SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box:
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Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
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USDATA Corporation
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(Name of Registrant as Specified in Its Charter)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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1) Amount Previously Paid:
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[USDATA LOGO]
www.usdata.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-- MAY 28, 2002 --
Dear Stockholder:
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Stockholders of USDATA
Corporation, a Delaware corporation (the "Company" or "USDATA") will be held on
Tuesday, May 28, 2002, at 10:00 a.m. local time, at our headquarters located at
2435 North Central Expressway, Richardson, TX 75080-2759 (the "Annual Meeting").
A list of stockholders entitled to vote at the Annual Meeting shall be open to
the examination of any stockholder, during ordinary business hours, beginning on
April 19, 2002 and continuing through the Annual Meeting. You will find
directions to the Annual Meeting on our web site at www.usdata.com.
Holders of USDATA's common stock and preferred stock of record at the close of
business on April 19, 2002 are entitled to receive this notice and to vote at
this meeting or any adjournments that may take place. At the Annual Meeting, you
will be asked to:
o Elect five directors to serve until the 2003 Annual Meeting, and
o Attend to any other business properly presented at the meeting.
We also will report on USDATA's 2001 business results and other matters of
interest to our stockholders. You will have an opportunity at the meeting to ask
questions, make comments and meet our management team.
All stockholders are cordially invited to attend the meeting. No admission
tickets are required. Whether or not you expect to attend the meeting, please
complete, date and sign the accompanying proxy card and return it promptly in
the enclosed envelope. This will ensure representation of your shares in the
event you are unable to attend the meeting. You may revoke your proxy and vote
in person at the meeting if you so desire.
OUR BOARD OF DIRECTORS IS A VITAL RESOURCE. NO MATTER HOW MANY SHARES YOU HOLD,
WE CONSIDER YOUR VOTE IMPORTANT, AND WE ENCOURAGE YOU TO VOTE AS SOON AS
POSSIBLE.
This proxy statement, accompanying proxy card and 2001 Annual Report on Form
10-K are being mailed to stockholders beginning on or about April 30, 2002 in
connection with the solicitation of proxies by the board of directors of USDATA
Corporation.
Please contact Robert A. Merry, President and Chief Executive Officer, at (972)
680-9700 with any questions or concerns.
Sincerely,
/s/ ROBERT A. MERRY
Robert A. Merry
President and Chief Executive Officer
April 30, 2002
[USDATA LOGO]
USDATA CORPORATION
2435 NORTH CENTRAL EXPRESSWAY
RICHARDSON, TEXAS 75080-2759
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 28, 2002
This proxy statement is furnished in connection with the solicitation
of proxies from the holders of USDATA Corporation common stock and preferred
stock by the Board of Directors for use at the 2002 annual meeting (the "Annual
Meeting"). This proxy statement and accompanying form of proxy are first being
mailed to our stockholders on or about April 30, 2002.
TIME AND PLACE; PURPOSE
The Annual Meeting will be held at USDATA's corporate offices, 2435
North Central Expressway, Richardson, Texas 75080-2759. At the meeting, you will
be asked to vote upon: (1) the election of five directors to serve until the
2003 annual meeting and (2) such other matters as may properly come before the
meeting.
VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL
The Board of Directors has fixed the close of business on April 19,
2002 as the record date for the Annual Meeting. Only holders of record of shares
of USDATA's common stock and preferred stock on the record date are entitled to
notice of and to vote at the meeting. On the record date, there were: 2,836,138
shares of USDATA common stock; 50,000 shares of USDATA Series A Preferred Stock;
265,000 shares of USDATA Series B Preferred Stock; and 53,750 shares of USDATA
Series C Preferred Stock (collectively the "Preferred Stock") outstanding and
entitled to vote at the meeting.
Each holder of record of USDATA common stock as of the record date is
entitled to cast one vote per share. The holders of USDATA Preferred Stock as of
the record date is entitled to cast one vote per share of common stock that may
be received upon conversion of their Preferred Stock to common stock and for
which the holders of those shares are entitled to vote with the holders of
common stock as a single class on all matters submitted to our stockholders. As
of the record date, the Preferred Stock was convertible into 2,333,028 shares of
common stock, including accrued dividends. The presence, in person or by proxy,
of the holders of a majority of the outstanding shares of USDATA common stock
and Preferred Stock entitled to vote is necessary to constitute a quorum at the
meeting. A properly executed proxy marked "ABSTAIN," although counted for
purposes of determining whether there is a quorum and for purposes of
determining the aggregate number of shares represented and entitled to vote at
the meeting, will have no effect on the vote. In addition, where brokers are
prohibited from exercising discretionary authority in voting shares for
beneficial owners who have not provided voting instructions (commonly referred
to as "broker non-votes"), those shares will not be included in vote totals, but
will be counted for purposes of determining whether there is a quorum at the
Annual Meeting.
All shares of USDATA common stock and Preferred Stock represented by
properly executed proxies received prior to or at the meeting and not revoked
will be voted in accordance with the instructions indicated in the proxies. If
no instructions are indicated on a properly executed and timely returned proxy,
the persons named in the proxy will vote the shares FOR election of the five
nominees of the Board of Directors. If you decide to attend the Annual Meeting,
you can vote your shares in person, even if you have already returned your
proxy.
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The Board of Directors is not currently aware of any business to be
acted upon at the meeting other than as described in this proxy statement. If,
however, other matters are properly brought before the meeting, or any
adjournments or postponements of the meeting, the persons appointed as proxies
will have discretion to vote or act on such matters according to their best
judgment.
You may revoke your proxy at any time prior to its use by delivering
or mailing in sufficient time to be received prior to the meeting a signed
notice of revocation or a later-dated signed proxy to the Chief Financial
Officer of USDATA, at the address listed on the notice of annual meeting of
stockholders, or by attending the meeting and voting in person. Attendance at
the meeting will not in itself constitute the revocation of a proxy.
USDATA will pay the cost of solicitation of proxies. In addition to
solicitation by mail, arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to beneficial
owners, and USDATA will, upon request, reimburse them for their reasonable
expenses in so doing. To the extent necessary to ensure sufficient
representation at the meeting, USDATA may request, in person, by telephone or
telecopy, the return of proxy cards. Such solicitation may be made by USDATA's
directors, officers or regular employees. USDATA also may employ an outside firm
to assist in the solicitation of proxies, and the cost for such services would
be paid by USDATA.
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QUESTIONS AND ANSWERS
Q: WHAT MAY I VOTE ON?
A: You may vote on the election of five directors who have been nominated to
serve on our board of directors.
Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The board recommends a vote FOR each board nominee.
Q: HOW DO I VOTE?
A: Sign and date each proxy card you receive, mark the boxes indicating how
you wish to vote, and return the proxy card in the prepaid envelope
provided.
If you sign your proxy card but do not mark any boxes showing how you wish
to vote, your shares will be voted as recommended by the board of
directors.
Your proxy may be revoked by: (a) providing notice in writing to Robert A.
Merry, our President and Chief Executive Officer or Jennifer P. Dooley, our
Chief Financial Officer, at any time, or (b) by advising either Mr. Merry
or Ms. Dooley at the Annual Meeting that you wish to revoke your proxy and
vote your shares in person. Your attendance at the meeting will not
constitute an automatic revocation of the proxy.
Q: WHAT IF I HOLD MY USDATA SHARES IN A BROKERAGE ACCOUNT?
A: If you hold your USDATA shares through a broker, bank or other nominee, you
will receive a voting instruction form directly from them describing how to
vote your shares. This form will, in most cases, offer you the following
voting options:
1. by telephone,
2. via the Internet, or
3. by returning the form to your broker.
Q: WHAT IF I WANT TO CHANGE MY VOTE?
A: You may change your vote at any time before the Annual Meeting by any of
the following methods:
1. notifying Jennifer P. Dooley, our Chief Financial Officer, in writing,
2. voting in person at the meeting, or
3. submitting a proxy card with a later date.
If you hold your shares through a broker, bank or other nominee and wish to
vote at the meeting, you must obtain a legal proxy from that nominee
authorizing you to vote at the Annual Meeting. We will be unable to accept
a vote from you at the meeting without that form. If you hold your shares
directly and wish to vote at the Annual Meeting, no additional forms will
be required.
Q: HOW WILL DIRECTORS BE ELECTED?
A: The five nominees receiving the highest number of affirmative votes at a
meeting of the stockholders at which a quorum is present will be elected as
directors.
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Q: WHO WILL COUNT THE VOTES?
A: Ms. Jennifer P. Dooley, Chief Financial Officer of USDATA will count the
votes and act as the inspector of elections.
Q: WHAT IS A QUORUM?
A: A quorum is a majority of the outstanding shares entitled to be cast on a
matter. The shares may be represented at the meeting either in person or by
proxy. To hold the meeting, there must be a quorum present.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: Your shares may be registered differently or may be in more than one
account. We encourage you to have all accounts registered in the same name
and address (whenever possible). You may obtain information about how to do
this by contacting our transfer agent at:
Mellon Investor Services
85 Challenger Road
Ridgefield Park, NJ 07660
(toll-free telephone 800-526-0801)
If you provide Mellon Investor Services with photocopies of the proxy cards
that you receive or with the account numbers that appear on each proxy
card, it will be easier for Mellon Investor Services to combine your
accounts.
You also can find information on transferring shares and other useful
stockholder information on their web site at www.melloninvestor.com.
Q: WHAT IS THE EFFECT IF I ABSTAIN OR FAIL TO GIVE INSTRUCTIONS TO MY BROKER?
A: If you submit a properly executed proxy, your shares will be counted as
part of the quorum even if you abstain from voting or withhold your vote
for a particular director.
Broker non-votes also are counted as part of the quorum. A broker non-vote
occurs when banks, brokers or other nominees holding shares on behalf of a
stockholder do not receive voting instructions from the stockholder by a
specified date before the meeting. In this event, banks, brokers and other
nominees may vote those shares on matters deemed routine. The election of
directors is considered a routine matter.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders and have the effect of negative votes. A
"withheld" vote is treated the same as an abstention. Broker non-votes are
not counted for purposes of determining whether a proposal has been
approved.
Q: WHO CAN ATTEND THE MEETING?
A: All stockholders are encouraged to attend the meeting. Admission tickets
are not required.
Q: WHAT IS A STOCKHOLDER PROPOSAL?
A: A stockholder proposal is your recommendation or requirement that we, or
our board of directors take action on a matter that you intend to present
at a meeting of stockholders. However, under the proxy rules we have the
ability to exclude certain matters proposed, including those that deal with
matters relating to our ordinary business operations.
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Q: CAN ANYONE SUBMIT A STOCKHOLDER PROPOSAL?
A: To be eligible to submit a proposal, you must have continuously held at
least $2,000 in market value, or 1%, of our common stock for at least one
year by the date you submit your proposal. You also must continue to hold
those securities through the date of the meeting.
Q: IF I WISH TO SUBMIT A STOCKHOLDER PROPOSAL FOR THE ANNUAL MEETING IN 2003,
WHAT ACTION MUST I TAKE?
A: If you wish us to consider including a stockholder proposal in the proxy
statement for the annual meeting in 2003, you must submit the proposal, in
writing, so that we receive it no later than 120 days December 31, 2002.
The proposal must meet the requirements established by the Securities and
Exchange Commission. Send your proposal to:
Jennifer P. Dooley
Chief Financial Officer
USDATA Corporation
2435 North Central Expressway
Richardson, TX 75080-2759
As to any proposal presented by a stockholder at the annual meeting that
has not been included in the proxy statement, management proxies will be
allowed to use their discretionary voting authority unless we receive
notice of such proposal no later than March 15, 2003.
Q: WHO ARE USDATA'S LARGEST STOCKHOLDERS?
A: As of April 19, 2002, Safeguard Scientifics, Inc. ("Safeguard")
beneficially owns 33.7%, SCP Private Equity Partners II, L.P. ("SCP")
beneficially owns 46.4%, Technology Leaders I L.P. beneficially owns 6.0%,
Technology Leaders II L.P. beneficially owns 6.0%, and our directors and
executive officers as a group beneficially own 3.3%, of our common stock.
At April 19, 2002, no other stockholder owned more than 5% of our common
stock (on an as-converted basis).
[USDATA LOGO] 5
ELECTION OF DIRECTORS
Directors are elected annually and serve a one-year term. There are five
nominees for election this year. Each nominee is currently serving as a director
and has consented to serve until the next annual meeting if elected, and until
his successor is elected and qualified. You will find detailed information on
each nominee below. If any director is unable to stand for re-election after
distribution of this proxy statement, the board may reduce its size or designate
a substitute. If the board designates a substitute, proxies voting on the
original director candidate will be cast for the substituted candidate. Under
the terms of an investors' rights agreement we entered into with certain of our
stockholders, the holders of the Series C Preferred Stock may nominate one
director to the board of directors. The holders of the Series C Preferred Stock
have nominated Mr. Churchill pursuant to these terms. Information concerning the
nominees for election as directors is presented below. Each nominee has
consented to being named and, if elected, to serve as a director.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH NOMINEE. THE FIVE NOMINEES WHO
RECEIVE THE HIGHEST NUMBER OF AFFIRMATIVE VOTES WILL BE ELECTED AS DIRECTORS.
SERVED AS
NAME OF DIRECTOR AGE INFORMATION ABOUT DIRECTOR DIRECTOR SINCE
---------------- --- -------------------------- --------------
WINSTON J. CHURCHILL 62 Mr. Churchill has been Managing General Partner of SCP Private 2000
Equity Partners since its inception, and has over 25 years of
experience in private equity investment. Mr. Churchill
founded Churchill Investment Partners, Inc. in 1989 and CIP
Capital, L.P., a venture capital fund, in 1990. Prior to
that, Mr. Churchill was a Managing General Partner of a
private investment firm, that specialized in leveraged buyouts
on behalf of Bessemer Securities Corporation. Mr. Churchill
is a director of a number of companies, both public and
private, including Amkor Technology, Inc. and Visalign, LLC,
for which he serves as Chairman. Mr. Churchill has served on
our board since October 2000 and in February 2001 was elected
Chairman of the Board. In February 2001, he was also elected
to the compensation committee to serve as its Chairman. He
also serves on the Audit Committee.
JAMES W. DIXON 55 Director; Mr. Dixon serves as Chief Executive Officer of 1994
Network Integration Services, Inc., a network management
services company for mid-sized businesses. Prior to that, Mr.
Dixon served as Chief Executive Officer of Broadreach
Consulting, Inc., an internet professional services company,
from 1997 to 2001. From 1987 to 1996, Mr. Dixon served as
Chief Executive Officer and Chairman of CompuCom Systems,
Inc., a provider of technology management services and
information technology products. Mr. Dixon is a director of
AER Energy, Inc. Mr. Dixon serves on the Audit Committee.
[USDATA LOGO] 6
ROBERT A. MERRY 52 President, Chief Executive Officer; Mr. Merry has served as 1997
our President and Chief Executive Officer since July 1997.
From June 1995 to July 1997, Mr. Merry served as president of
the Process Manufacturing Strategic Business Unit of
Electronic Data Systems ("EDS") and from March 1992 to June
1995, he served as the Vice President and Regional Sales
Manager of Manufacturing.
JACK L. MESSMAN 62 Director; Mr. Messman has served as chairman of the board and 1994
chief executive officer for Novell, Inc., a leader in Net
business solutions, since November 2001. Mr. Messman
previously served as president and chief executive officer for
Novell, Inc., since its July 2001 merger with Cambridge
Technology Partners, where Mr. Messman served as president and
chief executive officer from August 1999 to July 2001. From
April 1991 until August 1999, Mr. Messman served as chairman
and chief executive officer of Union Pacific Resources Group,
Inc., an energy company. Mr. Messman is a director of Novell,
Inc., Metallurg, Inc., RadioShack Corporation, and Safeguard
Scientifics, Inc.
Mr. Messman was elected to the Compensation Committee in May
2001, replacing Max D. Hopper, who was a member of the Board
of Directors from 1995 through May 2001.
ARTHUR R. SPECTOR 61 Director; Mr. Spector is a Managing Director of the General 1994
Partner and of the management company of Safeguard
International Fund, L. P. ("SIF"), an international private
equity fund. From January 1997 to March 1998, Mr. Spector
served as a managing director of TL Ventures LLC, a venture
capital management company organized to manage day-to-day
operations of TL Ventures III L. P. and TL Ventures III
Offshore L. P. From January 1995 to December 1996, Mr.
Spector served as director of acquisitions for SIF. Mr.
Spector is Chairman of the Board of Directors of Neoware
Systems, Inc., a Director of DocuCorp International, Inc. and
various companies in the Safeguard International portfolio.
Mr. Spector is Chairman of the Audit Committee and also serves
on the Compensation Committee.
[USDATA LOGO] 7
COMPENSATION OF DIRECTORS
Annual and Meeting Attendance Fees. Our Board of Directors are reimbursed for
attendance at our board and annual stockholder meetings. Directors who are not
executive officers of Safeguard, SCP or our employees are reimbursed for travel
expenses incurred in connection with attending board meetings or other business
but do not receive compensation for serving as directors.
Stock Options. Directors who are not executive officers of Safeguard, or any of
their respective wholly owned subsidiaries, or are not employees of us or any of
our subsidiaries receive:
o options to purchase 4,000 shares of our common stock upon initial
election to the board, vesting 25% each year starting on the first
anniversary of the grant date, and
o annual service grants of 1,000 shares of our common stock, fully
vested as of the grant date.
Directors' options have an eight-year term. The exercise price is equal to the
closing price of a share of our common stock on the grant date.
Upon election to the board in May 2001, Mr. Churchill received 4,000 shares at
an exercise price of $2.50 per share.
Prior to the adoption of the stock equity compensation program described above,
directors received an initial stock option grant of 3,000 shares. Upon adoption
of the current plan in February 2000, Mr. Dixon, Mr. Messman and Mr. Spector
each received an option for 1,000 shares at an exercise price of $78.4375 per
share vesting 25% each year starting on the first anniversary of the grant date.
Annual service grants of 1,000 shares were made in May 2001 and May 2000 to Mr.
Dixon, Mr. Messman and Mr. Spector at an exercise price of $2.50 per share and
$33.4375 per share, respectively. Annual service grants of 600 shares were made
in April 1999 to Mr. Dixon, Mr. Messman and Mr. Spector at an exercise price of
$17.50 per share.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors held eight meetings in 2001, and has established two
committees; the Audit Committee and Compensation Committee. Each director
attended at least 75% of the total number of meetings of the board and
committees of which he was a member during the period in which he served as a
director. Information regarding each committee is set forth below.
Audit Committee. The audit committee, pursuant to the written charter adopted by
the board of directors and attached as Appendix A recommends our independent
accountants, discusses the scope and results of our audit with the independent
accountants, reviews with management and the independent accountants our interim
and year-end operating results, considers the adequacy of our internal
accounting controls and audit procedures, and reviews the non-audit services to
be performed by the independent accountants. During 2001, the Audit Committee
met 3 times.
Compensation Committee. The compensation committee reviews and recommends
compensation arrangements for senior management, including salaries, cash
incentives and option grants and administers our equity compensation plan.
During 2001, the Compensation Committee met once.
Nominating Committee. The Company has no Nominating Committee.
[USDATA LOGO] 8
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is composed of three outside directors and operates under a
charter adopted by the Board of Directors according to the rules and regulations
of the Securities and Exchange Commission and the Nasdaq National Market. The
Audit Committee charter is attached as Appendix A. The Audit Committee members
are Mr. Churchill, Mr. Dixon and Mr. Spector, and Mr. Spector is Chairperson of
the Audit Committee. The Board of Directors believes that all of these directors
are independent as defined by the Nasdaq National Market.
The following is the report of the Audit Committee with respect to our audited
financial statements for the fiscal year ended December 31, 2001, which include
our consolidated balance sheets as of December 31, 2001 and 2000, and the
related consolidated statements of operations, stockholders' equity (deficit)
and comprehensive loss and cash flows for each of the three years in the period
ended December 31, 2001, and the notes thereto.
The information contained in this report shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor
shall the information be incorporated by reference into any future filing under
the Securities Act of 1933, as amended, or the 1934 Securities Exchange Act, as
amended, except to the extent that the company specifically incorporates it by
reference in such filing.
Review With Management
The Audit Committee has reviewed and discussed our audited financial statements
with management.
Review and Discussions With Independent Accountants
The Audit Committee held three meetings in conjunction with the full board
during our fiscal year ended December 31, 2001. The Audit Committee has
discussed with KPMG LLP, our independent accountants, the matters required to be
discussed by SAS 61 (Codification of Statements on Accounting Standards) that
includes, among other items, matters related to the conduct of the audit of our
financial statements.
The Audit Committee has also received written disclosures and the letter from
KPMG LLP required by Independent Standards Board Standard No. 1 (that relates to
the accountant's independence from us and our related entities) and has
discussed with KPMG LLP their independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that our audited financial statements be
included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2001.
Fees Billed by Independent Auditors
The fees we incurred from our principal auditor for the fiscal year ended
December 31, 2001 is comprised of the following: $66,000 for the annual audit,
$19,500 for quarterly reviews, $9,500 for review of the federal income tax
return and $11,500 for the audit of our 401k Plan.
SUBMITTED BY THE AUDIT COMMITTEE OF USDATA CORPORATION
Arthur R. Spector, Chairperson, Winston J. Churchill &
James W. Dixon
[USDATA LOGO] 9
EXECUTIVE OFFICERS OF THE COMPANY
NAME AGE POSITION
---- --- --------
Robert A. Merry 52 President, Chief Executive Officer
Edward R. Nugent 44 Vice-President Global Distribution &
Services
Timothy G. Davis 37 Vice-President Marketing and Product
Development
Robert A. Merry's employment background is described above under Election of
Directors
Edward R. Nugent - Mr. Nugent joined USDATA in 1992 and has held a variety of
positions prior to becoming Vice President Global Distribution and Services,
including VP of Sales in the Americas and Asia Pacific Division and Chief
Operating Officer of the USDATA products division. Prior to joining USDATA, Mr.
Nugent was with Boeing Computer Services, Research and Technology Division.
During his tenure at Boeing, he was assigned to the National Institute of
Science and Technology as a Research Associate for manufacturing automation. Mr.
Nugent holds a master of business administration from the University of Puget
Sound, in Washington, and was an Associate Professor in the Operations Research
department there. He also holds an undergraduate degree in Engineering Mechanics
from the University of Wisconsin - Madison.
Timothy G. Davis - Mr. Davis joined USDATA in 1992 and has held a variety of
positions before being promoted to Vice President Marketing and Development,
including director of product marketing, product marketing manager, branch sales
manager and sales engineer. Prior to joining USDATA, Mr. Davis spent five years
in software development positions at Trinity Consultants and TU Electric. Mr.
Davis holds a master of business administration degree from Southern Methodist
University, Dallas, a master of computer science degree from University of Texas
at Arlington and a bachelor of science degree in nuclear engineering from Purdue
University in Indiana.
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN OTHER BENEFICIAL OWNERS
AS OF APRIL 19, 2002
The following table sets forth the beneficial ownership of our common stock by
each person known to us to beneficially own 5% or more of our common stock, each
of our directors and nominees, each of our executive officers and each of our
directors and executive officers as a group. The calculation of the percentage
of our common stock beneficially owned as of April 19, 2002 is based on
2,836,138 shares of common stock issued and outstanding as of that date, plus
2,333,028 shares of common stock that may be received by the holders of the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
(all of which includes accrued dividends) upon conversion to common stock and
for which the holders of those shares are entitled to vote with the holders of
common stock as a single class on all matters submitted to our stockholders.
Share amounts have been adjusted to reflect the one-for-five reverse stock split
effective August 21, 2001.
[USDATA LOGO] 10
Shares of
Common Stock Shares of Shares of Shares of
Beneficially % of Series A % of Series B % of Series C % of
Owned Voting Preferred Voting Preferred Voting Preferred Voting
Name Class Stock Class Stock Class Stock Class
--------------------------- ------------ ---------- ------------- ---------- ------------ ---------- ------------ ----------
Safeguard Scientifics, 1,742,467(1) 33.7% 50,000 100.0% 132,500 50.0%
Inc.
800 The Safeguard building
435 Devon Park Drive
Wayne, PA 19087
SCP Private Equity 3,093,743(2) 46.4% 132,500 50.0% 53,750 100.0%
Partners II, L.P.
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Technology Leaders I 311,772(3) 6.0%
L.P.
800 The Safeguard building
435 Devon Park Drive
Wayne, PA 19087
Technology Leaders II L.P. 311,771(4) 6.0%
800 The Safeguard building
435 Devon Park Drive
Wayne, PA 19087
Winston J. Churchill 1,000(5) *
James W. Dixon 9,840(6) *
Robert A. Merry 101,436(7) 1.9%
Jack L. Messman 20,395(8) *
Arthur R. Spector 6,669(9) *
Timothy G. Davis 13,550(10) *
Edward R. Nugent 19,851(11) *
Executive officers and
directors as a group (7 172,741(12) 3.3%
persons)
* Less than 1% of outstanding shares of common stock
Each individual has the sole power to vote and to dispose of the shares (other
than shares held jointly with spouse) except as follows:
(1) Includes shares held by Safeguard Scientifics (Delaware), Inc., a
wholly-owned subsidiary of Safeguard. All of the shares beneficially owned
by Safeguard have been pledged by Safeguard as collateral under its line of
credit. Also includes 261,792 shares that may be acquired upon conversion
of 50,000 shares of Series A Preferred Stock (100% of that class) and
477,493 shares that may be acquired upon conversion of 132,500 shares of
Series B Preferred Stock (50% of that class). Does not include shares
beneficially owned by each of Technology Leaders I L.P. and Technology
Leaders II L.P., venture capital partnerships in which Safeguard has a
beneficial interest. Safeguard disclaims beneficial ownership of the shares
beneficially owned by each of Technology Leaders I L.P. and Technology
Leaders II L.P.
[USDATA LOGO] 11
(2) Includes 477,493 shares that may be acquired upon conversion of 132,500
shares of Series B Preferred Stock (50% of that class) and 1,116,250 shares
that may be acquired upon conversion of 53,750 shares of Series C-1
Preferred Stock (100% of that class). Also includes 1,500,000 shares that
may be acquired upon conversion of 75,000 shares of Series C-2 Preferred
Stock pursuant to currently exercisable warrants to purchase 75,000 shares
of Series C-2 Preferred Stock.
(3) Consists of Technology Leaders L.P. and Technology Leaders Offshore C.V.
Technology Leaders Management L.P., the sole general partner of Technology
Leaders L.P. and the co-general partner of Technology Leaders Offshore
C.V., exercises, through its executive committee, sole investment and
voting power with respect to the shares owned by such entities. Of the
311,772 shares owned by Technology Leaders I, 166,205 shares are owned by
Technology Leaders L.P. and 145,567 shares are owned by Technology Leaders
Offshore C.V. Technology Leaders L.P., Technology Leaders Offshore C.V.,
Technology Leaders Management L. P., Technology Leaders II L.P., Technology
Leaders II Offshore C.V. and Technology Leaders II Management L.P. are
members of a group for purposes of Sections 13(d) and 13(g) of the
Securities Exchange Act of 1934. Technology Leaders I L.P. disclaims
beneficial ownership of the shares beneficially owned by Technology Leaders
II L.P.
(4) Consists of Technology Leaders II L.P. and Technology Leaders II Offshore
C.V. Technology Leaders II Management L.P., the sole general partner of
Technology Leaders II L.P. and the co-general partner of Technology Leaders
II Offshore C.V., exercises, through its executive committee, sole
investment and voting power with respect to the shares owned by such
entities. Of the 311,771 shares owned by Technology Leaders II, 173,750
shares are owned by Technology Leaders II L.P. and 138,021 shares are owned
by Technology Leaders II Offshore C.V. Technology Leaders L.P., Technology
Leaders Offshore C.V., Technology Leaders Management L.P., Technology
Leaders II L.P., Technology Leaders II Offshore C.V. and Technology Leaders
II Management L.P. are members of a group for purposes of Sections 13(d)
and 13(g) of the Securities Exchange Act of 1934. Technology Leaders II
disclaims beneficial ownership of the shares beneficially owned by
Technology Leaders I L.P.
(5) Includes options to purchase 1,000 shares of common stock that are
exercisable within 60 days.
(6) Includes options to purchase 6,550 shares of common stock that are
exercisable within 60 days.
(7) Includes options to purchase 101,250 shares of common stock that are
exercisable within 60 days.
(8) Includes options to purchase 6,550 shares of common stock that are
exercisable within 60 days. Also includes 1,324 shares held in trust for
Mr. Messman's daughter and 1,324 shares held in trust for Mr. Messman's
son. Mr. Messman disclaims beneficial ownership of the securities held in
trust for his children.
(9) Includes options to purchase 6,550 shares of common stock that are
exercisable within 60 days.
(10) Includes options to purchase 13,350 shares of common stock that are
exercisable within 60 days.
(11) Includes options to purchase 19,150 shares of common stock that are
exercisable within 60 days.
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(12) Includes options to purchase 154,400 shares of common stock that are
exercisable within 60 days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
directors, officers and certain beneficial owners of the Company's equity
securities are required to file reports of their transactions in the Company's
equity securities with the Securities and Exchange Commission on specified due
dates. In 2001, reports of transactions by all directors, officers and such
beneficial holders were timely filed, with the exception of a late filed Form 5
for Winston J. Churchill. In making this statement, the Company has relied on
the written representations of its directors, officers and five percent (5%)
stockholders and copies of the reports that they filed with the Securities and
Exchange Commission.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All decisions regarding the compensation of the executive officers were made by
the compensation committee of the board of directors, which is comprised
entirely of non-employee members of the board of directors. Although Mr. Merry
made recommendations to the committee with regard to the compensation of the
other executive officers he did not participate in the committee's deliberations
with respect to his own compensation.
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STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on our common stock for
the period from December 31, 1996, through December 31, 2001, with the
cumulative total return on the Nasdaq Index and the peer group index for the
same period.
[PERFORMANCE GRAPH]
Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01
------ ------ ------ ------ ------ ------
USDATA 100 82 33 247 10.00 4.98
Nasdaq 100 122 173 304 191 152
Peer Group 100 123 208 400 212 172
1. The peer group consists of SIC Code 737-- computer programming and data
processing services.
2. We have historically reinvested earnings in the growth of our business and
have not paid cash dividends on our common stock.
3. Assumes an investment of $100 on December 31, 1996.
[USDATA LOGO] 14
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
Our mission is to succeed in a highly competitive business and achieve maximum
returns for our stockholders by providing industrial automation software tools,
applications and consulting services designed to provide businesses with the
knowledge and control needed to perfect the products they produce and processes
they manage.
Our philosophy is to align the compensation of senior management and other
employees with that mission and the long-term interests of our stockholders.
This philosophy also helps us to:
o attract and retain outstanding executives,
o promote among our executives the economic benefits of stock
ownership, and
o motivate and reward executives who, by their hard work, loyalty and
exceptional service, make contributions of special importance to
the success of our business.
COMPENSATION STRUCTURE
The compensation of our executives consists of:
o base salary,
o annual cash incentives, and
o stock options.
Base Pay. Base pay is established initially on the basis of a combination of
subjective factors, including experience and achievements of the individual and
the level of responsibility assumed at USDATA. Salary increases are based on:
o level of achievement of financial and strategic objectives,
o levels of individual responsibility and performance, and
o general levels of inflation.
Based on the guidelines discussed above, the 2001 base salaries for Mr. Merry,
Mr. Nugent and Mr. Davis were $256,500, $135,000 and $127,800, respectively.
Annual Cash Incentives. Annual cash incentives are intended to create an
incentive for executives who significantly contribute to and influence our
strategic plans and are responsible for our performance. Our primary objectives
are to:
o focus executives' attention on profitability and asset management,
o encourage teamwork, and
o tie executives' pay to corporate performance goals consistent with
long-term goals of our stockholders.
Incentives are awarded based on achievement of annual financial and strategic
goals approved by the compensation committee at the beginning of the year, which
goals may include target ranges of:
o pretax earnings,
o revenue growth,
o earnings per share,
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o return on equity,
o cash management, or
o some other objective measurement consistent with long-term goals of
our stockholders.
The committee approves a target range for specific and/or strategic goals and a
range of potential incentive amounts for each executive, stated as a percentage
of base salary, and based upon the executive's ability to impact our
performance. Incentives are awarded at year-end based on the level achievement
of the goals compared to the target ranges established.
Based on these criteria, neither Mr. Merry nor any other executive was eligible
for a cash incentive for 2001.
Stock Options. Stock options are intended to align the interests of executives
and key employees with the long-term interests of our stockholders and other
investors and to encourage executives and key employees to remain in our employ.
Grants are not made in every year, but are awarded subjectively based on the
following factors including:
o individual's level of responsibility,
o amount and term of options already held by the individual, and
o individual's achievement of financial and strategic objectives,
which may include in addition to the goals described above:
- developing strategic alliances,
- identifying and expanding markets,
- developing new products,
- expanding existing market share and penetration,
- expanding operating capabilities, and
- improving net operating margins and return on equity.
In 2001, the committee granted stock options to purchase 10,000 shares, 5,000
shares and 5,000 shares at $3.125 per share to Mr. Merry, Mr. Nugent and Mr.
Davis, respectively. These options vest 25% per year beginning with the first
anniversary date from date of grant.
Submitted by the compensation committee:
Winston J. Churchill, Chairman
Jack L. Messman
Arthur R. Spector
IRS LIMITS ON DEDUCTIBILITY OF COMPENSATION.
Section 162(m) of the Internal Revenue Code provides that publicly held
companies may not deduct in any taxable year compensation in excess of
$1,000,000 paid to any of the individuals named in the Summary Compensation
Table that is not "performance-based." To qualify as "performance-based"
compensation, the compensation committee's discretion to grant incentive awards
must be strictly limited. The compensation committee believes that the benefit
of retaining the ability to exercise discretion under USDATA's incentive
compensation plans outweighs the limited risk of loss of tax deductions under
section 162(m). Therefore, the compensation committee does not currently plan to
qualify its incentive compensation plans under section 162(m).
[USDATA LOGO] 16
EXECUTIVE COMPENSATION & OTHER ARRANGEMENTS
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ----------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION OPTIONS/SARS(#) COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) (3) ($)(2)
------------------ ------ ---------- ---------- ------------ ---------------- ------------
Robert A. Merry, 2001 $279,000 -- -- 10,000 $2,625
President and Chief 2000 $282,000 -- -- -- $2,625
Executive Officer 1999 $260,000 $173,978 -- 50,000 $2,500
Edward R. Nugent, 2001 $147,000 -- -- 5,000 $1,422
Vice-President Global 2000 $149,000 -- -- 20,000 $2,625
Distribution & Services 1999 $144,000 $165,374 -- 70,000 $2,500
Timothy G. Davis, 2001 $137,000 -- -- 5,000 $2,625
Vice-President Marketing 2000 $129,000 -- -- -- $2,625
and Product Development 1999 $120,000 $ 85,424 -- 35,000 $2,500
NOTES TO ANNUAL COMPENSATION TABLE:
(1) For 2001, personal benefits did not exceed $50,000 or 10% of the total
annual salary and bonus for any executive.
(2) For 2001, all other compensation includes USDATA's contributions to the
401(k) Matched Savings Plan.
(3) Share amounts have been adjusted to reflect the one-for-five reverse stock
split effective August 21, 2001.
[USDATA LOGO] 17
OPTION GRANTS IN LAST FISCAL YEAR
Share and per share amounts have been adjusted to reflect the one-for-five
reverse stock split effective August 21, 2002.
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
---------------------------------------------------------- ----------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME (#)(2) FISCAL YEAR ($/SH)(3) DATE ($) ($)
---- ---------- ------------- --------- ---------- ------ ------
Robert A. Merry 10,000 13.0% $3.125 3/2/2009 14,920 35,737
Edward R. Nugent 5,000 6.5% $3.125 3/2/2009 7,460 17,869
Timothy G. Davis 5,000 6.5% $3.125 3/2/2009 7,460 17,869
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END STOCK OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ----------- ----------- ------------- ----------- -------------
Robert A. Merry -- -- 97,500 12,500 $ 0 $ 0
Edward R. Nugent -- -- 12,051 16,349 $ 0 $ 0
Timothy G. Davis -- -- 9,750 9,100 $ 0 $ 0
(1) Value is based on the difference between the option exercise price and the
fair market value per share of our common stock. The fair market value of
our common stock on December 31, 2001 was $1.40 per share.
EMPLOYMENT CONTRACTS; SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Merry is an "at will" employee. We have an arrangement with Mr. Merry
providing that if he is terminated, other than for gross negligence, that he
will be entitled to payment of his salary and certain benefits for a period of
one year. In addition, if Mr. Merry's employment is terminated within nine
months after any one investor, excluding Safeguard Scientifics, Inc., Technology
Leaders I, L.P. and Technology Leaders II, L.P. funds, accumulates 30% or more
of our common stock, all of his respective stock options will immediately vest.
Mr. Merry's options will also immediately vest upon a change of control.
In addition, the stock options granted in March 2001 to Mr. Nugent and Mr. Davis
will immediately vest upon change of control.
[USDATA LOGO] 18
On April 25, 2002 the Board, upon the recommendation by the compensation
committee approved a change of control distribution plan for our executive
officers (the "Liquidation Plan"). The compensation committee recommended the
approval of the Liquidation Plan in accordance with its general philosophy of
aligning the interests of management with the long term interests of all of our
stockholders. The options currently held by management align its interests with
those of the holders of common stock, and the Liquidation Plan aligns the
interests of the executive team with the holders of our preferred stock.
The Liquidation Plan provides compensation to our executive officers based on
the liquidation preference received by the stockholders of USDATA's Series B
Preferred Stock upon a liquidation event of the Company. The holders of our
preferred stock are entitled to a preferential distribution of up to
approximately $50 million upon a liquidation event of the Company. Out of this
liquidation preference, the holders of the Series B Preferred Stock are entitled
to receive approximately $29 million, which equals $30.45 per share on a common
stock equivalent basis. In connection therewith, the Liquidation Plan will allow
executive officers of USDATA (as a group) to also receive a preferential
distribution, prior to any distribution to the holders of our common stock, of;
(a) 15% of the liquidation preference received by the holders of then
outstanding shares of Series B Preferred Stock above $9.67 per share and below
$19.35 per share on a common stock equivalent basis, and (b) 20% of the
liquidation preference received by the holders of then outstanding shares of
Series B Preferred Stock above $19.35 per share on a common stock equivalent
basis.
The Liquidation Plan will be allocated to USDATA's executives as follows: (a)
Mr. Merry will receive the first $500,000 of the Liquidation Plan and (b)
thereafter Mr. Merry will receive 25% of any additional allocation in excess of
$500,000 with the remainder to be divided between USDATA's top executives (up to
a maximum of five executives).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH MANAGEMENT AND OTHERS
In January 2001, SCP and Safeguard each elected to exercise their right to
convert their eMake Series A preferred stock into shares of our Series B
Convertible Preferred Stock ("Series B Preferred"). SCP and Safeguard each hold
132,500 shares of our Series B Preferred, totaling 265,000 shares. Each share of
Series B Preferred may be converted into the number of shares of common stock
determined by dividing the purchase price of such share of $100.00 plus any
accrued but unpaid dividends by the conversion price of $30.25. Dividends are
cumulative and are payable in additional shares of Series B Preferred at a rate
of $8.00 per share per annum.
On March 30, 2001, we received an equity contribution of $1.5 million from SCP
through the issuance of 37,500 shares of Series C-1 Preferred Stock and a
warrant to purchase up to 75,000 shares of Series C-2 Preferred Stock. In
addition, SCP had committed to purchase an additional 37,500 shares of Series
C-1 Preferred ("Option Stock") at the purchase price of $40 per share or $1.5
million. We could have exercised our right to sell these shares on or before the
expiration of nine months after March 30, 2001, but not before May 30, 2001. In
addition, we needed to be in compliance with specified monthly targets as
defined in the Series C Preferred Stock Purchase Agreement.
On July 20, 2001, we exercised our right to sell 16,250 shares of the Option
Stock to SCP. We received $635,596, net of transaction costs, in exchange for
issuing these shares to SCP.
In March 2002, we entered into a First Amendment to the Series C Preferred Stock
Purchase Agreement (the "Agreement"). The Agreement extended the Option Stock
draw down period to December 31, 2002, deleted the specified monthly target
provisions and provided for additional warrant coverage equal to 50% of the
remaining Option Stock, or 10,625 shares. All other
[USDATA LOGO] 19
terms of the original Series C Preferred Stock Purchase Agreement were
unchanged. The agreement was unanimously approved by the disinterested members
of our board of directors on March 8, 2002.
The Series C Preferred Stock is convertible into our common stock at a
conversion rate of 100 shares of common stock for each share of Series C
Preferred Stock. Cumulative dividends are payable at $4.00 per share per annum
in the form of additional shares of Series C Preferred. As an additional
condition to this financing, SCP and Safeguard agreed to not exercise their
right to exchange shares of Series A-1 and Series A-2, respectively, Preferred
Stock of eMake that they may receive upon the exercise of warrants issued by
eMake Corporation.
Pursuant to our certificate of incorporation, the holders of the Series C
Preferred Stock are entitled to elect one director to our board of directors by
the vote of a majority of the holders of the Series C Preferred. Currently, SCP
holds all of the outstanding Series C Preferred Stock. As a result, at its
discretion SCP may elect one additional director to our board of directors.
In addition, pursuant to the Second Amended and Restated Investors' Rights
Agreement, SCP (as long as it owns at least 5% of our common stock on an
as-converted basis) is entitled to propose one director for election to our
board of directors. SCP has proposed that Winston J. Churchill be its director
nominee, to stand for election as proposed.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP has been engaged by the Company to serve as our independent accountants
since November 11, 1999. A representative of KPMG LLP is expected to be present
at the annual meeting and will have an opportunity at the meeting to make a
statement if he or she desires to do so, and will be available to respond to
appropriate questions.
ANNUAL REPORT
The Company's Annual Report for the year ended December 31, 2001, including
financial statements and other information with respect to the Company, is
enclosed with this Proxy Statement. Additional copies of this Annual Report may
be obtained by writing to the Chief Financial Officer of the Company at 2435
North Central Expressway, Richardson, TX 75080-27.
OTHER MATTERS
Management is not aware of any other matters that may come before the Annual
Meeting. However, if any further business should properly come before the Annual
Meeting, the persons named in the enclosed proxy card will vote upon such
business in accordance with their best judgment.
STOCKHOLDERS PROPOSALS FOR THE COMPANY'S 2003 ANNUAL MEETING
Proposals of stockholders of the Company that are intended to be presented by
such stockholders at the Company's 2003 Annual Meeting of Stockholders must be
received by the Chief Financial Officer of the Company at the Company's offices
located at 2435 North Central Expressway, Richardson, Texas 75080-2759, not
later than December 31, 2002 in order to be included in the Proxy Statement and
form of proxy relating to that meeting. However, if the date of the 2003 Annual
Meeting is more than 30 days from the anniversary date of the Annual Meeting, in
order to be included in the Proxy Statement and form of proxy relating to that
meeting, a stockholder's notice must be received a reasonable time before the
Company begins to print and mail the proxy materials for such Annual Meeting. In
addition, such proposals must comply with the requirements of Rule 14a-8, as
promulgated under Regulation 14A the Securities Exchange Act of 1934, as
amended, and their inclusion in the proxy statement will be determined pursuant
to Rule 14a-8.
[USDATA LOGO] 20
It is important that your shares be represented at the Annual Meeting.
Stockholders are urged to mark, date, execute and return promptly the
accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ ROBERT A. MERRY
Robert A. Merry
President and Chief Executive Officer
April 30, 2002
APPENDIX A -AUDIT COMMITTEE CHARTER
[USDATA LOGO] 21
APPENDIX A
USDATA CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
GENERAL
The role of the Audit Committee (the "Committee") of the Board of
Directors (the "Board") of USDATA Corporation (the "Corporation") is to assist
the Board of Directors in fulfilling its oversight responsibilities by:
o Serving as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system.
o Reviewing and appraising the audit efforts of the
Corporation's independent accountants.
o Providing an open avenue of communication among the
independent accountants, financial and senior management and
the Board of Directors.
COMPOSITION
The Committee shall consist of three or more directors as determined by
the Board. No later than June 14, 2001, each member of the Committee shall be an
independent director and free from any relationship that, in the opinion of the
Board, would interfere with the exercise of his or her independent judgment as a
member of the Committee. In determining whether any director is independent, the
Board shall take into consideration the requirements of the principal exchange
or system on which the Corporation's common stock is traded. Directors who are
affiliates of the Company, or officers or employees of the Company or of its
subsidiaries, will not be considered independent.
All members of the Committee must be able to read and understand
fundamental financial statements, including a balance sheet, income statement
and cash flow statement, or become able to do so within a reasonable period of
time after his or her appointment to the Committee, and at least one member of
the Committee is to have past employment experience in finance or accounting,
requisite professional certification in accounting or any other comparable
experience or background which results in that member's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
The members of the Committee are to be elected by the Board and shall
serve until their successors are duly elected and qualified. Unless a Chair is
elected by the full Board, the members of the Committee may designate a Chair by
majority vote of the full Committee membership.
A-1
MEETINGS
The Committee shall hold regular meetings as may be necessary and
special meetings as may be called by the Chair of the Committee. As part of its
job to foster open communication, the Committee should meet at least annually
with management and the independent accountants in separate executive sessions
to discuss any matters that the Committee or either of these groups believe
should be discussed privately. In addition, the Committee or its Chair should
meet with the independent accountants and management quarterly to review the
Corporation's financial statements.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Corporation's independent accountants are to be ultimately
accountable to the Board and the Committee, and the Committee and the Board
shall have the ultimate authority and responsibility to select, evaluate and,
where appropriate, replace the independent accountants (or nominate the outside
auditor to be proposed for shareholder approval in any proxy statement).
RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Committee shall:
Documents/Reports Review
o Review and assess the adequacy of this Charter at least
annually, and otherwise as conditions dictate.
o Review the Corporation's annual financial statements and any
reports or other financial information submitted to the
Securities and Exchange Commission or the public, including
any certification, report, opinion, or review rendered by the
independent accountants.
o Review with financial management and the independent
accountants the Corporation's filings with the Securities and
Exchange Commission on Form 10-Q prior to their filing or
prior to the release of earnings. The Chair of the Committee
may represent the entire Committee for purposes of this
review.
Independent Accountants
o Recommend to the Board the selection of the independent
accountants, considering independence and effectiveness, and
approve the fees and other compensation to be paid to the
independent accountants.
o On an annual basis, obtain from the independent accountants,
and review and discuss with the independent accountants, a
formal written statement delineating
A-2
all relationships the independent accountants have with the
Corporation, consistent with Independence Standards Board
Standard 1, and actively engage in a dialogue with the
independent accountants with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the independent accountants.
o Recommend to the Board any appropriate action to oversee the
independence of the independent accountants.
o Review the performance of the independent accountants and
approve any proposed discharge of the independent accountants
when circumstances warrant.
o Periodically consult with the independent accountants out of
the presence of management about internal controls and the
fullness and accuracy of the Corporation's financial
statements.
Financial Reporting Processes
o In consultation with the independent accountants, review the
integrity of the Corporation's financial reporting processes,
both internal and external.
o Consider the independent accountant's judgment about the
quality and appropriateness of the Corporation's accounting
principles as applied in its financial reporting.
o Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices
as suggested by the independent accountants or management.
o Establish regular and separate reporting to the Committee by
each of management and the independent accountants regarding
any significant judgment made in management's preparation of
the financial statements and the view of each as to
appropriateness of such judgment.
o Following completion of the annual audit, review separately
with each of management and the independent accountants any
significant difficulties encountered during the course of the
audit, including any restrictions on the scope of work or
access to required information.
o Review any significant disagreement among management and the
independent accountants in connection with the preparation of
the financial statements.
A-3
o Review with the independent accountants and management the
extent to which changes or improvements in financial or
accounting practices, as approved by the Committee, have been
implemented.
Ethical and Legal Compliance
o Establish, review and update periodically a Code of Conduct
and ensure that management has established a system to enforce
this Code.
o Review with the Corporation's legal counsel any matter that
could have a significant impact on the Corporation's financial
statements.
o Perform any other activities consistent with this Charter, the
Corporation's bylaws and governing law, as the Committee or
the Board deems necessary or appropriate.
Adopted by Resolution of the Board of Directors effective as of
September 22, 2000.
A-4
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. PLEASE MARK
YOUR VOTES AS
INDICATED IN [X]
THIS EXAMPLE
1. ELECTION OF DIRECTORS Nominees:
FOR all nominees WITHHOLD 01 Winston J. Churchill 04 Jack L. Messman
listed below AUTHORITY 02 James W. Dixon 05 Arthur R. Spector
(except as marked to vote for all nominee(s) 03 Robert A. Merry
to the contrary) listed below
To withhold authority to vote for any individual nominee while voting
[ ] [ ] for the remainder, strike a line through the nominee's name in the list.
Signature Signature Date
---------------------------------------------- ---------------------------------------------- ----------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
------------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
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Your Proxy vote is important,
regardless of the number of shares you own.
Whether or not you plan to attend the meeting in person, please
complete, date and sign the above Proxy card and return it
without delay in the enclosed envelope.
PROXY
USDATA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE SIGN AND DATE THIS PROXY, AND INDICATE HOW YOU WISH TO VOTE, ON THE BACK
OF THIS CARD. PLEASE RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE. YOUR
VOTE IS IMPORTANT.
When you sign and return this proxy card, you
o appoint Robert A. Merry (or any substitutes he may appoint), as proxies to
vote your shares, as you have instructed, at the annual meeting on May 28,
2002, and at any adjournments of that meeting,
o authorize the proxies to vote, in their discretion, upon any other business
properly presented at the meeting, and
o revoke any previous proxies you may have signed.
IF YOU DO NOT INDICATE HOW YOU WISH TO VOTE, THE PROXIES WILL VOTE FOR ALL
NOMINEES TO THE BOARD OF DIRECTORS, AND AS THEY MAY DETERMINE, IN THEIR
DISCRETION, WITH REGARD TO ANY OTHER MATTER PROPERLY PRESENTED AT THE MEETING.
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
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