<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Netopia, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[NETOPIA LOGO]
February 1, 2000
Netopia, Inc.
2470 Mariner Square Loop
Alameda, CA 94501
NOTICE OF ANNUAL STOCKHOLDER MEETING
Notice is hereby given that the Annual Stockholder Meeting of Netopia, Inc.,
(the "Company") will be held on February 29, 2000, at 10:00 a.m. local time, at
2470 Mariner Square Loop, Alameda, California 94501 for the following purposes:
1. To elect four directors, the names of whom are set forth in the
accompanying proxy statement, to serve until the 2001 Annual Stockholder
Meeting;
2. To approve an amendment to the Company's 1996 Stock Option Plan to
increase the number of shares of the Company's Common Stock available
under the Plan by 500,000 shares and to amend the Option Plan's
Automatic Option Grant Program, as set forth in the accompanying proxy;
3. To approve an amendment to the Company's Employee Stock Purchase Plan to
increase the number of shares of the Company's Common Stock available
for issuance by 50,000 shares, as set forth in the accompanying proxy;
4. To ratify the appointment of KPMG LLP as independent auditors of the
Company; and
5. To transact such other business as may properly be brought before the
meeting.
The foregoing items of business are more fully described in the attached
Proxy Statement.
Stockholders of record at the close of business on December 31, 1999 are the
only stockholders entitled to notice of and to vote at the Annual Stockholder
Meeting and at any adjournment or postponements thereof. A list of such
stockholders will be available for inspection at the Company's headquarters
located at 2470 Mariner Square Loop, Alameda, CA 94501, during ordinary
business hours for the ten-day period prior to the Annual Stockholder Meeting.
The Board of Directors,
/s/ Alan B. Lefkof
Alan B. Lefkof
President, Chief Executive Officer
and Director
Alameda, California
February 1, 2000
IMPORTANT
Whether you expect to attend the meeting or not, please vote, sign,
date and return the enclosed proxy in the attached self-addressed envelope
as promptly as possible. If you attend the meeting, you may vote your
shares in person, even though you have previously signed and returned your
proxy.
<PAGE>
NETOPIA, INC.
PROXY STATEMENT FOR ANNUAL STOCKHOLDER MEETING
TO BE HELD ON FEBRUARY 29,2000
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL INFORMATION........................................................ 1
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................ 2
ELECTION OF DIRECTORS...................................................... 3
EXECUTIVE COMPENSATION AND OTHER MATTERS................................... 5
Employment and Change of Control Arrangements............................ 7
Certain Relationships and Related Transactions........................... 7
Compensation of Directors................................................ 7
Compensation Committee Interlocks and Insider Participation.............. 8
Section 16(a) Beneficial Ownership Reporting Compliance.................. 8
EXECUTIVE OFFICERS......................................................... 8
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION............. 9
COMPARISON OF STOCKHOLDER RETURNS.......................................... 12
APPROVAL OF AMENDMENT OF THE 1996 STOCK OPTION PLAN........................ 13
Summary of the Provisions of the 1996 Stock Option Plan.................. 13
APPROVAL OF AMENDMENT OF THE EMPLOYMENT STOCK PURCHASE PLAN................ 20
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS........................ 24
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL
STOCKHOLDER MEETING....................................................... 25
OTHER MATTERS.............................................................. 25
</TABLE>
i
<PAGE>
Netopia, Inc.
2470 Mariner Square Loop
Alameda, CA 94501
----------------
PROXY STATEMENT
FOR THE ANNUAL STOCKHOLDER MEETING
To be held on February 29, 2000
The accompanying proxy is solicited by the Board of Directors of Netopia,
Inc., a Delaware corporation (the "Company" or "Netopia"), for use at the
Annual Stockholder Meeting to be held on Tuesday, February 29, 2000, at 10:00
a.m. local time or any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Stockholder Meeting. The meeting will be held at
the Company's facility at 2470 Mariner Square Loop, Alameda, California. The
Company's telephone number is (510) 814-5100. The date of this Proxy Statement
is February 1, 2000, the approximate date on which this Proxy Statement and the
accompanying form of proxy were first sent or given to stockholders.
GENERAL INFORMATION
Annual Report. An annual report for the fiscal year ended September 30, 1999
is enclosed with this Proxy Statement.
Voting Securities. The Company's Common Stock is the only type of security
entitled to vote at the Annual Stockholder Meeting. On December 31, 1999, the
record date for the determination of stockholders entitled to vote at the
Annual Stockholder Meeting, there were 16,281,460 shares of the Company's
Common Stock issued and outstanding. Each stockholder of record on December 31,
1999 will be entitled to one (1) vote for each share of Common Stock held by
such stockholder on December 31, 1999 at the meeting and any adjournment
thereof. Shares of Common Stock may not be voted cumulatively. All votes will
be tabulated by the inspector of elections appointed for the meeting, who will
separately tabulate affirmative and negative votes, abstentions and broker non-
votes.
Each holder of shares of the Company's Common Stock is entitled to one (1)
vote on the proposals presented in this Proxy Statement for each share of stock
held. Stockholders may vote in person or by proxy. The Company's bylaws provide
that a majority of all of the shares of the Common Stock entitled to vote,
whether present in person or represented by proxy, shall constitute a quorum
for the transaction of business at the Annual Stockholder Meeting. Abstentions
and broker non-votes will be counted as present for the purpose of determining
the presence of a quorum.
Solicitation of Proxies. The cost of soliciting proxies will be borne by the
Company. In addition to soliciting holders by mail through its regular
employees, 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 others to solicit proxies, personally or by telephone,
without additional compensation.
Voting of Proxies. Whether or not you are able to attend the Annual
Stockholder Meeting, you are urged to complete and return the enclosed proxy,
which is solicited by the Company's Board of Directors and which will be voted
as you direct on your proxy when properly completed. In the event no directions
are specified, such proxies will be voted FOR the Nominees of the Board of
Directors (as set forth in Proposal No. 1), FOR
<PAGE>
Proposals No. 2, No. 3 and No. 4, and in the discretion of the proxy holders as
to other matters that may properly come before the Annual Stockholder Meeting.
All valid proxies received prior to the meeting will be voted. All shares
represented by a proxy will be voted, and where a holder specifies by means of
the proxy a choice with respect to any matter to be acted upon, the shares will
be voted in accordance with the specification so made. A holder giving a proxy
has the power to revoke his or her proxy, at any time prior to the time it is
voted, by delivery to the Secretary of the Company of a written instrument
revoking the proxy or a duly executed proxy with a later date, or by attending
the meeting and voting in person.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of December 31, 1999,
with respect to the beneficial ownership of the Company's Common Stock by (i)
the Chief Executive Officer and the four other executive officers of the
Company named in the "Executive Compensation and Other Matters--Summary
Compensation Table," (ii) all directors and nominees, (iii) all executive
officers and directors of the Company as a group, and (iv) owners of more than
5% of the Company's outstanding Common Stock. Beneficial ownership has been
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons share the
power to vote or the power to dispose of the shares). In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire shares (for example, upon exercise of an option or warrant) within
sixty (60) days of the date as of which the information is provided; in
computing the percentage ownership of any person, the amount of shares is
deemed to include the amount of shares beneficially owned by such person (and
only such person) by reason of such acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in the following table
does not necessarily reflect the person's actual voting power at any particular
date.
<TABLE>
<CAPTION>
Shares
Beneficially Owned
(1)
------------------
Currently Percent
Name of Beneficial Owner Owned of Class
------------------------ --------- --------
<S> <C> <C>
Alan B. Lefkof (2)...................................... 388,342 2.3%
James A. Clark (3)...................................... 101,315 *
Didier Cop (4).......................................... 98,692 *
Thomas A. Skoulis (5)................................... 115,438 *
Michael P. Trupiano (6)................................. 133,066 *
Reese M. Jones (7)...................................... 2,203,968 13.5%
David C. King........................................... 0 *
David F. Marquardt (8).................................. 94,486 *
All Current Directors and Executive Officers as a Group
(9 persons)(9)......................................... 3,154,745 18.4%
</TABLE>
--------
* Less than 1% of the outstanding shares of Common Stock.
(1) The number of shares of Common Stock beneficially owned includes
shares issuable pursuant to stock options that may be exercised within
sixty (60) days after December 31, 1999.
(2) Includes options exercisable into 366,625 shares of Common Stock under
the 1996 Stock Option Plan ("Option Plan") and 21,717 shares held by
the Lefkof Family Trust over which Alan B. Lefkof has shared voting
and investment authority.
(3) Includes options exercisable into 84,915 shares of Common Stock under
the Option Plan.
(4) Includes options exercisable into 87,304 shares of Common Stock under
the Option Plan.
(5) Includes options exercisable into 110,022 shares of Common Stock under
the Option Plan.
(6) Includes options exercisable into 131,688 shares of Common Stock under
the Option Plan.
(7) Includes options exercisable into 20,313 shares of Common Stock under
the Option Plan.
(8) Includes options exercisable into 25,000 shares of Common Stock under
the Option Plan.
(9) Includes options exercisable into 843,305 shares of Common Stock under
the Option Plan.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The directors who are being nominated for election to the Board of Directors
(the "Nominees"), their ages as of September 30, 1999, their positions and
offices held with the Company and certain biographical information are set
forth below. The proxy holders intend to vote all proxies received by them in
the accompanying form FOR the Nominees listed below unless otherwise
instructed. In the event any Nominee is unable or declines to serve as a
director at the time of the Annual Stockholder Meeting, the proxies will be
voted for any nominee who may be designated by the present Board of Directors
to fill the vacancy. As of the date of this Proxy Statement, the Board of
Directors is not aware of any Nominee who is unable or will decline to serve as
a director. The four Nominees receiving the highest number of affirmative votes
of the shares entitled to vote at the Annual Stockholder Meeting will be
elected directors of the Company to serve until the next Annual Stockholder
Meeting or until their successors have been duly elected and qualified. James
R. Swartz, who served as a director of the Board of the Company since 1992,
declined to be renominated for election to the Board, and resigned as a
director effective January 13, 2000.
<TABLE>
<CAPTION>
First Became
Name and Positions Held with the Company Age a Director
---------------------------------------- --- ------------
<S> <C> <C>
Alan B. Lefkof, President, Chief Executive Officer and
Director (1)............................................. 46 1991
Reese M. Jones, Chairman of the Board of Directors........ 41 1987
David C. King, Director (3)............................... 40 2000
David F. Marquardt, Director (2)(3)....................... 50 1990
</TABLE>
--------
(1) Member of the Stock Option Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Alan B. Lefkof joined the Company as President in August 1991 and has been
Chief Executive Officer since November 1994. Prior to joining the Company, Mr.
Lefkof spent over nine years at GRiD Systems, a manufacturer of laptop
computers, where he served as President from October 1989 to August 1991, Chief
Financial Officer from March 1987 to September 1989, and Vice President of
Marketing from August 1983 to February 1987. Before joining GRiD Systems, Mr.
Lefkof served as a Management Consultant at McKinsey & Company from July 1977
to January 1982. Mr. Lefkof received a B.S. in computer science from the
Massachusetts Institute of Technology in 1975 and an M.B.A. from Harvard
Business School in 1977.
Reese M. Jones, founder of the Company, has served as Chairman of the Board
of Directors of the Company since inception. Mr. Jones served as Chief
Executive Officer of the Company from the date of the Company's incorporation
until Mr. Lefkof was appointed Chief Executive Officer in November 1994. Mr.
Jones currently serves on the Board of Directors of a number of privately held
companies. Mr. Jones received a B.A. in biophysics from the University of
California at Berkeley in 1982.
David C. King has been a director of the Company since January 2000. Mr.
King is Chairman, President and CEO of Proxim, Inc. Mr. King joined Proxim in
1992 as Vice President of Marketing and acting Chief Financial Officer, in 1993
was appointed President, Chief Executive Officer and Director, and in 1996 was
named Chairman of the Board of Directors. From 1990 to 1992, Mr. King served as
vice president of marketing and customer services at Vitalink Communications
and from 1985 to 1990, Mr. King was Senior Manager in the San Francisco office
of McKinsey & Company, Inc. Mr. King holds three degrees from Harvard
University. He received an A.B. in economics in 1981, a J.D in 1985, and an
M.B.A in 1985.
David F. Marquardt has been a director of the Company since 1990. Mr.
Marquardt is a founding general partner of August Capital, formed in 1995 and
has been a general partner of various Technology Venture Investors ("TVI")
entities since August 1980. August Capital and the TVI entities are all private
venture
3
<PAGE>
capital partnerships. Mr. Marquardt currently serves on the Board of Directors
of Microsoft Corporation, Tumbleweed Communications and a number of privately
held companies. Mr. Marquardt received a B.S. in mechanical engineering from
Columbia University in 1973 and an M.B.A. from Stanford University in 1979.
Information regarding the Company's executive officers may be found in
"Executive Officers" below.
During the fiscal year ended September 30, 1999, the Board held eight (8)
meetings. No director listed above who served on the Board in fiscal year 1999
attended fewer than 75% of the meetings of the Board and any committee on which
he served. The Board has an Audit Committee, Compensation Committee and Stock
Option Committee. The Board does not have a standing Nominating Committee.
During the fiscal year ended September 30, 1999, the Company's Audit
Committee met four (4) times. The Audit Committee makes recommendations to the
Board regarding engagement of the Company's independent auditors, approves
services rendered by such auditors, reviews the activities of such auditors,
reviews and evaluates the Company's accounting systems, financial controls and
financial personnel. The sole member of the Audit Committee during the 1999
fiscal year was David F. Marquardt.
During the fiscal year ended September 30, 1999, the Compensation Committee
met four (4) times and acted by written consent seven (7) times. Its members
during the 1999 fiscal year were David F. Marquardt and James R. Swartz.
Following Mr. Swartz's resignation as a director of the Board, Mr. King was
appointed to the Compensation Committee. The Compensation Committee sets
salaries and other compensation arrangements for officers and other key
employees of the Company, administers the Company's stock option, stock
purchase and stock bonus plans, and advises the Board on general aspects of the
Company's compensation and benefit policies. For additional information
concerning the Compensation Committee, see "Report of the Compensation
Committee on Executive Compensation," "Executive Compensation and Other
Matters," and "Compensation Committee Interlocks and Insider Participation."
During the fiscal year ended September 30, 1999, the Stock Option Committee
acted by written consent twenty-four (24) times. The Stock Option Committee
grants stock options to employees and other eligible individuals. Its current
member is Alan B. Lefkof.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Directors are elected by a plurality of the affirmative votes cast by those
shares of Common Stock present in person or represented by proxy and entitled
to vote at the Annual Stockholder Meeting. The four (4) nominees for director
receiving the highest number of affirmative votes will be elected. Abstentions
and broker non-votes will each be counted as present for purposes of
determining the presence of a quorum. Abstentions and broker non-votes will not
be counted towards a nominee's total. Stockholders may not cumulate votes in
the election of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE DIRECTORS AS
NAMED ABOVE.
4
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following Summary Compensation Table sets forth the compensation earned
by the Company's Chief Executive Officer and the four other most highly
compensated officers, each of whom earned salary and bonus for fiscal 1999 in
excess of $100,000 (collectively, the "Named Officers"), for services rendered
in all capacities to the Company and its subsidiary for the three fiscal years
ended September 30, 1999. Bonus payments shown with respect to services
performed in each fiscal year were paid in the subsequent fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation (1) Awards
---------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Salary Bonus Compensation Options (#) Compensation(2)
- --------------------------- -------- ------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Lefkof.................. 1999 $267,500 $65,000 $2,325(3) 60,000 $7,830
President and Chief Executive 1998 253,750 13,500 643(3) 120,000 7,272
Officer 1997 235,000 -- 1,125(3) 160,000 7,944
James A. Clark.................. 1999 166,000 40,000 65(3) 25,000 6,000
Vice President and Chief 1998 157,750 32,200 125(3) 75,000 6,000
Financial Officer 1997 151,000 -- -- 85,000 6,000
Didier Cop (4).................. 1999 130,000 78,092 80,961(7) 25,000 6,731
Vice President of International 1998 137,023 60,447 33,942(6) 76,500 6,579
and Marketing, Internet
Equipment 1997 130,373 36,996 69,070(5) 63,500 6,179
Thomas A. Skoulis (8)........... 1999 130,000 75,469 -- 30,000 6,000
Senior Vice President and 1998 128,750 56,451 -- 65,000 6,000
General Manager, Web Platforms 1997 118,750 50,919 -- 81,500 6,000
Michael P. Trupiano (9)......... 1999 177,083 60,906 -- 100,000 6,000
Senior Vice President and
General 1998 151,250 6,750 -- 92,000 6,000
Manager, Internet Equipment 1997 140,326 -- -- 93,000 6,000
</TABLE>
- --------
(1) Includes amounts deferred under the Company's 401(k) Plan.
(2) Represents car allowances.
(3) Represents amounts paid in connection with tax services paid for by the
Company.
(4) Bonus includes commissions earned of $36,996, $56,247 and $61,592 during
fiscal 1997, 1998 and 1999, respectively.
(5) Represents amounts paid in connection with Didier Cop's relocation to the
United States, including $25,720 in tuition reimbursement and $24,900
temporary housing allowance.
(6) Represents amounts paid in connection with Didier Cop's relocation to the
United States, including $31,109 in tuition reimbursement, and amounts paid
in connection with tax services paid for by the Company.
(7) Represents amounts paid in connection with Didier Cop's relocation to the
United States, including $10,709 in tuition reimbursement, $67,440 in debt
forgiveness, and amounts paid in connection with tax services paid for by
the Company.
(8) Bonus includes commissions earned of $50,919, $52,701 and $50,469 during
fiscal 1997, 1998 and 1999, respectively.
(9) Bonus includes commissions earned of $25,906 during fiscal 1999.
5
<PAGE>
Option Grants in Last Fiscal Year
The following table contains information concerning the stock option grants
made to each of the Named Officers in the fiscal year ended September 30, 1999.
No stock appreciation rights were granted to these individuals during such
year.
<TABLE>
<CAPTION>
Individual Grants Potential
------------------------------- Realizable Value at
% of Total Assumed Annual
Number of Options Rates of Stock
Securities Granted to Price Appreciation
Underlying Employees Exercise for Option Term (4)
Options in Fiscal Price per Expiration -------------------
Name Granted 1999 (2) Share (3) Date 5% 10%
- ---- ---------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Lefkof.......... 60,000 4.39% $ 6.75 1/4/09 $254,702 $ 645,466
President and Chief
Executive Officer
James A. Clark.......... 25,000 1.83% 6.75 1/4/09 106,126 268,944
Vice President and
Chief Financial Officer
Didier Cop.............. 25,000 1.83% 6.75 1/4/09 106,126 268,944
Vice President of
International and
Marketing, Internet
Equipment
Thomas A. Skoulis....... 30,000 2.19% 6.75 1/4/09 127,351 322,733
Senior Vice President
and General Manager,
Web Platforms
Michael P. Trupiano..... 40,000 2.93% 6.75 1/4/09 169,802 430,310
Senior Vice President 60,000 4.39% 18.00 6/24/09 679,206 1,721,242
and General Manager of
Internet Equipment
</TABLE>
- --------
(1) The options become exercisable in quarterly installments over four years
beginning from the grant date. All outstanding options will automatically
accelerate in full and then terminate following an acquisition of the
Company by merger or asset sale unless the acquiring company assumes the
outstanding options or replaces the outstanding options with a substitute
option or with a cash incentive program. Any options which are assumed or
replaced shall automatically accelerate in the event the optionee's service
should subsequently terminate by reason of an involuntary termination
within twelve (12) months of such transaction and remain exercisable for a
one (1)-year period from the date of termination.
(2) Based on options for an aggregate of 1,366,900 shares granted in the 1999
fiscal year.
(3) The exercise price may be paid in cash or in shares of the Company's Common
Stock valued at fair market value on the exercise date. The Company may
also finance the option exercise by loaning the optionee sufficient funds
to pay the exercise price for the purchased shares, together with any
federal and state income tax liability incurred by the optionee in
connection with such exercise.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of
the Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the Company's Common Stock
appreciates over the option term, no value will be realized from the option
grants made to the executive officers.
6
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information concerning the shares acquired
and the value realized upon the exercise of stock options during the 1999
fiscal year and the year-end number and value of unexercised options with
respect to each of the Named Officers. No stock appreciation rights were
exercised by the Named Officers in fiscal 1999.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options in-the-Money Options
Shares at September 30, 1999 at September 30, 1999 (2)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Lefkof.......... 0 -- 393,625 209,375 $14,564,350 $7,119,325
James A. Clark.......... 15,000 $387,882 123,503 111,497 4,480,715 3,819,628
Didier Cop.............. 9,241 199,169 71,554 97,530 2,442,988 3,337,810
Thomas A. Skoulis....... 15,000 459,425 94,564 106,936 3,378,450 3,642,725
Michael P. Trupiano..... 0 -- 145,325 202,675 5,128,963 6,232,338
</TABLE>
- --------
(1) Market price at exercise less exercise price.
(2) Based on the fair market value of the Company's Common Stock at September
30, 1999 ($39.875 per share), as determined by the closing price on the
Nasdaq Stock Market, less the exercise price payable for such shares.
Employment and Change of Control Arrangements
The Compensation Committee, as Plan Administrator of the 1996 Stock Option
Plan, has the authority to provide for accelerated vesting of the shares of
Common Stock subject to outstanding options held by the Named Officers and any
other executive officer in connection with certain changes in control of the
Company or the subsequent termination of the officer's employment following the
change in control event.
None of the Named Officers have employment agreements with the Company, and
their employment may be terminated at any time. However, the Company has
entered into an agreement with Messrs. Lefkof, Clark, Cop, Skoulis and Trupiano
which provides for acceleration of vesting of option shares as if the officer
remained employed for twelve (12) additional months in the event the officer's
employment is involuntarily terminated during the twelve (12) month period
following certain acquisitions or changes in control of the Company. In
addition, Mr. Clark will receive severance pay equal to twelve (12) months
salary and Messrs. Lefkof, Cop, Skoulis and Trupiano will receive severance pay
equal to six (6) months salary upon any such termination.
Certain Relationships and Related Transactions
The Company entered into a loan agreement on November 14, 1997 with Didier
Cop, Vice President of International and Marketing, Internet Equipment, to
assist in his relocation to the United States. During the fiscal year ended
September 30, 1999, the largest aggregate amount of indebtedness outstanding
was $158,310, including interest that accrues at a rate of 6.1% per annum. As
of December 31, 1999, the remaining obligation on the loan was $90,703.
Compensation of Directors
Members of the Company's Board of Directors do not receive compensation for
their services as directors. Nonemployee directors of the Company are eligible
for options under the Company's 1996 Stock Option Plan. The Automatic Option
Grant Program provides for the grant of an option to purchase 25,000 shares of
the Company's Common Stock upon a nonemployee director's initial election or
appointment to the Board. On June 12, 1996, Mr. Marquardt was granted a
nonstatutory stock option to purchase 25,000 shares of the Company's Common
Stock under the Automatic Option Grant Program at an exercise price of $16 per
share,
7
<PAGE>
and on January 13, 2000, Mr. King was granted a nonstatutory stock option to
purchase 25,000 shares of the Company's Common Stock under the Automatic Option
Grant Program at an exercise price of $51.75 per share. The terms applicable to
the foregoing option grants are summarized below in the description of the
Automatic Option Grant Program. Mr. Jones received an option to purchase 25,000
shares at an exercise price of $9.50 per share on September 16, 1996 under the
1996 Stock Option Plan. See "1996 Stock Option Plan."
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee"), as of September 30, 1999, consisted of Messrs.
Marquardt and Swartz. Neither Mr. Marquardt nor Mr. Swartz was at any time
during the fiscal year ended September 30, 1999, or at any other time, an
officer or employee of the Company. No member of the Compensation Committee
serves as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee.
Further information may be found in "Certain Relationships and Related
Transactions" above.
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 to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
persons are required by SEC 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 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 during fiscal 1999 except that Reese Jones
filed one report late reporting one transaction.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
First
Became an
Executive
Name and Positions Held with the Company Age Officer
---------------------------------------- --- ---------
<S> <C> <C>
Alan B. Lefkof................................................ 46 1991
President, Chief Executive Officer
and Director
James A. Clark................................................ 43 1994
Vice President and Chief Financial Officer
Didier Cop.................................................... 45 1995
Vice President of International and Marketing,
Internet Equipment
David A. Kadish............................................... 47 1999
Vice President, General Counsel
and Secretary
Thomas A. Skoulis............................................. 43 1994
Senior Vice President and General Manager,
Web Platforms
Michael Trupiano.............................................. 43 1995
Senior Vice President and General Manager
of Internet Equipment
</TABLE>
8
<PAGE>
Alan B. Lefkof--See "Proposal No. 1--Election of Directors"
James A. Clark, Vice President and Chief Financial Officer, joined the
Company in November 1994. Prior to joining the Company, Mr. Clark was Vice
President and Chief Financial Officer at Integral, a developer of large scale,
client/server business application software, from November 1985 to November
1994. Before joining Integral, Mr. Clark was Manager of Reporting and
International Accounting at MicroPro from April 1984 to November 1985. Mr.
Clark received a B.A. in business administration/accounting from California
State University at Chico in 1978 and is a Certified Public Accountant.
Didier Cop, Vice President of International and Marketing, Internet
Equipment, joined the Company in June 1991. Prior to joining the Company, Mr.
Cop was Sales and Marketing Manager for Mood Media, a multimedia and
advertising system company, from August 1990 to May 1991. Before joining Mood
Media, Mr. Cop was General Manager for Southern Europe Sales with General
Parametrics. Mr. Cop received a degree in business administration from
E.S.S.E.C. in France, in 1976.
David A. Kadish, Vice President, General Counsel and Secretary, joined
Netopia in June 1999. Prior to joining Netopia, Mr. Kadish provided legal
consulting services to Netopia from September 1997 to June 1999. Mr. Kadish
operated an independent legal consulting practice from May 1996 to June 1999.
He served as Senior International Counsel and Manager, Intellectual Property
Law for the Electronic Power Research Institute, Inc., from December 1997 to
June 1999. He was Vice President, General Counsel and Secretary of Integral
Systems, a developer of large scale, client/server business application
software, from September 1987 to April 1996. Mr. Kadish received a B.A. in
American history from University of California at Santa Cruz in 1973, an M.A.
in American history from Brandeis University in 1974, and a J.D. from Yale
University in 1979.
Thomas A. Skoulis, Senior Vice President and General Manager, Web Platforms,
joined the Company in September 1991. Prior to joining the Company, Mr. Skoulis
held various sales management positions with 3Com from March 1988 to September
1991. Before joining 3Com, Mr. Skoulis also held the position of Senior Sales
Representative at Digital Equipment from June 1980 to March 1988. Mr. Skoulis
received a B.A. in business administration from Miami University in Oxford,
Ohio, in 1980.
Michael P. Trupiano, Senior Vice President and General Manager of Internet
Equipment, joined the Company in May 1992. Prior to joining the Company, Mr.
Trupiano was Director of R&D/Product Marketing at Verifone, a transaction
processing products company, from January 1989 to May 1992. Before joining
Verifone, Mr. Trupiano was Vice President of Engineering at Isix from June 1987
to December 1989, and was Director of Engineering at Amtel Systems from January
1984 to June 1987. Mr. Trupiano received a B.S. in electrical engineering and
computer science from Santa Clara University in 1978.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") has the authority to establish
the level of base salary payable to the Chief Executive Officer ("CEO") and to
administer the Company's 1996 Stock Option Plan, Stock Bonus Plan and Employee
Stock Purchase Plan. In addition, the Committee has the responsibility for
approving the individual bonus program to be in effect for the CEO. The CEO has
the authority to establish the level of base salary payable to all other
employees of the Company, including all executive officers, subject to the
approval of the Committee. In addition, the CEO has the responsibility for
approving the bonus programs to be in effect for all other executive officers
and other key employees each fiscal year, subject to the approval of the
Committee.
For fiscal 1999, the process utilized by the CEO in determining executive
officer compensation levels took into account both qualitative and quantitative
factors. Among the factors considered by the CEO were informal surveys
conducted by Company personnel among local companies. The Committee reviewed
but made no changes to the CEO's compensation proposals for the officers.
9
<PAGE>
General Compensation Policy. The CEO's fundamental policy is to offer the
Company's executive officers competitive compensation opportunities based upon
overall Company performance, their individual contribution to the financial
success of the Company and their personal performance. It is the CEO's
objective to have a substantial portion of each officer's compensation
contingent upon the Company's performance, as well as upon his or her own level
of performance. Accordingly, each executive officer's compensation package
consists of: (i) base salary, (ii) cash bonus awards and (iii) long-term stock-
based incentive awards.
In preparing the stock performance graph for this Proxy Statement, the
Company has selected the Standard & Poor's 500 Index, the Nasdaq Stock Market-
US Index and the Hambrecht and Quist Technology Index. To the extent that the
Company compares its compensation practices against other companies, through
informal compensation surveys or otherwise, the constituent companies are not
necessarily those included in the Indices, because the latter may not be
competitive with the Company for executive talent or because compensation
information is not available to the Company.
Base Salary. The base salary for each executive officer is set at the time
of hire based on individual negotiation and any subsequent increases are
awarded on the basis of personal performance.
Annual Cash Bonuses. Each executive officer has an established bonus target
each fiscal year. The annual pool of bonuses for executive officers is
determined on the basis of the Company's achievement of financial performance
targets established at the start of the fiscal year including operating
results, gross margin performance and revenue, and then a range is established
for each executive on the basis of his/her expected contribution to the
Company's performance targets. Actual bonuses paid reflect both achievement of
corporate objectives and an individual's accomplishment of functional
objectives, with greater weight being given to achievement of corporate rather
than functional objectives.
Long-Term Incentive Compensation. Generally, a significant grant is made in
the year that an officer commences employment and grants typically of lesser
amounts are made periodically. Generally, the size of each grant is set at a
level that the Committee deems appropriate, to create a meaningful opportunity
for stock ownership based upon the individual's position with the Company, the
individual's potential for future responsibility and promotion, the
individual's performance in the recent period and the number of unvested
options held by the individual at the time of the new grant. The relative
weight given to each of these factors will vary from individual to individual
at the Committee's discretion based on the recommendation made by the CEO to
the Committee. In fiscal 1999, stock option grants were awarded to each of the
executive officers to provide an incentive for the officers to improve the
Company's performance.
Each grant allows the officer to acquire shares of the Company's Common
stock at a fixed price per share (the market price on the grant date) over a
specified period of time. The option vests in periodic installments over a
four-year period, contingent upon the executive officer's continued employment
with the Company. Accordingly, the option will provide a return to the
executive officer only if he/she remains in the Company's employ, and then only
if the market price of the Company's Common Stock appreciates over the option
term.
CEO Compensation. Mr. Lefkof, the Company's President and CEO, received an
increase in annual base salary on January 1, 1999. The remaining components of
the CEO's fiscal 1999 incentive compensation were entirely dependent upon the
Company's financial performance and provided no dollar guarantees. The bonus
paid to the CEO for fiscal 1999 was based on the same incentive plan as for all
other officers who are eligible to receive bonuses and is subject to review by
the Compensation Committee. Along with the other executive officers, in fiscal
1999, stock option grants were awarded to the CEO to provide an incentive for
the CEO to improve the Company's performance.
Tax Limitation. A publicly held company such as 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 year. This limitation will be in effect for all fiscal years of
the Company ending after the Company's initial public offering. The
stockholders approved the Company's 1996 Stock Option Plan,
10
<PAGE>
which includes a provision that limits the maximum number of shares of Common
Stock for which any one participant may be granted stock options over a 3-year
period. Accordingly, any compensation deemed paid to an executive officer when
he exercises an option under the 1996 Stock Option Plan with an exercise price
equal to the fair market value of the option shares on the grant date will
generally qualify as performance-based compensation that will not be subject to
the $1 million limitation. Since it is not expected that the cash compensation
to be paid to the Company's executive officers for the 2000 fiscal year will
exceed the $1 million limit per officer, the Committee will defer any decision
on whether to limit the dollar amount of the cash compensation payable to the
Company's executive officers to the $1 million cap.
Compensation Committee
David F. Marquardt
James R. Swartz
11
<PAGE>
COMPARISON OF STOCKHOLDER RETURNS
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 Standard & Poor's 500 Index, the Nasdaq Stock Market-US
Index and the Hambrecht & Quist Technology Index for the period commencing on
June 13, 1996 and ending on September 30, 1999. The Company's fiscal year ended
September 30, 1999. This stock performance graph includes data as of the latest
practicable date.
COMPARISON OF 39 MONTH CUMULATIVE TOTAL RETURN*
AMONG NETOPIA, INC., THE S & P 500 INDEX,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
<TABLE>
<CAPTION>
Cumulative Total Returns
6/13/96 6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99 9/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NETOPIA, INC. 100 92 66 40 27 31 43 32 38 49 35 43 51 149 249
S&P 500 100 100 104 112 115 135 145 150 171 176 159 192 202 216 203
NASDAQ STOCK MARKET (U.S.) 100 97 100 105 99 118 138 129 151 155 140 182 203 222 272
HAMBRECHT & QUIST TECHNOLOGY 100 96 102 109 104 125 152 128 155 159 141 199 217 257 272
</TABLE>
12
<PAGE>
PROPOSAL NO. 2
AMENDMENT OF THE 1996 STOCK OPTION PLAN
The stockholders are being asked to vote on a proposal to approve an
amendment to the Netopia, Inc. 1996 Stock Option Plan (the "Option Plan")
adopted by the Board on January 13, 2000. The amendment increases the number of
shares of Company Common Stock available for issuance under the Option Plan by
500,000 shares to a total of 6,680,301 shares of Common. The Option Plan's
Automatic Option Grant Program for the non-employee directors was also amended
(A) to provide for an annual option grant of 6,000 shares to each non-employee
director serving on the Board, vesting upon completion of twelve (12) months of
service, and (B) to modify the vesting schedule for initial options such that
all such options vest in four (4) equal annual installments, as discussed
below. The proxy holders intend to vote all proxies received by them FOR the
Amendment of the 1996 Stock Option Plan. The following is a description of the
Option Plan. The Company established the Option Plan as a successor to the 1987
Restated Stock Option Plan ("1987 Plan") to provide a means whereby employees,
officers, directors, consultants, and independent advisers of the Company or
parent or subsidiary corporations may be given an opportunity to purchase
shares of the Company's Common Stock. The Option Plan was adopted by the Board
on April 16, 1996 and amended on February 14, 1997, October 29, 1997, October
27, 1998 and on January 13, 2000, and the stockholders approved each of the
foregoing amendments, except the last. The Board believes that option grants
under the Option Plan play an important role in the Company's efforts to
attract, employ, and retain employees, directors, and consultants of
outstanding ability.
Summary of 1996 Stock Option Plan
The principal terms and provisions of the Option Plan are summarized below.
The summary, however, is not intended to be a complete description of all the
terms of the Option Plan. A copy of the Option Plan will be furnished by the
Company to any stockholder upon written request to the Chief Financial Officer
at the executive offices in Alameda, California.
Structure. The Option Plan contains two separate equity incentive programs:
(i) a Discretionary Option Grant Program under which eligible persons may be
granted stock options to purchase shares of the Company's Common Stock, and
(ii) an Automatic Option Grant Program under which option grants will be made
at specified intervals to the nonemployee Board members.
Administration. The Option Plan is currently administered by the
Compensation Committee of the Board of Directors. The Option Plan may also be
administered by the Board or a secondary committee comprised of one or more
Board members with respect to optionees who are not executive officers subject
to the short-swing profit rules of Federal securities laws. Currently, a
secondary committee, the Stock Option Committee, which has as its sole member
Alan B. Lefkof, the Company's Chief Executive Officer, has the authority to
grant options under the Option Plan to individuals who are not officers or
directors of the Company. Committee members serve for such period of time as
the Board may determine. The Committee (or Board or secondary committee to the
extent acting as plan administrator) has full authority (subject to the express
provisions of the Option Plan) to determine the eligible individuals who are to
receive grants under the Option Plan, the number of shares to be covered by
each granted option, the date or dates on which the option is to become
exercisable, the maximum term for which the option is to remain outstanding,
whether the granted option will be an incentive stock option ("Incentive
Option") which satisfies the requirements of section 422 of the Internal
Revenue Code (the "Code") or a nonstatutory option not intended to meet such
requirements, and the remaining provisions of the option grant.
Administration of the Automatic Option Grant Program is self-executing in
accordance with the terms of that program, however, the Plan Administrator may
exercise discretionary functions with respect to grants made thereunder.
13
<PAGE>
Eligibility. Employees (including officers), consultants, independent
contractors and nonemployee members of the board of directors who render
services to the Company or its parent or subsidiary corporations (whether now
existing or subsequently established) are eligible to receive option grants
under the Discretionary Option Grant Program. A nonemployee member of the board
of directors of the Company is also eligible for option grants under the
Automatic Option Grant Program.
Securities Subject to Option Plan. The number of shares of the Company's
Common Stock which may be issued over the term of the Option Plan shall not
exceed 6,680,301 shares, including an increase of 500,000 shares, which is the
subject of this Proposal No. 2. Such share reserve will be subject to further
adjustment in the event of subsequent changes to the capital structure of the
Company. The shares may be made available either from the Company's authorized
but unissued Common Stock or from Common Stock reacquired by the Company,
including shares purchased on the open market. The share reserve shall increase
automatically on January 1, 2001 by the number of shares of Common Stock equal
to 5% of the number of shares of Common Stock outstanding on the last trading
day of the preceding calendar year up to a maximum annual increase of 1,200,000
shares. The share reserve was increased on January 1, 2000 by 814,073 shares
pursuant to a provision of the Option Plan providing for an automatic increase
in that year.
In no event, however, may any one participant in the Option Plan acquire
shares of the Company's Common Stock under the Option Plan in excess of 750,000
shares over the period beginning on the effective date of the Option Plan and
ending on June 30, 1999. In addition, in no event may any one participant in
the Option Plan acquire shares of the Company's Common Stock under the Option
Plan in excess of 750,000 shares over the period beginning on July 1, 1999 and
ending on July 1, 2002.
Should an option expire or terminate for any reason prior to exercise in
full, including options incorporated from the 1987 Plan, the shares subject to
the portion of the option not so exercised will be available for subsequent
option grants under the Option Plan.
The holder of an option shall have no stockholder rights with respect to the
shares underlying the option until such person shall have exercised the option,
paid the exercise price and become the stockholder of record of the purchased
shares.
Discretionary Option Grant Program
Price and Exercisabilty. The option exercise price per share may not be less
than eighty-five percent (85%) of the fair market value of the Company's Common
Stock on the grant date. Options granted under the Discretionary Option Grant
Program become exercisable at such time or times, and during such period, as
the Committee may determine and set forth in the instrument evidencing the
option grant. In any event, options granted under the Option Plan may not have
a term in excess of 10 years.
The exercise price for options granted under the Option Plan may be paid in
cash or in outstanding shares of the Company's Common Stock. Options may also
be exercised on a cashless basis through the same-day sale of the purchased
shares. The Compensation Committee may also permit the optionee to pay the
exercise price through a promissory note payable in installments over a period
of years. The amount financed may include any Federal or state income and
employment taxes incurred by reason of the option exercise.
No optionee is to have any stockholder rights with respect to the option
shares until the optionee has exercised the option and paid the exercise price.
Options are not assignable or transferable other than by will or the laws of
descent and distribution, and during the optionee's lifetime, the option may be
exercised only by the optionee.
Termination of Service. Any option held by the optionee at the time of
cessation of service will not remain exercisable beyond the designated post-
service exercise period. Under no circumstances may any option be exercised
after the specified expiration date of the option term. Each such option will
normally,
14
<PAGE>
during such limited period, be exercisable only to the extent of the number of
shares of the Company's Common Stock in which the optionee is vested at the
time of cessation of service. The optionee will be deemed to continue in
service for so long as such individual performs services for the Company (or
any parent or subsidiary corporation), whether as an employee, independent
contractor, consultant or Board member.
The Committee has complete discretion to extend the period following the
optionee's cessation of service during which his or her outstanding options may
be exercised and/or to accelerate the exercisability of such options in whole
or in part. Such discretion may be exercised at any time while the options
remain outstanding, whether before or after the optionee's actual cessation of
service.
The shares of the Company's Common Stock acquired upon the exercise of one
or more options may be subject to repurchase by the Company at the original
exercise price paid per share upon the optionee's cessation of service prior to
vesting in such shares. The Committee has complete discretion in establishing
the vesting schedule to be in effect for any such unvested shares and may
cancel the Company's outstanding repurchase rights with respect to those shares
at any time, thereby accelerating the vesting of the shares subject to the
canceled rights.
Incentive Options. Incentive Options may only be granted to individuals who
are employees of the Company or its parent or subsidiary corporation. During
any calendar year, the aggregate fair market value (determined as of the grant
date(s)) of the Company's Common Stock for which one or more options granted to
any employee under the Option Plan (or any other option plan of the Company or
its parent or subsidiary corporations) may for the first time become
exercisable as incentive stock options under section 422 of the Code shall not
exceed $100,000.
If an employee to whom an Incentive Option is granted is the owner of stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any of its parent or subsidiary
corporations, then the option price per share will be at least one hundred and
ten percent (110%) of the fair market value per share on the grant date, and
the option term will not exceed five (5) years, measured from the grant date.
Tandem Stock Appreciation Rights. The Committee is authorized to issue
tandem stock appreciation rights in connection with option grants under the
Discretionary Option Grant Program. Tandem stock appreciation rights provide
the holders with the right, subject to the Committee's approval, to surrender
their options for a distribution from the Company equal in amount to the excess
of (a) the fair market value of the vested shares of Company Common Stock
subject to the surrendered option over (b) the aggregate exercise price payable
for such shares. Such distribution may, at the discretion of the Committee, be
made in cash or in shares of Company Common Stock or partly in shares of
Company Common Stock and partly in cash.
Automatic Option Grant Program
Under the Automatic Option Grant Program, non-employee Board members will
receive option grants at designated dates during their period of Board service.
These special grants may be summarized as follows:
Each individual who was serving as a non-employee Board member on June 12,
1996 was automatically granted on that date a nonstatutory stock option to
purchase 25,000 shares of Common Stock. Each individual who first becomes a
non-employee Board member after the date of the initial public offering,
whether through election by the stockholders or appointment by the Board, will
automatically be granted, at the time of such initial election or appointment,
a nonstatutory stock option to purchase 25,000 shares of Common Stock, provided
such individual has not previously been in the employ of the Company. Each
individual who is serving as a non-employee Board member on the date of each
Annual Stockholders Meeting held after January 13, 2000 will automatically be
granted, at the time of such Annual Meeting, a nonstatutory stock option to
purchase 6,000 shares of Common Stock. An individual who has previously been in
the employ of the Company is eligible for the annual option grants; but a non-
employee director who receives the initial option in a calendar year will not
also receive an annual option grant in that same calendar year.
15
<PAGE>
Each option grant under the Automatic Option Grant Program will be subject
to the following terms and conditions:
1. The option price per share will be equal to 100% of the fair market
value per share of the Company's Common Stock on the automatic grant date
and each option is to have a maximum term of ten years measured from the
grant date.
2. Each automatic option granted before December 31, 1996 will be
immediately exercisable for all of the option shares, but the shares
purchasable under the option will be subject to repurchase at the original
exercise price in the event the optionee's Board service should cease prior
to full vesting. With respect to each initial grant, the repurchase right
will lapse and the optionee vest in a series of five (5) successive annual
installments, measured from the grant date, provided such optionee
continues service as a Board member.
3. Each initial option granted on or after January 13, 2000 will become
exercisable in a series of four (4) successive annual installments over the
optionee's Board service measured from the grant date. Prior to the
amendment that is the subject of this Proposal No. 2, initial options
vested over five (5) years. Each annual option grant will become
exercisable in full upon the optionee's completion of one year of Board
service measured from the grant date.
4. The option will remain exercisable for a twelve (12)-month period
following the optionee's termination of service as a Board member for any
reason. Should the optionee die while serving as a Board member or during
the twelve (12)-month period following his or her cessation of Board
service, then such options may be exercised during the twelve (12)-month
period following such optionee's cessation of service by the personal
representatives of the optionee's estate or the person to whom the grant is
transferred by the optionee's will or the laws of inheritance. In no event,
however, may the option be exercised after the expiration date of the
option term. During the applicable exercise period, the option may not be
exercised for more than the number of vested shares (if any) for which it
is exercisable at the time of the optionee's cessation of Board service.
5. The option shares will become fully exercisable and fully vested in
the event of a Corporate Transaction (as defined below) or a Change in
Control (as defined below). The option shares will become fully exercisable
and fully vested in the event of the optionee's cessation of Board service
by reason of death or permanent disability.
6. Upon the occurrence of a hostile tender offer, each option granted
before December 31, 1996 which has been in effect for at least six (6)
months (whether or not the optionee is vested in such option) shall be
automatically canceled and the optionee will in return be entitled to a
cash distribution from the Company in an amount per canceled option share
equal to the excess of (i) the highest reported price per share of the
Company's Common Stock paid in the tender offer or, if greater, the fair
market value per share of the Company's Common Stock over (ii) the option
exercise price payable per share.
7. Option grants under the Automatic Option Grant Program will be made
in strict compliance with the express provisions of that program. The
remaining terms and conditions of the options will in general conform to
the terms described above for option grants under the Discretionary Option
Grant Program and will be incorporated into the option agreement evidencing
the automatic grant.
General Provisions
Acceleration of Options/Termination of Repurchase Rights. Upon the
occurrence of either of the following transactions (a "Corporate Transaction"):
(i) the sale, transfer, or other disposition of all, or substantially
all, of the Company's assets in complete liquidation or dissolution of the
Company, or
(ii) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities are transferred to a person or
16
<PAGE>
persons different from the persons holding those securities immediately
prior to such transaction, each outstanding option under the Option Plan
will, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable for all of the shares at the time subject to such
option. However, an outstanding option shall not accelerate if and to the
extent: (a) such option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation (or parent) or to be
replaced with a comparable option to purchase shares of the capital stock
of the successor corporation (or parent), (b) such option is to be replaced
with a cash incentive program of the successor corporation which preserves
the spread existing on the unvested option shares at the time of the
Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (c) the acceleration
of such option is subject to other limitations imposed by the Committee at
the time of the option grant. Immediately following the consummation of the
Corporate Transaction, all outstanding options will terminate and cease to
be exercisable, except to the extent assumed by the successor corporation.
Also upon a Corporate Transaction, the Company's outstanding repurchase
rights will terminate automatically and the shares of the Company's Common
Stock subject to those terminated rights shall vest in full unless assigned to
the successor corporation or accelerated vesting is precluded by other
limitations imposed by the Committee at the time the repurchase right is
issued.
Any options which are assumed or replaced in the Corporate Transaction and
do not otherwise accelerate at that time shall automatically accelerate (and
any of the Company's outstanding repurchase rights which do not otherwise
terminate at the time of the Corporate Transaction shall automatically
terminate and the shares of Common Stock subject to those terminated rights
shall immediately vest in full) in the event the optionee's service should
subsequently terminate by reason of an involuntary or constructive termination
within twelve (12) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for fully
vested shares until the earlier of (i) the expiration of the option term or
(ii) the expiration of the one (1)-year period measured from the effective date
of the employment termination.
The Committee has the discretion to accelerate outstanding options and
terminate the Company's outstanding repurchase rights in its discretion,
including upon the occurrence of the following transactions ("Change in
Control"):
(i) any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) acquires beneficial ownership of more
than fifty percent (50%) of the Company's outstanding voting stock without
the Board's recommendation, or
(ii) there is a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases by reason of a proxy contest(s) to be comprised of
individuals who (a) have been Board members continuously since the
beginning of such period or (b) have been elected or nominated for
selection as Board members by a majority of the Board in clause (a) who
were still in office at the time such election or nomination was approved
by the Board. The Committee also has the discretion to accelerate
outstanding options and terminate the Company's outstanding repurchase
rights upon the subsequent termination of the optionee's service within a
specified period following the Change in Control.
The acceleration of options in the event of a Corporate Transaction or
Change in Control may be seen as an anti-takeover provision and may have the
effect of discouraging a merger proposal, a takeover attempt, or other efforts
to gain control of the Company.
Valuation. For purposes of establishing the option price and for all other
valuation purposes under the Option Plan, the fair market value of a share of
Company Common Stock on any relevant date will be the closing price per share
of Company Common Stock on that date, as such price is reported on the Nasdaq
Stock Market. The fair market value on December 31, 1999 as reported on the
Nasdaq Stock Market was $54.3125 per share.
17
<PAGE>
Change in Capitalization. In the event any change is made to the Company's
Common Stock issuable under the Option Plan by reason of any stock split, stock
dividend, combination of shares, exchange of shares, or other change effecting
the outstanding Company's Common Stock as a class without the Company's receipt
of consideration, appropriate adjustments will be made to (i) the maximum
number and/or class of securities issuable under the Option Plan, (ii) the
maximum number and/or class of securities for which any one person may be
granted options over the specified term, (iii) the number and/or class of
securities for which automatic option grants are to be subsequently made per
director under the Automatic Option Grant Program and (iv) the number and/or
class of securities and the exercise price per share in effect under each
outstanding option (including any option incorporated from the 1987 Plan) in
order to prevent the dilution or enlargement of benefits thereunder.
Each outstanding option which is assumed in connection with a Corporate
Transaction will be appropriately adjusted to apply and pertain to the number
and class of securities which would otherwise have been issued, in consummation
of such Corporate Transaction, to the option holder had the option been
exercised immediately prior to the Corporate Transaction. Appropriate
adjustments will also be made to the option price payable per share and to the
class and number of securities available for future issuance under the Option
Plan on both an aggregate and a per-participant basis.
Option Plan Amendments. The Board may amend or modify the Option Plan in any
and all respects whatsoever. The Board may not, without the approval of the
Company's stockholders, (i) materially increase the maximum number of shares
issuable under the Option Plan (except in connection with certain changes in
capitalization) or (ii) materially modify the eligibility requirements for
option grants.
Unless sooner terminated by the Board, the Option Plan will in all events
terminate on April 15, 2006. Any options outstanding at the time of such
termination will remain in force in accordance with the provisions of the
instruments evidencing such grants.
New Plan Benefits. As of January 1, 2000 options covering 3,846,291 shares
were outstanding under the Option Plan, 1,324,105 shares remained available for
future option grants assuming approval of this Proposal No. 2, and 1,509,905
shares have been issued under the Option Plan. The expiration dates for all
such options range from April 2001 to December 2009.
Except as set forth above under the caption "Automatic Option Grant
Program," grants to be made under the Option Plan in the future are at the
discretion of the Committee and are not determinable at this time. The
following table shows all option grants made under the Option Plan during the
fiscal year ending September 30, 1999 and through December 31, 1999, to the
indicated individuals, all current executive officers as a group, all current
directors who are not executive officers as a group, and all employees
(including all current officers who are not executive officers) as a group,
respectively:
<TABLE>
<CAPTION>
Number of
Option Shares
-------------
<S> <C>
Alan B. Lefkof............................................... 60,000
James A. Clark............................................... 25,000
Didier Cop................................................... 25,000
Thomas A. Skoulis............................................ 30,000
Michael P. Trupiano.......................................... 100,000
Reese M. Jones............................................... 0
David C. King................................................ 0
David F. Marquardt........................................... 0
All Current Executive Officers as a Group (6 persons)........ 356,500
All Directors who were not employees as a group (3 persons).. 0
All Employees (including officers who are not executive
officers)................................................... 1,095,586
</TABLE>
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<PAGE>
Federal Income Tax Consequences of Options Granted Under the Option Plan
Options granted under the Option Plan may be either incentive stock options
that satisfy the requirements of Section 422 of the Internal Revenue Code or
nonstatutory options that are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
Incentive Stock Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. However, the excess of the fair market value
of the purchased shares on the exercise date over the exercise price paid for
the shares generally is includable in alternative minimum taxable income. The
optionee will recognize taxable income in the year in which the purchased
shares are sold or otherwise made the subject of disposition.
For Federal tax purposes, dispositions are divided into two categories: (i)
qualifying and (ii) disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other disposition of such
shares is made after the optionee has held the shares for more than two (2)
years after the grant date of the option and more than one (1) year after the
exercise date. If the optionee fails to satisfy either of these two holding
periods prior to the sale or other disposition of the purchased shares, then a
disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will recognize
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition of the purchased shares over (ii)
the exercise price paid for such shares. If there is a disqualifying
disposition of the shares, then the excess of (i) the fair market value of
those shares on the date the option was exercised over (ii) the exercise price
paid for the shares will be taxable as ordinary income. Any additional gain
recognized upon the disposition will be a capital gain.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction for the taxable
year in which such disposition occurs equal to the excess of (i) the fair
market value of such shares on the date the option was exercised over (ii) the
exercise price paid for the shares. In no other instance will the Company be
allowed a deduction with respect to the optionee's disposition of the purchased
shares. The Company anticipates that any compensation deemed paid by the
Company upon one or more disqualifying dispositions of incentive stock option
shares by the Company's executive officers will remain deductible by the
Company and will not have to be taken into account for purposes of the $1
million limitation per covered individual on the deductibility of the
compensation paid to certain executive officers of the Company.
Nonstatutory Options. No taxable income is recognized by an optionee upon
the grant of a nonstatutory option.
The optionee will in general recognize ordinary income in the year in which
the option is exercised equal to the excess of the fair market value of the
purchased shares on the exercise date over the exercise price paid for the
shares, and the optionee will be required to satisfy the tax withholding
requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the acquisition of
the Company's Common Stock under a nonstatutory option if the purchased shares
are subject to repurchase by the Company. These special provisions may be
summarized as follows:
(i) If the shares acquired upon exercise of the nonstatutory option are
subject to repurchase by the Company at the original exercise price in the
event of the optionee's termination of service prior to vesting in such
shares, the optionee will not recognize any taxable income at the time of
exercise but will have to report as ordinary income, as and when the
Company's repurchase right lapses, an amount equal to the excess of (a) the
fair market value of the shares on the date such repurchase right lapses
with respect to such shares over (b) the exercise price paid for the
shares.
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<PAGE>
(ii) The optionee may, however, elect under Section 83(b) of the
Internal Revenue Code to include as ordinary income in the year of exercise
of the nonstatutory option an amount equal to the excess of (a) the fair
market value of the purchased shares on the exercise date (determined as if
the shares were not subject to the Company's repurchase right) over (b) the
exercise price paid for such shares. If the Section 83(b) election is made,
the optionee will not recognize any additional income as and when the
repurchase right lapses.
The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised nonstatutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee. The Company anticipates that the compensation deemed paid by the
Company upon the exercise of nonstatutory options with exercise prices equal to
the fair market value of the option shares on the grant date will remain
deductible by the Company and will not have to be taken into account for
purposes of the $1 million limitation per covered individual on the
deductibility of the compensation paid to certain executive officers of the
Company.
Stock Appreciation Rights. An optionee who is granted a stock appreciation
right will recognize ordinary income in the year of exercise equal to the
amount of the appreciation distribution. The Company will be entitled to a
business expense deduction equal to the appreciation distribution for the
taxable year of the Company in which the ordinary income is recognized by the
optionee.
Vote Required and Board of Directors' Recommendation
The affirmative vote of a majority of the shares present or represented by
proxy and entitled to vote at the Annual Stockholder Meeting, at which a quorum
representing a majority of all outstanding shares of Common Stock of the
Company is present, either in person or by proxy, is required for approval of
this proposal. Abstentions are not affirmative votes and, therefore, will have
the same effect as a vote against the proposal. Broker non-votes will not be
treated as entitled to vote on the matter and thus, will not affect the outcome
of the voting on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT OF THE
1996 STOCK OPTION PLAN.
PROPOSAL NO. 3
AMENDMENT OF THE EMPLOYEE STOCK PURCHASE PLAN
The stockholders are being asked to vote on a proposal to approve an
amendment to the Netopia, Inc. Employee Stock Purchase Plan (the "Purchase
Plan") to increase the number of shares of the Company's Common Stock available
for issuance under the Option Plan by 50,000 shares to a total of 800,000
shares of Company Common Stock. The Company has been advised by its counsel
that it should reserve a sufficient number of shares under its Purchase Plan to
last through the end of each twenty-four month offering period beginning prior
to the 2001 Annual Stockholder Meeting. In accordance with recently issued
accounting guidance, an insufficient number of shares reserved at the beginning
of an offering period may result in future compensation charges for financial
reporting purposes. Accordingly, the Board is recommending an increase to the
number of shares available under the Purchase Plan.
The Purchase Plan was adopted by the Board on April 16, 1996 and approved by
the stockholders on May 15, 1996. The Purchase Plan was amended on February 14,
1997 to increase the number of shares issuable thereunder by 200,000 shares, on
October 29, 1997 to increase the number of shares issuable thereunder by
100,000 shares, on October 27, 1998 to increase the number of shares issuable
thereunder by 150,000 shares, and on January 13, 2000 to increase the number of
shares issuable thereunder by 50,000 shares. The stockholders approved the 1997
and 1998 amendments. The Purchase Plan, and the right of participants to
20
<PAGE>
make purchases thereunder, is intended to meet the requirements of an "employee
stock purchase plan" as defined in Section 423 of the Internal Revenue Code
(the "Code"). The proxy holders intend to vote all proxies received by them FOR
the Amendment of the Purchase Plan.
The principal terms and provisions of the Purchase Plan are summarized
below. The summary, however, is not intended to be a complete description of
all the terms of the Purchase Plan. A copy of the Purchase Plan will be
furnished by the Company to any stockholder upon written request to the Chief
Financial Officer at the executive offices in Alameda, California.
Purpose. The purpose of the Purchase Plan is to provide employees of the
Company and designated parent or subsidiary corporations (collectively,
"Participating Companies") an opportunity to participate in the ownership of
the Company by purchasing Common Stock of the Company through payroll
deductions. The Company is the only Participating Company in the Purchase Plan.
The Purchase Plan is intended to benefit the Company as well as its
stockholders and employees. The Purchase Plan gives employees an opportunity to
purchase shares of Company Common Stock at a favorable price. The Company
believes that the stockholders will correspondingly benefit from the increased
interest on the part of participating employees in the appreciation of the
Company's share price. Finally, the Company will benefit from the periodic
investments of equity capital provided by participants in the Purchase Plan.
Administration. The Purchase Plan is currently administered by the
Compensation Committee of the Board (the "Committee"). All costs and expenses
incurred in plan administration are paid by the Company without charge to
participants. All cash proceeds received by the Company from payroll deductions
under the Purchase Plan are credited to a non-interest bearing book account.
Shares and Terms. The stock issuable under the Purchase Plan is the
Company's authorized but unissued or reacquired Common Stock. The maximum
number of shares of Company Common Stock that may be issued under the Purchase
Plan is 800,000 assuming approval of this Proposal No. 3. Company Common Stock
subject to a terminated purchase right shall be available for purchase pursuant
to purchase rights subsequently granted.
Adjustments. If any change in the Company Common Stock occurs (through
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares, or other change affecting the outstanding Common Stock as a class
without the Company's receipt of consideration), appropriate adjustments shall
be made by the Company to the class and maximum number of shares subject to the
Purchase Plan, to the class and maximum number of shares purchasable by each
participant on any one purchase date, and the class and number of shares and
purchase price per share subject to outstanding purchase rights in order to
prevent the dilution or enlargement of benefits thereunder.
Eligibility. Generally, any individual who is customarily employed by a
Participating Company more than 20 hours per week and for more than five months
per calendar year is eligible to participate in the Purchase Plan.
Approximately 275 employees (including 6 officers) were eligible to participate
in the Purchase Plan as of December 31, 1999.
Offering Periods. The Purchase Plan is implemented by offering periods which
generally have a duration of twenty-four months. Each offering period is
comprised of a series of one or more successive purchase periods, each of which
generally have a duration of six (6) months. Offering periods are concurrent
and successive and, accordingly, a new offering period commences every six
months and runs concurrently with each prior offering period. Generally,
purchase periods start on the first business day in each of February and August
and end, respectively, on the last business day of July of the same year and
January of the following year. A new offering period will begin on February 1,
2000 and will end on January 31, 2002. The Committee in its discretion may vary
the beginning date and ending date of the offering periods prior to their
commencement, provided no offering period (other than the initial offering
period) shall exceed twenty-four (24) months in length, and may terminate an
offering period following any purchase period.
21
<PAGE>
The participant will have a separate purchase right for each offering period
in which he or she participates. The purchase right will be granted on the
first day of the offering period and will be automatically exercised in
successive installments on the last day of each purchase period within the
offering period.
Purchase Price. The purchase price per share under the Purchase Plan will be
85% of the lower of (i) the fair market value of a share of Company Common
Stock on the first day of the applicable offering period, or (ii) the fair
market value of a share of Company Common Stock on the purchase date.
Generally, the fair market value of the Company Common Stock on a given date is
the closing sale price of the Company Common Stock, as reported on the Nasdaq
Stock Market. The market value of the Company's Common Stock as reported on the
Nasdaq Stock Market as of December 31, 1999 was $54.3125 per share.
Limitations. The plan imposes certain limitations upon a participant's
rights to acquire Company Common Stock, including the following:
1. No purchase right shall be granted to any person who immediately
thereafter would own, directly or indirectly, stock or hold outstanding
options or rights to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the
Company or any of its parent or subsidiary corporations.
2. In no event shall a participant be permitted to purchase more than
2,000 shares on any one purchase date.
3. The right to purchase Company Common Stock under the Purchase Plan
(or any other employee stock purchase plan that the Company or any of its
subsidiaries may establish) in an offering intended to qualify under
Section 423 of the Code may not accrue at a rate that exceeds $25,000 in
fair market value of such Company Common Stock (determined at the time such
purchase right is granted) for any calendar year in which such purchase
right is outstanding.
The purchase right shall be exercisable only by the Participant during the
Participant's lifetime and shall not be assignable or transferable by the
Participant.
Payment of Purchase Price; Payroll Deductions. Payment for shares by
participants shall be by accumulation of after-tax payroll deductions during
the purchase period. The deductions may not exceed 15% of a participant's cash
compensation paid during a purchase period. Compensation for this purpose will
include elective contributions that are not includable in income under Code
Sections 125 or 401(k) and all bonuses, overtime, commissions, and other
amounts to the extent paid in cash.
The participant will receive a purchase right for each offering period in
which he or she participates to purchase up to the number of shares of Company
Common Stock determined by dividing such participant's payroll deductions
accumulated prior to the purchase date by the applicable purchase price
(subject to the limitations described in the "Limitations" section). No
fractional shares shall be purchased. Any payroll deductions accumulated in a
participant's account that are not sufficient to purchase a full share will be
retained in the participant's account for the subsequent purchase period. No
interest shall accrue on the payroll deductions of a participant in the
Purchase Plan.
Termination and Change to Payroll Deductions. A purchase right shall
terminate at the end of the offering period or earlier if (i) the participant
terminates employment and then any payroll deductions which the participant may
have made with respect to a terminated purchase right will be refunded or (ii)
the participant elects to withdraw from the Purchase Plan. Any payroll
deductions which the participant may have made with respect to a terminated
purchase right under clause (ii) will be refunded unless the participant elects
to have the funds applied to the purchase of shares on the next purchase date.
Unless a participant has irrevocably elected otherwise, he or she may decrease
his or her deductions once during a purchase period.
Amendment and Termination. The Purchase Plan shall continue in effect until
the earlier of (i) the last business day in July 2006, (ii) the date on which
all shares available for issuance under the Purchase Plan shall have been
issued or (iii) a Corporate Transaction, unless the Purchase Plan is earlier
terminated by the Board in its discretion.
22
<PAGE>
The Board may at any time alter, amend, suspend or discontinue the Purchase
Plan, provided that, without the approval of the stockholders, no such action
may (i) alter the purchase price formula so as to reduce the purchase price
payable for shares under the Purchase Plan, (ii) materially increase the number
of shares issuable under the Purchase Plan or the maximum number of shares
purchasable per participant, or (iii) materially increase the benefits accruing
to participants under the Purchase Plan or materially modify the eligibility
requirements.
In addition, the Company has specifically reserved the right, exercisable in
the sole discretion of the Board, to terminate the Purchase Plan immediately
following any six-month purchase period. If such right is exercised by the
Board, then the Purchase Plan will terminate in its entirety and no further
purchase rights will be granted or exercised, and no further payroll deductions
shall thereafter be collected under the Purchase Plan.
Corporate Transaction. In the event of (i) a merger or consolidation in
which securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction or (ii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company in
complete liquidation or dissolution of the Company (a "Corporate Transaction"),
each purchase right under the Purchase Plan will automatically be exercised
immediately before consummation of the Corporate Transaction as if such date
were the last purchase date of the offering period. The purchase price per
share shall be equal to eighty-five percent (85%) of the lower of the fair
market value per share of Company Common Stock on the start date of the
offering period or the fair market value per share of Company Common Stock
immediately prior to the effective date of such Corporate Transaction. Any
payroll deductions not applied to such purchase shall be promptly refunded to
the participant.
The grant of purchase rights under the Purchase Plan will in no way affect
the right of the Company to adjust, reclassify, reorganize, or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
Proration of Purchase Rights. If the total number of shares of Company
Common Stock for which purchase rights are to be granted on any date exceeds
the number of shares then remaining available under the Purchase Plan, the
Committee shall make a pro rata allocation of the shares remaining.
Federal Income Tax Consequences. The following is a general description of
certain federal income tax consequences of the Purchase Plan. This description
does not purport to be complete.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. Under a plan which so qualifies, no
taxable income will be reportable by a participant, and no deductions will be
allowable to the Company, by reason of the grant or exercise of the purchase
rights issued thereunder. A participant will, however, recognize taxable income
in the year in which the purchased shares are sold or otherwise made the
subject of disposition.
A sale or other disposition of the purchased shares will be a disqualifying
disposition if made before the later of two years after the start of the
offering period in which such shares were acquired or one year after the shares
are purchased. If the participant makes a disqualifying disposition of the
purchased shares, then the Company will be entitled to an income tax deduction,
for the taxable year in which such disposition occurs, equal to the amount by
which the fair market value of such shares on the date of purchase exceeded the
purchase price, and the participant will be required to satisfy the employment
and income tax withholding requirements applicable to such income. In no other
instance will the Company be allowed a deduction with respect to the
participant's disposition of the purchased shares.
Any additional gain or loss recognized upon the disposition of the shares
will be a capital gain, which will be long-term if the shares have been held
for more than one (1) year following the date of purchase under the Purchase
Plan.
23
<PAGE>
The foregoing is only a summary of the federal income taxation consequences
to the participant and the Company with respect to the shares purchased under
the Purchase Plan. In addition, the summary does not discuss the tax
consequences of a participant's death or the income tax laws of any city, state
or foreign country in which the participant may reside.
New Purchase Plan Benefits. Since purchase rights are subject to discretion,
including an employee's decision not to participate in the Purchase Plan,
awards under the Purchase Plan for the current fiscal year are not
determinable. However, in the fiscal year ended September 30, 1999, each of the
Named Officers purchased the following number of shares of Common Stock at a
price of $3.93 per share: Mr. Clark 4,000; Mr. Cop 4,000; Mr. Lefkof 3,553; and
Mr. Skoulis 4,000. In addition, Mr. Trupiano purchased 2,526 shares at a price
of $4.04 per share. All executive officers as a group (6 persons) purchased
18,079 shares during the fiscal year ended September 30, 1999.
Vote Required and Board of Directors' Recommendation
The affirmative vote of a majority of the shares present or represented by
proxy and entitled to vote at the Annual Stockholder Meeting, at which a quorum
representing a majority of all outstanding shares of Common Stock of the
Company is present, either in person or by proxy, is required for approval of
this proposal. Abstentions are not affirmative votes and, therefore, will have
the same effect as a vote against the proposal. Broker non-votes will not be
treated as entitled to vote on the matter and thus, will not affect the outcome
of the voting on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board has selected KPMG LLP as the independent auditors of the Company
for the fiscal year ending September 30, 2000. KPMG LLP has acted in such
capacity since its appointment for fiscal year 1987. A representative of KPMG
LLP will be present at the Annual Stockholder Meeting, will be given the
opportunity to make a statement, if he or she so desires, and will be available
to respond to appropriate questions.
In the event ratification by the holders of the appointment of KPMG LLP as
the Company's independent auditors is not obtained, the Board will reconsider
such appointment.
Vote Required and Board of Directors' Recommendation
In accordance with the Company's current bylaws, the affirmative vote of a
majority of the shares present or represented by proxy and entitled to vote at
the Annual Stockholder Meeting, at which a quorum representing a majority of
all outstanding shares of Common Stock of the Company is present, either in
person or by proxy, is required for approval of this proposal. Abstentions and
broker non-votes will each be counted as present for purposes of determining
the presence of a quorum. Abstentions and broker non-votes will each have the
same effect as a negative vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND A VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 2000.
24
<PAGE>
Form 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
COMPANY'S FORM 10-K REPORT FOR FISCAL 1999, INCLUDING THE CONSOLIDATED
FINANCIAL STATEMENTS, SCHEDULE AND LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO
NETOPIA, INC., 2470 MARINER SQUARE LOOP, ALAMEDA, CALIFORNIA 94501, ATTN:
INVESTOR RELATIONS.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL STOCKHOLDER MEETING
Proposals of stockholders intended to be presented at the next Annual
Stockholder Meeting of the Company must be received by the Company at its
offices at 2470 Mariner Square Loop, Alameda, California 94501, not later than
September 20, 2000 and satisfy the conditions established by the Securities and
Exchange Commission for holder proposals to be included in the Company's proxy
statement for that meeting. Pursuant to new amendments to Rule 14a-4(c) of the
Securities Exchange Act of 1934, as amended, a stockholder proposal intended to
be presented at the next Annual Stockholder Meeting of the Company must be
received by the Company at its offices at 2470 Mariner Square Loop, Alameda,
California 94501, not later than December 4, 2000 in order for proxy holders to
be allowed to use their discretionary voting authority to vote on such proposal
when the proposal is raised at the next Annual Stockholder Meeting, even
through there is no discussion of such proposal in the Company's proxy
statement for that meeting.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
informed of any other matter, other than those stated above, that may be
brought before the meeting. The persons named in the enclosed form of proxy or
their substitutes will vote with respect to any such matters in accordance with
their best judgment.
By order of the Board of Directors,
/s/ Alan B. Lefkof
Alan B. Lefkof
President, Chief Executive Officer
and Director
Dated: February 1, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
POSTAGE PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE
ANNUAL STOCKHOLDER MEETING. IF YOU DECIDE TO ATTEND THE ANNUAL STOCKHOLDER
MEETING AND WISH TO CHANGE YOUR VOTE, YOU MAY DO SO AUTOMATICALLY BY
VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL STOCKHOLDER MEETING.
25
<PAGE>
NETOPIA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan B. Lefkof and James A. Clark, and
either of them, to vote all shares of stock which the undersigned is entitled to
vote at the Annual Stockholder Meeting, to be held at 2470 Mariner Square Loop,
Alameda, California 94501 on Tuesday, February 29, 2000 at 10:00 a.m., local
time, and at any continuation or adjournment thereof, with all the powers which
the undersigned might have if personally present at the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual
Stockholder Meeting and Proxy Statement, dated February 1, 2000, and a copy of
the Company's 1999 Annual Report to Stockholders. The undersigned hereby
expressly revokes any and all proxies heretofore given or executed by the
undersigned with respect to the shares of stock represented by this Proxy and,
by filing this Proxy with the Secretary of the Company, gives notice of such
revocation.
WHERE NO CONTRARY CHOICE IS INDICATED BY THE STOCKHOLDER, THIS PROXY, WHEN
RETURNED, WILL BE VOTED FOR SUCH PROPOSALS, FOR SUCH NOMINEES AND WITH
DISCRETIONARY AUTHORITY UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
1. ELECTION OF DIRECTORS
For all nominees [ ] Withhold Authority to vote for nominees [ ]
listed below listed below
Reese M. Jones, Alan B. Lefkof, David C. King and David F. Marquardt
2. PROPOSAL TO APPROVE AMENDMENTS TO THE 1996 STOCK OPTION PLAN, INCLUDING THE
500,000 SHARE INCREASE IN THE NUMBER OF SHARES AVAILABLE , AS SET FORTH IN
THE ACCOMPANYING PROXY.
For [ ] Against [ ] Abstain [ ]
3. TO APPROVE AN AMENDMENT TO THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN TO
INCREASE THE NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK AVAILABLE FOR
ISSUANCE BY 50,000 SHARES, AS SET FORTH IN THE ACCOMPANYING PROXY.
For [ ] Against [ ] Abstain [ ]
4. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS OF
THE COMPANY.
For [ ] Against [ ] Abstain [ ]
5. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE
MEETING.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned Stockholder.
DATED: ___________________, 2000 _________________________________
PLEASE VOTE, SIGN, DATE AND Signature
RETURN THE PROXY CARD USING
THE ENCLOSED ENVELOPE
_________________________________
Signature (if held jointly)
