For Immediate Release
CONTACT: Morgen-Walke Associates
Jason Golz/Quynh Nguyen (Investor Relations)
415/296-7383
investors@npix.com
or
Ron Heckmann (Financial Media)
415/439-4513
NPI ANNOUNCES STRATEGIC INVESTMENT IN FALCONSTOR(TM) SOFTWARE,
AN EMERGING LEADER IN THE NETWORK STORAGE
INFRASTRUCTURE SOFTWARE MARKET
Acquires Exclusive Option to Merge with FalconStor
FREMONT, Calif.--April 2, 2001--Network Peripherals Inc. (NPI) (Nasdaq: NPIX)
today announced that it has invested US$25 million for a significant minority
stake in privately held FalconStor Software, Inc. Headquartered in Melville, New
York, and headed by ReiJane Huai, formerly President and Chief Executive Officer
of Cheyenne Software, FalconStor is an emerging leader in network storage
infrastructure software, one of the fastest-growing areas of the $44 billion
global storage industry.
Under the terms of the transaction, which was unanimously approved by the NPI
Board of Directors, NPI has also acquired an exclusive option to merge with
FalconStor, which option may be exercised during a 14-day period expected to
begin during the last week of April 2001. Upon exercise of the option and
completion of the merger, NPI would change its name to FalconStor, with the
merged company headquartered in Melville, New York. It is anticipated that NPI
shareholders would hold approximately one-third of the common stock of the
combined enterprise. Completion of the merger would be subject to expiration of
the applicable Hart-Scott-Rodino waiting period, NPI shareholder approval and
other customary closing conditions. Reflecting the transaction announced today,
NPI has the right to name a director to FalconStor's existing three-member
Board.
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"This transaction is designed to achieve our overriding objective of building
value for all NPI shareholders," said Jim Regel, President and Chief Executive
Officer of NPI. "It will reposition the company as a leading provider of network
storage infrastructure software. It will give us the potential to realize the
high growth, high operating margins and profitability associated with successful
software enterprises. Moreover, we will have the strategic, operational and
financial resources for significant future growth in the rapidly growing storage
management software market, which is expected to be a $14 billion industry by
2004.
"We are particularly pleased to deepen our relationship with ReiJane Huai.
ReiJane is widely regarded as a technology visionary throughout the storage
industry. He is well-known for his remarkable record at Cheyenne Software, which
was acquired by Computer Associates in 1996 in a $1.3 billion transaction,"
Regel concluded.
Reflecting its strategic decision to focus on software solutions for the
convergence of networking and storage, NPI has retained Lehman Brothers to
evaluate strategic alternatives for the company's existing hardware business.
"We welcome NPI's investment in our company, which builds upon the business
relationship we recently established with NPI," said ReiJane Huai, President and
Chief Executive Officer of FalconStor. "By enhancing our balance sheet,
FalconStor will be able to expand its R&D initiatives and accelerate the
establishment of its global business infrastructure."
On March 6, 2001, NPI announced its collaboration with FalconStor to embed that
company's new IPStorTM software into an NPI switch consistent with current
industry standards including Gigabit Ethernet ports, SCSI ports and Fibre
Channel ports. The new XSAN(TM) is also the first switch enabled by IPStor to
provision storage over IP with a full suite of enterprise-class storage services
including virtualization, mirroring, remote replication, snapshot and
zero-impact backup/restore facilitators. XSAN(TM) is designed to fully support
the emerging iSCSI standard.
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FalconStor has a leading software solution for IP storage. FalconStor's
open-standards- based software bridges all existing storage network standards
and provides seamless device compatibility between disparate storage subsystems,
leveraging the investment made in existing infrastructure. The company's
product, IPStor, enables IP-based storage and offers virtualization throughout
the storage environment to provide SAN (storage-area network) and NAS
(network-attached storage) services under a unified management umbrella,
representing a fundamental shift compared to current virtualization and storage
management solutions.
NPI's financial advisor with regard to the FalconStor transaction is Lehman
Brothers. Credit Suisse First Boston acted as placement agent and advisor to
FalconStor.
About FalconStor
FalconStor Software, Inc. is a storage infrastructure company bridging the
divide between storage and IP networking. FalconStor's IPStor is the first
software to centralize, virtualize and provision storage over IP using standard
industry components such as Gigabit Ethernet, Fibre Channel and SCSI, with
future support for iSCSI and InfiniBand. Founded in 2000, FalconStor is
headquartered in Melville, New York, with international offices in Paris,
Taichung (Taiwan) and Tokyo.
About Network Peripherals
Network Peripherals Inc. (NPI; Nasdaq: NPIX), headquartered in Fremont, Calif.,
supplies a full range of Layer 2/3 Ethernet switching solutions based on its
flexible NuWaveArchitecture(TM), a combination of proprietary chips and
high-performance software. The Company's product development and customer care
efforts are focused on market-specific solutions to help network owners handle
increased traffic, including media-rich applications. More information is
available in the U.S. at 800-674-8855 or at www.npi.com on the World Wide Web.
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The Company will conduct a conference call with investment professionals at 9:00
a.m. EDT (6:00 a.m. PDT) today, April 2, 2001, to discuss this announcement. The
conference call can be accessed by calling (888) 391-0900 or (415) 904-2449.
Additionally, there will be a webcast live at www.npi.com.
With the exception of historical information, the statements set forth above
include forward-looking statements (including but not limited to expected
benefits to be realized from the FalconStor transactions, express or implied
statements regarding the consummation or success of a potential merger
transaction and strategic alternatives for the hardware business and the
potential growth of the storage industry) that involve risk and uncertainties
that could cause actual results to differ materially from those in the
forward-looking statements. These risks and uncertainties include: risks that
the reduction in our liquid assets could limit our ability to operate
independently if the merger is not consummated; risks that the closing
conditions will not be satisfied; the early stage of FalconStor's business; our
dependence on a small number of OEM and distribution channel customers;
potential delays in product development; rapid technological change in the
storage and networking industries; potential litigation involving intellectual
property and other issues; and other risk factors discussed in the company's
reports on Forms 10-K, 10-Q and other reports filed with the Securities and
Exchange Commission.