<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.1)
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))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ULTRADATA Corporation
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction 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:
-----------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF ULTRADATA CORPORATION]
May 13, 1997
To Our Stockholders:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of ULTRADATA Corporation (the "Company") to be held at the offices of the
Company located at 5000 Franklin Drive, Pleasanton, California on Friday, May
30, 1997, at 2:00 p.m., local time.
The matters expected to be acted upon at the meeting are described in detail
in the following Notice of Annual Meeting and Proxy Statement.
It is important that you use this opportunity to take part in the affairs of
your Company by voting on the business to come before this meeting. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT
YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
THE PROXY SHOULD BE RETURNED TO THE OFFICES OF THE COMPANY AT 5000 FRANKLIN
DRIVE, PLEASANTON, CALIFORNIA 94588-3354, NOT LATER THAN 2:00 P.M. ON
WEDNESDAY, MAY 28, 1997, BEING 48 HOURS PRIOR TO THE TIME FIXED FOR THE ANNUAL
MEETING. Returning the Proxy does not deprive you of your right to attend the
meeting and to vote your shares in person.
We look forward to seeing you at the meeting.
Sincerely,
/s/ PHILIP D. RANGER
Philip D. Ranger
Secretary
<PAGE>
[LOGO OF ULTRADATA CORPORATION]
ULTRADATA CORPORATION
5000 FRANKLIN DRIVE
PLEASANTON, CALIFORNIA 94588-3354
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ULTRADATA
Corporation (the "Company") will be held at the offices of the Company located
at 5000 Franklin Drive, Pleasanton, California on Friday, May 30, 1997, at
2:00 p.m., for the following purposes:
1. To elect five directors of the Company, each to serve until the next
Annual Meeting of Stockholders or until his successor has been elected and
qualified or until his earlier resignation or removal. The Company's Board
of Directors intends to present the following nominees for election as
directors:
Nigel P. Gallop Robert J. Majteles
John F. Carlson Lawrence M. Howell
M. M. Stuckey
2. To approve an amendment to the Company's 1994 Equity Incentive Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder from 1,000,000 to 1,300,000 shares.
3. To approve an amendment to the Company's 1995 Employee Stock Purchase
Plan to increase the number of shares of Common Stock reserved for issuance
thereunder from 200,000 to 250,000 shares.
4. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for 1997.
5. To transact such other business as may properly come before the
meeting or 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 April 15, 1997 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ ROBERT J. MAJTELES
Robert J. Majteles
President and Chief Executive
Officer
Pleasanton, California
May 13, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE>
ULTRADATA CORPORATION
5000 FRANKLIN DRIVE
PLEASANTON, CALIFORNIA 94588-3354
----------------
PROXY STATEMENT
----------------
May 13, 1997
The accompanying proxy is solicited on behalf of the Board of Directors (the
"Board") of ULTRADATA Corporation, a Delaware corporation (the "Company" or
"ULTRADATA"), for use at the Annual Meeting of Stockholders of the Company to
be held at the offices of the Company located at 5000 Franklin Drive,
Pleasanton, California on Friday, May 30, 1997, at 2:00 p.m. (the "Meeting").
This Proxy Statement and the accompanying form of proxy were first mailed to
stockholders on or about May 13, 1997. An annual report for the year ended
December 31, 1996 is enclosed with this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Only holders of record of the Company's Common Stock at the close of
business on April 15, 1997 (the "Record Date") will be entitled to vote at the
Meeting. A majority of the shares outstanding on the Record Date will
constitute a quorum for the transaction of business at the Meeting. At the
close of business on the Record Date, the Company had 7,575,291 shares of
Common Stock outstanding and entitled to vote.
Holders of the Company's Common Stock are entitled to one vote for each
share held as of the Record Date. Shares of Common Stock may not be voted
cumulatively.
In the event that a broker, bank, custodian, nominee or other record holder
of the Company's Common Stock indicates on a proxy that it does not have
discretionary authority to vote certain shares on a particular matter (a
"broker non-vote"), those shares will not be considered present and entitled
to vote with respect to that matter, although they will be counted in
determining the presence of a quorum.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Meeting and
entitled to vote on the election of directors. Approval of Proposals No. 2, 3
and 4 requires the affirmative vote of the majority of shares of Common Stock
present in person or represented by proxy at the Meeting that are voted "for"
the proposal. Neither an abstention nor a broker non-vote will be counted as a
vote "for" or "against" Proposal No. 2, 3 or 4. All votes will be tabulated by
the inspector of elections appointed for the Meeting.
The proxy accompanying this Proxy Statement is solicited on behalf of the
Board for use at the Meeting. Stockholders are requested to complete, date and
sign the accompanying proxy card and promptly return it in the enclosed
envelope. All executed, returned proxies that are not revoked will be voted in
accordance with the instructions contained therein; however, returned signed
proxies that give no instructions as to how they should be voted on a
particular proposal will be counted as votes "for" such proposal (or, in the
case of the election of directors, as a vote "for" election to the Board of
all the nominees presented by the Board).
In the event that sufficient votes in favor of the proposals are not
received by the date of the Meeting, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitations of
proxies. Any such adjournment would require the affirmative vote of the
majority of the shares present in person or represented by proxy at the
Meeting and entitled to vote.
<PAGE>
The expenses of soliciting proxies to be voted at the Meeting will be paid
by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company will request that brokers, custodians,
nominees and other record holders of the Company's Common Stock forward copies
of the proxy and other soliciting materials to persons for whom they hold
shares of Common Stock and request authority for the exercise of proxies. In
such cases, the Company, upon the request of the record holders, will
reimburse such holders for their reasonable expenses. The original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers and regular employees of the
Company.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement has
the power to revoke it before the Meeting or at the Meeting before the vote
pursuant to the proxy. A proxy may be revoked by a writing delivered to the
Company stating that the proxy is revoked, by a subsequent proxy that is
signed by the person who signed the earlier proxy and is presented at the
Meeting, or by attendance at the Meeting and voting in person. Please note,
however, that if a stockholder's shares are held of record by a broker, bank
or other nominee and that stockholder wishes to vote at the Meeting, the
stockholder must bring to the Meeting a letter from the broker, bank or other
nominee confirming that stockholder's beneficial ownership of the shares.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
The Board currently consists of five directors. Five directors are to be
elected at the Meeting. Each director will be elected to hold office until the
next annual meeting of stockholders or until a successor is duly elected and
qualified or until such director's earlier resignation or removal. Shares
represented by the accompanying proxy will be voted for the election of each
of the five nominees named below unless the proxy is marked in such a manner
as to withhold authority so to vote. If any nominee for any reason is unable
to serve or for good cause will not serve, the proxies may be voted for such
substitute nominee as the proxy holder may determine. The Company is not aware
of any nominee who will be unable to or for good cause will not serve as a
director.
NOMINEES
The names of the nominees, each of whom is currently a director of the
Company, and certain information about them are set forth below:
<TABLE>
<CAPTION>
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---------------- --- -------------------- --------------
<S> <C> <C> <C>
Robert J. Majteles...... 32 President and Chief Executive 1996
Officer
Nigel P. Gallop......... 51 Chairman of the Board 1981
John F. Carlson......... 58 Small Business Advisor 1997
Lawrence M.
Howell(1)(2)........... 51 Managing Partner of Howell 1995
Capital
M. M. Stuckey(1)(2)..... 58 Chief Executive Officer and 1995
Chairman of the Board of Fourth
Shift Corporation
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Robert J. Majteles--Mr. Majteles is a director of the Company, served as
President and Chief Operating Officer since October 1996, and has served as
President and Chief Executive Officer since April 1997. From January 1992 to
June 1996, Mr. Majteles served in various executive positions at CAMAX Systems
Inc., a computer software firm, including President and Chief Executive
Officer from June 1994 to June 1996. Mr. Majteles holds a Bachelor of Arts
from Columbia College and a Juris Doctor from Stanford University.
Nigel P. Gallop--Mr. Gallop, a co-founder of the Company, has been a
director of the Company since its incorporation in May 1981 and has served as
its Chairman since October 1989. Mr. Gallop served as President of the Company
from October 1989 to October 1996, and served as Chief Executive Officer of
the Company from October 1989 to April 1997.
2
<PAGE>
John F. Carlson--Mr. Carlson has been a director of the Company since 1997.
Since June 1995, Mr. Carlson has been self-employed as an advisor to small
businesses. From September 1991 to December 1992, Mr. Carlson served as
President and Chief Operating Officer of Cray Research, Inc., a supercomputer
manufacturer, and as its Chairman and Chief Executive Officer from January
1993 to May 1995. Mr. Carlson holds a Bachelor of Science from St. Mary's
University of Minnesota.
Lawrence M. Howell--Mr. Howell has been a director of the Company since
December 1995. Since January 1996, Mr. Howell has been Managing Partner of
Howell Capital, an investment banking advisory firm. From January 1993 to
December 1995, Mr. Howell was employed by Morgan Stanley & Co. Incorporated,
an investment banking firm, where he served most recently as Advisory
Director. From May 1970 to December 1992, he was employed in the investment
banking division of Goldman Sachs & Co., an investment banking firm. Mr.
Howell holds a Bachelor of Business Administration from the University of
Texas and a Master of Business Administration from Southern Methodist
University.
M. M. Stuckey--Mr. Stuckey has been a director of the Company since December
1995. Since October 1982, Mr. Stuckey has been Chief Executive Officer and
Chairman of the Board of Fourth Shift Corporation, a supplier of client-server
based software. Mr. Stuckey holds a Bachelor of Science in Math and Business
from Southern Methodist University.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
During 1996, the Board met 6 times, including telephone conference meetings.
No director attended fewer than 75% of the aggregate of the total number of
meetings of the Board (held during the period for which he was a director) and
the total number of meetings held by all committees of the Board on which such
director served (during the period that such director served).
Standing committees of the Board include an Audit Committee and a
Compensation Committee. During 1996, the Board did not have a nominating
committee or a committee performing similar functions.
The current members of the Audit Committee are Messrs. Howell and Stuckey.
The Audit Committee was formed in September 1995 and met 4 times during 1996.
The Audit Committee meets with the Company's independent auditors to review
the adequacy of the Company's internal control systems and financial reporting
procedures; reviews the general scope of the Company's annual audit and the
fees charged by the independent auditors; reviews and monitors the performance
of non-audit services by the Company's auditors; reviews the fairness of any
proposed transaction between any officer, director or other affiliate of the
Company and the Company, and after such review, makes recommendations to the
full Board; and performs such further functions as may be required by any
stock exchange or over-the-counter market upon which the Company's Common
Stock may be listed.
The current members of the Compensation Committee are Messrs. Howell and
Stuckey. The Compensation Committee was formed in September 1995 and met 6
times during 1996. The Compensation Committee recommends compensation for
officers and employees of the Company, grants options and stock awards under
the Company's employee benefit plans and reviews and recommends adoption of
and amendments to stock option and employee benefit plans.
DIRECTOR COMPENSATION
The Company reimburses the members of its Board of Directors for reasonable
expenses associated with their attendance at Board meetings. Non-employee
directors are entitled to receive a quarterly retainer fee of $1,500, plus
$1,000 per Board meeting and $500 per committee meeting. Members of the Board
who are not employees of the Company, or any parent, subsidiary or affiliate
of the Company, are eligible to participate in the Company's 1995 Directors
Stock Option Plan. For a discussion of the provisions of the 1995 Directors
Stock Option Plan, see "Summary of 1995 Directors Stock Option Plan." In 1996,
the Company granted no options to directors under the 1995 Directors Stock
Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINATED DIRECTORS.
3
<PAGE>
PROPOSAL NO. 2--AMENDMENT OF 1994 EQUITY INCENTIVE PLAN
Stockholders are being asked to approve an amendment to the Company's 1994
Equity Incentive Plan (the "Incentive Plan") to increase the number of shares
of Common Stock reserved for issuance thereunder by 300,000 shares, from
1,000,000 shares to 1,300,000 shares.
The Board believes that the increase in the number of shares reserved for
issuance under the Incentive Plan is in the best interests of the Company
because of the continuing need to provide stock options to attract and retain
quality employees and remain competitive in the industry. The grant of equity
incentives under the Incentive Plan plays an important role in the Company's
efforts to attract and retain employees of outstanding ability. Competition
for skilled engineers and other key employees in the software industry is
intense and the use of significant stock options for retention and motivation
of such personnel is pervasive in the high technology industries. The Board
believes that the additional reserve of shares with respect to which equity
incentives may be granted will provide the Company with adequate flexibility
to ensure that the Company can continue to meet those goals and facilitate the
Company's expansion of its employee base.
The Board approved the proposed amendment in April 1997, to be effective
upon stockholder approval. Below is a summary of the principal provisions of
the Incentive Plan, assuming stockholder approval of the amendment. The
summary is not necessarily complete, and reference is made to the full text of
the Incentive Plan.
INCENTIVE PLAN HISTORY
The Incentive Plan was adopted by the Board in March 1994 and approved by
the stockholders of the Company in July 1994. An amendment and restatement of
the Incentive Plan was adopted by the Board in September 1995 to incorporate
certain provisions related to public companies. Stockholders approved this
amendment and restatement in September 1995. The purpose of the Incentive Plan
is to offer eligible persons an opportunity to participate in the Company's
future performance through awards of stock options, restricted stock and stock
bonuses.
From inception of the Incentive Plan in March 1994 to December 31, 1996,
options to purchase an aggregate of 1,035,800 shares of the Company's Common
Stock were granted under the Incentive Plan (including options made available
by the termination of unexercised options). Of these, options to purchase a
total of 685,800 shares were granted to all employees as a group (including
all current officers who are non-executive officers). The remaining options to
purchase 350,000 shares were granted to executive officers of the Company.
SHARES SUBJECT TO THE INCENTIVE PLAN
The stock subject to issuance under the Incentive Plan consists of shares of
the Company's authorized but unissued Common Stock. The Board reserved an
aggregate of 1,300,000 shares of Common Stock for issuance under the Incentive
Plan. Shares subject to an option granted pursuant to the Incentive Plan that
expires or terminates for any reason without being exercised or shares subject
to an award granted pursuant to the Incentive Plan that are forfeited or are
repurchased by the Company at the original issue price or are subject to an
award granted pursuant to the Incentive Plan that otherwise terminates without
shares being issued, will again become available for grant and issuance
pursuant to awards under the Incentive Plan. This number of shares is subject
to proportional adjustment to reflect stock splits, stock dividends and other
similar events.
ELIGIBILITY
Employees, officers, directors, consultants, and advisors of the Company
(and of any subsidiaries and affiliates) are eligible to receive awards under
the Incentive Plan (the "Participants"). No Participant is eligible to receive
more than 100,000 shares of Common Stock in any calendar year under the
Incentive Plan, other than new employees of the Company (including directors
and officers who are also new employees) who are eligible
4
<PAGE>
to receive up to a maximum of 250,000 shares of Common Stock in the calendar
year in which they commence their employment with the Company. As of December
31, 1996, approximately 300 persons were in the class of persons eligible to
participate in the Incentive Plan, 103,298 shares had been issued upon
exercise of options, 580,149 shares were subject to outstanding options and no
shares had been issued pursuant to stock bonus awards. As of that date,
316,104 shares were available for future grant, after taking into account the
proposed amendment to the Incentive Plan. The closing price of the Company's
Common Stock on the Nasdaq National Market was $3.625 per share as of April
14, 1997, the last trading day before the Record Date.
ADMINISTRATION
The Incentive Plan is administered by the Compensation Committee (the
"Committee"), the members of which are appointed by the Board. The Committee
currently consists of Lawrence M. Howell and M. M. Stuckey, both of whom are
"non-employee directors," as defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and "outside
directors", as defined pursuant to Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code").
Subject to the terms of the Incentive Plan, the Committee determines the
persons who are to receive awards, the number of shares subject to each such
award, and the terms and conditions of such awards. The Committee also has the
authority to construe and interpret any of the provisions of the Incentive
Plan or any awards granted thereunder.
STOCK OPTIONS
The Incentive Plan permits the granting of options that are intended to
qualify either as Incentive Stock Options ("ISOs") or Nonqualified Stock
Options ("NQSOs"). ISOs may be granted only to employees (including officers
and directors who are also employees) of the Company or any parent or
subsidiary of the Company. The option exercise price for each ISO share must
be no less than 100% of the "fair market value" (as defined in the Incentive
Plan) of a share of Common Stock at the time the ISO is granted. The option
exercise price for each NQSO share must be no less than 85% of the fair market
value of a share of Common Stock at the time of grant, provided that the per
share exercise price of any option granted to a 10% stockholder must be no
less than 110% of the fair market value of a share of Common Stock at the time
the option is granted. The Company has not granted options under the Incentive
Plan at less than fair market value and does not intend to do so in the
foreseeable future.
The exercise price of options granted under the Incentive Plan may be paid
as approved by the Committee at the time of grant: (1) in cash (by check); (2)
by cancellation of indebtedness of the Company to the Participant; (3) by
surrender of shares of the Company's Common Stock owned by the Participant for
more than six months (or obtained by the Participant in the public market) and
having a fair market value on the date of surrender equal to the aggregate
exercise price of the option; (4) by tender of a full recourse promissory
note; (5) by waiver of compensation due to or accrued by the Participant for
services rendered; (6) by tender of property (7) by a "same-day sale"
commitment from the Participant and a National Association of Securities
Dealers, Inc. ("NASD") broker; (8) by a "margin" commitment from the
Participant and a NASD broker; or (9) by any combination of the foregoing.
RESTRICTED STOCK AWARDS
The Committee may grant Participants restricted stock awards to purchase
stock either in addition to, or in tandem with, other awards under the
Incentive Plan, under such terms, conditions and restrictions as the Committee
may determine. The purchase price for such awards must be no less than 85% of
the fair market value of the Company's Common Stock on the date of the award
(and in the case of an award granted to a 10% stockholder, the purchase price
shall be 100% of fair market value) and can be paid for in any of the forms of
consideration listed in items (1) through (6) in "Stock Options" above, as are
approved by the Committee at the time of grant. The Company has not granted
any restricted stock awards under the Incentive Plan and does not intend to do
so in the foreseeable future.
5
<PAGE>
STOCK BONUS AWARDS
The Committee may grant Participants stock bonus awards either in addition
to, or in tandem with, other awards under the Incentive Plan, under such
terms, conditions and restrictions as the Committee may determine. The Company
has not granted any stock bonus awards under the Incentive Plan and does not
intend to do so in the foreseeable future.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL
In the event of a merger, consolidation, dissolution or liquidation of the
Company, the sale of substantially all of the assets of the Company or any
other similar corporate transaction, the successor corporation may assume,
replace or substitute equivalent awards in exchange for those granted under
the Incentive Plan or provide substantially similar consideration, shares or
other property as was provided to stockholders of the Company (after taking
into account provisions of the awards). In the event that the successor
corporation does not assume or substitute awards, such awards will expire upon
the closing of such transaction at the time and upon the conditions as the
Board determines.
AMENDMENT OF THE INCENTIVE PLAN
The Board may at any time terminate or amend the Incentive Plan, including
amending any form of award agreement or instrument to be executed pursuant to
the Incentive Plan. However, the Board may not amend the Incentive Plan in any
manner that requires stockholder approval pursuant to the Code or the
regulations promulgated thereunder, or pursuant to the Exchange Act or Rule
16b-3 (or its successor) promulgated thereunder.
TERM OF THE INCENTIVE PLAN
Unless terminated earlier as provided in the Incentive Plan, the Incentive
Plan will expire in March 2004, ten years from the date the Incentive Plan was
adopted by the Board.
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT OF
THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPANTS UNDER THE
INCENTIVE PLAN. FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL, STATE AND LOCAL
TAX CONSEQUENCES FOR ANY PARTICIPANT WILL DEPEND UPON HIS OR HER INDIVIDUAL
CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN AND IS ENCOURAGED TO SEEK THE ADVICE
OF A QUALIFIED TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN
THE INCENTIVE PLAN.
Incentive Stock Options. A Participant will recognize no income upon grant
of an ISO and incur no tax on its exercise (unless the Participant is subject
to the alternative minimum tax ("AMT")). If the Participant holds shares
acquired upon exercise of an ISO (the "ISO Shares") for more than one year
after the date the option was exercised and for more than two years after the
date the option was granted, the Participant generally will realize long-term
capital gain or loss (rather than ordinary income or loss) upon disposition of
the ISO Shares. This gain or loss will be equal to the difference between the
amount realized upon such disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration of either
required holding period (a "disqualifying disposition"), the gain realized
upon such disposition, up to the difference between the fair market value of
the ISO Shares on the date of exercise (or, if less, the amount realized on a
sale of such shares) and the option exercise price, will be treated as
ordinary income. Any additional gain will be long-term or short-term capital
gain, depending upon the amount of time the ISO Shares were held by the
Participant.
6
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Alternative Minimum Tax. The difference between the fair market value of the
ISO Shares on the date of exercise and the exercise price is an adjustment to
income for purposes of AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular tax) is 26% of an individual taxpayer's alternative minimum
taxable income (28% in the case of alternative minimum taxable income in
excess of $175,000). Alternative minimum taxable income is determined by
adjusting regular taxable income for certain items, increasing that income by
certain tax preference items (including the difference between the fair market
value of the ISO Shares on the date of exercise and the exercise price), and
reducing this amount by the applicable exemption amount ($45,000 in case of a
joint return, subject to reduction under certain circumstances). If a
disqualifying disposition of the ISO Shares occurs in the same calendar year
as exercise of the ISO, there is no AMT adjustment with respect to those ISO
Shares. Also, upon a sale of ISO Shares that is not a disqualifying
disposition, alternative minimum taxable income is reduced in the year of sale
by the excess of the fair market value of the ISO Shares at exercise over the
amount paid for the ISO Shares.
Nonqualified Stock Options. A Participant will not recognize any taxable
income at the time an NQSO is granted. However, upon exercise of an NQSO, the
Participant must include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the Participant's exercise price. The included amount must be treated as
ordinary income by the Participant and will be subject to withholding by the
Company (either by payment in cash or withholding out of the Participant's
salary). Upon resale of the shares by the Participant, any subsequent
appreciation or depreciation in the value of the shares will be treated as
capital gain or loss.
Restricted Stock and Stock Bonus Awards. Restricted stock and stock bonus
awards will generally be subject to tax at the time of receipt, unless there
are restrictions that enable the Participant to defer tax. At the time the tax
is incurred, the tax treatment will be similar to that discussed above for
NQSOs.
Omnibus Budget Reconciliation Act of 1993. The Omnibus Budget Reconciliation
Act of 1993 provides that the maximum tax rate applicable to ordinary income
is 39.6%. Long-term capital gain will be taxed at a maximum of 28%. For this
purpose, in order to receive long-term capital gain treatment, the shares must
be held for more than one year. Capital gains may be offset by capital losses
and up to $3,000 of capital losses may be offset annually against ordinary
income.
Tax Treatment of the Company. The Company generally will be entitled to a
deduction in connection with the exercise of an NQSO by a Participant or the
receipt of restricted stock or stock bonuses by a Participant to the extent
that the Participant recognizes ordinary income. The Company will be entitled
to a deduction in connection with the disposition of ISO Shares only to the
extent that the Participant recognizes ordinary income on a disqualifying
disposition of the ISO Shares.
ERISA. The Incentive Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") and is not qualified
under Section 401(a) of the Code.
THE BOARD RECOMMENDS A VOTE FOR THE AMENDMENT
OF THE 1994 EQUITY INCENTIVE PLAN
PROPOSAL NO. 3--AMENDMENT OF 1995 EMPLOYEE STOCK PURCHASE PLAN
Stockholders are being asked to approve an amendment to the Company's 1995
Employee Stock Purchase Plan (the "Stock Purchase Plan") to increase the
number of shares of Common Stock reserved for issuance thereunder by 50,000
shares, from 200,000 shares to 250,000 shares. The Board believes that the
increase in the number of shares reserved for issuance under the Stock
Purchase Plan is in the best interests of the Company because of the
continuing need to provide equity participation to attract and retain quality
employees and remain competitive in the industry. The Stock Purchase Plan
plays an important role in the Company's efforts to attract and retain
employees of outstanding ability.
7
<PAGE>
The Board approved the proposed amendment in April 1997, to be effective
upon stockholder approval. Below is a summary of the principal provisions of
the Stock Purchase Plan, assuming stockholder approval of the amendment. The
summary is not necessarily complete, and reference is made to the full text of
the Stock Purchase Plan.
STOCK PURCHASE PLAN HISTORY
The Board adopted the Stock Purchase Plan in September 1995 and it was
approved by the stockholders of the Company in September 1995. The Stock
Purchase Plan was amended in February 1996 to provide for a longer first
Offering Period, to change the dates of subsequent offering periods, and make
certain other administrative changes to the Purchase Plan, and such amendment
was approved by the stockholders in February 1996. The purpose of the Stock
Purchase Plan is to provide employees of the Company and its subsidiaries
("Participating Employees") with a convenient means to acquire an equity
interest in the Company through payroll deductions and to provide an incentive
for continued employment. The Company intends that the Stock Purchase Plan
will qualify as an "employee stock purchase plan" under Section 423 of the
Code.
SHARES SUBJECT TO THE STOCK PURCHASE PLAN
The stock subject to issuance under the Stock Purchase Plan consists of
shares of the Company's authorized but unissued Common Stock. An aggregate of
250,000 shares of Common Stock has been reserved by the Board for issuance
under the Stock Purchase Plan. This number of shares is subject to
proportional adjustment to reflect stock splits, stock dividends and other
similar events.
ADMINISTRATION
The Stock Purchase Plan is administered by the Committee. The interpretation
or construction by the Committee of any provisions of the Stock Purchase Plan
will be final and binding on all Participating Employees.
ELIGIBILITY
All employees of the Company, or any subsidiary, are eligible to participate
in an Offering Period (as defined below) under the Stock Purchase Plan, except
the following:
(a) employees who are not employed by the Company on the fifteenth day of
the month before the beginning of such Offering Period;
(b) employees who are customarily employed for less than 20 hours per
week;
(c) employees who are customarily employed for less than five months in a
calendar year; and
(d) employees who own stock or hold options to purchase stock or who, as
a result of participation in the Stock Purchase Plan, would own stock or
hold options to purchase stock, possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company.
As of December 31, 1996, approximately 300 persons were eligible to
participate in the Stock Purchase Plan. As of December 31, 1996, 30,566 shares
had been issued pursuant to the Stock Purchase Plan. As of that date, 169,434
shares were available for future issuance under the Stock Purchase Plan. As of
April 14, 1997 (the last trading day prior to the Record Date), the closing
price of the Company's Common Stock on the Nasdaq National Market was $3.625
per share.
Participating Employees participate in the Stock Purchase Plan through
payroll deductions. A Participating Employee sets the rate of such payroll
deductions, which may not be less than 2% nor more than 10% of the
Participating Employee's W-2 compensation, including, but not limited to, base
salary, wages, commissions, overtime, shift premiums, bonuses and draws
against commissions, before any deductions from the Participating Employee's
salary pursuant to Sections 125 or 401(k) of the Code. No Participating
Employee is permitted to purchase shares under the Stock Purchase Plan at a
rate which, when aggregated with such employee's rights to
8
<PAGE>
purchase stock under all similar purchase plans of the Company, exceeds
$25,000 in fair market value determined as of the Offering Date for each
calendar year.
OFFERING PERIODS
Each offering of Common Stock under the Stock Purchase Plan is for a period
of 6 months (the "Offering Period"). Offering Periods are planned to commence
on February 1 and August 1 of each year and end on July 31 and January 31 of
each year, respectively; provided, however, that the initial Offering Period
commenced on February 16, 1996 and will expire on July 31, 1996. The Board has
the power to change the duration of Offering Periods without stockholder
approval if such change is announced at least 15 days before the scheduled
beginning of the first Offering Period to be affected. The first business day
of each Offering Period is the "Offering Date" for such Offering Period and
the last business day of each Offering Period is the "Purchase Date" for such
Offering Period.
Participating Employees will participate in the Stock Purchase Plan during
each Offering Period through regular payroll deductions as described above.
Participating Employees may elect to participate in any Offering Period by
enrolling as provided under the terms of the Stock Purchase Plan. Once
enrolled, a Participating Employee will automatically participate in each
succeeding Offering Period unless the Participating Employee withdraws from
the Offering Period or the Stock Purchase Plan is terminated. After the rate
of payroll deductions for an Offering Period has been set by a Participating
Employee, that rate will continue to be effective for the remainder of the
Offering Period (and for all subsequent Offering Periods in which the
Participating Employee is automatically enrolled) unless otherwise changed by
the Participating Employee. The Participating Employee may increase or lower
the rate of payroll deductions for any subsequent Offering Period, but may
only lower the rate of payroll deductions for an ongoing Offering Period. No
more than one change may be made during a single Offering Period.
PURCHASE PRICE
The purchase price of shares that may be acquired in any Purchase Period
under the Stock Purchase Plan will be 85% of the lesser of: (i) the fair
market value of the shares on the Offering Date; or (ii) the fair market value
of the shares on the Purchase Date. The fair market value of a share of the
Company's Common Stock is deemed to be the closing price of the Company's
Common Stock on the Nasdaq National Market on the last trading day prior to
the date of determination as reported in The Wall Street Journal, except that
the fair market value of a share of the Company's Common Stock on the Offering
Date of the first Offering Period was the price per share at which shares of
the Company's Common Stock were offered for sale to the public in the
Company's initial public offering of shares of its Common Stock pursuant to a
registration statement filed with the SEC under the Securities Act.
PURCHASE OF STOCK UNDER THE STOCK PURCHASE PLAN
The number of whole shares a Participating Employee will be able to purchase
in any Offering Period will be determined by dividing the total payroll amount
withheld from the Participating Employee during the Offering Period pursuant
to the Stock Purchase Plan by the purchase price for each share determined as
described above. The purchase will take place automatically on the Purchase
Date of such Offering Period.
WITHDRAWAL
A Participating Employee may withdraw from any Offering Period. Upon
withdrawal, the accumulated payroll deductions will be returned to the
withdrawn Participating Employee, without interest, provided that the
withdrawal occurs at least 15 days before the related Purchase Date. If the
withdrawal occurs less than 15 days before such Purchase Date, payroll
deductions will continue for the remainder of that Offering Period. No further
payroll deductions for the purchase of shares will be made for the succeeding
Offering Period unless the Participating Employee enrolls in the new Offering
Period at least 15 days before the Offering Date.
9
<PAGE>
AMENDMENT OF THE STOCK PURCHASE PLAN
The Board may at any time amend, terminate or extend the term of the Stock
Purchase Plan, except that any such termination cannot affect the terms of
shares previously granted under the Stock Purchase Plan, nor may any amendment
make any change in the terms of shares previously granted which would
adversely affect the right of any participant, nor may any amendment be made
without stockholder approval if such amendment would: (a) increase the number
of shares that may be issued under the Stock Purchase Plan; (b) change the
designation of the employees (or class of employees) eligible for
participation in the Stock Purchase Plan; or (c) constitute an amendment for
which stockholder approval is required in order to comply with Rule 16b-3 (or
any successor rule) of the Exchange Act.
TERM OF THE STOCK PURCHASE PLAN
The Stock Purchase Plan will continue until the earlier to occur of: (i)
termination of the Stock Purchase Plan by the Board; (ii) the issuance of all
the shares of Common Stock reserved for issuance under the Stock Purchase
Plan; or (iii) September 2005, ten years after the date the Stock Purchase
Plan was adopted by the Board.
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT OF
THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND EMPLOYEES PARTICIPATING
IN THE STOCK PURCHASE PLAN. FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL, STATE
AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPATING EMPLOYEE WILL DEPEND UPON HIS
OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPATING EMPLOYEE HAS BEEN AND IS
ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISER REGARDING THE TAX
CONSEQUENCES OF PARTICIPATION IN THE STOCK PURCHASE PLAN.
The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code.
Tax Treatment of the Participating Employee. Participating Employees will
not recognize income for federal income tax purposes either upon enrollment in
the Stock Purchase Plan or upon the purchase of shares. All tax consequences
are deferred until a Participating Employee sells the shares, disposes of the
shares by gift or dies.
If shares are held for more than one year after the date of purchase and
more than two years from the beginning of the applicable Offering Period, or
if the Participating Employee dies while owning the shares, the Participating
Employee realizes ordinary income on a sale (or a disposition by way of gift
or upon death) to the extent of the lesser of: (i) 15% of the fair market
value of the shares at the beginning of the Offering Period; or (ii) the
actual gain (the amount by which the market value of the shares on the date of
sale, gift or death exceeds the purchase price). All additional gain upon the
sale of shares is treated as long-term capital gain. If the shares are sold
and the sale price is less than the purchase price, there is no ordinary
income and the Participating Employee has a long-term capital loss for the
difference between the sale price and the purchase price.
If the shares are sold or are otherwise disposed of including by way of gift
(but not death, bequest or inheritance) (in any case, a "disqualifying
disposition") within either the one-year or the two-year holding periods
described above, the Participating Employee realizes ordinary income at the
time of sale or other disposition, taxable to the extent that the fair market
value of the shares at the date of purchase is greater than the purchase
price. This excess will constitute ordinary income (not currently subject to
withholding) in the year of the sale or other disposition even if no gain is
realized on the sale or if a gratuitous transfer is made. The difference, if
any, between the proceeds of sale and the aggregate fair market value of the
shares at the date of purchase is a capital gain or loss. Capital gains may be
offset by capital losses, and up to $3,000 of capital losses may be used
annually against ordinary income.
10
<PAGE>
Tax Treatment of the Company. The Company will be entitled to a deduction in
connection with the disposition of shares acquired under the Stock Purchase
Plan only to the extent that the Participating Employee recognizes ordinary
income on a disqualifying disposition of the shares. The Company will treat
any transfer of record ownership of shares as a disposition, unless it is
notified to the contrary. In order to enable the Company to learn of
disqualifying dispositions and ascertain the amount of the deductions to which
it is entitled, Participating Employees will be required to notify the Company
in writing of the date and terms of any disposition of shares purchased under
the Stock Purchase Plan.
ERISA. The Stock Purchase Plan is not subject to any of the provisions of
ERISA nor is it qualified under Section 401(a) of the Code.
THE BOARD RECOMMENDS A VOTE FOR THE AMENDMENT OF THE
1995 EMPLOYEE STOCK PURCHASE PLAN
PROPOSAL NO. 4--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Company has selected KPMG Peat Marwick LLP as its independent auditors
to perform the audit of the Company's financial statements for the year ending
December 31, 1997, and the stockholders are being asked to ratify such
selection. Representatives of KPMG Peat Marwick LLP will be present at the
Meeting, will have the opportunity to make a statement at the Meeting if they
desire to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF KPMG PEAT MARWICK LLP
SUMMARY OF 1995 DIRECTORS STOCK OPTION PLAN
Below is a summary of the principal provisions of the Company's 1995
Directors Stock Option Plan. There is no need to vote for stockholder approval
of this plan at the Meeting, and stockholder approval is not being sought.
This summary is provided to inform the stockholders of the Company of terms
and conditions of such plan and is qualified in its entirety by reference to
the full text of such plan.
DIRECTORS PLAN HISTORY
The Company's 1995 Directors Stock Option Plan (the "Directors Plan") was
adopted by the Board in September 1995 and approved by the stockholders of the
Company in September 1995. The purpose of the Directors Plan is to enhance the
Company's ability through the use of equity incentives to attract and retain
highly qualified outside directors.
STOCK SUBJECT TO OPTIONS
The stock subject to options under the Directors Plan consists of shares of
the Company's authorized but unissued Common Stock. The aggregate number of
shares that may be issued pursuant to the Directors Plan is 150,000 shares of
Common Stock, subject to proportional adjustment to reflect stock splits,
stock dividends and other similar events. In the event that any outstanding
option under the Directors Plan expires or is terminated for any reason, the
shares of Common Stock allocable to the unexercised portion of such option may
again be available for the grant of options under the Directors Plan.
ADMINISTRATION
The Directors Plan is administered by the Board. The interpretation by the
Board of any of the provisions of the Directors Plan or any option granted
under the Directors Plan will be final and conclusive.
11
<PAGE>
ELIGIBILITY
Under the Directors Plan, the Company automatically grants options to each
director of the Company who is not an employee of the Company (or of any
parent, subsidiary or affiliate of the Company) (the "Outside Directors") in
accordance with the formula specified in the next paragraph. As of December
31, 1996, two persons were in the class of persons eligible to receive options
pursuant to the Directors Plan, no shares had been issued upon exercise of
options and the Company's current non-employee directors, as a group, had been
granted options to purchase an aggregate of 40,000 shares under the Directors
Plan. As of April 14, 1997 (the last trading day prior to the Record Date),
the closing price of the Company's Common Stock on the Nasdaq National Market
was $3.625 per share.
FORMULA FOR OPTION GRANTS
Each Outside Director who first becomes a member of the Board on or after
the effective date of the Directors Plan, will automatically be granted an
option to purchase 20,000 shares of Common Stock on the date the Outside
Director first becomes a member of the Board (an "Initial Grant"). At each
annual meeting of stockholders following the effective date of the Directors
Plan, each outside Director who has served continuously as a member of the
Board for at least one year will automatically be granted an option for 5,000
shares (a "Succeeding Grant").
TERMS OF OPTION GRANTS
Options granted pursuant to the Directors Plan are intended to be NQSOs.
Each Initial Grant and Succeeding Grant will have a term of ten years and be
exercisable as they vest. The shares vest at the rate of 25% of the shares
subject to such option upon each of the first 4 successive anniversaries of
such Initial Grant or Succeeding Grant, so long as the Outside Director
continuously remains a director of the Company. The option exercise price will
be the "fair market value" (as defined in the Directors Plan) of the Common
Stock of the Company as of the date of the grant of the option. The option
exercise price will be payable in cash (by check) and in a number of other
forms of consideration, including fully paid shares of Common Stock owned by
the Outside Director for more than six months, by waiver of compensation due
or accrued to the Outside Director for services rendered, through a "same day
sale," through a "margin commitment," or through any combination of the
foregoing.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL
In the event of a merger or consolidation in which the Company is not the
surviving corporation, the dissolution or liquidation of the Company, the sale
of substantially all of the assets of the Company or any other similar
corporate transaction, the vesting of all options grant pursuant to the
Directors Plan will accelerate and the options will become exercisable in full
prior to the consummation of such corporate transaction at such times and on
such conditions as the Committee determines. Such options, if not exercised
prior to the consummation of the corporate transaction, shall terminate in
accordance with the provisions of the Directors Plan.
AMENDMENT OF THE DIRECTORS PLAN
The Committee, to the extent permitted by law, and with respect to any
shares at the time not subject to options, may terminate or amend the
Directors Plan; provided, however, that the Committee may not, without
shareholder approval, increase the total number of shares of Common Stock
available for issuance under the Directors Plan or change the class of persons
eligible to receive options; and provided further that amendments may not be
made to the formula for and terms of option grants more than once in any six-
month period, other than to comport with changes in the Code, ERISA or the
rules thereunder. In any case, no amendment of the Directors Plan may
adversely affect any then outstanding options or any unexercised portions
thereof without the written consent of the Outside Director.
TERM OF THE DIRECTORS PLAN
Unless terminated earlier as provided in the Directors Plan, options may be
granted pursuant to the Directors Plan from time to time up until September
2005, ten years after the date the Directors Plan was adopted by the Board.
12
<PAGE>
FEDERAL INCOME TAX INFORMATION
For the federal tax implications to the Outside Directors and the Company
for options granted under the Directors Plan, please refer to the discussion
of the tax implications of NQSOs in "Proposal No. 2--Amendment of 1994 Equity
Incentive Plan--Federal Income Tax Information" above.
ERISA
The Directors Plan is not subject to any of the provisions of ERISA nor is
it qualified under Section 401(a) of the Code.
NEW PLAN BENEFITS
The amounts of future option grants under the Incentive Plan are not
determinable because, under the terms of the Incentive Plan, such grants are
made in the discretion of the Committee. Future option exercise prices are not
determinable because they are based upon fair market value of the Company's
Common Stock on the date of grant. Similarly, the amounts of future stock
purchases under the Stock Purchase Plan are not determinable because, under
the terms of the Stock Purchase Plan, purchases are based upon elections made
by Participating Employees. Future purchase prices are not determinable
because they are based upon fair market value of the Company's Common Stock.
Only non-employee directors of the Company are eligible to participate in
the Directors Plan. The grant of options under the Directors Plan is not
discretionary. Under the Directors Plan, each outside director who has served
continuously for at least one year will automatically be granted an option to
purchase 5,000 shares of the Company's Common Stock on the date of the
Meeting. Any outside director who first joins the Board during 1997 will
automatically be granted an option to purchase 20,000 shares of the Company's
Common Stock on the date of his or her first appointment to the Board. The
exercise prices of these options are not determinable because they are equal
to fair market value of the Company's Common Stock on the date of grant.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 15, 1997,
with respect to the beneficial ownership of the Company's Common Stock by: (i)
each stockholder known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock; (ii) each director and nominee; (iii) each
Named Executive Officer; and (iv) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF PERCENT OF OUTSTANDING
OWNER BENEFICIAL OWNERSHIP(1) COMMON STOCK(1)
------------------------------ ----------------------- ----------------------
<S> <C> <C>
Nigel P. Gallop(2)............. 1,729,000 21.5%
c/o ULTRADATA Corporation
5000 Franklin Drive
Pleasanton, California 94588-
3544
Andrew J. Phelan............... 1,279,000 16.9%
c/o Ultradata Australia
25 Richardson Street
West Perth 6005
Australia
Brian N. Dean.................. 1,178,742 15.6%
1919 Malvern Road
East Malvern Victoria
Australia 3145
Malcolm R. McKellar............ 1,055,000 13.9%
25 Endeavor Street
Port Douglas 4871
Australia
John F. Carlson................ -- --%
Lawrence M. Howell(3).......... 21,300 *
M. M. Stuckey(4)............... 7,500 *
Robert J. Majteles............. -- --%
Philip D. Ranger(5)............ 1,499 *
David J. Robbins(6)............ 7,499 *
James R. Graham, II(7)......... 66,665 *
Whitelaw Wright III(8)......... 38,541 *
Mary K. Pecka.................. -- --%
All executive officers and
directors as a group
(10 persons)(9)............... 1,872,004 23.0%
</TABLE>
- --------
* Less than 1%
(1) Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all
shares beneficially owned, subject to community property laws where
applicable. Shares of Common Stock subject to options that are currently
exercisable or exercisable within 60 days of April 15, 1997 are deemed to
be outstanding and to be beneficially owned by the person holding such
options for the purpose of computing the percentage ownership of such
person but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person.
(2) Includes 450,000 shares of Common Stock subject to options exercisable
within 60 days of April 15, 1997. Mr. Gallop is a director of the Company.
(3) Includes 11,400 shares held by the Howell Revocable Trust and 4,900 shares
held by the Howell Children's Trust. Also includes 5,000 shares of Common
Stock subject to options exercisable within 60 days of April 15, 1997. Mr.
Howell is a director of the Company.
(4) Includes 5,000 shares of Common Stock subject to options exercisable
within 60 days of April 15, 1997. Mr. Stuckey is a director of the
Company.
(5) Includes 1,499 shares of Common Stock subject to options exercisable
within 60 days of April 15, 1997. Mr. Ranger is Chief Financial Officer of
the Company.
(6) Includes 7,499 shares of Common Stock subject to options exercisable
within 60 days of April 15, 1997. Mr. Robbins is Vice President, Customer
Services of the Company.
(7) Includes 66,665 shares of Common Stock subject to options exercisable
within 60 days of April 15, 1997. Mr. Graham is a former President and
Chief Operating Officer of the Company.
(8) Includes 38,541 shares of Common Stock subject to options exercisable
within 60 days of April 15, 1997. Mr. Wright is a former Executive Vice
President, Product Development of the Company.
(9) Includes 574,204 shares of Common Stock subject to options exercisable
within 60 days of April 15, 1997, including the options described in
footnotes (2) through (8).
14
<PAGE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME OF EXECUTIVE
OFFICER AGE TITLE OFFICER SINCE
- ----------------- --- ----- -------------
<S> <C> <C> <C>
Robert J. Majteles...... 32 President and Chief Executive Officer 1996
Philip D. Ranger........ 40 Chief Financial Officer 1996
David J. Robbins........ 38 Vice President, Customer Service 1995
Ronald A. Marguglio..... 54 Vice President, Sales and Marketing 1996
Cindy L. Stinnette...... 39 Vice President, Product Development 1997
</TABLE>
Robert J. Majteles--Mr. Majteles is a director of the Company, served as
President and Chief Operating Officer since October 1996, and has served as
President and Chief Executive Officer since April 1997. From January 1992 to
June 1996, Mr. Majteles served in various executive positions at CAMAX
Systems, Inc., a computer software firm, including President and Chief
Executive Officer from June 1994 to June 1996. Mr. Majteles holds a Bachelor
of Arts from Columbia College and a Juris Doctor from Stanford University.
Philip D. Ranger--Mr. Ranger has served as Chief Financial Officer since
December 1996. From December 1995 to December 1996, Mr. Ranger served as the
Company's Director, Financial Planning. From October 1989 to June 1994, Mr.
Ranger served in various managerial positions at Triad Systems Corporation.
Mr. Ranger holds a Bachelor of Arts from the University of Texas.
David J. Robbins--Mr. Robbins has served as Vice President, Customer
Services since November 1995. From January 1992 to November 1995, Mr. Robbins
served as Director, Product Development at Automated Data Processing, Inc.
From March 1986 to January 1992, he served as branch manager of Progressive
Corporation. Mr. Robbins holds a Bachelor of Arts from Westminister College
and a Master of Arts from the University of Phoenix.
Ronald A. Marguglio--Mr. Marguglio has served as Vice President, Sales &
Marketing since September 1996. Mr. Marguglio served as Vice President and
Director of Marketing at Diebold Inc. from June 1993 to August 1996, and as
its Vice President, Western Division from February 1986 to May 1993. Mr.
Marguglio holds a Bachelor of Science from Charleston University.
Cindy L. Stinnette--Ms. Stinnette has served as Vice President, Product
Development since February 1997. Ms. Stinnette served as the Company's Product
Definition Specialist from July 1987 to August 1992, as Manager, Product
Development from August 1992 to January 1997, and as Director, Product
Development from January 1997 to February 1997.
15
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded, earned or paid for
services rendered in all capacities to the Company and its subsidiaries during
each of 1995 and 1996 to the Company's Chief Executive Officer, the Company's
four other most highly compensated executive officers who were serving as
executive officers at the end of 1996, and two highly compensated executive
officers who were not serving as executive officers at the end of 1996
(together, the "Named Executive Officers"). This information includes the
dollar values of base salaries, bonus awards, the number of shares subject to
stock options granted and certain other compensation, if any, whether paid or
deferred. The Company does not grant stock appreciation rights and has no
long-term compensation benefits other than the stock options.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- ------------
SECURITIES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING
POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS
------------------ ------ -------- ------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Nigel P. Gallop......... 1996 $338,381 $ -- $ -- 35,000
Chief Executive Officer 1995 $530,286 -- -- 600,000
Robert J. Majteles...... 1996 $ 51,250(2) $ -- $14,288(3) 600,000
President and Chief
Operating Officer
Philip D. Ranger........ 1996 $113,333 $ -- $ -- 4,000
Chief Financial Officer 1995(4) $ 7,153 -- -- --
David J. Robbins........ 1996 $110,000 $ -- $ -- 20,000
Vice President, 1995(6) $ 9,871 -- -- --
Customer Services
James R. Graham, II..... 1996 $251,515 -- $40,565(7) 50,000
Former President and 1995 $210,484 -- $ 8,198 --
Chief Operating Officer
Whitelaw Wright III..... 1996 $191,050 $27,000(5) $ -- 20,000
Former Executive Vice 1995 $153,713 -- $ 6,260 --
President,
Product Development
Mary K. Pecka........... 1996 $164,931 $ -- $16,584(7) --
Former Executive Vice 1995 $153,713 -- $ 6,687 --
President, Training and
Installation
</TABLE>
- --------
(1) Unless otherwise noted, consists of contributions made by the Company to
each Named Executive Officer's 401(k) plan account in 1995. These
contributions are subject to a vesting schedule that provides for vesting
of 20% of the contributions for each year of service with the Company.
(2) Mr. Majteles commenced employment with the Company in October 1996. Mr.
Majteles was appointed Chief Executive Officer in April 1997.
(3) Represents payment to Mr. Majteles for relocation expenses.
(4) Mr. Ranger was employed by the Company as its Director of Finance in
December 1995.
(5) The Company paid Mr. Wright a discretionary $27,000 bonus reflecting
performance in 1995 and determined in 1996.
(6) Mr. Robbins commenced employment as Vice-President, Customer Services in
December 1995.
(7) Represents accrued vacation paid upon termination of employment.
The following table sets forth further information regarding option grants
during 1996 to each of the Named Executive Officers. Except with respect to
the option granted to Mr. Majteles, all options were granted pursuant to the
Company's 1994 Equity Incentive Plan. In accordance with the rules of the
Securities and Exchange
16
<PAGE>
Commission, the table sets forth the hypothetical gains or "option spreads"
that would exist for the options at the end of their respective ten-year
terms. These gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the option was granted to the end of
the option term.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF PERCENTAGE OF VALUE AT ASSUMED ANNUAL
SECURITIES TOTAL OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION --------------------------------
NAME GRANTED(1) 1996 PER SHARE DATE 5% 10%
---- ---------- ------------- -------------- ---------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Nigel P. Gallop......... 35,000 3.8% $6.625 8/23/06 $ 145,824.94 $ 369,548.46
Robert J. Majteles...... 600,000 65.3% $ 3.50 10/17/06 $ 1,320,676.66 $ 3,346,854.00
Philip D. Ranger........ 4,000 0.4% $ 7.25 2/8/06 $ 18,237.94 $ 46,218.53
David J. Robbins........ 20,000 2.2% $ 7.25 2/8/06 $ 91,189.72 $ 231,092.30
James R. Graham, II..... 50,000 5.4% $6.625 6/29/97 $ 208,321.34 $ 527,926.38
Whitelaw Wright III..... 20,000 2.2% $ 7.25 2/8/06 $ 91,189.72 $ 231,092.30
Mary K. Pecka........... -- -- -- -- -- --
</TABLE>
- --------
(1) The options shown in the table were granted at fair market value, are
(with the exception of the nonqualified option grant to Mr. Majteles)
incentive stock options and will expire ten years from the date of grant,
subject to earlier termination upon termination of the optionee's
employment. The options become exercisable over a four-year period, with
25% of the shares vesting on the first anniversary of the date of grant
and thereafter 2.083% of the shares vesting for each full month that the
optionee renders services to the Company.
(2) The 5% and 10% assumed annual compound rates of stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of future Common Stock
prices.
The following table sets forth certain information concerning the exercise
of options by each of the Named Executive Officers during 1996, including the
aggregate amount of gains on the date of exercise. In addition, the table
includes the number of shares covered by both exercisable and unexercisable
stock options as of December 31, 1996. Also reported are values of "in-the-
money" options that represent the positive spread between the respective
exercise prices of outstanding stock options and $4.125 per share, which was
the closing price of the Company's Common Stock as reported on the Nasdaq
National Market on December 31, 1996, the last day of trading for 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR- IN-THE-MONEY OPTIONS AT
SHARES END(1) FISCAL YEAR-END(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(1) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Nigel P. Gallop......... -- -- 485,000 150,000 -- --
Robert J. Majteles...... -- -- -- 600,000 -- $375,000
Philip D. Ranger........ -- -- -- 4,000 -- --
David J. Robbins........ -- -- -- 20,000 -- --
James R. Graham, II..... -- -- -- -- -- --
Whitelaw Wright III..... -- -- 37,500 32,500 -- --
Mary K. Pecka........... 50,000 $30,625 -- -- -- --
</TABLE>
- --------
(1) "Value Realized" represents the fair market value of the shares of Common
Stock underlying the option on the date of exercise less the aggregate
exercise price of the option.
(2) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized and are based on the
positive spread between the respective exercise prices of outstanding
options and the closing price of the Company's Common Stock on December
31, 1996, the last day of trading for 1996.
17
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Howell and Stuckey. For a
description of transactions between the Company and members of the
Compensation Committee and entities affiliated with such members, see the
discussion under "Certain Relationships and Related Transactions" below.
EMPLOYMENT AGREEMENTS
The Company is a party to an employment agreement dated as of January 1,
1992 with Nigel P. Gallop (the "Former Employment Agreement") pursuant to
which he served as President and Chief Executive Officer of the Company. Under
the Former Employment Agreement, Mr. Gallop's base salary was initially set at
$443,000 per year, which was increased annually to adjust for inflation. In
addition, Mr. Gallop was entitled to receive an incentive bonus equal to 30%
of the amount by which royalties paid to the Company's stockholders and the
Company's profits exceeded 12% of the Company's gross revenues. Mr. Gallop was
also entitled to certain medical and disability benefits, reimbursement of
various expenses, including expenses associated with his relocation from
Australia to the United States, the use of an automobile and certain other
benefits. The Former Employment Agreement expired on December 31, 1996 and
provided for the continued payment of Mr. Gallop's base salary, benefits and
reimbursement of expenses through December 31, 1996 in the event that he was
terminated other than for cause. In July 1995, the Company approved a new
Employment Agreement with Mr. Gallop (the "Current Employment Agreement")
pursuant to which he was to continue to serve as the Company's President and
Chief Executive Officer. The Current Employment Agreement superseded the
Former Employment Agreement effective March 1, 1996. Under the current
Employment Agreement, he received a base salary at the rate of $300,000 per
year from March 1, 1996 through December 31, 1996, which was to be increased
annually to account for inflation, and he was entitled to benefits similar to
those under the Former Employment Agreement. The Current Employment Agreement
will expire on December 31, 1998, unless terminated earlier in accordance with
its provisions. If Mr. Gallop's employment is terminated by the Company other
than for cause, the Current Employment Agreement provides that he will receive
as severance his base salary, benefits and reimbursement of expenses through
December 31, 1998. In October 1996 and April 1997, Mr. Gallop ceased being
President and Chief Executive Officer, respectively, although he continues to
be Chairman of the Company.
The Company is currently negotiating a severance package with Mr. Gallop
that is expected to include: (a) termination of the Current Employment
Agreement; (b) cash severance of approximately $260,000; (c) transfer of
property valued at approximately $70,000; (d) acceleration of exercisability
of options to purchase 150,000 shares of Common Stock with an exercise price
of $6.00 per share; (e) extension of exercisability of options to purchase
600,000 shares of Common Stock with an exercise price of $6.00 per share
(including the accelerated shares) through expiration in July 2000; (f)
reimbursement of relocation expenses as incurred up to $100,000 and (g) an
agreement by Mr. Gallop not to receive any additional compensation as a
director of the Company, including but not limited to options under the
Directors Plan, other than reimbursement of expenses incurred on behalf of the
Company.
The Company also is a party to an employment agreement effective as of
October 17, 1996 with Robert J. Majteles pursuant to which he served as the
Company's President and Chief Operating Officer, which provides for Mr.
Majteles to receive an annual salary of $250,000. Mr. Majteles also is
entitled to certain medical and disability benefits and reimbursement of
expenses associated with his relocation to California. Mr. Majteles is
eligible to receive a bonus of up to 30% of his base salary annually according
to a bonus plan approved by the Compensation Committee. The Company also
granted to Mr. Majteles nonqualified options outside of the Incentive Plan to
purchase 600,000 shares of common stock at $3.50 per share. These options vest
over four years, with 25% of the shares becoming exerciseable on October 17,
1997 and the remaining shares vesting in equal increments monthly throughout
the remainder of the period. In addition, such options automatically
accelerate immediately prior to the closing of (a) a merger or acquisition in
which the Company is not the surviving entity (with certain exceptions); (b) a
sale, transfer or other disposition of all or substantially all of the assets
of the Company; (c) or any other corporate reorganization or business
combination in which the beneficial
18
<PAGE>
ownership of 50% or more of the Company's outstanding voting stock is
transferred. In addition, beginning January 1, 1998 and annually throughout
employment, Mr. Majteles is entitled to receive an ongoing option grant,
subject to board approval. The number of shares subject to such option grant
will be equal to $150,000 divided by the fair market value per share on the
date of grant and will be granted at fair market value. If Mr. Majteles is
terminated by the Company other than for cause, the Company will provide Mr.
Majteles with a severance payment equivalent to Mr. Majteles' then-current
base salary plus 30% of such base salary. Mr. Majteles was appointed Chief
Executive Officer of the Company in April 1997.
REPORT ON EXECUTIVE COMPENSATION
Final decisions regarding executive compensation and stock option grants to
executives are made by the Compensation Committee of the Board (the
"Committee"). Prior to the Company's initial public offering in February 1996,
the Board participated in compensation decisions and granted stock options.
The Committee is composed of two independent non-employee directors, neither
of whom have any interlocking relationships as defined by the Securities
Exchange Commission ("SEC").
GENERAL COMPENSATION POLICY
The Committee acts on behalf of the Board to establish the general
compensation policy of the Company for all employees of the Company. During
1996, the Committee reviewed base salary levels and target bonuses for the
Chief Executive Officer ("CEO") and other executive officers and employees of
the Company. During 1997, the Committee reviewed base salary levels and target
bonuses for the CEO and President and Chief Operating Officer of the Company
and general base salary levels and target bonuses for the other executive
officers. The Committee administers the Company's incentive and equity plans,
including the Incentive Plan and the Stock Purchase Plan.
The Committee's philosophy in compensating executive officers, including the
CEO, is to relate compensation directly to corporate performance. Thus, the
Company's compensation policy, which applies to its executive management,
relates a portion of each individual's total compensation to the Company-wide
revenues and earnings objectives. Consistent with this policy, a designated
portion of the compensation of the executive officers of the Company is
contingent on corporate performance, as determined by the Committee in its
discretion. Long-term equity incentives for executive officers are effected
through the granting of stock options under the Incentive Plan. Stock options
generally have value for the executive only if the price of the Company's
stock increases above the fair market value on the grant date and the
executive remains in the Company's employ for the period required for the
options to vest.
The base salaries, incentive compensation and stock option grants of the
executive officers are determined in part by the Committee informally
reviewing data on prevailing compensation practices in technology companies
with whom the Company competes for executive talent, and by their evaluating
such information in connection with the Company's corporate goals. To this
end, the Committee attempted to compare the compensation of the Company's
executive officers with the compensation practices of comparable companies to
determine base salary, target bonuses and target total cash compensation. In
addition, the Company's executive officers, other than those holding more than
10% of the Company's Common Stock (which in 1996 included the CEO), are each
entitled to participate in the Stock Purchase Plan.
In preparing the performance graph for this Proxy Statement, the Company
used the Standard & Poor's Technology (Computer Software & Services)-550 index
("S&P Software Sector Index") as its published line of business index. The
compensation practices of most of the companies in the S&P Software Sector
Index were not reviewed by the Company when the Committee reviewed the
compensation information described above because such companies were
determined not to be competitive with the Company for executive talent.
19
<PAGE>
1996 EXECUTIVE COMPENSATION
Base Compensation. The Committee reviewed the recommendations and
performance and market data outlined above and established a base salary level
effective January 1, 1996 for each executive officer, including the CEO. The
compensation of the Company's President and Chief Operating Officer was
determined by the Committee in October 1996 in connection with his
appointment. The Company considered the factors described above as well as the
Company's strategic management needs at the time.
Incentive Compensation. Cash bonuses are awarded only if the Company met
predetermined corporate objectives set annually by the Committee. Objectives
are set annually in accordance with the Company's strategic plan. Bonuses are
awarded quarterly based solely on the financial performance of the Company as
measured by quarterly revenues and quarterly earnings per share. The target
amount of bonus and the actual amount of bonus are determined by the
Committee, in its discretion in accordance with the plan established by the
Committee. As the Company did not meet its performance goals in 1996, no cash
bonuses were paid for 1996 to any of the Company's executive officers,
including the CEO.
Stock Options. Stock options are an essential element of the Company's
executive compensation package. The Committee believes that equity-based
compensation in the form of stock options links the interests of management
and stockholders by focusing employees and management on increasing
stockholder value. The actual value of such equity-based compensation depends
entirely on appreciation of the Company's stock. Nearly all of the Company's
full-time employees participate in the Incentive Plan.
Stock options typically have been granted to executive officers when the
executive first joins the Company, in connection with a significant change in
responsibilities and, occasionally, to achieve equity within a peer group. The
Committee may, however, grant additional stock options to executives for other
reasons. The number of shares subject to each stock option granted is within
the discretion of the Committee and is based on anticipated future
contribution and ability to impact corporate and/or business unit results,
past performance or consistency within the executive's peer group.
In February 1996, the Company granted options to two new executive officers.
In August 1996, stock options were granted to three of the Company's executive
officers, including the CEO, based on a review of comparable company
statistics. The Committee considered the foregoing factors, as well as the
number of options held by such executive officers as of the date of grant that
remained unvested. In October 1996, the Company granted a nonqualified stock
option to purchase 600,000 shares of the Company's Common Stock with an
exercise price equal to then-current fair market value to the Company's new
President and Chief Operating Officer in connection with his appointment. In
the discretion of the Committee, executive officers may also be granted stock
options to provide greater incentives to continue their employment with the
Company and to strive to increase the value of the Company's Common Stock. The
stock options generally become exercisable over a four-year period and are
granted at a price that is equal to the fair market value of the Company's
Common Stock on the date of grant.
Compliance with Section 162(m) of the Internal Revenue Code of 1986. The
Company intends generally to comply with the requirements of Section 162(m) of
the Internal Revenue Code of 1986. The Incentive Plan is already in compliance
with Section 162(m) by limiting stock awards to named executive officers. The
Company does not expect cash compensation for 1996 to be in excess of
$1,000,000 or consequently affected by the requirements of Section 162(m). The
option granted to the Company's President and Chief Operating Officer in
October 1996 was granted outside of the Incentive Plan and therefore did not
fall within the requirements of Section 162(m). The Committee expects future
option grants to be in compliance with Section 162(m).
COMPENSATION COMMITTEE
M. M. Stuckey, Chairman
Lawrence M. Howell
20
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The stock price performance graph below is required by the SEC and shall not
be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
soliciting material or filed under such Acts.
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company on February 16, 1996 (the effective date of the
Company's registration statement with respect to the Company's initial public
offering) to December 31, 1996 with the cumulative total return on the
Standard & Poor's Index and the S&P Software Sector Index over the same period
(assuming the investment of $100 in the Common Stock of Company and in each of
the other indices on the date of the Company's initial public offering, and
reinvestment of all dividends).
The comparisons in the graph below are based on historical data and are not
intended to forecast the possible future performance of the Company's Common
Stock.
TOTAL SHAREHOLDER RETURN
PERFORMANCE GRAPH APPEARS HERE
Base Base
Period Period
Company / Index 16 Feb 96 31 Dec 96
- ----------------------------------------------------------------------------
ULTRADATA CORP 100 41.25
S&P 500 INDEX 100 114.49
S&P SOFTWARE SECTOR INDEX 100 132.40
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1, 1996 to the present, there are no currently proposed
transactions in which the amount involved exceeds $60,000 to which the Company
or any of its subsidiaries was (or is to be) a party and in which any
executive officer, director, 5% beneficial owner of the Company's Common Stock
or member of the immediate family of any of the foregoing persons had (or will
have) a direct or indirect material interest, except for: (i) transactions set
forth under "Executive Compensation" above; (ii) indemnification agreements
entered into by the Company with each of its directors and executive officers
that provide the maximum indemnity available to directors and executive
officers under Section 145 of the Delaware General Corporation Law and the
Company's Bylaws, as well as certain additional procedural protections; and
(iii) a loan in the amount of $110,000 from the Company to Nigel P. Gallop,
which loan was repaid by Mr. Gallop. Such indemnity agreements provide
generally that the Company will advance expenses incurred by directors and
executive officers in any action or proceeding as to which they may be
indemnified, and require the Company to indemnify such individuals to the
fullest extent permitted by law.
21
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1998
Annual Meeting of Stockholders must be received by the Company at its
principal executive offices no later than December 1, 1997 in order to be
included in the Company's Proxy Statement and form of proxy relating to that
meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16 of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports
of changes in ownership with the SEC. Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors
of the Company, the Company believes that all Section 16(a) filing
requirements were met during 1996, except that the Form 4, reporting a
purchase of securities for Lawrence M. Howell and M. M. Stuckey, each of whom
is a director of the Company, were filed late. In addition, the Form 4,
reporting an option exercise and a sale of securities, for James R. Graham,
II, a former President and Chief Operating Officer of the Company, and the
Form 4, reporting a sale of securities for Brian N. Dean, beneficial owner of
more than 10% of the Company's Common Stock, of the Company, were filed late.
OTHER BUSINESS
The Board does not intend to bring any other business before the Meeting,
and, so far as is known to the Board, no matters are to be brought before the
Meeting except as specified in the notice of the Meeting. As to any business
that may properly come before the Meeting, however, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.
Dated: May 13, 1997
By Order of the Board of Directors
/s/ PHILIP D. RANGER
Philip D. Ranger
Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING.
22
<PAGE>
ULTRADATA CORPORATION
1994 EQUITY INCENTIVE PLAN
As Adopted March 23, 1994
As Amended and Restated as of September 14, 1995 and as of _________, 1997
1. PURPOSE. The purpose of the Plan, as amended herein (the
"AMENDMENT AND RESTATEMENT"), is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are
important to the success of the Company, its Parent, Subsidiaries and
Affiliates, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 18,
--------------------------
the total number of Shares reserved and available for grant and issuance
pursuant to the Plan shall be 1,300,000 Shares. Subject to Sections 2.2 and 18,
Shares that: (a) are subject to issuance upon exercise of an Option but cease
to be subject to such Option for any reason other than exercise of such Option;
(b) are subject to an Award granted hereunder but are forfeited or are
repurchased by the Company at the original issue price; or (c) are subject to an
Award that otherwise terminates without Shares being issued; will again be
available for grant and issuance in connection with future Awards under this
Plan. At all times the Company shall reserve and keep available a sufficient
number of Shares as shall be required to satisfy the requirements of all
outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
2.2 Adjustment of Shares. In the event that the number of
--------------------
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under the Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards shall be
proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share shall not be issued but shall
- -------- -------
either be replaced by a cash payment equal to the Fair Market Value of such
fraction of a Share or shall be rounded up to the nearest whole Share, as
determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may
be granted to employees, officers, directors, consultants and advisors of the
Company or any Parent, Subsidiary or Affiliate of the Company; provided such
--------
consultants and advisors render bona fide services not in connection with the
offer and sale of securities in a capital-raising transaction. No person shall
be eligible to receive more than 100,000 Shares in any calendar year under this
Plan pursuant to the grant of Awards hereunder, other than new employees of the
Company or of a Parent, Subsidiary or Affiliate of the Company (including new
employees who are also officers and directors of the Company or any Parent,
Subsidiary or Affiliate of the Company) who are eligible to receive up to a
maximum of 250,000 Shares in the calendar year in which they commence their
employment. A person may be granted more than one Award under the Plan.
4. ADMINISTRATION.
4.1 Committee Authority. The Plan shall be administered by the
-------------------
Committee or the Board acting as the Committee. Subject to the general
purposes, terms and conditions of the Plan, and to the direction of the Board,
the Committee shall have full power to implement and carry out the Plan. The
Committee shall have the authority to:
<PAGE>
(a) construe and interpret the Plan, any Award Agreement and any other
agreement or document executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations relating to the
Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to
Awards;
(f) determine whether Awards will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to,
other Awards under the Plan or any other incentive or compensation
plan of the Company or any Parent, Subsidiary or Affiliate of the
Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of the Plan.
4.2 Committee Discretion. Any determination made by the
--------------------
Committee with respect to any Award shall be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
the Plan or Award, at any later time, and such determination shall be final and
binding on the Company and all persons having an interest in any Award under the
Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under the Plan to Participants who are not Insiders
of the Company.
4.3 Exchange Act Requirements. If two (2) or more members of the
-------------------------
Board are Outside Directors, the Committee will be comprised of at least two (2)
members of the Board, all of whom are Outside Directors and Disinterested
Persons. During all times that the Company is subject to Section 16 of the
Exchange Act, the Company will take appropriate steps to comply with the
disinterested administration requirements of Section 16(b) of the Exchange Act,
which will consist of the appointment by the Board of a Committee consisting of
not less than two (2) members of the Board, each of whom is a Disinterested
Person.
5. OPTIONS. The Committee may grant Options to eligible persons and
shall determine whether such Options shall be Incentive Stock Options within the
meaning of the Code ("ISOS") or Nonqualified Stock Options ("NQSOS"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under the Plan
--------------------
shall be evidenced by an Award Agreement which shall expressly identify the
Option as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee shall from time to time approve, and which shall comply with and be
subject to the terms and conditions of the Plan.
-2-
<PAGE>
5.2 Date of Grant. The date of grant of an Option shall be the
-------------
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
the Plan will be delivered to the Participant within a reasonable time after the
granting of the Option.
5.3 Exercise Period. Options shall be exercisable within the
---------------
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option shall
-------- -------
be exercisable after the expiration of ten (10) years from the date the Option
is granted; and provided further that no ISO granted to a person who directly or
-------- -------
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary of the
Company ("TEN PERCENT STOCKHOLDER") shall be exercisable after the expiration of
five (5) years from the date the Option is granted. The Committee also may
provide for the Options to become exercisable at one time or from time to time,
periodically or otherwise, in such number of Shares or percentage of Shares as
the Committee determines.
5.4 Exercise Price. The Exercise Price shall be determined by
--------------
the Committee when the Option is granted and may be not less than 85% of the
Fair Market Value of the Shares on the date of grant; provided that (i) the
Exercise Price of an ISO shall be not less than 100% of the Fair Market Value of
the Shares on the date of grant and (ii) the Exercise Price of any Option
granted to a Ten Percent Stockholder shall not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of the Plan.
5.5 Method of Exercise. Options may be exercised only by
------------------
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set forth
-----------
in the Stock Option Agreement, exercise of an Option shall always be subject to
the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then Participant may exercise such Participant's
Options only to the extent that such Options would have been
exercisable upon the Termination Date no later than three (3)
months after the Termination Date (or such shorter or longer time
period not exceeding five (5) years as may be determined by the
Committee, with any exercise beyond three (3) months after the
Termination Date deemed to be an NQSO), but in any event, no
later than the expiration date of the Options.
(b) If the Participant is terminated because of Participant's death
or Disability (or the Participant dies within three (3) months
after termination other than because of Participant's death or
Disability), then Participant's Options may be exercised only to
the extent that such Options would have been exercisable by
Participant on the Termination Date and must be exercised by
Participant (or Participant's legal representative or authorized
assignee) no later than twelve (12) months after the Termination
Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any such
exercise beyond (a) three (3) months after the Termination Date
when the Termination is for any reason other than the
Participant's death or disability as defined in Code Section
22(e)(3), or (b) twelve (12) months after Termination Date when
the Termination is for Participant's death or disability as
defined in Code Section 22(e)(3), deemed to be an NQSO as may be
specified in the Stock Option Agreement), but in any event no
later than the expiration date of the Options.
-3-
<PAGE>
5.7 Limitations on Exercise. The Committee may specify a
-----------------------
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value
-------------------
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
the Plan or under any other incentive stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) shall not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, the Options for the first $100,000 worth of Shares to become
exercisable in such calendar year shall be ISOs and the Options for the amount
in excess of $100,000 that become exercisable in that calendar year shall be
NQSOs. In the event that the Code or the regulations promulgated thereunder are
amended after the Effective Date of this Amendment and Restatement to provide
for a different limit on the Fair Market Value of Shares permitted to be subject
to ISOs, such different limit shall be automatically incorporated herein and
shall apply to any Options granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
----------------------------------
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of Participant, impair any of Participant's rights under any
Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
- -------- -------
Exercise Price that would be permitted under Section 5.4 of the Plan for Options
granted on the date the action is taken to reduce the Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision in
-------------------
the Plan, no term of the Plan relating to ISOs shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee shall determine to whom an offer will be made, the number of
Shares the person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares shall be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
------------------------------
Restricted Stock Award made pursuant to the Plan shall be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that shall be in such form
(which need not be the same for each Participant) as the Committee shall from
time to time approve, and shall comply with and be subject to the terms and
conditions of the Plan. The offer of Restricted Stock shall be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If
such person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer shall terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant
--------------
to a Restricted Stock Award shall be determined by the Committee and shall be at
least 85% of the Fair Market Value of the Shares on the date the Restricted
Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price shall be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8
of the Plan.
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<PAGE>
6.3 Restrictions. Restricted Stock Awards shall be subject to
------------
such restrictions (if any) as the Committee may impose. The Committee may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or part, based on length of service,
performance or such other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
-----------------------
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may be
awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company (provided that the Participant pays the
Company the par value of the Shares awarded by such Stock Bonus in cash)
pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that shall be in
such form (which need not be the same for each Participant) as the Committee
shall from time to time approve, and shall comply with and be subject to the
terms and conditions of the Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that shall be in such form (which need not be the same for each
Participant) as the Committee shall from time to time approve, and shall comply
with and be subject to the terms and conditions of the Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent, Subsidiary or Affiliate
and/or individual performance factors or upon such other criteria as the
Committee may determine.
7.2 Terms of Stock Bonuses. The Committee shall determine the
----------------------
number of Shares to be awarded to the Participant and whether such Shares shall
be Restricted Stock. If the Stock Bonus is being earned upon the satisfaction
of performance goals pursuant to a Performance Stock Bonus Agreement, then the
Committee shall determine: (a) the nature, length and starting date of any
period during which performance is to be measured (the "PERFORMANCE PERIOD") for
each Stock Bonus; (b) the performance goals and criteria to be used to measure
the performance, if any; (c) the number of Shares that may be awarded to the
Participant; and (d) the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously
with respect to Stock Bonuses that are subject to different Performance Periods
and different performance goals and other criteria. The number of Shares may be
fixed or may vary in accordance with such performance goals and criteria as may
be determined by the Committee. The Committee may adjust the performance goals
applicable to the Stock Bonuses to take into account changes in law and
accounting or tax rules and to make such adjustments as the Committee deems
necessary or appropriate to reflect the impact of extraordinary or unusual
items, events or circumstances to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be
---------------
paid currently or on a deferred basis with such interest or dividend equivalent,
if any, as the Committee may determine. Payment may be made in the form of
cash, whole Shares, including Restricted Stock, or a combination thereof, either
in a lump sum payment or in installments, all as the Committee shall determine.
7.4 Termination During Performance Period. If a Participant is
-------------------------------------
Terminated during a Performance Period for any reason, then such Participant
shall be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee
shall determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
---------------------------
8.1 Payment. Payment for Shares purchased pursuant to the Plan
-------
may be made in cash (by check) or, where expressly approved for the Participant
by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such
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<PAGE>
shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares);
or (2) were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that Participants who are not
-------- -------
employees or directors of the Company shall not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares; provided,
--------
further, that the portion of the Purchase Price equal to the par
-------
value of the Shares, if any, must be paid in cash.
(d) by waiver of compensation due or accrued to Participant for
services rendered; provided, that the portion of the Purchase
--------
Price equal to the par value of the Shares, if any, must be paid
in cash;
(e) by tender of property;
(f) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Participant
irrevocably elects to exercise the Option and to sell a
portion of the Shares so purchased to pay for the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly
to the Company; or
(2) through a "margin" commitment from Participant and an NASD
Dealer whereby Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the exercise price directly to the Company;
or
(g) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant pay
---------------
for Shares purchased under the Plan by authorizing a guarantee by the Company of
a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
---------------------
satisfaction of Awards granted under the Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under the Plan, payments
in satisfaction of Awards are to be made in cash, such payment shall be net of
an amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
-----------------
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "TAX DATE"). All
-6-
<PAGE>
elections by a Participant to have Shares withheld for this purpose shall be
made in writing in a form acceptable to the Committee and shall be subject to
the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, then except as provided below, the election shall be
irrevocable as to the particular Shares as to which the election
is made;
(c) all elections shall be subject to the consent or disapproval of
the Committee;
(d) if the Participant is an Insider and if the Company is subject to
Section 16(b) of the Exchange Act: (1) the election may not be
made within six (6) months of the date of grant of the Award,
except as otherwise permitted by SEC Rule 16b-3(e) under the
Exchange Act, and (2) either (A) the election to use stock
withholding must be irrevocably made at least six (6) months prior
to the Tax Date (although such election may be revoked at any time
at least six (6) months prior to the Tax Date) or (B) the exercise
of the Option or election to use stock withholding must be made in
the ten (10) day period beginning on the third day following the
release of the Company's quarterly or annual summary statement of
sales or earnings; and
(e) in the event that the Tax Date is deferred until six (6) months
after the delivery of Shares under Section 83(b) of the Code, the
Participant shall receive the full number of Shares with respect
to which the exercise occurs, but such Participant shall be
unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant shall have any of the
--------------------
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
shall be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
--------
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company shall be subject to the same restrictions as
the Restricted Stock; provided, further, that the Participant shall have no
-------- -------
right to retain such stock dividends or stock distributions with respect to
Shares that are repurchased at the Participant's original Purchase Price
pursuant to Section 12.
10.2 Financial Statements. The Company shall provide financial
--------------------
statements to each Participant prior to such Participant's purchase of Shares
under the Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company shall not be
-------- -------
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under the Plan, and any interest
therein, shall not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as consistent with the specific
Plan and Award Agreement provisions relating thereto. During the lifetime of
the Participant an Award shall be exercisable only by the Participant, and any
elections with respect to an Award may be made only by the Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement (a)
a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, and/or (b) a
right to repurchase a portion of or all Shares held by a Participant following
such Participant's Termination at any time within ninety
-7-
<PAGE>
(90) days after the later of Participant's Termination Date and the date
Participant purchases Shares under the Plan, for cash or cancellation of
purchase money indebtedness, at: (A) with respect to Shares that are "Vested"
(as defined in the Award Agreement), the higher of: (l) Participant's original
Purchase Price, or (2) the Fair Market Value of such Shares on Participant's
Termination Date, provided, such right of repurchase terminates when the
--------
Company's securities become publicly traded; or (B) with respect to Shares that
are not "Vested" (as defined in the Award Agreement), at the Participant's
original Purchase Price, provided, that the right to repurchase at the original
--------
Purchase Price lapses at the rate of at least 20% per year over 5 years from the
date the Shares were purchased (or from the date of grant of options in the case
of Shares obtained pursuant to a Stock Option Agreement and Stock Option
Exercise Agreement) and if the right to repurchase is assignable, the assignee
must pay the Company, upon assignment of the right to repurchase, cash equal to
the excess of the Fair Market Value of the Shares over the original Purchase
Price.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under the Plan shall be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under the Plan shall be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
-------- -------
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company shall have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant shall be required to execute and deliver a written
pledge agreement in such form as the Committee shall from time to time approve.
The Shares purchased with the promissory note may be released from the pledge on
a pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant shall agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award shall
not be effective unless such Award is in compliance with all applicable federal
and state securities laws, rules and regulations of any governmental body, and
the requirements of any stock exchange or automated quotation system upon which
the Shares may then be listed or quoted, as they are in effect on the date of
grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in the Plan, the Company shall have no
obligation to issue or deliver certificates for Shares under the Plan prior to
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (b) completion of any registration
or other qualification of such shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company shall be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company shall have no liability for any inability or failure to
do so.
-8-
<PAGE>
17. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award granted
under the Plan shall confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent, Subsidiary or Affiliate of the Company or limit in any
way the right of the Company or any Parent, Subsidiary or Affiliate of the
Company to terminate Participant's employment or other relationship at any time,
with or without cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the
------------------------------------------------
event of (a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company and the Awards granted under the Plan are assumed or replaced by the
successor corporation, which assumption shall be binding on all Participants),
(b) a dissolution or liquidation of the Company, (c) the sale of substantially
all of the assets of the Company, or (d) any other transaction which qualifies
as a "corporate transaction" under Section 424(a) of the Code wherein the
stockholders of the Company give up all of their equity interest in the Company
(except for the acquisition, sale or transfer of all or substantially all of the
------
outstanding shares of the Company), any or all outstanding Awards may be assumed
or replaced by the successor corporation (if any), which assumption or
replacement shall be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event such
successor corporation (if any) refuses to assume or substitute Options, as
provided above, pursuant to a transaction described in this Subsection 18.1,
such Options shall expire on such transaction at such time and on such
conditions as the Board shall determine.
18.2 Other Treatment of Awards. Subject to any greater rights
-------------------------
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards shall be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
18.3 Assumption of Awards by the Company. The Company, from time
-----------------------------------
to time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Award under the Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under the Plan if the terms of such assumed award could be applied to an Award
granted under the Plan. Such substitution or assumption shall be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under the Plan if the other company had applied the rules of
the Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award shall remain unchanged
(except that the exercise price and the number and nature of Shares issuable
- -------
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Amendment and Restatement
shall become effective on the date on which the registration statement filed by
the Company with the SEC under the Securities Act registering the initial public
offering of the Company's Common Stock is declared effective by the SEC;
provided, however, that if the Effective Date does not occur on or before June
- -------- -------
30, 1996, this Amendment and Restatement will terminate as of June 30, 1996
having never become effective (the "EFFECTIVE DATE"). The Plan shall be
approved by the stockholders of the Company (excluding Shares issued pursuant to
this Plan), consistent with applicable laws, within twelve (12) months before or
after this Plan is adopted by the Board. Upon adoption by the Board, the Board
may grant Awards pursuant to the Plan; provided, however, that: (a) no Option
-------- -------
may be exercised prior to initial stockholder approval of the Plan; (b) no
Option granted pursuant to an increase in
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<PAGE>
the number of Shares approved by the Board shall be exercised prior to the time
such increase has been approved by the stockholders of the Company; and (c) in
the event that stockholder approval is not obtained within the time period
provided herein, all Awards granted hereunder shall be canceled, any Shares
issued pursuant to any Award shall be canceled and any purchase of Shares
hereunder shall be rescinded. So long as the Company becomes subject to Section
16(b) of the Exchange Act, the Company will comply with the requirements of Rule
16b-3 (or its successor), as amended, with respect to stockholder approval.
20. TERM OF PLAN. Unless earlier terminated as provided herein, the
Plan will terminate ten (10) years from the date the Plan is adopted by the
Board or, if earlier, the date of stockholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to the Plan; provided, however, that the Board shall not, without the approval
-------- -------
of the stockholders of the Company, amend the Plan in any manner that requires
such stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or (if the Company is subject
to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to the
Exchange Act or Rule 16b-3 (or its successor), as amended, thereunder,
respectively.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by
the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in the Plan, the following terms shall have
the following meanings:
"AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
"AWARD" means any award under the Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer the Plan, or if no committee is appointed, the Board.
"COMPANY" means Ultradata Corporation, a corporation organized
under the laws of the State of Delaware, or any successor corporation.
"DISABILITY" means a disability, whether temporary or permanent,
partial or total as determined by the Committee.
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<PAGE>
"DISINTERESTED PERSON" means a director who has not, during the
period that person is a member of the Committee and for one year prior to
service as a member of the Committee, been granted or awarded equity securities
pursuant to the Plan or any other plan of the Company or any Parent, Subsidiary
or Affiliate of the Company, except in accordance with the requirements set
forth in Rule 16b-3(c)(2)(i) (and any successor regulation thereto) as
promulgated by the SEC under Section 16(b) of the Exchange Act, as such rule is
amended from time to time and as interpreted by the SEC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of
the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National Market,
its last reported sale price on the Nasdaq National Market or, if
no such reported sale takes place on such date, the average of the
closing bid and asked prices;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, the last reported sale price or, if
no such reported sale takes place on such date, the average of the
closing bid and asked prices on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading;
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and
asked prices on such date, as reported by The Wall Street Journal,
for the over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board in good
faith.
"INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.
"OUTSIDE DIRECTOR" means any director who is not; (a) a current
employee of the Company or any Parent, Subsidiary or Affiliate of the Company;
(b) a former employee of the Company or any Parent, Subsidiary or Affiliate of
the Company who is receiving compensation for prior services (other than
benefits under a tax-qualified pension plan); (c) a current or former officer of
the Company or any Parent, Subsidiary or Affiliate of the Company; or (d)
currently receiving compensation for personal services in any capacity, other
than as a director, from the Company or any Parent, Subsidiary or Affiliate of
the Company; provided, however, that at such time as the term "Outside
-------- -------
Director", as used in Section 162(m) of the Code is defined in regulations
promulgated under Section 162(m) of the Code, "Outside Director" will have the
meaning set forth in such regulations, as amended from time to time and as
interpreted by the Internal Revenue Service.
"OPTION" means an award of an option to purchase Shares pursuant
to Section 5.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under the Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under the Plan.
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<PAGE>
"PLAN" means this Ultradata Corporation 1994 Equity Incentive
Plan, as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved for
issuance under the Plan, as adjusted pursuant to Sections 2 and 18 and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
granting of the Award, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
"TERMINATION" or "TERMINATED" means, for purposes of the Plan with
respect to a Participant, that the Participant has ceased to provide services as
an employee, director, consultant, independent contractor or adviser, to the
Company or a Parent, Subsidiary or Affiliate of the Company, except in the case
of sick leave, military leave, or any other leave of absence approved by the
Committee, provided, that such leave is for a period of not more than ninety
--------
(90) days, or reinstatement upon the expiration of such leave is guaranteed by
contract or statute. The Committee shall have sole discretion to determine
whether a Participant has ceased to provide services and the effective date on
which the Participant ceased to provide services (the "TERMINATION DATE").
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<PAGE>
ULTRADATA CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
As Adopted on September 14, 1995
As Amended on February 8, 1996 and on ___________, 1997
1. ESTABLISHMENT OF PLAN. Ultradata Corporation, a Delaware corporation
(the "COMPANY"), proposes to grant options for purchase of the Company's Common
Stock, $0.001 par value, to eligible employees of the Company and its
Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase
Plan (this "PLAN"). For purposes of this Plan, "PARENT CORPORATION" and
"SUBSIDIARY" (collectively, "SUBSIDIARIES") shall have the same meanings as
"parent corporation" and "subsidiary corporation" in Sections 424(e) and 424(f),
respectively, of the Internal Revenue Code of 1986, as amended (the "CODE").
The Company intends this Plan to qualify as an "employee stock purchase plan"
under Section 423 of the Code (including any amendments to or replacements of
such Section), and this Plan shall be so construed. Any term not expressly
defined in this Plan but defined for purposes of Section 423 of the Code shall
have the same definition herein. A total of 200,000 shares of the Company's
Common Stock is reserved for issuance under this Plan. Such number shall be
subject to adjustments effected in accordance with Section 14 of this Plan.
2. PURPOSE. The purpose of this Plan is to provide employees of the
Company and Subsidiaries designated by the Board of Directors of the Company
(the "BOARD") as eligible to participate in this Plan with a convenient means of
acquiring an equity interest in the Company through payroll deductions, to
enhance such employees' sense of participation in the affairs of the Company and
Subsidiaries, and to provide an incentive for continued employment.
3. ADMINISTRATION. This Plan shall be administered by a committee
appointed by the Board (the "COMMITTEE") consisting of at least two (2) members
of the Board, each of whom is a Disinterested Person as defined in Rule 16b-3(d)
of the Securities Exchange Act of 1934 (the "EXCHANGE ACT"). As used in this
Plan, references to the "Committee" shall mean either such committee or the
Board if no committee has been established. After registration of the Company
under the Exchange Act, Board members who are not Disinterested Persons may not
vote on any matters affecting the administration of this Plan, but any such
member may be counted for determining the existence of a quorum at any meeting
of the Board. Subject to the provisions of this Plan and the limitations of
Section 423 of the Code or any successor provision in the Code, all questions of
interpretation or application of this Plan shall be determined by the Board and
its decisions shall be final and binding upon all participants. Members of the
Board shall receive no compensation for their services in connection with the
administration of this Plan, other than standard fees as established from time
to time by the Board for services rendered by Board members serving on Board
committees. All expenses incurred in connection with the administration of this
Plan shall be paid by the Company.
4. ELIGIBILITY. Any employee of the Company or the Subsidiaries is
eligible to participate in an Offering Period (as hereinafter defined) under
this Plan except the following:
(a) employees who are not employed by the Company or Subsidiaries on the
fifteenth (15th) day of the month before the beginning of such Offering Period
except that employees who are employed on the effective date of the registration
statement filed by the Company with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended (the "Securities Act")
registering the initial public offering of the Company's Common Stock is
declared effective by the SEC shall be eligible to participate in the first
Offering Period under the Plan;
(b) employees who are customarily employed for less than twenty (20)
hours per week;
(c) employees who are customarily employed for less than five (5) months
in a calendar year;
<PAGE>
(d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code, own stock or
hold options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Subsidiaries or who, as a result of being granted an option under this Plan
with respect to such Offering Period, would own stock or hold options to
purchase stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or any of its
Subsidiaries.
5. OFFERING DATES. The offering periods of this Plan (each, an "OFFERING
PERIOD") shall be of six (6) months duration commencing on February 1 and August
1 of each year and ending on July 31 and January 31 of each year; provided,
---------
however, that notwithstanding the foregoing, the first such Offering Period
- -------
shall commence on the date on which price quotations for the Company's Common
Stock are first available on the Nasdaq National Market (the "FIRST OFFERING
DATE") and shall end on July 31, 1996. The first business day of each Offering
Period is referred to as the "OFFERING DATE". The last business day of each
Offering Period is referred to as the "PURCHASE DATE". The Board shall have the
power to change the duration of Offering Periods with respect to future
offerings without stockholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first Offering Period
to be affected.
6. PARTICIPATION IN THIS PLAN. Eligible employees may become participants
in an Offering Period under this Plan on the first Offering Date after
satisfying the eligibility requirements by delivering a subscription agreement
to the Company's treasury department (the "TREASURY DEPARTMENT") not later than
the 15th day of the month before such Offering Date unless a later time for
filing the subscription agreement authorizing payroll deductions is set by the
Board for all eligible employees with respect to a given Offering Period. An
eligible employee who does not deliver a subscription agreement to the Treasury
Department by such date after becoming eligible to participate in such Offering
Period shall not participate in that Offering Period or any subsequent Offering
Period unless such employee enrolls in this Plan by filing a subscription
agreement with the Treasury Department not later than the 15th day of the month
preceding a subsequent Offering Date. Once an employee becomes a participant in
an Offering Period, such employee will automatically participate in the Offering
Period commencing immediately following the last day of the prior Offering
Period unless the employee withdraws or is deemed to withdraw from this Plan or
terminates further participation in the Offering Period as set forth in Section
11 below. Such participant is not required to file any additional subscription
agreement in order to continue participation in this Plan.
7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an eligible employee in
this Plan with respect to an Offering Period will constitute the grant (as of
the Offering Date) by the Company to such employee of an option to purchase on
the Purchase Date up to that number of shares of Common Stock of the Company
determined by dividing (a) the amount accumulated in such employee's payroll
deduction account during such Offering Period by (b) the lower of (i) eighty-
five percent (85%) of the fair market value of a share of the Company's Common
Stock on the Offering Date (but in no event less than the par value of a share
of the Company's Common Stock), or (ii) eighty-five percent (85%) of the fair
market value of a share of the Company's Common Stock on the Purchase Date (but
in no event less than the par value of a share of the Company's Common Stock);
provided, however, that the number of shares of the Company's Common Stock
- -------- -------
subject to any option granted pursuant to this Plan shall not exceed the maximum
number of shares which may be purchased pursuant to Section 10(b) below with
respect to the applicable Offering Period The fair market value of a share of
the Company's Common Stock shall be determined as provided in Section 8 hereof.
8. PURCHASE PRICE. The purchase price per share at which a share of
Common Stock will be sold in any Offering Period shall be eighty-five percent
(85%) of the lesser of:
(a) The fair market value on the Offering Date; or
(b) The fair market value on the Purchase Date;
provided, however, that in no event may the purchase price per share of the
- -----------------
Company's Common Stock be below the par value per share of the Company's Common
Stock.
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<PAGE>
For purposes of this Plan, the term "fair market value" means as of any
date, the value a share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National Market,
its closing price on the Nasdaq National Market on the last
trading day prior to the date of determination as reported in The
---
Wall Street Journal;
-------------------
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the last
trading day prior to the date of determination on the principal
national securities exchange on which the Common Stock is listed
or admitted to trading as reported in The Wall Street Journal;
-----------------------
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and
asked prices on the last trading day prior to the date of
determination as reported in The Wall Street Journal; or
-----------------------
(d) if none of the foregoing is applicable, by the Board in good
faith, which in the case of the First Offering Period will be the
price determined by the Pricing Committee of the Board for the
Common Stock to be sold to the Company's underwriters.
9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF
SHARES.
(a) The purchase price of the shares is accumulated by regular payroll
deductions made during each Offering Period. The deductions are made as a
percentage of the participant's compensation in one percent (1%) increments not
less than two percent (2%), nor greater than ten percent (10%) or such lower
limit set by the Committee. Compensation shall mean all W-2 compensation,
including, but not limited to base salary, wages, commissions, overtime, shift
premiums and bonuses, plus draws against commissions; provided, however, that
-----------------
for purposes of determining a participant's compensation, any election by such
participant to reduce his or her regular cash remuneration under Sections 125 or
401(k) of the Code shall be treated as if the participant did not make such
election. Payroll deductions shall commence on the first payday following the
Offering Date and shall continue to the end of the Offering Period unless sooner
altered or terminated as provided in this Plan.
(b) A participant may lower (but not increase) the rate of payroll
deductions during an Offering Period by filing with the Treasury Department a
new authorization for payroll deductions, in which case the new rate shall
become effective for the next payroll period commencing more than fifteen (15)
days after the Treasury Department's receipt of the authorization and shall
continue for the remainder of the Offering Period unless changed as described
below. Such change in the rate of payroll deductions may be made at any time
during an Offering Period, but not more than one (1) change may be made
effective during any Offering Period. A participant may increase or decrease
the rate of payroll deductions for any subsequent Offering Period by filing with
the Treasury Department a new authorization for payroll deductions not later
than the 15th day of the month before the beginning of such Offering Period.
(c) All payroll deductions made for a participant are credited to his or
her account under this Plan and are deposited with the general funds of the
Company. No interest accrues on the payroll deductions. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.
(d) On each Purchase Date, so long as this Plan remains in effect and
provided that the participant has not submitted a signed and completed
withdrawal form before that date which notifies the Company that the participant
wishes to withdraw from that Offering Period under this Plan and have all
payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company shall apply
the funds then in the participant's account to the purchase of whole shares of
Common Stock reserved under the option granted to such participant with respect
to the Offering Period to the extent that such option is exercisable on the
Purchase Date. The purchase price per share shall be as specified in Section 8
of this Plan. Any cash remaining in a
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<PAGE>
participant's account after such purchase of shares shall be refunded to such
participant in cash, without interest. In the event that this Plan has been
oversubscribed, all funds not used to purchase shares on the Purchase Date shall
be returned to the participant, without interest. No Common Stock shall be
purchased on a Purchase Date on behalf of any employee whose participation in
this Plan has terminated prior to such Purchase Date.
(e) As promptly as practicable after the Purchase Date, the Company
shall arrange the delivery to each participant of a certificate representing the
shares purchased upon exercise of his option.
(f) During a participant's lifetime, such participant's option to
purchase shares hereunder is exercisable only by him or her. The participant
will have no interest or voting right in shares covered by his or her option
until such option has been exercised. Shares to be delivered to a participant
under this Plan will be registered in the name of the participant or in the name
of the participant and his or her spouse.
10. LIMITATIONS ON SHARES TO BE PURCHASED.
(a) No participant shall be entitled to purchase stock under this Plan
at a rate which, when aggregated with his or her rights to purchase stock under
all other employee stock purchase plans of the Company or any Subsidiary,
exceeds $25,000 in fair market value, determined as of the Offering Date (or
such other limit as may be imposed by the Code) for each calendar year in which
the employee participates in this Plan.
(b) No participant shall be entitled to purchase more than the
Individual Share Limitation (as defined below) on any single Purchase Date. Not
less than thirty (30) days prior to the commencement of any Offering Period, the
Board may, in its sole discretion, set a maximum number of shares which may be
purchased by any participant at any single Purchase Date (hereinafter the
"INDIVIDUAL SHARE LIMITATION"). When an Individual Share Limitation is set, all
participants must be notified of such Individual Share Limitation not less than
fifteen (15) days prior to the commencement of the next Offering Period. Once
the Individual Share Limitation is set, it shall continue to apply with respect
to all succeeding Purchase Dates and Offering Periods unless revised by the
Board as set forth above.
(c) Participants shall not be entitled to purchase more than the Maximum
Share Amount (as defined below) on any single Purchase Date. Not less than
thirty (30) days prior to the commencement of any Offering Period, the Board
may, in its sole discretion, set a maximum number of shares which may be
purchased by all participants at any single Purchase Date (hereinafter the
"MAXIMUM SHARE AMOUNT"). Unless otherwise set by the Board as set forth above,
the Maximum Share Amount for the First Offering Period shall be 100,000 shares,
the Maximum Share Amount for the second Offering Period shall be thirty three
and one-thirds percent (33-1/3%) of the shares available for issuance following
the First Offering Period, the Maximum Share Amount for the third Offering
Period shall be fifty percent (50%) of the shares available for issuance
following the second Offering Period and the Maximum Share Amount for the fourth
Offering Period shall be all of the shares available for issuance following the
third Offering Period. If a new Maximum Share Amount is set, then all
participants must be notified of such Maximum Share Amount not less than fifteen
(15) days prior to the commencement of the next Offering Period. Once the
Maximum Share Amount is set, it shall continue to apply with respect to all
succeeding Purchase Dates and Offering Periods unless revised by the Board as
set forth above. If the number of shares to be purchased on a Purchase Date by
all employees participating in this Plan exceeds the Maximum Share Amount, then
the Company will make a pro rata allocation of the Maximum Share Amount in as
uniform a manner as shall be reasonably practicable and as the Board shall
determine to be equitable. In such event, the Company shall give written notice
of such reduction of the number of shares to be purchased under a participant's
option to each participant affected thereby.
(d) If the number of shares to be purchased on a Purchase Date by all
employees participating in this Plan exceeds the number of shares then available
for issuance under this Plan, then the Company will make a pro rata allocation
of the remaining shares in as uniform a manner as shall be reasonably
practicable and as the Board shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of shares
to be purchased under a participant's option to each participant affected
thereby.
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<PAGE>
(e) Any payroll deductions accumulated in a participant's account which
are not used to purchase stock due to the limitations in this Section 10 shall
be returned to the participant as soon as practicable after the end of the
applicable Offering Period, without interest.
11. WITHDRAWAL.
(a) Each participant may withdraw from an Offering Period under this
Plan by signing and delivering to the Treasury Department a written notice to
that effect on a form provided for such purpose. Such withdrawal may be elected
at any time at least fifteen (15) days prior to the end of an Offering Period.
(b) Upon withdrawal from this Plan, the accumulated payroll deductions
shall be returned to the withdrawn participant, without interest, and his or her
interest in this Plan shall terminate. In the event a participant voluntarily
elects to withdraw from this Plan, he or she may not resume his or her
participation in this Plan during the same Offering Period, but he or she may
participate in any Offering Period under this Plan which commences on a date
subsequent to such withdrawal by filing a new authorization for payroll
deductions in the same manner as set forth above for initial participation in
this Plan.
12. TERMINATION OF EMPLOYMENT. Termination of a participant's employment
for any reason, including retirement, death or the failure of a participant to
remain an eligible employee, immediately terminates his or her participation in
this Plan. In such event, the payroll deductions credited to the participant's
account will be returned to him or her or, in the case of his or her death, to
his or her legal representative, without interest. For purposes of this Section
12, an employee will not be deemed to have terminated employment or failed to
remain in the continuous employ of the Company in the case of sick leave,
military leave, or any other leave of absence approved by the Board; provided
--------
that such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
13. RETURN OF PAYROLL DEDUCTIONS. In the event a participant's interest
in this Plan is terminated by withdrawal, termination of employment or
otherwise, or in the event this Plan is terminated by the Board, the Company
shall promptly deliver to the participant all payroll deductions credited to
such participant's account. No interest shall accrue on the payroll deductions
of a participant in this Plan.
14. CAPITAL CHANGES. Subject to any required action by the stockholders
of the Company, the number of shares of Common Stock covered by each option
under this Plan which has not yet been exercised and the number of shares of
Common Stock which have been authorized for issuance under this Plan but have
not yet been placed under option (collectively, the "RESERVES"), as well as the
price per share of Common Stock covered by each option under this Plan which has
not yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Common Stock of the
Company resulting from a stock split or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
issued and outstanding shares of Common Stock effected without receipt of any
consideration by the Company; provided, however, that conversion of any
-----------------
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration"; and provided further, that the price per
-------- -------
share of Common Stock shall not be reduced below its par value per share. Such
adjustment shall be made by the Board, whose determination shall be final,
binding and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
In the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that the options
under this Plan shall terminate as of a date fixed by the Board and give each
participant the right to exercise his or her option as to all of the optioned
stock, including shares which would not otherwise be exercisable. In the event
of a proposed sale of all or substantially all of the assets of the Company, or
the merger or consolidation of the Company with or into another corporation,
each option under this Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu
-5-
<PAGE>
of such assumption or substitution, that the participant shall have the right to
exercise the option as to all of the optioned stock. If the Board makes an
option exercisable in lieu of assumption or substitution in the event of a
merger, consolidation or sale of assets, the Board shall notify the participant
that the option shall be fully exercisable for a period of twenty (20) days from
the date of such notice, and the option will terminate upon the expiration of
such period.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, or
in the event of the Company being consolidated with or merged into any other
corporation; provided, that the price per share of Common Stock shall not be
--------
reduced below its par value per share.
15. NONASSIGNABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under this Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 22 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be void and
without effect.
16. REPORTS. Individual accounts will be maintained for each participant
in this Plan. Each participant shall receive promptly after the end of each
Offering Period a report of his or her account setting forth the total payroll
deductions accumulated, the number of shares purchased, the per share price
thereof and the remaining cash balance, if any, carried forward to the next
Offering Period.
17. NOTICE OF DISPOSITION. Each participant shall notify the Company if
the participant disposes of any of the shares purchased in any Offering Period
pursuant to this Plan if such disposition occurs within two (2) years from the
Offering Date or within one (1) year from the Purchase Date on which such shares
were purchased (the "NOTICE PERIOD"). Unless such participant is disposing of
any of such shares during the Notice Period, such participant shall keep the
certificates representing such shares in his or her name (and not in the name of
a nominee) during the Notice Period. The Company may, at any time during the
Notice Period, place a legend or legends on any certificate representing shares
acquired pursuant to this Plan requesting the Company's transfer agent to notify
the Company of any transfer of the shares. The obligation of the participant to
provide such notice shall continue notwithstanding the placement of any such
legend on the certificates.
18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the grant of
any option hereunder shall confer any right on any employee to remain in the
employ of the Company or any Subsidiary, or restrict the right of the Company or
any Subsidiary to terminate such employee's employment.
19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have equal
rights and privileges with respect to this Plan so that this Plan qualifies as
an "employee stock purchase plan" within the meaning of Section 423 or any
successor provision of the Code and the related regulations. Any provision of
this Plan which is inconsistent with Section 423 or any successor provision of
the Code shall, without further act or amendment by the Company or the Board, be
reformed to comply with the requirements of Section 423. This Section 19 shall
take precedence over all other provisions in this Plan.
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with this Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. TERM; STOCKHOLDER APPROVAL. After this Plan is adopted by the Board,
this Plan will become effective on the date that is the First Offering Date (as
defined above); provided, however, that if the First Offering Date does not
-------- -------
occur on or before June 30, 1996, this Plan will terminate as of June 30, 1996
having never become effective. This Plan shall be approved by the stockholders
of the Company, in any manner permitted by applicable corporate law, within
twelve (12) months before or after the date this Plan is adopted by the Board.
No purchase of shares pursuant to this Plan shall occur prior to such
stockholder approval. Thereafter, no later than twelve (12) months after the
Company becomes subject to Section 16(b) of the Exchange Act, the Company will
comply with the requirements of Rule 16b-3
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<PAGE>
with respect to stockholder approval. This Plan shall continue until the earlier
to occur of (a) termination of this Plan by the Board (which termination may be
effected by the Board at any time), (b) issuance of all of the shares of Common
Stock reserved for issuance under this Plan, or (c) ten (10) years from the
adoption of this Plan by the Board.
22. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
this Plan in the event of such participant's death subsequent to the end of an
Offering Period but prior to delivery to him of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under this Plan in the event
of such participant's death prior to a Purchase Date.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under this Plan who is living
at the time of such participant's death, the Company shall deliver such shares
or cash to the executor or administrator of the estate of the participant, or if
no such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares or cash to the
spouse or to any one or more dependents or relatives of the participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES.
Shares shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
or automated quotation system upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
24. APPLICABLE LAW. The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of California.
25. AMENDMENT OR TERMINATION OF THIS PLAN. The Board may at any time
amend, terminate or the extend the term of this Plan, except that any such
termination cannot affect options previously granted under this Plan, nor may
any amendment make any change in an option previously granted which would
adversely affect the right of any participant, nor may any amendment be made
without approval of the stockholders of the Company obtained in accordance with
Section 21 hereof within twelve (12) months of the adoption of such amendment
(or earlier if required by Section 21) if such amendment would:
(a) increase the number of shares that may be issued under this Plan;
(b) change the designation of the employees (or class of employees)
eligible for participation in this Plan; or
(c) constitute an amendment for which stockholder approval is required
in order to comply with Rule 16b-3 (or any successor rule) of the Exchange Act.
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<PAGE>
ULTRADATA CORPORATION
5000 Franklin Drive
Pleasanton, California 94588-3354
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Majteles and Philip D. Ranger as
proxies, each with full powers of substitution, and hereby authorizes them to
represent and to vote, as designated below, all shares of Common Stock, $0.001
par value, of ULTRADATA Corporation (the "Company") held of record by the
undersigned on April 15, 1997, at the Annual Meeting of Stockholders of the
Company to be held on Friday, May 30, 1997, and at any continuations or
adjournments thereof.
This Proxy, when properly executed and returned in a timely manner, will be
voted at the Annual Meeting and any adjournments thereof in the manner described
herein. If no contrary indication is made, the proxy will be voted FOR the
Board of Director nominees, FOR Proposals 2, 3 and 4 and in accordance with the
judgment of the persons named as proxies herein on any other matters that may
properly come before the Annual Meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE
----------------
SEE REVERSE SIDE
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<PAGE>
[X] Please mark votes
as in this example.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE BOARD
OF DIRECTOR NOMINEES AND FOR PROPOSALS 2, 3 AND 4.
1. Election of Directors.
[_] FOR all nominees listed [_] WITHHOLD AUTHORITY to vote for
below except as marked. all nominees.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THAT NOMINEE'S NAME:
Nigel P. Gallop, John F. Carlson, M.M. Stuckey, Robert J. Majteles,
and Lawrence M. Howell
2. Proposal to approve the FOR AGAINST ABSTAIN
amendment to the 1994 Equity [_] [_] [_]
Incentive Plan.
3. Proposal to approve the FOR AGAINST ABSTAIN
amendment to the 1995 [_] [_] [_]
Employee Stock Purchase Plan.
4. Proposal to ratify the FOR AGAINST ABSTAIN
appointment of KPMG Peat [_] [_] [_]
Marwick LLP as independent
auditors for 1997.
In accordance with their judgment, the proxies are authorized to vote
upon such other matters as may properly come before the Annual
Meeting or any adjournment thereof.
This Proxy must be signed exactly as your name appears hereon. If more
than one name appears, all persons so designated should sign. Attorneys,
executors, administrators, trustees and guardians should indicate their
capacities. If the signer is a corporation, please print full corporate name
and indicate capacity of duly authorized officer executing on behalf of the
corporation. If the signer is a partnership, please print full partnership name
and indicate capacity of duly authorized person executing on behalf of the
partnership.
Signature: _______________________________ Date:__________________, 1997
Signature: _______________________________ Date:__________________, 1997
(Reverse Side)
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THIS PROXY CARD AND RETURN IT PRIOR TO THE MEETING IN THE ENCLOSED ENVELOPE.
