<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
C-Cube Microsystems Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box)
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies: N/A
(2)Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
(4)Proposed maximum aggregate value of transaction: N/A
(5)Total fee paid: N/A
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid: N/A
(2)Form, Schedule, or Registration Statement No.: N/A
(3)Filing Party: N/A
(4)Date Filed: N/A
================================================================================
<PAGE>
[LOGO OF C-CUBE MICROSYSTEMS APPEARS HERE]
March 17, 1997
Dear Stockholder:
This year's Annual Meeting of Stockholders ("Annual Meeting") of C-Cube
Microsystems Inc. (the "Company") will be held on Tuesday, April 22, 1997 at
1:00 p.m., local time, at the Company's principal executive offices located at
1778 McCarthy Boulevard, Milpitas, California. You are cordially invited to
attend.
The Notice of Annual Meeting and a Proxy Statement, which describe the
formal business to be conducted at the Annual Meeting, follow this letter.
After reading the Proxy Statement, please promptly mark, sign, and return
the enclosed proxy in the prepaid envelope to assure that your shares will be
represented. Your shares cannot be voted unless you date, sign, and return the
enclosed proxy or attend the Annual Meeting in person. Regardless of the
number of shares you own, your careful consideration of, and vote on, the
matters before our stockholders are important.
I would like to take this opportunity to thank Bill O'Meara, who retired
from the Board of Directors effective February 18, 1997, for his years of
service and dedication to C-Cube. Bill was the Chief Executive Officer of the
Company from 1991 to 1995 and was a Board member from 1991 to 1997. His
contributions to the Company were enormous and his absence will be felt. We
are grateful for Bill's time and effort and wish him all the best in his new
endeavors.
I would also like to warmly welcome Don McKinney, the Chief Executive
Officer of International Network Services, as the newest member of the Board
of Directors to fill the vacancy left by Bill O'Meara's departure. Don has
many valuable years of experience in the networking and semiconductor
industries, and I look forward to his making a substantial contribution to the
future success of the Company.
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 is also enclosed for your information.
We look forward to seeing you at the Annual Meeting.
Very truly yours,
/s/ Alexandre A. Balkanski
------------------------------------
Alexandre A. Balkanski
President and Chief Executive
Officer
<PAGE>
C-CUBE MICROSYSTEMS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1997
To the Stockholders:
The Annual Meeting of Stockholders ("Annual Meeting") of C-Cube Microsystems
Inc. (the "Company"), will be held on Tuesday, April 22, 1997, at 1:00 p.m.,
local time, at C-Cube Microsystems Inc., 1778 McCarthy Boulevard, Milpitas,
California 95035, for the following purposes:
1. To elect two Class III directors to hold office for a three-year term
and until their successors are elected and qualified.
2. To consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent public accountants
for the fiscal year ending December 31, 1997.
3. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 3, 1997 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the
stockholders entitled to vote at the meeting will be available for examination
by any stockholder for any purpose relating to the meeting during ordinary
business hours at the principal office of C-Cube Microsystems Inc.
By order of the Board of Directors
/s/ Alexandre A. Balkanski
-------------------------------------
Alexandre A. Balkanski
President and Chief Executive
Officer
Milpitas, California
March 17, 1997
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY
CARD IN THE ACCOMPANYING PREPAID ENVELOPE TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE MEETING. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY CHOOSE
TO VOTE IN PERSON EVEN IF YOU HAVE PREVIOUSLY SENT IN YOUR PROXY CARD.
<PAGE>
C-CUBE MICROSYSTEMS INC.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
GENERAL
The accompanying proxy is solicited by the Board of Directors of C-Cube
Microsystems Inc., a Delaware corporation ("C-Cube" or the "Company"), for use
at the Annual Meeting of Stockholders ("Annual Meeting") to be held on
Tuesday, April 22, 1997, at 1:00 p.m., local time, or any adjournment thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. The meeting will be held at the Company's principal executive
offices located at 1778 McCarthy Boulevard, Milpitas, California 95035. The
date of this Proxy Statement is March 17, 1997, the approximate date on which
this Proxy Statement and the accompanying form of proxy were first sent or
given to stockholders.
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 is enclosed with this Proxy Statement.
SOLICITATION AND VOTING
The cost of soliciting proxies will be borne by the Company. The Company has
engaged Corporate Investor Communications Inc. ("CIC") to assist in the
solicitation of proxies for the Annual Meeting. The Company will pay
approximately $5,000 in fees for CIC's services and will reimburse CIC for
reasonable out-of-pocket costs.
In addition, the Company will request banks and brokers, and other
custodians, nominees and fiduciaries, to solicit their customers who have
stock of the Company registered in the names of such persons and will
reimburse them for their reasonable, out-of-pocket costs. The Company may use
the services of its officers, directors, and regular employees to solicit
proxies, personally or by telephone, without additional compensation.
Only stockholders of record as of the close of business on March 3, 1997,
will be entitled to vote at the meeting and any adjournment thereof. As of
that date, there were 36,332,320 shares of common stock of the Company, par
value $.001 per share ("Common Stock"), issued and outstanding. Stockholders
may vote in person or by proxy. Each holder of shares of Common Stock is
entitled to one (1) vote for each share of stock held on the proposals
presented in this Proxy Statement.
QUORUM; VOTING OF PROXIES
The Company's By-Laws provide that a majority of all of the shares of the
stock entitled to vote, whether present in person or represented by proxy,
shall constitute a quorum for the transaction of business at the Annual
Meeting. Shares that are voted "FOR," "AGAINST" or "ABSTAIN" with respect to a
matter are treated as being present at the meeting for purposes of
establishing a quorum and are also treated as shares entitled to vote at the
Annual Meeting (the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors and
ratification of appointment of the Company's independent public accountants).
In the absence of controlling precedent to the contrary, the Company intends
to
1
<PAGE>
treat abstentions in this manner. Accordingly, abstentions will have the same
effect as a vote against the proposal when considered as Votes Cast.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Accordingly, the Company intends to treat
broker non-votes in this manner. Thus, a broker non-vote will not affect the
outcome of the voting on a proposal.
All valid proxies received prior to the Annual Meeting will be voted. All
shares represented by a proxy will be voted, and where a stockholder specifies
by means of the proxy a choice ("FOR," "AGAINST" or "ABSTAIN") with respect to
any matter to be acted upon, the shares will be voted in accordance with the
specification so made. If no choice is indicated on the proxy, the shares will
be voted in favor of the proposal (other than instances of broker non-votes).
REVOCABILITY OF PROXIES
A stockholder giving a proxy has the power to revoke his or her proxy, at
any time prior to the time it is voted, by delivering to the Secretary of the
Company a written instrument revoking the proxy or a duly executed proxy with
a later date, or by attending the Annual Meeting and voting in person.
PROPOSAL NO. 1
Election of Directors
The Company has a classified Board of Directors consisting of two Class I
Directors (Donald McKinney and one vacancy), three Class II Directors (Donald
T. Valentine, Alexandre A. Balkanski and Gregorio Reyes), and two Class III
Directors (T. J. Rodgers and Baryn S. Futa), who will serve until the annual
meetings of stockholders to be held in 1998, 1999 and 1997, respectively, and
until their respective successors are duly elected and qualified. At each
annual meeting of stockholders, directors are elected for a full term of three
years to succeed those directors whose terms expire on the annual meeting
dates. Vacancies on the Board of Directors resulting from death, resignation,
retirement, disqualification or other cause (other than removal from office by
vote of the stockholders) may be filled by a majority vote of the directors
then in office, and directors so chosen shall hold office for a term expiring
at the annual meeting of stockholders at which the term of office of the class
to which they have been elected expires.
The term of the Class III Directors will expire on the date of the upcoming
Annual Meeting. Two people are to be elected to serve as Class III Directors
of the Board of Directors at that meeting. Management's nominees for election
by the stockholders to these positions are T. J. Rodgers and Baryn S. Futa,
the two current Class III Directors of the Board of Directors. If elected, the
nominees will serve as directors until the Company's annual meeting of
stockholders held in 2000, and until their successors are elected and
qualified. The proxies will be voted, unless the authorization to do so is
withheld, for the election of the nominees. If any of the nominees declines to
serve, the proxies may be voted for such substitute nominees as the Company
may designate. It is not presently expected that any of the nominees will
decline to serve as a director.
2
<PAGE>
The directors of the Company, including the Class III Director nominees to
be elected at the Annual Meeting, and their ages as of March 3, 1997, are as
follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITIONS WITH THE COMPANY SINCE
- ---- --- -------------------------- --------
<S> <C> <C> <C>
CLASS I DIRECTOR WHOSE TERM EXPIRES AT
THE 1998 ANNUAL MEETING OF
STOCKHOLDERS:
Donald McKinney....................... 47 Director 1997
CLASS II DIRECTORS WHOSE TERM EXPIRES
AT THE 1999 ANNUAL MEETING OF
STOCKHOLDERS:
Donald T. Valentine................... 64 Director 1992
Alexandre A. Balkanski, Ph.D.......... 36 President, Chief Executive 1993
Officer and Director
Gregorio Reyes........................ 56 Director 1992
CLASS III DIRECTORS NOMINATED FOR
ELECTION AT THE 1997 ANNUAL MEETING
OF STOCKHOLDERS:
T. J. Rodgers......................... 48 Director 1994
Baryn S. Futa......................... 42 Director 1994
</TABLE>
Mr. McKinney, the founder of International Network Services, a network
service provider, served as President and Chief Executive Officer and Director
of International Network Services from its date of inception in August 1991
until January 1996 and has since served as its Chairman of the Board and Chief
Executive Officer. Mr. McKinney served as the Vice President of Sales and
Marketing of Electronics for Imaging Inc., a provider of hardware and software
products for the digital color imaging market, from May 1989 to February 1991.
Mr. McKinney was the founding Vice President of Sales, Marketing and Customer
Service at Silicon Graphics, Inc. Later Mr. McKinney opened Silicon Graphics'
international operations and subsequently was General Manager of its OEM
Subsystems Division. Mr. McKinney worked for Silicon Graphics, Inc. from
January 1982 to May 1987. Mr. McKinney has also served in various sales,
management and consulting positions at Sequoia Capital, Chromatics and
International Business Machines Corporation. He is a limited partner of
certain entities affiliated with Sequoia Capital. See "EXECUTIVE COMPENSATION
AND OTHER MATTERS--Certain Relationships and Related Transactions."
Mr. Valentine has served as Chairman of the Board of Directors since
December 1992. He has been a General Partner of Sequoia Capital, a venture
capital firm, since 1974. Mr. Valentine is also Chairman of the Board of
Elantec, Inc. and Network Appliances Corporation, and Vice Chairman of the
Board of Cisco Systems, Inc.
Dr. Balkanski co-founded the Company in July 1988 as Vice President and was
named Senior Vice President in August 1989. From February 1993 to February
1994 Dr. Balkanski was Vice President of Worldwide Sales and Marketing. He
served as Executive Vice President from February 1994 to July 1995. He has
served as President and Chief Executive Officer since July 1995. He was
elected to the Board of Directors in April 1993. Prior to founding C-Cube, Dr.
Balkanski was the founder and the President of Diamond Devices Inc., a
semiconductor company which was formed to develop fast algorithms and VLSI
architectures for digital signal processing. Dr. Balkanski currently serves on
the board of directors of Sierra Semiconductor, Inc. and
3
<PAGE>
CKS/Group. Dr. Balkanski holds a B.A. in physics from Harvard College and an
M.S. in physics and a Ph.D. in business economics from Harvard University. He
is a limited partner of certain entities affiliated with Sequoia Capital. See
"EXECUTIVE COMPENSATION AND OTHER MATTERS--Certain Relationships and Related
Transactions."
Mr. Reyes has served on the Board of Directors since July 1992. Since August
1994, Mr. Reyes has been a private investor and management consultant. From
September 1990 to August 1994, he served as Chairman and Chief Executive
Officer of Sunward Technologies, Inc., a provider of rigid disk magnetic
recording head products for the data storage industry. Since August 1994, Mr.
Reyes has been on special assignment to the office of the President of Sunward
Technologies, Inc. From March 1986 to August 1990, Mr. Reyes was Chairman and
Chief Executive Officer of American Semiconductor Equipment Technologies.
Since January 1995, Mr. Reyes has served as a Chairman of the Board of Sync
Research. Mr. Reyes also serves as a director of Western Microtechnology and
several privately-held companies. He is a limited partner of certain entities
affiliated with Sequoia Capital. See "EXECUTIVE COMPENSATION AND OTHER
MATTERS--Certain Relationships and Related Transactions."
Mr. Rodgers has served on the Board of Directors since January 1994. He
founded Cypress Semiconductor Corporation in 1983, where he currently serves
as President, Chief Executive Officer and a director. Mr. Rodgers also serves
as a director of Vitesse Semiconductor. Mr. Rodgers is a limited partner of
certain entities affiliated with Sequoia Capital. See "EXECUTIVE COMPENSATION
AND OTHER MATTERS--Certain Relationships and Related Transactions."
Mr. Futa has served on the Board of Directors since February 1994. In July
1996, he founded MPEG LA, LLC, a company which was formed to provide licensing
access to essential MPEG 2 intellectual property to users of the technology,
where he currently serves as Manager and Chief Executive Officer. From
September 1988 to June 1996, he served as the Executive Vice President and
Chief Operating Officer of Cable Television Laboratories, Inc., a research and
development consortium of cable television system operators.
There is currently one Class I Director vacancy which will remain open while
the Board of Directors considers candidates to fill such vacancy.
See also "STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT." A
description of the business experience of the other executive officers of the
Company is contained in the Company's Annual Report on From 10-K for the
fiscal year ended December 31, 1996, filed with the Securities and Exchange
Commission and enclosed herewith. There are no family relationships between
any of the Company's directors or executive officers.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 1996, the Board of Directors held
nine (9) meetings. No director attended fewer than 75% of the total number of
meetings of the Board of Directors and of the committees of the Board of
Directors on which such director served during the fiscal year ended December
31, 1996.
The Company has an Audit Committee and a Compensation Committee but does not
have a standing nominating committee.
4
<PAGE>
The Audit Committee's function is to review, with the Company's independent
public accountants, management and the Board of Directors, the Company's
financial reporting processes and internal financial controls. The Audit
Committee reviews the results of the examination of the Company's financial
statements by the independent public accountants and the independent public
accountants' opinion. The Audit Committee also approves all professional
services performed by the independent public accountants, recommends the
retention of the independent public accountants to the Board of Directors,
subject to ratification by the stockholders, and periodically reviews the
Company's accounting policies and internal accounting and financial controls.
During 1996, the members of the Audit Committee were Donald T. Valentine and
Baryn S. Futa. The Audit Committee held one (1) meeting during the fiscal year
ended December 31, 1996.
The Compensation Committee's primary function is to review and approve the
compensation of C-Cube's executive officers. The Compensation Committee also
administers the Company's stock option and purchase plans and is responsible
for determining the grants of stock options under such plans. The members of
the Compensation Committee are Donald T. Valentine and Gregorio Reyes. The
Compensation Committee met eight (8) times and conducted numerous telephonic
consultations during the fiscal year ended December 31, 1996.
COMPENSATION OF DIRECTORS
In May 1995, the Board of Directors established a standard compensation for
members of the Board of Directors, whereby each director who is not an
employee of the Company (an "Outside Director") receives an annual retainer of
$12,000 plus $1,000 and reimbursement of reasonable travel expenses for each
meeting of the Board of Directors attended. The Company does not pay
additional amounts to directors for committee participation or special
assignments of the Board of Directors.
Directors who are not employees are also automatically granted nonqualified
options to purchase C-Cube's Common Stock under the Company's 1994 Outside
Directors Stock Option Plan (the "Directors Plan"). A total of 450,000 shares
of Common Stock have been reserved for issuance under the Directors Plan. Each
Outside Director holding office on the effective date of the Directors Plan
who did not then hold an option to acquire shares of C-Cube's Common Stock
received an option to purchase 40,000 shares of Common Stock on the effective
date of the Directors Plan. Each person who is newly elected or appointed as
an Outside Director after the effective date of the Directors Plan receives an
option to purchase 40,000 shares of Common Stock on the day immediately
following such initial election or appointment. Thereafter, each Outside
Director generally receives an option to purchase 10,000 shares of Common
Stock on each anniversary date. Options granted under the Directors Plan vest
over four years and generally must be exercised within ten years. Shares of
Common Stock underlying options granted under the Directors Plan vest at the
rate of one-fourth (1/4) of the total number of shares of Common Stock
underlying the option one year after the date of grant and one forty-eighth
(1/48) of such shares on the last date of each full month thereafter until all
of the shares of Common Stock underlying the option have vested. The exercise
price of the options in all cases will be equal to the fair market value per
share of the Common Stock on the date of grant.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The two nominees for Class III Directors receiving the highest number of
votes will be elected as Class III Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
MESSRS. T. J. RODGERS AND BARYN S. FUTA.
5
<PAGE>
PROPOSAL NO. 2
Ratification of Appointment of Independent Public Accountants
The Board of Directors of the Company has selected Deloitte & Touche LLP as
independent public accountants to audit the financial statements of the
Company for the fiscal year ending December 31, 1997. Deloitte & Touche LLP
has acted in such capacity since its appointment in 1991. Notwithstanding this
selection, the Board, in its sole discretion, may direct the appointment of
new independent accountants at any time during the year, if the Board
concludes that such change is in the best interest of the Company and its
stockholders. A representative of Deloitte & Touche LLP is expected to be
present at the annual meeting, will have the opportunity to make a statement
if the representative desires to do so, and is expected to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
6
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 3, 1997,
with respect to the beneficial ownership of the Company's Common Stock by (i)
all persons known by the Company to be the beneficial owners of more than 5%
of the outstanding Common Stock of the Company, (ii) each director of the
Company, (iii) the Chief Executive Officer and the four other most highly
compensated executive officers of the Company as of December 31, 1996, whose
salary and incentive compensation for the fiscal year ended December 31, 1996
exceeded $100,000, and (iv) all executive officers and directors of the
Company as a group:
<TABLE>
<CAPTION>
SHARES OWNED
--------------------
FIVE-PERCENT STOCKHOLDERS, NUMBER OF PERCENTAGE
DIRECTORS AND EXECUTIVE OFFICERS(1) SHARES OF CLASS
----------------------------------- --------- ----------
<S> <C> <C>
FIVE-PERCENT STOCKHOLDERS:
Kubota Corporation(2)..................................... 2,939,002 8.1%
Fuyuhiko Usui
2880 Lakeside Drive, Suite 131
Santa Clara, California 95087
Entities affiliated with American Century Companies,
Inc.(3).................................................. 2,750,000 7.6%
Twentieth Century Tower
4500 Main Street
Kansas City, Missouri 64111
DIRECTORS AND EXECUTIVE OFFICERS:
Donald T. Valentine(4).................................... 1,085,008 3.0%
Alexandre A. Balkanski(5)................................. 590,203 1.6%
Nolan Daines(6)........................................... 124,998 *
T. J. Rodgers(7).......................................... 112,270 *
James G. Burke(8)......................................... 92,805 *
Richard Foreman(9)........................................ 54,430 *
Baryn S. Futa(10)......................................... 43,336 *
Mark Allen(11)............................................ 36,837 *
Gregorio Reyes(12)........................................ 9,659 *
Donald McKinney........................................... 1,014 *
All executive officers and directors as a group
(12 persons)(4)-(13)..................................... 2,255,127 6.1%
</TABLE>
- --------
* Represents less than 1%
(1) The persons named in this table have the sole voting and investment power
with respect to all shares shown as beneficially owned by them, subject to
community property laws where applicable and to the information contained
in the footnotes to this table. Unless otherwise indicated, the business
address of each of the beneficial owners listed in this table is 1778
McCarthy Boulevard, Milpitas, California 95035.
(2) Based in part on a filing with the Securities and Exchange Commission
dated February 13, 1997, reporting beneficial ownership as of December 31,
1996. Includes 2 shares owned directly by Fuyuhiko Usui and 25,000 shares
subject to an option held by Mr. Usui that is exercisable within 60 days
of March 3, 1997. Mr. Usui is a consultant to and former director of the
Company and is a General Manager of Kubota Corporation, and, as a result,
Mr. Usui may be deemed to beneficially own the 2,914,000 shares of Common
Stock owned by Kubota Corporation. Mr. Usui disclaims beneficial ownership
of all such shares owned by Kubota Corporation.
7
<PAGE>
(3) Based on a filing with the Securities and Exchange Commission dated
February 3, 1997, reporting beneficial ownership as of December 31, 1996.
This joint filing was made by American Century Companies, Inc. ("ACC") on
behalf of American Century Investment Management, Inc. ("ACIM"); American
Century Mutual Funds, Inc. ("ACMF"); and James E. Stowers, Jr. The filing
states that Mr. Stowers controls ACC, which is the parent of ACIM, and
that ACIM is an investment advisor to ACMF, an investment company. As a
result, the 2,750,000 shares of Common Stock owned by ACMF are deemed to
be beneficially owned by Mr. Stowers, ACC and ACIM, each of which
disclaims beneficial ownership of such shares.
(4) Includes 15,000 shares subject to an option that is exercisable within 60
days of March 3, 1997. Mr. Valentine is a general partner of certain
entities affiliated with Sequoia Capital and, therefore, may be deemed to
beneficially own the shares of Common Stock held by such entities,
including 868,349 shares held by Sequoia Capital Growth Fund and 52,338
shares held by Sequoia Technology Partners III. However, Mr. Valentine
disclaims beneficial ownership of all such shares held by entities
affiliated with Sequoia Capital, except those shares as to which he has a
direct pecuniary interest.
(5) Includes 305,211 shares subject to options that are exercisable within 60
days of March 3, 1997.
(6) Includes 31,042 shares subject to options that are exercisable within 60
days of March 3, 1997 and 8,715 shares held in trust for the benefit of
Mr. Daines and his immediate family members.
(7) Includes 100,000 shares subject to an option that is immediately
exercisable, 81,250 of which shares are vested as of 60 days from March 3,
1997, and 2,504 shares held of record by entities affiliated with Sequoia
Capital which are beneficially owned by Mr. Rodgers, who is a limited
partner of such entities. Also includes 8,750 shares subject to an option
that is exercisable within 60 days of March 3, 1997.
(8) Includes 17,354 shares subject to an option that is exercisable within 60
days of March 3, 1997.
(9) Includes 49,167 shares subject to options that are exercisable within 60
days of March 3, 1997.
(10) Includes 35,000 shares subject to an option that is immediately
exercisable, 26,667 of which shares are vested as of 60 days from March
3, 1997. Also includes 8,334 shares subject to an option that is
exercisable within 60 days of March 3, 1997.
(11) Includes 34,000 shares subject to options that are exercisable within 60
days of March 3, 1997.
(12) Includes 1,144 shares held of record by entities affiliated with Sequoia
Capital which are beneficially owned by Mr. Reyes, who is a limited
partner of such entities. Also includes 5,000 shares subject to options
that are exercisable within 60 days of March 3, 1997.
(13) Includes 215,208 shares subject to options that are immediately
exercisable, 141,250 of which shares are vested as of 60 days from March
3, 1997. Also includes 494,524 shares subject to options that are
exercisable within 60 days of March 3, 1997.
8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company and the four other most highly
compensated executive officers of the Company as of December 31, 1996 during
the fiscal years ended December 31, 1996, December 31, 1995 and December 31,
1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------------- COMPENSATION
OTHER ANNUAL AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS(#) COMPENSATION
- --------------------------- ---- ------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Alexandre A. Balkanski 1996 199,999 487,153 5,400(2) 150,000 0
President and Chief 1995 187,500(3) 277,345(3) 5,400(2) 500,000 0
Executive Officer 1994 140,000(4) 56,315(4) 5,400(2) 50,000 731(5)
Nolan Daines 1996 60,730 463,135(6) 0 250,000 0
President of DiviCom
Inc., 1995 -- -- -- -- --
a wholly-owned
subsidiary of the
Company 1994 -- -- -- -- --
James G. Burke 1996 150,000 168,105 0 20,000 0
Vice President of
Finance 1995 147,250 173,067 0 25,000 0
and Administration,
Chief Financial Officer
and Secretary 1994 136,750 0 0 0 0
Mark Allen 1996 175,000 167,024 0 40,000 0
Vice President of 1995 145,337 173,143 0 240,000 0
Operations 1994 -- (7) -- -- -- --
Richard Foreman 1996 146,250 168,105 0 100,000 0
Vice President and Chief 1995 131,250(8) 78,181 0 0 0
Information Officer 1994 19,615(9) 0 0 60,000 0
</TABLE>
(1) The amounts shown under the Bonus column represents cash bonuses earned
for the indicated fiscal years.
(2) Consists of car allowances.
(3) Dr. Balkanski has served as President and Chief Executive Officer since
July 1995. Dr. Balkanski's compensation for 1995 includes compensation he
received for his service as Executive Vice President and Chief Operating
Officer until his appointment to the office of President and Chief
Executive Officer in July 1995.
(4) Reflects compensation received by Dr. Balkanski for his services as the
Company's Executive Vice President and Chief Operating Officer.
(5) Consists of interest forgiven on notes payable to C-Cube.
(6) Includes a bonus of $300,000 granted on August 28, 1996, in connection
with the Company's acquisition of DiviCom Inc. Mr. Daines was not a
director, officer or employee of the Company prior to this date.
(7) Mr. Allen became an employee of the Company in February 1995.
(8) Includes compensation earned by Mr. Foreman as Director of Information
Technology through December 1995.
(9) Mr. Foreman became an employee of the Company in November 1994.
The Company does not have employment contracts with any of the persons named
in the Summary Compensation Table, or any defined benefit or actuarial plan
under which benefits are determined primarily by final compensation or average
final compensation and years of service.
9
<PAGE>
STOCK OPTION GRANTS
The following table provides the specified information concerning grants of
options to purchase the Company's Common Stock made during the fiscal year
ended December 31, 1996 to the persons named in the Summary Compensation
Table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN FISCAL 1996
--------------------------------------- POTENTIAL REALIZABLE
VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES
OPTIONS OF STOCK PRICE
GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM(2)
GRANTED IN FISCAL PRICE EXPIRATION --------------------
NAME (#) YEAR ($/SH)(1) DATE 5% ($) 10% ($)
---- ------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alexandre A. Balkanski.. 150,000 1.9 54.000 04/11/06 5,097,858 12,915,383
Nolan Daines............ 250,000 3.2 38.125 08/28/06 5,965,124 15,100,147
James G. Burke.......... 20,000 0.3 54.000 04/11/06 679,714 1,772,051
Mark Allen.............. 40,000 0.5 38.125 04/11/06 908,776 2,275,544
Richard Foreman......... 100,000 1.3 38.125 01/17/06 2,204,005 5,482,723
</TABLE>
- --------
(1) Options were granted at an exercise price equal to the fair market value
per share of C-Cube's Common Stock as of the date of the grant.
(2) Potential realizable values are net of exercise price, but before taxes
associated with exercise. Amounts represent hypothetical gains that could
be achieved for the respective options if exercised at the end of the
option term. The assumed 5% and 10% rates of stock price appreciation are
provided in accordance with rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
the future Common Stock price. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock,
overall market conditions and the option holders' continued employment
through the vesting period. This table does not take into account any
appreciation in the price of the Common Stock from the date of grant to
date.
10
<PAGE>
STOCK OPTION EXERCISES
The following table provides the specified information concerning exercises
of options to purchase the Company's Common Stock in the fiscal year ended
December 31, 1996, and unexercised options held as of December 31, 1996, by
the persons named in the Summary Compensation Table:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/96 OPTIONS AT 12/31/96(2)
------------------------- -------------------------
SHARES VALUE
ACQUIRED ON REALIZED EXERCISABLE UNEXERCISABLE
NAME EXERCISE ($)(1) EXERCISABLE UNEXERCISABLE ($) ($)
---- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alexandre A. Balkanski.. 58,794 2,582,178 236,460 437,292 6,302,635 8,923,187
Nolan Daines............ 2,375 97,969 13,875 239,750 39,187 64,125
James G. Burke.......... 0 0 13,084 31,916 302,093 422,907
Mark Allen.............. 100,667 4,685,365 11,333 168,000 290,000 3,770,000
Richard Foreman......... 0 0 36,250 123,750 859,375 790,625
</TABLE>
- --------
(1) Based upon the market price of the purchased shares on the exercise date
less the option exercise price paid for such shares.
(2) Based upon the market price of $36.500 per share, which was the closing
price per share of Common Stock on the Nasdaq National Market on December
31, 1996, less the option exercise price payable per share.
STOCK OPTION REPRICING
The following table sets forth all repricings of stock options held by the
Company's executive officers since the Company's initial public offering in
April 1994. See "REPORT OF THE BOARD OF DIRECTORS AND COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION--Stock Option Repricing."
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT TIME REMAINING AT
OPTIONS/ TIME OF OF REPRICING DATE OF
SARS REPRICING OR OR NEW REPRICING OR
REPRICED OR AMENDMENT AMENDMENT EXERCISE AMENDMENT
NAME DATE AMENDED (#) ($) ($) PRICE ($) (YEARS/DAYS)
---- ------- ----------- ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mark Allen.............. 9/11/96 40,000 38.125 54.000 38.125 9/212
Brian Connors........... 9/11/96 20,000 38.125 54.000 38.125 9/212
Nolan Daines............ 9/11/96 250,000 38.125 39.125 38.125 9/351
Richard Foreman......... 9/11/96 100,000 38.125 48.500 38.125 9/128
Sai-Wai Fu.............. 9/11/96 25,000 38.125 54.000 38.125 9/212
Didier Le Gall.......... 9/11/96 40,000 38.125 54.000 38.125 9/212
Sanjeev Renjen.......... 9/11/96 50,000 38.125 54.000 38.125 9/212
</TABLE>
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee reviews and approves the compensation of C-Cube's
executive officers and administers the Company's stock option and purchase
plans. Donald T. Valentine and Gregorio Reyes served during the fiscal year
ended December 31, 1996 as members of the Compensation Committee of the Board
of Directors. No member of the Compensation Committee has a relationship that
would constitute an interlocking relationship with executive officers or
directors of another entity.
In June 1993, March 1994 and March 1996, the Company granted options to
Pierre Lamond to purchase up to 100,000 shares, 20,000 shares and 20,000
shares, respectively, of the Company's Common Stock at prices per share of
$0.50, $6.75 and $38.125, respectively, the first of which options was
subsequently exercised. Such options were granted in connection with Mr.
Lamond providing certain services and assistance to the Company. Mr. Valentine
and Mr. Lamond are general partners of Sequoia Capital. Entities affiliated
with Sequoia Capital hold of record more than 5% of the outstanding shares of
C-Cube.
CHANGE-IN-CONTROL ARRANGEMENTS
The Company's 1990 Stock Plan (the "1990 Plan") provides that in the event
of a transfer of control (as defined in the 1990 Plan) of the Company, the
Board of Directors will either (i) provide that any unexercisable and/or
unvested portion of the outstanding awards shall be immediately exercisable
and vested as of a date prior to the transfer of control or (ii) arrange with
the surviving, continuing, successor or purchasing corporation, as the case
may be (the "Acquiring Corporation"), to either assume the Company's rights
and obligations under outstanding awards or substitute awards for the
Acquiring Corporation's stock for such outstanding awards. Any awards which
are neither exercised as of the date of the transfer of control nor assumed
nor substituted by the Acquiring Corporation shall terminate effective as of
the date of the transfer of control.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1993, March 1994 and March 1996, the Company granted options to
Pierre Lamond to purchase up to 100,000 shares, 20,000 shares and 20,000
shares, respectively, of the Company's Common Stock at prices per share of
$0.50, $6.75 and $38.125, respectively, the first of which options was
subsequently exercised. Such options were granted in connection with Mr.
Lamond providing certain services and assistance to the Company. Mr. Valentine
and Mr. Lamond are general partners of Sequoia Capital. Entities affiliated
with Sequoia Capital hold of record more than 5% of the outstanding shares of
C-Cube.
In payment of the exercise price of options to purchase the Company's Common
Stock exercised in February 1993 by William J. O'Meara, the Company accepted a
promissory note from Mr. O'Meara in the principal amount of $525,000, with
interest payable thereon at the rate of 6.22% per annum. As of December 31,
1996, the balance due on such loan was approximately $304,609. Such loan was
paid in full in March 1997. Mr. O'Meara was a director of the Company as of
December 31, 1996 and retired from that position effective February 18, 1997.
The Company granted a nonqualified stock option to Donald T. Valentine in
February 1993, but through an oversight failed to deliver the option to Mr.
Valentine in a timely manner. As a result, Mr. Valentine incurred less
favorable tax consequences when he exercised the option than he would have
incurred had the option been timely issued by the Company and exercised
immediately thereafter by Mr. Valentine. The Company, however, gained from
this oversight by receiving a tax benefit. To rectify this matter, in June
1994 the Company entered into a tax agreement with Mr. Valentine pursuant to
which the Company (i) made payments to Mr. Valentine of
12
<PAGE>
$192,267, the amount necessary to compensate him for the adverse tax
consequences, (ii) guaranteed a loan from a bank to Mr. Valentine in the
amount of $279,647 and (iii) made payments to Mr. Valentine in an amount
sufficient to compensate Mr. Valentine for the interest thereon. The results
of this arrangement have not adversely affected the Company's cash flow, and
the Company believes that overall consequences of this arrangement to the
Company's financial performance in any period were not significant.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10%
of the Company's Common Stock for fiscal year 1996 to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission. Such persons are required by the Commission's regulations to
furnish the Company with copies of all Section 16(a) forms filed by such
persons.
Based solely on the Company's review of such forms furnished to the Company
for fiscal year 1996 and written representations from certain reporting
persons, the Company believes that all filing requirements applicable to the
Company's executive officers, directors and more than 10% stockholders were
complied with.
REPORT OF THE BOARD OF DIRECTORS AND COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors (the
"Committee") has the exclusive authority to establish the cash compensation
for all executive officers of the Company, including the Chief Executive
Officer. The Committee also administers the Company's stock option and
purchase plans and makes grants to executive officers under such plans. The
Committee makes general recommendations regarding the plans to the Board and
reviews grants to executive officers. The Committee and the Board consult with
management and approve the compensation offered to newly hired executives at
the time offers are made to them. Thereafter, on an annual basis at the time
of each executive officer's performance review, the Committee and the Board
meets to review and approve the compensation of each individual executive
officer.
The goals of the Committee and the Board are to:
. attract, retain and motivate highly qualified employees and executive
officers who contribute to the long-term success of the Company
. align the compensation of executives with business objectives and
performance
. align incentives for executive officers with the interests of
stockholders in maximizing stock value
Through 1994, it had been the Committee's objective to provide compensation
exclusively through fixed salaries and long-term stock-based incentive awards
which serve to align the interests of the executive officers and stockholders.
The Committee had set salaries at levels which, in the Committee members'
experience, are at or below the median level for technology companies that are
comparable to the Company in age, number of employees and revenue. For fiscal
year 1995 and future years, the Committee and the Board adopted the Management
and Key Employee Performance Bonus Plan which provides for an annual variable
performance award payable in cash tied to specific measures of the Company's
financial performance as well as individual performance based upon individual
performance objectives. The Committee and the Board adopted this change in
order to provide strong performance-based incentives.
13
<PAGE>
As a result of federal tax legislation, the Company will not be allowed a
federal income tax deduction for compensation paid to certain executive
officers to the extent that compensation exceeds $1 million per officer in any
fiscal year. No officer of the Company has received compensation in excess of
$1 million to date. The Committee and the Board will continue to monitor this
issue and will formulate a policy with respect to this limitation on
deductibility if and when appropriate.
BASE SALARY
For fiscal year 1996, the base salary of each executive officer was set
based upon the results of the executive's performance review. Each executive
is reviewed annually by the Chief Executive Officer and other members of
management and given specific objectives, with the objectives varying based
upon the executive's position and responsibilities and the specific objectives
for that position for the coming year. At the next annual review, the
management of the Company reviews the performance of the executive versus the
objectives. The results of this review are then reported to the Compensation
Committee along with management's compensation recommendation and the
Compensation Committee then determines whether base salary should be adjusted
for the coming year.
LONG-TERM INCENTIVE COMPENSATION
Through fiscal year 1994, the executive officers of the Company had been
granted options only at the time the officer joined the Company. Grants of
stock options are designed to align the interests of executive officers with
those of stockholders. The size of these grants is generally set at a level
which the Board feels is in proportion with the role and responsibility of the
executive, as well as his or her opportunity to effect the Company's
performance, while also being sufficient to attract the executive to accept
employment with the Company. The Board had generally not made additional
awards to executive officers once they joined the Company except upon a
promotion. However, beginning in fiscal year 1995, the Board made additional
awards based on annual performance reviews of each executive officer and the
Board will continue to grant future additional options on a case-by-case basis
depending on the annual performance review.
CHIEF EXECUTIVE OFFICER COMPENSATION
The salary for the Company's President and Chief Executive Officer,
Alexandre A. Balkanski, was $199,999 for fiscal year 1996. Dr. Balkanski was
also granted options to purchase 150,000 shares in light of his significant
contributions to the Company. In making its decision, in addition to the
factors considered for each executive officer as described above, the
Committee reviewed Dr. Balkanski's experience and contribution to the
Company's performance during the prior fiscal year and the experience of each
of the Committee members with the compensation levels of similarly situated
chief executive officers.
STOCK OPTION REPRICING
In September 1996, the Board of Directors offered to all employees (except
the President and the Chief Financial Officer) the opportunity to cancel
outstanding options with exercise prices in excess of $38.125 per share (the
fair market value of the Company's Common Stock at that time) in exchange for
options exercisable at $38.125 per share. The terms of the repriced options
were identical to those of the canceled options except that the repriced
options are subject to new vesting periods beginning on the respective dates
they were issued. The option exchange was an acknowledgment of the importance
to the Company of having equity incentives in the hands of key employees.
Stock option which are "out of the money" provide no particular compensatory
14
<PAGE>
incentive if an employee is considering alternative opportunities. The renewed
vesting period incurred in the option exchange was viewed as a means of
retaining the services of valued employees for a longer period of time. The
Committee decided to include officers in the exchange because of the
importance of their administrative and technical leadership to the success of
the Company's business.
BOARD OF DIRECTORS COMPENSATION COMMITTEE
Donald T. Valentine Donald T. Valentine
Alexandre A. Balkanski Gregorio Reyes
Gregorio Reyes
T. J. Rodgers
Baryn S. Futa
Donald McKinney
15
<PAGE>
COMPARISON OF STOCKHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the Nasdaq Composite Index and the Electronic Components Index
for the period commencing on April 20, 1994(1) and ending on December 31,
1996.(2)
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
FROM APRIL 20, 1994 THROUGH DECEMBER 31, 1996:(3)
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period C-CUBE NASDAQ STOCK NASDAQ ELECTRONIC
(Fiscal Year Covered) MICROSYSTEMS INC MARKET COMPONENTS STOCKS
- ------------------- ---------------- ------------ -----------------
<S> <C> <C> <C>
Measurement Pt- 04/20/94 $100 $100 $100
FYE 12/31/94 $127 $103 $109
FYE 12/31/95 $833 $146 $181
FYE 12/31/96 $493 $180 $313
</TABLE>
<TABLE>
<CAPTION>
APRIL DECEMBER DECEMBER DECEMBER
1994 1994 1995 1996
----- -------- -------- --------
<S> <C> <C> <C> <C>
Nasdaq Stock Market (US & Foreign)............. 100 103 146 180
Nasdaq Electronic Components Stocks............ 100 109 181 313
C-Cube Microsystems Inc........................ 100 127 833 493
</TABLE>
- --------
(1) The Company's initial public offering commenced on April 21, 1994. For
purposes of this presentation, the Company has assumed that its initial
offering price of $7.50 would have been the closing sale price on
April 20, 1994, the day prior to commencement of trading.
(2) Assumes $100 invested on April 20, 1994 in each investment.
(3) Total return assumes reinvestment of dividends. Past results are not an
indication of future investment returns.
16
<PAGE>
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next annual
meeting of the stockholders of the Company must be received by the Company at
its offices at 1778 McCarthy Boulevard, Milpitas, California 95035, no later
than November 17, 1997, and satisfy the conditions established by the
Securities and Exchange Commission for stockholder proposals to be included in
the Company's proxy statement for that meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business that the Board of
Directors intends to present or knows that others will present at the meeting
is as set forth above. If any other matter or matters are properly brought
before the meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying form of proxy to vote the proxy on such
matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ Alexander A. Balkanski
--------------------------------------
Alexandre A. Balkanski
President and Chief Executive
Officer
March 17, 1997
17
<PAGE>
PROXY C-CUBE MICROSYSTEMS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Alexandre A. Balkanski and Richard
Foreman, and each of them, with full power of substitution, to represent the
undersigned and to vote all of the shares of stock in C-Cube Microsystems Inc.
(the "Company") which the undersigned is entitled to vote at the Annual Meeting
of the Stockholders of the Company to be held at the principal executive offices
of the Company at 1778 McCarthy Boulevard, Milpitas, California 95035 on April
17, 1997 at 1:00 p.m. Pacific Time, and at any adjournment thereof (1) as
hereinafter specified upon the proposals listed on the reverse side and as more
particularly described in the Proxy Statement of the Company dated March 22,
1997 (the "Proxy Statement"), receipt of which is hereby acknowledged, and (2)
in their discretion, upon such other matters as may properly come before the
meeting. The undersigned hereby acknowledges receipt of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 AND 2.
---
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
SEE REVERSE
SIDE
PLEASE MARK
VOTES AS IN
[X] THIS EXAMPLE
A VOTE FOR THE FOLLOWING PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS.
1. ELECTION OF CLASS III MARK HERE IF 2. PROPOSAL TO FOR AGAINST ABSTAIN
DIRECTORS. YOU PLAN TO RATIFY THE [_] [_] [_]
ATTEND THE APPOINTMENT OF
NOMINEES: BARYN S. FUTA MEETING [_] DELOITTE &
AND T.J. RODGERS TOUCHE LLP AS
MARK HERE THE COMPANY'S
FOR WITHHELD FOR ADDRESS INDEPENDENT
[_] [_] CHANGE PUBLIC
AND NOTE ACCOUNTANTS FOR
BELOW [_] THE FISCAL YEAR
[_] ____________________ ENDING DECEMBER
For all nominees 31, 1997.
except as noted above
CHANGE OF ADDRESS:
WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, YOU ARE URGED TO
SIGN AND PROMPTLY MAIL THIS PROXY IN Signature: ________________ Date _______
THE RETURN ENVELOPE SO THAT YOUR STOCK
MAY BE REPRESENTED AT THE MEETING. Signature: ________________ Date _______
