SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DIGITAL LINK CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
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:
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<PAGE>
Digital Link Corporation
217 Humboldt Court
Sunnyvale, California 94089
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Digital
Link Corporation (the "Company") will be held at the Santa Clara Marriott Hotel
located at 2700 Mission College Boulevard, Santa Clara, California 95054 on
Wednesday, May 20, 1998, at 2:00 p.m. Pacific Daylight Time, for the following
purposes:
1. To elect six directors of the Company, each to hold office until the
next Annual Meeting of Shareholders and until his or her successor has
been elected and qualified or until his or her earlier resignation or
removal. The following persons are the nominees for election as
directors:
Vinita Gupta Richard C. Alberding
Gregory M. Avis Lance B. Boxer
Alan I. Fraser Narendra K. Gupta
2. To ratify the selection of Coopers & Lybrand, L.L.P. as independent
auditors for the Company for the current fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 27, 1998 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ Stanley E. Kazmierczak
Stanley E. Kazmierczak
Vice President, Finance and Administration,
Chief Financial Officer and Secretary
Sunnyvale, California
April 20, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE>
DIGITAL LINK CORPORATION
217 Humboldt Court
Sunnyvale, California 94089
-------------------
PROXY STATEMENT
-------------------
April 20, 1998
The accompanying proxy is solicited on behalf of the Board of Directors
of Digital Link Corporation, a California corporation (the "Company" or "Digital
Link"), for use at the Annual Meeting of Shareholders of the Company to be held
at the Santa Clara Marriott Hotel located at 2700 Mission College Boulevard,
Santa Clara, California 95054 on Wednesday, May 20, 1998, at 2:00 p.m. Pacific
Daylight Time (the "Meeting"). All proxies will be voted in accordance with the
instructions contained therein, and, if a proxy is executed and no choice is
specified, the proxy will be voted in favor of the nominees and the proposals
set forth in the accompanying Notice of Meeting and this Proxy Statement. This
Proxy Statement and the accompanying form of proxy were first mailed to
shareholders on or about April 20, 1998.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Holders of the Company's Common Stock are entitled to one vote for each
share held as of March 27, 1998 (the "Record Date"). At the close of business on
the Record Date, the Company had 9,349,006 shares of Common Stock outstanding
and entitled to vote. Only holders of record of the Company's Common Stock at
the close of business on the Record Date will be entitled to vote at the
Meeting. A majority of the shares outstanding on the Record Date will constitute
a quorum for the transaction of business.
With respect to proposal no. 1, the affirmative vote of a plurality of
the votes of the shares of Common Stock present in person or represented by
proxy at the Meeting and entitled to vote on the election of directors is
required to approve the election of the six directors. Cumulative voting for
directors is not permitted. Proposal no. 2 requires for approval the affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy at the Meeting and entitled to vote. For purposes of such
calculations (i) the aggregate number of votes entitled to be cast by all
shareholders present in person or represented by proxy at the Meeting, whether
such shareholders vote "for," "against," "abstain" or give no instructions, will
be counted for purposes of determining the minimum number of affirmative votes
required to approve proposal no. 2, (ii) the total number of shares cast for a
proposal or giving no instructions will be considered to have been voted in
favor of the proposal, and (iii) an abstention from voting on a matter by a
shareholder present in person or by proxy at the Meeting has the same effect as
a vote against the proposal. In addition, the affirmative votes for proposal no.
2 must constitute at least a majority of the required quorum. In the event that
a broker indicates on a proxy that it does not have discretionary authority as
to certain shares to vote on a particular matter, those shares will be counted
for purposes of determining the presence or absence of a quorum for the
transaction of business but will not be considered present and entitled to vote
with respect to that matter.
In the event that sufficient votes in favor of the proposals are not
received by the date of the Meeting, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitations of
proxies. Any such adjournment would require the affirmative vote of the majority
of the outstanding shares present in person or represented by proxy at the
Meeting.
The cost of preparing, assembling, printing and mailing the Proxy
Statement, the Notice of Annual Meeting of Shareholders and the enclosed form of
proxy, as well as the cost of soliciting proxies relating to the Meeting, will
be borne by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company will request that the brokers, custodians,
nominees and other record holders forward copies of the proxy and other
soliciting materials to persons for whom they hold shares of Common Stock and
request authority for the exercise of proxies. In such cases, the Company, upon
the request of the record holders, will reimburse such holders for their
reasonable expenses. The official solicitation of proxies may also be
supplemented by telephone, telegram and personal solicitation by directors,
officers and regular employees of the Company.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy
Statement has the power to revoke it prior to the Meeting or at the Meeting
prior to the vote pursuant to the proxy. A proxy may be revoked by a written
instrument delivered to the Company stating that the proxy is revoked, by a
subsequent proxy that is signed by the person who signed the earlier proxy and
is presented at the Meeting or by attendance at the Meeting and voting in
person. Please note, however, that if a shareholder's shares are held of record
by a broker, bank or other nominee and that shareholder wishes to vote at the
Meeting, the shareholder must bring to the Meeting a letter from the broker,
bank or other nominee confirming that shareholder's beneficial ownership of the
shares.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Nominees
A board of six directors is to be elected at the Meeting. Each director
will be elected to hold office until the next annual meeting of shareholders or
until his or her successor is duly elected and qualified or until such
director's earlier resignation or removal. Shares represented by the
accompanying proxy will be voted for the election of each of the six nominees
named below unless the proxy is marked in such a manner as to withhold authority
so to vote. If any nominee for any reason is unable to serve or for good cause
will not serve, the proxies may be voted for such substitute nominee as the
proxy holder may determine.
The names of the nominees, each of whom is currently a director of the
Company, and certain information about them as of March 27, 1998, are set forth
below:
<TABLE>
<CAPTION>
Name of Director Age Principal Occupation Director Since
- ---------------- --- -------------------- --------------
<S> <C> <C> <C>
Vinita Gupta 47 Chairperson of the Board, President and 1985
Chief Executive Officer of the Company
Richard C. Alberding 67 Executive Vice President, Hewlett Packard 1994
Company (Retired)
Gregory M. Avis 39 Managing General Partner, Summit Partners 1987
Lance B. Boxer 44 Chief Information Officer, MCI 1997
Telecommunications
Alan I. Fraser 47 President and Chief Executive Officer, 1996
Vertical Networks, Inc.
Narendra K. Gupta 49 Chairman of the Board, Integrated Systems, 1985
Inc.
</TABLE>
Mrs. Gupta is a founder of the Company. She has served as Chairperson of
the Board since its formation in May 1985. She has also served as Chief
Executive Officer of the Company from May 1985 to September 1996 and from March
1998 to the present, President of the Company from May 1985 to March 1995, from
October 1995 to September 1996 and from March 1998 to the present, Chief
Financial Officer of the Company from November 1991 to December 1992 and
Secretary of the Company from May 1985 to December 1993. From March 1978 to
February 1985, Mrs. Gupta held various engineering management positions at Bell
Northern Research Inc., a research and development arm of Northern Telecom, Ltd.
Mrs. Gupta also serves as a director of Integrated Systems, Inc., which develops
and markets real-time software products. Mrs. Gupta holds a Bachelor of
Engineering degree in Electronics and Communications from the University of
Roorkee (Roorkee, India) and a Master of Science degree in Electrical
Engineering from the University of California, Los Angeles. Dr. Narendra K.
Gupta, also a director of the Company, is the husband of Mrs. Gupta.
Mr. Alberding has served as a director of the Company since December 1994.
Since 1991, Mr. Alberding has served on the boards of a number of public and
private companies. He retired from the Hewlett Packard Company ("Hewlett
Packard") in 1991, at which time he was serving as an Executive Vice President.
Mr. Alberding is a director of Kennametal, Inc., Walker Interactive Systems,
Digital Microwave Corp., Paging Network Inc., SYBASE, Inc., Quickturn Design
Systems, Inc., Storm Technology, Inc., and several privately held corporations.
Mr. Alberding holds a Bachelor of Arts degree in Business Administration from
Augustana University and an engineering degree from Devry Technical Institute.
Mr. Avis has served as a director of the Company since December 1987.
Since January 1987, Mr. Avis has been a managing general partner of Summit
Partners. Summit Partners and its affiliates manage a number of venture capital
funds. Mr. Avis also serves as a director of Powerwave Technologies, Splash
Technology Holdings and several privately held corporations. Mr. Avis holds a
Bachelor of Arts degree in Political Economy from Williams College and a Master
of Business Administration degree from Harvard Business School.
Mr. Boxer has served as a director of the Company since June 1997. Since
1982, Mr. Boxer has served in various executive management positions at MCI
Telecommunications ("MCI"). He has served as Chief Information Officer of MCI
since 1996. Mr. Boxer also serves as a director of Allen Technology Foundation
and Collin County Childrens Advocacy Center. Mr. Boxer holds an engineering
degree from New York University.
Mr. Fraser has served as a director of the Company since September 1996.
Since March 1998, Mr. Fraser has served as President and Chief Executive Officer
of Vertical Networks, Inc., a wireless networking company. From September 1996
to February 1998 he served as President and Chief Executive Officer of Digital
Link. From September 1995 to August 1996, Mr. Fraser served as President of
Microunity Systems Engineering, Inc., a privately-held semi-conductor company.
From November 1976 to August 1995, Mr. Fraser held various executive management
positions at Northern Telecom, Inc., a telecommunications manufacturer. Mr.
Fraser is a Certified General Accountant.
Dr. Gupta has served as a director of the Company since October 1985.
Dr. Gupta founded Integrated Systems, Inc., a company that develops and markets
real-time software products, in 1980 and is currently Chairman of its Board of
Directors. Dr. Gupta is a Fellow of the Institute of Electrical and Electronic
Engineers (IEEE). In addition to Integrated Systems, Inc., Dr. Gupta is also a
director of Simulation Sciences Inc. Dr. Gupta holds a Bachelors degree from
I.I.T. Delhi (Delhi, India), a Master of Science degree from the California
Institute of Technology and a Ph.D. degree from Stanford University, all in
Engineering. Mrs. Gupta, founder, Chairperson of the Board of Directors,
President and Chief Executive Officer of the Company, is the wife of Dr. Gupta.
Board of Directors' Meetings and Committees
The Board of Directors met six times and acted by written consent two
times during fiscal 1997. No director attended fewer than 75% of the aggregate
of the total number of meetings of the Board of Directors (held during the
period for which he or she was a director) and the total number of meetings held
by all committees of the Board of Directors on which he or she served (during
the period that he or she served).
Standing committees of the Board of Directors include an Audit
Committee and a Compensation Committee. The Board of Directors does not have a
nominating committee or any committee performing similar functions.
Messrs. Alberding and Avis are currently the members of the Audit
Committee. The Audit Committee met two times during fiscal 1997. The Audit
Committee meets with the Company's independent accountants to review the
adequacy of the Company's internal control systems and financial reporting
procedures, reviews the general scope of the Company's annual audit and the fees
charged by the independent accountants, reviews and monitors the performance of
non-audit services by the Company's auditors, reviews the fairness of any
proposed transaction between any officer, director or other affiliate of the
Company and the Company, and after such review, makes recommendations to the
full Board of Directors and performs such further functions as may be required
by any stock exchange or over-the-counter market upon which the Company's Common
Stock is listed.
From January 1997 to July 1997, Messrs. Alberding and Avis served on
the Company's Compensation Committee and since July 1997, Messrs. Alberding and
Boxer have served on such committee. The Compensation Committee met one time and
acted by written consent six times during fiscal 1997. The Compensation
Committee administers the Company's 1992 Equity Incentive Plan, as amended and
1993 Employee Stock Purchase Plan, as amended and determines the salaries and
other compensation for officers and certain other employees of the Company.
Director Compensation
The Company's compensation policy for its directors includes a $5,000
annual retainer for all nonemployee directors. In addition to this annual
payment, each nonemployee director receives $1,000 per meeting attended, $500
per committee meeting attended and $250 per meeting via teleconference, and each
director is reimbursed for his reasonable expenses in attending meetings of the
Board of Directors. In accordance with this policy, Mr. Alberding received
$11,750, Mr. Avis received $11,000, Mr. Boxer received $5,250 and Dr. Gupta
received $10,000 for their services as directors of the Company during fiscal
1997.
In October 1994, the Company adopted the Directors Plan, which provides
for a grant of 10,000 shares to each nonemployee director who was serving on the
Board at the time of the Board's adoption of the Directors Plan and for the
grant of 15,000 shares for each new nonemployee director on the date such
director is appointed to the Board. In addition, the Directors Plan provides for
annual grants in the amount of 5,000 shares to each nonemployee director on the
anniversary of such director joining the Board, as long as he remains a member
of the Board. In accordance with the Directors Plan, Mr. Alberding was granted
nonqualified stock options to purchase 5,000 shares of Common Stock with an
exercise price of $13.50 per share in December 1997; Mr. Avis was granted
nonqualified stock options to purchase 5,000 shares of Common Stock with an
exercise price of $13.25 per share in December 1997; Mr. Boxer was granted
nonqualified stock options to purchase 15,000 shares of Common Stock with an
exercise price of $21.25 per share in June 1997; Mr. Fraser was granted
nonqualified stock options to purchase 15,000 shares of Common Stock with an
exercise price of $12.375 per share in March 1998; and Dr. Gupta was granted
nonqualified stock options to purchase 5,000 shares of Common Stock with an
exercise price of $25.75 per share in October 1997. Each of these options
becomes exercisable with respect to 2.08% of the shares each calendar month
after the grant date so long as the director remains a member of the Board.
The Board of Directors recommends a vote FOR the election of each of
the nominees listed above.
PROPOSAL NO. 2 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Coopers & Lybrand, L.L.P. as the
Company's independent auditors to perform the audit of the Company's financial
statements for the fiscal year ending December 31, 1998, and the shareholders
are being asked to ratify such selection. Notwithstanding the selection, the
Board, in its discretion, may direct the appointment of new independent auditors
at any time during the year, if the Board feels that such a change would be in
the best interests of the Company and its shareholders. In the event of a
negative vote for such ratification, the Board of Directors will reconsider its
selection.
Representatives of Coopers & Lybrand, L.L.P. will be present at the
Meeting, will have the opportunity to make a statement at the Meeting if they
desire to do so and will be available to respond to appropriate questions.
The Board of Directors Recommends a vote FOR the
Ratification of the Selection of Coopers & Lybrand, L.L.P.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company,
as of March 27, 1998, with respect to beneficial ownership of the Company's
Common Stock by (i) each shareholder known by the Company to be the beneficial
owner of more than 5% of the Company's Common Stock, (ii) each present director,
(iii) each executive officer named in the Summary Compensation Table below (the
"Named Officers") and (iv) all current executive officers and directors as a
group.
<TABLE>
<CAPTION>
Common Stock(1)
-------------------------------------------
Amount and Nature
of Beneficial Percent
Name of Beneficial Owner Ownership of Class
- -------------------------------------------------------- --------------------- -----------------
<S> <C> <C>
Vinita Gupta (2)........................................ 4,049,582 43.2%
Narendra K. Gupta (2)................................... 4,049,582 43.2
Kopp Investment Advisors, Inc. (3)...................... 3,686,083 39.4
Alan I. Fraser (4)...................................... 124,761 1.3
Stanley E. Kazmierczak (5).............................. 49,658 *
Richard C. Alberding (6)................................ 23,751 *
Gregory M. Avis (7)..................................... 18,542 *
Toni M. Bellin (8)...................................... 18,040 *
Jack A. Musgrove (9).................................... 16,550 *
Lance B. Boxer (10)..................................... 3,438 *
Steven T. Tabaska (11).................................. -- --
Timothy K. Montgomery (12).............................. -- --
All current executive officers and directors as a group
(11 persons) (13).................................. 4,292,136 44.8
- --------------------
</TABLE>
* Less than 1%.
(1) Based upon information supplied by officers, directors and principal
shareholders. Beneficial ownership is determined in accordance with
rules of the Securities and Exchange Commission ("SEC") that deem shares
to be beneficially owned by any person who has or shares voting or
investment power with respect to such shares. Unless otherwise
indicated, the persons named in this table have sole voting and sole
investment power with respect to all shares shown as beneficially owned,
subject to community property laws where applicable. Shares of Common
Stock subject to an option that is currently exercisable or exercisable
within 60 days of March 27, 1998 are deemed to be outstanding and to be
beneficially owned by the person holding such option for the purpose of
computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) Represents 3,118,187 shares of Common Stock held of record by Vinita and
Narendra K. Gupta, as trustees for The Narendra and Vinita Gupta Living
Trust, dated 2 December 1994, 862,500 shares held of record by Vinita
and Narendra K. Gupta, together with a third party, as trustees for
their minor children, an aggregate of 54,000 shares held of record by
Mrs. Gupta as custodian for each of her two minor children (27,000 on
behalf of each child), and 14,895 shares subject to options granted to
Dr. Gupta, which are exercisable within 60 days of March 27, 1998. Mrs.
Gupta is Chairperson of the Board, President and Chief Executive Officer
of the Company. Dr. Gupta is a director of the Company. The address of
Dr. and Mrs. Gupta is c/o Digital Link Corporation, 217 Humboldt Court,
Sunnyvale, California 94089.
(3) Based on the joint report on Schedule 13D dated February 27, 1998 for
Kopp Investment Advisors, Inc. ("KIA"), Kopp Holding Company ("KHC"),
Kopp Funds, Inc. ("KFI") and LeRoy C. Kopp. KIA is an investment advisor
managing discretionary accounts owned by numerous third party clients
which beneficially owns 3,550,083 shares of the Company's Common Stock
(of which 50,000 shares are owned directly by KIA and 476,000 shares are
owned by KFI). Of these shares, KIA has sole voting power as to 925,700
shares, sole dispositive power as to 526,000 shares and shared
dispositive power as to 3,024,083 shares. KHC is the parent corporation
of KIA, and LeRoy C. Kopp is the president of both KHC and KIA. By
virtue of these relationships to KIA, both KHC and Mr. Kopp may be
deemed to have indirect beneficial ownership of the shares beneficially
owned by KIA. In addition, Mr. Kopp has beneficial ownership, and sole
voting and dispositive power, of 136,000 shares of the Company's Common
Stock, of which 6,000 shares are held by the Kopp Holding Company Profit
Sharing Plan, of which Mr. Kopp is sole trustee, 40,000 shares are held
by the Kopp Family Foundation, of which Mr. Kopp is a director, 60,000
shares are held in the LeRoy C. Kopp IRA and 30,000 shares are held by
Mr. Kopp directly. The address of the foregoing persons is 7701 France
Avenue South, Suite 500, Edina, Minnesota 55435.
(4) Includes 123,958 shares subject to options exercisable within 60 days of
March 27, 1998 and 803 shares held beneficially. Mr. Fraser is a
director of the Company. He resigned as President and Chief Executive
Officer in February 1998.
(5) Includes 33,425 shares subject to options exercisable within 60 days of
March 27, 1998 and 16,233 shares held beneficially. Mr. Kazmierczak is
Vice President, Finance and Administration, Chief Financial Officer and
Secretary of the Company.
(6) Represents 23,751 shares subject to options exercisable within 60
days of March 27, 1998. Mr. Alberding is a director of the Company.
(7) Represents 18,542 shares subject to options exercisable within 60
days of March 27, 1998. Mr. Avis is a director of the Company.
(8) Includes 18,000 shares subject to options exercisable within 60
days of March 27, 1998 and 40 shares held beneficially. Ms. Bellin is
Vice President, Operations of the Company.
(9) Includes 15,208 shares subject to options exercisable within 60 days of
March 27, 1998 and 1,342 shares held beneficially. Mr. Musgrove ceased
to be an officer and employee of the Company in March 1998.
(10) Represents 3,438 shares subject to options exercisable within 60
days of March 27, 1998. Mr. Boxer is a director of the Company.
(11) Mr. Tabaska is Vice President, Engineering and Chief Technical Officer
of the Company.
(12) Mr. Montgomery ceased to be an officer and employee of the Company in
November 1997.
(13) Includes the shares held of record and shares subject to options
described in footnotes 2, 4 through 8, 10 and 11 and an additional
3,600 shares subject to options exercisable within 60 days of March 27,
1998 and 764 shares held beneficially by two executive officers not
named in the compensation table.
EXECUTIVE OFFICERS
The following table lists certain information regarding the Company's
executive officers as of March 27, 1998.
Name Age Position
---- --- --------
Vinita Gupta............... 47 Chairperson of the Board, President
and Chief Executive Officer
Toni M. Bellin............. 52 Vice President, Operations
Kent A. Bossange........... 47 Vice President, Marketing
Stanley E. Kazmierczak..... 37 Vice President, Finance and
Administration, Chief Financial
Officer and Secretary
Dianne Mastilock........... 46 Vice President, Human Resources
Steven T. Tabaska.......... 37 Vice President, Engineering and
Chief Technical Officer
Information regarding Vinita Gupta is listed under "Proposal No. 1 -
Election of Directors."
Ms. Bellin has served as Vice President, Operations of the Company since
she joined the Company in December 1993. From July 1987 to December 1993, she
was Vice President of Operations with Humphrey Instruments Inc., a manufacturer
of high technology medical systems. From July 1981 to July 1987, Ms. Bellin held
several progressively responsible management positions with Humphrey
Instruments. She is also a certified fellow of the American Production and
Inventory Control Society (APICS). Ms. Bellin holds a Bachelor of Arts degree in
Management and a Master of Business Administration degree from St. Mary's
College of California.
Mr. Bossange has served as Vice President, Marketing of the Company since
March 1998. From June 1995 to March 1998, he was Director, Sales of the Company.
From July 1994 to June 1995, Mr. Bossange was Manager, Enterprise Marketing of
Bay Networks, Inc. (formerly known as SynOptics Communications), a networking
company. From November 1993 to June 1994, he was Marketing Director for Digital
Link. From October 1987 to June 1993, Mr. Bossange held several management
positions with Ultra Network Technologies, a developer and manufacturer of a
gigabit LAN for the UNIX market. From March 1976 to October 1987, Mr. Bossange
held various sales and marketing positions in the computer industry. Mr.
Bossange holds a Bachelor of Science degree in Psychology from Lewis and Clark
College.
Mr. Kazmierczak has served as Vice President, Finance and Chief
Financial Officer of the Company since December 1992, Secretary of the Company
since December 1993 and Vice President, Finance and Administration since March
1996. He joined the Company in August 1987 and until December 1992 held various
financial management positions with the Company that included responsibilities
for financial planning and analysis. From May 1986 to August 1987, Mr.
Kazmierczak was Cost Accounting Manager with Verilink Corporation, a
manufacturer of communications equipment. Prior to that, he was employed by
Security Pacific Bank for one year. Mr. Kazmierczak holds a Bachelor of Science
degree in Business Administration from San Jose State University.
Ms. Mastilock has served as Vice President, Human Resources of the Company
since January 1998. From August 1994 to December 1997, she was Director, Human
Resources of the Company. From June 1993 to June 1994, Ms. Mastilock was
Director, Human Resources for Humphrey Instruments. From January 1991 to June
1993, she was the Human Resources Manager for Union Carbide Corporation. From
November 1982 to January 1990, she was Director, Human Resources for KTI
Chemicals, Incorporated, a subsidiary of Union Carbide Corporation. Ms.
Mastilock holds a Bachelor of Science degree in Recreation and Leisure Studies
from San Jose State University and a Master of Science degree in Human Resources
and Organization Development from the University of San Francisco.
Mr. Tabaska has served as Vice President, Engineering and Chief
Technical Officer since he joined the Company in February 1997. From April 1994
to February 1997, he was Executive Director of Data Services Engineering for MCI
Communications. From May 1990 to April 1994, he was Director of Systems and
Hardware Development of Williams Telecommunications, Inc. ("WilTel"), a
telecommunications carrier company. From May 1985 to April 1990, he was Vice
President, Technology of Telinq Systems, Inc., a telecommunications equipment
supplier he co-founded. From June 1982 to May 1985, he was a Design Engineer of
Rockwell International (now part of Alcatel). Mr. Tabaska holds a Bachelor of
Science degree in Electrical Engineering from The Milwaukee School of
Engineering and a Master of Business Administration degree from the University
of Houston.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by,
or paid for services rendered in all capacities to the Company during the fiscal
years ended December 31, 1997, 1996 and 1995 by (i) the Company's Chief
Executive Officer during 1997, (ii) the Company's four other most highly
compensated executive officers whose total annual salary and bonuses exceeded
$100,000 during, and who were serving as executive officers at the end of 1997,
and (iii) Timothy K. Montgomery, the Company's former Vice President, Sales
(together, the "Named Officers"). This information includes the dollar values of
the base salaries, bonus awards, the number of stock options granted and certain
other compensation, if any, whether paid or deferred. The Company does not grant
SARs and has no long-term compensation benefits other than options.
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities All Other
Salary Bonus Underlying Compensation
Name and Principal Position Year ($) ($)(1) Options (#) ($)(2)
- --------------------------------- ---------- ----------- ------------ --------------- ----------------
<S> <C> <C> <C> <C> <C>
Alan I. Fraser (3)............. 1997 300,000 41,297 -- 4,750
Former President and Chief 1996 69,234 45,000 370,000 --
Executive Officer 1995 -- -- -- --
Toni M. Bellin ................ 1997 170,000 24,516 -- 3,827
Vice President, Operations 1996 160,000 32,000 10,000 3,138
1995 150,462 12,440 60,000 3,009
Stanley E. Kazmierczak ........ 1997 145,000 19,010 -- 4,020
Vice President, Finance and 1996 130,000 26,000 40,000 3,166
Administration, Chief Financial 1995 122,019 5,472 25,000 3,080
Officer and Secretary
Timothy K. Montgomery (4)...... 1997 190,000 0 -- 3,886
Former Vice President, Sales 1996 199,000(5) 25,000 60,000 3,166
1995 200,957(5) 0 -- 3,080
Jack A. Musgrove (6)........... 1997 164,000 20,425 -- 3,870
Former Vice President, Marketing 1996 155,000 31,000 20,000 3,098
1995 40,385 -- 60,000 --
Steven T. Tabaska (7).......... 1997 168,007 72,418(8) 100,000 33,081(9)
Vice President, Engineering and 1996 -- -- -- --
Chief Technical Officer 1995 -- -- -- --
</TABLE>
- --------------------------------------------------------------------------------
(1) Represents bonuses for services rendered in the fiscal year indicated
but paid in the succeeding fiscal year.
(2) Except as otherwise indicated, "All Other Compensation" for 1997, 1996
and 1995 represents Company contributions to match amounts deferred by
such executives pursuant to the Digital Link Corporation 401(k) Savings
Plan.
(3) Mr. Fraser commenced employment with the Company in September
1996. He ceased to be an officer and employee of the Company in
February 1998.
(4) Mr. Montgomery ceased to be an officer and employee of the
Company in November 1997.
(5) Includes commissions.
(6) Mr. Musgrove ceased to be an officer and employee of the Company
in March 1998.
(7) Mr. Tabaska commenced employment with the Company in February 1997.
(8) Includes hiring bonus.
(9) Includes expenses of $30,658 paid in connection with Mr. Tabaska's
relocation to California.
<PAGE>
Option Grants in Fiscal 1997
The following table sets forth information regarding individual option
grants pursuant to the Company's equity incentive plans during 1997 to each of
the Named Officers. In accordance with the rules of the Securities and Exchange
Commission, the table sets forth the hypothetical gains or "option spreads" that
would exist for the options at the end of their respective ten-year terms. These
gains are based on assumed rates of annual compound stock appreciation of 5% and
10% from the date the option was granted to the end of the option terms. Actual
gains, if any, on option exercises are dependent on the future performance of
the Company's Common Stock and overall market conditions. There can be no
assurance that the potential realizable values shown in this table will be
achieved.
Option Grants in Fiscal 1997
<TABLE>
<CAPTION>
Percent of Potential
Total Realizable Value at
Number of Options Assumed
Securities Granted to Exercise Annual Rates of
Underlying Employees Price Stock Price Appreciation
Options in Fiscal Per Expiration For Option Term($)(2)
Name Granted(#)(1) 1997 Share($) Date 5%($) 10%($)
- ---------------------------- --------------- ------------- ---------- ----------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan I. Fraser (3)...... -- -- -- -- -- --
Toni M. Bellin.......... -- -- -- -- -- --
Stanley E. Kazmierczak.. -- -- -- -- -- --
Timothy K. Montgomery (4) -- -- -- -- -- --
Jack A. Musgrove (5).... -- -- -- -- -- --
Steven T. Tabaska (6)... 100,000 19.6% $21.625 01/09/07 $1,359,985 $3,446,468
- -----------
</TABLE>
(1) The options shown in the table are nonqualified stock options that were
granted at fair market value. These options become exercisable with
respect to 25% of the shares after the first full year that the optionee
renders services to the Company after the date of grant and with respect
to 2.084% of the shares for each full month thereafter that the optionee
renders services to the Company. These options will expire ten years
from the date of grant, subject to earlier termination upon termination
of employment. The exercise price may be paid, among other things, by
delivery of shares already owned, and tax-withholding obligations
related to exercise may be paid by offset of the underlying shares,
subject to certain conditions.
(2) The 5% and 10% assumed rates of annual compound stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and
do not represent the Company's estimate or projection of future Common
Stock prices.
(3) Mr. Fraser ceased to be an officer and employee of the Company in
February 1998.
(4) Mr. Montgomery ceased to be an officer and employee of the
Company in November 1997.
(5) Mr. Musgrove ceased to be an officer and employee of the Company in
March 1998.
(6) Mr. Tabaska commenced employment with the Company in February 1997.
These shares were repriced to $11.00 per share in February 1998.
<PAGE>
Option Exercises in Fiscal 1997 and December 31, 1997 Option Values
The following table sets forth certain information concerning the
exercise of options by each of the Named Officers during fiscal 1997, including
the aggregate amount of gain on the date of exercise. In addition, the table
includes the number of shares covered by both exercisable and unexercisable
stock options held on December 31, 1997 by each of the Named Officers. Also
reported are values for "in-the-money" stock options that represent the positive
spread between the respective exercise prices of outstanding stock options and
the fair market value of the Common Stock as of December 31, 1997 (as determined
by the closing price of the Company's Common Stock on that date as reported by
the Nasdaq National Market tier of the Nasdaq Stock Market ($9.406)).
Aggregated Option Exercises in Fiscal 1997 and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-The-Money Options
Fiscal Year -End (#) at Fiscal Year-End ($)(2)
Value -------------------- -------------------------
Shares Acquired Realized
Name On Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan I. Fraser (3)......... -- -- 115,625 254,375 -- --
Toni M. Bellin............. 19,500 $234,500 19,125 49,375 -- $35,857
Stanley E. Kazmierczak..... 13,800 304,500 41,530 47,020 $87,612 9,733
Timothy K. Montgomery (4). 65,000 1,313,512 -- -- -- --
Jack A. Musgrove (5)...... -- -- 41,042 38,958 -- --
Steven T. Tabaska......... -- -- -- 100,000 -- --
- ---------------
</TABLE>
(1) "Value Realized" represents the fair market value of the shares of Common
Stock underlying the option, as determined by the closing price of the
Company's Common Stock on the day before the date of exercise as reported
by the Nasdaq National Market tier of the Nasdaq Stock Market, less the
aggregate exercise price of the option.
(2) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized.
(3) Mr. Fraser ceased to be an officer and employee of the Company in
February 1998.
(4) Mr. Montgomery ceased to be an officer and employee of the
Company in November 1997.
(5) Mr. Musgrove ceased to be an officer and employee of the Company in
March 1998.
<PAGE>
Compensation Committee Interlocks and Insider Participation
From January 1997 to July 1997, the Company's Compensation Committee
consisted of Messrs. Alberding and Avis. Thereafter through the present, the
Compensation Committee has consisted of Messrs. Alberding and Boxer. During
fiscal 1997, Vinita Gupta, Chairperson of the Board of the Company, served as a
member of the Board of Directors and of the Compensation Committee of the Board
of Directors of Integrated Systems, Inc., whose Chairman of the Board, Dr.
Narendra K. Gupta, is a director of the Company. Mrs. Gupta is the wife of Dr.
Gupta. See "Certain Transactions" below for a discussion of certain
relationships between the Company and Mr. Boxer.
CERTAIN TRANSACTIONS
Since January 1, 1997, there have been the following transactions or
series of transactions involving more than $60,000 between the Company and any
current executive officer, director, 5% beneficial owner of the Company's Common
Stock or any member of the immediate family of any of the foregoing in which one
or more of the foregoing individuals or entities had a material interest, in
addition to those indicated in "Executive Compensation" and "Director
Compensation" above.
Pursuant to a Secured Promissory Note dated September 30, 1996 and
related Security Agreement dated September 30, 1996, the Company loaned $250,000
to Alan I. Fraser, then President, Chief Executive Officer and a director of the
Company. Such loan is due and payable on or before September 30, 1999, bears
interest at a rate of 6.02% per annum, compounded annually and is secured by an
option to purchase 370,000 shares of the Company's Common Stock granted to Mr.
Fraser on September 30, 1996. As of the Record Date, the entire principal amount
of such promissory note and all accrued interest thereon remained outstanding.
Pursuant to a Secured Promissory Note dated March 31, 1997 and related
Security Agreement dated March 31, 1997, the Company loaned $300,000 to Steven
T. Tabaska, the Vice President, Engineering and Chief Technology Officer of the
Company. Such loan is due and payable on or before March 31, 2001, bears
interest at a rate of 6.42% per annum, compounded annually and is secured by an
option to purchase 100,000 shares of the Company's Common Stock granted to Mr.
Tabaska on January 9, 1997. As of the Record Date, the entire principal amount
of such promissory note and all accrued interest thereon remained outstanding.
Lance Boxer, a director of the Company, is the Chief Information
Officer of MCI Telecommunications ("MCI"), which is a customer of the Company.
During 1997, the Company derived 20% of its revenues from MCI in connection with
the purchase of the Company's products by MCI.
<PAGE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report on Executive Compensation shall not
be deemed to be incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the Securities Act of
1933, as amended, or under the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
To the Board of Directors
Final decisions regarding executive compensation and stock option grants to
executives are made by the Compensation Committee of the Board of Directors (the
"Committee"). From January 1997 to July 1997, the Committee consisted of Richard
C. Alberding and Gregory M. Avis. Since July 1997, the Committee has consisted
of Messrs. Alberding and Boxer. Each of Messrs. Alberding, Avis and Boxer are
independent directors and none of them have any interlocking relationships as
defined by the SEC. Although Mrs. Gupta attends and, while President and Chief
Executive Officer, Mr. Fraser attended, the meetings of the Committee, they do
not vote on any matters that relate to compensation.
General Compensation Policy
The Committee acts on behalf of the Board to establish the general
compensation policy of the Company for all employees of the Company. The
Committee typically reviews base salary levels and target bonuses for the Chief
Executive Officer ("CEO"), other executive officers and other management of the
Company at or about the beginning of each year. The Committee administers the
1986 Stock Option Plan, the 1992 Equity Incentive Plan, as amended, and the 1993
Employee Stock Purchase Plan, as amended. In addition, the Committee evaluates
and makes determinations with respect to any other incentive compensation for
executive officers.
The Committee's philosophy in compensating executive officers,
including the CEO, is to relate compensation directly to corporate performance.
Thus, the Company's compensation policy, which applies to management of the
Company, relates a portion of each individual's total compensation to the
Company's corporate objectives set forth at the beginning of the Company's
fiscal year, as well as to individual contributions. Consistent with this
policy, a designated portion of the compensation of the executive officers and
other management of the Company is contingent on corporate performance and
adjusted based on the individual officer's performance as measured against
personal objectives established by the Compensation Committee. Long-term equity
incentives for executive officers are effected through the granting of stock
options under the 1992 Equity Incentive Plan, as amended. Stock options
generally have value for the executive only if the price of the Company's stock
increases above the fair market value on the grant date and the executive
remains in the Company's employ for the period required for the shares to vest.
The base salaries, target bonuses, stock option grants and other
incentive compensation of the executive officers are determined in part by the
Committee by reviewing the Radford survey and, in some cases, similar surveys
and evaluating the base salary, bonus and stock option grant standards included
in such surveys against the achievement by the Company of its corporate goals.
The Radford survey is nationally known for its database of high technology
company compensation practices. Only some of the companies in the Radford Survey
and the other surveys considered by the Company are included within the indices
used by the Company in its Performance Graph. The compensation of the Company's
executive officers is compared to the compensation of executives in comparable
positions within the relevant surveys and to competitive market compensation
levels in order to determine base salary, target bonuses and target total cash
compensation. In addition to their base salaries, the Company's executive
officers, including the CEO, are each eligible to receive an annual cash bonus
and are entitled to participate in the 1992 Equity Incentive Plan, as amended.
<PAGE>
1997 Executive Compensation
Base Compensation. The foregoing information was presented to the
Committee in January 1997. The Committee reviewed the recommendations and
performance and market data outlined above and established a base salary level
to be effective January 1, 1997 for each executive officer, including the CEO.
Incentive Compensation. Cash bonuses are awarded if the Company meets
certain financial corporate objectives that are set by the Committee in the
beginning of the year. The CEO's objective judgment of executives' performance
(other than his or her own) after the end of the year is taken into account in
determining whether those goals have been satisfied and may be adjusted
accordingly. These objectives include revenue and operating income, as well as
other business related goals. The specific Company objectives, which are
considered by the Company to be confidential business information, do not
necessarily have an immediate or direct effect on the trading price of the
Common Stock of the Company.
Stock Options. Stock options typically have been granted to executive
officers when the executive first joins the Company, to stay competitive on an
ongoing basis, and occasionally, to achieve equity within a peer group. The
Committee may, however, grant additional stock options to executives for other
reasons. The number of shares subject to each stock option granted is based on
anticipated future contribution and ability to impact corporate and/or business
unit results, past performance or consistency within the executive's peer group.
In 1997, options were granted to Steven T. Tabaska when he was hired by the
Company as Vice President, Engineering and Chief Technology Officer in February
1997 as part of the Company's standard practices in order to remain competitive
as an employer and provide an incentive to increase the value of the Company's
stock.
Company Performance and CEO Compensation. In September 1996, Alan I. Fraser
was hired as the Company's President and Chief Executive Officer, and the
Compensation Committee recommended a base salary of $300,000, with a sign-on
bonus of $45,000. This base salary was effective throughout 1997. In determining
Mr. Fraser's base salary for 1997, the Compensation Committee considered the
various factors discussed above, in particular his ability to impact corporate
results. After careful review of the Company's performance as measured against
its objectives for 1997, the Committee recommended that Mr. Fraser receive a
bonus of $42,000 to be paid to Mr. Fraser pursuant to the Committee's
determination that certain of the milestones or objectives established by the
Committee for 1997 had been accomplished. These milestones included revenue and
operating income objectives as well as other business related goals. These
recommendations were approved by the Board of Directors.
Compliance with Section 162(m) of the Internal Revenue Code of 1986.
The Company intends to comply with the requirements of Section 162(m) of the
Internal Revenue Code of 1986 for 1998. The 1992 Equity Incentive Plan, as
amended, is currently in compliance with Section 162(m) by virtue of the
inclusion of a limitation on the number of shares that an executive officer may
receive under the 1992 Equity Incentive Plan. The Company does not expect cash
compensation for 1998 to be affected by the requirements of Section 162(m).
Repricing of Options. The Compensation Committee believes that stock
options are a critical component of the compensation offered by the Company to
promote long-term retention of its employees and to motivate their performance.
Subsequent to fiscal 1997, the Company offered to all executive officers the
opportunity to amend outstanding options issued on or after November 1, 1995 to
reduce the exercise price of such options to an amount equal to the closing
price of the Company's stock on February 9, 1998 and to adjust the vesting of
the options to begin on such date. In addition, the Company offered to all other
employees of the Company the same repricing option, with the exception that in
lieu of restarting vesting, any repriced options would not be exercisable for a
12- month period. The above described option amendment was an acknowledgment of
the importance to the Company of providing adequate equity incentives to its
employees. Given the decline in the Company's stock price since the initial
grant of the options, the exercise prices of such options were significantly in
excess of the trading price of the Company's Common Stock at the time of the
repricing. Stock options whose exercise prices are significantly above the
trading price of the Company's Common Stock do not provide meaningful incentives
for continued employment with the Company or motivation toward increasing the
value of the Company's Common Stock. The renewed vesting period and the exercise
period blackout included in the option amendments were viewed as a means of
<PAGE>
retaining the services of valued employees for a longer period of time and as a
way for the Company to receive something in exchange for the repricing of
options.
COMPENSATION COMMITTEE
Richard C. Alberding
Gregory M. Avis
Lance B. Boxer
<PAGE>
PERFORMANCE GRAPH
The stock price performance graph below includes indices required by
the Securities and Exchange Commission and shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed soliciting material or filed under such Acts.
The following graph demonstrates a comparison of cumulative total
returns based upon an initial investment of $100.00 in the Company's Common
Stock as compared with the Nasdaq Stock Market (US) Index and the Nasdaq
Telecommunications Stock Index. The stock price performance shown on the graph
below is not necessarily indicative of future price performance and only
reflects the Company's relative stock price on January 31, 1994 (as offered by
the Company pursuant to its initial public offering of Common Stock on such
date) and on December 30, 1994, December 29, 1995, December 31, 1996 and
December 31, 1997.
Nasdaq Stock Nasdaq
Digital Link Market - US Index Telecommunications Index
01/31/94 $100.00 $100.00 $100.00
12/30/94 191.89 94.79 82.89
12/29/95 100.89 134.16 99.73
12/31/96 169.64 165.03 111.91
12/31/97 168.75 202.60 165.34
<PAGE>
SHAREHOLDER PROPOSALS AND ANNUAL REPORT ON FORM 10-K
Proposals of shareholders intended to be presented at the Company's 1999
Annual Meeting of Shareholders must be received by the Company at its principal
executive offices no later than December 21, 1998 in order to be included in the
Company's Proxy Statement and form of proxy relating to that meeting.
The Company's Annual Report on Form 10-K as filed with the Securities
and Exchange Commission for the year ended December 31, 1997 is available
without charge by writing to or calling the Company's headquarters. Requests
should be directed to the Company's Investor Relations Department at 217
Humboldt Court, Sunnyvale, California 94089 or by calling (408) 745-6200.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission and the Nasdaq National Market. Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. During 1997, the Company is unaware of any failures to file Forms 3, 4 or
5 or any failures to file Forms 3, 4 or 5 on a timely basis.
OTHER BUSINESS
The Board of Directors does not presently intend to bring any other
business before the Meeting, and, so far as is known to the Board of Directors,
no matters are to be brought before the Meeting except as specified in the
notice of the Meeting. As to any business that may properly come before the
Meeting, however, it is intended that proxies, in the form enclosed, will be
voted in respect thereof in accordance with the judgment of the persons voting
such proxies.
Dated: April 20, 1998 By Order of the Board of Directors
/s/ Stanley E. Kazmierczak
Stanley E. Kazmierczak
Vice President, Finance and Administration,
Chief Financial Officer and Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE>
PROXY DIGITAL LINK CORPORATION PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
May 20, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Vinita Gupta and Stanley E. Kazmierczak,
or either of them, as proxies, each with full power of substitution, and hereby
authorizes them to represent and to vote, as designated below, all shares of
Common Stock, of Digital Link Corporation (the "Company"), held of record by the
undersigned on March 27, 1998, at the Annual Meeting of Shareholders of the
Company to be held at the Santa Clara Marriott Hotel located at 2700 Mission
College Boulevard, Santa Clara, California 95054 on Wednesday, May 20, 1998,
2:00 p.m. Pacific Daylight Time, and at any adjournments or postponements
thereof.
(Continued, and to be signed on the other side)
<PAGE>
Please mark |X|
your vote
as this
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Directors Withhold 2. The ratification of the selection of Coopers & For Against Abstain
Instruction: To withhold For For All Lybrand, L.L.P. as the Company's |_| |_| |_|
authority to vote for any |_| |_| Independent Auditors for the current fiscal
individual nominee, strike a year.
line through that nominee's
name in the list below. 3. The transaction of such other business as may properly
come before the meeting or any adjournments or
postponements of the meeting.
Vinita Gupta, Richard C. Alberding, Gregory M. Avis,
Lance B. Boxer, Alan I. Fraser and Narendra K. Gupta The Board of Directors recommends that you vote
FOR the election of all nominees and FOR proposal 2.
- ----------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
PROMPTLY MAIL THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE.
WHEN NO CHOICE IS INDICATED, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE SIX NOMINEES
AND FOR PROPOSAL 2. In their discretion, the
proxy holders are authorized to vote upon
such other business as may properly come
before the meeting or any adjournments or
postponements thereof to the extent authorized
by Rule 14a-4(c) promulgated under the Securities
Exchange Act of 1934, as amended.
</TABLE>
Signature (s) ____________________________________ Dated: __________, 1998
Please sign exactly as your name(s) appear(s) on your stock certificate. If
shares of stock stand of record in the names of two or more persons or in the
name of husband and wife, whether as joint tenants or otherwise, both or all of
such persons should sign the proxy. If shares of stock are held of record by a
corporation, the proxy should be executed by the president or vice president and
the secretary or assistant secretary. Executors, administrators or other
fiduciaries who execute the above proxy for a deceased shareholder should give
their full title. Please date the proxy.
