<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-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)(4) 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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
April 17, 1998
To Our Stockholders:
You are cordially invited to attend the 1998 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 8, 1998,
at 9:00 a.m., Pacific 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 9:00 A.M. ON WEDNESDAY,
MAY 6, 1998, 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/ Ronald H. Bissinger
-----------------------
Ronald H. Bissinger
Vice President of Finance
<PAGE>
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 8, 1998, at 9:00
a.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
John F. Carlson
Lawrence M. Howell
Robert J. Majteles
M. M. Stuckey
2. To ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for 1998.
3. 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 March 25, 1998 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/ Ronald H. Bissinger
-----------------------
Ronald H. Bissinger
Vice President of Finance
Pleasanton, California
April 17, 1998
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
April 17, 1998
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 8, 1998, at 9:00 a.m. (the "Meeting"). This Proxy
Statement and the accompanying form of proxy were first mailed to stockholders
on or about April 17, 1998. An annual report for the year ended December 31,
1997 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
March 25, 1998 (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 7,652,597 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 Proposal No. 2 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. 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>
Nigel P. Gallop ...................................... 52 Chairman of the Board 1981
Robert J. Majteles ................................... 33 President and Chief Executive Officer 1996
John F. Carlson(1)(2) ................................ 59 Small Business Advisor 1997
Lawrence M. Howell(1)(2) ............................. 52 Managing Partner of Howell Capital 1995
M. M. Stuckey(1)(2) .................................. 59 Chief Executive Officer and Chairman of the 1995
Board of Fourth Shift Corporation
</TABLE>
- --------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
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.
Robert J. Majteles - Mr. Majteles is a director of the Company, and has
served as President and Chief Executive Officer since April 1997. From October
1996 to April 1997, Mr. Majteles served as the Company's President and Chief
Operating Officer. 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 University and a Juris Doctor
from Stanford University.
2
<PAGE>
John F. Carlson - Mr. Carlson has been a director of the Company since
January 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 super computer
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 1997, the Board met four 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 and Finance Committee and a
Compensation Committee. During 1997, the Board did not have a nominating
committee or a committee performing similar functions.
The current members of the Audit and Finance Committee are Messrs. Carlson,
Howell and Stuckey. The Audit and Finance Committee was formed in September 1995
and met four times during 1997. The Audit and Finance 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. Carlson, Howell
and Stuckey. The Compensation Committee was formed in September 1995 and met
seven times during 1997. 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,
3
<PAGE>
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 (the "Directors Plan"). Under the Directors Plan,
each non-employee director will be granted an option to purchase 20,000 shares
of Common Stock upon such director's election to the Board of Directors. In
addition, each non-employee director will be granted an option to purchase 5,000
shares of Common Stock at each annual stockholders' meeting. All such options
vest as to 25% on each of the first four anniversaries of the date of grant.
Option grants under the Directors Plan are non-discretionary.
During 1997, the Company granted options covering 5,000 shares to each of
Messrs. Howell and Stuckey, each of whom is a non-employee director of the
Company, at an exercise price per share of $3.031 under the Directors Plan. The
fair market value of such Common Stock on the date of grant was $3.031 per share
(based on the closing sales price reported in the Wall Street Journal on the
date of grant). In addition the Company granted options covering 20,000 shares
to Mr. Carlson, who is a non-employee director of the Company, at an exercise
price per share of $4.125 under the Directors Plan. The fair market value of
such Common Stock on the grant was $4.125 per share (based on the closed sales
price reported in the Wall Street Journal on the date of grant). As of March
16, 1998, no options had been exercised under the Directors Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION
---
OF EACH OF THE NOMINATED DIRECTORS.
PROPOSAL NO. 2--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Company has selected Deloitte & Touche LLP as its independent auditors to
perform the audit of the Company's financial statements for the year ending
December 31, 1998, and the stockholders are being asked to ratify such
selection. Representatives of Deloitte & Touche 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.
KPMG Peat Marwick LLP was previously the principal accountants for the
Company. On April 1, 1998, that firm's appointment as principal accountants
was terminated and Deloitte and Touche LLP was engaged as principal
accountants. The decision to change accountants was approved by the Company's
Board of Directors. Representatives of KPMG Peat Marwick LLP will not be
present at the Meeting.
In connection with the audits of the two fiscal years ended December 31,
1997, and the subsequent interim period through April 1, 1998, there were no
disagreements between the Company and KPMG Peat Marwick LLP on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of KPMG Peat Marwick LLP, would have caused it to make a
reference to the subject matter of the disagreement. Further, during this
period there were no "reportable events," as the term is used in Regulation
S-K, Item 304, except as follows.
In connection with the audit of the Company's 1996 financial statements, KPMG
Peat Marwick LLP identified certain "reportable conditions" relating to
material weaknesses in the Company's internal controls. With respect to the
Company's process for new product releases, KPMG Peat Marwick LLP noted
material weaknesses in the Company's field testing procedures and customer
communication, resulting in installation delays, aging of receivables,
unbilled revenues and the shipment of products in advance of the Company's
capacity to install on a timely basis resulting in a significant increase in
unbilled revenues. Material weaknesses were also identified in the Company's
procedures for timely analyzing customer balances and estimating the overall
cost of training and installation obligations and the cost to complete at any
particular time. These material weaknesses were exacerbated by inefficiencies
in the Company's accounting system.
As a result of these material weaknesses in the Company's accounting system,
KPMG Peat Marwick LLP expressed significant concerns about the Company's
ability to report timely, accurate financial information in the future. The
Audit Committee of the Company's Board of Directors discussed the subject
matter of the noted material weaknesses with KPMG Peat Marwick LLP.
Furthermore, as a result of these material weaknesses, KPMG Peat Marwick LLP
significantly expanded the scope of their testwork over revenue recognition in
1996. Significant audit differences were posted in 1996 and 1997.
The Company has authorized KPMG Peat Marwick LLP to respond fully to the
inquiries of Deloitte & Touche LLP concerning the subject matter of the noted
material weaknesses. During the last two fiscal years and the subsequent
interim period preceding the date hereof, the Company did not consult Deloitte
& Touche LLP regarding any of the matters or events set forth in Item 304
(a)(2)(i) and (ii) of Regulation S-K.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
---
OF THE SELECTION OF DELOITTE & TOUCHE LLP
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 16, 1998, 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>
AMOUNT AND NATURE OF BENEFICIAL PERCENT OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (1) COMMON STOCK (1)
- ------------------------------------ ------------- -------------------
<S> <C> <C>
Nigel P. Gallop(2)............................. 1,879,000 22.8%
c/o ULTRADATA Corporation
5000 Franklin Drive
Pleasanton, California 94588-3544
Andrew J. Phelan............................... 1,203,000 15.7%
c/o ULTRADATA Australia
25 Richardson Street
West Perth 6005
Australia
Brian N. Dean.................................. 1,075,742 14.1%
c/o ULTRADATA Australia
1919 Malvern Road
East Malvern Victoria
Australia 3145
Malcolm R. McKellar............................ 1,018,500 13.3%
10-12 Hibiscus Court
Rocky Point, FNQ 4783
Australia
Robert J. Majteles(3).......................... 239,998 3.0%
Philip D. Ranger (4)........................... 18,136 *
David J. Robbins(5)............................ 25,090 *
Cindy Stinnette (6)............................ 19,069 *
James Berthelsen (7)........................... 8,868 *
Ronald Marguglio (8)........................... 15,104 *
John F. Carlson(9)............................. 5,000 *
Lawrence M. Howell(10)......................... 26,300 *
M. M. Stuckey(11).............................. 12,500 *
All executive officers and directors as a group 2,249,065 26.2%
(10 persons)(12)
</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 March 16, 1998 are deemed to
be outstanding and to be beneficially owned by the person holding
5
<PAGE>
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 600,000 shares of Common Stock subject to options exercisable
within 60 days of March 16, 1998. Mr. Gallop is a director of the Company.
(3) Includes 224,998 shares of Common Stock subject to options exercisable
within 60 days of March 16, 1998. Mr. Majteles is President and Chief
Executive Officer of the Company.
(4) Includes 16,623 shares of Common Stock subject to options exercisable
within 60 days of March 16, 1998. Mr. Ranger is Chief Financial Officer of
the Company.
(5) Includes 21,457 shares of Common Stock subject to options exercisable
within 60 days of March 16, 1998. Mr. Robbins is Vice President, Customer
Services of the Company.
(6) Includes 14,623 shares of Common Stock subject to options exercisable
within 60 days of March 16, 1998. Ms. Stinnette is Vice President, Product
Development of the Company.
(7) Includes 3,822 shares of Common Stock subject to options exercisable within
60 days of March 16, 1998. Mr. Berthelsen is Vice President, Marketing of
the Company.
(8) Includes 15,104 shares of Common Stock subject to options exercisable by
May 6, 1998. Mr. Marguglio is no longer affiliated with the Company.
(9) Includes 5,000 shares of Common Stock subject to options exercisable within
60 days of March 16, 1998. Mr. Carlson is a director of the Company.
(10) Includes 11,400 shares held by the Howell Revocable Trust and 4,900 shares
held by the Howell Children's Trust. Also includes 10,000 shares of Common
Stock subject to options exercisable within 60 days of March 16, 1998. Mr.
Howell is a director of the Company.
(11) Includes 10,000 shares of Common Stock subject to options exercisable
within 60 days of March 16, 1998. Mr. Stuckey is a director of the Company.
(12) Includes 921,627 shares of Common Stock subject to options exercisable
within 60 days of March 16, 1998.
6
<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, 1996 and 1997 to the Company's Chief Executive Officer, its former
Chief Executive Officer, and the Company's four other most highly compensated
executive officers who were serving as executive officers at the end of 1997,
and one highly compensated executive officers who was not serving as an
executive officer at the end of 1997 (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
FISCAL OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) OPTIONS
- --------------------------- -=---- -------- ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Nigel P. Gallop ................... 1997 $300,000 -- $201,052(2) --
Chairman of the Board ............. 1996 $338,381 -- -- 35,000
1995 $530,286 -- -- 600,000
Robert J. Majteles ................ 1997 $250,000 -- $ 895 50,000
President and Chief Executive ..... 1996(3) $ 51,250 -- $ 14,288(4) 600,000
Officer
Philip D. Ranger .................. 1997 $135,000 $ 650(5) $ 2,475 71,000
Chief Financial Officer ........... 1996 $113,333 -- -- 4,000
1995(6) $ 7,153 -- -- --
David J. Robbins .................. 1997 $135,000 $ 650(5) $ 1,463 55,000
Vice President, Customer Services . 1996 $110,000 -- -- 20,000
1995(7) $ 9,871 -- -- --
Cindy Stinnette ................... 1997 $127,786 $ 650(5) $ 1,406 71,000
Vice President, Product Development 1996 $ 83,985 $ 5,174(8) $ 5,713(9)
1995 $ 83,022 $ 3,327(8) $ 6,237(10)
James Berthelsen .................. 1997 $108,750 $ 650(5) $ 2,008 70,200
Vice President, Marketing ......... 1996 $100,027 $ 7,500(8) $134,115(9) 800
1995 $ 90,850 $ 27,500(8) $ 75,938(11)
Ronald Marguglio .................. 1997 $150,095 -- $ 12,408(13) 25,000
Former Vice President, Sales ...... 1996(12) $ 40,625 -- 25,000
</TABLE>
(1) Unless otherwise noted, consists of matching contributions made by the
Company to each Named Executive Officer's 401(k) plan account. 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)
Represents non-salary value of severance package described under
"Employment Agreements."
(3) Mr. Majteles commenced employment with the Company in October 1996.
(4) Represents payment to Mr. Majteles for relocation expenses.
(5) Represents company-wide bonus for those employees who were employed in
calendar year 1996.
(6) Mr. Ranger commenced employment with the Company in December 1995.
(7) Mr. Robbins commenced employment with the Company in December 1995.
7
<PAGE>
(8) Represents discretionary bonus.
(9) Represents commission paid for participation in Company sales activities.
(10) Represents $3,421 in commission for 1995 sales activity and a contribution
of $2,816 made by the Company to 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.
(11) Represents $72,864 in commission for 1995 sales activity and a contribution
of $3,074 made by the Company to 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.
(12) Mr. Marguglio commenced employment with the Company in August 1996.
(13) Includes $9,933 for accrued vacation paid upon termination of employment,
and $2,475 for 401(k) Company match.
The following table sets forth further information regarding option grants
during 1997 to each of the Named Executive Officers. All options were granted
pursuant to the Company's 1994 Equity Incentive Plan. In accordance with the
rules of the Securities and Exchange 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 1997
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF POTENTIAL REALIZABLE
SECURITIES TOTAL OPTIONS VALUE AT ASSUMED ANNUAL
UNDERLYING GRANTED TO RATES OF STOCK PRICE
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION APPRECIATION FOR OPTION TERM(2)
NAME GRANTED(1) 1997 PER SHARE DATE 5% 10%
- --------------------- ---------- ------------- -------------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Majteles.... 50,000 11.2% $3.375 12/18/07 $106,126 $ 268,944
Philip D. Ranger...... 25,000 15.9% $3.375 12/18/07 $ 53,063 $ 134,472
46,000 $4.125 1/30/07 $119,333 $ 302,413
David J. Robbins...... 25,000 12.3% $3.375 12/18/07 $ 53,063 $ 134,472
30,000 $4.125 1/30/07 $ 77,826 $ 197,226
Cindy Stinnette....... 25,000 15.9% $3.375 12/18/07 $ 53,063 $ 134,472
44,000 $ 4.00 4/22/07 $110,685 $ 280,499
2,000 $4.125 1/30/07 $ 5,188 $ 13,148
Jim Berthelsen........ 25,000 15.8% $3.375 12/18/07 $ 53,063 $ 134,472
44,000 $ 5.00 10/23/07 $138,357 $ 350,623
1,200 $4.125 1/30/07 $ 3,113 $ 7,889
Ronald Marguglio...... 25,000 5.6% $4.125 5/6/98 $ 5,156 $ 10,313
</TABLE>
(1) The options shown in the table were granted at fair market value,
non-qualified 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.
8
<PAGE>
The following table sets forth certain information concerning the exercise of
options by each of the Named Executive Officers during 1997, 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, 1997. Also reported are values of
"in-the-money" options that represent the positive spread between the respective
exercise prices of outstanding stock options and $3.0625 per share, which was
the closing price of the Company's Common Stock as reported on the Nasdaq
National Market on December 31, 1997, the last day of trading for 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END (1) FISCAL YEAR-END (2)
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(1) REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Nigel P. Gallop....... -- -- 600,000 -- -- --
Robert J. Majteles.... -- -- 175,000 475,000 -- --
Philip D. Ranger...... -- -- 1,833 73,167 -- --
David J. Robbins...... -- -- 10,416 64,584 -- --
Cindy Stinnette....... -- -- 2,583 72,417 -- --
James Berthelsen...... -- -- 2,966 72,034 -- --
Ronald Marguglio...... -- -- 8,333 41,667 -- --
</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, 1997, the last day of trading for 1997.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Carlson, 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 a severance agreement with Nigel P. Gallop effective
as of April 30, 1997 which provided for the termination of the Employment
Agreement dated as of July 31, 1995 between the Company and Mr. Gallop. Pursuant
to the severance agreement, Mr. Gallop received (a) cash severance of $200,000;
(b) cash in the amount of $60,000 representing ten weeks of accrued vacation;
(c) acceleration of exercisability of options to purchase 150,000 shares of
Common Stock with an exercise price of $6.00 per share so long as Mr. Gallop
continues to provide services to the Company as a director, officer, employee or
consultant through January 1, 1998; (d) 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) so long as Mr. Gallop continues to
provide services to the Company as a director, officer, employee or consultant
and for three months following the termination of the provision of such
services; (e) reimbursement of relocation expenses of approximately $50,000;
(f) the transfer of property valued at approximately $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 1995 Directors
Stock 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 was appointed Chief Executive
Officer of the Company in April 1997. Mr. Majteles 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 based
on performance according to a 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 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 determined by the Compensation Committee in accordance with
industry norms. 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.
In the second quarter of 1997, the Company entered into employment agreements
with each of its executive officers to provide for salary that will be
reviewed and adjusted by the Board according to industry norms, a performance
bonus determined in accordance with criteria established by the Board and/or
its Compensation Committee, and up to twelve months of severance pay at 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 ownership of 50% or more of the Company's outstanding voting stock
is transferred.
10
<PAGE>
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"). The Committee is composed of three 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 1997, the
Committee reviewed base salary levels and target bonuses for the executive
officers and employees of the Company, excluding the Chief Executive Officer
("CEO"). The Committee administers the Company's incentive and equity plans,
including the 1994 Equity Incentive Plan (the "Incentive Plan") and the 1995
Employee Stock Purchase Plan (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 5% of the Company's
Common Stock, 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.
1997 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, 1997 for each executive officer. 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.
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
11
<PAGE>
such equity-based compensation depends entirely on appreciation of the Company's
stock. A majority 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.
CEO Compensation. The Company 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 was appointed Chief
Executive Officer of the Company in April 1997. Mr. Majteles 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
based on performance according to a 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 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 determined by the Compensation Committee in accordance with
industry norms. 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.
The Board believed it necessary to provide the compensation package to Mr.
Majteles that is described above in order to encourage Mr. Majteles to accept
employment with, and thereafter remain employed by, the Company. This package
was agreed by the Company after taking into account the compensation packages
offered by the Company's competitors and the compensation packages being
requested by other CEOs.
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 1997 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
John F. Carlson
12
<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, 1997 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.
[LINE GRAPH APPEARS HERE]
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1, 1997 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; and (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. 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.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1999 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices no later than December 1, 1998 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 1997, except that the Form 3, reporting the initial statement of
beneficial ownership of securities for John Carlson, Director of the Company,
was 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: April 17, 1998
By Order of the Board of Directors
/s/ Ronald H. Bissinger
-----------------------
Ronald H. Bissinger
Vice President of Finance
14
<PAGE>
PROXY PROXY
ULTRADATA CORPORATION
5000 Franklin Drive
Pleasanton, California 94588
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Majteles and Ronald H. Bissinger as
proxies, each with full powers of substitution, and hereby authorizes them to
represent and to vote, as designated below, all the shares of Common Stock,
$0.001 par value, of ULTRADATA Corporation (the "Company") held of record by
the undersigned on March 25, 1998, at the Annual Meeting of Stockholders of
the Company to be held on Friday, May 8, 1998, and at any continuations or
adjustments 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 Proposal 2, 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
----------------
<PAGE>
The Board of Directors unanimously recommends you vote FOR the Board of
Director nominees and FOR proposal 2.
1. Election of Directors For All Withhold All All Except
Nigel P. Gallop
John F. Carlson
Lawrence M. Howell
Robert J. Majteles
M.M. Stuckey
2. Proposal to ratify the appointment of Deloitte & Touche LLP as independent
auditors for 1998.
For All Withhold All All Except
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.
Dated:_____________, 1998
Signature(s)___________________
