<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 Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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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(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
181 METRO DRIVE, THIRD FLOOR
SAN JOSE, CALIFORNIA 95110
August 26, 1998
To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Unify Corporation (the "Company"). The Annual Meeting will be held on Friday,
October 2, 1998 at 4:00 p.m. local time at the Summerfield Suites Hotel, 1602
Crane Court, San Jose, California.
The actions expected to be taken at the Annual Meeting are described in
detail in the attached Notice of Annual Meeting of Stockholders and Proxy
Statement.
Included with the Proxy Statement is a copy of the Company's Annual Report
for fiscal 1998. We encourage you to read the Annual Report as it includes
information on the Company's operations, markets, products and services as well
as the Company's audited financial statements.
Please take advantage of this opportunity to participate in the affairs of
the Company by voting on the business to come before this meeting. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Returning the proxy
does not deprive you of your right to attend the meeting and vote your shares in
person for the matters acted upon at the meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ REZA MIKAILLI
Reza Mikailli
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
UNIFY CORPORATION
181 METRO DRIVE, THIRD FLOOR
SAN JOSE, CALIFORNIA 95110
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 2, 1998
To our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Unify
Corporation (the "Company") will be held on October 2, 1998 at 4:00 p.m. local
time at the Summerfield Suites Hotel, 1602 Crane Court, San Jose, California,
for the following purposes:
1. To elect four members of the Board of Directors to hold office until the
1999 Annual Meeting of Stockholders and until their respective successors
are duly elected and qualified.
2. To vote upon a proposal to ratify the appointment of Deloitte & Touche
LLP as the Company's independent accountants for the fiscal year ending
April 30, 1999.
3. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on August 7, 1998 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the stockholders
entitled to vote at the meeting will be available for examination by any
stockholder for any purpose relating to the meeting during ordinary business
hours at the principal office of Unify Corporation.
By Order of the Board of Directors,
/s/ REZA MIKAILLI
Reza Mikailli
SECRETARY
San Jose, California
August 26, 1998
STOCKHOLDERS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. PROXIES ARE REVOCABLE, AND ANY
STOCKHOLDER MAY WITHDRAW HIS OR HER PROXY AND VOTE IN PERSON AT THE MEETING.
<PAGE>
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
AUGUST 26, 1998
The accompanying proxy is solicited by the Board of Directors (the "Board")
of Unify Corporation, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on October 2, 1998 (the "Annual
Meeting"), or any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. The date of this Proxy Statement is
August 26, 1998, the approximate date on which this Proxy Statement and the
accompanying form of proxy were first sent or given to stockholders.
GENERAL INFORMATION
ANNUAL REPORT. An Annual Report for the fiscal year ended April 30, 1998 is
enclosed with this Proxy Statement.
VOTING SECURITIES. Only stockholders of record as of the close of business
on August 7, 1998 will be entitled to vote at the meeting and any adjournment
thereof. As of that date, there were 8,432,241 shares of Common Stock of the
Company, par value $0.001 per share, issued and outstanding. Stockholders may
vote in person or by proxy. Each holder of shares of Common Stock is entitled to
one vote for each share of stock held on the proposals presented in this Proxy
Statement. The Company's bylaws provide that a majority of all of the shares of
the stock entitled to vote, whether present in person or represented by proxy,
shall constitute a quorum for the transaction of business at the meeting.
SOLICITATION OF PROXIES. The cost of soliciting proxies will be borne by
the Company. In addition to soliciting stockholders by mail, the Company will
request brokers and nominees who hold Common Stock in their names to furnish
proxy materials to beneficial owners of the shares and will reimburse such
brokers and nominees for their reasonable out-of-pocket expenses. The Company
may also use the services of directors, officers, and other employees to solicit
proxies, personally or by telephone, without additional compensation.
VOTING OF PROXIES. All valid proxies received prior to the meeting will be
voted. All shares represented by a proxy will be voted, and where a stockholder
specifies by means of the proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A stockholder giving a proxy has the power to revoke his or her proxy
at any time prior to the time it is voted by delivery to the Secretary of the
Company of a written instrument revoking the proxy or a duly executed proxy with
a later date, or by attending the meeting and voting in person.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of July 31, 1998 with
respect to the beneficial ownership of the Company's Common Stock by (i) each
director of the Company, (ii) the Chief Executive Officer, the three other most
highly compensated executive officers of the Company as of April 30, 1998 whose
salary and bonus for fiscal 1998 exceeded $100,000, and one former executive
officer whose total salary and bonus for fiscal 1998 exceeded $100,000, (iii)
all current directors and executive officers of the Company as a group, and (iv)
each person known by the Company to own more than 5% of the Company's Common
Stock.
<TABLE>
<CAPTION>
SHARES OWNED (1)
-------------------------
NUMBER PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES OF CLASS
- ----------------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
DIRECTORS
Reza Mikailli (2)........................................................................ 480,798 5.6%
Arthur C. Patterson (3).................................................................. 849,503 10.1%
Roel Pieper (4).......................................................................... 11,718 *
Steven D. Whiteman (5)................................................................... 11,041 *
EXECUTIVE OFFICERS
CURRENT EXECUTIVE OFFICERS
Walter Kopp (6).......................................................................... 50,274 *
Richard Medeiros (7)..................................................................... 48,832 *
Frank Verardi (8)........................................................................ 45,023 *
FORMER EXECUTIVE OFFICER
Todd Wille (9)........................................................................... 8,689 *
All current directors and executive officers
as a group (7 persons) (10)............................................................ 1,497,189 17.3%
5% STOCKHOLDERS
Accel Capital L.P. (11).................................................................. 849,503 10.1%
428 University Avenue
Palo Alto, CA 94301
Joseph J. O'Donnell (12)................................................................. 543,950 6.5%
c/o Lourie & Cutler, P.C.
60 State Street
Boston, MA 02109
</TABLE>
- ------------------------
* Less than 1%
(1) Except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to community
property laws where applicable. Unless otherwise indicated, the individuals
in the table may be contacted in care of Unify Corporation, 181 Metro Drive,
Third Floor, San Jose, California 95110.
(2) Mr. Mikailli is President, Chief Executive Officer, Acting Vice President,
Finance and Administration, and a director of the Company. Includes 384,731
shares owned by Mr. Mikailli which secure a full-recourse note payable to
the Company. Also includes 87,648 shares subject to options which are
exercisable within 60 days of July 31, 1998. Finally, includes 5,415 shares
subject to a right of repurchase in favor of the Company which expires
ratably through January 1999.
(3) Mr. Patterson is a director of the Company. Includes 356,679 shares held by
Accel Capital L.P., 237,785 shares held by Accel Capital (International)
L.P., and 27,628 shares held by Ellmore C.
2
<PAGE>
Patterson Partners. Mr. Patterson is either a General Partner or a General
Partner of the respective General Partner of Accel Capital L.P., Accel
Capital (International) L.P. and Ellmore C. Patterson Partners. Mr.
Patterson disclaims beneficial ownership of such shares except to the extent
to which he holds a pecuniary interest. Also includes 1,000 shares owned by
each of Mr. Patterson's three minor children and spouse and 12,300 shares
subject to options held by Mr. Patterson which are exercisable within 60
days of July 31, 1998.
(4) Mr. Pieper is a director of the Company. Consists entirely of shares subject
to options held by Mr. Pieper which are exercisable within 60 days of July
31, 1998.
(5) Mr. Whiteman is a director of the Company. Consists entirely of shares
subject to options held by Mr. Whiteman which are exercisable within 60 days
of July 31, 1998.
(6) Mr. Kopp is Vice President, Product Development of the Company. Includes
21,843 shares subject to options which are exercisable within 60 days of
July 31, 1998. Also includes 1,251 shares subject to a right of repurchase
in favor of the Company which expires ratably through February 1999.
(7) Mr. Medeiros is Vice President, Americas Sales and Services of the Company.
Includes 40,832 shares subject to options which are exercisable within 60
days of July 31, 1998.
(8) Mr. Verardi is Vice President, Worldwide Product Delivery and Customer
Support of the Company. Includes 20,891 shares subject to options which are
exercisable within 60 days of July 31, 1998. Also includes 3,156 shares
subject to a right of repurchase in favor of the Company which expires
ratably through November 1999.
(9) Mr. Wille was Vice President, Finance and Administration, and Chief
Financial Officer of the Company through March 31, 1998.
(10) Includes 206,273 shares subject to options which are exercisable within 60
days of July 31, 1998 and 9,822 shares subject to a right of repurchase in
favor of the Company which expires as indicated in footnotes 2, 6 and 8
above.
(11) Includes 356,679 shares held by Accel Capital L.P., 237,785 shares held by
Accel Capital (International) L.P., and 27,628 shares held by Ellmore C.
Patterson Partners. Also includes 211,111 shares owned by Arthur C.
Patterson, 1,000 shares owned by each of Mr. Patterson's three minor
children and spouse, and 12,300 shares subject to options held by Mr.
Patterson which are exercisable within 60 days of July 31, 1998. See
footnote 3 above.
(12) Includes 512,150 shares held by The Blind Trust u/d/t March 26, 1993, the
beneficiary of which is Mr. O'Donnell's spouse, Katherine O'Donnell; 4,600
shares held by Katherine O'Donnell; and 27,200 shares held by Mr. O'Donnell
as custodian for his two minor children.
3
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Management's nominees for election to the Board of Directors and information
with respect to their ages as of July 31, 1998, positions and offices held with
the Company, and certain biographical information are set forth below. The proxy
holders intend to vote all proxies received by them in the accompanying form FOR
the nominees listed below unless otherwise instructed. Proxies may not be voted
for a greater number of persons than the number of nominees named. Management
knows of no reason why any nominee should be unable or unwilling to serve as a
director. However, if any nominee(s) should for any reason be unable or
unwilling to serve, the proxies will be voted for such substitute nominees as
management may designate.
If a quorum is present and voting, the nominees for directors receiving the
highest number of votes will be elected as directors of the Company to serve
until the next annual meeting of stockholders and until their successors have
been duly elected and qualified. Abstentions and shares held by brokers that are
present, but not voted because the brokers were prohibited from exercising
discretionary authority, i.e., "broker non-votes," will be counted as present
for purposes of determining if a quorum is present.
There are two vacancies on the Company's Board of Directors. Management has
not yet identified suitable candidates to fill these vacancies and does not
anticipate nominating any such candidates prior to the Annual Meeting. These
vacancies may be filled at any time after the Annual Meeting by a majority vote
of the directors then in office, and the directors so chosen shall hold office
for a term expiring at the next annual meeting of stockholders and until such
directors' successors have been duly elected and qualified. The Board of
Directors continues to evaluate prospective candidates.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
- -------------------------------- ---------------------------------------------------------------- --- -----------
<S> <C> <C> <C>
Reza Mikailli President, Chief Executive Officer, Acting Vice President, 46 1994
Finance and Administration, and Director
Arthur C. Patterson Director 54 1986
Roel Pieper Director 42 1997
Steven D. Whiteman Director 47 1997
</TABLE>
REZA MIKAILLI has been President and Chief Executive Officer and a director
of the Company since November 1994, after serving as Senior Vice President of
Products from October 1992 to November 1994. Mr. Mikailli has also been serving
as the Company's Acting Vice President of Finance and Administration since April
1998. From 1989 to 1992, Mr. Mikailli was Vice President of Server and
Connectivity Products at Informix Corporation, a manufacturer of computer
database and software tool products. Mr. Mikailli received an M.S. degree in
computer science from Santa Clara University, and a B.S. degree in computer
science and an M.S. degree in mathematics from the University of Tehran, Iran.
ARTHUR C. PATTERSON has served as a director of the Company since December
1986. From 1983 to the present, Mr. Patterson has been a Managing Partner of
Accel Partners, a venture capital management firm investing in software and
telecommunication companies. Mr. Patterson is also a director of VIASOFT, Inc.,
a software tools company, and PageMart Wireless, Inc., a wireless communication
company.
ROEL PIEPER has served as a director of the Company since February 1997.
From May 1998 to the present, Mr. Pieper has been Executive Vice President,
Technology, Strategy and Planning, of Philips Electronics, an electronics
manufacturer in the Netherlands. From August 1996 to March 1998, Mr. Pieper was
Chief Executive Officer and a director of Tandem Computers, Inc., a computer
hardware and system software manufacturer. From September 1993 to August 1996,
Mr. Pieper was President and Chief Executive Officer of UB Networks, a
networking hardware, software and service company, and from January 1991 to
August 1993 he was President and Chief Executive Officer of Unix System
Laboratories, an operating system software company. Mr. Pieper is also a
director of VERITAS Software Corporation, a storage management software company,
General Magic, Inc., a provider of computer-Internet-telephony
4
<PAGE>
integration solutions for mobile users, and Lincoln National Corporation, a
financial services, insurance and investment company.
STEVEN D. WHITEMAN has served as a director of the Company since May 1997.
Mr. Whiteman has been President, Chief Executive Officer and a director of
VIASOFT, Inc., a software tools company, since April 1993 and Chairman of the
Board of that company since April 1997. From December 1990 to April 1993, he was
Vice President of Marketing and Sales of VIASOFT, Inc. Mr. Whiteman is also a
director of Actuate Software Corporation, an enterprise reporting software
company.
The Company's bylaws currently authorize up to six directors. Each director
holds office until the next annual meeting of stockholders and until his
successor is duly elected and qualified. The executive officers of the Company
serve at the discretion of the Board. There are no family relationships between
any of the directors or executive officers of the Company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During fiscal 1998, the Board held four meetings. No director serving on the
Board in fiscal 1998 attended fewer than 75% of such meetings of the Board
except Mr. Pieper, who attended two of the four meetings. No director serving on
the Committees of the Board in fiscal 1998 attended fewer than 75% of the
meetings of all Committees of which he was a member. The Board of Directors has
two standing committees: the Audit Committee and the Compensation Committee.
The Audit Committee's functions are to review with the Company's independent
accountants and management the annual financial statements and independent
accountants' opinion, review the scope and results of the examination of the
Company's financial statements by the independent accountants, approve all
professional services performed by the independent accountants and related fees,
recommend the retention of the independent accountants to the Board, subject to
ratification by the stockholders, and periodically review the Company's
accounting policies and internal accounting and financial controls. The members
of the Audit Committee are Arthur C. Patterson, Roel Pieper and Steven D.
Whiteman. During fiscal 1998, the Audit Committee held four meetings.
The Compensation Committee's functions are to review and establish salary
levels for executive officers and certain other management employees and to
grant stock options. The members of the Compensation Committee are Arthur C.
Patterson, Roel Pieper and Steven D. Whiteman. During fiscal 1998, the
Compensation Committee held three meetings. For additional information
concerning the Compensation Committee, see "COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION."
DIRECTOR COMPENSATION
Members of the Company's Board of Directors currently do not receive cash
compensation for their services as directors. Non-employee Board members are
eligible for stock option grants under the Company's 1991 Stock Option Plan. In
February 1996, Mr. Patterson was granted an option to purchase 14,285 shares of
Common Stock at an exercise price of $4.20 per share. In February 1997, Mr.
Pieper was granted an option to purchase 25,000 shares of Common Stock at an
exercise price of $3.56 per share and in May 1997, Mr. Whiteman was granted an
option to purchase 25,000 shares of Common Stock at an exercise price of $3.00
per share. All of these options were granted pursuant to the 1991 Stock Option
Plan, vest over a three year period from the date of grant, and expire 10 years
from the date of grant.
Directors who are employees of the Company are eligible to receive options
under the 1991 Stock Option Plan. Such employee-directors are also eligible to
participate in the Company's 1996 Employee Stock Purchase Plan, provided that
each employee-director does not own or hold options to purchase, or as a result
of participation in the 1996 Employee Stock Purchase Plan would own or hold
options to purchase, 5% or more of the total combined voting power or value of
all classes of stock of the Company.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company, the three other most highly
compensated executive officers of the Company whose total salary and bonus for
fiscal 1998 exceeded $100,000, and one former executive officer whose total
salary and bonus for fiscal 1998 exceeded $100,000 for services in all
capacities to the Company during fiscal 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) -------------
SECURITIES
---------------------- UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS (#)
- ------------------------------------------------------------------ ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Reza Mikailli .................................................... 1998 $ 236,000 $ 129,500 --
President, Chief Executive Officer, Acting Vice President, 1997 236,000 16,100 --
Finance and Administration, and Director 1996 200,000 88,250 416,274
Richard Medeiros(2) .............................................. 1998 165,000 75,332 10,000
Vice President, Americas Sales and Services 1997 38,817 21,250 80,000
Frank Verardi .................................................... 1998 110,000 27,750 10,000
Vice President, Worldwide Product Delivery and 1997 105,000 2,300 20,000
Customer Support 1996 98,400 20,000 11,428
Walter Kopp ...................................................... 1998 110,000 27,750 10,000
Vice President, Product Development 1997 102,000 5,800 20,000
1996 95,200 20,000 7,142
Todd Wille(3) .................................................... 1998 93,965 23,750 10,000
Vice President, Finance and Administration, 1997 82,500 19,312 2,500
Chief Financial Officer, and Secretary 1996 58,750 13,750 21,427
</TABLE>
- ------------------------
(1) The total amount of personal benefits paid to each executive officer during
each of fiscal 1998, 1997 and 1996 was less than the lesser of (i) $50,000
or (ii) 10% of the officer's total reported salary and bonus.
(2) Mr. Medeiros joined the Company in February 1997.
(3) Mr. Wille served as Vice President, Finance and Administration, Chief
Financial Officer and Secretary of the Company from October 1997 through
March 1998, after which time he was no longer an employee of the Company.
Prior to October 1997, Mr. Wille served as Corporate Controller of the
Company.
6
<PAGE>
The following table provides the specified information concerning grants of
options to purchase the Company's Common Stock made during the fiscal year ended
April 30, 1998 to the persons named in the Summary Compensation Table:
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM(3)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED(1) FISCAL YEAR ($/SH)(2) DATE 5% ($) 10% ($)
- --------------------------------------------- ----------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Reza Mikailli................................ -- --% $ -- -- $ -- $ --
Richard Medeiros............................. 10,000 2.8 2.38 8/07/02 6,562 14,500
Frank Verardi................................ 10,000 2.8 2.38 8/07/02 6,562 14,500
Walter Kopp.................................. 10,000 2.8 2.38 8/07/02 6,562 14,500
Todd Wille................................... 10,000 2.8 2.38 8/07/02 6,562 14,500
</TABLE>
- ------------------------
(1) All options were granted under the Company's 1991 Stock Option Plan and vest
as to one half of the subject shares six months from the grant date and an
additional one-twelfth of the subject shares upon completion of each full
month of continuous employment with the Company thereafter. The Board of
Directors retains discretion to modify the terms, including the price, of
outstanding options.
(2) All options were granted with an exercise price equal to the fair market
value per share of the Common Stock on the date of grant, as determined by
the closing sales price on the Nasdaq National Market.
(3) Potential gains are net of the exercise price but before taxes associated
with the exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. The assumed 5% and 10% rates of stock price appreciation are provided
in accordance with the rules of the Securities and Exchange Commission and
do not represent the Company's estimate or projection of the future Common
Stock price. Actual gains, if any, on stock option exercises are dependent
on the future financial performance of the Company, overall market
conditions, and the option holders' continued employment through the vesting
period.
7
<PAGE>
The following table provides the specified information concerning exercises
of options to purchase the Company's Common Stock during the fiscal year ended
April 30, 1998 and unexercised options held as of April 30, 1998 by the persons
named in the Summary Compensation Table:
AGGREGATE OPTION EXERCISES IN FISCAL 1998
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE- MONEY OPTIONS AT
OPTIONS AT 4/30/98(1) 4/30/98(2)
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Reza Mikailli..................... -- $ -- 73,512 62,202 $ -- $ --
Richard Medeiros.................. -- -- 28,333 61,667 -- --
Frank Verardi..................... -- -- 14,046 21,668 2,430 1,892
Walter Kopp....................... -- -- 14,850 22,292 3,038 2,363
Todd Wille........................ -- -- 9,493 -- 2,925 --
</TABLE>
- ------------------------
(1) Options granted under the Company's 1991 Stock Option Plan are generally
exercisable to the extent vested and generally vest as to one fourth of the
subject shares on the first anniversary of the grant date and an additional
one forty-eighth of the subject shares upon completion of each full month of
continuous employment with the Company thereafter.
(2) Valuation based on the difference between the option exercise price and the
fair market value of the underlying securities as of April 30, 1998 of $2.16
per share, based on the closing sales price on the last trading day of
fiscal 1998 as reported by the Nasdaq National Market.
The following table provides the specified information concerning all
repricings of options to purchase the Company's Common Stock held by any
executive officer of the Company since June 14, 1996, the date of the Company's
initial public offering.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
MARKET LENGTH OF
NUMBER OF PRICE OF EXERCISE ORIGINAL
SECURITIES STOCK AT PRICE AT NEW OPTION TERM
UNDERLYING TIME OF TIME OF EXERCISE REMAINING AT
OPTIONS REPRICING REPRICING PRICE DATE OF
NAME AND POSITION DATE REPRICED ($/SH) ($/SH) ($/SH) REPRICING
- ------------------------------------------- --------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Susan Salvesen(1) ......................... 2/07/97 64,285 $ 3.56 $ 7.00 $ 3.56 109 months
Former Vice President, Finance and
Administration, Chief Financial Officer,
and Secretary
</TABLE>
- ------------------------
(1) Ms. Salvesen resigned her position with the Company effective September
1997.
8
<PAGE>
EMPLOYMENT AGREEMENTS AND TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
The Company is party to an employment agreement with Mr. Mikailli, the
Company's President and Chief Executive Officer. Under the agreement, as
amended, Mr. Mikailli receives an annual salary of $236,000 and is eligible to
receive certain bonus payments upon the Company's achieving certain levels of
its business plan. If Mr. Mikailli is terminated within twelve months following
a merger of the Company or a sale by the Company of all or substantially all of
its assets, the unvested portion of all options held by him as of the date of
such termination will automatically vest. If Mr. Mikailli is terminated under
any other circumstances, such options will have the benefit of one additional
year of vesting and Mr. Mikailli will receive an amount equal to six months'
salary and bonus, based upon the actual bonus earned for the prior year. Mr.
Mikailli will also receive his annual base salary, benefits and bonus for an
additional six months from the date of termination or until he commences new
employment, whichever occurs first.
In October 1997, the Company entered into agreements with certain executive
officers which provide that in the event of a merger of the Company or a sale by
the Company of all or substantially all of its assets, bonuses totaling $510,000
will be payable to those individuals if they remain with the Company for at
least 90 days following the closing date of such transaction. These agreements
terminate in September 1998.
The Company has also entered into agreements with certain executive officers
of the Company which provide that 50% of any unvested options held by such
officers will vest and become immediately exercisable if their employment with
the Company is terminated other than for cause following a merger of the Company
or a sale by the Company of all or substantially all of its assets.
The Company's 1991 Stock Option Plan contains provisions pursuant to which
the unvested portions of all outstanding options become fully vested and
immediately exercisable upon a merger of the Company in which the Company's
stockholders do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company or its successor, if the
successor corporation fails to assume the outstanding options or substitute
options for the successor corporation's stock to replace the outstanding
options. The outstanding options will terminate to the extent they are not
exercised as of consummation of the merger or assumed or substituted for by the
successor corporation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of the Company's Common Stock to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) reports filed by them.
Based solely on the Company's review of such reports furnished to the
Company and written representations from certain reporting persons, the Company
believes that all filing requirements applicable to the Company's executive
officers, directors and more than 10% stockholders for the fiscal year ended
April 30, 1998 were complied with, except: executive officers Walter Kopp,
Richard Medeiros, Frank Verardi and Todd Wille each filed one late report
involving fiscal 1998 stock option grants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AMOUNTS DUE FROM OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS. In January
1996, the Company accepted a full-recourse promissory note in the principal
amount of $195,022 from Mr. Mikailli in payment of the exercise price for
options which were granted in fiscal 1994, 1995 and 1996. The note bears
interest at 5% per annum, is secured by the related 384,731 shares of Common
Stock and is due upon the earlier of the sale of the shares by Mr. Mikailli,
ninety days following the termination of Mr. Mikailli's employment with the
Company, or January 1999.
9
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To date, the Company has made no loans to executive officers, directors,
principal stockholders or other affiliates except as described above or other
than advances of reimbursable expenses. All such transactions, including loans,
are subject to approval by a majority of the Company's independent and
disinterested directors.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS. The Company's Restated
Certificate of Incorporation (the "Certificate") limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that a corporation's certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director for monetary
damages for breach of their fiduciary duties as directors, except for liability
for (i) any breach of their duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law, or (iv) any transactions from which
the director derived an improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its directors,
executive officers, and trustees to the fullest extent permitted by law. The
Company believes that indemnification under its Bylaws covers at least
negligence and gross negligence on the part of indemnified parties. The
Company's Bylaws also permit the Company to secure insurance on behalf of any
executive officer, director, employee or other agent for any liability arising
out of his or her actions in such capacity, regardless of whether the Bylaws
would permit indemnification.
The Company has entered into agreements to indemnify its directors and
executive officers, in addition to the indemnification provided for in the
Company's Bylaws. These agreements, among other things, indemnify the Company's
directors and executive officers for certain expenses (including attorneys'
fees), judgments, fines and settlement amounts incurred by any such person in
any action or proceeding, including any action by or in the right of the Company
or any other company or enterprise to which the person provides services at the
request of the Company. The Company believes that these provisions and
agreements are necessary to attract and retain qualified persons as directors
and executive officers.
At present, there is no pending litigation or proceeding involving any
director, executive officer, employee or agent of the Company where
indemnification will be required or permitted. The Company is not aware of any
threatened litigation or proceeding that might result in a claim for such
indemnification.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") consists of directors Arthur C. Patterson, Roel Pieper and Steven D.
Whiteman, none of whom is an executive officer or employee of the Company. The
Compensation Committee is responsible for setting and administering the policies
governing annual compensation of the executive officers of the Company. These
policies are based upon the philosophy that the Company's long-term success in
its marketplace is best achieved by attracting, retaining and rewarding highly
skilled executives who will achieve the Company's business goals and build
long-term stockholder value. Consequently, the Compensation Committee's policies
are designed to align the financial interests of executive officers with the
performance of the Company, to strengthen the relationship between executive
compensation and stockholder value, to motivate executive officers to achieve
the Company's business goals and to reward individual performance. The
Compensation Committee applies its policies in three principal areas: base
salary, management incentives, and long-term incentives.
In preparing the stock performance graph for this Proxy Statement, the
Company has selected the Nasdaq Computer and Data Processing Services Industry
Index as its peer group. The companies that the Company references in its salary
surveys are not necessarily those included in this index as such companies may
not compete with the Company for executive talent.
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BASE SALARY
The Compensation Committee evaluates the performance and sets the base
salary of the Company's Chief Executive Officer, Reza Mikailli, on an annual
basis. Mr. Mikailli evaluates the performance of all other executive officers
and recommends salary adjustments which are reviewed and approved by the
Compensation Committee. Performance evaluations for individual executive
officers are based on predetermined individual goals. For Mr. Mikailli these
goals are set by the Compensation Committee and for all other executive officers
these goals are set by Mr. Mikailli. In establishing base salaries for executive
officers, the Compensation Committee and Mr. Mikailli consider the individual
executive's level of responsibility relative to other positions within the
Company as well as compensation surveys and market data for comparable positions
at companies that compete with the Company for executive talent. In reviewing
executive officers' salaries annually, the Compensation Committee and Mr.
Mikailli consider the individual performance of each executive officer, the
Company's financial performance, and changes in salary levels at comparable
companies.
Mr. Mikailli has served as President, Chief Executive Officer and a director
of the Company since November 1994. In June 1996, the Compensation Committee
increased Mr. Mikailli's base salary 18% effective May 1, 1996. The increase was
based on the Company's achievement of certain operational milestones, especially
the successful initial public offering of the Company's Common Stock, on Mr.
Mikailli's responsibilities as the Chief Executive Officer of a publicly traded
company, and on information concerning salaries for similar positions at
comparable companies. The Compensation Committee reviewed Mr. Mikailli's
compensation in May 1997 and made no change to his base salary for fiscal 1998.
MANAGEMENT INCENTIVE PLAN
The Company seeks to provide additional incentives and rewards to executives
for their contributions to the achievement of Company-wide performance goals.
For this reason, the Compensation Committee administers a Management Incentive
Plan, which can comprise a substantial portion of the total compensation of
executive officers when earned and paid.
The Management Incentive Plan provides for the establishment of a
compensation pool based on the achievement of worldwide goals for revenues and
net income in the Company's operating plan as well as of other objectives in the
operating plan specific to each executive officer's individual areas of
management responsibility. Incentive compensation target amounts for each
executive officer are set annually by the Compensation Committee in consultation
with the Chief Executive Officer. Performance against established goals is
determined quarterly and any incentive compensation due is paid at that time.
Executive officers with sales responsibilities receive commission compensation
in addition to base salary and management incentives.
Revenue and net income performance goals established under the Company's
Management Incentive Plan for all quarters of fiscal 1998 were met and cash
bonuses based on these targets were paid to executive officers, including Mr.
Mikailli. See "SUMMARY COMPENSATION TABLE."
LONG-TERM INCENTIVE COMPENSATION
The Compensation Committee believes that employee equity ownership provides
significant additional motivation to executive officers to maximize value for
the Company's stockholders, and therefore administers and makes periodic stock
option grants under the 1991 Stock Option Plan. Such options are granted at the
prevailing market price and will only have value if the Company's stock price
increases over the exercise price. Therefore, the Compensation Committee
believes that stock options serve to align the interests of executive officers
closely with the Company's other stockholders because of the direct financial
benefit that executive officers receive through improved stock performance.
11
<PAGE>
The Compensation Committee periodically considers the grant of stock-based
compensation to all executive officers. Such grants are made on the basis of a
subjective analysis of the individual performance of the executive, previous
option grants to the executive, and the Company's financial performance. Option
grants for the fiscal year ended April 30, 1998 are set forth in the table
entitled "OPTION GRANTS IN FISCAL 1998" in the section entitled "EXECUTIVE
COMPENSATION AND OTHER MATTERS."
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
To the extent appropriate, the Company intends to take the necessary steps
to conform its compensation practices to comply with the $1 million compensation
deduction limit under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code").
THE COMPENSATION COMMITTEE
Arthur C. Patterson
Roel Pieper
Steven D. Whiteman
12
<PAGE>
COMPARISON OF STOCKHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the Nasdaq U.S. Index and the Nasdaq Computer and Data
Processing Services Industry Index for the period commencing on June 14, 1996,
the date of the Company's initial public offering, and ending on April 30, 1998.
COMPARISON OF CUMULATIVE TOTAL RETURN
FROM JUNE 14, 1996 THROUGH APRIL 30, 1998(1):
UNIFY CORPORATION, NASDAQ U.S. INDEX,
NASDAQ COMPUTER AND DATA PROCESSING SERVICES INDUSTRY INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ COMPUTER AND DATA PROCESSING
UNIFY CORPORATION NASDAQ U.S. INDEX SERVICES INDUSTRY INDEX
<S> <C> <C> <C>
14-Jun-96 $100 $100 $100
30-Apr-97 $19 $104 $110
30-Apr-98 $18 $155 $171
</TABLE>
- ------------------------
(1) Assumes that $100.00 was invested on June 14, 1996 in the Company's Common
Stock and in each index. Stockholder returns over the indicated period
should not be considered indicative of future stockholder returns.
13
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Deloitte & Touche LLP
("Deloitte & Touche") as independent accountants to audit the financial
statements of the Company for the fiscal year ending April 30, 1999. Deloitte &
Touche has acted as the Company's independent accountants since August 1996. A
representative of Deloitte & Touche is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if the representative
desires to do so, and is expected to be available to respond to appropriate
questions.
The affirmative vote of a majority of the votes cast at the Annual Meeting
of Stockholders, at which a quorum representing a majority of all outstanding
shares of Common Stock of the Company is present and voting, either in person or
by proxy, is required for approval of this proposal. Abstentions and broker non-
votes will each be counted as present for purposes of determining the presence
of a quorum. Abstentions will have the same effect as a negative vote on this
proposal. Broker non-votes will have no effect on the outcome of this vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING APRIL 30, 1999.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders of the Company must be received by the Company at its
offices at 181 Metro Drive, Third Floor, San Jose, California 95110, not later
than April 9, 1999 and satisfy the conditions established by the Securities and
Exchange Commission for stockholder proposals to be included in the Company's
proxy statement for that meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the meeting is
as set forth above. If any other matter or matters are properly brought before
the meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.
By Order of the Board of Directors,
/s/ REZA MIKAILLI
Reza Mikailli
SECRETARY
August 26, 1998
14
<PAGE>
UNIFY CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Reza Mikailli with full power of
substitution to represent the undersigned and to vote all the shares of the
stock of Unify Corporation which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at the Summerfield
Suites Hotel, 1602 Crane Court, San Jose, California on October 2, 1998 at
4:00 p.m. local time, and at any adjournment thereof (1) as hereinafter
specified upon the proposals listed below and as more particularly described
in the Company's Proxy Statement and (2) in his discretion upon such other
matters as may properly come before the meeting.
The undersigned hereby acknowledges receipt of: (1) Notice of Annual
Meeting of Stockholders of the Company, (2) accompanying Proxy Statement,
and (3) Annual Report of the Company for the fiscal year ended April
30, 1998.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 AND 2.
1. Election of the following directors:
Nominees: Reza Mikailli
Arthur C. Patterson
Roel Pieper
Steven D. Whiteman
[ ] FOR [ ] WITHHELD
[ ] ______________________________________
For all nominees except as noted above
2. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent accountants for the fiscal year ending
April 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID RETURN
ENVELOPE SO THAT YOUR STOCK MAY BE REPRESENTED AT THE MEETING.
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW.
[ ] MARK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE>
Sign exactly as your name(s) appears on your stock certificate. If shares of
stock stand of record in the names of two or more persons or in the name of
husband and wife, whether as joint tenants or otherwise, both or all of such
persons should sign the Proxy. If shares of stock are held of record by a
corporation, the Proxy should be executed by the President or Vice President and
the Secretary or Assistant Secretary, and the corporate seal should be affixed
thereto. Executors or administrators or other fiduciaries who execute the above
Proxy for a deceased stockholder should give their full title. Please date the
Proxy.
Date: ___________________________________
Signature(s): ____________________
