<PAGE>
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 Section240.14a-11(c) or
Section240.14a-12
DITECH COMMUNICATIONS 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:
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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:
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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>
DITECH COMMUNICATIONS CORPORATION
825 E. MIDDLEFIELD ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 7, 1999
------------------------
TO THE STOCKHOLDERS OF DITECH COMMUNICATIONS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of DITECH
COMMUNICATIONS CORPORATION, a Delaware corporation ("Ditech" or the "Company"),
will be held on Thursday, October 7, 1999 at 3:00 p.m. local time at the offices
of the Company, 825 E. Middlefield Road, Mountain View, California 94043 for the
following purpose:
1. To elect two directors to hold office until the 2002 Annual Meeting of
Stockholders.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Company for its fiscal year ending April 30, 2000.
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.
The Board of Directors has fixed the close of business on August 20, 1999,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ ANDREI M. MANOLIU
ANDREI M. MANOLIU
SECRETARY
Mountain View, California
September 7, 1999
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
DITECH COMMUNICATIONS CORPORATION
825 E. Middlefield Road
Mountain View, California 94043
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 7, 1999
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Ditech Communications Corporation, a Delaware corporation ("Ditech" or the
"Company"), for use at the Annual Meeting of Stockholders to be held on October
7, 1999 at 3:00 p.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at the offices of the
Company, 825 E. Middlefield Road, Mountain View, California 94043. The Company
intends to mail this proxy statement and accompanying proxy card on or about
September 7, 1999, to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on August
20, 1999 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on August 20, 1999 the Company had outstanding and entitled to
vote 12,223,938 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 825 E.
Middlefield Road, Mountain View, California 94043, a written notice of
revocation
<PAGE>
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
SHAREHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2000 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is May 11, 2000. The deadline for submitting a stockholder proposal
or a nomination for director that is not to be included in such proxy statement
and proxy is July 9, 1999. Stockholders are also advised to review the Company's
By-laws, which contain additional requirements with respect to advance notice of
stockholder proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and By-laws provide that
the Board of Directors shall be divided into three classes, each class
consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board may
be filled only by persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy (including a vacancy created by
an increase in the Board of Directors) shall serve for the remainder of the full
term of the class of directors in which the vacancy occurred and until such
director's successor is elected and qualified.
The Board of Directors is presently composed of seven members. There are two
directors in the class whose term of office expires in 1999. Each of the
nominees for election to this class is currently a director of the Company who
was previously elected by the stockholders. If elected at the Annual Meeting,
each of the nominees would serve until the 2002 annual meeting and until his or
her successor is elected and has qualified, or until such director's earlier
death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the two nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve.
Set forth below is biographical information for each person nominated and each
person whose term of office as a director will continue after the Annual
Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
GREGORY M. AVIS, age 40, has been a director of Ditech since February 1997.
Mr. Avis has served as a Managing Partner of Summit Partners, a private equity
capital firm, since 1990 and has been a General Partner since 1987. Summit
Partners and its affiliates manage a number of venture capital funds, including
Summit Ventures IV, L.P., Summit Investors III, L.P. and Summit Subordinated
Debt Fund, L.P., which are all stockholders of Ditech. Mr. Avis also serves as a
director of Extended Systems, Inc., a network peripherals and wireless
communications company; Powerwave Technologies, Inc., a designer and
manufacturer of power amplifiers for wireless communications; Splash Technology
Holdings, Inc., a developer of color server systems; and several privately held
companies. Mr. Avis received a B.A. from Williams College and an M.B.A. from
Harvard University.
GEORGE J. TURNER, age 62, has been a director of Ditech since November 1993.
He is currently the President and Chief Operating Officer of Globe Wireless,
Inc., a position he has held since December 1996. He previously worked for
Automated Call Processing for over ten years, serving the company in
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several senior management roles. Mr. Turner has a B.A., an M.A. and a PhD. from
the University of California, Berkeley.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
PETER Y. CHUNG, age 31, has been a director of Ditech since February 1997.
Mr. Chung is a General Partner of Summit Partners, a private equity capital
firm, where he has been employed since August 1994. Summit Partners and its
affiliates manage a number of venture capital funds, including Summit Ventures
IV, L.P., Summit Investors III, L.P. and Summit Subordinated Debt Fund, L.P.,
which are all stockholders of Ditech. From August 1989 to July 1992, Mr. Chung
worked in the Mergers and Acquisitions Department of Goldman, Sachs & Co. Mr.
Chung also serves as a director of E-Tek Dynamics, Inc., an optical components
and modules company; Splash Technology Holdings, Inc., a developer of color
server systems; and several privately held companies. Mr. Chung received a B.A.
from Harvard University and an M.B.A. from Stanford University.
KENNETH E. JONES, age 52, has been a director of Ditech since July 1983. He
is currently the Chairman and Chief Executive Officer of Globe Wireless, Inc., a
position he has held since Globe Wireless was sold by Automated Call Processing
and became an independent company in 1997. Mr. Jones founded Automated Call
Processing in 1983 (which in 1997 merged with Ditech and changed its name to
Ditech Corporation), and worked as its President and Chief Executive Officer
until 1997. From 1986 to 1994, he also served as President and Chief Executive
Officer of Automated Call Processing's wholly-owned subsidiary, Ditech
Corporation. Prior to founding Automated Call Processing, Mr. Jones served as
President and Chief Executive Officer of Clausen-Koch Company, a private label
manufacturer of canned meats. Mr. Jones also served as the Chief Financial
Officer of Hills Brothers Coffee, Inc. from 1976 to 1979. Mr. Jones is a
director of Quadramed Corporation, a medical software company. He served as a
commanding officer of USS Flagstaff in the United States Navy and has a B.S.
from the University of Nebraska and an M.B.A. from Harvard University.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
WILLIAM A. HASLER, age 57, has been a director of Ditech since May 1997. He
also serves as a Co-Chief Executive Officer and Director of Aphton Corp., a
bio-pharmaceutical company, a position he has held since July 1998. From August
1991 to July 1998, Mr. Hasler was the Dean of the Haas School of Business at the
University of California at Berkeley, and from January 1984 to August 1991, Mr.
Hasler served as a Vice Chairman of KPMG Peat Marwick. Mr. Hasler is a director
of numerous companies, including Quickturn Design Systems, Inc., a design
verification company, Solectron Corp., an electronics manufacturing services
company, TCSI Corporation, a telecommunications software company, Tenera Inc.,
an engineering consulting firm, and Walker Interactive Systems, Inc., an
operations and analytical software company. He received a B.A. from Pomona
College and an M.B.A. from Harvard University.
PONG C. LIM, age 45, has served as Ditech's Chairman of the Board since
October 1998. From March 1997 to September 1998, Mr. Lim served as Ditech's
Chief Executive Officer and President. From May 1994 to March 1997, Mr. Lim
served as Ditech's President and Chief Operating Officer. From June 1989 to
April 1994, Mr. Lim served as General Manager of Santa Clara Business Unit, a
division of DSC Communications, a telecommunications company. Mr. Lim has a B.S.
in civil engineering from Drexel University and an M.B.A. in marketing and
finance from the University of Phoenix.
TIMOTHY K. MONTGOMERY, age 46, has served as Ditech's President and Chief
Executive Officer since September 1998 and as a Director since October 1998.
From November 1997 to September 1998, he served as Ditech's Senior Vice
President of Sales and Marketing. Mr. Montgomery served as Vice President of
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Sales of Digital Link Corporation, a manufacturer of digital access products for
wide area networks, from August 1993 to October 1997. From October 1992 to July
1993, Mr. Montgomery worked as an independent consultant. From August 1986 to
September 1992 Mr. Montgomery was employed as Vice President of Sales at Telebit
Corporation, a networking company. Mr. Montgomery has a B.S.B.A. in marketing
from Florida State University.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended April 30, 1999 the Board of Directors held
seven meetings. The Board has an Audit Committee, a Compensation Committee.
The Audit Committee meets with the Company's independent accountants at
least annually to review the results of the annual audit and discuss the
financial statements; recommends to the Board the independent accountants to be
retained; and receives and considers the accountants' comments as to controls,
adequacy of staff and management performance and procedures in connection with
audit and financial controls. The Audit Committee is composed of two
non-employee directors: Messrs. Chung and Hasler. As audit issues were discussed
in full board meetings in fiscal year 1999, the Audit Committee did not meet
during such fiscal year.
The Compensation Committee makes decisions concerning salaries and incentive
compensation, awards stock options to employees and consultants under the
Company's stock option plans and otherwise determines compensation levels and
performs such other functions regarding compensation as the Board may delegate.
All decisions by the Compensation Committee are reviewed by the Board, except
that decisions regarding stock awards under the Company's 1999 Stock Option Plan
are made solely by the Compensation Committee. The Compensation Committee is
composed of three non-employee directors: Messrs. Avis, Hasler and Jones. It met
two times during such fiscal year.
During the fiscal year ended April 30, 1999, all directors except Mr. Turner
attended at least 75% of the aggregate of the meetings of the Board and of the
committees on which they served, held during the period for which they were a
director or committee member, respectively. Mr. Turner did not attend any
meetings of the Board held during the fiscal year ended April 30, 1999 due to
ill health.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending April 30, 2000 and
has further directed that management submit the selection of independent
accountants for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
April 1998. Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
the Company's independent accountants is not required by the Company's By-laws
or otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of
good corporate practice. If the stockholders fail to ratify the selection, the
Audit Committee and the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee and the Board in
their discretion may direct the appointment of different independent accountants
at any time during the year if they determine that such a change would be in the
best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of PricewaterhouseCoopers LLP. Abstentions
will be counted toward the tabulation of votes cast on proposals
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<PAGE>
presented to the stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether this matter has been approved.
In April 1998, the Company's Board of Directors determined to change its
accountants and approved the engagement of PricewaterhouseCoopers LLP (formerly
Coopers & Lybrand LLP) to replace the former accountants as the Company's
principal accountants. Prior to and as of PricewaterhouseCoopers' appointment,
there were no disagreements with the former accountants during the two years
ended April 30, 1997 or during the subsequent interim period preceding their
replacement on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which, if not resolved to
the former accountants' satisfaction, would have caused them to make reference
to the matter in their report. The former accountants issued an unqualified
opinion on the financial statements of the Company as of and for the two years
ended April 30, 1997. The Company did not consult with PricewaterhouseCoopers
LLP on any accounting or financial reporting matters in the periods prior to
their appointment.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
EXECUTIVE OFFICERS OF THE COMPANY
TIMOTHY K. MONTGOMERY, age 46, has served as Ditech's President and Chief
Executive Officer since September 1998 and as a Director since October 1998.
From November 1997 to September 1998, he served as Ditech's Senior Vice
President of Sales and Marketing. Mr. Montgomery served as Vice President of
Sales of Digital Link Corporation, a manufacturer of digital access products for
wide area networks, from August 1993 to October 1997. From October 1992 to July
1993, Mr. Montgomery worked as an independent consultant. From August 1986 to
September 1992 Mr. Montgomery was employed as Vice President of Sales at Telebit
Corporation, a networking company. Mr. Montgomery has a B.S.B.A. in marketing
from Florida State University.
TONI M. BELLIN, age 53, joined Ditech in December 1998 as Vice President of
Operations. Before joining Ditech, Ms. Bellin served as the Vice President of
Operations for Digital Link Corporation from December 1993 to December 1998, and
as the Vice President of Operations of Zeiss Humphrey Systems, a medical capital
equipment manufacturer, from July 1987 to December 1993. Ms. Bellin has a B.A.
in business administration and an M.B.A. in executive management from St. Mary's
College.
SALIM N. JABR, age 47, joined Ditech in May 1995 as Vice President of
Engineering and Development, Optical Products. In August 1994, Mr. Jabr founded
ORCA Technology, a company engaged in the development of DWDM systems. From
November 1993 to December 1994, Mr. Jabr was a senior staff manager for SDL
Inc., a designer and manufacturer of specialized semiconductor products. Mr.
Jabr served as Director of Optical Technology at Raychem Corporate Technology, a
telecommunications and industrial equipment manufacturing company, from
September 1989 to November 1993. From June 1981 to September 1989, he worked at
Litton Guidance and Control, an aerospace company. He was also an Assistant
Professor in Physics at the University of Southern California from September
1979 to August 1981. Mr. Jabr has a Ph.D. in physics and an M.S. in electrical
engineering from Yale University, and a B.S. in physics from The American
University in Beirut.
MARC SCHWAGER, age 42, joined Ditech in April 1999 as its Vice President,
Marketing. Before joining Ditech, Mr. Schwager served as the Director of Product
Management for Bandwidth Unlimited, a Silicon Valley start-up working in the
optical networking field, from November 1998 to April 1999. From May 1981
through October of 1998, Mr. Schwager held a series of marketing positions at
Hewlett-Packard, most recently as Director of Marketing for the Advanced
Networks Division. Mr. Schwager holds a B.S. in Chemical Engineering from
Rensselaer Polytechnic Institute.
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SERGE STEPANOFF, age 57, joined Ditech in February 1987 and was its Vice
President of Engineering until May 1991. In September 1996, he rejoined Ditech
and assumed his current position of Vice President of Engineering and
Development, Echo Cancellation Products. Mr. Stepanoff worked as Director of
Software at Telecom Solutions, a telecommunications company, from March 1995 to
August 1996. From May 1991 to February 1995, he was a Senior Manager for MCI
Communications, a telecommunications company. He has a B.S. in electrical
engineering from Heald Engineering College and an M.S. in Computer Science from
West Coast University.
WILLIAM J. TAMBLYN, age 40, joined Ditech in June 1997 as a Vice President
and Chief Financial Officer. Mr. Tamblyn was the Chief Financial Officer at
Conductus, Inc., a telecommunications company, from December 1993 to June 1997.
He served as Chief Financial Officer at Ramtek, an imaging company, from May
1993 to December 1993. Prior to May 1993, Mr. Tamblyn worked in public
accounting, including for Coopers & Lybrand, LLP. He has a B.S. in accounting
from San Jose State University and is a certified public accountant.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of July 31, 1999 by: (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table; (iii) all executive officers and directors of the Company as
a group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock.
Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to securities.
Except as indicated by footnote, and subject to community property laws where
applicable, the Company believes, based on information furnished by such
persons, that the persons named in the table below have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them. Percentage of beneficial ownership is based on
12,223,938 shares of common stock outstanding as of July 31, 1999.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------
BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------------------------------------------ ---------- -----------
<S> <C> <C>
Entities affiliated with Summit Partners (1)............................ 3,867,649 31.6%
Seahawk Ranch Irrevocable Trust (2)..................................... 758,985 6.2
Seahawk Investment Trust (2)............................................ 611,324 5.0
Timothy Montgomery (3).................................................. 399,998 3.3
Pong Lim (4)............................................................ 499,998 4.1
William Tamblyn (5)..................................................... 116,665 *
Toni Bellin (6)......................................................... 100,000 *
Serge Stepanoff (7)..................................................... 99,998 *
Salim Jabr (8).......................................................... 199,999 1.6
Marc Schwager (9)....................................................... 100,000 *
Gregory Avis (10)....................................................... 3,867,649 31.6
Peter Chung (11)........................................................ 3,867,649 31.6
William Hasler.......................................................... 66,666 *
Kenneth E. Jones (12)................................................... 1,387,421 11.4
George Turner........................................................... 154,052 1.3
All directors and executive officers as a group (12
persons)(13).......................................................... 6,992,446 54.7%
</TABLE>
- ------------------------
* Represents beneficial ownership of less than 1 percent.
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(1) Shares consist of 3,515,433 shares held by Summit Ventures IV, L.P., 116,262
shares held by Summit Investors III, L.P., and 235,954 shares held by Summit
Subordinated Debt Fund, L.P. Summit Partners is located at 600 Atlantic
Ave., Suite 2800, Boston, MA 02210-2227. Summit Partners IV, L.P. is the
General Partner of Summit Ventures IV, L.P. and Stamps, Woodsum & Co., IV is
the General Partner of Summit Partners IV, L.P. Summit Partners SD, L.P. is
the General Partner of Summit Subordinated Debt Fund, L.P. and Stamps,
Woodsum & Co., III is the General Partner of Summit Partners SD, L.P. The
following individuals are General Partners of Stamps, Woodsum & Co., IV,
Summit Investors III, L.P. and Stamps, Woodsum & Co., III, L.P.: E. Roe
Stamps, IV, Stephen G. Woodsum, Martin J. Mannion, John A. Genest, Gregory
M. Avis, Bruce R. Evans, Walter G. Kortschak, Thomas S. Roberts, Joseph F.
Trustey and Kevin P. Mohan. As general partners, such persons may be deemed
to have beneficial ownership of the shares held by Summit Ventures IV, L.P.,
Summit Investors III, L.P. and Summit Subordinated Debt Fund, L.P.
(2) Seahawk Investment Trust and Seahawk Ranch Irrevocable Trust are located at
550 Pilgrim Drive, Foster City, California 94404. Kenneth Jones and Signe
Kim Lauridsen-Jones are trustees of the Seahawk Investment Trust and, as
such, may be deemed to have beneficial ownership of the shares held by
Seahawk Investment Trust. Mr. Jones and Philip E. Blake are trustees of the
Seahawk Ranch Irrevocable Trust and, as such, may be deemed to have
beneficial ownership of the shares held by Seahawk Ranch IrrevocableTrust.
(3) Includes 100,000 shares which may be acquired pursuant to the exercise of
stock options. On July 31, 1999, 180,555 of Mr. Montgomery's shares were
subject to a repurchase option in favor of Ditech.
(4) On July 31, 1999, 67,222 of Mr. Lim's shares were subject to a repurchase
option in favor of Ditech. The address for Mr. Lim is c/o Ditech
Corporation, 825 E. Middlefield Rd., Mountain View, CA 94043.
(5) Includes 30,084 shares which may be acquired pursuant to the exercise of
stock options. On July 31, 1999, 35,192 of Mr. Tamblyn's shares were subject
to a repurchase option in favor of Ditech.
(6) Consists solely of 100,000 shares which may be acquired pursuant to the
exercise of stock options.
(7) Consists solely of 99,998 shares which may be acquired pursuant to the
exercise of stock options.
(8) Includes 125,000 shares which may be acquired pursuant to the exercise of
stock options.
(9) Consists solely of 100,000 shares which may be acquired pursuant to the
exercise of stock options.
(10) The shares are beneficially owned by Summit Partners. Mr. Avis is a
Managing Partner of Summit Partners. See footnote (1). The address for Mr.
Avis is c/o Summit Partners, 600 Atlantic Ave., Suite 2800, Boston, MA
02210-2227.
(11) The shares are beneficially owned by Summit Partners. Mr. Chung is a
Principal of Summit Partners. See footnote (1). The address for Mr. Chung is
c/o Summit Partners, 600 Atlantic Ave., Suite 2800, Boston, MA 02210-2227.
(12) Total number of shares includes 758,985 shares of common stock held by
Seahawk Ranch Irrevocable Trust, of which Mr. Jones is a trustee; 611,324
shares of common stock held by Seahawk Investment Trust, of which Mr. Jones
is a trustee; and 17,112 shares of common stock held by Western General
Corporation, of which Mr. Jones is the president. The address for Mr. Jones
is 550 Pilgrim Drive, Foster City, California 94404.
(13) Includes 555,082 shares that may be acquired pursuant to the exercise of
stock options. See notes 1 through 12 above.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
The Company was not subject to Section 16 of the 1934 Act during the fiscal
year ended April 30, 1999, and so no compliance was required by such persons.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Ditech does not currently provide cash compensation to non-employee
directors for services in such capacity, but directors may be reimbursed for
certain expenses in connection with attendance at Board of Directors and
committee meetings.
In March and April 1999 the Board adopted, and the stockholders approved,
Ditech's 1999 Non-Employee Directors' Stock Option Plan (the "Directors' Option
Plan"). The Board has reserved 100,000 shares of common stock for issuance under
the Director's Option Plan. Under the Directors' Option Plan:
- each new non-employee director who is elected or appointed for the first
time other than at an annual meeting will automatically be granted an
option to purchase that number of shares of common stock equal to 5,000
multiplied by the number of months remaining until the next succeeding
annual meeting of stockholders divided by twelve; and
- each non-employee director will automatically be granted an option to
purchase 5,000 shares of common stock immediately following each annual
meeting of stockholders; provided, that such grant to a non-employee
director receiving such annual grant for the first time shall be 10,000
shares rather than 5,000 shares.
Options granted under the Directors' Option Plan are granted at 100% of the
fair market value of the common stock on the date of grant. Options granted
under the Directors' Option Plan have a five-year term and are fully vested. The
Directors' Option Plan will terminate in March 2009, unless earlier terminated
by the Board of Directors.
Upon certain changes in control of Ditech, all outstanding options under the
Directors' Option Plan shall be assumed by the surviving entity or the surviving
entity shall substitute similar options for such outstanding options. If the
surviving entity determines not to assume such outstanding options or substitute
similar options therefor, then the options will terminate if not exercised prior
to such change in control.
As of April 30, 1999, no options had been granted under the Directors'
Option Plan, and 100,000 shares were reserved for future grants or purchases
under the Directors' Option Plan.
SUMMARY OF COMPENSATION
The following table sets forth certain information for the fiscal year ended
April 30, 1999, regarding the compensation of Ditech's Chief Executive Officer
and each of the most highly compensated executive officers of Ditech whose
salary and bonus for such year were in excess of $100,000 on an annualized basis
(the "Named Executive Officers"). In accordance with Securities and Exchange
Commission rules, annual compensation in the form of perquisites and other
personal benefits has been omitted where the aggregate amount of such
perquisites and other personal benefits constitutes less than the lesser of
$50,000 or 10% of the total annual salary and bonus for the Named Executive
Officer for the fiscal year.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION (1) SECURITIES
----------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------------------------------- --------- ----------- ----------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Timothy Montgomery
Chief Executive Officer, President and Senior
Vice President, Sales and Marketing (1).......... 1999 $ 225,000 $ 100,000 133,333 --
Pong Lim
Chairman of the Board (2)........................ 1999 175,000 100,000 -- $ 1,636
Salim Jabr
Vice President of Engineering and Development,
Optical Products................................. 1999 120,000 43,000 -- --
Serge Stepanoff
Vice President of Engineering and Development,
Echo Cancellation Products....................... 1999 120,000 42,960 -- --
William Tamblyn
Vice President and Chief Financial Officer....... 1999 135,000 54,000 16,666 --
</TABLE>
- ------------------------
(1) Mr. Montgomery was promoted to his current position of President, Chief
Executive Officer of Ditech in September 1998.
(2) Mr. Lim served as President and Chief Executive Officer of Ditech until
September 1998, at which time Mr. Montgomery became President and Chief
Executive Officer. Mr. Lim became Chairman of the Board of Ditech in October
1998. Compensation listed in the "all other compensation" column consists of
insurance premiums paid by Ditech for the benefit of Mr. Lim.
STOCK OPTION GRANTS AND EXERCISES
The following table sets forth each grant of stock options made during the
fiscal year ended April 30, 1999 to each of the Named Executive Officers. The
exercise price per share of each option was equal to the fair market value of
the common stock on the date of grant as determined in good faith by the Board
of Directors on such date based upon such factors as the purchase price paid by
investors for shares of Ditech's preferred stock, the absence of a trading
market for Ditech's securities and Ditech's financial outlook and results of
operations. During the fiscal year ended April 30, 1999, Ditech granted
employees, consultants and directors options to purchase an aggregate of 702,956
shares of common stock.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES APPRECIATION FOR
UNDERLYING % OF TOTAL EXERCISE OPTION TERM
OPTIONS OPTIONS GRANTED PRICE PER EXPIRATION --------------------
NAME GRANTED 1998 SHARE DATE 5% 10%
- ------------------------------------------------------ ----------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Timothy Montgomery.................................... 133,333 19.0 $ 1.50 10/15/08 $ 125,779 $ 318,748
Pong Lim.............................................. -- -- -- -- -- --
William Tamblyn....................................... 16,666 2.4 1.50 11/6/08 15,772 39,842
Serge Stepanoff....................................... -- -- -- -- -- --
Salim Jabr............................................ -- -- -- -- -- --
</TABLE>
The options granted to Messrs. Montgomery and Tamblyn vest over a standard
four-year period, with 25% vesting after one year and monthly vesting
thereafter.
9
<PAGE>
In accordance with the rules of the Securities and Exchange Commission, the
columns referring to potential realizable value show the gains or "option
spreads" that would exist for the options granted based on the assumed rates of
annual compound stock price appreciation of 5% and 10% from the date the option
was granted over the full option term. The rules of the SEC require the Company
to use these assumed annual compound rates of stock price appreciation. These
estimated rates do not represent the Company's estimate or projection of future
common stock prices.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
The following table sets forth information regarding option exercises, and
the fiscal year end values of stock options held by each of the Named Executive
Officers during the fiscal year ended April 30, 1999 and exercisable and
unexercisable options held as of April 30, 1999:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
UNDERLYING AT APRIL 30, 1999 AT APRIL 30, 1999
SHARES ACQUIRED VALUE ---------------------------- ------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- --------------- --------- ----------- --------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Timothy Montgomery..................... 299,998 $ 54,373 100,000 -- $ 825,000 --
Pong Lim............................... 479,998 247,499 -- -- -- --
William Tamblyn........................ 81,581 38,349 35,084 -- 304,969 --
Serge Stepanoff........................ -- -- 99,998 -- 89,482 --
Salim Jabr............................. 74,999 45,000 125,000 -- 1,138,125 --
</TABLE>
Each option grant permits immediate exercise subject to a repurchase option
in favor of Ditech, which lapses over a four-year period with 25% lapsing after
the first year and monthly thereafter. The fair market value of Ditech's common
stock on or about April 30, 1999 was $9.75 per share as determined in good faith
by the Board of Directors on such date based upon such factors as the absence of
a trading market for Ditech's common stock, the probability of completing the
Company's initial public offering at that time and the low price of the initial
public offering price range.
EMPLOYMENT AGREEMENTS
In September 1998, Ditech entered into an employment agreement with Timothy
Montgomery to serve as Ditech's President and Chief Executive Officer at a base
salary of $225,000 a year starting on November 1, 1998, with an annual
discretionary bonus set by the Board and based upon specific objectives to be
agreed upon by Mr. Montgomery and the Board. The employment agreement also
provides that Mr. Montgomery will receive an option to purchase 133,333 shares
of Ditech common stock. The employment agreement is at-will, contains a
non-solicitation agreement, and provides that if Mr. Montgomery is terminated
without cause, he will be paid a lump sum equal to twelve months base salary.
However, if Mr. Montgomery resigns, his employment is terminated for cause, or
there is a change in control of Ditech, he will receive no severance benefits.
In the event of a change of control of Ditech, all of Mr. Montgomery's
outstanding, unvested options will immediately become fully vested.
In September 1998, Ditech entered into an employment agreement with Pong Lim
to serve as Chairman of the Board of Directors and a Ditech employee at a base
salary of $175,000 a year, with an annual bonus based on Ditech financial
achievements. In addition, if the requirements tied to the bonus are met, all of
Mr. Lim's remaining unvested stock options will become fully vested in September
1999. The employment agreement is at-will, contains a non-solicitation agreement
and provides that if Mr. Lim is terminated for any reason before September 1999,
his compensation package will be paid in full, including the bonus and
accelerated vesting provisions.
In November 1998, Ditech entered into an employment agreement with Toni
Bellin to serve as Vice President of Operations at a base salary of $150,000 a
year, with a guaranteed bonus of $25,000 in 1999 and an option to purchase
100,000 shares of Ditech common stock. The employment agreement is at-will,
10
<PAGE>
although if Ms. Bellin is terminated for other than cause or permanent
disability during her first two years of service Ditech must pay Ms. Bellin's
base salary for the lesser of a period of one year following the termination of
her employment, or the period ending on the second anniversary of her first day
of employment. Ms. Bellin received a signing bonus of $25,000, though if she
severs her employment with Ditech within her first twelve months with the
Company she must repay $12,500 of the signing bonus.
In April 1999, Ditech entered into an employment agreement with Marc
Schwager to serve as Vice President of Marketing at a base salary of $150,000 a
year, with a guaranteed bonus of $30,000 in 1999 and an option to purchase
100,000 shares of Ditech common stock. The employment agreement is at-will,
although if Mr. Schwager is terminated for other than cause or permanent
disability during his first year of service Ditech must pay Mr. Schwager's base
salary for the period ending on the first anniversary of his first day of
employment. Mr. Schwager received a signing bonus of $25,000, though if he
severs his employment with Ditech within his first twelve months with the
company he must repay $12,500 of the signing bonus.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Company's Board of Directors generally
makes decisions on compensation of the Company's Chief Executive Officer,
Timothy K. Montgomery, and its other executive officers. During fiscal 1999, the
Compensation Committee consisted of Gregory M. Avis, William A. Hasler and
Kenneth E. Jones; all three are outside directors. All decisions by the
Compensation Committee are reviewed by the full Board of Directors, except for
decisions about awards under the Company's 1999 Stock Option Plan, which
decisions must be made solely by the Compensation Committee for awards under
such plan to satisfy Rule 16b-3 under the 1934 Act. The Compensation Committee
has furnished the following report on the 1999 compensation of Timothy K.
Montgomery and the Company's other executive officers.
In setting the compensation levels, the Compensation Committee considers the
standard practices in the telecommunications industry, including data from
surveys, as well as the practices of companies with whom the Company competes
for executive talent. The Company believes that its total executive compensation
package is near the median among its peers making the transition from a private
company with less than $15 million in revenues to a publicly traded company with
greater than $25 million of revenues.
It is the current philosophy of the Company to keep the base salary of
executives between the 25th and 50th percentiles based on the RADFORD ASSOCIATES
MANAGEMENT TOTAL COMPENSATION PLAN 1998-- OVERALL COMPANIES LESS THAN $40M
(Radford) & ADVANCED EQUITY PRE-IPO SURVEY - $10M LEVEL (AE), so that more of
their compensation depends on bonuses, which are contingent upon Company and
individual performance. The Radford and AE surveys include some but not all
companies included in the Graph Index. See "Comparison of Stockholder Return".
The executives are thus motivated to enhance stockholder value.
As the Company has commercial products and developing products, the
Compensation Committee believes that corporate performance should be measured by
both traditional financial performance criteria such as profitability and
earnings per share and by analyzing the degree to which the Company achieves
certain goals established by the Compensation Committee and approved by the
Board.
- ------------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before or
after the date hereof and irrespective of any general incorporation language
contained in such filing.
11
<PAGE>
Under the Executive Compensation Bonus Plan, an executive's annual incentive
award depends on improved Company performance, both revenue growth and profits
for the fiscal year and key individual contributions. The current philosophy of
the Company is to keep total compensation including bonuses for executives
between the 50th and 75th percentiles of the companies in the Radford and AE
surveys.
The performance goals for the Company are derived from the Company's
business plans that include critical individual performance targets relating to
strategic product positioning, revenue growth, and profitability for the fiscal
year and key internal deliveries. The performance bonuses are based on a
percentage on each related task. The incentive targets vary with each executive
officer and are based overall as a percentage of base salary. The incentive
targets range from 40% to 50%. The Compensation Committee annually reviews and
approves specific bonus targets, maximums and performance criteria for all
executives.
STOCK OPTIONS
The Compensation Committee grants stock options under the Company's stock
option plans to foster executive ownership and to provide direct linkage with
stockholder interests. The Compensation Committee considers the current level of
equity holdings in the Company, stock options previously granted, industry
practices, the executive's accountability level, and assumed potential stock
value when determining stock option grants. The Compensation Committee relies
upon competitive guideline ranges of retention-effective, target-gain objectives
to be derived from option gains based upon relatively aggressive assumptions
relating to planned growth and earnings. In this manner, potential executive
gains parallel those of other stockholders over the long term. Therefore, the
stock option program serves as the Company's primary long-term incentive and
retention tool for executives and other key employees. The exercise prices of
stock options granted to the executive officers are equal to the market value of
the stock on the date of grant.
CEO COMPENSATION
Mr. Montgomery commenced employment with the Company effective November 1,
1997 as Senior Vice President of Sales and Marketing. As of September 15, 1998
he became the President and Chief Executive Officer. In general, as President
and CEO the factors utilized in determining Mr. Montgomery's compensation are
the same as those applied to the other executive officers in the manner
described in the preceding paragraphs, although achievement of Company financial
performance goals have a greater impact on his total compensation.
In establishing Mr. Montgomery's base salary, it was the Compensation
Committee's intent to provide him with a level of stability and certainty each
year. His base salary for the 1999 fiscal year of $225,000 approximates the 50th
percentile or competitive classification of reported base salaries for Chief
Executive Officers based on Radford and AE.
The annual bonus component of Mr. Montgomery's compensation package was
based on the Company's financial performance and individual goal achievement, as
described above. Based upon Mr. Montgomery's performance, his resultant bonus
for 1999 included his full bonus at plan plus an additional $25,000 for
exceeding plan, for a total of $100,000.
Upon becoming President and CEO during the fiscal year, Mr. Montgomery
received an additional 133,333 stock options. These options were granted based
on industry averages as related to his new position within the Company.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction for compensation exceeding $1 million paid to certain
of the corporation's executive officers. It is not expected
12
<PAGE>
that the compensation to be paid to the Company's executive officers for fiscal
1999 will exceed the $1 million limit per officer. The Company's 1998 Stock
Option Plan is structured so that any compensation deemed paid to an executive
officer when he/she exercises an outstanding option under the Plan with an
exercise price equal to the fair market value of the option shares on the grant
date will qualify as performance-based compensation; which will not be subject
to the $1 million limitation. The Compensation Committee will defer any decision
on whether or not to limit the dollar amount of all other compensation payable
to the Company's executive officer ever approach that level.
In summary, it is the opinion of the Compensation Committee that the adopted
executive compensation policies and plans provide the necessary total
remuneration program to properly align the Company's performance and the
interest of the Company's stockholders with competitive and equitable executive
compensation in a balanced and reasonable manner, for both the short and
long-term.
Compensation Committee
Gregory M. Avis
William A. Hasler
Kenneth E. Jones
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, Messrs. Avis, Hasler and Jones served as members of the
Compensation Committee of Ditech's Board of Directors. Mr. Avis is a Managing
Partner of Summit Partners, a private equity capital firm that became a major
stockholder of Ditech in connection with Ditech's recapitalization.
No member of the Compensation Committee serves as a member of the board of
directors or compensation committee of any other entity that has one or more
executive officers serving as a member of Ditech's Board of Directors or
Compensation Committee. Prior to the formation of the Compensation Committee in
May 1997, the Board of Directors of Ditech as a whole made decisions relating to
compensation of Ditech's executive officers.
PERFORMANCE MEASUREMENT COMPARISON
The Company completed its initial public offering on June 9, 1999, at which
time the Company's Common Stock first became publicly traded. Consequently, the
Company's Common Stock was not publicly traded until after the completion of its
last fiscal year, and so no performance measurement comparison has been
provided.
CERTAIN TRANSACTIONS
In April 1999 the Company redeemed all of its Series C preferred stock by
distribution to the holders of such stock all of the shares of Series A
preferred stock of Globe Wireless, Inc. held by the Company. Such distribution
was made on a one-for-one basis. In connection with such redemption, the Company
redeemed: from The Seahawk Investment Trust and the Seahawk Ranch Irrevocable
Trust, collectively, an aggregate of 3,596,795 shares of Series C preferred
stock, of which trusts Mr. Jones, a director of the Company, is a trustee; and
from Mr. Turner, a director of the Company, 404,358 shares of Series C preferred
stock.
In June 1999, in connection with the Company's initial public offering, the
Company redeemed all of its Series A Preferred Stock by payment of approximately
$1.14 per share of Series A Preferred Stock pursuant to the terms thereof. In
connection with this redemption, the Company redeemed: from funds affiliated
with Summit Partners, of which Mr. Avis, a director of the Company, is Managing
Partner, and of which Mr. Chung, a director of the Company, is a Principal, an
aggregate of 12,000,000 shares of Series A
13
<PAGE>
preferred stock; from The Seahawk Investment Trust and the Seahawk Ranch
Irrevocable Trust, collectively, an aggregate of 2,272,344 shares of Series A
preferred stock, of which trusts Mr. Jones, a director of the Company, is a
trustee; and from Mr. Turner, a director of the Company, 255,461 shares of
Series A preferred stock.
The Company has entered into employment contracts with each of its Chief
Executive Officer, Chairman, Vice President of Operations, and Vice President of
Marketing. See "Employment Agreements."
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party be
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
By-laws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ ANDREI M. MANOLIU
Andrei M. Manoliu
Secretary
September 7, 1999
14
<PAGE>
DITECH COMMUNICATIONS CORPORATION
825 E. MIDDLEFIELD ROAD, MOUNTAIN VIEW, CALIFORNIA 94043 PROXY
- -------------------------------------------------------------------------------
DITECH COMMUNICATIONS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 7, 1999
The undersigned hereby appoints Timothy K. Montgomery and William J. Tamblyn,
and each of them, as attorneys and proxies of the undersigned, with full
power of substitution, to vote all of the shares of stock of Ditech
Communications Corporation which the undersigned may be entitled to vote at
the Annual Meeting of Stockholders of Ditech Communications Corporation to be
held at the offices of Ditech Communications Corporation, 825 E. Middlefield
Road, Mountain View, California 94043, on Thursday, October 7, 1999 at 3:00
p.m. (local time), and at any and all postponements, continuations and
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as
to any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED,
THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
SEE REVERSE FOR VOTING INSTRUCTIONS
<PAGE>
PLEASE DETACH HERE
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
1: To elect two directors to hold office until the 2002 Annual
Meeting of Stockholders.
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below). listed below.
NOMINEES: 01 Gregory M. Avis 02 George J. Turner
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S) WRITE SUCH NOMINEE(S)'
NAME(S) IN THE BOX PROVIDED TO THE RIGHT.
---------------------------------
---------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
2: To ratify selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending April 30, 2000.
/ / FOR / / AGAINST / / ABSTAIN
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
Address Change? Mark Box / / DATED _________________
Indicate changes below:
------------------------------------------------------
------------------------------------------------------
SIGNATURE(S)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF
THE STOCK IS REGISTERED IN THE NAMES OF TWO OR MORE
PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD
THEIR TITLES. IF SIGNER IS A CORPORATION, PLEASE GIVE
FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED OFFICER
SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
