SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
NETWORK COMPUTING DEVICES, INC.
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(Name of Registrant as Specified In Its Charter)
NETWORK COMPUTING DEVICES, INC.
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(Name of Person(s) Filing Proxy Statement)
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 transaction
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applies:
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amount on which the filing fee is calculated and state how
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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
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April 30, 2001
TO OUR SHAREHOLDERS:
Accompanying this Proxy Statement and Notice of Annual Meeting of
Shareholders is the 2000 Annual Report and Form 10-K of Network Computing
Devices, Inc.
During 2000, NCD had sharply lower revenues of $49.3 million and a full-year
net loss of $32.7 million, or $1.96 per share. The loss includes charges
totaling $7.2 million, primarily for restructuring but also for writing off
acquisition-related in-process research and development. Last year's figures
compare unfavorably with 1999's results, when NCD was also unprofitable and had
a net loss of $16.1 million, or $0.99 per share, on revenues of $108.9 million.
Somewhat obscured by these results are the positive steps management took,
beginning early last year, to confront seemingly intractable product and
operating issues, as we sought to turn the company around. We addressed the
expected, serious and irreversible erosion of our traditional X-terminals
business, and we also halted our expensive initiatives to develop new,
stand-alone software for emerging thin client markets.
These strategic decisions meant that early, intensive action had to be taken
to stop the bleeding and eliminate all unnecessary operating expenses. Also, as
it became clear that none of the strategic mergers or acquisitions we were
exploring was likely to materialize, we restructured our operations and sharply
reduced the workforce. We also began to redirect marketing and sales toward more
viable, growing markets where we believe we can now compete for profitable
business.
As 2000 ended and 2001 began, we started to see some early tangible results
from these measures. By the end of the fourth quarter, we had completely
reconstituted the company, rebuilt relationships and forged new ones with key
software and hardware allies, reaffirmed commitments from our lenders to make
improvements to the balance sheet, and ended the year essentially trending
towards a cash positive position. In other words, despite understandable
skepticism in the investment community, NCD survived 2000 and now looks forward
to continuing to rebuild and revitalize itself.
Naturally, some things are not within our control. There continues to be
unpredictability regarding the timing and extent of the penetration and
acceptance of thin client products in large corporate information systems.
Forecasts from leading industry analysts suggest that thin client represents a
reasonable and growing niche market for products such as Windows-based
terminals, network computers and information appliances for enterprise
customers. These trends play to NCD's strengths and help define our outstanding
line of thin client products and systems. Accordingly, we believe we are now
positioned well enough, are lean enough and tough enough to take a share of the
thin client business that can help move this company back on the road to
profitability.
That is our challenge in 2001 and the years ahead, and we look forward
reporting on it regularly as we strive to make further progress.
Sincerely,
RUDOLPH G. MORIN
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 30, 2001
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders 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 30, 2001, at 10:00 a.m. for the following purposes:
1. To elect four (4) members of the Board of Directors to serve for the
ensuing year and until their successors are duly elected and qualified.
2. To ratify the selection of BDO Seidman, LLP as independent auditors of
the Company for the current fiscal year.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on April 23, 2001, are
entitled to notice of and to vote at the meeting. The transfer books will not be
closed. For ten days prior to the meeting, a complete list of stockholders
entitled to vote at the meeting will be available for examination by any
stockholder, for any purpose relating to the meeting, during ordinary business
hours at the Company's principal offices located at 301 Ravendale Drive,
Mountain View, California.
All stockholders 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 stockholder 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 30, 2001
NETWORK COMPUTING DEVICES, INC.
301 RAVENDALE DRIVE
MOUNTAIN VIEW, CALIFORNIA 94043
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
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 Stockholders to be held Wednesday, May 30, 2001 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 Stockholders. 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 30, 2001 to
all stockholders entitled to vote at the Annual Meeting.
RECORD DATE
Stockholders of record at the close of business on April 23, 2001 are
entitled to notice of, and to vote at, the Annual Meeting. At the record date,
17,613,237 shares of the Company's Common Stock, $.001 par value, and 220,000 of
Series B Preferred Stock, $.001 par value, were issued and outstanding, all of
which are entitled to vote with respect to all matters to be acted upon at the
Annual Meeting. Each stockholder of record as of that date is entitled to one
vote for each share of Common Stock held by him or her and 10 votes for each
share of Series B Preferred Stock held by him or her. The Company's Bylaws
provide that a majority of all of the shares of stock entitled to vote, whether
present in person or represented by proxy, shall constitute a quorum for the
transaction of business at the meeting. Votes for and against, abstentions and
"broker non-votes" will each be counted as present for purposes of determining
the presence of a quorum.
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
All valid proxies received before the meeting will be exercised. All shares
represented by a proxy will be voted, and where a proxy specifies a
stockholder's choice with respect to any matter to be acted upon, the shares
will be voted in favor of the proposal. A stockholder giving a proxy has the
power to revoke his or her proxy at any time before it is exercised by
delivering to the Secretary of the Company a written instrument revoking the
proxy or a duly executed proxy with a later date, or by attending the meeting
and voting in person.
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 stockholders. The Company has
retained the services of Mellon Investor Services, L.L.C. ("Mellon") 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. Mellon 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.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
The Company's bylaws require advance notice of any stockholder proposals to
be brought before a stockholders' 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 stockholder 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 stockholders in connection with the previous year's annual meeting
of stockholders, 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 stockholder 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 public
disclosure of such date was made.
Accordingly, proposals of stockholders intended to be presented at the 2002
Annual Meeting of Stockholders must be received by the Company no later than
December 31, 2001. 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 four (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 (4) nominees named below, all of whom are currently directors of
the Company. Two current directors, Stephen MacDonald and Guenther Pfaff, will
not be standing for election. 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 (4) 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
Stockholders or until such time as his successor has been duly elected and
qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES NAMED BELOW.
The names of the Company's nominees for director and certain information
about them are set forth below.
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- --------------- --- -------------------- -----
Rudolph G. Morin.................. 63 President and Chief Executive Officer of the 1998
Company
Robert G. Gilbertson.............. 59 Independent Consultant 1996
Douglas H. Klein.................. 46 Vice President of Operations of Packet Design, 1998
Inc.
Michael Ledbetter................. 50 Corporate Asset and Risk Manager of SCI Systems, 2001
Inc.
2
Mr. Morin has served as President and Chief Executive Officer and as a
member of our Board of Directors since August 1999. From May 1996 to
August 1999, Mr. Morin served as Executive Vice President, Operations & Finance
and Chief Financial Officer of the Company. Prior to joining us, Mr. Morin
served as Senior Vice President, Finance and Administration for Memorex Telex
Corporation from 1993 to 1996. Prior thereto, he was Executive Vice President of
Data Switch Corporation. 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
from Harvard University.
Mr. Gilbertson has served as Chairman of the Board since August 1999. From
May 1996 to August 1999, Mr. Gilbertson served as President and Chief Executive
Officer of the Company. Prior to joining us, Mr. Gilbertson served as Chairman
of Avidia Systems, Inc., a manufacturer of ATM switching systems, and also as
President and Chief Executive Officer of CMX Systems, Inc., a manufacturer of
precision measurement and positioning products from 1993 to 1996.
Mr. Gilbertson has also 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. Gilbertson holds an MBA from the University of
Chicago.
Mr. Klein has served on our Board of Directors since March 1998. Since
May 2001, Mr. Klein has served as Vice President of Operations of Packet
Design, Inc., a privately-held developer of IP services technologies. From
January 1998 to April 2000, Mr. Klein 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 with the Company in various
capacities, most recently as our Chief Technical Officer from June 1996 to
December 1997. Mr. Klein holds a BSME from the University of Cincinnati and an
MSME from the California Institute of Technology.
Mr. Ledbetter has served on our Board of Directors since April 2001. Since
1990, Mr. Ledbetter has served as Corporate Asset and Risk Manager of SCI
Systems, Inc., a global Electronic Manufacturing Service (EMS) provider. Prior
to his employment at SCI, Mr. Ledbetter's experience included various senior
management positions in the banking, financial, and manufacturing industries.
Mr. Ledbetter has also served as the Managing Director of Ledbetter Investment
Corporation, a privately held company, since 1998. Mr. Ledbetter holds a BS in
Accounting and an MBA and PHD in Economics from the University of Georgia.
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 eight (8) meetings during the
year ended December 31, 2000. The Board of Directors has an Audit 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, 2000, no director attended fewer than 90% 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. 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 three (3) meetings during the fiscal year
ended December 31, 2000.
The Compensation and Stock Committee of the Board of Directors (the
"Compensation Committee") currently consists 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 and 1999 Non-Statutory
Stock Option Plan. The Compensation Committee acted several times by unanimous
written consent, but did not hold any meetings during the fiscal year ended
December 31, 2000.
3
PRINCIPAL STOCKHOLDERS 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 stockholder 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 each nominee for director and
(iv) all executive officers and directors as a group, as of March 30, 2001.
NUMBER OF SHARES
NAME AND ADDRESS OWNED (1) PERCENT (2)
- ---------------- ---------------- -----------
Guenther Pfaff (3).......................................... 4,000,500 19.6%
Underbachstrasse 22
CH-6318 Walchwil, Switzerland
SCI Technology, Inc. (4).................................... 3,300,000 15.8%
2101 West Clinton Avenue
Huntsville, Alabama 35805
Tektronics, Inc. (5)........................................ 1,750,000 9.4%
P.O. Box 500, MS 55-722
Beaverton, Oregon 97077
Alan Andreini (6)........................................... 1,171,600 6.7%
395 Hudson Street
New York, New York 10014
Kiskiminetas Springs School (7)............................. 1,036,800 5.9%
1888 Brett Lane
Saltsburg, PA 15681
Rudolph G. Morin (8)........................................ 433,910 2.4%
Robert G. Gilbertson (9).................................... 722,894 3.9%
Douglas H. Klein (10)....................................... 179,418 1.0%
Stephen A. MacDonald (11)................................... 56,875 *
Michael A. Garner (12)...................................... 18,750 *
Michael Ledbetter (13)...................................... 0 *
Gregory S. Wood (14)........................................ 0 *
John DeSantis (15).......................................... 17,192 *
Directors and executive officers as a group 5,429,539 24.9%
(9 persons) (16)..........................................
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* Less than 1%
(1) The persons or entities named in the table above 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 to the information contained in the footnotes to this table.
(2) Calculated on the basis of 17,613,237 shares of Common Stock outstanding as
of March 30, 2001, except that shares of Common Stock underlying options,
warrants and convertible notes exercisable or convertible within 60 days of
March 30, 2001 are deemed outstanding for purposes of calculating the
beneficial ownership of Common Stock of the holders of such options.
(3) Includes shares of Series B Preferred Stock that are convertible into
2,200,000 shares of Common Stock and a warrant that is exercisable for
600,000 shares of Common Stock.
4
(4) Consists of shares issuable upon conversion of a $3.3 million convertible
note.
(5) Includes a warrant to purchase 1,000,000 shares which is currently
exercisable.
(6) Based on a Schedule 13G Amendment filed by Alan Andreini on February 14,
2000 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.
(7) 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, 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.
(8) Includes 417,500 shares of Common Stock that may be acquired upon exercise
of options that are currently exercisable or will become exercisable within
60 days after March 30, 2001.
(9) Includes 702,500 shares of Common Stock that may be acquired upon exercise
of options that are currently exercisable or will become exercisable within
60 days after March 30, 2001.
(10) Includes 172,250 shares of Common Stock that may be acquired upon exercise
of options that are currently exercisable or will become exercisable within
60 days after March 30, 2001.
(11) Consists of 56,875 shares of Common Stock that may be acquired upon
exercise of options that are currently exercisable or will become
exercisable within 60 days after March 30, 2001.
(12) Consists of 18,750 shares of Common Stock that may be acquired upon
exercise of options that are currently exercisable or will become
exercisable within 60 days after March 31, 2001.
(13) Excludes shares held of record by SCI Technology, Inc. Mr. Ledbetter is the
Corporate Asset and Risk Manager of SCI Systems, Inc., of which SCI
Technology, Inc. is a division, but disclaims beneficial ownership of such
shares.
(14) Mr. Wood's employment with the Company terminated in November 2000.
(15) Mr. DeSantis' employment with the Company as its Senior Vice President of
Sales and Marketing terminated in April 2000.
(16) Includes 1,367,875 shares of Common Stock that may be acquired upon
exercise of options that are currently exercisable or will become
exercisable within 60 days after March 30, 2001. Also includes
5
shares of Series B Preferred Stock that are convertible into 2,200,000
shares of Common Stock and a warrant that is exercisable for 600,000 shares
of Common Stock. See footnote 3.
SECTION 16(a) 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, 2000, except for one late Form 3 filed by
Mike Garner reporting his initial of beneficial ownership as of November 2000,
one late Form 5 filed by Robert Gilbertson reporting his annual change in
beneficial ownership for the fiscal year ended December 31, 2000, one late
Form 5 filed by Rudy Morin reporting his annual change in beneficial ownership
for the fiscal year ended December 31, 2000, and one late Form 5 filed by Doug
Klein reporting his annual change in beneficial ownership for the fiscal year
ended December 31, 2000.
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
our two other most highly compensated executive officers (determined as of
December 31, 2000) (collectively, the "Named Officers") for the fiscal years
ended December 31, 1998, 1999 and 2000.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- ----------------
STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS OPTIONS (SHARES) COMPENSATION
- --------------------------- -------- ---------- -------- ---------------- ------------
Rudolph G. Morin (2).............. 2000 $325,000 $ -- 100,000 $ 7,200(3)
President and Chief Executive 1999 298,333 50,000 85,000 7,200(3)
Officer 1998 276,667 -- -- 14,267(3)
Gregory S. Wood (4)............... 2000 $197,083 $ -- 100,000 $ --
Former Vice President and Chief 1999 92,891 -- -- --
Financial Officer 1998 -- -- --
John DeSantis (5)................. 2000 $195,000(6) $ -- -- $ --
Former Senior Vice President of 1999 267,117 35,682 85,000 64,628(7)
Sales and Marketing 1998 205,114 74,094 -- --
- ------------------------
(1) Includes amounts (if any) deferred under the 401(k) Plan and commissions
earned in 1999.
(2) Mr. Morin joined us in May 1996 and was promoted to President and Chief
Executive Officer in August 1999.
(3) Includes $7,200, $7,200 and $14,267 paid for automobile allowances in 2000,
1999, and 1998, respectively.
(4) Mr. Wood joined us in July 1999 and was promoted to Vice President and Chief
Financial Officer in August 2000. Mr. Wood's employment terminated on
November 13, 2000.
6
(5) 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.
(6) Includes $130,000 in severance pay.
(7) Consists of $64,628 for relocation expenses.
STOCK OPTION GRANTS
The following table contains information concerning grants of stock options
under our 1999 Non-Statutory Stock Option Plan to the Named Officers during the
year ended December 31, 2000.
OPTION GRANTS IN 2000
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (1)
---------------------------------------------------------------- -----------------------
NUMBER OF
SHARES % OF TOTAL
UNDERLYING OPTIONS GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED (2) IN FISCAL YEAR (3) PER SHARE (4) DATE 5% 10%
- ---- ----------- ------------------ -------------- ---------- ---------- ----------
Rudolph G. Morin........ 100,000 6.89% $1.09375 9/18/10 $68,785 $174,316
Gregory S. Wood......... 100,000(5) 6.89% 5.375 9/18/10 68,785 174,316
John DeSantis........... -- -- -- -- -- --
- ------------------------
(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, overall market
conditions and the optionee's continued employment through the vesting
period. The amounts reflected in this table may not necessarily be achieved.
(2) Each option vests and becomes exercisable to the extent of 25% of the
underlying shares three months following the date of grant, another 25%
vesting one year from the date of the grant, with the remainder vesting on a
monthly basis ratably over the 24-month period thereafter, subject to the
optionee's continuous employment with the Company.
(3) Options to purchase an aggregate of 1,388,990 shares of Common Stock were
granted to employees during the year.
(4) Each option was granted at market value on the date of grant.
(5) Mr. Wood's options were canceled 30 days following the termination of his
employment as Chief Financial Officer.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information with respect to the Named Officers
concerning the exercise of options during the fiscal year ended December 31,
2000 and unexercised options held as of December 31, 2000. There were no
exercises of options by any of the Named Officers during the fiscal year ended
December 31, 2000.
7
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 2000 AT DECEMBER 31, 2000(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
Rudolph G. Morin............................... 408,645 126,355 -- --
Gregory S. Wood................................ -- -- -- --
John De Santis................................. -- -- -- --
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(1) Based on the closing price of $0.2812, as reported on The Nasdaq National
Market on December 31, 2000 (the last trading day prior to the fiscal
year-end).
COMPENSATION OF DIRECTORS
Non-employee directors are paid an annual retainer of $15,000 per 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. Under the 1994 Outside Directors' Stock Option Plan (the "Directors'
Plan"), each non-employee director is granted an initial option for 30,000
shares of 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
addition to the foregoing, Directors Gilbertson, Klein and MacDonald each
received one-time option grants of 10,000 shares in September 2000. In the year
ended December 31, 2000, no other compensation was paid to a director serving in
such capacity.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Douglas H. Klein served on the Compensation and Stock Committee of the Board
of Directors during the past fiscal year. Mr. Klein is a former executive
officer of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 2000, we entered into a stock purchase agreement with Guenther
Pfaff, pursuant to which Dr. Pfaff purchased 220,000 shares of Series B
Preferred Stock at a purchase price of $6.82 per share, or an aggregate purchase
price of $1,500,000, and received a warrant to purchase 600,000 shares of Common
Stock at an exercise price of $0.75 per share. Each share of Series B Preferred
Stock is convertible into 10 shares of Common Stock. The stock purchase
agreement included an option for Dr. Pfaff to purchase an additional 70,000
shares of Series B Preferred Stock and to acquire warrants to purchase an
additional 200,000 shares of Common Stock on or before February 15, 2001, which
Dr. Pfaff did not exercise. Dr. Pfaff was elected to our Board of Directors
following the closing of this transaction. Dr. Pfaff is not standing for
election at the Annual Meeting.
In September 2000, we issued a $3,300,000 convertible promissory note to SCI
Technology, Inc. in exchange for SCI Technology, Inc.'s cancellation of a like
amount of accounts receivable owed by us. The note is due and payable in
October 2001, and the principal is convertible into shares of our Common Stock
at the holder's election at the rate of one share for each $1.00 in principal
converted. Michael Ledbetter, Corporate Asset and Risk Manager of SCI Systems,
Inc., of which SCI Technology, Inc. is a division, has been a member of our
Board of Directors since April 2001.
We have entered into employment agreements with Rudolph G. Morin and Robert
G. Gilbertson. See "Executive-Compensation Employment, Severance and Change of
Control Agreements."
8
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.
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 an annual renewal date.
The agreement fixes Mr. Morin's base salary, subject to increases by the
Compensation Committee, 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 Mr. Morin's 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. In
September 2000, the Compensation Committee approved a grant of an option to
purchase 100,000 shares of Common Stock to Mr. Morin under the 1999
Non-Statutory Stock Option Plan. In May 1999, the Compensation Committee
approved a grant of an option to purchase 85,000 shares of Common Stock to
Mr. Morin under the 1999 Stock Option Plan ("99 Option Plan"). In 1996 pursuant
to his agreement, Mr. Morin received an option to purchase 350,000 shares of
Common Stock 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 greater
of 12 months or the term of employment remaining under the agreement and to
receive up to $40,000 in outplacement assistance.
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 provided that, for a period
of six months after April 3, 2000, Mr. DeSantis would receive severance payments
of $21,667 per month. Under the agreement, Mr. DeSantis 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 continued vesting through October 1, 2000.
9
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 1999 Non-Statutory Stock Option Plan, including the awarding of options
under such plans.
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 stockholders.
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 2000, the
Compensation Committee set financial objectives based upon our net operating
income for 2000. Mr. Morin was not awarded a bonus for 2000 because our
operating income for that year fell short of target. 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."
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 stockholders, 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%
10
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 PLANS
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
and 1999 Non-Statutory Stock 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 stockholder value. Options granted
under the 1999 Option Plan and 1999 Non-Statutory Stock Option Plan generally
vest and become exercisable to the extent of 25% one year from grant date with
the remainder vesting ratably over the 36-month period thereafter, to encourage
employees to remain with us on a long-term basis.
COMPENSATION AND STOCK COMMITTEE
Stephen A. MacDonald
Douglas Klein
11
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including internal control
systems. BDO Seidman, LLP is responsible for expressing an opinion as to the
conformity of our audited financial statements with generally accepted
accounting principles.
The Audit Committee acts pursuant to a written charter that has been adopted
by the Board of Directors. A copy of this charter is attached to this Proxy
Statement as Appendix A.
The Committee has discussed and reviewed with the auditors all matters
required to be discussed Statement on Auditing Standards No. 61 (Communication
with Audit Committees). The Committee has met with BDO Seidman, LLP, with and
without management present, to discuss the overall scope of BDO Seidman, LLP's
audit, the results of its examinations, its evaluations of the Company's
internal controls and the overall quality of its financial reporting.
The Audit Committee has received from the auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees), discussed
with the auditors any relationships that may impact their objectivity and
independence, and satisfied itself as to the auditors' independence.
Based on the review and discussions referred to above, the committee
recommended to the Board of Directors that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.
AUDIT COMMITTEE
Stephen A. MacDonald
Douglas Klein
12
PERFORMANCE GRAPH
Set forth below is a graph indicating cumulative total return at
December 31, 1996, 1997, 1998, 1999 and 2000 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, 1995.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NETWORK COMPUTING NASDAQ STOCK NASDAQ COMPUTER
DATE DEVICES INC. MARKET MANUFACTURES STOCKS
12/29/95 $100.0 $100.0 $100.0
1/31/96 $101.8 $100.5 $100.4
2/29/96 $86.0 $104.3 $110.4
3/29/96 $56.1 $104.7 $103.0
4/30/96 $54.4 $113.4 $118.1
5/31/96 $58.8 $118.6 $126.1
6/28/96 $71.9 $113.2 $115.8
7/31/96 $49.1 $103.1 $103.9
8/30/96 $73.7 $108.9 $111.1
9/30/96 $86.8 $117.2 $127.6
10/31/96 $108.8 $115.9 $128.1
11/29/96 $121.1 $123.1 $139.4
12/31/96 $142.1 $123.0 $133.9
1/31/97 $215.8 $131.8 $145.7
2/28/97 $177.2 $124.5 $125.4
3/31/97 $149.1 $116.3 $112.5
4/30/97 $136.8 $120.0 $117.1
5/30/97 $177.2 $133.6 $144.1
6/30/97 $163.2 $137.7 $145.3
7/31/97 $126.3 $152.2 $176.9
8/29/97 $166.7 $151.9 $176.2
9/30/97 $156.1 $161.0 $182.3
10/31/97 $121.1 $152.6 $168.7
11/28/97 $117.5 $153.4 $170.4
12/31/97 $131.6 $150.7 $161.8
1/30/98 $131.6 $155.5 $176.6
2/27/98 $177.2 $170.1 $200.1
3/31/98 $147.4 $176.3 $199.1
4/30/98 $130.7 $179.3 $213.4
5/29/98 $120.2 $169.4 $208.5
6/30/98 $114.0 $181.2 $236.1
7/31/98 $109.6 $179.1 $247.5
8/31/98 $92.1 $143.6 $214.8
9/30/98 $85.1 $163.5 $258.9
10/30/98 $91.2 $170.7 $269.0
11/30/98 $100.9 $188.0 $295.0
12/31/98 $98.2 $212.5 $351.8
1/29/99 $105.3 $243.3 $433.9
2/26/99 $75.4 $221.5 $365.5
3/31/99 $70.2 $238.3 $396.1
4/30/99 $71.9 $245.9 $408.4
5/28/99 $68.4 $239.1 $385.6
6/30/99 $67.5 $260.7 $440.8
7/30/99 $72.8 $256.0 $445.1
8/31/99 $70.2 $266.8 $502.6
9/30/99 $63.2 $267.1 $500.9
10/29/99 $66.7 $288.5 $536.1
11/30/99 $91.2 $323.6 $632.3
12/31/99 $110.5 $394.8 $746.8
1/31/00 $84.2 $380.2 $720.1
2/29/00 $110.5 $452.5 $879.7
3/31/00 $73.7 $443.2 $935.6
4/28/00 $24.6 $372.8 $829.2
5/31/00 $22.8 $327.8 $693.5
6/30/00 $17.5 $385.3 $811.7
7/31/00 $19.7 $364.4 $817.1
8/31/00 $17.5 $407.5 $931.4
9/29/00 $11.4 $354.5 $828.3
10/31/00 $5.7 $325.3 $753.2
11/30/00 $4.4 $250.8 $511.7
12/29/00 $3.9 $237.4 $420.7
13
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected BDO Seidman, LLP ("BDO Seidman") as the
independent auditors of the Company for the current fiscal year. The selection
of the independent auditors is being submitted to the stockholders for
ratification at the Annual Meeting. In the event that ratification by the
stockholders of the selection of BDO Seidman as the Company's independent
auditors is not obtained, the Board of Directors will reconsider such selection.
Representatives of BDO Seidman 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.
CHANGE IN AUDITORS
On January 8, 2001, the Company engaged BDO Seidman as its independent
auditor and dismissed its former auditor KPMG LLP ("KPMG"). The decision to
change auditors was approved by the Company's Board of Directors. The report of
KPMG on our financial statements for the year ended December 31, 1999 was
qualified by the assumption that we would continue as a going concern; except
for the foregoing, the reports of KPMG on our financial statements for each of
the past two fiscal years contained no adverse opinions or disclaimers of
opinion, and were not qualified or modified as to audit scope or accounting
principles. During the two most recent fiscal years and through January 8, 2001,
we had no disagreements with KPMG on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to KPMG's satisfaction, would have caused it to
make reference to the subject matter of the disagreement(s) in connection with
its report. In addition, during the two most recent fiscal years and through
January 8, 2001, there were no reportable events (as such term is defined in
Item 304(a)(1)(v) of Regulation S-K). We have not consulted with BDO Seidman
prior to its engagement regarding the application of accounting principles to a
specified transaction, either completed or proposed, the type of audit opinion
that might be rendered on our financial statements or any matter that was either
the subject of a disagreement or a reportable event.
AUDIT FEES
The following table sets forth the aggregate fees billed to the Company for
fiscal 2000 by KPMG:
Audit Fees.................................................. $ --
Financial Information Systems Design and Implementation
Fees...................................................... $ --
All Other Fees.............................................. $125,000(1)
-------------------------------
(1) Generally consists of quarterly reviews and physical inventory
observation.
The following table sets forth the aggregate fees billed to the Company for
fiscal 2000 by BDO Seidman:
Audit Fees.................................................. $140,000
Financial Information Systems Design and Implementation
Fees...................................................... $ --
All Other Fees.............................................. $ --
14
The Audit Committee has considered the role of KPMG in providing quarterly
reviews and physical inventory observation services and other non-audit services
to the Company and has concluded that such services were compatible with KPMG's
independence as the Company's auditors.
REQUIRED VOTE
The ratification of the selection of BDO Seidman 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 STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE SELECTION OF BDO SEIDMAN, LLP.
15
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.
By order of the Board of Directors,
Rudolph G. Morin
President and Chief Executive Officer
April 30, 2001
16
APPENDIX A
AUDIT COMMITTEE CHARTER
MEMBERSHIP:
The Audit Committee shall consist of such number of members of the Board of
Directors of the Company as shall be designated by the Board from time to time,
but in no event shall the Committee consist of fewer than two members. All
members of the Audit Committee shall be competent to perform the
responsibilities and duties of the Audit Committee and shall be able to read and
understand fundamental financial statements. The Chairperson of the Committee
shall be selected by the Board of Directors. None of the members of the
Committee shall be employed by the Company or any of its subsidiaries, nor shall
any member of the Committee have been so employed within the three years
preceding appointment to the Committee. In addition, each member of the
Committee shall be independent of management of the Company and shall be free
from any relationship that, in the opinion of the Board of Directors of the
Company, would interfere with the exercise of independent judgment by such
Committee member.
PURPOSE:
The purpose of the Audit Committee is to support the oversight function of
the Board of Directors of the Company over the Company's accounting and
financial reporting practices. The Audit Committee shall perform this function
through the periodic review of the Company's processes for producing financial
data and identifying and controlling key business, financial and other risks.
The Audit Committee shall also review the adequacy of the Company's internal
controls and the independence of its external auditor.
The Audit Committee shall have unrestricted access to Company personnel,
records and information and be provided with the resources necessary to
discharge its responsibilities.
FUNCTIONS AND POWERS:
The Audit Committee shall:
1. Recommend the firm to be employed as the company's external auditor and
review the proposed discharge of such firm;
2. Review the independent auditor's compensation, the proposed term of its
engagement and its independence;
3. Receive annually a written statement from the independent auditor
delineating all relationships between the independent auditor and the
Company and assess the effect of any such relationships on such auditor's
objectivity and independence;
4. Review with management and the independent public accountants, the audit
plan, proposed fees and any special activities for the coming year. The
review shall be designed to evaluate the coverage of the audit plan and to
satisfy the Committee as to its adequacy;
5. Review the scope and results of each independent audit of the Company, the
reports of the audit, any related management letter and management's
responses to recommendations made by the independent auditor in connection
with the audit;
6. Review the Company's annual financial statements and quarterly financial
reports, and related press releases, including management's discussion and
analysis, any certification, report, opinion, or review rendered by the
external auditor in connection therewith, and any significant disputes
between management and the external auditor that arose in connection with
the preparation of such financial statements;
A-1
7. Consider, in consultation with the Company's financial management and the
Company's external auditor, the adequacy of the Company's internal controls;
8. Review the Company's engagement of the independent public accountants to
perform types of non-audit services to ensure that such engagements do not
compromise the independence of the independent public accountants;
9. Consider major changes and other major questions of choice regarding the
appropriate accounting principles and practices to be used in the
preparation of the Company's financial statements;
10. Inquire into any other financial matters not set forth above which the
Committee in its judgment determines to be necessary, by either
investigating such matter on its own, referring such matter to the Board of
Directors or requesting management of the Company to conduct an appropriate
investigation;
11. Serve as the channel of communications between the independent auditor and
the Board of Directors, and between the senior internal auditing executive
and the Board of Directors;
12. Annually review this charter and revise it as conditions dictate;
13. Approve the minutes of all meetings of the Committee;
14. Report regularly to the Board of Directors on matters within the scope of
the Committee as well as any special problems that merit the attention of
the Board of Directors; and
15. Perform such other duties as the Board of Directors may from time to time
assign to it.
A-2
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NETWORK COMPUTING DEVICES, INC.
2001 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; 30, 2001, and the Annual
Report on Form 10-K for the year ended December 31, 2000, and hereby appoints
Rudolph G. Morin and Michael A. Garner, 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 2001 Annual Meeting
of Shareholders of Network Computing Devices, Inc., to be held on May 30, 2001,
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 /*\
PLEASE MARK /X/
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
FOR* AGAINST
1. ELECTION OF
DIRECTORS / / / /
Nominees
Rudolph G. Morin, Robert G. Gilbertson, Douglas H. Klein and Michael Ledbetter
- --------------------------------------------------------------------------------
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).
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment of BDO
Seidman, LLP as the independent auditors / / / / / /
of the Company.
3. 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. If no direction is indicated, will be
voted for the election of named directors and for the ratification of the
appointment of BDO Seidman, LLP 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 /*\