SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
NETWORK PERIPHERALS INC.
----------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transactions 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:
<PAGE>
NETWORK PERIPHERALS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 25, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Network Peripherals Inc., a Delaware corporation (the "Company"), will be held
on Tuesday, April 25, 2000 at 11:00 a.m., local time, at Marriott Hotel, 46100
Landing Parkway, Fremont, California, for the following purposes:
1. To elect two Class III directors of the Company to serve for the
ensuing three-year term and until their successors are duly
elected.
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of the
Company's Common Stock from 20,000,000 shares to 60,000,000 shares.
3. To approve an amendment to the Company's 1997 Stock Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 1,000,000 shares.
4. To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company for the fiscal year ending
December 31, 2000.
5. 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 stockholders of record at the close of business on March 10, 2000
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-paid, return envelope enclosed for that purpose. Any stockholder
attending the meeting may vote in person even if he or she has returned a proxy.
Sincerely,
Wilson Cheung
Secretary
Fremont, California
March 24, 2000
- --------------------------------------------------------------------------------
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
- --------------------------------------------------------------------------------
<PAGE>
NETWORK PERIPHERALS INC.
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of Network Peripherals Inc.
(the "Company" or "NPI") for use at the Annual Meeting of Stockholders to be
held on Tuesday, April 25, 2000 at 11:00 a.m., local time, or at any adjournment
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Stockholders. The Annual Meeting will be held at Marriott
Hotel, 46100 Landing Parkway, Fremont, California. The Company's principal
executive office is located at 2859 Bayview Drive, Fremont, California 94538.
These proxy solicitation materials were mailed on or about March 24,
2000, together with the Company's 1999 Annual Report to Stockholders, to all
stockholders entitled to vote at the meeting.
Record Date and Principal Stockholders
Stockholders of record at the close of business on March 10, 2000 (the
"Record Date") are entitled to notice of and to vote at the meeting. On the
Record Date, 15,804,197 shares of the Company's Common Stock were issued and
outstanding. For information regarding security ownership by management and
certain other holders of the Company's Common Stock, see "OTHER INFORMATION--
Share Ownership by Principal Stockholders and Management."
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 delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
Voting and Solicitation
Every stockholder voting in the election of directors is entitled to
one vote for each share held. Stockholders are not entitled to cumulate votes
for the election of directors or for any other purpose.
The cost of soliciting proxies will be borne by the Company. The
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their reasonable expenses in forwarding solicitation
material to such beneficial owners. Certain of the Company's directors, officers
and regular employees, without additional compensation, may also solicit
proxies, personally or by telephone, letter, telegram, facsimile transmission or
other means of electronic communication.
Quorum; Abstentions; Broker Non-Votes
The required quorum for the transaction of business at the Annual
Meeting is the presence in person or by proxy of a majority of the shares of
Common Stock outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST" or "WITHHELD" from a matter are treated as being present at the
meeting for purposes of establishing a quorum, but only shares voted "FOR" or
"AGAINST" are treated as shares "representing and voting" at the Annual Meeting
(the "Votes Cast") with respect to such matter. Accordingly, abstentions and
broker non-votes will be counted for purposes of determining the number of Votes
with respect to a proposal.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at next year's Annual Meeting must be received by
the Company no later than December 1, 2000, and
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<PAGE>
must otherwise comply with the requirements of Rule 14a-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in order that they may be
included in the proxy statement and form of proxy relating to that meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
The Board of Directors fixes, from time to time, the number of
directors authorized by the Company's By-Laws. The Board of Directors has
currently set the number of directors at six. The Company's By-Laws provides
that the directors shall be divided into three classes, with the classes of
directors serving for staggered, three-year terms. The two Class III directors
to be elected at the Annual Meeting are to hold office until the Annual Meeting
to be held in 2003 and until their successors have been elected and qualified.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Company's two nominees named below, both of whom are presently
directors of the Company. In the event that any nominee of the Company is unable
or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of the
nominees listed below, and, in such event, the specific nominees to be voted for
will be determined by the proxy holders.
The following table sets forth the name and age of the nominee, and each
director of the Company whose term of office continues after the Annual Meeting,
the principal occupation of each during the past five years, and the period
during which each has served as a director of the Company:
<TABLE>
Nominees for Election as Class III Director Serving for a Three-Year
Term Expiring in 2003:
<CAPTION>
Principal Occupation Director
Name During the Past Five Years Age Since
---- -------------------------- --- -----
<S> <C> <C> <C>
Glenn Penisten Mr. Penisten has served as the Chairman of the Board 68 1996
of Directors of NPI since June 1996. From 1985 to
present, he has been a partner of Alpha Partners, a
venture capital firm. He has served as Chief
Executive Officer for several leading technology
companies including: Superconductor Technologies,
Inc., from May 1987 to June 1988; American
Microsystems, Inc., from July 1976 to December 1984;
and Data Transmission Co., from February 1972 to
April 1976. Mr. Penisten has also held director level
positions at Dataproducts Corporation, Sanders
Associates and Gould, Inc. He served as a corporate
officer at Texas Instruments, Inc., and chairman of
the American Electronics Association. Mr. Penisten
currently serves as director for IKOS Systems, Bell
Microproducts, Pinnacle Systems, and Superconductor
Technologies, Inc.
2
<PAGE>
Principal Occupation Director
Name During the Past Five Years Age Since
---- -------------------------- --- -----
Charles Hart Mr. Hart has served as a director of NPI since 61 1996
November 1996. From February 1999 to present, he has
been the Chief Executive Officer of SANetworks, Inc.,
a manufacturer of networking interface cards and
switches. Previously in 1998, he served as the Chief
Executive Officer and a director of Micronics
Computers Inc., a supplier of advanced system boards
for high-performance personal computers. From April
1997 through February 1998, he served as the
Executive Vice President, Business Development, for
NPI. From August 1995 to May 1997, he was a founding
board member of InsWeb Corporation, an internet
technology company providing a vertically integrated
marketplace for the insurance industry on the World
Wide Web. From July 1992 through July 1995, he was
President and Chief Executive Officer of Semaphore
Communications Corporation. Previously, he held
positions of President and Chief Executive Officer
with Phaser Systems, Etak, Inc. and Nestar Systems,
Inc.
Incumbent Directors Not Standing for Re-election at the 2000 Annual Meeting:
Principal Occupation Director
Name During the Past Five Years Age Since
---- -------------------------- --- -----
William F. Rosenberger Mr. Rosenberger has served as the President, Chief 50 1998
Executive Officer and a director of NPI since July
1998. From January 1996 to June 1998, he was
President and Chief Executive Officer of NetAccess,
Inc., a wide area networking equipment manufacturer.
From October 1995 to December 1995, he was Vice
President of Sales and Business Development for
NetVision Corporation, an Ethernet switching company.
From March 1993 to June 1995, he was General Manager
of ACSYS, Inc., a networking equipment manufacturer.
Prior to March 1993, Mr. Rosenberger was President
and Chief Executive Officer of Netronix, Inc., a
networking hardware designer and manufacturer.
Steve Bell Mr. Bell has served as a director of NPI since July 45 1998
1998. From March 1998 to the present, he has served
as President and Chief Executive Officer of SVNL of
Agilent (formerly Silicon Valley Networking
Laboratory, Inc.), a provider of networking testing
services. From November 1999 to the present, he has
served as General Manager of Agilent Technologies
West Coast, a networking lab business. From September
1993 to present, he has been founder and President of
Bell Consulting, Inc., a networking industry
consultancy. Mr. Bell has also held marketing and
engineering management positions at AT&T Bell Labs,
Western Digital, National Semiconductor and Hughes
LAN Systems.
3
<PAGE>
Principal Occupation Director
Name During the Past Five Years Age Since
---- -------------------------- --- -----
Michael Gardner Mr. Gardner has served as a director of NPI since May 55 1998
1998. From July 1999 to the present, he has been
Senior Vice President, Operations of Blue Pumpkin
Software, a software company. From February 1998 to
April 1999, he served as Senior Vice President for
Sybase, Inc., an information management software
company. From November 1996 to February 1998, he was
Chief Operating Officer for ACT Networks, a wide-area
network access products manufacturer. From May 1995
to November 1996, he was President of Whittaker
Communications (formerly Hughes LAN Systems), a
networking company. From April 1993 to April 1995,
Mr. Gardner was Senior Vice President of Worldwide
Sales for UB Networks, a supplier of networking
systems.
</TABLE>
There are no family relationships among any directors or officers of
the Company.
Vote Required and Board of Directors Recommendation
Directors are elected by a plurality of votes cast. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE NAMED
NOMINEES.
Board of Directors Meetings and Committees
The Board of Directors of the Company held a total of six meetings
during 1999. No action was taken by written consent. No current director
participated in fewer than 75% of all such meetings and actions by the Board of
Directors, if any, and the committees, upon which such directors served, at the
time they were directors of the Company.
The Board of Directors has an Audit Committee and a Compensation
Committee. It does not have a Nominating Committee or a committee performing the
functions of a Nominating Committee. The functions of a Nominating Committee are
performed by the Board of Directors as a whole.
The Audit Committee of the Board of Directors recommends the engagement
of the Company's independent accountants, reviews and approves the scope of an
annual audit and other services performed by the independent accountants, and
reviews and evaluates the Company's accounting principles and its systems of
internal accounting controls. Mr. Penisten and Mr. Gardner are the members of
the Audit Committee. The Audit Committee had four meetings in 1999.
The Compensation Committee of the Board of Directors reviews and
approves the compensation policies applicable to the Company's executive
officers, and reviews and approves grants of stock options pursuant to the
Company's stock option plans. For 1999, the entire Board of Directors reviewed
and approved compensation for the Company's executive officer. No separate
meeting of the Compensation Committee was held in 1999.
Compensation of Directors
Directors who are not employees of the Company (an "Outside Director")
are entitled to receive a director fee of $3,750 per fiscal quarter so long as
they remain directors of the Company. Directors do not receive any additional or
special remuneration for their services on any of the committees established by
the Board of Directors.
An Outside Director is eligible to participate in the Company's 1994
Outside Directors Stock Option Plan (the "Outside Directors Plan"). The Outside
Directors Plan, as amended, provides for the automatic
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<PAGE>
granting of nonstatutory stock options to Outside Directors of the Company. Each
new Outside Director will be granted an option to purchase 15,000 shares of the
Company's Common Stock on the date of election. Each continuing Outside Director
will be granted an option to purchase 5,000 shares of Common Stock on the date
of each annual meeting of stockholders.
During 1999, the Company granted an option to purchase 5,000 shares of
Common Stock from the Outside Directors Plan to each Outside Director, including
Mr. Bell, Mr. Hart and Mr. Gardner. Mr. Gardner was also granted an option to
purchase 5,500 shares from the 1997 Stock Plan for his consulting services
rendered to the Company in 1999. No stock options were granted to Mr.
Rosenberger and Mr. Penisten in 1999.
OTHER INFORMATION
Share Ownership by Principal Stockholders and Management
The following table sets forth the beneficial ownership of the
Company's Common Stock as of March 10, 2000 by: (a) each director; (b) each of
the executive officers named in the Summary Compensation Table ("Named
Officers"); (c) all directors and executive officers as a group; and (d) each
person known to the Company who beneficially owns 5% or more of the outstanding
shares of its Common Stock. The number and percentage of shares beneficially
owned is determined under rules of the Securities and Exchange Commission
("SEC"), and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership includes
any shares as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within 60 days after March 10, 2000 through the exercise of any stock
option or other right. To the Company's knowledge, the persons named in the
following table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, subject to community
property laws where applicable and the information contained in the footnotes to
this table. A total of 15,804,197 shares of the Company's Common Stock were
issued and outstanding as of March 10, 2000.
Shares Beneficially Owned
Name of Beneficial Owner Number Percent
------------------------ ------ -------
Glenn Penisten(1) .................................. 446,925 2.7%
William F. Rosenberger(2) .......................... 212,166 1.3%
Robert Zecha(3) .................................... 70,000 *
Steve Bell(3) ...................................... 2,917 *
James Sullivan(3) .................................. 72,999 *
Charles Hart(3) .................................... 20,832 *
Wilson Cheung(4) ................................... 39,737 *
Michael Gardner (3) ................................ 16,332 *
Jerry McDowell(3) .................................. 49,050 *
All directors and executive officers as a group(5) . 930,958 5.6%
- ------------
* Represents less than 1%.
(1) Includes 426,667 shares issuable upon exercise of outstanding stock
options, which were exercisable at the Record Date or within 60 days
thereafter.
(2) Includes 209,166 shares issuable upon exercise of outstanding stock
options, which were exercisable at the Record Date or within 60 days
thereafter.
(3) Represents the number of shares issuable upon exercise of outstanding stock
options, which were exercisable at the Record Date or within 60 days
thereafter.
(4) Includes 39,687 shares issuable upon exercise of outstanding stock options,
which were exercisable at the Record Date or within 60 days thereafter.
(5) Includes 907,650 shares issuable upon exercise of outstanding stock
options, which were exercisable at the Record Date or within 60 days
thereafter.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
<TABLE>
The following table sets forth certain information concerning the
compensation of our Chief Executive Officer, and the four other most highly
compensated executive officers whose salary and bonus for the year ended
December 31, 1999 exceeded $100,000 (collectively "Named Officers").
<CAPTION>
Long-term
Compensation
Annual Compensation Awards
Name and ----------------------------------------- Securities Underlying
Principal Position Year Salary Bonus(1) Options(1)
- ------------------------ ------ ------------------- ------------------- -----------------------
<S> <C> <C> <C> <C>
William F. Rosenberger 1999 $ 250,000 $ 75,000 --
President and CEO 1998 $ 125,000 $ 50,000(2) 500,000
James Sullivan 1999 $ 246,086(3) -- 15,000
VP of Sales 1998 $ 253,574(3) -- 60,000
1997 $ 80,567(3) -- 100,000(4)
Jerry McDowell 1999 $ 180,000 -- --
VP of Marketing 1998 $ 27,346 -- 150,000
Robert Zecha 1999 $ 152,884 $ 62,500 10,000
VP of Research & 1998 $ 167,875 -- 20,000
Development
Wilson Cheung 1999 $ 131,669 $ 13,200 95,000(5)
VP of Finance and CFO 1998 $ 93,433 $ 23,925(6) 10,000
<FN>
- ------------
(1) From time to time, the Compensation Committee reviews the performance of an
executive officer and may award cash bonuses and/or stock options to an
officer.
(2) Bonus paid to Mr. Rosenberger in 1998 was pursuant to "sign-on" provisions
in the employment contract.
(3) Included in Mr. Sullivan's salaries are commissions of $96,086, $103,574
and $15,664 in 1999, 1998 and 1997, respectively.
(4) Option to purchase 50,000 shares was granted to Mr. Sullivan on October 31,
1997, replacing option to purchase 50,000 shares granted on July 7, 1997.
(5) Option to purchase 65,000 shares was granted to Mr. Cheung in 1999 based on
his appointment to the executive office.
(6) Bonus paid to Mr. Cheung in 1998 was based on performance relating to the
period prior to his appointment to the executive office.
</FN>
</TABLE>
6
<PAGE>
Option Grants in Last Fiscal Year
<TABLE>
The following table sets forth details regarding stock options granted to
the Named Officers in 1999. The Company granted no stock appreciation rights in
1999. In addition, in accordance with SEC rules, the table shows the
hypothetical gains or "option spreads" that would exist for the respective
options. These gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the full
option term. The actual value, if any, an executive may realize will depend on
the spread between the market price and the exercise price on the date the
option is exercised.
<CAPTION>
Individual Grants
-----------------------------------------------------
Potential Realizable Value at
Number of Percent of Assumed Annual Rates of
Securities Total Options Exercise Stock Price Appreciation for
Underlying Granted to or Base Option Term(1)
Options Employees in Price Expiration -------------------
Name Granted Fiscal Year Per Share Date 5%($) 10%($)
---- ------- ----------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
William F. Rosenberger -- -- -- -- -- --
James Sullivan 15,000 2.18% $ 14.37 4/29/09 $135,605 $343,651
Jerry McDowell -- -- -- -- -- --
Robert Zecha 10,000 1.45% $ 23.87 10/25/09 $150,149 $380,506
Wilson Cheung 30,000 4.36% $ 14.37 4/29/09 $271,211 $687,301
Wilson Cheung 65,000 9.44% $ 4.31 1/13/09 $176,287 $446,746
<FN>
- ------------
(1) The potential gain is calculated based on the fair market value of the
Company's Common Stock on the date of grant, which is equal to the closing
price reported on the Nasdaq National Market. These amounts only represent
certain assumed rates of appreciation as established by the SEC. Actual
gains, if any, on stock option exercises are dependent upon the future
performance of the Company and overall stock market conditions. There can
be no assurance that the amounts reflected in this table or the associated
rates of appreciation will be achieved.
</FN>
</TABLE>
Aggregated Option Exercises and Fiscal Year End Option Values
<TABLE>
The following table sets forth certain information concerning options
exercised by the Named Officers during 1999, including the aggregate value of
gains on the date of exercise. In addition, this table includes the number of
shares covered by both exercisable and unexercisable stock options as of
year-end. Also reported are the values for "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Company's Common Stock.
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired Options at Fiscal Year End Fiscal Year End(1)
On Value ------------------------------- -------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ ---------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William F. Rosenberger -- -- 187,500 312,500 $8,085,937 $13,476,562
James Sullivan -- -- 62,082 62,918 $2,707,782 $ 2,578,468
Jerry McDowell 7,200 $231,980 36,550 106,250 $1,631,044 $ 4,741,406
Robert Zecha 5,000 $161,178 71,665 73,335 $3,059,303 $ 2,932,885
Wilson Cheung 5,000 $190,927 8,956 106,044 $ 380,877 $ 4,254,123
<FN>
- ------------
(1) Market value of underlying securities, based on the closing price of the
Company's Common Stock, as reported by the Nasdaq National Market System,
on December 31, 1999 of $47.25, minus the exercise price.
</FN>
</TABLE>
7
<PAGE>
Employment Agreements and Change in Control Arrangements
In June 1998, the Company entered into an employment agreement with
William Rosenberger whereby Mr. Rosenberger agreed to become the Company's
President and Chief Executive Officer. Pursuant to the employment agreement, Mr.
Rosenberger receives an annual base salary of $250,000 and a signing bonus of
$50,000, and was granted a stock option to purchase 500,000 shares of the
Company's Common Stock with a four-year vesting period. If the Company
terminates Mr. Rosenberger without cause, or if a constructive termination
occurs following a change in control, as defined in the employment agreement,
Mr. Rosenberger shall become a non-officer employee of the Company for a period
of one year and, during this one-year period, shall receive (i) his then current
base salary and medical insurance coverage, and (ii) an accelerated vesting of
all stock options so that such options become immediately exercisable.
The Company has entered into salary continuation agreements with Joseph
Botta, Wilson Cheung, Jerry McDowell, James Sullivan and Robert Zecha. Each such
agreement provides that in the event such executive is terminated, including a
constructive termination or a termination within a specified time period around
a change in control, as those terms are defined in each agreement, the executive
shall be entitled to continued salary and bonus payments for a period of one
year. The executive shall also be entitled to continued medical coverage by the
Company during the period of salary contiuation unless the executive is covered
by another employer's group health plan. In addition, each agreement provides
that, in the event of a change of control, all stock options granted to that
executive shall become immediately exercisable.
The 1997 Stock Plan provides that the Board of Directors may, in its
sole discretion, accelerate the vesting and the ability to exercise options held
by executive officers in the event of a change of control of the Company.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
During 1999, no members of the Compensation Committee were officers or
employees of the Company or any of its subsidiaries.
The 1997 Stock Plan, as Amended
For the description of the 1997 Stock Plan, please refer to information
provided in Proposal 3.
Summary of the 1999 Stock Plan
The purpose of the 1999 Stock Plan (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 eligible employees (excluding officers
and directors) and consultants and by motivating such persons to contribute to
the Company's growth and profitability. A maximum of 500,000 of the authorized
but unissued or reacquired shares of Common Stock of the Company may be issued
under the 1999 Plan. The Board of Directors or a duly appointed committee of the
Board administers the 1999 Plan. Subject to the provisions of the 1999 Plan, the
Board determines the persons to whom awards are to be granted and all other
terms and conditions of the awards. An award, which may be a nonstatutory stock
option or a restricted stock, may be granted under the 1999 Plan to eligible
employees, excluding all officers and directors, and consultants of the Company.
The exercise price of a nonstatutory stock option granted under the 1999 Plan
may not be less than 85% of such fair market value. Options granted under the
1999 Plan 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. If a Change in Control occurs, as defined by the 1999
Plan, the Board may provide that any unexercisable or unvested portion of the
outstanding awards will become immediately exercisable and vested in full as of
a date determined by the Board and/or may arrange with the surviving, acquiring
or successor corporation or parent corporation thereof to either assume the
Company's rights and obligations under the outstanding awards or substitute
substantially equivalent awards for such corporation's stock. 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 1999 Plan have been
8
<PAGE>
issued and all restrictions on such shares under the terms of the 1999 Plan and
the agreements evidencing awards granted under the 1999 Plan have lapsed. The
Board may terminate or amend the 1999 Plan at any time.
Compliance with Section 16(a) of the Exchange Act
The Company believes that, under the SEC's rules for reporting of
securities transactions by directors and officers, all required reports were
timely filed during 1999, except that Joseph Botta, a Company's executive
officer, was delinquent in filing Form 3.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of
non-employee directors. The Compensation Committee is responsible for setting
and administering policies governing compensation of executive officers. The
Compensation Committee reviews the performance and compensation levels for
executive officers, sets salary and bonus levels and makes option grants under
the Company's 1997 Option Plan.
Compensation Policies
The goals of the Company's executive officer compensation policies are
to attract, retain and reward executive officers who contribute to the Company's
success, to align executive officer compensation with the Company's performance
and to motivate executive officers to achieve the Company's business objectives.
The Company uses salary, bonuses and stock options to achieve these goals. The
Compensation Committee reviews various available data, including compensation
surveys, to enable the Compensa-tion Committee to compare the Company's
compensation package with that of other high technology companies of similar
size and growth rates in the Company's geographic area.
Compensation Components
Salaries are set for each executive officer with reference to a range
of salaries for comparable positions among high technology companies of similar
size, growth rate and location. Annual salary adjustments take into account
achievements of individual executive officers during the prior fiscal year as
measured against key Company-wide objectives set each year by the Board of
Directors, as well as the executive officers' performance of their individual
responsibilities. Each Compensation Committee member weighs objective and
subjective performance factors and a consensus is obtained through discussion.
The Compensation Committee also considered relative levels of responsibility
among executive officers in attempting to reach equitable and appropriate
projected compensation levels.
Cash incentive compensation is provided through participation in the
Company's executive bonus plan. The Compensation Committee determines the amount
of an individual's bonus based on subjective judgment of the Company's financial
performance and the achievement of established goals. Performance bonuses of
$75,000, $62,500 and $13,200 were paid to William Rosenberger, Robert Zecha and
Wilson Cheung, respectively, in 1999.
The Compensation Committee strongly believes that equity ownership by
executive officers provides incentives to build stockholder value and aligns the
interests of executive officers with the stockholders. The size of an initial
option grant to an executive officer has generally been determined with
reference to comparable equity compensation offered by high technology companies
of similar size for similar positions, the responsibilities and expected future
contributions of the executive officer, as well as recruitment considerations.
In determining the size of subsequent grants, the Compensation Committee has
considered the individual executive officer's performance during the previous
fiscal year, the expected contributions during the coming year, the amount of
options already held and the level of recent grants. Stock options granted to
executive officers during 1999 were based upon available data concerning option
grants to executive officers of companies of similar size, growth and location
and a review of recent grants. The Compensation Committee believes that future
subsequent option grants, with vesting schedules of up to four years, will
provide strong incentives for executive officers to remain with the Company.
9
<PAGE>
Chief Executive Officer Compensation
The Compensation of the Chief Executive Officer is based upon the same
criteria outlined above for the other executive officers of the Company. While
the Chief Executive Officer makes recommendations about the compensation levels,
goals and performance of the other executive officers, he does not participate
in the discussions regarding his compensation or performance.
Qualifying Compensation
The Compensation Committee has considered the potential impact of
Section 162(m) of the Internal Revenue Code ("Section 162(m)") adopted under the
Federal Revenue Reconciliation Act of 1993. Section 162(m) disallows a tax
deduction for any publicly held corporation for certain executive officers'
compensation exceeding $1 million per person in any taxable year unless it is
"performance based" within the meaning of Section 162(m). Since to date the cash
compensation plus restricted stock vesting of each of the Company's executive
officers has been below the $1 million threshold and since the Committee
believes that any options granted under the Company's option plan will meet the
requirement of being performance-based under the provisions of Section 162(m),
the Committee believes that Section 162(m) will not reduce the tax deduction
available to the Company for fiscal year 1999 or prior years. The Company's
policy is, to the extent reasonable, to qualify its executive officers'
compensation for deductibility under the applicable tax laws.
10
<PAGE>
STOCK PERFORMANCE GRAPH
<TABLE>
The graph below compares the cumulative total return on the Company's
Common Stock since the initial public offering in June 1994 to the CRSP Total
Return Index for the Nasdaq Stock Market (U.S. companies), an indicator of broad
market performance, and the CRSP Total Return Index for the Nasdaq Computer
Manufacturer Stocks (SIC 357), an indicator of the market performance of this
sector. The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
[GRAPH OMITTED]
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
<CAPTION>
6/94 12/94 12/95 12/96 12/97 12/98 12/99
------ ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NPI $100 $436 $188 $284 $116 $ 72 $ 756
Nasdaq Stock Market (U.S.) $100 $107 $151 $186 $228 $321 $ 584
Nasdaq Comp. Mfg. $100 $140 $220 $295 $357 $773 $1,631
</TABLE>
The graph assumes $100 invested on June 28, 1994 in the Company's
Common Stock and in each index listed above, and reinvestment of dividends.
Dividends have never been declared on the Com-pany's Common Stock. Data points
are as of the last business day of the respective month starting December 1994.
11
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK OF
THE COMPANY
On March 1, 2000, the Board of Directors authorized an amendment to the
Company's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock, $0.001 par value per share, from 20,000,000
to 60,000,000. The Company's Restated Certificate of Incorporation currently
authorizes the issuance by the Company of up to 20,000,000 shares of Common
Stock, $0.001 par value per share, and 2,000,000 shares of Preferred Stock,
$0.001 par value per share (the "Preferred Shares"). As of March 10, 2000, there
were approximately 15,804,200 shares of Common Stock issued and outstanding,
approximately 3,387,500 shares of Common Stock reserved for issuance under
various stock plans of the Company and approximately 808,300 shares of Common
Stock remaining available for future issuance. No Preferred Shares are issued or
outstanding. There are no preemptive rights with respect to the Company's Common
Stock. The Board of Directors believes that the proposed increase is desirable
so that, as the need may arise, the Company will have more flexibility to issue
shares of Common Stock in connection with future opportunities for expanding the
business through investments or acquisitions, possible future stock dividends or
stock splits, and for other general corporate purposes. Recently, the market
price of the Company's Common Stock has been at historically high levels. Should
the market price continue to increase, the Company will consider a stock split
in the form of a stock dividend, subject to the Restated Certificate of
Incorporation being amended to create a sufficient amount of authorized shares.
Other than the foregoing, the Company has no specified use planned for the
additional shares being proposed for authorization under this amendment.
Authorized but unissued shares of the Company's Common Stock may be issued at
such times, for such purposes and for such consideration as the Board of
Directors may determine to be appropriate without further authority from the
Company's stockholders, except as otherwise required by applicable law or Nasdaq
Stock Market policies. The increase in authorized Common Stock will not have any
immediate effect on the rights of existing stockholders. To the extent that the
additional authorized shares are issued in the future, they will decrease the
existing stockholders' percentage equity ownership; depending upon the price at
which they are issued, they could be either dilutive or nondilutive to the
existing stockholders. The increase in the authorized number of shares of Common
Stock and the subsequent issuance of such shares could have the effect of
delaying or preventing a change in control of the Company without further action
by the stockholders. Shares of authorized and unissued Common Stock could
(within the limits imposed by applicable law) be issued in one or more
transactions which would make a change in control of the Company more difficult,
and therefore less likely. Any such issuance of additional stock could have the
effect of diluting the earnings per share and book value per share of
outstanding shares of Common Stock, and such additional shares could be used to
dilute the stock ownership or voting rights of a person seeking to obtain
control of the Company. The proposal to increase the authorized Common Stock of
the Company is not in response to any offer, solicitation on proposal to merge,
combine or otherwise acquire control by a third party.
Vote Required and Board of Directors Recommendation
The affirmative vote of a majority of all outstanding shares of Common
Stock of the Company is required for approval of this proposal. Abstentions and
broker non-votes will each have the same effect as a negative vote on this
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL
TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK FROM 20,000,000 SHARES
TO 60,000,000 SHARES.
12
<PAGE>
PROPOSAL 3
APPROVAL OF AMENDMENT OF 1997 STOCK PLAN
As of February 29, 2000, only 113,800 shares remained available for
future option grants under the Company's 1997 Stock Plan (the "1997 Plan"),
which amount the Board of Directors believes to be insufficient to satisfy the
Company's anticipated equity incentive objectives. Accordingly, in March 2000,
the Board of Directors approved, subject to stockholder approval, the
reservation of an additional 1,000,000 shares for issuance under the 1997 Plan.
The Internal Revenue Code of 1986, as amended (the "Code") limits the amount of
compensation paid to a corporation's chief executive officer and four other most
highly compensated officers which may be deductible as an expense for federal
income tax purposes. The stockholders are now being asked to approve the
increase from 2,500,000 to 3,500,000 in the maximum aggregate number of shares
that may be issued under the 1997 Plan. The Board of Directors believes that
approval of this amendment is in the best interests of the Company and its
stockholders because the availability of an adequate stock option program is an
important factor in attracting, motivating and retaining qualified officers,
employees and consultants essential to the success of the Company and in
aligning their long-term interests with those of the stockholders.
Description of the 1997 Plan
The following summary of the 1997 Plan, as amended, is qualified in its
entirety by the specific language of the 1997 Plan, a copy of which is available
to any stockholder upon request.
General
The 1997 Plan provides for the grant of incentive stock options within
the meaning of section 422 of the Code and nonstatutory stock options. As of
February 29, 2000, options to purchase 218,700 shares of Common Stock granted
pursuant to the 1997 Plan had been exercised, options to purchase an aggregate
of 2,167,500 shares were outstanding, and 113,800 shares of Common Stock
remained available for future grants under the 1997 Plan. In addition to the
1997 Plan, the Company maintains the 1994 Outside Directors Stock Option Plan
(the "1994 Plan") and the 1999 Stock Plan (the "1999 Plan"). Under the 1994
Plan, an aggregate of 150,000 shares of the Company's Common Stock may be
issued. The 1994 Plan provides for the grant of nonstatutory stock options to
non-employee directors of the Company. As of February 29, 2000, options to
purchase 10,400 shares of Common Stock granted pursuant to the 1994 Plan had
been exercised, options to purchase an aggregate of 49,600 shares were
outstanding, and 90,000 shares of Common Stock remained available for future
grants under the 1994 Plan. Under the 1999 Plan, an aggregate of 500,000 shares
of the Company's Common Stock may be issued. The 1999 Plan provides for the
grant of nonstatutory stock options to employees and consultants of the Company
(excluding officers and directors of the Company). As of February 29, 2000, no
options to purchase shares of Common Stock granted pursuant to the 1999 Plan had
been exercised, options to purchase an aggregate of 112,600 were outstanding,
and 387,400 shares of Common Stock remained available for future grants under
the 1999 Plan.
Upon adoption of the 1997 Plan in April 1997, the Company terminated
the 1993 Stock Option Plan (the "1993 Plan") and the 1996 Nonstatutory Stock
Option Plan (the "1996 Plan"). Options are no longer granted under these two
plans. As of February 29, 2000, 1,397,100 shares of Common Stock granted under
the 1993 Plan have been exercised, and 42,100 shares of Common Stock granted
under the 1996 Plan have been exercised. Furthermore, options to purchase an
aggregate of 418,800 shares of Common Stock were outstanding under the 1993
Plan, and options to purchase an aggregate of 47,800 shares of Common Stock were
outstanding under the 1996 Plan.
Shares Subject to Plan
The Board of Directors has amended the 1997 Plan, subject to
stockholder approval, to increase by 1,000,000 the maximum number of authorized
but unissued or reacquired shares of the Company's Common Stock issuable
thereunder to an aggregate of 3,500,000. In the event of any stock dividend,
stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments will be made to the shares subject to the 1997 Plan,
13
<PAGE>
to the Grant Limit and to outstanding options. To the extent any outstanding
option under the 1997 Plan expires or terminates prior to exercise in full or if
shares issued upon exercise of an option are repurchased by the Company, the
shares of Common Stock for which such option is not exercised or the repurchased
shares are returned to the 1997 Plan and become available for future grant.
Administration
The 1997 Plan is administered by the Board of Directors or a duly
appointed committee of the Board of Directors (hereinafter referred to as the
"Board"). With respect to the participation of individuals whose transactions in
the Company's equity securities are subject to Section 16 of the Securities
Exchange Act of 1934 (the "Exchange Act"), the 1997 Plan must be administered in
compliance with the requirements, if any, of Rule 16b-3 under the Exchange Act.
Subject to the provisions of the 1997 Plan, the Board 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 terms of exercisability of each option and the vesting of the
shares acquired, including the effect thereon of an optionee's termination of
service, the exercise price and type of consideration to be paid to the Company
upon exercise of an option, the duration of each option, and all other terms and
conditions of the options. Subject to certain limitations, the 1997 Plan
provides 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 1997 Plan. The Board will interpret the 1997 Plan and
options granted thereunder, and all determinations of the Board will be final
and binding on all persons having an interest in the 1997 Plan or any option.
Eligibility
All employees, consultants and directors of the Company are eligible to
participate in the 1997 Plan. In addition, options may be granted to prospective
employees, consultants and directors in connection with written offers of
employment or engagement. However, any such options may not become exercisable
prior to such individual's commencement of service. As of February 29, 2000, the
Company had approximately 150 employees, including six executive officers and
five directors. Any person eligible under the 1997 Plan may be granted a
nonstatutory option. However, only employees may be granted incentive stock
options. Subject to stockholder approval, no employee may be granted, in any
fiscal year, options under the 1997 Plan for more than 500,000 shares of the
Company's Common Stock.
Terms and Conditions of Options
Each option granted under the 1997 Plan is 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 1997 Plan. The exercise price per share
must equal at least the fair market value of a share of the Company's Common
Stock on the date of grant of an incentive stock option and at least 85% of the
fair market value of a share of the Common Stock on the date of grant of a
nonstatutory stock option. The exercise price of 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 be at least 110% of the fair market value of a share of the Company's
Common Stock on the date of grant. On March 17, 2000, the closing price of a
share of the Company's Common Stock was $49.00, as reported on the Nasdaq
National Market. Generally, the exercise price may be paid in cash, by check, or
in cash equivalent, by tender of shares of the Company's Common Stock owned by
the optionee having a fair market value not less than the exercise price, by the
assignment of the proceeds of a sale or loan with respect to some or all of the
shares of Common Stock being acquired upon the exercise of the option, by means
of a promissory note, by any other lawful consideration approved by the Board or
by any combination of these. The Board may restrict the forms of payment
permitted in connection with any option grant. Options granted under the 1997
Plan will become exercisable and vested at such times and subject to such
conditions as specified by the Board. Generally, options granted under the 1997
Plan are exercisable on and after the date of grant, subject to the Company's
right to reacquire at the optionee's exercise price any unvested shares held by
the optionee upon termination of employment or service with the Company or if
the optionee attempts to transfer any
14
<PAGE>
unvested shares. Shares subject to options generally vest in installments
subject to the optionee's continued employment or service. The maximum term of
incentive stock options granted under the 1997 Plan is ten years, except that an
incentive stock option granted to a Ten Percent Stockholder may not have a term
longer than five years. Consistent with the Code, the 1997 Plan does not limit
the term of nonstatutory stock options granted under the 1997 Plan. Stock
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.
Transfer of Control
The 1997 Plan provides that in the event of (i) a sale or exchange by
the stockholders of more than 50% of the Company's voting stock, (ii) a merger
or consolidation to 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, wherein the stockholders of the
Company immediately before any such event do not retain direct or indirect
beneficial ownership of more than 50% of the total combined voting power of the
voting stock of the Company, its successor, or the corporation to which the
assets of the Company were transferred (a "Transfer of Control"), the Board may
provide that any unexercised or unvested portion of the outstanding options may
be immediately exercisable and vested in full as of a date determined by the
Board and/or may arrange with the surviving, continuing, purchasing or successor
corporation or parent corporation thereof (the "Acquiring Corporation") to
assume or substitute substantially equivalent new options for the options
outstanding under the 1997 Plan. To the extent that the options outstanding
under the 1997 Plan are not assumed, replaced, or exercised prior to such event,
they will terminate.
Termination or Amendment
The 1997 Plan currently provides that, unless sooner terminated, no
incentive stock options may be granted under the 1997 Plan after February 18,
2007. The Board may terminate or amend the 1997 Plan at any time, but, without
stockholder approval, the Board may not amend the 1997 Plan to increase the
total number of shares of Common Stock reserved for issuance thereunder, change
the class of persons eligible to receive incentive stock options, or expand the
class of persons eligible to receive nonstatutory stock options. No amendment or
termination of the Plan may adversely affect an outstanding option without the
consent of the optionee, unless the amendment is required to preserve the
option's status as an incentive stock option or is necessary to comply with any
applicable law or regulation.
Summary of Federal Income Tax Consequences of the 1997 Plan
The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law of participation
in the 1997 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 the result of the grant or exercise of an incentive stock option
qualifying under section 422 of the Code. Optionees who do not dispose of their
shares for two years following the date the option was granted nor within one
year following the exercise of the option will normally recognize a mid-term or
long-term 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 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 from the date of
exercise (a "disqualifying disposition"), the difference between the fair market
value of the shares on the exercise date 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. A capital gain or loss will be
mid-term or long-term if the optionee's holding period is more than 12 months.
Any ordinary income recognized by the optionee upon the disqualifying
disposition of
15
<PAGE>
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 or the regulations thereunder. The difference between the
option exercise price and the fair market value of the shares on the exercise
date of an incentive stock option is 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. Nonstatutory stock options have 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
exercise date. If the optionee is an employee, such ordinary income generally is
subject to withholding of income and employment taxes. 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
exercise date, will be taxed as capital gain or loss. A capital gain or loss
will be mid-term or long-term if the optionee's holding period is more than 12
months. No tax deduction is available to the Company with respect to the grant
of a nonstatutory 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 option, except to the extent such deduction is limited by
applicable provisions of the Code or the regulations there under.
New Plan Benefits and Additional Information
The future grant of options under the 1997 Plan will be made at the
discretion of the Board, and, accordingly, are not yet determinable. In
addition, benefits under the 1997 Plan will depend on a number of factors,
including the fair market value of the Company's Common Stock on future dates
and the exercise decisions made by the optionees. Consequently, it is not
possible to determine the benefits that might be received by optionees receiving
discretionary grants under the 1997 Plan. The numbers of shares of Common Stock
subject to options granted under the 1997 Plan to certain persons during the
year ended December 31, 1999 are as follows: Messrs. Botta and Cheung were
granted options to purchase 85,000 shares and 95,000 shares, respectively; all
current executive officers as a group were granted options to purchase an
aggregate of 205,000 shares; and all current employees, including officers who
are not executive officers, as a group were granted options to purchase an
aggregate of 468,600 shares. No person, other than those individuals set forth
above, was granted five percent or more of the total amount of options granted
under the 1997 Plan during such fiscal year.
Vote Required and Board of Directors Recommendation
The affirmative vote of a majority of the votes cast on the proposal at
the Annual Meeting of Stockholders, at which a quorum representing a majority of
all outstanding shares of Common Stock of the Company is present, either in
person or by proxy, is required for approval of this proposal. Votes for and
against, abstentions and broker non-votes will each be counted as present for
purposes of determining the presence of a quorum. Abstentions and broker
non-votes will have no effect on the outcome of this vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF
AN INCREASE BY 1,000,000 IN THE MAXIMUM AGGREGATE NUMBER OF SHARES ISSUABLE
UNDER THE OPTION PLAN AND THE ESTABLISHMENT OF THE GRANT LIMIT.
16
<PAGE>
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
independent accountants to audit the financial statements of the Company for the
fiscal year ending December 31, 2000. PricewaterhouseCoopers has audited the
Company's financial statements since 1989. A representative of
PricewaterhouseCoopers is expected to be present at the Annual Meeting with the
opportunity to make a statement if he or she so desires, and is expected to be
available to respond to appropriate questions.
Vote Required and Board of Directors Recommendation
The affirmative vote of a majority of the votes present or represented
by proxy and entitled to vote at the Annual Meeting of Stockholders, at which a
quorum representing a majority of all outstanding shares of Common Stock of the
Company is present, either in person or by proxy, is required for approval of
this proposal. Abstentions and broker non-votes will each be counted as present
for purposes of determining the presence of a quorum. Abstentions will have the
same effect as a negative vote on this proposal. Broker non-votes will have no
effect on the outcome of this vote.
The Board of Directors has conditioned its appointment of the Company's
independent accountants upon the receipt of the affirmative vote. In the event
that the stockholders do not approve the selection of PricewaterhouseCoopers,
the Board of Directors will reconsider the appointment of the independent
accountants.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters are properly brought before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares they
represent as the Board of Directors may recommend.
It is important that your shares be represented at the meeting,
regardless of the number of shares, which you hold. You are, therefore, urged to
complete, date, execute and return, at your earliest convenience, the
accompanying proxy card in the envelope, which has been enclosed.
THE BOARD OF DIRECTORS
Dated: March 24, 2000
17
<PAGE>
SKU #1334-PS-00
<PAGE>
APPENDIX A
PROXY
NETWORK PERIPHERALS INC.
Proxy For Annual Meeting of Stockholders to be held April 25, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Network Peripherals Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, and hereby appoints William Rosenberger and
Wilson Cheung, 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 Annual Meeting of Stockholders of Network
Peripherals Inc. to be held on April 25, 2000, at 11:00 a.m., local time, and at
any adjournment or adjournments 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 below.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" THE PROPOSALS SET FORTH ON
THE REVERSE SIDE.
Please fill in, date, sign and mail this proxy in the enclosed postage-paid
return envelope.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
DETACH HERE
[ X ] Please mark
votes as in
this example.
1. To elect two Class III directors of
the Company to serve for the
ensuing three year term and until
their successors are duly elected
Nominees: (01) Glenn Penisian and
(02) Charles Hart
FOR WITHHELD
[ ] [ ]
[ ] ______________________________________
For all nominees except as noted above
2. To approve an amendment to the FOR AGAINST ABSTAIN
Company's Restated Certificate of [ ] [ ] [ ]
Incorporation to increase the
number of authorized shares of the
Company's Common Stock to issue
from 20,000,000 share to 60,000,000
shares.
3. To approve an amendment to the FOR AGAINST ABSTAIN
Company's 1997 Stock Plan to [ ] [ ] [ ]
increase the number of shares of
Common Stock reserved for issuance
thereunder by 1,000,000 shares.
4. To ratify the appointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP as [ ] [ ] [ ]
Independent accountants for the
Company for the fiscal year ending
December 31, 2000.
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
MARK IF YOU PLAN TO ATTEND THE MEETING. [ ]
Please sign exactly as your name appears hereon. If stock is held jointly, each
holder should sign. If signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give full title.
Signature_____________ Date:___________ Signature____________ Date:_____________
