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
ASANTE TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transactions applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date filed:
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ASANTE TECHNOLOGIES, INC.
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Notice of Annual Meeting of Stockholders
To Be Held On February 26, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Asante Technologies, Inc. (the "Company"), a Delaware corporation, will be held
on February 26, 1999, at 10:00 a.m., local time, at the Company's principal
executive offices, located at 821 Fox Lane, San Jose, California 95131 for the
following purposes:
1. To elect directors to serve for the ensuing year and until
their successors are elected.
2. To increase the number of shares available for issuance under
the Company's 1993 Employee Stock Purchase Plan by 100,000
shares.
3. To ratify the appointment of PricewaterhouseCoopers, LLP as
the Company's independent accountants for the fiscal year
ending October 2, 1999.
4. To transact such other business as may properly come before
the meeting and any adjournment or postponement 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 January 4, 1999
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 ensure your representation at the meeting, we urge you to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
FOR THE BOARD OF DIRECTORS
Raj Matthew
Secretary
San Jose, California
January 25, 1999
ASANTE TECHNOLOGIES, INC.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Asante Technologies, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on February 26, 1999, at 10:00 a.m., local time, or at
any adjournment or postponement 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 principal executive offices, located at 821 Fox
Lane, San Jose, California 95131. The telephone number at that location is (408)
435-8388.
These proxy solicitation materials and the Company's Annual Report to
Stockholders (on Form 10-K) for the year ended October 3, 1998, including
financial statements, were mailed on or about January 25, 1999, to all
stockholders entitled to vote at the meeting.
Record Date and Voting Securities
Stockholders of record at the close of business on January 4, 1999, are
entitled to notice of and to vote at the meeting. At the record date, 9,218,893
shares of the Company's Common Stock, $0.001 par value, were issued and
outstanding. No shares of the Company's Preferred Stock are outstanding. Based
on the last reported sale on the NASDAQ National Market on January 4, 1999, the
market value of one share of the Company's Common Stock closed at $1.44.
Revocability of Proxies
Any proxy given may be revoked by the person giving it at any time
before its use by delivering to the Secretary of 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
Each share shall have one vote for the election of directors, unless
cumulative voting is invoked. Each stockholder voting for the election of
directors may cumulate such stockholder's votes and give one candidate a number
of votes equal to the number of directors to be elected (four) multiplied by the
number of shares held by such stockholder, or may distribute such stockholder's
votes on the same principle among as many candidates as the stockholder may
select, provided that votes cannot be cast for more than four directors.
However, no stockholder will be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting, and the
stockholder, or any other stockholder, has given notice at the meeting prior to
the voting of the intention to cumulate votes. If any stockholder gives such
notice, all stockholders may cumulate their votes for the candidates in
nomination. In the event that cumulative voting is invoked, the proxy holders
will have the discretionary authority to vote all proxies received by them in
such a manner as to ensure the election of as many of the Board of Directors'
nominees as possible. See "Proposal 1-Election of Directors." On all other
matters, each share has one vote.
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The Company will bear the cost of soliciting proxies. The Company will
also reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Solicitation of proxies by mail may be supplemented by
telephone, telegram, facsimile or personal solicitation by directors, officers
or regular employees of the Company. No additional compensation will be paid to
such persons for such services.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's 2000 Annual Meeting must be
received by the Company no later than September 21, 1999, 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
Wilson Wong, Jeff Lin, Edmond Tseng and Michael Kaufman were re-elected
to the Board of Directors at last year's Annual Meeting of Stockholders. There
are currently six seats authorized on the Board of Directors, four of which will
be filled by directors to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's four nominees named below, all of whom are
currently 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 substitute nominee who shall be designated by
the current Board of Directors to fill the vacancy. It is not expected that any
nominee listed below will be unable or will decline to serve as a director. 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 in
accordance with cumulative voting as will ensure the election of as many of the
nominees listed below as possible, and in such event the specific nominees to be
voted for will be determined by the proxy holders. In any event, the proxy
holders cannot vote for more than six duly nominated persons. The term of office
of each person elected as a director will continue until the next Annual Meeting
of Stockholders or until such director's successor has been elected and
qualified.
Director
Name Age Principal Occupation Since
---- --- -------------------- -----
Wilson Wong 51 President and Chief Executive Officer of the 1988
Company and Chairman of the Board of Directors
Jeff Yuan-Kai Lin 47 President, Lite-on Communications, Inc. 1988
Michael D. Kaufman 56 Managing General Partner, MK Global Ventures 1995
Edmond Y. Tseng 51 President and Chief Executive Officer, OSE, Inc. 1989
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Mr. Wong co-founded the Company in 1988, and effective January 1, 1999
assumed the positions of President, Chief Executive Officer and Chairman of the
Board of Directors, and will continue as Vice President of Engineering. Prior to
his return to the Company as Vice President of Engineering on September 10,
1998, Mr. Wong was Chief Executive Officer of Pixo Arts Corporation. From 1994
to August 1997, he served as Vice President and General Manager for the Company.
From 1993 to 1994, he served as Vice President and General Manager for the
Company's Client Access products. From 1988 to 1993, he served as the Company's
President and Chief Executive Officer.
Mr. Lin co-founded the Company in 1988, and served as President, Chief
Executive Officer and Chairman of the Board of Directors from July 1994 until
December 31, 1998. Mr. Lin will continue to serve as a Director of the Company.
Mr. Lin also held the position of Vice President of Engineering from November
1997 until August 1998. From June 1993 through July 1994, he served as Vice
President, General Manager of Network Systems Business for the Company. From
1991 to 1993, he served as the Company's Chairman of the Board of Directors and
Chief Operating Officer. From 1988 to 1991, Mr. Lin served as the Company's Vice
President of Operations and Engineering, Chief Financial Officer and Secretary.
Mr. Lin has assumed the position of President of Lite-On Communications
Corporation which is an internetworking company located in Taiwan. Lite-on
Communications is a subsidiary of Lite-On Group, which is one of Asante's OEM
suppliers in Asia.
Mr. Kaufman has served as Managing General Partner of MK Global
Ventures, a venture capital management company, since he founded the firm in
1987. Mr. Kaufman also currently serves as a director of Davox Corporation, a
provider of call technology and integration systems; Disc, Inc., a manufacturer
of high-capacity storage libraries; Document Technologies, Inc., a manufacturer
of high-resolution displays for document management systems; HyperMedia
Communications, Inc., a wireless networking products manufacturer; Proxim, Inc.,
a publisher of "New Media" and other internet magazines, Syntellect Inc., a
provider of voice processing and computer telephony integration, and Human
Pheromone Sciences, Inc. (Erox Corporation), a manufacturer of fragrance and
toiletry products.
Mr. Tseng has served as President and Chief Executive Officer of OSE,
Inc., a semiconductor products company which serves as the exclusive North
American sales representative for Orient Semiconductor Electronics, Ltd., since
January 1990. See "Security Ownership of Directors, Officers and Certain
Beneficial Owners" and "Certain Relationships and Related Transactions." Prior
to that time, Mr. Tseng was the Director of Engineering at Condata, Inc., an
electronics products and engineering consulting company.
There are no family relationships among the directors and executive
officers of the Company.
Board Meetings and Committees
The Board of Directors of the Company held a total of 5 meetings and
did not act by written consent during the fiscal year ended October 3, 1998.
During fiscal 1998, no director attended fewer than 75% of the meetings of the
Board of Directors and its committees upon which such director served. The Board
of Directors has an Audit Committee and a Compensation Committee. The Board of
Directors has no nominating committee or any committee performing similar
functions.
The Audit Committee of the Board of Directors which currently consists
of Mr. Kaufman and Mr. Tseng met 1 time during the last fiscal year. The Audit
Committee is responsible for reviewing annual audited financial statements,
approving the services performed by the Company's independent accountants,
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and reviewing and evaluating the Company's accounting principles and its system
of internal accounting controls. The Audit Committee is also responsible for
handling disagreements with the Company's independent accountants or the
termination of their engagement.
The Compensation Committee of the Board of Directors which consisted of
Mr. Kaufman and Mr. Lam met 1 time during the year. The Compensation Committee
reviews and approves the Company's executive compensation policy, including the
salaries and target bonuses of the Company's executive officers. In addition,
the Compensation Committee administers the Company's stock plans, which includes
recommending or approving the grant of options to new and existing employees
(including officers and employee directors). Since the Compensation Committee
held no meetings during the last fiscal year, the Company's compensation
policies have been reviewed and ratified by the Company's Board of Directors.
As of January 14, 1999, Mr. Lam resigned from the Board of Directors of
the Company.
Compensation of Directors
Directors who are employees of the Company receive no fees for services
provided in that capacity, but are reimbursed for out-of-pocket expenses
incurred in connection with attendance at meetings of the Board of Directors and
its committees. See "EXECUTIVE COMPENSATION."
Directors who are not employees of the Company receive a fee of $1,000
for each meeting attended and are also reimbursed for out-of-pocket expenses
incurred in connection with their attendance of meetings at the Board of
Directors and its committees.
Non-employee Directors are also entitled to participate in the
Company's 1993 Directors' Stock Option Plan (the "Directors' Plan"). The
Directors' Plan, which was adopted by the Board of Directors in September 1993,
and approved by the stockholders in October 1993, authorizes a total of 300,000
shares of Common Stock for issuance pursuant to options granted under the
Directors' Plan. The Directors' Plan provides for an automatic grant of 40,000
shares of Common Stock to each non-employee Director on the date on which such
individual first becomes a director. As approved by stockholders at the 1996
Annual Shareholder's Meeting, the Directors' Plan also provides that each
non-employee Director will be granted additional options for the purchase of
10,000 shares of Common Stock at the Board meeting immediately following the
annual anniversary date of the non-employee Director's commencement of service
on the Board of Directors.
Initial options granted under this plan have terms of ten years and
typically the shares underlying the option vest over four years at the rate of
25% on the one year anniversary date, with the remaining shares vesting monthly
in equal increments over the remaining three years. Subsequent options granted
under this plan have a term of ten years and typically vest over the four years
at the rate of 25% annually from the anniversary date. The exercise price of
each option granted equals 100% of the fair market value of the Common Stock,
based on the closing price of the Common Stock as reported on the NASDAQ
National Market on the date of grant. Options granted under the Directors' Plan
must be exercised within three months following the end of the optionee's tenure
as a director of the Company, or within six months after the termination of a
director's tenure due to death or disability. The Directors' Plan is designed to
work automatically, without administration; to the extent administration is
necessary, however, the Directors' Plan has been structured so that options
granted to non-employee Directors who administer the Company's stock plans shall
qualify as transactions exempt from Section 16(b) of the Securities Exchange Act
of 1934, as amended, pursuant to Rule 16b-3 promulgated thereunder.
-4-
In September 1993, Mrs. Koh and Mr. Tseng each received options to
purchase 40,000 shares of Common Stock exercisable at a price of $7.50 per
share. In September 1993, Mr. Tsui received an option to purchase 40,000 shares
of Common Stock exercisable at $9.00 per share. In July 1995, Mr. Kaufman
received an option to purchase 40,000 shares of Common Stock exercisable at
$4.63 per share. In March 1997, Mr. Lam received an option to purchase 40,000
shares of Common Stock exercisable at $4.56.
Pursuant to the amendment of the Directors' Plan approved by the
stockholders at the 1996 Annual Meeting, additional options for the purchase of
10,000 shares of Common Stock were automatically earned on the anniversary of
each non-employee Director's service on the Company's Board and issued as of the
date of the next Board meeting subsequent to such anniversary. Mr. Kaufman
earned annual options for the purchase of 10,000 shares of Common Stock in April
1996, April 1997, and April 1998 at exercise prices of $5.88, $6.31 and $ 2.34,
respectively. Annual options to Mr. Tseng for the purchase of 10,000 shares of
Common Stock were issued in October 1997 and September 1996, $5.14 and $6.13
respectively. Mr. Tsui's annual options were issued in October 1997 and
September 1996, at an exercise price of $5.14 and $6.63 respectively. Subsequent
to the last fiscal year, annual options for the purchase of 10,000 shares of
Common Stock were earned by Mr. Tseng and Mr. Tsui and granted in November 1998,
at an exercise price of $2.38. Mr. Lam earned annual options for the purchase of
10,000 shares of Common Stock in March 1998 at an exercise price of $2.34.
Vote Required and Recommendation of Board of Directors
The four nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them shall be
elected as Directors. Votes withheld from any director will be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business at the meeting, but have no other legal effect upon election of
directors under Delaware law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE NOMINEES SET FORTH HEREIN.
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PROPOSAL 2 - AMENDMENT OF THE ASANTE TECHNOLOGIES, INC. 1993 EMPLOYEE STOCK
PURCHASE PLAN
General
In 1993, the Company adopted the Asante Technologies, Inc. 1993
Employee Stock Purchase Plan (the "Purchase Plan"). The Purchase Plan currently
is authorized to issue up to an aggregate of 500,000 shares of the Company's
common stock. The shareholders are being requested at this annual Shareholders
Meeting to approve an Amendment to the Purchase Plan to increase by 100,000 the
number of shares that may be issued under the Purchase Plan. As of October 3,
1998, only 58,979 shares of common stock remained available for issuance under
the Purchase Plan. The Board of Directors believes that the shares which remain
available for issuance will be insufficient to achieve the purposes of the
Purchase Plan over the term of the plan unless the additional shares are
authorized and approved by the shareholders.
Purpose
The purpose of the Purchase Plan is to provide employees of the Company
with an opportunity to purchase common stock of the Company at a discount from
the price quoted for the Company's stock on the NASDAQ National Market System
("NMS"). The Company believes that encouraging stock ownership among the
Company's employees will provide an additional incentive to the Company's
employees and a sense of ownership in the Company's success.
Administration
The Compensation Committee of the Board of Directors (comprised of
non-employee directors) has been delegated the authority to supervise the
operation of the Purchase Plan. All questions of interpretation or application
of the Purchase Plan are determined by the Board of Directors, whose decisions
are final and binding upon all participants.
Eligibility
All eligible employees of the Company, including executive officers
other than Messrs. Lin and Wong, may participate in the Purchase Plan. An
"eligible employee" is any person who is employed by the Company for at least 20
hours per week and more than five months in each calendar year and who has been
so employed for at least three months with the Company. Non-employee directors
of the Company may not participate in the Purchase Plan.
As of October 3, 1998, there were 49 employees participating in the
Purchase Plan.
Due to the fact that participating employees of the Company determine
on their own whether they wish to participate in the Purchase Plan and the
amount of their salary they wish to allocate to the Purchase Plan, it is not
possible to state the number of shares which may be purchased or who will choose
to participate in the Purchase Plan in the future.
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Description of General Terms of the Purchase Plan
The Purchase Plan provides a mechanism whereby eligible employees of
the Company may purchase the Company's common stock at a discount from the
market price of the Company's stock. The shares under the Purchase Plan are
offered to employees during six-month offering periods which generally commence
on January 1 and July 1 of each calendar year. During each offering period,
participating employees determine the amount of payroll deduction they wish to
have made for the purpose of acquiring stock pursuant to the Purchase Plan.
At the end of each offering period, the purchase price for shares being
acquired pursuant to the Purchase Plan is determined. The applicable purchase
price is 85% of the fair market value of a share of the Company's common stock
determined either on the offering date (which is the first day of the offering
period) or the exercise date (which is the last day of the offering period)
which ever is lower.
Purchase of shares pursuant to the Purchase Plan is made through
payroll deductions made on each payday during the offering period in an amount
not less than 1% and not more than 10% of such participant's compensation on
each such payday. The maximum number of shares that a participant may purchase
during each offering period shall be determined at the offering date by dividing
$12,500 by the fair market value of a share of the Company's common stock on the
offering date. During the offering period, each participant shall be granted an
option to purchase on the exercise date a number of shares of the Company's
common stock determined by dividing such participant's contributions accumulated
during the offering period divided by the purchase price per share determined
under the Purchase Plan's valuation provisions. Unless a participant withdraws
from the plan, his or her option for the purchase of shares during the offering
period will be exercised automatically on the exercise date of the offering
period and the maximum number of full shares subject to option will be purchased
at the applicable option price with the accumulated contributions in his or her
account. Upon the death or termination of employment by the participant or the
voluntary withdrawal from the Purchase Plan by the participant, all accumulated
contributions held on behalf of such participant will be refunded to that
participant or their beneficiaries.
Shares acquired pursuant to the Purchase Plan are issued to the
Participant as soon as practicable after the end of each offering period. As a
condition upon issuance of the shares, each participant may be required to
represent and warrant at the time of acquisition of the shares that such shares
are being purchased only for investment and without any present intention to
sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by the provision of any applicable securities
laws.
The Board of Directors of the Company may at any time terminate or
amend the Purchase Plan which could include changing the length or frequency of
offering periods or changing the eligibility criteria for the Purchase Plan.
Individual accounts are maintained for each participant in the Purchase Plan and
Statements of Account are given to each participant promptly following the end
of each offering period.
The Purchase Plan will continue in effect for a term of twenty years
from the date of adoption unless terminated sooner by action of the Company's
Board of Directors.
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Federal Income Tax Consequences Relating to Purchase Plan
The Purchase Plan is intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code. Under a plan
which so qualifies, no taxable income will be recognized by a participant, and
no deductions will be allowable to the Company, upon either the grant or the
exercise of the purchase options. Taxable income will not be recognized until
there is a sale or other disposition of the shares acquired under the Purchase
Plan or in the event the participant should die while still owning the purchased
shares.
If the participant sells or otherwise disposes of the purchased shares
within two (2) years after his or her entry date into the offering period in
which such shares were acquired or within one (1) year after the purchase date
on which those shares were actually acquired, then the participant will
recognize ordinary income in the year of sale or disposition equal in amount to
such excess.
If the participant sells or disposes of the purchased shares more than
two (2) years after his or her entry date into the offering period in which the
shares were acquired and more than one (1) year after the purchase date of those
shares, then the participant will recognize ordinary income in the year of sale
or disposition equal to the lower of (i) the amount by which the fair market
value of the shares on the sale or disposition date exceeded the purchase price
paid for those shares or (ii) fifteen percent (15%) of the fair market value of
the shares on the participant's entry date into that offering period. Any
additional gain upon the disposition will be taxed as a long-term capital gain
subject to a maximum federal tax rate of 20% if the shares are held for more
than one (1) year after the purchase date. The Company will not be entitled to
an income tax deduction with respect to such disposition.
If the participant still owns the purchased shares at the time of
death, his or her estate will recognize ordinary income in the year of death
equal to the lower of (i) the amount by which the fair market value of the
shares on the date of death exceeds the purchase price or (ii) fifteen percent
(15%) of the fair market value of the shares on his or her entry date into the
offering period in which those shares were acquired.
A copy of the Purchase Plan as proposed to be amended may be obtained
upon written request to the Company's Secretary at the address shown on page 1
of this Proxy Statement.
The affirmative vote of holders of a majority of the shares of common
stock represented at the meeting is required to approve the Amendment to the
Purchase Plan.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE PROPOSED AMENDMENT TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK BY 100,000 AND TO RESERVE SUCH SHARES FOR ISSUANCE UNDER THE PURCHASE
PLAN.
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PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP,
independent accountants, to audit the financial statements of the Company for
the year ending October 2, 1999, and recommends that the stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
PricewaterhouseCoopers LLP has audited the Company's financial
statements since fiscal 1993. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Annual Meeting and will have the opportunity to
make a statement if they so desire. The representatives also are expected to be
available to respond to appropriate questions from stockholders.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING OCTOBER 2, 1999.
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SECURITY OWNERSHIP OF DIRECTORS,
OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of January
4, 1999, by (i) each beneficial owner of more than 5% of the Company's Common
Stock, (ii) the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers during the year ended October 3,
1998, (collectively, the "Named Officers"), (iii) each director of the Company
and (iv) all directors and executive officers of the Company as a group. Except
as otherwise indicated, each person has sole voting and investment power with
respect to all shares shown as beneficially owned, subject to community property
laws where applicable.
Shares Percentage
Beneficially Beneficially
Beneficial Owner Owned Owned
- ---------------- ----- -----
Jeff Yuan-Kai Lin (1)(2) 1,324,041 14.4%
Wilson Wong (3) 1,324,250 14.4%
Dr. Eugene C.Y. Duh(4) 1,191,073 12.9%
OSE, Inc.(5) 71,665 *
MK GVD Fund(6) 500,000 5.4%
Michael D. Kaufman(7) 84,666 *
Edmond Tseng(8) 90,833 *
Cyrus Y. Tsui(9) 47,500 *
David K. Lam (10) 27,148 *
Robert Sheffield 18,000 *
Paul Smith 0 0
William Leung(11) 94,889 1.0%
All directors and executive officers
as a group (11 persons) 4,774,065 51.8%
* Represents less than one percent of the outstanding Common Stock.
- ----------------------------------
(1) The address for Mr. Lin is Asante Technologies, Inc., 821 Fox Lane, San
Jose, California 95131.
(2) Includes 1,041 shares issuable under stock options exercisable within
60 days of January 4, 1999.
(3) Mr. Wong was rehired by the Company effective September 10, 1998, in
the position of Interim Vice President of Engineering . In addition and
subsequent to year end, Mr. Wong was appointed as President, Chief
Executive Officer, and Chairman of the Board. The address for Mr. Wong
is 821 Fox Lane, San Jose, California 95131.
(4) The address for Dr. Duh is Orient Semiconductor Electronics, Ltd., No.
12-2 Nei Huang S. Rd., NEPZ Kaohsiung 81120, Taiwan, ROC.
(5) Dr. Duh is a Director and Mr. Tseng is President of OSE, Inc. As such,
Dr. Duh and Mr. Tseng may be deemed to be beneficial owners of these
shares.
(6) The address for MK GVD Fund and Mr. Kaufman is 2471 E. Bayshore Road,
Suite 520, Palo Alto, California 94303. Mr. Kaufman and Gregory Lahann
are general partners of MK GVD Management. Each of these individuals
shares voting and investment power with respect to the shares held by
MK GVD Fund, and therefore may be deemed to be beneficial owners of
such shares.
(7) Includes 43,333 shares issuable under stock options exercisable within
60 days of January 4, 1999.
(8) Includes 47,500 shares issuable under stock options exercisable within
60 days of January 4, 1999.
(9) Represents shares issuable under stock options exercisable within 60
days of January 4, 1999.
(10) Includes 22,500 shares issuable under stock options exercisable within
60 days of January 4, 1999.
(11) Includes 85,665 shares issuable under stock options exercisable within
60 days of January 4, 1999.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation received by the Named
Officers for services rendered to the Company in all capacities for fiscal years
ended September 28, 1996, September 27, 1997, and October 3, 1998:
Long-Term
Annual Compensation Compensation Awards
------------------------------------------- -------------------
Number
Restricted of Shares
Other Annual Stock Underlying LTIP All Other
Name and Principal Position Year Salary Bonus Compensation($) Awards Options Payouts Compensation(1)
- --------------------------- ---- ------ ----- --------------- ------ ------- ------- ---------------
Jeff Yuan-Kai Lin (2) 1998 200,008 28,750 -- -- -- -- 2059
President and Chief Executive Officer 1997 203,854 15,000 -- -- -- -- 1,412
1996 202,700 9,500 -- -- 50,000 -- 1,270
William Leung (3) 1998 181,188 23,000 -- -- 20,000 -- 4,585
Vice President of Operations 1997 160,673 12,000 -- -- 32,000 -- 2,983
1996 141,172 20,450 -- -- -- -- 2,681
Robert Sheffield (4) 1998 140,868 23,000 -- -- -- -- 1,527
Chief Financial Officer 1997 161,378 12,000 -- -- 10,000 -- 1,371
1996 85,385 7,600 -- -- 120,000 -- 798
Paul Smith (5) 1998 123,733 28,750 -- -- -- -- 760
Senior Vice President of Marketing 1997 165,237 15,000 -- -- 33,000 -- 4,585
and Sales 1996 143,169 17,925 -- -- 17,000 -- 686
<FN>
- --------------------------------------------------------------
(1) Amount consists of premiums paid by the Company for life insurance,
including compensation relating to over $50,000 Life Insurance and
Executive Life.
(2) In January 1996, the Company agreed that Mr. Lin shall be paid an
amount equal to his annual base salary and that his unvested options
will be accelerated in the event Mr. Lin is terminated without cause.
(3) Mr. Leung joined the Company on August 31, 1995.
(4) Mr. Sheffield joined the Company on March 6, 1996 and resigned
effective June 30, 1998.
(5) Mr. Smith joined the Company on May 15, 1995 and resigned effective May
1, 1998.
</FN>
-11-
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to
stock options granted to each of the Named Officers during the fiscal year ended
October 3, 1998. In accordance with the rules of the Securities and Exchange
Commission, also shown below is the potential realizable value over the term of
the option (the period from the grant date to the expiration date) based on
assumed rates of stock appreciation of 5% and 10%, compounded annually. These
amounts are based on certain assumed rates of appreciation and do not represent
the Company's estimate of future stock price. Actual gains, if any, on stock
option exercises will be dependent on the future performance of the Common
Stock.
Option Grants in Last Fiscal Year
Individual Grants
------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Number of Appreciation
Shares % of Total Options for Option Term (3)
Underlying Granted to Exercise --------------------
Options Employees in Price
Name Granted Fiscal Year(2) Per Share Expiration Date 5% 10%
---- ------- -------------- --------- --------------- ------ -----
Jeff Yuan-Kai Lin -- -- -- -- -- --
William Leung 20,000(1) 2.73% $ 1.875 07/24/08 23,584 59,765
Robert Sheffield -- -- -- -- -- --
Paul Smith -- -- -- -- -- --
<FN>
- --------------------------------------------------
(1) All options were granted under either the Company's 1990 Plan or the
Company's Key Executive Stock Plan and have exercise prices equal to
the fair market value on the grant date. The options vest ratably over
a four year period from the grant date and have a ten year term.
(2) Based on options to purchase an aggregate of 733,010 shares granted in
fiscal 1998.
(3) Market value of option grants is based on the price of the last
reported sale of the Company's Common Stock on the NASDAQ National
Market of $1.44 per share on January 4, 1999.
</FN>
-12-
Option Exercises and Holdings
The following table provides information with respect to option
exercises in fiscal 1998, by the Named Officers and the value of such officers'
unexercised options at October 3, 1998:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Number of Shares
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Fiscal Year-End Fiscal Year-End (1)(2)
------------------------------- ---------------------------
Shares
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Jeff Yuan-Kai Lin -- -- 33,333 16,667 -- --
William Leung -- -- 80,372 51,628 -- --
Robert Sheffield -- -- -- -- -- --
Paul Smith -- -- -- -- -- --
<FN>
- ------------------------------------
(1) Market value of unexercised options is based on the price of the last
reported sale of the Company's Common Stock on the Nasdaq National
Market of $1.53 per share on October 2, 1998 (the last trading day for
fiscal 1998), minus the exercise price.
(2) None of the options were in-the-money as of October 3, 1998.
</FN>
Compensation Committee Interlocks and Insider Participation
For the fiscal year ended October 3, 1998, the Compensation Committee
consisted of Mr. Kaufman and Mr. Lam, neither of whom is an officer of the
Company. The Company is not aware of any interlocks or insider participation
required to be disclosed under applicable rules of the Securities and Exchange
Commission.
-13-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company subcontracts the manufacturing of a substantial portion of
its products through Orient Semiconductor Electronics, Ltd. ("OSE"). Under the
Company's arrangement with OSE, the Company purchases certain components from
third party vendors and sells these components to OSE at cost. OSE purchases or
manufactures other components, assembles printed circuit boards, and tests and
packages products for the Company on a purchase order basis. The Company is
obligated to purchase products only to the extent it has signed firm purchase
commitments with OSE. During fiscal 1996, 1997 and 1998, the Company's purchases
from OSE totaled $17.9 million, $16.8 million and $8.2 million, respectively.
The Company's arrangement with OSE provides for payment terms of 45 days from
date of receipt of product. The Company sells certain component parts to OSE
with payment terms similar to those granted to the Company. OSE and its
affiliates are significant stockholders of the Company. See "Security Ownership
of Directors, Officers and Certain Beneficial Owners."
Prior to his appointment as a Director in fiscal 1997, Mr. Lam provided
business consulting services to the Company for which he was paid $20,000 and
received 4,648 shares of the Company's restricted common stock. During the
fiscal year 1998, Mr. Lam provided business consulting services to the Company
for which he was paid $54,008 and an additional $6,500, which was earned by Mr.
Lam in fiscal 1998, but paid in fiscal 1999.
On April 3, 1998, the Company made a loan of $75,000 to Ronald Volkmar, the
Company's Vice President of Sales-Americas. The loan bears interest at 5.51% per
annum and all principal and accrued interest is due on March 15, 2002. Mr.
Volkmar was terminated on January 18, 1999, and all amounts remaining due became
due and payable on that date.
-14-
The information contained in the following report of the Board of
Directors and the Performance Graph set forth on page 18, shall not be deemed to
be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates such information by reference into such filing.
COMPENSATION COMMITTEE REPORT OF THE BOARD OF DIRECTORS
In fiscal 1998, the Compensation Committee ("Committee") consisted of
Mr. Kaufman and Mr. Lam, neither of whom is or has been an employee of the
Company. The Committee is responsible for reviewing the compensation and
benefits for the Company's executive officers, as well as supervising and making
recommendations to the Board on compensation matters generally. The Committee
also administers the Company's stock option and purchase plans and makes grants
to executive officers under the Company's 1990 Plan and Key Executive Stock
Plan.
The Committee held 1 meeting during fiscal 1998, the following report
is submitted on behalf of the Board of Directors.
Compensation Policies
The Company operates in the high technology industry, characterized by
rapid changes and extreme competition. The Board's compensation philosophy is to
provide cash and equity incentives to the Company's executive officers and other
employees to attract highly qualified personnel in order to maintain the
Company's competitive position. The Board's compensation program goals are to:
attract, retain and motivate qualified executive officers and employees who
contribute to the Company's long-term success; align the compensation of
executive officers with the Company's business objectives and performance; and
align incentives for executive officers with the interests of stockholders in
maximizing value.
Compensation Components
The compensation for executive officers generally consists of salary,
annual incentives and stock option awards.
Base Salary. The salaries of each of the executive officers of the
Company are generally based on salary levels of similarly sized companies,
primarily those located in Silicon Valley. The Committee reviews generally
available surveys and other published compensation data. The compensation of the
executive officers, including the Chief Executive Officer, are generally
reviewed annually by the Committee and/or the Board and adjusted on the basis of
performance, the Company's results for the previous year and competitive
conditions.
Bonuses. The Company's intention is to develop bonus compensation plans
designed to reward the Company's executive officers based on the Company's
financial performance. In April 1997, the Company established an updated bonus
plan for fiscal 1997, under which the executive officers were eligible to earn
quarterly cash bonus payments. Criteria for earning the bonuses under this plan
consists of achieving certain operating profit levels and return on shareholder
equity. This plan was approved by the Board of Directors in fiscal 1997, and
replaced the Company's 1995 bonus plan.
-15-
Equity-Based Compensation. The Company enables all eligible employees,
including executive officers other than Mssrs. Lin and Wong, to purchase the
Company's Common Stock at a discount by participating in the Company's 1993
Employee Stock Purchase Plan. In addition, the Company periodically grants to
its executive officers stock options under the 1990 Plan, and the Key Executive
Plan, and grants to other employees stock options under the 1990 Plan, in order
to provide additional incentive for such persons. The Board believes that such
incentive promotes the long-term interests of the Company's stockholders.
Options generally vest over a four-year period to encourage option holders to
continue employment with the Company. In granting options, the Committee takes
into account each individual's level of responsibility within the Company and
such individual's expected future contribution, as well as the number of shares
and outstanding options already held by the individual. The Board has adopted a
stock option grant policy, pursuant to which employees (including officers
except for Mssrs. Lin and Wong) may receive annual stock option grants,
generally on their review date with the Company, in amounts based on certain
criteria including continuous time with the Company, current salary,
responsibilities, and job performance. Employees may also be entitled to receive
additional option grants where the employee's job has significantly changed
through growth or promotion. The exercise price of all options is the market
price on the date of grant.
Compensation of Chief Executive Officer
The process of determining the compensation for the Company's Chief
Executive Officer and the factors taken into consideration in such determination
are generally the same as the process and factors used in determining the
compensation of all of the executive officers of the Company. Under the fiscal
1997 bonus plan described above, Mr. Lin earned a bonus of $28,750 in fiscal
1998. The Committee based this bonus on results of operations of the Company for
fiscal 1997.
Report on Repricing of Stock Options
Subsequent to the Company's 1998 fiscal year-end, the Compensation Committee
determined to offer a repricing of the Company's outstanding stock options
issued pursuant to the 1990 Stock Option Plan and Key Executive Option Plan. The
repricing included a new 4-year vesting schedule commencing November 23, 1998
for those who elected to reprice. Those options electing to be repriced were
repriced to the closing price of the Company's stock listed on the NASDAQ NMS as
of November 20, 1998 (which was $2.50/share). A report by the Compensation
Committee regarding this repricing will be contained in the Proxy Statement for
fiscal year 1999.
-16-
Tax Deductibility of Executive Compensation
Section 162(m) of the Code limits the federal income tax deductibility
of compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. The Company may deduct
such compensation only to the extent that during any fiscal year the
compensation paid to any such individual does not exceed $1,000,000, unless
compensation is performance-based and meets certain specified conditions
(including stockholder approval). Based on the Company's current compensation
plans and policies and the transition rules of Section 162(m), the Company and
the Board do not anticipate, for the near future, that the Company will lose any
significant tax deduction for executive compensation.
This report presented herein was approved by a motion of the Board of Directors.
FOR THE COMPENSATION COMMITTEE
Michael Kaufman
David Lam
-17-
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
return, calculated on a dividend reinvested basis, for Asante Technologies,
Inc., the NASDAQ Composite Total Return Index (US) and the Hambrecht & Quist
Technology Index. The graph assumes that $100 was invested in the Company's
Common Stock, the NASDAQ Composite Total Return Index (US) and the Hambrecht &
Quist Technology Index from the date of the Company's initial public offering,
December 10, 1993, through October 2, 1998, the last trading day of the
Company's 1998 fiscal year. Because the Company effected its initial public
offering on December 10, 1993, the information in the graph is provided in
quarterly intervals. Historic stock price performance is not necessarily
indicative of future stock price performance.
THE H&Q TOTAL RETURN GROWTH & TECHNOLOGY INDICES
Asante Technologies Inc (ASNT)
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
Cumulative Total Return
---------------------------------------------------------------------------------------------------
12/10/93 12/93 3/94 6/94 9/94 12/94 3/95 6/95 9/95 12/95 3/96
ASANTE TECHNOLOGIES, INC 100.00 106.38 73.40 61.70 45.74 36.17 35.11 40.43 65.96 69.15 53.19
NASDAQ STOCK MARKET (U.S.) 100.00 102.05 97.76 93.19 100.91 99.76 108.77 124.41 139.40 141.09 147.67
HAMBRECHT & QUIST TECHNOLOGY 100.00 102.88 106.67 97.59 111.28 123.59 138.39 172.64 195.11 184.79 188.35
Cumulative Total Return
-------------------------------------------------------------------------------
6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98
ASANTE TECHNOLOGIES, INC. 56.91 56.38 40.43 33.51 46.81 46.81 30.85 29.26 19.15 14.89
NASDAQ STOCK MARKET (U.S.) 159.72 165.38 173.51 164.09 194.17 227.01 212.88 249.02 256.22 232.04
HAMBRECHT & QUIST TECHNOLOGY 201.76 214.18 229.67 218.91 263.49 319.34 269.26 326.03 333.78 296.70
-18-
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of the Company's Common Stock, to file reports of ownership on
Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange
Commission (the "SEC"). Such executive officers, directors and 10% stockholders
are also required by SEC rules to furnish the Company with copies of all Section
16(a) forms they file. Based solely upon its review of copies of such forms
received by it, or on written representations from certain reporting persons
that no other filings were required for such persons, the Company believes that,
during the year ended October 3, 1998, its executive officers, directors and 10%
stockholders complied all applicable Section 16(a) filing requirements.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting.
If any other matters properly come before the meeting or any adjournment or
postponement thereof, 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.
For the Board of Directors
Raj Matthew
Secretary
Dated: January 25, 1998
-19-