NETWORK COMPUTING DEVICES INC, DEF 14A, 2000-04-28

NETWORK COMPUTING DEVICES INC
DEF 14A, 2000-04-28
COMPUTER TERMINALS

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

<TABLE>
<S> <C>
Filed by the Registrant / /
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

NETWORK COMPUTING DEVICES, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>

Payment of Filing Fee (Check the appropriate box):

<TABLE>
<S> <C> <C>
/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:
----------------------------------------------------------
</TABLE>
<PAGE>
NETWORK COMPUTING DEVICES, INC.

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

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

TO THE SHAREHOLDERS:

NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders of
Network Computing Devices, Inc., a Delaware corporation (the "Company"), will be
held at the Company's offices at 301 Ravendale Drive, Mountain View, California,
on Wednesday, May 31 2000, at 10:00 a.m. for the following purposes:

1. To elect directors of the Company to serve for the ensuing year and
until their successors are duly elected and qualified. Management's
nominees for Director are Robert G. Gilbertson, Douglas H. Klein,
Stephen A. MacDonald and Rudolph G. Morin.

2. To approve an amendment to the Company's 1999 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 500,000 shares.

3. To approve an amendment to the Company's 1992 Employee Stock Purchase
Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 200,000 shares.

4. To ratify the selection of KPMG as independent auditors of the Company
for the current fiscal year.

5. To transact such other business as may properly come before the meeting
or any adjournment thereof.

Only shareholders of record at the close of business on April 5, 2000, are
entitled to notice of and to vote at the meeting. The transfer books will not be
closed.

All shareholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend the meeting, please mark, sign and date the
enclosed proxy and return it as promptly as possible in the envelope enclosed
for that purpose. Any shareholder attending the meeting may vote in person even
if he has returned a proxy.

By Order of the Board of Directors

Rudolph G. Morin
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Mountain View, California
April 24, 2000
<PAGE>
NETWORK COMPUTING DEVICES, INC.
350 NORTH BERNARDO AVENUE
MOUNTAIN VIEW, CALIFORNIA 94043

PROXY STATEMENT

INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

The enclosed proxy is solicited on behalf of Network Computing
Devices, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Shareholders to be held Wednesday, May 31, 2000 at 10:00 a.m., local
time, or at any adjournment thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting
will be held at the Company's offices located at 301 Ravendale Drive, Mountain
View, California. The telephone number at that address is (650) 694-0650.

These proxy solicitation materials were mailed on or about April 24, 2000 to
all shareholders entitled to vote at the Annual Meeting.

RECORD DATE

Shareholders of record at the close of business on April 5, 2000 are
entitled to notice of, and to vote at, the Annual Meeting. At the record date,
16,579,171 shares of the Company's Common Stock, $.001 par value, were issued
and outstanding.

REVOCABILITY OF PROXIES

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivery to the Company of a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.

VOTING

The shares represented by the proxies received will be voted as you direct.
If you give no direction, the shares will be voted as recommended by the Board
of Directors.

In connection with the Delaware reincorporation, we eliminated cumulative
voting. Each shareholder is entitled to one vote for each share of stock held by
him or her on all matters.

SOLICITATION

The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
and any additional soliciting materials sent to shareholders. The Company has
retained the services of ChaseMellon Shareholder Services, L.L.C. ("Chase") to
aid in the solicitation of proxies, deliver proxy materials to brokers,
nominees, fiduciaries and other custodians for distribution to beneficial owners
of stock and to solicit proxies therefrom. Chase will receive a fee of
approximately $5,000 and reimbursement of all reasonable out-of-pocket expenses.
In addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation materials to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone or telegram.

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<PAGE>
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

The Company's bylaws require advance notice of any shareholder proposals to
be brought before a shareholders' meeting. Under the bylaws, in order for
business to be properly brought before a meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Company.

To be timely, a shareholder proposal to be presented at an annual meeting
must be received at the Company's principal executive offices not less than 120
calendar days in advance of the date that the Company's proxy statement was
released to shareholders in connection with the previous year's annual meeting
of shareholders, except that if no annual meeting was held in the previous year
or the date of the annual meeting has been changed by more than 30 calendar days
from the date contemplated at the time of the previous year's proxy statement,
or in the event of a special meeting, notice by the shareholder to be timely
must be received not later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made.

Accordingly, proposals of shareholders intended to be presented at the 2001
Annual Meeting of Shareholders must be received by the Company no later than
December 31, 2000. Such proposals may be included in next year's proxy statement
if they comply with certain rules and regulations promulgated by the Securities
and Exchange Commission (the "SEC").

PROPOSAL NO. 1
ELECTION OF DIRECTORS

NOMINEES

A board of 4 directors will be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the four nominees named below, all of whom are currently directors of the
Company. The Company is not aware of any nominee who will be unable or will
decline to serve as a director. In the event that any such nominee is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. The four candidates receiving the highest number
of affirmative votes of the shares voting at the Annual Meeting will be elected
directors of the Company. The term of office of each person elected as a
director will continue until the next Annual Meeting of Shareholders or until
such time as his successor has been duly elected and qualified.

The names of the Company's directors and certain information about them are
set forth below. The nominees for election as director at the Annual Meeting are
Messrs. Morin, Gilbertson, Klein and MacDonald. Messrs. Greer, Low and Preuss
will not be standing for election.

<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------- -------- -------------------- --------------
<S> <C> <C> <C>
Rudolph G. Morin................... 62 President and Chief Executive 1998
Officer of the Company
Robert G. Gilbertson............... 58 Independent Consultant 1996
Douglas H. Klein................... 45 President and Chief Operating 1998
Officer, NuvoMedia, Inc.
Stephen A. MacDonald............... 54 Independent Consultant 1995
Philip Greer....................... 64 Senior Managing Director, Weiss, 1992
Peck & Greer, LLC
Paul Low........................... 67 President and Chief Executive 1995
Officer, PRL Associates
Peter Preuss....................... 57 President, The Preuss Foundation, 1995
Inc.
</TABLE>

2
<PAGE>
Mr. Gilbertson has served as Chairman of the Board of Directors since August
1999. Prior to that Mr. Gilbertson had served as President and Chief Executive
Officer since joining us in May 1996. Prior to joining us, Mr. Gilbertson served
as Chairman of Avidia Systems, Inc., a manufacturer of ATM switching systems,
also as President and Chief Executive Officer of CMX Systems, Inc., a
manufacturer of precision measurement and positioning products from 1993 to
1996. Prior thereto he served as President and Chief Executive Officer of Data
Switch Corporation. Mr. Gilbertson holds an MBA from the University of Chicago,
served as Chairman of the Board of the American Electronics Association, and was
a member of the faculty of Harvard Business School for five years.

Mr. Morin has served as President and Chief Executive Officer since August
1999. Prior to that Mr. Morin had served as Executive Vice President,
Operations & Finance and Chief Financial Officer since joining us in May 1996.
Mr. Morin has served as a director since March 1998. Prior to joining us,
Mr. Morin served as Senior Vice President of Finance and Administration for
Memorex Telex Corporation from 1993 to 1996. Prior thereto, he worked at Data
Switch where he was Executive Vice President. Mr. Morin's background also
includes more than ten years with Thyssen Bornemisza Inc. as head of corporate
development and general manager of several of its subsidiaries. Mr. Morin holds
MBAs from INSEAD and Harvard.

Mr. Klein has served on our Board of Directors since March 1998. Since
January 1998 Mr. Klein has served as President and Chief Operating Officer of
NuvoMedia, Inc., a designer and developer of electronic books. From
February 1988 to December 1997, Mr. Klein served our company in various
capacities, most recently as the Company's Chief Technical Officer from
June 1996 to December 1997.

Mr. MacDonald has served on our Board of Directors since May 1995. From
October 1997 to April 1998, Mr. MacDonald served as a consultant for Active
Software, Inc., a software company. Mr. MacDonald also served as President and
Chief Executive Officer of Active Software from April 1996 to September 1997.
Mr. MacDonald was employed by Adobe Systems Incorporated, a software company,
from 1983 to March 1996, where he served as Vice President, Sales and Marketing
from 1983 to 1989 and as Senior Vice President and General Manager from 1989 to
1996. Mr. MacDonald is also a director of Verity, Inc., a software company as
well as an independent consultant for various companies in the software
industry.

Mr. Greer has served on our Board of Directors since November 1992.
Mr. Greer has been a senior managing director of Weiss, Peck & Greer, L.L.C., an
investment management company, or its predecessor, since 1970. Mr. Greer is also
a director of Federal Express Corporation and Robert Mondavi Corp., a winemaker.

Dr. Low has served on our Board of Directors since December 1995. Dr. Low
has been President and Chief Executive Officer of PRL Associates, a technology
consulting firm, since 1992. Prior to forming PRL Associates, from 1957 to 1992,
Dr. Low served in various capacities at International Business Machines
Corporation ("IBM"), most recently as President of the General Products Division
from 1987 to 1990 and as General Manager, Technology and Products and a member
of IBM's Corporate Management Board from 1990 to 1992. Dr. Low held the title of
Vice President at IBM from 1984 to 1992. Dr. Low is also a director of Applied
Materials Corporation, a semiconductor equipment manufacturer, Solectron
Corporation and Veeco Instruments, as well as several privately-held
corporations.

Mr. Preuss has served on our Board of Directors since April 1995 and as
Chairman of the Board from January 1996 to August 1999. Mr. Preuss has served as
President of The Preuss Foundation, Inc., a non-profit corporation that sponsors
cancer research and related seminars and conferences, since it was founded in
1985. From 1970 to 1986, Mr. Preuss was President and Chairman of the Board of
Integrated Software Systems Corporation, which he founded. Mr. Preuss currently
serves as a director of Overland Data, a manufacturer of high-performance tape
solutions for back-up, interchange and archival storage. Mr. Preuss is also a
Regent of the University of California.

3
<PAGE>
There are no family relationships among directors or executive officers of
the Company.

BOARD MEETINGS AND COMMITTEES

The Board of Directors of the Company held six meetings during the year
ended December 31, 1999. The Board of Directors has an Audit Committee, an
Executive Committee, and a Compensation and Stock Committee. The Board of
Directors has no standing nominating committee or committee performing similar
functions. During the year ended December 31, 1999, other than Mr. MacDonald, no
director attended fewer than 75% of the aggregate of (i) all meetings of the
Board of Directors (held during the period in which such director served) and
(ii) all meetings of committees of the Board on which such director served.

The Audit Committee of the Board of Directors currently consists of
Messrs. Greer, Low and MacDonald. After the Annual Meeting, the Audit Committee
will consist of Messrs. Klein and MacDonald. The Audit Committee recommends the
engagement of independent auditors, consults with the independent auditors
regarding the scope of annual audits and reviews the Company's system of
internal accounting controls. The Audit Committee held four meetings during the
fiscal year ended December 31, 1999.

In late December 1995, the Executive Committee of the Board of Directors was
formed to focus primarily on technology issues related to the Company. The
Executive Committee currently consists of Messrs. Gilbertson, Preuss and Low.
After the Annual Meeting the Executive Committee will consist of
Messrs. Gilbertson, Klein and MacDonald. One Executive Committee meeting was
held during the fiscal year ended December 31, 1999.

The Compensation and Stock Committee of the Board of Directors (the
"Compensation Committee") currently consists of Messrs. Preuss and MacDonald.
After the Annual Meeting, the Compensation Committee will consist of
Messrs. Klein and MacDonald. The Compensation Committee makes recommendations to
the Board regarding executive compensation and related matters and is
responsible for the administration of option grants under the Company's 1999
Stock Option Plan. The Compensation Committee held one meeting during the fiscal
year ended December 31, 1999.

4
<PAGE>
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP BY MANAGEMENT

The following table sets forth certain information known to us relating to
the beneficial ownership of our Common Stock by (i) each person who is known by
us to be the beneficial owner of more than 5% of the outstanding shares of our
Common Stock, (ii) each executive officer named in the tables under "Executive
Compensation," (iii) each director, and (iv) all executive officers and
directors as a group, as of February 29, 2000:

<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND ADDRESS OWNED(1) PERCENT
- ---------------- --------- --------
<S> <C> <C>
Dimensional Fund Advisors Inc.(2)........................... 943,200 5.81%
1299 Ocean Avenue, 11(th) Floor
Santa Monica, CA 90401
Kiskiminetas Springs School(3).............................. 1,036,800 6.4%
1888 Brett Lane
Saltsburg, Pa 15681
Alan Andreini(4)............................................ 1,171,600 7.2%
395 Hudson Street
New York, NY 10014
Robert G. Gilbertson(5)..................................... 712,849 4.32%
Rudolph G. Morin(6)......................................... 361,282 2.2%
Peter Preuss(7)............................................. 111,250 *
Douglas H. Klein(8)......................................... 164,884 1.00%
Paul Low(9)................................................. 111,250 *
John DeSantis(10)........................................... 74,171 *
Philip Greer(11)............................................ 55,950 *
Stephen A. MacDonald(12).................................... 41,250 *
All executive officers and directors
As a group (8 persons)(13)................................ 1,632,886 9.9%
</TABLE>

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

* Less than 1%

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

(2) Pursuant to Schedule 13G filed by Dimensional Fund Advisors Inc.
("Dimensional") on February 11, 2000, Dimensional is an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940 which
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other commingled group trusts and separate accounts. These
investment companies, trusts and accounts are the "Funds." In its role as
investment advisor or manager, Dimensional possesses voting and investment
power over the securities described in this table and owned by the Funds.
All securities reported in this table are owned by the Funds, and
Dimensional disclaims beneficial ownership of such securities.

(3) Based on a Schedule 13G filed by Kiskiminetas Springs School
("Kiskiminetas") on February 10, 2000, Kiskiminetas is a non-profit
educational institution that has an endowment composed of Network Computing
Devices, Inc. common stock and certain other securities. The voting power
and the investment power of Kiskiminetas over the shares of common stock
vested in the Finance Committee of the Board of Trustees of Kiskiminetas
(the "Finance Committee"), which is exercised by the approval of the
majority of the members thereof. The Finance Committee is composed of seven
members. The Members of the Finance Committee are Alan J. Andreini, Michael
Yukevich,

5
<PAGE>
Jr., John A. Pidgeon, Allen R. Glick, Carl L. Kalnow, James P. Moore, Jr.,
Maynard H. Murch, IV, and Janice Fuellhart. Since the decision-making power
is vested in the Finance Committee, we need not be concerned with which
individuals are responsible for administering which brokerage account.

(4) On February 14, 2000, Alan Andreini filed a Schedule 13G Amendment
reflecting ownership of securities listed in this table for his own account
and by persons for whom he exercises trading authority. As of December 31,
1999, Mr. Andreini's accounts held 934,500 shares of common stock. As of
December 31, 1999, Mr. Andreini was authorized to exercise trading
authority over: (i) an account of Kiskiminetas at PaineWebber, which held
170,000 shares of common stock; (ii) the account of The Andreini Foundation
(the "Foundation") which held 23,500 shares of common stock; (iii) the
account of John D. Andreini (who is deceased) and Blanche M. Andreini (the
"Parents") at Cheevers Hand & Angeline, Inc., which held 41,700 shares of
common stock; and (iv) an account at Piper Jaffray, Inc. for the benefit of
his son, Alan J. Andreini, Jr., under Illinois Uniform Transfers to Minors
Act, which held 2,000 shares of common stock. Pursuant to the
rules promulgated under the federal securities laws, Mr. Andreini may be
deemed to be the beneficial owner of the common stock owned by each such
person because he has shared investment and voting power in respect of the
account of Kiskiminetas and the account of the Parents, and has sole
investment and voting power in respect of the Foundation and of the account
of his son. Mr. Andreini disclaims beneficial ownership of the common stock
held by Kiskiminetas, the Parents and the Foundation.

(5) Includes 700,000 shares of Common Stock that may be acquired upon exercise
of stock options that are currently exercisable or will become exercisable
within 60 days of February 29, 2000.

(6) Includes 350,000 shares of Common Stock that may be acquired upon exercise
of stock options that are currently exercisable or will become exercisable
within 60 days of February 29, 2000.

(7) Includes 50,000 vested shares underlying options held by Stephen A. Hurwitz
as Trustee for Mr. Preuss' son, with respect to which Mr. Preuss disclaims
beneficial ownership. Also includes 61,250 shares of Common Stock that may
be acquired upon exercise of stock options that are currently exercisable
or will become exercisable within 60 days of February 29, 2000.

(8) Includes 157,666 shares of Common Stock that may be acquired upon exercise
of stock options that are currently exercisable or will become exercisable
within 60 days of February 29, 2000.

(9) Includes 111,250 shares of Common Stock that may be acquired upon exercise
of stock options that are currently exercisable or will become exercisable
within 60 days of February 29, 2000.

(10) Includes 61,979 shares of Common Stock that may be acquired upon exercise
of stock options that are currently exercisable or will become exercisable
within 60 days of February 29, 2000.

(11) Includes 7,200 shares held by Norman Gold as Trustee for Mr. Greer's
daughters, with respect to which Mr. Greer disclaims beneficial ownership.
Also includes 48,750 shares of Common Stock that may be acquired upon
exercise of stock options that are currently exercisable or will become
exercisable within 60 days of February 29, 2000.

(12) Includes 41,250 shares of Common Stock that may be acquired upon exercise
of stock options that are currently exercisable or will become exercisable
within 60 days of February 29, 2000.

(13) Includes 1,582,145 shares of Common Stock that may be acquired upon
exercise of stock options that are currently exercisable or will become
exercisable within 60 days of February 29, 2000.

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<PAGE>
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities. Officers, directors and greater than 10% beneficial owners
are required by SEC regulation to furnish us with copies of all reports they
file under Section 16(a). To our knowledge, based solely on our review of the
copies of such reports furnished to us and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with
during the year ended December 31, 1999, except for one late Form 5 filed by
Philip Greer reporting options granted to him in May 1999 pursuant to our
outside Directors Stock Option Plan.

EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table provides certain summary information concerning
compensation paid or accrued to or on behalf of our Chief Executive Officer and
each of our four other most highly compensated executive officers (determined as
of December 31, 1999) (collectively, the "Named Officers") for the fiscal years
ended December 31, 1997, 1998 and 1999:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------
----------------------- STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS (SHARES) COMPENSATION(2)
- --------------------------- -------- --------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Rudolph G. Morin(3) ....................... 1999 $298,333 $50,000 85,000 $ 7,200(4)
President and Chief Executive Officer 1998 276,667 -- -- 14,267(4)
1997 257,500 31,250 -- 4,172(4)

Robert G. Gilbertson(5) ................... 1999 $270,833 $ -- -- $ --
Former President and Chief Executive 1998 314,583 9,591 -- 5,213
Officer 1997 300,000 37,500 -- 4,950

John DeSantis(6) .......................... 1999 $267,117(8) $35,682 85,000 $64,628(7)
Former Senior Vice President--Sales and 1998 205,114(8) 74,094(8) -- --
Marketing 1997 102,206(8) 43,649(8) -- --
</TABLE>

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

(1) Includes amounts (if any) deferred under the 401(k) Plan and commissions
earned in 1999.

(2) Except as otherwise noted, consists of the dollar value of premiums paid on
life insurance for the benefit of the Named Officer.

(3) Mr. Morin joined us in May 1996 and was promoted to President and Chief
Executive Officer in August 1999.

(4) Includes $7,200, $7,200 and $7,800 paid for automobile allowance in 1999,
1998 and 1997, respectively.

(5) Mr. Gilbertson joined us as President and Chief Executive Officer in
May 1996. In August 1999 he resigned as President and Chief Executive
Officer and was simultaneously appointed Chairman of the Board of Directors.

(6) Mr. DeSantis joined us in July 1997 and was promoted to Senior Vice
President, Sales and Marketing in April 1999. Mr. DeSantis' employment
terminated on April 3, 2000.

(7) Consists of $64,628 for relocation expenses.

(8) In April 1999 Mr. DeSantis was promoted to Senior Vice President, Sales and
Marketing. Prior to that Mr. DeSantis had served as Vice President
International Operations from July 1997 through March 1999. Of the $267,117
salary earned by Mr. DeSantis during 1999, $51,367 was earned during

7
<PAGE>
the period January through March 1999 while serving in the capacity of Vice
President International Operations.

STOCK OPTION GRANTS

The following table contains information concerning grants of stock options
under our 1999 Stock Option Plan (the "1999 Option Plan") and 1999 Non-Statutory
Stock Option Plan to the Named Officers during the year ended December 31, 1999:

OPTION GRANTS IN 1999

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED EXERCISE OPTION TERM(1)
GRANTED TO EMPLOYEES PRICE EXPIRATION -----------------------
NAME (SHARES)(2) IN FISCAL YEAR(3) ($/SHARE) DATE 5% ($) 10% ($)
- ---- ----------- ----------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Rudolph G. Morin.................... 85,000 10.34% $5.375 5/4/09 $287,326 $728,141
Robert G. Gilbertson................ -- -- -- -- -- --
John DeSantis....................... 85,000 10.34% $5.375 5/4/09 $287,326 $728,141
</TABLE>

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

(1) Gains are reported net of the option exercise price but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of our Common Stock, as well as the
optionee's continued employment through the vesting period.

(2) Each option vests and becomes exercisable to the extent of 25% of the
underlying shares one year following the date of grant, with the remainder
vesting on a monthly basis ratably over the 36-month period thereafter.

(3) Options to purchase an aggregate of 821,900 shares of Common Stock were
granted to employees during the year.

OPTION EXERCISES AND YEAR-END HOLDINGS

The following table provides information with respect to the Named Officers
concerning the exercise of options during 1999 and unexercised options held as
of December 31, 1999:

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Rudolph G. Morin................ -- -- 350,000 85,000 $1,531,250 $212,500
Robert G. Gilbertson............ -- -- 700,000 -- $3,062,500 --
John DeSantis................... -- -- 59,895 100,105 -- $212,500
</TABLE>

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

(1) Based on the closing price of $7.875, as reported on The Nasdaq National
Market on December 31, 1999 (the last trading day prior to the fiscal
year-end).

(2) Sale price at time of exercise less exercise price.

8
<PAGE>
COMPENSATION OF DIRECTORS

Non-employee directors are paid an annual retainer of $15,000 per calendar
year, payable semiannually, plus a fee of $1,500 for each meeting of the Board
of Directors they attend and $500 for each meeting of a committee they attend,
plus reimbursement for transportation and other expenses incurred in attending
such meetings. In addition to the foregoing compensation, Directors Preuss and
Low also receive a fee of $1,500 for each meeting of the Executive Committee
they attend. Under the 1994 Outside Directors' Stock Option Plan (the
"Directors' Plan"), each non-employee director of the Company is granted an
initial option for 30,000 shares of the Company's Common Stock, followed by
annual grants of options for 7,500 shares each, subject to the director's
continuous service on the Board of Directors. In 1999, no other compensation was
paid to a director serving in such capacity.

EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS

We entered into an employment agreement with Rudolph G. Morin effective
May 28, 1996. The original term of the agreement was two years and is subject to
automatic annual renewal for successive one-year terms unless either party
provides notice of termination at least 60 days prior to the end of each term.
The agreement fixes Mr. Morin's base salary, subject to increases, if any. On
August 25, 1999, the Compensation Committee approved an increase in Mr. Morin's
annual salary from $285,000 to $325,000, effective August 27, 1999. The
agreement provides for an incentive bonus award based on the achievement of
certain financial objectives, up to a maximum amount equal to 300% of base
salary. The agreement also provides for reimbursement of reasonable
out-of-pocket and ordinary expenses for commuting or relocating to the Mountain
View area and necessary business expenses incurred in performing services as
President and Chief Executive Officer and in his former role as Executive Vice
President, Operations & Finance and Chief Financial Officer. In May 1999, the
Compensation Committee approved a grant of 85,000 options to Mr. Morin under the
1999 Stock Option Plan. In 1996 pursuant to his agreement, Mr. Morin received
350,000 options to purchase shares of common stock under the 1989 Option Plan.
The agreement provides that these options will vest in full and become fully
exercisable in the event of any change in control. In the event Mr. Morin is
terminated other than for cause, or if he voluntarily terminates his employment
because of a material change in his job duties or title or specified acts of
misconduct by us, he is entitled under the agreement to receive a severance
payment equal to his then-current base salary for a period equal to the term of
employment remaining under the agreement (but not less than 12 months) and to
receive up to $40,000 in outplacement assistance.

We entered into an employment agreement with Robert G. Gilbertson effective
May 20, 1996. The agreement originally fixed Mr. Gilbertson's annual salary at
$300,000. On May 28, 1998, the Compensation Committee approved an increase in
Mr. Gilbertson's salary from $300,000 to $325,000, which was subsequently
reduced to $162,500 when Mr. Gilbertson assumed a role as half-time employee.
Mr. Gilbertson's agreement remains subject to further annual increases, if any,
and provides for an incentive bonus award based on the achievement of certain
financial objectives, up to a maximum amount equal to 300% of base salary. The
agreement also provides for reimbursement of reasonable out-of-pocket and
ordinary expenses for commuting or relocating to the Mountain View area and
necessary business expenses incurred in performing services as Chairman of the
Board. As part of his agreement, Mr. Gilbertson has been granted options to
purchase 700,000 shares of Common Stock. The agreement provides that these
options will become fully exercisable in the event of a change of control. The
agreement provides that all stock options currently held by Mr. Gilbertson under
the 1989 Option Plan and other outside plans will vest in full and become fully
exercisable in the event of any change in control after six months from
employment date. In the event Mr. Gilbertson is terminated other than for cause,
or if he voluntarily terminates his employment because of a material change in
his job duties or title or specified acts of misconduct by us, he is entitled
under the agreement to receive a severance payment equal to his then-current
base salary for a period equal to the term of employment remaining under the
agreement (but not less than 12 months) and to receive up to $40,000 in
outplacement assistance.

9
<PAGE>
In April 2000, we entered into a Confidential Separation Agreement with John
DeSantis pursuant to which Mr. DeSantis resigned as Senior Vice President, Sales
and Marketing effective April 3, 2000. The agreement provides that, for a period
of six (6) months after April 3, 2000, Mr. DeSantis will receive severance
payments of $21,667 per month. Under the agreement, Mr. DeSantis has agreed to
provide consulting services through October 3, 2000 to facilitate the transfer
of responsibilities as Senior Vice President, Sales and Marketing and to hold
himself available to provide additional part-time consulting services as needed,
on a schedule consistent with such duties as Mr. DeSantis may have as a
full-time employee elsewhere. The agreement also provides that the stock options
granted to Mr. DeSantis will continue to vest through October 3, 2000.

REPORT OF THE COMPENSATION AND STOCK COMMITTEE
OF THE BOARD OF DIRECTORS

Annual compensation of officers is determined by the Compensation Committee,
which recommends the amount of salary and bonus to be paid to each executive
officer, subject to approval and ratification by the Board of Directors. The
Compensation Committee is also responsible for administering the 1999 Option
Plan, including the awarding of options under such plan.

COMPENSATION PHILOSOPHY

Our compensation programs for executive officers are designed to align
compensation with business objectives and performance and to enable us to
attract, retain and reward executive officers who are likely to contribute to
our long-term success. We believe that a strong link should exist between
executive compensation and the value received by shareholders.

COMPONENTS OF COMPENSATION

SALARY

In setting base salary levels, we initially review the salary structure and
pay practice data of other companies in similar industries. In doing so, we
compare our company to a group of computer, networking and systems companies of
similar size and capitalization using information compiled by an independent
compensation consulting firm. There are currently approximately 300 companies in
this comparison group.

Salaries are generally reviewed annually by the Compensation Committee and
are subject to increases based on (i) the Compensation Committee's determination
that the individual's level of contribution has increased since his or her
salary had last been reviewed and (ii) increases in median competitive pay
levels.

The salary paid to Rudolph G. Morin, President and Chief Executive Officer,
has been determined in accordance with his employment agreement. On August 25,
1999, the Compensation Committee approved an increase in Mr. Morin's annual
salary from $285,000 to $325,000 effective August 27, 1999. Such increase is a
result of Mr. Morin's promotion from Executive Vice President, Finance and
Operations to President and Chief Executive Officer, which was also effective
August 27, 1999. Mr. Morin's agreement remains subject to further annual
increases, if any. Mr. Morin's agreement also entitles him to receive an annual
incentive bonus based upon the achievement of certain financial objectives. The
incentive bonus award will be equal to 50% of base salary when 100% of the
financial objectives are met, and if overall performance exceeds these financial
objectives, the bonus award is increased by an amount representing a percentage
of annual salary that is 1.5 times the percentage by which these objectives are
exceeded, up to a maximum bonus award equal to 300% of base salary. In
connection with our efforts to recruit Mr. Morin, we negotiated the terms of his
employment agreement with Mr. Morin at arm's length. See "Executive-
Compensation Employment, Severance and Change of Control Arrangements."

10
<PAGE>
BONUS PLAN

Effective January 1, 1997, we adopted an All-Employee Incentive Plan (the
"Incentive Plan"). Employees, including officers, are eligible to participate in
the Incentive Plan. The Incentive Plan has been designed to align the interests
of employees with those of shareholders, and to reward employees for
contributing to our ongoing financial success. The Incentive Plan pays
employees, at varying percentages of base salary, a bonus which is funded by a
percentage of our pretax, prebonus operating income.

The bonus earned by Mr. Morin is determined in accordance with his
employment agreement, which provides for an incentive bonus award based on the
achievement of financial objectives set by the Compensation Committee for the
fiscal year. The bonus award is equal to 50% of base salary when 100% of the
financial objectives are met. In the event overall performance exceeds these
financial objectives, the bonus award is increased by an amount representing a
percentage of base salary that is 1.5 times the percentage by which these
objectives are exceeded, up to a maximum bonus award equal to 300% of base
salary. See "Executive-Compensation Employment, Severance and Change of Control
Arrangements."

STOCK OPTION PLAN

As is typical with emerging growth high-technology companies, a significant
component of the compensation provided to our executive officers is in the form
of equity participation through stock options granted under the 1999 Option
Plan. As a result, our executive officers are directly rewarded for our success
and provided an economic incentive to contribute to our future success and
maximize shareholder value. Options granted under the 1999 Option Plan generally
vest over a four-year period, to encourage employees to remain with us on a
long-term basis.

COMPENSATION OF CHIEF EXECUTIVE OFFICER

The compensation payable to Mr. Morin is determined in accordance with
Mr. Morin's employment agreement, as described above, which provides for an
annual incentive bonus award based on the achievement of financial objectives
set by the Compensation Committee for that fiscal year. The bonus award is equal
to 50% of base salary when 100% of the financial objectives are met. In the
event overall performance exceeds these financial objectives, the bonus award is
increased by an amount representing a percentage of base salary that is 1.5
times the percentage by which these objectives are exceeded, up to a maximum
bonus award equal to 300% of base salary. In 1998, the Compensation Committee
set financial objectives based upon our net operating income for 1998. Because
our 1999 net operating income fell short of this target, Mr. Morin was not
awarded a bonus for 1999.

COMPENSATION AND STOCK COMMITTEE

Peter Preuss
Stephen A. MacDonald

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<PAGE>
PERFORMANCE GRAPH

Set forth below is a graph indicating cumulative total return at
December 31, 1995, 1996, 1997, 1998 and 1999 on $100 invested, alternatively, in
the Company's Common Stock, the CRSP Total Return Index for the Nasdaq Stock
Market and the Nasdaq Computer Manufacturing Stocks Index at the close of
business on December 31, 1994.

COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
NETWORK COMPUTING DEVICES, INC.

PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
Produced on 03/17/2000 including data to 12/31/1999

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
NASDAQ COMPUTER
MANUFACTURERS STOCKS
NETWORK COMPUTING NASDAQ STOCK SIC 3570-3579
DEVICES, INC. MARKET (US COMPANIES) US & FOREIGN
<S> <C> <C> <C>
12/30/1994 $100.00 $100.00 $100.00
12/29/1995 $167.60 $141.30 $156.60
12/31/1996 $238.20 $173.90 $209.60
12/31/1997 $220.60 $213.10 $253.50
12/31/1998 $164.70 $300.40 $549.70
12/31/1999 $185.30 $556.00 $1,170.80
</TABLE>

LEGEND

<TABLE>
<CAPTION>
CRSP TOTAL RETURNS INDEX FOR: 12/1994 12/1995 12/1996 12/1997 12/1998 12/1999
- ----------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Network Computing Devices, Inc........... 100.0 167.6 238.2 220.6 164.7 185.3
Nasdaq Stock Market (US Companies)....... 100.0 141.3 173.9 213.1 300.4 556.0
Nasdaq Computer Manufacturers Stocks
SIC 3570-3579 US & Foreign............... 100.0 156.6 209.6 253.5 549.7 1170.8
</TABLE>

NOTES:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization
on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/30/1994.

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<PAGE>
CERTAIN TRANSACTIONS

As discussed above we have entered into employment agreements with
Rudolph G. Morin and Robert G. Gilbertson. See "Executive-Compensation
Employment, Severance and Change of Control Agreements."

Our Bylaws provide that we shall indemnify our directors and officers to the
full extent permitted by Delaware law. We have entered into indemnification
agreements with certain officers and directors containing provisions that may
require us, among other things, to indemnify such officers and directors against
certain liabilities that may arise by reason of their status or service as
officers or directors (other than liabilities arising from willful misconduct of
a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified and to obtain
directors' and officers' insurance if available on reasonable terms. We maintain
insurance covering officers and directors.

PROPOSAL NO. 2
AMENDMENT TO THE 1999 STOCK OPTION PLAN

At the Annual Meeting, the stockholders will be asked to approve an
amendment to our 1999 Stock Option Plan (the "1999 Plan") to increase the number
of shares of Common Stock reserved for issuance thereunder by 500,000 shares to
a total of 1,048,000 shares.

The 1999 Plan currently provides for the issuance of 374,010 shares of
Common Stock upon the exercise of options granted thereunder. As of
February 29, 2000, options for 406,350 shares of Common Stock were outstanding
at a weighted average price of $5.313 per share. As of February 29, 2000, no
options had been exercised and the amount of shares of Common Stock underlying
options which were available for grant were 141,150 shares. The closing price
of our Common Stock on February 29, 2000 as reported on the Nasdaq National
Market was $7.875. As of February 29, 2000, options to purchase 2,312,601 shares
of the Company's Common Stock were outstanding at an average exercise price of
$5.2393 under the expired 1989 Stock Option Plan.

We believe that in order to successfully attract and retain the best
possible candidates for positions of responsibility, we must continue to offer a
competitive equity incentive program. We think the increase in shares reserved
for stock options is particularly important in light of the very tight and
competitive employment market and our plans to reposition the Company. We also
believe that the number of remaining shares available for issuance under the
1999 Plan will be insufficient to accomplish this purpose, but anticipate that
this increase in shares reserved under the 1999 Plan should meet our goals of
retaining and attracting qualified people.

SUMMARY OF THE 1999 PLAN

GENERAL. The 1999 Plan was adopted by our Board of Directors and
shareholders in May 1999. The purpose of the 1999 Plan is to advance the
interests of the Company and its stockholders by providing an incentive to
attract, retain and reward the Company's employees, directors and consultants
and by motivating such persons to contribute to the Company's growth and
profitability. The 1999 Plan provides for the grant to employees of incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and the grant to employees, directors and
consultants of nonstatutory stock options.

To enable the Company to deduct in full for federal income tax purposes the
compensation recognized by certain executive officers in connection with options
granted under the 1999 Plan, the plan is designed to qualify such compensation
as "performance-based compensation" under Section 162(m) of the Code. To comply
with Section 162(m), the 1999 Plan limits the number of shares for which options
may be granted to any employee. Under this limitation (the "Grant Limit"), no
employee serving as the Chairman of the Board, Chief Executive Officer or Chief
Operating Officer at any time during a fiscal year may be

13
<PAGE>
granted options for more than 500,000 shares in such fiscal year, and no other
employee may be granted options for more than 250,000 shares in any fiscal year.
The Grant Limit is subject to appropriate adjustment in the event of certain
changes in the Company's capital structure, as previously described.

ADMINISTRATION. The 1999 Plan may be administered by the Board of Directors
or a duly appointed committee of the Board, which, in the case of options
intended to qualify for the performance-based compensation exemption under
Section 162(m) of the Code, must be comprised solely of two or more "outside
directors" within the meaning of Section 162(m). The 1999 Plan is currently
being administered by the Compensation Committee (the "Committee"), which is
comprised of two outside directors. Subject to the provisions of the 1999 Plan,
the Committee determines the persons to whom options are to be granted, the
number of shares to be covered by each option, whether an option is to be an
incentive stock option or a nonstatutory stock option, the timing and terms of
exercisability and vesting of each option, the purchase price and the type of
consideration to be paid to the Company upon the exercise of each option, the
time of expiration of each option, and all other terms and conditions of the
options. The Committee may amend, modify, extend, cancel, renew, or grant a new
option in substitution for any option, waive any restrictions or conditions
applicable to any option, and accelerate, continue, extend or defer the
exercisability or vesting of any option. The 1999 Plan provides, subject to
certain limitations, for indemnification by the Company of any director, officer
or employee against all reasonable expenses, including attorneys' fees, incurred
in connection with any legal action arising from such person's action or failure
to act in administering the 1999 Plan. The Committee will interpret the 1999
Plan and options granted thereunder, and all determinations of the Committee
will be final and binding on all persons having an interest in the 1999 Plan or
any option.

ELIGIBILITY. Options may be granted under the 1999 Plan to employees,
directors and consultants of the Company or of any present or future parent or
subsidiary corporations of the Company. In addition, options may be granted to
prospective service providers in connection with written offers of employment or
other service relationship, provided that no shares may be purchased prior to
such person's commencement of service. As of February 29, 2000, the Company had
approximately 335 employees, including 3 executive officers, 5 directors and
consultants who would be eligible under the 1999 Plan. While any eligible person
may be granted a nonstatutory stock option, only employees may be granted
incentive stock options.

TERMS AND CONDITIONS OF OPTIONS. Each option granted under the 1999 Plan
will be evidenced by a written agreement between the Company and the optionee
specifying the number of shares subject to the option and the other terms and
conditions of the option, consistent with the requirements of the 1999 Plan.
Incentive stock options must have an exercise price at least equal to the fair
market value of a share of the Common Stock on the date of grant, while
nonstatutory stock options must have an exercise price equal to at least 85% of
such fair market value. However, any incentive stock option granted to a person
who at the time of grant owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any parent or
subsidiary corporation of the Company (a "Ten Percent Stockholder") must have an
exercise price equal to at least 110% of the fair market value of a share of
Common Stock on the date of grant. As of February 29, 2000, the closing price of
the Company's Common Stock, as reported on the Nasdaq National Market, was
$7.875 per share.

The 1999 Plan provides that the option exercise price may be paid in cash,
by check, or in cash equivalent; by the assignment of the proceeds of a sale or
loan with respect to some or all of the shares being acquired upon the exercise
of the option; to the extent legally permitted, by tender of shares of Common
Stock owned by the optionee having a fair market value not less than the
exercise price or by means of a promissory note if the optionee is an employee;
by such other lawful consideration as approved by the Board; or by any
combination of these. Nevertheless, the Board may restrict the forms of payment
permitted in connection with any option grant. No option may be exercised unless
the optionee has made adequate provision for federal, state, local and foreign
taxes, if any, relating to the exercise of the option.

14
<PAGE>
Options will become vested and exercisable at such times or upon such events
and subject to such terms, conditions, performance criteria or restrictions as
specified by the Board. The maximum term of an option granted under the 1999
Plan is ten years, provided that an incentive stock option granted to a Ten
Percent Stockholder must have a term not exceeding five years. However, the
Board currently intends to generally limit the term of all options granted under
the 1999 Plan to a period of five years. An option generally will remain
exercisable for 30 days following the optionee's termination of service.
However, if such termination results from the optionee's death or disability,
the option generally will remain exercisable for three months or six months,
respectively. In any event, the option must be exercised no later than its
expiration date. Options are nontransferable by the optionee other than by will
or by the laws of descent and distribution, and are exercisable during the
optionee's lifetime only by the optionee.

CHANGE IN CONTROL. The 1999 Plan defines a "Change in Control" of the
Company as any of the following events upon which the stockholders of the
Company immediately before the event do not retain immediately after the event,
in substantially the same proportions as their ownership of shares of the
Company's voting stock immediately before the event, direct or indirect
beneficial ownership of more than 50% of the total combined voting power of the
stock of the Company, its successor or the corporation to which the assets of
the Company were transferred: (i) a sale or exchange by the stockholders in a
single or series of related transactions of more than 50% of the Company's
voting stock; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange or transfer of all or substantially all of the assets
of the Company; or (iv) a liquidation or dissolution of the Company. If a Change
in Control occurs, the surviving, continuing, successor or purchasing
corporation or parent corporation thereof may either assume the Company's rights
and obligations under the outstanding options or substitute substantially
equivalent options for such corporation's stock. In addition, the 1999 Plan
authorizes the Board to provide in any option agreement for acceleration of the
vesting and exercisability of the option upon such circumstances in connection
with a Change in Control as the Board determines. Options that are not assumed,
replaced or exercised prior to the Change in Control will terminate.

TERMINATION OR AMENDMENT. The 1999 Plan will continue in effect until the
earlier of its termination by the Board or the date on which all shares
available for issuance under the plan have been issued and all restrictions on
such shares under the terms of the plan and the agreements evidencing options
granted under the plan have lapsed, provided that all incentive stock options
must be granted within ten years of the date on which the Board adopted the 1999
Plan. The Board may terminate or amend the 1999 Plan at any time. However,
without stockholder approval, the Board may not amend the 1999 Plan to increase
the total number of shares of Common Stock issuable thereunder, change the class
of persons eligible to receive incentive stock options, or effect any other
change that would require stockholder approval under any applicable law,
regulation or rule. No termination or amendment may affect an outstanding option
unless expressly provided by the Board, and, in any event, may not adversely
affect an outstanding option without the consent of the optionee, unless the
amendment is required to preserve an option's status as an incentive stock
option or is necessary to comply with any applicable law, regulation or rule.

SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES

The following summary is intended only as a general guide as to the U.S.
federal income tax consequences under current law of participation in the 1999
Plan and does not attempt to describe all possible federal or other tax
consequences of such participation or tax consequences based on particular
circumstances.

INCENTIVE STOCK OPTIONS. An optionee recognizes no taxable income for
regular income tax purposes as a result of the grant or exercise of an incentive
stock option qualifying under Section 422 of the Code. Optionees who neither
dispose of their shares within two years following the date the option was
granted nor within one year following the exercise of the option will normally
recognize a capital gain or loss equal to the difference, if any, between the
sale price and the purchase price of the shares. If an optionee satisfies

15
<PAGE>
such holding periods upon a sale of the shares, the Company will not be entitled
to any deduction for federal income tax purposes. If an optionee disposes of
shares within two years after the date of grant or within one year after the
date of exercise (a "disqualifying disposition"), the difference between the
fair market value of the shares on the determination date (see discussion under
"Nonstatutory Stock Options" below) and the option exercise price (not to exceed
the gain realized on the sale if the disposition is a transaction with respect
to which a loss, if sustained, would be recognized) will be taxed as ordinary
income at the time of disposition. Any gain in excess of that amount will be a
capital gain. If a loss is recognized, there will be no ordinary income, and
such loss will be a capital loss. Any ordinary income recognized by the optionee
upon the disqualifying disposition of the shares generally should be deductible
by the Company for federal income tax purposes, except to the extent such
deduction is limited by applicable provisions of the Code.

The difference between the option exercise price and the fair market value
of the shares on the determination date of an incentive stock option (see
discussion under "Nonstatutory Stock Options" below) is treated as an adjustment
in computing the optionee's alternative minimum taxable income and may be
subject to an alternative minimum tax which is paid if such tax exceeds the
regular tax for the year. Special rules may apply with respect to certain
subsequent sales of the shares in a disqualifying disposition, certain basis
adjustments for purposes of computing the alternative minimum taxable income on
a subsequent sale of the shares and certain tax credits which may arise with
respect to optionees subject to the alternative minimum tax.

NONSTATUTORY STOCK OPTIONS. Options not designated or qualifying as
incentive stock options will be nonstatutory stock options having no special tax
status. An optionee generally recognizes no taxable income as the result of the
grant of such an option. Upon exercise of a nonstatutory stock option, the
optionee normally recognizes ordinary income in the amount of the difference
between the option exercise price and the fair market value of the shares on the
determination date (as defined below). If the optionee is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. The "determination date" is the date on which the option is exercised
unless the shares are subject to a substantial risk of forfeiture (as in the
case where an optionee is permitted to exercise an unvested option and receive
unvested shares which, until they vest, are subject to the Company's right to
repurchase them at the original exercise price upon the optionee's termination
of service) and are not transferable, in which case the determination date is
the earlier of (i) the date on which the shares become transferable or (ii) the
date on which the shares are no longer subject to a substantial risk of
forfeiture. If the determination date is after the exercise date, the optionee
may elect, pursuant to Section 83(b) of the Code, to have the exercise date be
the determination date by filing an election with the Internal Revenue Service
no later than 30 days after the date the option is exercised. Upon the sale of
stock acquired by the exercise of a nonstatutory stock option, any gain or loss,
based on the difference between the sale price and the fair market value on the
determination date, will be taxed as capital gain or loss. No tax deduction is
available to the Company with respect to the grant of a nonstatutory stock
option or the sale of the stock acquired pursuant to such grant. The Company
generally should be entitled to a deduction equal to the amount of ordinary
income recognized by the optionee as a result of the exercise of a nonstatutory
stock option, except to the extent such deduction is limited by applicable
provisions of the Code.

PLAN BENEFITS

During the year ended December 31, 1999: (i) Messrs. Morin and DeSantis were
granted options to purchase 85,000 shares each, and Mr. Gilbertson was not
granted any options; (ii) all current executive officers as a group were granted
options to purchase an aggregate of 170,000 shares; and (iii) all current
employees, including officers who are not executive officers, as a group were
granted options to purchase an aggregate of 821,900 shares. During the year
ended December 31, 1999, no options were granted under the 1999 Plan to any
directors who are not executive officers or to any associate of any director,
executive

16
<PAGE>
officer or Board nominee of the Company, and, other than Messrs. Morin and
DeSantis, no person was granted 5% or more of the total amount of options
granted under the Option Plan during that year.

REQUIRED VOTE

Approval of this proposal requires a number of votes "For" the proposal that
exceeds the number of votes "Against" the proposal, provided a quorum
representing a majority of all outstanding shares of Common Stock is present or
represented by proxy and voting "For" or "Against" the proposal. Abstentions and
broker non-votes will be disregarded for purposes of determining whether a
quorum is voting on the proposal but otherwise will have no effect on the
outcome of the vote.

As described above, the 1999 Plan is intended to preserve the treatment of
option-related compensation as "performance-based compensation" for purposes of
Section 162(m) of the Code. By approving this proposal, the stockholders will be
approving, among other things, the eligibility requirements for participation in
the 1999 Plan and the Grant Limit.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO APPROVE AN AMENDMENT TO THE 1999 STOCK OPTION PLAN.

PROPOSAL NO. 3
AMENDMENT OF THE 1992 EMPLOYEE STOCK PURCHASE PLAN

At the Annual Meeting, shareholders are being asked to approve an amendment
to the Company's 1992 Employee Stock Purchase Plan (the "Purchase Plan") to
increase the number of shares of Common Stock reserved for issuance thereunder
by 200,000 shares, to a total of 1,850,000 shares. As of February 29, 2000,
1,468,501 shares of Common Stock had been purchased under the Purchase Plan, at
an average purchase price of $5.26158 per share, and 181,499 shares remained
available for purchase.

Employee stock purchase plans of this type are a standard and competitive
perquisite in high-technology companies. The Company believes that the Purchase
Plan is necessary to attract and retain qualified employees, and that the
increase is necessary to ensure that there will be a sufficient number of shares
issuable thereunder to satisfy near term requirements.

The numbers of shares of Common Stock purchased under the Purchase Plan by
certain persons during the year ended December 31, 1999 are as follows:
Mr. Gilbertson, Mr. Morin, and Mr. DeSantis purchased 42 shares, 2,920 shares,
and 1,189 shares, respectively; all current executive officers as a group
purchased shares; and all current employees, including officers who are not
executive officers, as a group purchased 180,043 shares. During such year no
shares were purchased under the Purchase Plan by any directors who are not
executive officers, any other nominees for election as directors or any
associates of such directors or nominees or of any executive officers, and no
person purchased five percent or more of the total number of shares issued under
the Purchase Plan during that year.

SUMMARY OF THE PURCHASE PLAN

GENERAL. The Purchase Plan was adopted by the Company's Board of Directors
and shareholders in March 1992. An aggregate of 1,650,000 shares of Common Stock
have been reserved for issuance under the Purchase Plan. Subject to shareholder
approval, the Board of Directors has approved an amendment to increase the
number of shares reserved for issuance under the Purchase Plan by shares, to a
total of 1,850,000 shares.

The Purchase Plan, and the rights of participants to make purchases
thereunder, is intended to qualify as an "employee stock purchase plan" under
Sections 421 and 423 of the Internal Revenue Code. See "Federal Income Tax
Consequences" below.

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The Purchase Plan is not qualified under Section 401(a) of the Internal
Revenue Code and is not subject to the Employee Retirement Income Security Act
of 1974, as amended.

PURPOSE. The purpose of the Purchase Plan is to enable the Company to offer
incentives to its employees, so as to attract and retain the best available
officers and employees for positions of substantial responsibility, and to
promote the success of the Company's business.

ADMINISTRATION. The Purchase Plan may be administered by the Board of
Directors or by a committee appointed by the Board (the "Committee") and is
currently being administered by the Board of Directors. Members of the Board of
Directors who are eligible employees are permitted to participate in the
Purchase Plan; however, no member of the Committee, while serving as such, shall
be eligible to participate in the Purchase Plan. All costs and expenses incurred
in plan administration are paid by the Company without charge to participants.

ELIGIBILITY. Any individual (including officers and employee directors) who
is customarily employed by the Company or a designated subsidiary for at least
20 hours per week and more than five months per calendar year is eligible to
participate in the Purchase Plan.

No employee is permitted to purchase shares under the Purchase Plan if such
employee owns, directly or indirectly (including stock purchasable under any
outstanding purchase rights), five percent or more of the total combined voting
power or value of all classes of stock of the Company or any of its
subsidiaries. In addition, purchase options granted to a participant under the
Purchase Plan (and all other purchase plans of the Company and its subsidiaries)
may not permit such individual to purchase Common Stock having a fair market
value of more than $25,000 (valued at the time each purchase right is granted)
during any one calendar year.

During the fiscal year ended December 31, 1999, Messrs. Gilbertson, Morin
and DeSantis purchased 42 shares, 2,920 and 1,189 shares, respectively, under
the Purchase Plan and all current executive officers as a group and all current
employees who are not executive officers (including officers who are not
executive officers) as a group purchased 4,151 shares and 180,043 shares,
respectively, under the Purchase Plan. During that fiscal year, no nominee for
election as a director other than Messrs. Morin and Gilbertson was eligible to
participate in the Purchase Plan.

OFFERING DATES. The Purchase Plan is implemented in one-year offering
periods beginning on each June 1 and ending on May 31 of the following year. The
Board or Committee, at its discretion, may redesignate the commencement and
termination date of subsequent offering periods and may designate special short
offering periods in connection with such redesignations, but no such
redesignation shall affect an offering period in progress.

Each offering is divided into two six-month "purchase periods" during which
contributions are made through payroll deductions and at the end of which (the
"Purchase Date") shares are issued based on the contributions made during the
purchase period. A purchase period commencing on June 1 ends on the following
November 30. A purchase period commencing on December 1 ends on the following
May 31.

GRANT OF OPTION; PURCHASE OF STOCK. At the beginning of an offering period,
each participant is granted a purchase option to purchase up to the number of
shares equal to the participant's accumulated payroll deductions at the end of
each purchase period (at the rate designated by such employee, not to exceed an
amount equal to 10% of the participant's compensation during the applicable
purchase period) divided by 85% of the fair market value of a share of the
Company's Common Stock at the beginning of the offering period. If the total
number of shares that would otherwise be subject to options exceeds the number
of shares then available under the Purchase Plan (after deduction of all shares
for which options have been exercised or are then outstanding), the Company will
make a pro rata allocation of the shares remaining available for option grant in
as uniform a manner as shall be practicable and as it shall determine to be
equitable.

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Executing the enrollment agreement to participate in the Purchase Plan does
not obligate the employee to make the stock purchase; the enrollment agreement
is merely an election by the employee to have shares placed under option to him.
Unless the employee's participation is withdrawn as provided in the Purchase
Plan, his option for the purchase of shares will be exercised automatically at
each Purchase Date, and the maximum number of full shares subject to option that
are purchasable with the accumulated payroll deductions in his account will be
purchased for him at the applicable option price. Any cash remaining to the
credit of a participant's account under the Purchase Plan after the purchase of
shares at the end of an offering period is returned to the participant without
interest.

PURCHASE PRICE. The purchase price of the Common Stock acquired at the end
of a purchase period will be equal to the lesser of (i) 85% of the fair market
value per share of Common Stock on the date on which such offering period begins
or (ii) 85% of the fair market value per share of Common Stock on the Purchase
Date. The fair market value of the Common Stock shall be the opening sales price
as reported on The Nasdaq National Market on the date of determination.

PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS. The purchase price of the
shares to be acquired under the Purchase Plan is accumulated by payroll
deductions over the offering period. The deductions may not exceed 10% of the
total compensation which a participant receives during the offering period, and
shall not be less than $10.00 per month. A participant may discontinue his
participation in the Purchase Plan (see "Withdrawal from the Purchase Plan"
below) or may decrease, but not increase, his rate of payroll deductions at any
time during the offering period. Payroll deductions for a participant shall
commence on the first payday following the commencement of the offering period
and shall continue until altered or terminated as provided in the Purchase Plan.

All payroll deductions made for a participant are credited to his account
under the Purchase Plan and are deposited with the general funds of the Company.
All payroll deductions received or held by the Company under the Purchase Plan
may be used by the Company for any corporate purpose, and the Company shall not
be obligated to segregate such payroll deductions.

NONASSIGNABILITY. Purchase rights will be exercisable only by the
participant. No purchase rights, including but not limited to accumulated
payroll deductions and any rights with regard to the exercise of a purchase
option or to receive shares under the Purchase Plan, may be assigned,
transferred, pledged or otherwise disposed of in any way (other than upon death
of a participant as provided in the Purchase Plan) for any reason.

WITHDRAWAL FROM THE PURCHASE PLAN. A participant may terminate his
participation in the Purchase Plan and his interest in the then-current offering
period in whole, but not in part, by giving written notice to the Company of his
election to withdraw all of the accumulated payroll deductions credited to his
account under the Purchase Plan. Such withdrawal may be elected by a participant
at any time prior to the end of the applicable offering period. Any withdrawal
by the participant of his accumulated payroll deductions for a given offering
period automatically terminates the participant's interest in that offering
period of the Purchase Plan. A participant's withdrawal from an offering period
will not have any effect upon his eligibility to participate in subsequent
offerings under the Purchase Plan or in any similar plan which may hereafter be
adopted by the Company.

TERMINATION OF EMPLOYMENT. Termination of a participant's employment for
any reason, including retirement or death, or the failure of the participant to
remain in the continuous employ of the Company or any designated subsidiary for
at least 20 hours per week during the applicable offering period, cancels his
participation in the Purchase Plan immediately. In such event, the payroll
deductions credited to the participant's account will be returned to him or, in
the case of death, to the person or persons entitled thereto as provided in the
Purchase Plan.

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ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event that any change is
made to the Company's outstanding Common Stock (whether by reason of any
recapitalization, stock dividend, stock split, combination of shares, or other
similar change in corporate structure effected without receipt of
consideration), appropriate adjustments will be made to (i) the class and
maximum number of shares purchasable under the Purchase Plan, (ii) the class and
maximum number of shares purchasable per participant under any outstanding
purchase right or over the term of the Purchase Plan, and (iii) the class and
number of shares purchasable and the price per share payable under all
outstanding purchase rights.

AMENDMENT AND TERMINATION OF THE PURCHASE PLAN. The Purchase Plan will
terminate upon the earlier of (i) March 12, 2012 or (ii) the date on which all
shares available for issuance thereunder are sold pursuant to exercised purchase
rights. However, the Board may from time to time alter, amend, suspend or
discontinue the provisions of the Purchase Plan. If such right is exercised by
the Company, then the Purchase Plan will terminate in its entirety and no
further purchase rights will be granted or exercised thereunder.

The Board may not, without shareholder approval, (i) increase the number of
shares issuable under the Purchase Plan, except in connection with certain
changes in the Company's capital structure, (ii) permit payroll deductions at a
rate in excess of 10% of the participant's compensation rate, (iii) materially
increase the benefits accruing to participants under the Plan, or
(iv) materially modify the requirements for eligibility to participate in the
Purchase Plan.

SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES

The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Internal Revenue Code. Under these provisions, no income will be taxable
to a participant at the time of grant or exercise of a purchase option. As
summarized below, a participant may become liable for tax upon disposition of
the shares acquired, and the method of taxation will depend upon the
participant's holding period.

In order to receive the favorable Federal income tax consequences associated
with the Purchase Plan, the participant generally must not sell or dispose of
the shares acquired upon exercise of the purchase option within two years from
the grant date (the first day of the offering period) or within 12 months after
the Purchase Date. If the participant satisfies these requirements, then the
lesser of (a) the excess of the fair market value of the shares at the time of
sale or disposition over the option price, or (b) the excess of the fair market
value of the shares at the grant date over the option price (which is computed
as if exercised on the grant date), will be treated as ordinary income to the
participant. Any further gain upon the sale or disposition will generally be
taxed as a long-term capital gain calculated by adding the amount of ordinary
income to the basis of the shares. If the selling price is less than the option
price, there is no ordinary income and the participant would have a long-term
capital loss on the difference.

If the participant fails to satisfy the holding period requirements outlined
above, the disposition of shares of Common Stock he or she receives under the
Purchase Plan generally will be treated as a "disqualifying disposition." In the
event of a disqualifying disposition, the participant generally will recognize
ordinary income in the year of disposition equal to the amount by which the fair
market value of the stock at the date of exercise exceeded the exercise price.
Any additional gain will be long-term or short-term gain, depending on how long
the participant has held the stock. The Company may be allowed a deduction to
the extent of the ordinary income recognizable by the participant. These holding
period requirements do not apply to options exercised or stock transferred after
the participant's death.

The company is not entitled to a deduction for amounts taxed as ordinary
income to a participant, except to the extent that ordinary income must be
reported upon sales or other dispositions of shares before the expiration of the
holding period described above.

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The foregoing summary of the effect of current Federal income taxation upon
participants in the Purchase Plan and the Company with respect to the grant of
options for, and the purchase and subsequent disposition by the participant of,
shares under the Purchase Plan does not purport to be complete, and reference is
made to the applicable provisions of the Internal Revenue Code. The discussion
of laws herein, is based only on such laws, court decisions and administrative
rulings as of the date hereof. The foregoing summary also does not reflect
provisions of the income tax laws of any state or foreign jurisdiction in which
participants may reside, and does not address prospective estate, gift and other
tax consequences of acquiring stock under the Purchase Plan.

REQUIRED VOTE

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
EMPLOYEE STOCK PURCHASE PLAN.

PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has selected KPMG LLP ("KPMG") as the independent
auditors of the Company for the current fiscal year. The selection of the
independent auditors is being submitted to the shareholders for ratification at
the Annual Meeting. In the event that ratification by the shareholders of the
selection of KPMG as the Company's independent auditors is not obtained, the
Board of Directors will reconsider such selection.

KPMG has audited the Company's financial statements since 1988. Its
representatives are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.

The ratification of the selection of KPMG will require the affirmative vote
of not less than a majority of the shares of the Company's Common Stock
represented and voting at the Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF KPMG.

OTHER BUSINESS

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

Dated: April 24, 2000

THE BOARD OF DIRECTORS

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PLEASE MARK YOUR CHOICES LIKE THIS /X/

1. ELECTION OF DIRECTORS

FOR* AGAINST
/ / / /

Nominees
Rudolph G. Morin, Robert G. Gilbertson, Douglas H. Klein, Stephen MacDonald,

- -----------------------------------------------------------------
For all nominees, except as noted above

* FOR all nominees listed or, in the discretion of the proxies, for such other
persons as may be nominated if any such nominee does not or cannot stand for
election (except as indicated).

2. Proposal to approve an amendment to the Company's 1999 Stock Option Plan
to increase the Number of shares of Common Stock reserved for issuance
thereunder by 500,000 shares.

FOR AGAINST ABSTAIN
/ / / / / /

3. Proposal to approve an amendment to the Employee Stock Purchase Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 200,000 shares.

FOR AGAINST ABSTAIN
/ / / / / /

4. Proposal to ratify the appointment of KPMG LLP as the independent auditors
of the Company.

FOR AGAINST ABSTAIN
/ / / / / /

5. In their discretion, the proxies are authorized to vote upon such other
matter or matters that may properly come before the meeting and any
adjournment thereof.

This Proxy should be marked, dated, signed by the shareholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign.

This proxy will be voted as directed or, if no direction is indicated, will
be voted for the election of named directors, for the amendment to the
Company's 1999 Stock Option Plan, for the amendment to the Employee Stock
Purchase Plan and for the ratification of the appointment of KPMG Peat Marwick
as the independent auditors of the Company.

Signature(s) __________________________________ Date ____________________

Note: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

- FOLD AND DETACH HERE -
<PAGE>

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

NETWORK COMPUTING DEVICES, INC.

2000 ANNUAL MEETING OF SHAREHOLDERS

The undersigned shareholder of Network Computing Devices, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated: April 24, 2000, and the Annual
Report on Form 10-K for the year ended December 31, 1999, and hereby appoints
Rudolph G. Morin and Gregory S. Wood, or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 2000 Annual
Meeting of Shareholders of Network Computing Devices, Inc., to be held on May
31, 2000, at 10:00 a.m., local time, at 301 Ravendale Drive, Mountain View,
California, and at any adjournment(s) thereof, and to vote all shares of
Common Stock which the undersigned would be entitled to vote if then and
there personally present, on the matters set forth on the reverse side.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

- FOLD AND DETACH HERE -