and will not as a result of the Proposed  Reincorporation  have 100 or
more record  stockholders  resident in Nevada.  If and until that  threshold  of
Nevada  stockholders  is reached,  Sections 78.378 to 78.3793 would not apply to
the Company.

     To the extent such  provisions  were in the future to apply to the Company,
Sections  78.378  to  78.3793  should,  similarly  to the  business  combination
provisions  discussed above,  encourage any potential acquiror to negotiate with
the Company's  Board of Directors.  These sections would also have the effect of
limiting the ability of a potential  acquiror to make a  two-tiered  bid for the
Company in which stockholders  would be treated unequally.  Application of these
Sections  to the  Company  would  confer  upon the  Board  the power to reject a
proposed business combination,  even though a potential acquiror may be offering
a substantial  premium for the  Company's  shares over the  then-current  market
price.  These  Sections  would  also  discourage  certain  potential   acquirors
unwilling to comply with their provisions.

     Removal of Directors

     Under  California law, any director or the entire board of directors may be
removed,  with or without cause,  by the  affirmative  vote of a majority of the
outstanding  shares  entitled to vote;  however,  no individual  director may be
removed (unless the entire board is removed) if the number of votes cast against
such removal,  or not  consenting in writing to removal,  would be sufficient to
elect the director under cumulative  voting.  Under Nevada law, any director may
be removed from office by the vote of  stockholders  representing  not less than
two-thirds  of the voting  power of the class or series of stock of the  Company
entitled to elect such director,  unless the articles of  incorporation  provide
for  cumulative  voting  or a larger  percentage  of voting  stock.  If a Nevada
corporation's  articles  of  incorporation  provide  for  cumulative  voting,  a
director  may  not be  removed  except  upon  the  vote of  stockholders  owning
sufficient voting power to have prevented such director's  election in the first
instance.  The  Articles  of  Incorporation  of Actel  Nevada do not provide for
cumulative  voting,  and do not  specify  any  larger  percentage  for  removal;
therefore,  two-thirds  of the  voting  power of the  class or  series  of stock
entitled to elect a director may remove such director.

     Filling Vacancies on the Board of Directors

     Under  California  law,  unless the  articles  of  incorporation  or bylaws
provide otherwise,  any vacancy on the board of directors not created by removal
of a director  may be filled by the board.  If the number of  directors  is less
than a quorum,  a vacancy may be filled by the unanimous  written consent of the
directors then in office, by the affirmative vote of a majority of the directors
at a meeting  held  pursuant  to  notice  or  waivers  of  notice,  or by a sole
remaining  director.  Unless the articles of  incorporation  or bylaws otherwise
provide,  a vacancy  created  by removal  of a  director  may be filled  only by
approval of the shareholders.  Actel California's  Articles of Incorporation and
Bylaws permit directors to fill vacancies;  however,  if the vacancy was created
by the removal of a director by the vote or written consent of the  shareholders
or by court order,  the vacancy may be filled only by the affirmative  vote of a
majority  of shares  represented  and  voting at a duly held  meeting at which a
quorum  is  present,  or by the  unanimous  written  consent  of all the  shares
entitled to vote thereon.  Under Nevada law, unless a corporation's  articles of
incorporation  provide  otherwise,  any  vacancy  on  the  board  of  directors,
including  one  created by removal of a director or an increase in the number of
authorized directors,  may be filled by the majority of the remaining directors,
even if such number constitutes less than a quorum. Nevada law would thus enable
the Board of  Directors  to respond  quickly  to  opportunities  to attract  the
services of qualified directors; but it would also diminish control of the Board
by the shareholders of the Company between meetings.

     Loans to Officers and Employees

     Under  California  law,  any  loan to or  guarantee  for the  benefit  of a
director  or officer of a  corporation  or its parent  requires  approval of the
shareholders, not counting any shares owned by the relevant director or officer,
unless such loan or guaranty is provided under an employee benefit plan approved
by shareholders  owning a majority of the outstanding shares of the corporation.
In addition,  under  California law  shareholders of any corporation with 100 or
more  shareholders  of  record  may  approve  a bylaw  authorizing  the board of
directors  alone, not counting the vote of any interested  director,  to approve
loans or  guarantees  to or on behalf of officers  (whether or not such officers
are  directors)  if the  board  determines  that any such loan or  guaranty  may
reasonably  be  expected  to  benefit  the  corporation.  The  Bylaws  of  Actel
California  authorize  such loans or guarantees.  These  specific  provisions of
California law dealing with loans and guarantees would no longer apply after the
Proposed Reincorporation.

     Limitation of Liability and Indemnification

     California  and Nevada have similar laws  respecting  indemnification  by a
corporation of its officers, directors, employees, and other agents. The laws of
both states also permit  corporations  to adopt a provision in their articles of
incorporation  eliminating the liability of a director to the corporation or its
shareholders for monetary damages for breach of the director's fiduciary duty of
care.  There are  nonetheless  certain  differences  between the laws of the two
states respecting indemnification and limitation of liability.

     The Articles of Incorporation  of Actel California  eliminate the liability
of directors to the fullest extent permissible under California law.  California
law permits  eliminating  or limiting the  personal  liability of a director for
monetary  damages in an action brought by or in the right of the  corporation (a
"derivative  suit") for breach of a director's duties to the corporation and its
shareholders; provided, however, that the corporation may not eliminate or limit
liability for (i)  intentional  misconduct or knowing and culpable  violation of
law; (ii) acts or omissions that a director  believes to be contrary to the best
interests of the corporation or its shareholders, or that involve the absence of
good faith on the part of the director;  (iii)  receipt of an improper  personal
benefit;  (iv) acts or omissions that show reckless disregard for the director's
duty to the corporation or its shareholders,  where the director in the ordinary
course of  performing a director's  duties  should be aware of a risk of serious
injury  to the  corporation  or its  shareholders;  (v) acts or  omissions  that
constitute an unexcused  pattern of inattention that amounts to an abdication of
the director's  duty to the  corporation or its  shareholders;  (vi)  interested
transactions  between the  corporation  and a director in which a director has a
material  financial  interest;  and (vii) liability for improper  distributions,
loans, or guarantees.

     The Articles of  Incorporation  of Actel Nevada  eliminate the liability of
both directors and officers to the fullest extent  permissible under Nevada law,
as such law exists currently or as it may be amended in the future. Under Nevada
law,  such  provision may not  eliminate or limit  director or officer  monetary
liability for (i) acts or omissions involving intentional misconduct,  fraud, or
a  knowing  violation  of  law  or  (ii)  the  payment  of  certain   prohibited
distributions.  Such  limitation  of  liability  provision  also may not limit a
director's or officer's  liability for violation of, or otherwise  relieve Actel
Nevada or its  directors  or officers  from the  necessity  of  complying  with,
federal or state  securities  laws, or affect the  availability  of  nonmonetary
remedies such as injunctive relief or rescission.

     California law permits  indemnification  of expenses incurred in derivative
or third-party actions,  except that, with respect to derivative actions, (a) no
indemnification  may be made when a person is adjudged liable to the corporation
in the performance of that person's duty to the corporation and its shareholders
unless a court determines such person is entitled to indemnity for expenses, and
then such  indemnification  may be made only to the extent that such court shall
determine,  and (b) no indemnification may be made in respect of amounts paid in
settling or otherwise  disposing of a pending  action,  or expenses  incurred in
defending a pending  action that is settled or otherwise  disposed  of,  without
court approval.

     Indemnification  is permitted by California law only for acts taken in good
faith  and  believed  to be in the best  interests  of the  corporation  and its
shareholders,  as determined by a majority vote of a disinterested quorum of the
directors,  independent  legal counsel (if a quorum of independent  directors is
not  obtainable),  a majority  vote of a quorum of the  shareholders  (excluding
shares owned by the indemnified party), or the court handling the action.

     California   law  requires   indemnification   when  the   individual   has
successfully  defended the action on the merits (as opposed to Nevada law, which
requires  indemnification  relating  to a  successful  defense  on the merits or
otherwise).

     Nevada law generally  permits  indemnification  of expenses incurred in the
defense or settlement  of a derivative or  third-party  action,  provided  that,
unless a court orders  indemnification  or the  corporation  is bound to advance
expenses  as they are  incurred,  there is a  determination  by a  disinterested
quorum of the directors,  by independent  legal counsel,  or by the stockholders
that the  person  seeking  indemnification  acted in good  faith and in a manner
reasonably  believed to be in or (in contrast to California  law) not opposed to
the best  interests of the  corporation.  Without court  approval,  however,  no
indemnification  may be made in respect of any  derivative  action in which such
person  is   adjudged   liable  to  the   corporation.   Nevada   law   requires
indemnification   of  expenses  when  the  individual   being   indemnified  has
successfully  defended any action,  claim, issue, or matter therein,  whether on
the merits or otherwise.

     Nevada law states that the indemnification provided by statute shall not be
deemed  exclusive of any other rights under the articles of  incorporation,  any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
Each current  officer and director of the Company has entered into or will enter
into an indemnification  agreement with Actel Nevada that conforms to Nevada law
and  includes  within its purview  future  changes in Nevada law that expand the
permissible  scope of  indemnification  of  directors  and  officers  of  Nevada
corporations.

     Nevada law  provides  that the  articles of  incorporation  or bylaws or an
agreement  made by a corporation  may provide that the expenses of directors and
officers incurred in defending an action must be paid by the corporation as they
are incurred and in advance of the final  disposition of the action upon receipt
of an undertaking by or on behalf of the director or officer to repay the amount
if  the  court  ultimately  determines  that  such  person  is not  entitled  to
indemnification.  The Articles of  Incorporation  and the Bylaws of Actel Nevada
provide that the Company shall  indemnify  directors and officers to the fullest
extent  permitted  under Nevada law, and that the Company shall pay all expenses
incurred  in  defending  an action in advance.  The Bylaws of Actel  Nevada also
permit such  indemnification  of and  advancement  of expenses to employees  and
agents of the Company.

     Nevada law further  provides that a  corporation  may purchase and maintain
insurance  or make  other  financial  arrangements  on behalf  of any  director,
officer, employee, or agent of the corporation (or person who is serving in such
capacity with another enterprise at the request of the corporation),  whether or
not the  corporation  has the  authority to indemnify  such person.  These other
financial  arrangements may include a trust fund,  self-insurance,  securing the
corporation's  obligation  by granting a security  interest  or other  lien,  or
establishing  a letter of credit,  guaranty,  or surety,  although no  financial
arrangement  may provide  protection for  intentional  misconduct,  fraud,  or a
knowing  violation of law except with respect to the  advancement of expenses or
unless ordered by a court. In the absence of fraud, the decision of the board of
directors as to the propriety of any insurance or other financial arrangement is
conclusive,  and the  insurance or other  financial  arrangement  is not void or
voidable  and does not subject any director  approving it to personal  liability
even if such  director is a  beneficiary  of the  insurance  or other  financial
arrangement.  The Bylaws of Actel  Nevada  permit the  Company to  purchase  and
maintain insurance and make such other financial arrangements.

     Inspection of Shareholder List

     California law allows any shareholder to inspect the shareholder  list, the
accounting  books  and  records,  and  the  minutes  of  board  and  shareholder
proceedings  for a purpose  reasonably  related to such  person's  interest as a
shareholder.  California  law provides,  in addition,  for an absolute  right to
inspect  and copy the  corporation's  shareholder  list by  persons  who hold an
aggregate of five percent or more of a  corporation's  voting shares or who hold
one  percent  or more of such  shares  and have  filed a  Schedule  14A with the
Securities and Exchange Commission.

     Nevada law allows  inspection  of a  stockholder  list only upon five days'
notice  by  either a person  who has been a  stockholder  of record at least six
months or a person  holding,  or  authorized  in writing by the holder of,  five
percent of the corporation's  outstanding  shares. In addition,  the corporation
may deny such inspection rights if the stockholder requesting disclosure refuses
to sign an affidavit to the effect that (i) the  inspection is not desired for a
purpose  that is in the interest of a business or object other than the business
of the  corporation and (ii) the stockholder has not at any time sold or offered
for sale any list of  stockholders  of any  corporation or aided and abetted any
other person for such purpose. To inspect the accounting and financial books and
records  of  a  corporation,  a  stockholder  must  hold  or  have  the  written
authorization  of the  holders  of at least 15% of all  issued  and  outstanding
shares,  and a  corporation  may demand an  affidavit  to the  effect  that such
inspection is not desired for any purpose not related to such person's  interest
in the  corporation  as a  stockholder.  No right to inspect the  accounting and
financial books and records  applies to any  corporation  listed and traded on a
recognized   stock  exchange  or  which  furnishes   detailed  annual  financial
statements to its stockholders.

     Lack of  access  to  stockholder  records,  even  though  unrelated  to the
stockholder's  interests as a  stockholder,  could result in  impairment  of the
stockholder's   ability  to  coordinate   opposition  to  management  proposals,
including proposals with respect to a change in control of the Company. However,
California law provides that California  provisions concerning the inspection of
shareholder  lists  apply  not  only  to  California  corporations  but  also to
corporations  organized under the laws of other states that have their principal
executive  offices in  California or  customarily  hold meetings of the board in
California,  and that the California  provisions concerning accounting books and
records and the minutes of board and shareholder  proceedings  apply to any such
foreign corporation that has its principal executive offices in California.  For
so long as the Company  continues  to have its  principal  executive  offices in
California  and to hold board of directors  meetings in  California,  and to the
extent such provisions  applicable to foreign corporations are enforceable,  the
Company  will  need  to  comply  with  California  law  concerning   shareholder
inspections.

     Dividends and Repurchases of Shares

     Under   California  law,  a  corporation  may  not  make  any  distribution
(including dividends,  whether in cash or other property, and repurchases of its
shares)   unless,   immediately   prior  to  the  proposed   distribution,   the
corporation's  retained  earnings  equal or exceed  the  amount of the  proposed
distribution  or,  immediately  after giving  effect to such  distribution,  the
corporation's   assets   (exclusive  of  goodwill,   capitalized   research  and
development  expenses,  and deferred charges) would be at least equal to 125% of
its  liabilities  (not including  deferred  taxes,  deferred  income,  and other
deferred credits) and the  corporation's  current assets would be at least equal
to its current  liabilities  (or 125% of its current  liabilities if the average
pre-tax and  pre-interest  expense  earnings for the  preceding two fiscal years
were less than the average  interest  expense for such years).  California  also
prohibits  any  distribution  if  the  corporation  or  subsidiary   making  the
distribution  is or would  be  likely  to be  unable  to meet  its  liabilities.
California also prohibits making any distribution to a class or series of shares
junior to  another  class or series  with  respect to a  liquidation  preference
unless  after  giving  effect to the  distribution  the  excess  of assets  over
liabilities is at least equal to the  liquidation  preference of all such shares
or,  in the  case of a  dividend  preference,  retained  earnings  prior  to the
distribution at least equal the proposed  distribution plus cumulative dividends
in arrears on all such shares.

     Nevada  law  prohibits  a  distribution  (including  dividends,  purchases,
redemptions or other  acquisition of shares,  distributions of indebtedness,  or
otherwise)  if, after giving  effect to the  distribution,  (i) the  corporation
would not be able to pay its  debts as they  become  due in the usual  course of
business  or (ii)  except as provided  in the  articles  of  incorporation,  the
corporation's  total assets would be less than the sum of its total  liabilities
plus the amount that would be needed, if the corporation were to be dissolved at
the time of distribution, to satisfy the preferential rights upon dissolution of
stockholders  whose  preferential  rights are  superior to those  receiving  the
distribution.

     To date, the Company has not paid cash  dividends on its capital stock.  In
addition,  the  Company's  bank line of credit  prohibits  the  payment  of cash
dividends  without the bank's consent.  It is the present policy of the Board of
Directors to retain earnings for use in the Company's business,  and the Company
does  not  anticipate  paying  cash  dividends  on  its  capital  stock  in  the
foreseeable future.

     Shareholder Voting

     Both  California  and  Nevada law  generally  require  that a  majority  of
shareholders  of both the acquiring and target  corporations  approve  statutory
mergers.  Nevada  law does  not  require  a  stockholder  vote of the  surviving
corporation  in a merger  (unless  the  corporation  provides  otherwise  in its
articles  of  incorporation)  if (i) the  merger  agreement  does not  amend the
existing  articles of  incorporation  of the  surviving  corporation,  (ii) each
stockholder of the surviving  corporation  whose shares were outstanding  before
the merger  will hold the same  number of shares  with  identical  designations,
preferences,  limitations,  and relative rights after the merger,  and (iii) the
number of shares  outstanding  after the merger plus the number of shares issued
as a result of the merger, either by conversion or exercise of securities issued
pursuant to the merger, will not exceed by more than 20% the number of shares of
the  surviving  corporation   outstanding   immediately  prior  to  the  merger.
California  law  contains a similar  exception  to its voting  requirements  for
reorganizations   where  shareholders  or  the  corporation   itself,  or  both,
immediately  prior  to  the  reorganization   will  own  immediately  after  the
reorganization  equity  securities  constituting  more than  five-sixths  of the
voting power of the surviving or acquiring corporation or its parent entity.

     Both  California  and  Nevada  law  also  require  that  a  sale  of all or
substantially  all of the assets of a  corporation  be approved by a majority of
the voting shares of the corporation transferring such assets.

     With  certain  exceptions,  California  law  also  requires  that  mergers,
reorganizations,  certain sales of assets, and similar  transactions be approved
by a majority vote of each class of shares outstanding.  By contrast, Nevada law
generally  does  not  require  class  voting,  except  in  certain  transactions
involving  an amendment to the  articles of  incorporation  that  differentially
affects a specific class of shares.  As a result,  stockholder  approval of such
transactions  may be easier to obtain under Nevada law for  companies  that have
more than one class of shares outstanding.

     California  law also  requires  that,  except in a  short-form  merger or a
merger of a parent corporation into its subsidiary in which it owns at least 90%
of the  outstanding  shares,  if a constituent  corporation in the merger or its
parent owns at least 50% of another  constituent  corporation in the merger, the
nonredeemable  common shares of a constituent  corporation may be converted only
into nonredeemable common shares of the surviving  corporation or a parent party
unless all  shareholders of the class consent.  This provision of California law
may have the effect of making a "cash-out" merger by a majority shareholder more
difficult to accomplish. Although Nevada law does not parallel California law in
this  respect,  under some  circumstances  Sections  78.411 to 78.444  (business
combinations  with  interested  stockholders)  and  Sections  78.378 to  78.3793
(voting  rights of  acquiring  person's  control  shares) of the Nevada  General
Corporation Law do provide similar protection  against coercive  two-tiered bids
for a corporation in which the stockholders are not treated equally.

     California  law  provides  that,  except in certain  circumstances,  when a
tender offer or a proposal for a reorganization  or for a sale of assets is made
by an interested  party (generally a controlling or managing party of the target
corporation),  an  affirmative  opinion  in writing  as to the  fairness  of the
consideration  to  be  paid  to  the  shareholders  must  be  delivered  to  the
shareholders.  This fairness opinion requirement does not apply to a corporation
that  does not have  shares  held of  record  by at least  100  persons  or to a
transaction  that has been qualified under  California  state  securities  laws.
Furthermore,  if a tender of shares or vote is sought  pursuant to an interested
party's proposal and a later proposal is made by another party at least ten days
prior  to  the  date  of  acceptance  of  the  interested  party  proposal,  the
shareholders  must be informed  of the later offer and be afforded a  reasonable
opportunity to withdraw any vote,  consent, or proxy or to withdraw any tendered
shares. Nevada law has no comparable provision.

     Interested Director Transactions

     Under both California and Nevada law, certain  contracts or transactions in
which one or more of a corporation's  directors have an interest are not void or
voidable  because of such  interest  provided that certain  conditions,  such as
obtaining the required  approval and fulfilling the  requirements  of good faith
and full  disclosure,  are met.  With certain  exceptions,  the  conditions  are
similar under California and Nevada law. Under California and Nevada law, either
(i) the shareholders or the board of directors must approve any such contract or
transaction  after full  disclosure  of the  material  facts and, in the case of
board approval,  the contract or transaction  must also be "just and reasonable"
(in California) to the corporation or (ii) the contract or transaction must have
been  "just and  reasonable"  (in  California)  or  "fair"  (in  Nevada)  to the
corporation  at the time it was  approved.  In the latter case,  California  law
explicitly  places  the  burden of proof on the  interested  director.  If board
approval is sought,  the contract or transaction  must be approved by a majority
vote of a quorum of the directors,  without  counting the vote of any interested
directors  (except  that  interested  directors  may be counted for  purposes of
establishing a quorum). Under California law, if shareholder approval is sought,
the  interested  director is not  entitled to vote such  director's  shares at a
shareholder  meeting  with  respect to any action  regarding  such  contract  or
transaction,  whereas Nevada law requires that such director's  votes be counted
for such purpose.  Nevada law also provides that the  transaction is not void or
voidable if the fact of the common  directorship,  office, or financial interest
at issue is not  disclosed or known to the director at the time the  transaction
is brought before the board for action. Nevada law addresses not only interested
directors but also transactions with interested officers.

     Shareholder Derivative Suits

     California law provides that a shareholder  bringing a derivative action on
behalf  of a  corporation  need not have been a  shareholder  at the time of the
transaction in question,  provided that certain tests are met. Under Nevada law,
a stockholder may only bring a derivative action on behalf of the corporation if
the  stockholder  was a  stockholder  of  the  corporation  at the  time  of the
transaction in question or his or her stock thereafter  devolved upon him or her
by operation of law.  Nevada law also provides that a derivative  action may not
be maintained if it appears that the  plaintiff  does not fairly and  adequately
represent the interests of the stockholders  similarly situated in enforcing the
right of the corporation.

     Appraisal Rights

     Under both  California  and  Nevada  law, a  shareholder  of a  corporation
participating  in  certain  major  corporate  transactions  may,  under  varying
circumstances,   be  entitled  to  appraisal   rights  pursuant  to  which  such
shareholder  may receive  cash in the amount of the fair market  value of his or
her shares in lieu of the consideration he or she would otherwise receive in the
transaction.

     Under Nevada law,  dissenters' (or appraisal) rights are not available in a
merger or share  exchange  if the shares held by the  stockholders  prior to the
share exchange or merger were either listed on a national securities exchange or
held  by  at  least  2,000  stockholders  of  record,  unless  the  articles  of
incorporation  of  the  corporation   provide  for  dissenters'  rights  or  the
stockholders  are required to accept under the plan of merger or share  exchange
anything  other  than cash,  shares of the  surviving  corporation,  shares of a
publicly traded or widely held corporation, or a combination of these.

     The limitations on the  availability of appraisal  rights under  California
law are  different  from those under  Nevada law.  Shareholders  of a California
corporation  whose shares are listed on a national  securities  exchange or on a
list of  over-the-counter  margin stocks issued by the Board of Governors of the
Federal  Reserve System  generally do not have such appraisal  rights unless the
holders of at least five percent (5%) of the class of  outstanding  shares claim
the right or unless the  corporation  or any law  restricts the transfer of such
shares.  Appraisal  rights  are  also  unavailable  if  the  shareholders  of  a
corporation  or the  corporation  itself,  or  both,  immediately  prior  to the
reorganization  will own immediately after the reorganization  equity securities
constituting  more than  five-sixths  of the voting  power of the  surviving  or
acquiring  corporation  or its  parent  entity  (as will be the case  under  the
Proposed  Reincorporation).  Appraisal or dissenters' rights are, therefore, not
available  to  shareholders  of Actel  California  with  respect to the Proposed
Reincorporation.

     Dissolution

     Under California law,  shareholders holding 50% or more of the total voting
power may authorize a corporation's dissolution, with or without the approval of
the corporation's board of directors.  Under Nevada law, a corporation generally
may dissolve only upon the passing of a resolution by the corporation's board of
directors and upon approval by the stockholders.

Application of the General Corporation Law of California to Nevada Corporations

     Under  Section 2115 of the  California  General  Corporation  Law,  certain
foreign corporations (i.e., corporations not organized under California law) are
placed in a special  category  if they have  characteristics  of  ownership  and
operation  indicating that they have certain significant  business contacts with
California and more than one half of their voting  securities are held of record
by persons having addresses in California.  So long as a Nevada or other foreign
corporation is in this special category,  and it does not qualify for one of the
statutory  exemptions,  it is  subject  to a  number  of key  provisions  of the
California  General  Corporation Law applicable to corporations  incorporated in
California.  Among  the more  important  provisions  are those  relating  to the
election and removal of directors,  cumulative voting, prohibition of classified
boards of directors in privately held  corporations,  standards of liability and
indemnification  of  directors,  distributions,  dividends  and  repurchases  of
shares,  shareholder  meetings,  approval  of  certain  corporate  transactions,
dissenters'  and appraisal  rights,  and  inspection of corporate  records.  See
"Significant  Differences Between the Corporation Laws of California and Nevada"
above. An exemption from Section 2115 is provided for a corporation whose shares
are listed on a major national securities exchange,  or are traded on the Nasdaq
National  Market and has 800 or more  shareholders as of the record date for its
most recent annual meeting of shareholders. As Actel Nevada will have its shares
listed and  publicly  traded on the Nasdaq  National  Market,  the Company  will
qualify for the exemption from 2115 described above.

Certain Federal Income Tax Consequences

     The following is a discussion of certain federal income tax consequences to
holders of Actel California capital stock who receive Actel Nevada capital stock
in exchange for their Actel California capital stock as a result of the Proposed
Reincorporation.  No state,  local,  or foreign tax  consequences  are addressed
herein.

     This discussion  does not address all the tax  consequences of the Proposed
Reincorporation   that  may  be  relevant   to   particular   Actel   California
shareholders,  including without  limitation  dealers in securities,  holders of
stock options, and those Actel California shareholders who acquired their shares
upon the exercise of stock  options.  In view of the varying  nature of such tax
consequences, shareholders are urged to consult their own tax advisors as to the
specific tax consequences to them of the Proposed Reincorporation, including the
applicability of federal, state, local, or foreign tax laws.

     The Company has not  requested a ruling from the Internal  Revenue  Service
(the  "IRS") or an opinion of counsel  with  respect to the  federal  income tax
consequences of the Proposed  Reincorporation under the Internal Revenue Code of
1986, as amended (the "Code").  The Company  believes,  however,  that:  (a) the
Proposed Reincorporation will constitute a tax-free reorganization under Section
368(a) of the Code; (b) no gain or loss will be recognized by holders of capital
stock of Actel California upon receipt of capital stock of Actel Nevada pursuant
to the  Proposed  Reincorporation;  (c) the  aggregate  tax basis of the capital
stock of  Actel  Nevada  received  by each  shareholder  will be the same as the
aggregate  tax  basis of the  capital  stock of  Actel  California  held by such
shareholder as a capital asset at the time of the Proposed Reincorporation;  and
(d) the holding  period of the capital  stock of Actel  Nevada  received by each
shareholder  of  Actel  California  will  include  the  period  for  which  such
shareholder held the capital stock of Actel  California  surrendered in exchange
therefor,  provided  that such Actel  California  capital stock was held by such
shareholder as a capital asset at the time of the Proposed Reincorporation.

     A  successful  IRS  challenge  to  the  tax-free  status  of  the  Proposed
Reincorporation  would  result in a  shareholder  recognizing  gain or loss with
respect to each share of Actel California capital stock surrendered equal to the
difference  between that  shareholder's  basis in such share and the fair market
value,  as of the time of the  Proposed  Reincorporation,  of the  Actel  Nevada
capital stock  received in exchange  therefor.  In such event,  a  shareholder's
aggregate  basis in the shares of Actel  Nevada  capital  stock  received in the
exchange  would equal such fair market  value,  and such  shareholder's  holding
period  for  such  shares  would  not  include  the  period  during  which  such
shareholder held Actel California capital stock.

     State,  local, or foreign income tax  consequences to shareholders may vary
from the federal tax consequences  described above.  Shareholders should consult
their own tax  advisors as to the effect of the Proposed  Reincorporation  under
applicable federal, state, local, or foreign income tax laws.

     The  Company  should  not  recognize  gain or loss for  federal  income tax
purposes as a result of the Proposed  Reincorporation,  and Actel Nevada  should
succeed  without  adjustment  to the  federal  income  tax  attributes  of Actel
California.

Vote Required for the Proposed Reincorporation

     Approval of the Proposed  Reincorporation,  which includes  approval of the
Merger Agreement,  requires the affirmative vote of the holders of a majority of
the  outstanding  shares of Actel  California  Common Stock voting together as a
class.


                   PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT TO
                        1993 EMPLOYEE STOCK PURCHASE PLAN

General

     On January 24, 1997,  the Board of  Directors  amended the  Company's  1993
Employee  Stock  Purchase Plan (the "ESPP") to increase by 250,000 the number of
shares of Common Stock reserved for issuance under the ESPP,  bringing the total
number of shares  reserved for issuance  under the ESPP to 1,150,000.  Following
the last purchases  from the ESPP on January 31, 1997,  204,556 shares of Common
Stock remained available for issuance under the Plan.

     The  Board  of  Directors  recommends  that  shareholders  vote  "FOR"  the
amendment to the ESPP. An abstention will have the same effect as a vote against
approval of the amendment.

Summary of the ESPP

     On January 24, 1997,  the Board of  Directors  amended the  Company's  1993
Employee  Stock  Purchase Plan (the "ESPP") to increase by 250,000 the number of
shares of Common Stock reserved for issuance under the ESPP,  bringing the total
number of shares  reserved  for issuance  under the ESPP to 1,150,000  (of which
454,556 would be available for future issuance).

     Purpose

     The  purpose of the ESPP is to provide  employees  of the  Company  with an
opportunity to purchase Common Stock of the Company through  accumulated payroll
deductions.

     Administration

     The ESPP may be  administered  by the  Board of  Directors  or a  committee
appointed by the Board.  All questions of  interpretation  or application of the
ESPP are determined by the Board or its committee, whose decisions are final and
binding upon all participants.  Members of the Board who are eligible  employees
are  permitted  to  participate  in the  ESPP  but  may not  vote on any  matter
affecting  the  administration  thereof  or the  grant  of any  option  pursuant
thereto.  No director who is eligible to participate in the ESPP may be a member
of the committee  appointed to administer it. No charges for  administrative  or
other costs may be made against the payroll  deductions of a participant  in the
ESPP. Members of the Board receive no additional compensation for their services
in connection with the administration of the ESPP.

     Eligibility and Participation

     Any person who is employed  by the  Company  (or any of its  majority-owned
subsidiaries)  at least 20 hours per week for at least five months in a calendar
year is eligible  to  participate  in the ESPP,  provided  that the  employee is
employed  on the first day of an  offering  period.  Eligible  employees  become
participants  in the ESPP by delivering to the Company a subscription  agreement
authorizing  payroll  deductions  prior to the  applicable  enrollment  date. An
employee who becomes  eligible to participate in the ESPP after the commencement
of an offering period may not participate in the ESPP until the  commencement of
the next offering period.

     Offering and Purchase Periods

     The  ESPP is  generally  implemented  during  consecutive  and  overlapping
24-month offering periods, each of which is divided into four six-month purchase
periods.  Generally,  offering and purchase  periods  commence on February 1 and
August 1 of each year. Shares are purchased for  participating  employees on the
last day of each purchase period, referred to herein as the "Exercise Date." The
Board  may  alter the  duration  of the  offering  periods  without  shareholder
approval if such change is announced five days prior to the scheduled  beginning
of the first offering period to be affected.

     Purchase Price

     The purchase price per share at which shares will be sold under the ESPP is
the lower of 85% of the fair market  value of the Common  Stock on the first day
of each  offering  period or 85% of the fair market value of the Common Stock on
the  Exercise  Date.  The fair  market  value of a share of Common  Stock is the
closing  sales  price  for such  stock (or the  closing  bid,  if no sales  were
reported) as quoted on the NASDAQ National Market.

     The purchase price of the shares is accumulated  through payroll deductions
during the offering period. The deductions may not exceed 10% of a participant's
compensation,  which is defined in the ESPP to mean all base straight time gross
earnings,  including overtime and shift premium, and all incentive compensation,
incentive payments,  bonuses,  and other compensation.  A participant may at any
time  discontinue  his or her  participation  in the  ESPP  or may  increase  or
decrease  the rate of payroll  deductions.  Payroll  deductions  commence on the
first payday in the offering period and continue at the same rate in the current
and consecutive  offering  periods until amended or as provided in the ESPP. All
payroll deductions are credited to the participant's  account under the ESPP and
are  deposited  with the general  funds of the Company.  All payroll  deductions
received or held by the  Company  may be used by the  Company for any  corporate
purpose.

     Purchase of Stock

     At the beginning of each offering period, each participant,  by executing a
subscription  agreement  to  participate  in the ESPP,  is in effect  granted an
option to purchase  shares of Common Stock on each  Exercise  Date.  The maximum
number of shares  placed under option to a participant  in a purchase  period is
that number  determined  by dividing the amount of  participant's  total payroll
deductions  to be  accumulated  during  the  purchase  period by the  applicable
purchase price. Unless a participant withdraws from the ESPP, such participant's
option for the purchase of shares will be exercised  automatically at the end of
the purchase period for the maximum number of shares at the applicable price.

     Notwithstanding  the foregoing,  no employee will be permitted to subscribe
for shares  under the ESPP if,  immediately  after the grant of the option,  the
employee  would own 5% or more of the  voting  power or value of all  classes of
stock of the  Company  or of a parent or of any of its  subsidiaries  (including
stock that may be  purchased  under the ESPP or pursuant to any other  options),
nor shall any  employee be granted an option that would  permit the  employee to
buy more than $25,000 worth of stock (determined at the fair market value of the
shares at the time the option is granted) pursuant to all Company stock purchase
plans in any calendar year.

     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  ESPP.  Any  withdrawal  by the  participant  of  accumulated  payroll
deductions   for  a  given   offering   period   automatically   terminates  the
participant's  interest  in  that  offering  period.  The  failure  to  maintain
continuous  status as an  employee of the Company for at least 20 hours per week
during an offering  period will be deemed to be a withdrawal  from that offering
period.  The  ESPP  also  provides  that  participants  will be  deemed  to have
withdrawn from an offering during certain leaves of absence. In addition, if the
fair market value of the Common Stock on any Exercise Date in an offering period
is lower than the fair market value of the Common Stock on the  enrollment  date
of such offering period,  then all participants in such offering period shall be
automatically withdrawn from such offering period immediately after the exercise
of their  options on such  Exercise Date and  automatically  re-enrolled  in the
immediately  following offering period.  Generally,  a participant's  withdrawal
from an  offering  period  does not affect  such  participant's  eligibility  to
participate in subsequent offering periods.

     Termination of Employment

     Termination  of  a  participant's  employment  for  any  reason,  including
retirement or death,  cancels his or her  participation in the ESPP immediately.
In such event, the payroll deductions credited to the participant's account will
be  returned  to such  participant  or, in the case of death,  to the  person or
persons  entitled  thereto as  specified  by the  employee  in the  subscription
agreement.

     Capital Changes

     In the event any change is made in the Company's capitalization,  such as a
stock split or stock  dividend,  that  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 in the  shares  subject to
purchase  under the ESPP and in the  purchase  price per  share,  subject to any
required action by shareholders of the Company.

     Nonassignability

     No rights or accumulated payroll deductions of a participant under the ESPP
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 ESPP.

     Amendment and Termination

     The Board may at any time amend or terminate  the ESPP,  provided that such
termination shall not affect options  previously  granted,  and provided further
that an offering  period may be  terminated  if the Board  determines  that such
termination  is in the best  interests of the Company and its  shareholders.  No
amendment may be made to the ESPP without prior approval of the  shareholders of
the  Company  if  such  amendment  would   constitute  an  amendment  for  which
shareholder approval is required under the federal securities laws or the Code.
By its terms, the ESPP will terminate in May 2003.

Certain Federal Income Tax Information

     The ESPP, and the right of  participants to make purchases  thereunder,  is
intended to qualify  under the  provisions  of Sections 421 and 423 of the Code.
Under these  provisions,  no income will be taxable to a  participant  until the
sale or other disposition of the shares purchased under the ESPP. Upon such sale
or disposition,  the  participant  will generally be subject to tax in an amount
that depends upon the holding period. If the shares are sold or disposed of more
than two years from the first day of the offering  period,  the participant will
recognize  ordinary  income measured as the lesser of (a) the excess of the fair
market  value of the  shares  at the time of such sale or  disposition  over the
purchase  price or (b) an amount  equal to 15% of the fair  market  value of the
shares as of the first day of the offering  period.  Any additional gain will be
treated as long-term capital gain. If the shares are sold or otherwise  disposed
of before the expiration of this holding period,  the participant will recognize
ordinary income generally measured as the excess of the fair market value of the
shares  on the date the  shares  are  purchased  over the  purchase  price.  Any
additional  gain or  loss on such  sale  or  disposition  will be  long-term  or
short-term  capital  gain or loss,  depending on the holding  period.  Different
rules may apply with  respect to  participants  subject to Section  16(b) of the
Exchange  Act. The Company is not entitled to a deduction  for amounts  taxed as
ordinary  income  or  capital  gain to a  participant  except  to the  extent of
ordinary  income  recognized  upon a sale or  disposition of shares prior to the
expiration of the holding periods described above.

     The foregoing  summary of the federal income tax  consequences  of Purchase
Plan transactions is based upon federal income tax laws in effect on the date of
this Proxy  Statement.  This summary does not purport to be  comprehensive,  and
does not describe foreign, state, or local tax consequences.

     The following table  summarizes the approximate  dollar value and number of
shares  purchased  with  contributions  made  under  the ESPP in 1996 by (i) the
executive officers named in the Summary  Compensation  Table, (ii) all executive
officers as a group, and (iii) all employees who are not executive officers as a
group.  Only  directors  who are also  executive  officers  of the  Company  are
eligible to purchase shares under the ESPP.
<TABLE>
<CAPTION>
                                               Amended Plan Benefits

                                                                          1993 Employee Stock Purchase Plan (1)
                                                                     ----------------------------------------------
                                                                                                Number of Shares
                         Name and Position                              Dollar Value (2)          Purchased (3)
- -------------------------------------------------------------------- ---------------------- -----------------------

<S>                                                                          <C>                      <C>
John C. East.....................................................        $           0                      0
   President and Chief Executive Officer

Douglas D. Goodyear..............................................                5,696                    588
   Vice President of Worldwide Sales

Esmat Z. Hamdy...................................................               53,156                  3,224
   Senior Vice President of Technology & Operations

Jeffrey M. Schlageter............................................               54,227                  3,289
   Senior Vice President of Engineering

David M. Sugishita...............................................                6,248                    645
   Senior Vice President of Finance & Administration and Chief
   Financial Officer

Executive Officer Group (8 Persons)..............................              225,606                 14,192

Non-Executive Officer Employee Group.............................            3,232,122                209,340

- ---------------------------------------

<FN>
(1)      Future   benefits   under  the  ESPP  are  not   determinable   because
         participation in the ESPP is voluntary.

(2)      Indicates  the  difference  between  the  price  at which  shares  were
         purchased  under the ESPP with  contributions  made in 1996 and $23.50,
         the closing price of the  Company's  Common Stock on December 27, 1996,
         the last business day in fiscal 1996.

(3)      Indicates the number of shares that were purchased  with  contributions
         made in 1996 under the ESPP. More specifically, the number in the table
         indicates  shares of Common Stock  purchased on January 31, 1996,  July
         31, 1996, and January 31, 1997, with  contributions made under the ESPP
         in 1996,  and  excludes  shares  purchased  on January 31,  1996,  with
         contributions  made  under  the ESPP in 1995 and  shares  purchased  on
         January 31,  1997,  with  contributions  made under the ESPP in January
         1997.
</FN>
</TABLE>


                   PROPOSAL NO. 4 -- APPROVAL OF AMENDMENT TO
                        1993 DIRECTORS' STOCK OPTION PLAN

General

     On January 24, 1997,  the Board of  Directors  amended the  Company's  1993
Directors'  Stock  Option Plan (the  "Director  Plan") to increase by 90,000 the
number of shares of Common Stock  reserved for issuance under the Director Plan,
bringing  the total number of shares  reserved  for issuance  under the Director
Plan to 200,000.  At December 31, 1996, no shares remained  available for future
option grants under the Director Plan.

     The  Board  of  Directors  recommends  that  shareholders  vote  "FOR"  the
amendment to the Director  Plan.  An  abstention  will have the same effect as a
vote against approval of the amendment.

Summary of the Director Plan

     The  Director  Plan is not a  qualified  deferred  compensation  plan under
Section  201(a) of the Code,  and it is not  subject  to  ERISA.  The  essential
features of the Director Plan, as amended, are summarized below.

     Purposes

     The  purposes  of the  Director  Plan are to  attract  and  retain the best
available  personnel for service as outside directors of the Company, to provide
additional  incentive to such  nonemployee  directors,  and to  encourage  their
continued service on the Board.

     Administration

     The Director Plan is designed to operate  automatically  without  requiring
administration.  However,  to the  extent  administration  is  necessary,  it is
provided by the Board. The  interpretation  and construction of any provision of
the  Director  Plan by the Board shall be final and  conclusive.  Members of the
Board receive no additional  compensation  for their services in connection with
the administration of the Director Plan.

     Terms of Options

     The Director Plan provides for the grant of  nonstatutory  stock options to
nonemployee  directors of the  Company.  The Director  Plan  provides  that each
eligible  director shall be granted an initial option to purchase  20,000 shares
of the Company's  Common Stock on the date on which such person first becomes an
eligible  director (an "Initial  Option").  Thereafter,  each eligible  director
shall be granted an option to purchase 5,000  additional  shares of Common Stock
on August 1 of each year if, on such  date,  the  eligible  director  shall have
served  on  the  Company's  Board  of  Directors  for at  least  six  months  (a
"Subsequent Option").  Four of the Company's directors are currently eligible to
receive  option  grants  under the  Director  Plan.  Options  granted  under the
Director Plan expire 10 years after the date of grant.  Each option is evidenced
by a stock  option  agreement  between the Company and the director to whom such
option is granted.

     Rule 16b-3

     The Director Plan requires that options granted  thereunder must comply, to
the extent required,  with the applicable  provisions of Rule 16b-3  promulgated
under  the  Exchange  Act  or any  successor  thereto  and  shall  contain  such
additional conditions or restrictions as may be required thereunder from time to
time to qualify for the maximum  exemption  from  Section 16 of the Exchange Act
with respect to the Director Plan transactions.

     Exercise of the Options

     The Initial Option  becomes  exercisable as to 25% of the shares subject to
the  Initial  Option on the date of the  Company's  annual  shareholder  meeting
occurring  in each  of the  first,  second,  third,  and  fourth  calendar  year
following the calendar year in which the Initial Option was granted,  subject to
the optionee remaining a director. Each Subsequent Option becomes exercisable in
full on the date of the Company's annual  shareholder  meeting  occurring in the
fourth calendar year following the calendar year in which the Subsequent  Option
was  granted,  subject  to the  optionee  remaining  a  director.  An  option is
exercised by giving  written  notice of exercise to the Company,  specifying the
number of full shares of Common Stock to be purchased and  tendering  payment of
the  purchase  price to the  Company.  The  consideration  to be paid for shares
issued upon exercise of options granted under the Directors' Plan, including the
method of payment,  shall be  determined by the  administrators  and may consist
entirely  of (i) cash,  (ii)  check,  (iii)  shares of  Common  Stock,  (iv) the
delivery  of a  properly  executed  exercise  notice  together  with such  other
documentation  as the Board and the  broker,  if  applicable,  shall  require to
effect an  exercise  of the option and  delivery to the Company of the amount of
sale or loan proceeds required to pay the exercise price, or (v) any combination
of the foregoing methods.

     Option Price

     The option  price under the  Director  Plan is the fair market value of the
Company's Common Stock on the date of grant. The fair market value of a share of
Common  Stock is the closing  sales price for such stock (or the closing bid, if
no sales were reported) as quoted on the NASDAQ National Market (or the exchange
with the greatest volume of trading in Common Stock) on the date of grant.

     Termination of Status as a Director

     The Director  Plan  provides  that,  if the  optionee  ceases to serve as a
director of the  Company,  the  optionee  may, but only within 90 days after the
date he or she ceases to be a director, exercise his or her option to the extent
that the optionee  was entitled to exercise it at the date of such  termination,
provided that the option is exercised no later than its expiration date.

     Disability

     If an optionee  is unable to continue  service as a director of the Company
as a result of his or her total and permanent disability,  the optionee may, but
only within six months after the date of the  optionee's  termination,  exercise
his or her option to the extent that the optionee was entitled to exercise it at
the date of such  termination,  provided  that the option is  exercised no later
than its expiration date.

     Death

     In the event of the death of an  optionee,  the option may be  exercised at
any time within six months after  death,  but only to the extent that the option
would have been exercisable had the optionee  continued living and remained as a
director  for six months  after the date of death,  provided  that the option is
exercised no later than its expiration date.

     Nontransferability of Options

     An option is  nontransferable  by the  optionee,  other than by will or the
laws of descent  and  distribution,  and is  exercisable  during the  optionee's
lifetime only by the optionee.

     Adjustments; Dissolution; Mergers and Asset Sales

     In the event any change, such as a stock split or dividend,  is made in the
Company's  capitalization  that results in an increase or decrease in the number
of outstanding  shares of Common Stock without receipt of  consideration  by the
Company,  an appropriate  adjustment shall be made in the number of shares under
the Director Plan and the price per share covered by each outstanding option. In
the  event of the  proposed  dissolution  or  liquidation  of the  Company,  all
outstanding options will terminate immediately prior to the consummation of such
proposed action.  In the event of the merger of the Company with or into another
corporation or a proposed sale of all or substantially  all of the assets of the
Company,  each  outstanding  option  shall be  assumed  or  substituted  by such
successor corporation.

     Amendment and Termination

     The Board may amend or  terminate  the Director  Plan at any time,  but any
such action shall not adversely affect any stock option then  outstanding  under
the  Director  Plan  without  the consent of the holder  thereof.  To the extent
necessary and desirable to comply with Rule 16b-3 (or any other  applicable  law
or regulation),  the Company shall obtain shareholder  approval of any amendment
to the  Director  Plan in such a manner  and to such a degree as  required.  The
Director  Plan  will  terminate   automatically  in  August  2003.  Any  options
outstanding  under the Director Plan at the time of its termination shall remain
outstanding until they expire by their terms.

Certain Federal Income Tax Information

     Options  granted  under the  Director  Plan are  nonstatutory  options.  An
optionee  will  not  recognize  any  taxable  income  at the  time of grant of a
nonstatutory  option.  However,  upon its exercise,  the optionee will recognize
ordinary income for tax purposes  measured by the excess of the then fair market
value of the shares over the exercise price.  Because the optionee is a director
of the Company and therefore subject to Section 16 of the Exchange Act, the date
of taxation  (and the date of  measurement  of taxable  ordinary  income) may be
deferred  unless the optionee files an election under Section 83(b) of the Code.
Upon resale of such shares by the  optionee,  any  difference  between the sales
price and the exercise price, to the extent not recognized as ordinary income as
provided  above,  will be treated as capital  gain or loss.  The Company will be
entitled  to a tax  deduction  in the amount  and at the time that the  optionee
recognizes  ordinary  income with respect to shares acquired upon exercise of an
option.

     The foregoing  summary of the federal income tax  consequences  of Director
Plan  transactions  is based on federal income tax laws in effect on the date of
this Proxy Statement.  This summary is not intended to be complete, and does not
describe foreign, state, or local tax consequences.

     The following table  summarizes the approximate  dollar value and number of
option  shares  granted under the Director Plan in 1996 by (i) each director who
is not an  executive  officer  and  (ii)  all  directors  who are not  executive
officers as a group.  Only directors who are not also executive  officers of the
Company are eligible to receive options under the Director Plan.
<TABLE>
<CAPTION>
                                               Amended Plan Benefits

                                                                          1993 Directors' Stock Option Plan (1)
                                                                     ---------------------------------------------
                                                                                                Number of Option
                         Name and Position                                Dollar Value (2)       Shares Granted
- -------------------------------------------------------------------- ---------------------- ----------------------

<S>                                                                      <C>                         <C>
Keith B. Geeslin (3).............................................        $      81,875               12,500
   Director

Jos C. Henkens (3)...............................................               81,875               12,500
   Director

Frederic N. Schwettmann (3)......................................               81,875               12,500
   Director

Robert G. Spencer (3)............................................               81,875               12,500
   Director

Non-Executive Officer Director Group (4 persons).................        $     327,500               50,000

- ---------------------------------------

<FN>
(1)      Future  benefits under the Director Plan are not  determinable  because
         the value of  options  depends  on the  market  price of the  Company's
         Common Stock on the date of grant.

(2)      Indicates  the  difference  between the exercise  price at which shares
         were granted under the Director  Plan and $23.50,  the closing price of
         the Company's  Common Stock on December 27, 1996, the last business day
         in fiscal 1996. However, none of the options were exercisable in 1996.

(3)      Option  vests as to 2,500  shares on the date of the  Company's  annual
         shareholder  meeting in 1997, 2,500 shares on the date of the Company's
         annual shareholder meeting in 1998, and 2,500 shares on the date of the
         Company's  annual  shareholder  meeting in 1999.  The  remaining  5,000
         shares vest on the date of the Company's annual shareholder  meeting in
         2000.
</FN>
</TABLE>


                PROPOSAL NO. 5 -- RATIFICATION OF APPOINTMENT OF
                              INDEPENDENT AUDITORS

     The  Board  of  Directors  has  selected  Ernst & Young  LLP to  audit  the
financial  statements  of the Company for the current  fiscal  year,  which ends
December 28, 1997.  The Board of Directors  recommends  that  shareholders  vote
"FOR"  ratification  of the  selection  of  Ernst & Young  LLP as the  Company's
independent auditors. In the event of a negative vote, the Board will reconsider
its selection.

     Representatives  of Ernst & Young LLP are  expected  to be  present  at the
Annual Meeting, will have the opportunity to make a statement if they so desire,
and are expected to be available to respond to appropriate questions.


                                OTHER INFORMATION

Security Ownership of Management

     The following table sets forth certain information regarding the beneficial
ownership  of the  Company's  Common  Stock  as of the  Record  Date by (i) each
director,  (ii) each officer named in the Summary  Compensation Table, and (iii)
all directors and officers as a group:
<TABLE>
<CAPTION>
                                                                                          Shares        Percentage
                                                                                       Beneficially    Beneficially
                                        Name                                             Owned (1)      Owned (2)
- ------------------------------------------------------------------------------------- --------------- ---------------

<S>                                                                                        <C>              <C>
John C. East (3)...................................................................        265,690          1.3%

Keith B. Geeslin (4)...............................................................         16,617           *

Douglas D. Goodyear (5)............................................................         20,428           *

Esmat Z. Hamdy (6).................................................................         48,805           *

Jos C. Henkens (4).................................................................         26,297           *

Jeffrey M. Schlageter (7)..........................................................        112,432           *

Frederic N. Schwettmann (4)........................................................         12,500           *

Robert G. Spencer (4) .............................................................         30,166           *

David M. Sugishita (8).............................................................         40,879           *

All Directors and Executive Officers as a Group (12 persons) (9)...................        658,182          3.1

- ---------------------------------------

<FN>
*        Less than one percent.

(1)      Except as  indicated  in the  footnotes  to this table and  pursuant to
         applicable  community  property laws, the persons and entities named in
         the table have sole voting and sole  investment  power with  respect to
         all shares of Common Stock beneficially owned.

(2)      Calculated as a percentage of shares of Common Stock  outstanding as of
         the Record Date.

(3)      Includes  94,250  shares  issuable  pursuant to stock  options that are
         exercisable within 60 days after the Record Date.

(4)      Includes  12,500  shares issuable  pursuant to stock  options  that are
         exercisable within 60 days after the Record Date.

(5)      Includes  18,750  shares  issuable  pursuant to stock  options that are
         exercisable within 60 days after the Record Date.

(6)      Includes  9,750  shares  issuable  pursuant to stock  options  that are
         exercisable within 60 days after the Record Date.

(7)      Includes  32,249  shares  issuable  pursuant to stock  options that are
         exercisable within 60 days after the Record Date.

(8)      Includes  28,124  shares  issuable  pursuant to stock  options that are
         exercisable within 60 days after the Record Date.

(9)      Includes  296,905  shares  issuable  pursuant to stock options that are
         exercisable within 60 days after the Record Date.
</FN>
</TABLE>

Executive Compensation

     Summary of Officer Compensation

     The following table sets forth  information  concerning the compensation of
the Company's five mostly highly compensated  executive officers for each of the
last three completed fiscal years:
<TABLE>
<CAPTION>

                                          Summary Compensation Table (1)

                                                                                                       Long Term
                                                                                                     Compensation
                                                                                                        Awards
                                                                Annual Compensation                ------------------
                                         --------------------------------------------------------     Securities
                                                                                  Other Annual        Underlying
      Name and Principal Position         Year        Salary       Bonus (2)      Compensation          Options
- ---------------------------------------- -------   ------------  ------------  ------------------  ------------------

<S>                                       <C>      <C>           <C>           <C>                        <C>
John C. East...........................   1996     $    278,609  $    237,375  $         0                 60,000
   President and                          1995          253,279        67,412            0                122,000
   Chief Executive Officer                1994          236,708        52,173            0                 56,000

Douglas D. Goodyear....................   1996          195,349       176,250       80,972 (3)             95,000
   Vice President of
   Worldwide Sales

Esmat Z. Hamdy.........................   1996          192,167       129,765            0                 49,613 (4)
   Senior Vice President of               1995          174,481        32,970            0                 42,766
   Technology & Operations                1994          138,909        25,758            0                 27,250

Jeffrey M. Schlageter..................   1996          194,167       126,600            0                 51,188 (4)
   Senior Vice President of               1995          179,300        36,480            0                 42,000
   Engineering                            1994          164,839        27,475            0                 24,000

David M. Sugishita.....................   1996          205,833       135,462            0                 98,440 (5)
   Senior Vice President of               1995           64,359        13,056            0                 75,000
   Finance & Administration and Chief
   Financial Officer

- ---------------------------------------

<FN>
(1)      Except as set forth in this table, there was no reportable compensation
         awarded to, earned by, or paid to the named executive officers in 1996.

(2)      The  Company  paid  bonuses  in the year  following  that in which  the
         bonuses were earned.

(3)      Other  compensation  related to  expenses  incurred  in  relocating  to
         California,  tax protection on non-deductible  relocation  expenses,  a
         hire bonus, and car allowance.

(4)      Includes 21,750 options granted in 1995 that were repriced in 1996.

(5)      Includes 75,000 options granted in 1995 that were repriced in 1996.
</FN>
</TABLE>

     Option Grants

     The following  table sets forth certain  information  with respect to stock
options  granted  during  1996 to each of the  executive  officers  named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
                        Option Grants in Last Fiscal Year

                                                   Individual Grants (1)
                                   --------------------------------------------------------       Potential Realizable Value at
                                    Number of         % of Total          Per                  Assumed Annual Rates of Stock Price
                                   Securities       Options Granted      Share                   Appreciation for Option Term (2)
                                   Underlying       to Employees in    Exercise  Expiration   -------------------------------------
             Name                  Options (3)        Fiscal Year        Price      Date          0%           5%           10%
- -------------------------------    -----------      ---------------   ---------- ----------   -----------  -----------  -----------

<S>                                 <C>                   <C>         <C>         <C>         <C>          <C>          <C>
John C. East.................       60,000 (4)            2.60%       $  14.875   07/17/06    $         0  $   561,288  $ 1,422,415

Douglas D. Goodyear..........       60,000 (5)            2.60           13.5625  02/02/06              0      511,763    1,270,014
                                    15,000 (6)            0.65           14.875   07/17/06              0      140,322      355,604
                                    20,000 (7)            0.87           13.560   11/01/06        108,800      347,780      714,422

Esmat Z. Hamdy...............       21,750 (8)            0.94           10.625   01/05/06              0      145,334      368,304
                                    27,863 (9)            1.21           14.875   07/17/06              0      260,653      660,546

Jeffrey M. Schlageter........       21,750 (10)           0.94           10.625   01/05/06              0      145,334      368,304
                                    29,438 (11)           1.27           14.875   07/17/06              0      275,386      697,884

David M. Sugishita...........       75,000 (12)           3.25           10.625   01/05/06              0      501,150    1,270,014
                                    23,440 (13)           1.02           14.875   07/17/06              0      219,277      555,690

- ------------------------------------------------------

<FN>
(1)      Except for the "change of control"  grant  discussed in footnote 7, the
         exercise  price of these  options is equal to the fair market  value of
         the Company's  Common Stock on the date of grant,  as determined by the
         Company's Board of Directors. The options expire 10 years from the date
         of grant,  are not  transferable by the optionee (other than by will or
         the laws of descent and  distribution),  and are exercisable during the
         optionee's lifetime only by the optionee.  To the extent exercisable at
         the  time of  termination,  options  may be  exercised  within  30 days
         following  termination of the optionee's  employment  with the Company,
         unless termination is the result of total and permanent disability,  in
         which case the options may be  exercised  at any time within six months
         following termination, or unless termination is the result of death, in
         which case the  options may be  exercised  at any time within 12 months
         following  death by the optionee's  estate or a person who acquired the
         right to exercise the option by bequest or inheritance.

(2)      The 0%, 5%, and 10% assumed annual rates of  appreciation  are mandated
         by the rules of the SEC and do not represent the Company's  estimate or
         projection  of future Common Stock prices.  The  "potential  realizable
         value" at the assumed rates of appreciation  were calculated  using the
         applicable exercise price as the base.

(4)      Option vests and is exercisable 100% on August 1, 2000.

(5)      Option begins  vesting on February 1, 1996 and is exercisable as to 25%
         on February 1, 1997 and 6.25% quarterly thereafter.

(6)      Option  begins  vesting  as to 3,750  shares on  January 1, 1998 and is
         exercisable  quarterly in 1998,  1999, and 2000.  The remaining  11,250
         shares vest 100% on August 1, 2000.

(7)      Options vest and are fully exercisable upon an involuntary  termination
         "for cause," or a voluntary  termination "for good reason," following a
         "change of control" of the Company.  These "change of control"  options
         were granted at the same exercise  price as Mr.  Goodyear's  "new hire"
         grant (rounded to the nearest penny) and equal  one-third the number of
         his "new hire" grant.

(8)      Option  begins  vesting as to 6,038  shares on January 1, 1996,  at the
         rate of 678 shares per quarter in 1996 and 1997,  and 153.5  shares per
         quarter in 1998.  The  remaining  15,712  shares vest 100% on August 1,
         1999.  This option was  originally  granted in 1995 and was repriced in
         1996.

(9)      Option  begins  vesting as to 12,363  shares on January 1, 1997, at the
         rate of 772 shares per quarter in 1997,  1998, and 1999, and 775 shares
         per quarter in 2000. The remaining 15,500 shares vest 100% on August 1,
         2000.

(10)     Options  begin  vesting as to 6,562  shares on January 1, 1996,  at the
         rate of 797 shares per  quarter in 1996 and 1997,  and 46.5  shares per
         quarter in 1998.  The  remaining  15,188  shares vest 100% on August 1,
         1999.  These options were originally  granted in 1995 and were repriced
         in 1996.

(11)     Options begin  vesting as to 13,938 shares on January 1, 1997,  and are
         exercisable  quarterly as to 3,563 shares in 1997,  1998, and 1999, and
         are  exercisable  quarterly as to 3,250 shares in 2000.  The  remaining
         15,500 shares vest 100% on August 1, 2000.

(12)     Option begins  vesting on August 28, 1995 and is  exercisable as to 25%
         on August 28, 1996, and as to 6.25% quarterly  thereafter.  This option
         was originally granted in 1995 and was repriced in 1996.

(13)     Option  begins  vesting as to 7,940  shares on January 1, 1999,  at the
         rate of 1,172.5  per quarter  during 1999 and 812.5 per quarter  during
         2000. The remaining 15,500 shares vest 100% on August 1, 2000.
</FN>
</TABLE>

     Option Values

     The following table sets forth certain information concerning the number of
options  exercised  during 1996 by the executive  officers  named in the Summary
Compensation  Table, as well as the number and aggregate value of shares covered
by both  exercisable  and  unexercisable  stock  options held by such  executive
officers as of December 29, 1996, the end of the fiscal year.
<TABLE>
<CAPTION>
                 Aggregated Option Exercises in Last Fiscal Year
                        and Fiscal Year End Option Values

                                                                             Number of Securities         Value of Unexercised
                                                                            Underlying Unexercised       In-the-Money Options at
                                                                          Options at Fiscal Year-End       Fiscal Year-End (1)
                                         Shares Acquired      Value      ---------------------------   ----------------------------
                 Name                      on Exercise    Realized (2)   Exercisable   Unexercisable   Exercisable   Unexercisable
- ---------------------------------------  ---------------  -------------  -----------   -------------   ------------  --------------

<S>                                                <C>    <C>                <C>           <C>         <C>           <C>
John C. East........................               0      $           0      84,250        263,750     $  1,324,805  $    3,323,415

Douglas D. Goodyear.................               0                  0           0         95,000                 0        924,425

Esmat Z. Hamdy......................          24,812            286,314       4,296         98,696            61,718      1,267,520

Jeffrey M. Schlageter...............           4,500             35,213      27,297         97,516           462,770      1,239,717

David M. Sugishita..................               0                  0      23,437         75,003           301,751        866,044

- --------------------------------------------

<FN>
(1)      Calculated on the basis of the  difference  between the closing  market
         price as of the fiscal year end ($23.50) and the exercise price.

(2)      Calculated on the basis of the  difference  between the closing  market
         price as of the exercise date and the exercise price.
</FN>
</TABLE>

     Change-in-Control Arrangements

     David M.  Sugishita  joined the Company as Senior Vice President of Finance
and Chief Financial  Officer on August 28, 1995. The Company agreed that, upon a
"change of control," it will accelerate the  exercisability  of Mr.  Sugishita's
"new hire" stock option  grant.  In addition,  if a "change of control"  were to
occur before  August 28, 1997,  the Company  would make to Mr.  Sugishita at the
close of the transaction a lump-sum payment equal to one year's salary.

     The Company and its other  executive  officers have entered into Management
Continuity  Agreements,  which are designed to ensure  continued  service in the
event of a "change of control." The Agreements  provide for accelerated  vesting
of an officer's  stock  options if  following a change of control the  officer's
employment  is  terminated  other than for  "cause" or the  officer  voluntarily
terminates his or her employment "for good reason."

     In  addition,  on  October 5, 1995,  the Board of  Director's  Compensation
Committee  granted to the executive  officers other than Mr.  Sugishita  options
that vest six months after a "change of control." These options were intended to
approximate  the benefit that the executive  officers would receive if they were
eligible under the Company's  Employee  Retention  Plan. The Employee  Retention
Plan provides that all Company employees other than executive  officers who hold
unvested  stock  options  under the Option Plan as of the date of any "change of
control" of the  Company  shall  receive,  upon  remaining  in the employ of the
Company for six months following the date of such change of control (or earlier,
if terminated other than for "cause" prior to the end of such six month period),
an amount equal to one-third of the aggregate "spread" on their unvested options
as of the date of such change of control.  Payment shall be made in common stock
of the  acquiror.  For this purpose,  the "spread" is defined as the  difference
between the change-of-control price and the option exercise price. Mr. Goodyear,
who joined the Company in February 1996, was granted "change of control" options
on November 1, 1996.

     "Change  of  control"  is  defined  as (i)  acquisition  by any  person  of
beneficial  ownership  of more  than  30% of the  combined  voting  power of the
Company's  then-outstanding  securities;  (ii) a change of the  majority  of the
Board of Directors within a two-year period;  (iii) the consummation of a merger
or  consolidation  of the  Company  with  any  other  corporation  that has been
approved  by  the   shareholders  of  the  Company,   other  than  a  merger  or
consolidation  that  would  result  in the  voting  securities  of  the  Company
outstanding  immediately  prior thereto  continuing to represent at least 50% of
the total voting power  represented  by the voting  securities of the Company or
the surviving entity outstanding immediately after such merger or consolidation;
or (iv)  approval  by the  shareholders  of the  Company  of a plan of  complete
liquidation  of the Company or an agreement for the sale or  disposition  by the
Company of all or substantially all of the Company's assets.

Compensation Committee Report

     The  following  report is  provided to  shareholders  by the members of the
Compensation Committee of the Board of Directors.

     Background

     Since the Company's  incorporation  in 1986,  the  Compensation  Committee,
which is a standing  committee  of the Board of  Directors,  has been  primarily
responsible for establishing and reviewing the Company's management compensation
policies.  Since the  Company's  initial  public  offering in August  1993,  the
Compensation  Committee  has  formally  administered  the  Company's  management
compensation policies and plans,  including the 1986 Incentive Stock Option Plan
and the 1993 Employee Stock Purchase  Plan. The  Compensation  Committee has the
same  authority  as the Board to act on all  compensation  matters,  except  for
actions  requiring  shareholder  approval  or  related  to the  compensation  of
directors.

     No member of the  Compensation  Committee is a former or current officer or
employee of the Company.  The current members of the Compensation  Committee are
Jos C. Henkens, Frederic N. Schwettmann,  and Robert G. Spencer. Mr. Henkens has
been a member of the Compensation  Committee since 1986, Mr.  Schwettmann  since
1993, and Mr.  Spencer since 1989.  Meetings of the  Compensation  Committee are
attended by Michelle A. Begun,  the Company's Vice President of Human Resources,
who provides background and market information and makes executive  compensation
recommendations  but  does  not  vote on any  matters  before  the  Compensation
Committee.

     Compensation Policy

     There are three major  elements  of the  Company's  executive  compensation
program.  The first  element  is annual  cash  compensation  in the form of base
salary and incentive  bonuses.  The second element is long-term  incentive stock
options,  which are designed to align  compensation  incentives with shareholder
goals.  The third  element  is  compensation  and  employee  benefits  generally
available  to all  employees  of the Company,  such as the 1993  Employee  Stock
Purchase Plan, health insurance, and a 401(k) plan.

     The  Compensation  Committee  establishes the  compensation of each officer
principally  by  considering  the average  compensation  for officers in similar
positions  with 16  companies  in the  semiconductor  industry  that have annual
revenues  between $50 million and $650  million  (the  "Reference  Group").  The
purpose of monitoring the Reference  Group is to provide a stable and continuing
frame of  reference  for  compensation  decisions.  All of the  companies in the
Reference Group have a smaller market  capitalization  than the companies in the
Standard & Poor's  Semiconductor Index (see "Company Stock Performance"  below).
The  composition  of the Reference  Group is subject to change from year to year
based on the Committee's  assessment of  comparability,  including the extent to
which the Reference Group reflects  changes  occurring within the Company and in
the industry as a whole.  The Company's  policy is to have officer  compensation
near the average of the Reference Group.

     After analyzing  Reference Group base salaries as compared with salaries of
the Company's officers,  the Compensation  Committee determines an annual salary
increase  budget.  In August 1996, the Committee  approved base salary increases
averaging  approximately  9% for the  Company's  officers.  The salary  increase
budget is then allocated  among officers on the basis of individual  performance
(during the preceding 12 months) against  objectives related to their respective
areas of  responsibility.  Performance  objectives  are  proposed by  individual
officers,  negotiated by the executive  staff,  and approved by the Compensation
Committee with the advice of the Chief Executive Officer.

         Under the  Company's  Executive  Bonus  Plan for 1996,  incentive  cash
payments  were based  strictly  on the  Company's  revenues  and profits and the
growth of the Company  relative to its  principal  competitors.  The revenue and
profitability   objectives  and  the  "competitive   adjustment"  multiple  were
established in the Plan on a sliding scale,  so that the percentage  achievement
of each, which could be higher or lower than 100%, was determinable  objectively
at the end of the year. For example, the "competitive adjustment" multiple would
have  been  50% if the  Company  had  grown  at a  slower  rate  than all of its
principal  competitors  in 1996. The target bonus for an officer (other than the
Chief Executive  Officer) under the Plan was 40% of his or her base salary.  The
percentage  achievement  of the revenue  and  profitability  objectives  in 1996
together  totaled  approximately  210%.  This sum was then  multiplied by 20% to
normalize  the aggregate  percentage  achievement  to the 40% bonus target.  The
product  of  these  two  percentages,  which  was  approximately  42%,  was then
multiplied by the "competitive  adjustment"  multiple,  which was 150% since the
Company grew at a faster rate than all of its principal competitors in 1996. The
result for 1996 was bonus payments to officers  (other than the Chief  Executive
Officer) that averaged approximately 63% of base salary. Bonuses were paid under
the Executive  Bonus Plan in January of 1997.  The Committee  believes the bonus
amount for 1996 was  reasonable  not only  because  the  Company  increased  net
revenues by 37% compared with 1995 and outgrew its competitors, but also because
the Company was also able to improve its gross margin and operating  income as a
percentage of net revenues while achieving that rate of growth.

     The Company  believes  that  executive  officers  should hold  substantial,
long-term  equity  stakes in the  Company  so that the  interests  of  executive
officers  will coincide  with the  interests of the  shareholders.  As a result,
stock or stock options constitute a significant portion of the compensation paid
by the Company to its officers.  After  analyzing the practices of the Reference
Group, the Compensation  Committee determines an annual budget for option grants
to the Company's employees and officers.  In granting stock options to officers,
the Compensation  Committee considers a number of factors, such as the officer's
position,  responsibility, and equity interest in the Company, and evaluates the
officer's  past  performance  and future  potential to influence  the  long-term
growth and profitability of the Company.  After taking these considerations into
account, the Compensation  Committee in 1996 granted options to purchase 60,000,
15,000,  27,863,  29,438,  and 23,440  shares of Common  Stock to Messrs.  East,
Goodyear, Hamdy, Schlageter,  and Sugishita,  respectively.  All of such options
were granted at an exercise  price of $14.875 per share,  which was the value of
the Company's Common Stock on the date of grant.

     Compensation of Chief Executive Officer

     The  Compensation  Committee  generally  uses the same factors and criteria
described above in making  compensation  decisions regarding the Chief Executive
Officer.  In 1996,  Mr.  East's annual base salary was adjusted from $263,330 to
$300,000, an increase of approximately 14%. The Compensation  Committee believes
this is an appropriate  amount  considering Mr. East's exemplary  leadership and
resulting  influence over the Company's  performance.  Mr. East's 1996 bonus was
determined  under the  Company's  Executive  Bonus Plan in the manner  described
above  (except  that his target  bonus is equal to 50% of his base  salary)  and
resulted in a payment of $237,375, or approximately 79% of his base salary.

     Repricing of Options

     On  January  5,  1996,  the  Compensation  Committee  unanimously  approved
management's  request that the holders of outstanding options to purchase Common
Stock of the  Company at  exercise  prices in excess of $10.625  per share,  the
then-current  fair market value of the Company's  Common  Stock,  be offered the
opportunity  to exchange  their  higher  priced  options for new options with an
exercise price of $10.625. At Mr. East's request, his options were not repriced.
The  Committee  also  approved  management's  recommendation  that the exchanged
options generally not be exercisable for six months. The Compensation  Committee
concluded  that the  exchange  would  greatly  assist the  Company in  retaining
qualified  employees  in  an  extraordinarily  competitive  environment  and  in
maintaining a highly motivated group of employees, and therefore was in the best
interests  of  the  Company  and  its  shareholders.   In  deciding  to  approve
management's  repricing  recommendations,  the Committee was convinced  that the
down-turn  in the value of the  Company's  Common  Stock had been the  result of
general market forces rather than the Company's  performance.  For example,  the
then-current  fair market value of the Company's Common Stock was only about 12%
higher than the Company's  initial public  offering price of $9.50,  even though
the Company's quarterly revenues and earnings had doubled.

     Options  representing  the right to purchase a total of 1,093,639 shares of
Common Stock were repriced, of which 262,750 (or approximately 24%) were held by
executive  officers.  The following table sets forth information  concerning the
repricing of options held by any executive  officer since the Company has been a
public company.
<TABLE>
<CAPTION>
                                Option Repricings

                                                                                                        Length of
                                              Number of        Market                                    Original
                                              Securities      Price of      Exercise                    Option Term
                                              Underlying      Stock at      Price at        New        Remaining at
                                               Options        Time of       Time of       Exercise       Date of
             Name                  Date        Repriced      Repricing     Repricing       Price        Repricing
- ------------------------------  ----------  --------------  ------------  ------------  ------------   ------------
<S>                              <C>            <C>           <C>            <C>          <C>           <C>
Michelle A. Begun............    01/05/96       13,250        $10.625        $13.00       $10.625       9.5 Years

Esmat Z. Hamdy...............    01/05/96       21,750        $10.625        $13.00       $10.625       9.5 Years

Arthur S. Mandell............    01/05/96       17,500        $10.625        $11.00       $10.625       7.8 Years

Arthur S. Mandell............    01/05/96       21,750        $10.625        $13.00       $10.625       9.5 Years

Dennis F. Nye................    01/05/96       10,176        $10.625        $11.00       $10.625       7.8 Years

Dennis F. Nye................    01/05/96       21,750        $10.625        $13.00       $10.625       9.5 Years

Jeffrey M. Schlageter........    01/05/96       21,750        $10.625        $13.00       $10.625       9.5 Years

David M. Sugishita...........    01/05/96       75,000        $10.625        $16.75       $10.625       9.5 Years

David L. Van De Hey..........    01/05/96       32,500        $10.625        $13.00       $10.625       9.5 Years
</TABLE>

         Deductibility of Executive Compensation

     Beginning in 1994, the Code limited the federal income tax deductibility of
compensation paid to the Company's chief executive and to each of the other four
most highly compensated executive officers.  For this purpose,  compensation can
include,  in addition to cash compensation,  the difference between the exercise
price of stock  options  and the  value of the  underlying  stock on the date of
exercise.  The  Company  may deduct  compensation  with  respect to any of these
individuals  only to the extent that  during any fiscal  year such  compensation
does  not  exceed  $1  million  or  meets  certain  other  conditions  (such  as
shareholder approval).  Considering the Company's current compensation plans and
policy,  the Company and the Compensation  Committee  believe that, for the near
future,  there is little risk that the  Company  will lose any  significant  tax
deduction relating to executive compensation.  If the deductibility of executive
compensation  becomes a significant issue, the Company's  compensation plans and
policy  will be  modified  to  maximize  deductibility  if the  Company  and the
Compensation  Committee  determine  that such action is in the best interests of
the Company.

                                                         Jos C. Henkens
                                                         Frederic N. Schwettmann
                                                         Robert G. Spencer

Compensation Committee Interlocks and Insider Participation

     No member of the  Compensation  Committee  is an officer or employee of the
Company or any of its subsidiaries, and no officer or employee of the Company or
any of its  subsidiaries  has served as a member of the  Compensation  Committee
since the Company's initial public offering.

Company Stock Performance

     The following  graph shows a comparison of cumulative  total return for the
Company's Common Stock, the Standard & Poor's 500 Composite Stock Index, and the
Standard & Poor's  Semiconductor  Index.  In preparing the graph, it was assumed
that (i) $100 was invested on July 31, 1993, in the  Company's  Common Stock (at
the initial public offering price of $9.50 per share),  the S&P Composite Index,
and the S&P Semiconductor Index and (ii) all dividends were reinvested.
<TABLE>
<CAPTION>
                      Comparison of Cumulative Total Return

                                                  7/31/93       12/31/93      12/31/94      12/31/95      12/31/96
                                                  -------       --------      --------      --------      -------- 
<S>                                                 <C>           <C>           <C>           <C>           <C> 
ACTEL........................................       $100          $121          $ 87          $113          $250
S & P 500....................................        100           105           107           147           181
S & P ELEC (SEMI/COMPNTS)....................        100           106           124           169           304
</TABLE>

                                [GRAPHIC OMITTED]

     The closing price of the Company's  Common Stock on December 31, 1996,  was
$23.75.  The closing price of the Company's  Common Stock on March 27, 1997, was
$21.00.


                          COMPLIANCE WITH SECTION 16(a)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

     To the  Company's  knowledge,  based solely on review of the copies of such
reports furnished to the Company and written  representations that no additional
reports were required,  all directors and officers of the Company filed with the
SEC on a timely basis all reports required by Section 16(a) of the Exchange Act,
during the Company's most recent fiscal year. To the Company's knowledge,  there
was no beneficial  owner of more than 10% of the  Company's  Common Stock during
the Company's most recent fiscal year.


                                  OTHER MATTERS

     The  Company  knows of no  other  matters  to be  submitted  to the  Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention  of the persons  named in the  enclosed  proxy card to vote the shares
they represent as the Board of Directors may recommend.


                                              BY ORDER OF THE BOARD OF DIRECTORS

                                              David L. Van De Hey
                                              Secretary

Dated:  March 28, 1997

THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY  SHAREHOLDER  UPON WRITTEN REQUEST A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 29,
1996,  INCLUDING THE FINANCIAL  STATEMENTS  AND SCHEDULE AND A LIST OF EXHIBITS.
REQUESTS  SHOULD BE SENT TO  INVESTOR  RELATIONS,  ACTEL  CORPORATION,  955 EAST
ARQUES AVENUE, SUNNYVALE, CALIFORNIA 94086-4533.



                                                                       Exhibit A

                          AGREEMENT AND PLAN OF MERGER

                                       OF

                                ACTEL CORPORATION
                              a Nevada corporation

                                       AND

                                ACTEL CORPORATION
                            a California corporation


     THIS  AGREEMENT  AND PLAN OF  MERGER  dated as of  ____________,  1997 (the
"Agreement")  is between  Actel  Corporation,  a Nevada  corporation  having its
principal  place of  business  at 955 E.  Arques,  Sunnyvale,  CA 94086  ("Actel
Nevada"),  and Actel Corporation,  a California corporation having its principal
place of business at 955 E. Arques,  Sunnyvale,  CA 94086 ("Actel  California").
Actel  Nevada  and Actel  California  are  sometimes  referred  to herein as the
"Constituent Corporations."

                                    RECITALS

     a.   Actel Nevada is a corporation  duly  organized and existing  under the
laws of the State of Nevada and has an authorized  capital of 65,000,000 shares,
$0.001  par  value,  60,000,000  of which are  designated  "Common  Stock,"  and
5,000,000 of which are designated "Preferred Stock." As of __________, 1997, 100
shares of Common  Stock were issued and  outstanding,  all of which were held by
Actel California, and no shares of Preferred stock were issued and outstanding.

     b.   Actel  California is a corporation  duly  organized and existing under
the laws of the State of California and has an authorized  capital of 35,000,000
shares,  30,000,000  of which are  designated  "Common  Stock," and 5,000,000 of
which are designated  "Preferred  Stock." One series of preferred stock of Actel
California has been designated,  namely, Series A Preferred Stock (the "Series A
Preferred  Stock"),  consisting  of  1,000,000  shares.  As of March  12,  1997,
20,809,866 shares of Common Stock and no shares of Series A Preferred Stock were
issued and outstanding.

     c.   The Board of Directors of Actel  California has  determined  that, for
the purpose of effecting the  reincorporation of Actel California into the State
of Nevada, it is advisable and in the best interests of Actel California and its
shareholders  that Actel  California  merge with and into Actel  Nevada upon the
terms and conditions herein provided.

     d.   The  respective   Boards  of  Directors  of  Actel  Nevada  and  Actel
California have approved this Agreement and have directed that this Agreement be
submitted  to a vote  of  their  respective  shareholders  and  executed  by the
undersigned officers.

     NOW, THEREFORE,  in consideration of the mutual agreements and covenants
set forth herein, Actel Nevada and Actel California hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:

I.   MERGER

     A.   Merger.  In  accordance  with the  provisions of this  Agreement,  the
Nevada General Corporation Law and the California General Corporation Law, Actel
California  shall be merged  with and into  Actel  Nevada  (the  "Merger"),  the
separate  existence of Actel  California  shall cease and Actel Nevada shall be,
and is herein  sometimes  referred to as, the "Surviving  Corporation,"  and the
name of the Surviving Corporation shall be Actel Corporation,  and the surviving
corporation shall be a Nevada  corporation under the Nevada General  Corporation
Law.

     B.   Filing and  Effectiveness.  The Merger shall become effective when the
following actions shall have been completed:

          1.   This  Agreement  and the  Merger  shall  have  been  adopted  and
     approved by the shareholders of each Constituent  Corporation in accordance
     with  the  requirements  of the  Nevada  General  Corporation  Law  and the
     California General Corporation Law;

          2.   All of the conditions precedent to the consummation of the Merger
     specified in this Agreement shall have been satisfied or duly waived by the
     party entitled to satisfaction thereof;

          3.   Executed  Articles  of Merger  meeting  the  requirements  of the
     Nevada General  Corporation Law shall have been filed with the Secretary of
     State of the State of Nevada; and

          4.   An executed  Agreement of Merger meeting the  requirements of the
     California General Corporation Law shall have been filed with the Secretary
     of State of the State of California.

          The  date  and  time  when  the  Merger  shall  become  effective,  as
aforesaid, is herein called the "Effective Date of the Merger."

     C.   Effect of the  Merger.  Upon the  Effective  Date of the  Merger,  the
separate  existence of Actel  California  shall cease and Actel  Nevada,  as the
Surviving Corporation,  (i) shall continue to possess all of its assets, rights,
powers and property as  constituted  immediately  prior to the Effective Date of
the  Merger,  (ii) shall be subject to all actions  previously  taken by its and
Actel  California's  Boards of  Directors,  (iii) shall  succeed,  without other
transfer, to all of the assets,  rights, powers and property of Actel California
in the manner as more fully set forth in Section  92A.250 of the Nevada  General
Corporation  Law,  (iv)  shall  continue  to be  subject  to all  of its  debts,
liabilities  and obligations as constituted  immediately  prior to the Effective
Date of the Merger, and (v) shall succeed, without other transfer, to all of the
debts,  liabilities and obligations of Actel California in the same manner as if
Actel Nevada had itself  incurred  them,  all as more fully  provided  under the
applicable  provisions of the Nevada General  Corporation Law and the California
General Corporation Law.

II.  CHARTER DOCUMENTS; DIRECTORS AND OFFICERS

     A.   Articles of  Incorporation.  The  Articles of  Incorporation  of Actel
Nevada as in effect  immediately prior to the Effective Date of the Merger shall
continue in full force and effect as the  Certificate  of  Incorporation  of the
Surviving Corporation.

     B.   Bylaws.  The Bylaws of Actel Nevada as in effect  immediately prior to
the Effective  Date of the Merger shall continue in full force and effect as the
Bylaws of the Surviving  Corporation  until duly amended in accordance  with the
provisions thereof and applicable law.

     C.   Directors and Officers. The directors and officers of Actel California
immediately prior to the Effective Date of the Merger shall be the directors and
officers of the Surviving  Corporation  until their  successors  shall have been
duly  elected  and  qualified  or  until  as  otherwise  provided  by  law,  the
Certificate of Incorporation  of the Surviving  Corporation or the Bylaws of the
Surviving Corporation.

III. MANNER OF CONVERSION OF STOCK

     A.   Actel California  Common Stock. Upon the Effective Date of the Merger,
each share of Actel California  Common Stock issued and outstanding  immediately
prior  thereto  shall,  by virtue of the  Merger and  without  any action by the
Constituent  Corporations,  the holder of such  shares or any other  person,  be
converted  into and  exchanged  for one fully  paid and  nonassessable  share of
Common Stock, $0.001 par value, of the Surviving Corporation.

     B.   Actel  California  Options,  Stock  Purchase  Rights  and  Convertible
Securities.  Upon the Effective  Date of the Merger,  the Surviving  Corporation
shall assume and continue any stock option plans and all other employee  benefit
plans of Actel California.  As of the date hereof there are options  outstanding
under  Actel  California's  stock  option  plans to  purchase a total of _______
shares of Common Stock of Actel California.  As of the date hereof, there are no
other options,  purchase rights for or securities convertible into either Common
Stock or Preferred Stock of Actel  California.  Each outstanding and unexercised
option to purchase  Actel  California  Common  Stock  shall  become an option to
purchase the Surviving  Corporation's  Common Stock on the basis of one share of
the  Surviving  Corporation's  Common  Stock for each share of Actel  California
Common  Stock  issuable  pursuant  to any  such  option  on the same  terms  and
conditions  and at an  exercise  price per  share  equal to the  exercise  price
applicable  to any such Actel  California  option at the  Effective  Date of the
Merger.

          A number of shares of the Surviving  Corporation's  Common Stock shall
be reserved  for issuance  upon the  exercise of options  equal to the number of
shares of Actel  California  Common Stock so reserved  immediately  prior to the
Effective Date of the Merger.

     D.   Actel Nevada Common Stock. Upon the Effective Date of the Merger, each
share of Common Stock,  $0.001 par value, of Actel Nevada issued and outstanding
immediately  prior thereto shall, by virtue of the Merger and without any action
by Actel Nevada,  the holder of such shares or any other person, be canceled and
returned to the status of authorized but unissued shares.

     E.   Exchange of Certificates. After the Effective Date of the Merger, each
holder of an outstanding  certificate  representing  shares of Actel  California
Common  Stock  may,  at  such  shareholder's  option,  surrender  the  same  for
cancellation  to the transfer  agent and  registrar  for the Common Stock of the
Surviving  Corporation,  as exchange agent (the "Exchange Agent"), and each such
holder  shall be  entitled  to receive in  exchange  therefor a  certificate  or
certificates  representing the number of shares of Common Stock of the Surviving
Corporation's  into  which  the  surrendered  shares  were  converted  as herein
provided.  Until  so  surrendered,   each  outstanding  certificate  theretofore
representing  shares of Actel  California  Common  Stock shall be deemed for all
purposes  to  represent  the number of shares of Common  Stock of the  Surviving
Corporation's  Common  Stock into which such shares of Actel  California  Common
Stock were converted in the Merger.

          The  registered  owner  on the  books  and  records  of the  Surviving
Corporation or the Exchange  Agent of any such  outstanding  certificate  shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to the surviving Corporation or the Exchange Agent, have
and be entitled to exercise  any voting and other  rights with respect to and to
receive  dividends and other  distributions  upon the shares of capital stock of
the  Surviving  Corporation  represented  by  such  outstanding  certificate  as
provided above.

          Each   certificate   representing   Common  Stock  of  the   Surviving
Corporation  so issued in the Merger shall bear the same  legends,  if any, with
respect to the  restrictions  on  transferability  as the  certificates of Actel
California  so  converted  and  given in  exchange  therefor,  unless  otherwise
determined by the Board of Directors of the Surviving  Corporation in compliance
with applicable laws.

          If any certificate for shares of Actel Nevada stock is to be issued in
a name other than that in which the certificate surrendered in exchange therefor
is registered,  it shall be a condition of issuance thereof that the certificate
so  surrendered  shall be properly  endorsed  and  otherwise  in proper form for
transfer,  that such transfer otherwise be proper and that the person requesting
such  transfer pay to the Exchange  Agent any transfer or other taxes payable by
reason of the issuance of such new  certificate in a name other than that of the
registered   holder  of  the   certificate   surrendered  or  establish  to  the
satisfaction of Actel Nevada that such tax has been paid or is not payable.

IV.  GENERAL

     A.   Covenants of Actel Nevada.  Actel Nevada  covenants and agrees that it
will, on or before the Effective Date of the Merger:

          1.   Qualify to do business as a foreign  corporation  in the State of
     California and in connection  therewith  irrevocably  consent to service of
     process  directed to it upon its  designated  agent as  required  under the
     provisions of Section 2105 of the California General Corporation Law;

          2.   File any and all  documents  with the  California  Franchise  Tax
     Board  necessary for the assumption by Actel Nevada of all of the franchise
     tax liabilities of Actel California; and

          3.   Take such other  actions  as may be  required  by the  California
     General Corporation Law.

     B.   Further  Assurances.  From time to time, as and when required by Actel
Nevada or by its successors or assigns, there shall be executed and delivered on
behalf of Actel California such deeds and other instruments,  and there shall be
taken or caused to be taken by Actel  Nevada and Actel  California  such further
and other  actions,  as shall be  appropriate  or  necessary in order to vest or
perfect in or conform of record or  otherwise  by Actel  Nevada the title to and
possession  of  all  the  property,   interests,   assets,  rights,  privileges,
immunities,  powers,  franchises and authority of Actel California and otherwise
to carry out the purposes of this  Agreement,  and the officers and directors of
Actel Nevada are fully  authorized in the name and on behalf of Actel California
or  otherwise to take any and all such action and to execute and deliver any and
all such deeds and other instruments.

     C.   Abandonment. At any time before the Effective Date of the Merger, this
Agreement  may be  terminated  and the  Merger may be  abandoned  for any reason
whatsoever by the Board of Directors of either Actel California or Actel Nevada,
or both,  notwithstanding  the approval of this Agreement by the shareholders of
Actel California or by the sole stockholder of Actel Nevada, or by both.

          The Boards of Directors of the Constituent Corporations may amend this
Agreement at any time prior to the filing of this  Agreement (or  certificate in
lieu thereof)  with the  Secretaries  of State of the States of  California  and
Nevada,  provided  that an  amendment  made  subsequent  to the adoption of this
Agreement by the shareholders of either  Constituent  Corporation shall not: (1)
alter or change the amount or kind of shares, securities,  cash, property and/or
rights to be  received  in exchange  for or on  conversion  of all or any of the
shares of any class or series thereof of such Constituent Corporation, (2) alter
or  change  any  term  of the  Certificate  of  Incorporation  of the  Surviving
Corporation  to be  effected  by the  Merger,  or (3) alter or change any of the
terms and  conditions  of this  Agreement  if such  alteration  or change  would
adversely  affect the  holders of any class of shares or series  thereof of such
Constituent Corporation.

     D.   Registered Office. The registered office of the Surviving  Corporation
in the State of Nevada is located at 402 N. Division Street, Carson City, Nevada
89703, and Roy L. Farrow is the registered agent of the Surviving Corporation at
such address.

     E.   Expenses.  Each  party  to  the  transactions   contemplated  by  this
Agreement  (including,  without limitation,  Actel California,  Actel Nevada and
their respective  shareholders) shall pay its own expenses,  if any, incurred in
connection with such transactions.

     F.   Agreement.  Executed  copies of this  Agreement will be on file at the
principal  place of  business of the  Surviving  Corporation  at 955 E.  Arques,
Sunnyvale,  CA 94086 and copies thereof will be furnished to any  shareholder of
either Constituent Corporation, upon request and without cost.

     G.   Governing  Law.  This  Agreement  shall in all respects be  construed,
interpreted  and  enforced in  accordance  with and  governed by the laws of the
State  of  Nevada  and,  so far as  applicable,  the  merger  provisions  of the
California General Corporation Law.

     H.   Counterparts.  In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.

     IN  WITNESS  WHEREOF,  this  Agreement,   having  first  been  approved  by
resolutions of the Boards of Directors of Actel Nevada and Actel California,  is
hereby executed on behalf of each of such two corporations and attested by their
respective officers thereunto duly authorized.


ACTEL CORPORATION
a Nevada corporation


By:__________________________________
John C. East
President and Chief Executive Officer


ATTEST:


_____________________________________
David L. Van De Hey
Secretary



ACTEL CORPORATION
a California corporation


By:__________________________________
John C. East
President


ATTEST:


_____________________________________
David L. Van De Hey
Secretary



                                ACTEL CORPORATION
                            (California Corporation)

                              OFFICERS' CERTIFICATE


     John C. East and David L. Van De Hey certify that:

     1.   They  are the  President  and the  Secretary,  respectively,  of Actel
Corporation, a corporation organized under the laws of the State of California.

     2.   The  corporation  has authorized two classes of stock,  one designated
"Common  Stock"  and the  other  designated  "Preferred  Stock."  One  series of
Preferred  Stock,  designated  Series A Preferred Stock (the "Series A Preferred
Stock"), has been authorized.

     3.   There were 20,809,866 shares of Common Stock and no shares of Series A
Preferred  outstanding as of the record date for the meeting of  shareholders at
which the Agreement and Plan of Merger attached hereto (the "Merger  Agreement")
was approved.

     4.   The principal terms of the Merger Agreement were approved by the Board
of  Directors  and by the vote of a number of shares of each class and series of
stock that equaled or exceeded the vote required.

     5.   The vote  received  was  greater  than a majority  of the  outstanding
shares of Common Stock.

     6.   John C. East and David L. Van De Hey further  declare under penalty of
perjury  under  the  laws of the  State  of  California  that  each has read the
foregoing  certificate and knows the contents  thereof and that the same is true
of their own knowledge.

     Executed in ____________, California on ___________, 1997.



_____________________________________
John C. East
President and Chief Executive Officer



_____________________________________
David L. Van De Hey
Secretary



                                ACTEL CORPORATION
                             (Surviving Corporation)

                              OFFICERS' CERTIFICATE


     John C. East and David L. Van De Hey certify that:

     1.   They  are the  President  and the  Secretary,  respectively,  of Actel
Corporation, a corporation organized under the laws of the State of Nevada.

     2.   The  corporation  has authorized two classes of stock,  one designated
"Common Stock" and the other designated "Preferred Stock."

     3.   There were 100 shares of Common Stock outstanding and entitled to vote
on the Agreement and Plan of Merger  attached  hereto (the "Merger  Agreement").
There are no shares of Preferred Stock outstanding.

     4.   The principal terms of the Merger Agreement were approved by the Board
of  Directors  and by the vote of a number of shares of each class and series of
stock that equaled or exceeded the vote required.

     5.   The percentage  vote received was greater than a majority of the votes
entitled to be cast by holders of outstanding shares of Common Stock.

     6.   John C. East and David L. Van De Hey further  declare under penalty of
perjury  under the laws of the State of Nevada that each has read the  foregoing
certificate  and knows the  contents  thereof and that the same is true of their
own knowledge.

     Executed in ______________, California on ____________, 1997.



_____________________________________
John C. East
President



_____________________________________
David L. Van De Hey
Secretary



                   PROXY FOR ANNUAL MEETING OF SHAREHOLDERS OF
                                ACTEL CORPORATION

                            To Be Held On May 2, 1997

                   PROXY SOLICIITED BY THE BOARD OF DIRECTORS


        The  undersigned  holder  of  Common  Stock  of Actel  Corporation  (the
"Company")  acknowledges  receipt of the Company's  "Notice of Annual Meeting of
Shareholders" to be held May 2, 1997, and the accompanying Proxy Statement dated
March 28, 1997 (the  "Proxy  Statement"),  and,  revoking  any proxy  heretofore
given, hereby constitutes and appoints John C. East and Jos C. Henkens, and each
of them  individually,  with full power of  substitution,  attorney and proxy to
appear and vote all of the shares of Common Stock of the Company standing in the
name of the  undersigned  at the 1997 Annual  Meeting of  Shareholders,  and any
adjournment thereof, as follows:

1.      To elect the following  named persons as directors of the Company:  John
        C. East, Keith B. Geeslin, Jos C. Henkens, Frederic N. Schwettmann,  and
        Robert G. Spencer.

        FOR   ALL   NOMINEES    (except   as         AUTHORITY  WITHHELD TO VOTE
        indicated below                              FOR ALL NOMINEES

        To vote against or to withhold  authority to vote for any nominee(s) for
        election, write the name(s) of such nominee(s) in the following space:

        -----------------------------------------------------------------------

        If an  "against"  vote  is cast  for any  nominee,  or if  authority  is
        withheld to vote for any nominee,  indicated  whether the proxy may vote
        for another nominee, in his discretion; or such vote(s) are cast for the
        following person(s):

        -----------------------------------------------------------------------

2.      To   approve   a   change   in   the        FOR      AGAINST     ABSTAIN
        Company's  state  of   incorporation
        from California to Nevada.

3.      To approve an  amendment  increasing        FOR      AGAINST     ABSTAIN
        the   number  of  shares  of  Common
        Stock  reserved for  issuance  under
        the Company's Employee Stock Purchase
        Plan by 250,000.

4.      To approve an  amendment  increasing        FOR      AGAINST     ABSTAIN
        the   number  of  shares  of  Common
        Stock  reserved for  issuance  under
        the Company's 1993 Directors'  Stock
        Option Plan by 90,000.

5.      To ratify the  selection  of Ernst &        FOR      AGAINST     ABSTAIN
        Young LLP as the Company's independent
        auditors.


THIS  PROXY IS  SOLICITED  BY AND ON  BEHALF OF THE  BOARD OF  DIRECTORS  OF THE
COMPANY  AND MAY  REVOKED  PRIOR TO ITS  EXERCISE.  This  Proxy will be voted as
directed,  but if no direction is  indicated,  it will be voted for all nominees
for director as set forth in Proposal 1 and for Proposals 2, 3, 4, and 5. If any
other  business is presented to the 1997 Annual  Meeting of  Shareholders,  this
Proxy will be voted by those named in this Proxy in their best judgment.

                                         Dated____________________________, 1997

                                              ----------------------------------

                                              ----------------------------------
                                              Please   sign   EXACTLY   as  your
                                              name(s)  appear(s)  on the address
                                              label  used  to  mail  your  Proxy
                                              Statement. When shares are held by
                                              joint   tenants  or  as  community
                                              property,  both  should  sign.  If
                                              signing  as  attorney,   executor,
                                              administrator,     trustee,     or
                                              guardian,  please  give full title
                                              as such. If a corporation,  please
                                              sign  in  full  corporate  name by
                                              president   or  other   authorized
                                              officer. If a partnership,  please
                                              sign  in  partnership  name  by an
                                              authorized person.

                    PLEASE SIGN AND DATE YOUR PROXY AND RETURN
                      IT PROMPTLY IN THE ENCLOSED BUSINESS
                                 REPLY ENVELOPE.


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