<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
VMARK SOFTWARE, INC.
(Name of Registrant as Specified In Its Charter)
VMARK SOFTWARE, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
VMARK SOFTWARE, INC.
50 WASHINGTON STREET
WESTBORO, MASSACHUSETTS 01581-1021
April 10, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
VMARK Software, Inc., which will be held on Tuesday, May 6, 1997, at the offices
of the Company, 50 Washington Street, Westboro, Massachusetts, at 1:30 p.m.
The following Notice of Annual Meeting of Stockholders and Proxy Statement
describes the items to be considered by the stockholders and contains certain
information about the Company and its directors and executive officers.
Please sign and return the enclosed proxy card as soon as possible in the
envelope provided so that your shares can be voted at the meeting in accordance
with your instructions. Even if you now plan to attend the meeting, we urge you
to sign and return the proxy card. You can revoke it at any time before it is
exercised at the meeting and vote your shares personally if you attend.
We look forward to seeing you.
Sincerely,
ROBERT M. MORRILL
Chairman of the Board
<PAGE> 3
VMARK SOFTWARE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 6, 1997
The Annual Meeting of Stockholders of VMARK Software, Inc. (the "Company")
will be held at the offices of the Company, 50 Washington Street, Westboro,
Massachusetts on Tuesday, May 6, 1997 at
1:30 p.m. for the following purposes:
1. To elect two directors, each for a three year term.
2. To approve amendments to the Company's 1991 Director Stock Option Plan
providing for
(i) an increase in the number of shares authorized to be issued,
(ii) an increase in the number of shares for which options are to be
granted to non-employee directors each year,
(iii) an extension of the time during which holders may exercise options
after ceasing to be a director,
(iv) an acceleration of vesting in the event of a change of control, and
(v) an extension of the expiration date thereof.
3. To approve an amendment to the Company's Employee Stock Purchase Plan
providing for an extension of the expiration date thereof.
4. To ratify the Board of Directors' selection of Deloitte & Touche LLP as
the Company's independent public accountants for 1997.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on March 14, 1997 will be
entitled to vote at the meeting.
By Order of the Board of Directors
R. N. HOEHN
Secretary
Dated: April 10, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE IN
ORDER THAT YOUR SHARES MAY BE REPRESENTED.
<PAGE> 4
VMARK SOFTWARE, INC.
50 WASHINGTON STREET
WESTBORO, MASSACHUSETTS 01581-1021
508/366-3888
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished to the holders of common stock of VMARK
Software, Inc. (the "Company") in connection with the solicitation of proxies to
be voted at the Annual Meeting of Stockholders to be held on May 6, 1997 and at
any adjournment of that meeting. The enclosed proxy is solicited on behalf of
the Board of Directors of the Company. Each properly signed proxy will be voted.
A person giving the enclosed proxy has the power to revoke it, at any time
before it is exercised at the meeting, by written notice to the Secretary of the
Company, by sending a later dated proxy, or by revoking it in person at the
meeting.
The approximate date on which this proxy statement and the enclosed proxy
will first be sent to stockholders is April 14, 1997. The Company's Annual
Report to Stockholders for 1996 is being mailed together with this proxy
statement.
Only holders of common stock of record on the stock transfer books of the
Company at the close of business on March 14, 1997 (the "record date") will be
entitled to vote at the meeting. There were 8,356,578 shares of common stock
outstanding on the record date.
Each share of common stock is entitled to one vote. A plurality of the
shares voting is required for the election of directors. Approval of the other
matters which are before the meeting will require the affirmative vote of the
holders of a majority of the shares voting thereon. No vote may be taken at the
meeting, other than a vote to adjourn, unless a quorum has been constituted
consisting of the representation of a majority of the outstanding shares as of
the record date. Votes will be tabulated by the Company's transfer agent subject
to the supervision of persons designated by the Board of Directors as
inspectors.
All shares represented at the meeting, by holders present either in person
or by proxy, will be deemed to be represented for purposes of constituting a
quorum. Shares which are represented at the meeting but as to which the holder
abstains from voting or has no voting authority in respect of a particular
matter (such as in the case of a broker non-vote) will not be deemed to be voted
on such matter and will not be the equivalent of negative votes on such matter.
It is the position of the Securities and Exchange Commission, however, that, for
purposes of approval pursuant to Rule 16b-3 under the Securities Exchange Act of
1934 (the "1934 Act") of the second and third items listed in the Notice of
Annual Meeting, abstentions will be deemed the equivalent of negative votes.
<PAGE> 5
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of March 14, 1997 as to
shares of the Company's common stock beneficially owned by (i) each of its
directors, (ii) the executive officers named in the summary compensation table
below, and (iii) all of its current directors and executive officers as a group.
Except as otherwise indicated, each person has sole investment and voting power
with respect to the shares owned.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF
NAME BENEFICIALLY OWNED(1) OUTSTANDING SHARES
- ------------------------------------------------------- --------------------- ------------------
<S> <C> <C>
Robert M. Morrill...................................... 342,843 4.1
Robert G. Claussen..................................... 113,260 1.4
James M. Dow........................................... -- --
Alphonse M. Lucchese................................... -- --
Randolph S. Naylor..................................... 74,532 .9
Benjamin F. Robelen.................................... 68,969 .8
Peter Gyenes........................................... 127,847 1.5
James J. Capeless...................................... 156,842 1.9
Andrew Ridgers......................................... 99,357 1.2
Jason E. Silvia........................................ 100,639 1.2
James K. Walsh......................................... 120,790 1.5
Charles F. Kane........................................ 101,552 1.2
Thomas M. Palka........................................ 65,000 .8
All current directors and executive officers as a group
(13 persons)......................................... 1,368,389 16.4
</TABLE>
- ---------------
(1) Includes shares which may be acquired by exercise of stock options within
sixty days after March 14, 1997 by the directors and executive officers
individually and as a group as follows: Mr. Morrill, 147,667; Mr. Claussen,
8,334; Mr. Naylor, 18,332; Mr. Robelen, 14,978; Mr. Gyenes, 125,000; Mr.
Capeless, 87,500; Mr. Ridgers, 96,841; Mr. Silvia, 100,000; Mr. Walsh,
67,500; Mr. Kane, 100,000; Mr. Palka 60,500; and all current directors and
executive officers as a group, 983,174. Of those shares, 408,298 would be
fully vested as to all directors and executive officers within that sixty
day period, and the holders would have investment and voting powers; the
remaining shares would be subject to vesting, and the holders would have
voting but not investment powers until the shares vested.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth, to the knowledge of the Company, the only
beneficial owners of more than 5% of the common stock. This information is as of
December 31, 1996 and is based solely on Schedule 13G filings made with the
Securities and Exchange Commission.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING SHARES
- ------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
T. Rowe Price Associates, Inc................................ 730,001(1) 8.7%
100 E. Pratt Street
Baltimore, MD 21202
Merrill Lynch & Co., Inc..................................... 705,000(2) 8.4%
250 Vesey Street
New York, NY 10281
The TCW Group, Inc........................................... 646,500(3) 7.8%
865 Figuerson Street
Los Angeles, CA 90017
State of Wisconsin Investment Board.......................... 600,000(4) 7.2%
P.O. Box 7842
Madison, WI 53707
</TABLE>
- ---------------
(1) Shares are held by various investors, including T. Rowe Price Small Cap
Value Fund ("TRP Fund"), a registered investment company, for which T. Rowe
Price Associates Inc. ("TRP") serves as advisor.
2
<PAGE> 6
TRP has sole voting power with respect to 46,000 and sole dispositive power
with respect to all such shares. TRP Fund has sole voting power with respect
to 650,000 of such shares.
(2) Shares are held by registered investment companies and other investors whose
investment advisors have as general partner Princeton Services, Inc., a
subsidiary of Merrill Lynch Group, Inc., which is a subsidiary of Merrill
Lynch & Co., Inc. ("ML&Co."). ML&Co. has shared voting and dispositive
powers with respect to all such shares.
(3) Shares are held by investors for which TCW Asset Management Company, a
subsidiary of The TCW Group, Inc ("TCW"), serves as adviser. TCW has sole
voting and dispositive powers with respect to all such shares.
(4) Shares are held by public pension funds managed by the State of Wisconsin
Investment Board, which has sole voting and dispositive powers with respect
to all such shares.
ELECTION OF DIRECTORS
(ITEM 1 OF NOTICE)
There are currently seven members of the Board of Directors, divided into
three classes with terms expiring respectively at the 1997, 1998 and 1999 annual
meetings of stockholders. The Board has fixed the number of directors at seven
and nominated Messrs. Claussen and Dow, whose terms are expiring, for re-
election for three year terms expiring at the 2000 Annual Meeting and when their
successors are elected and qualified. The shares represented by the enclosed
proxy will be voted to elect the two nominees unless such authority is withheld
by marking the proxy to that effect or the proxy is marked with the names of
directors as to whom authority to vote is withheld. Each of the nominees has
agreed to serve, but in the event a nominee becomes unavailable for any reason,
the proxy, unless authority has been withheld as to that nominee, may be voted
for the election of a substitute.
The following information is furnished with respect to each nominee for
election as a director and for each director whose term of office will continue
after the meeting.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
NAME AND AGE EXPERIENCE DURING LAST FIVE YEARS;
AS OF MARCH 1, 1997 DIRECTOR SINCE DIRECTORSHIPS OF PUBLIC COMPANIES
- ---------------------------- --------------- --------------------------------------------------
<S> <C> <C>
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN 2000
Robert G. Claussen, 60...... 1987 Mr. Claussen has been, since 1989, the Chairman of
the Board and Chief Executive Officer of Claussen
Co., a real estate development company, and
managing general partner of several real estate
development partnerships affiliated with Claussen
Co.
James M. Dow, 46............ 1996 Mr. Dow has been, since 1994, the Chairman of the
Board of Microcom, Inc., a manufacturer of
communications products which enable access to the
Internet and other computing networks. From 1980
to 1994, he was President and Chief Executive
Officer of Microcom, Inc. He is a director of the
Massachusetts High Technology Council.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
NAME AND AGE EXPERIENCE DURING LAST FIVE YEARS;
AS OF MARCH 1, 1997 DIRECTOR SINCE DIRECTORSHIPS OF PUBLIC COMPANIES
- ---------------------------- --------------- --------------------------------------------------
<S> <C> <C>
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Alphonse M. Lucchese, 61.... 1996 Mr. Lucchese has been, since 1994, the Chairman of
the Board, President and Chief Executive Officer
of Davox Corporation, a manufacturer of telephone
call center software. From 1987 to 1994 he was the
President and Chief Executive Officer of Iris
Graphics, Inc., a manufacturer of pre-production
printing systems.
Robert M. Morrill, 59....... 1984 Mr. Morrill has been Chairman of the Board since
1984 and was Chief Executive Officer and President
of the Company from March 1996 through March 1997.
He has been a private investor since 1991. He is a
director of Stratus Computer, Inc., a manufacturer
of fault-tolerant computers.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
Peter Gyenes, 51............ 1997 Mr. Gyenes has been an executive officer of the
Company since May 1996, serving as Executive Vice
President, International Operations through
October 1996, Executive Vice President, Worldwide
Sales through March 1997, and, commencing April 1,
1997, President and Chief Executive Officer. From
May 1995 to May 1996, he was President and Chief
Executive Officer of Racal InterLan Inc., a
supplier of local area networking products. From
1994 to May 1995, he was President of the American
Division of Fibronics International, Inc.; and
from 1990 to 1993 he was Vice President and
General Manager of the international operations
and minicomputer business unit of Data General
Corporation. He is a director of Enteractive,
Inc., a supplier of multimedia software.
Randolph S. Naylor, 56...... 1985 Mr. Naylor has been Vice President, Marketing and
a Director of Interactive Group, Inc.,
("Interactive"), a developer and distributor of
business application software, since March 1996.
From 1977 to March 1996, he was the President and
Chairman of the Board of Intrepid Software, Inc.,
which merged with Interactive in March 1996.
Benjamin F. Robelen, 68..... 1984 Mr. Robelen has been a private investor since
1980. He is a director of Bay Networks, Inc., a
manufacturer of computer networking systems.
</TABLE>
BOARD AND COMMITTEE MEETINGS
The Board of Directors has Audit, Compensation and Nominating Committees.
The Audit Committee reviews the internal accounting procedures of the
Company and consults with and reviews the services provided by the Company's
independent auditors. The directors currently serving on the Audit Committee are
Messrs. Naylor and Robelen. The Audit Committee held five meetings in 1996.
The Compensation Committee reviews and recommends to the Board the
compensation and benefits of all officers of the Company and reviews general
policy relating to compensation and benefits of employees of the Company. The
Compensation Committee also administers the issuance of stock options. The
directors currently serving on the Compensation Committee are Messrs. Claussen,
Dow and Lucchese. The Compensation Committee held four meetings in 1996.
4
<PAGE> 8
The Nominating Committee establishes criteria and procedures for the
selection of nominees for election to the Board of Directors. The directors
currently serving on the Nominating Committee are Messrs. Dow and Lucchese. The
Nominating Committee was established in December 1996 and held no meetings in
1996.
During 1996, the Board held eight meetings. Each incumbent director
attended at least 75% of the aggregate number of the meetings of the Board and
the meetings of the committees of the Board on which he served.
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth compensation received
by the two persons who served as the Company's chief executive officer during
1996, the four other most highly compensated executive officers who were serving
as such on December 31, 1996, and one other person who served as an executive
officer during part of 1996. The table details compensation received for
services rendered to the Company during the fiscal years ended December 31,
1996, 1995 and 1994.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SHARES UNDER
NAME AND -------------------- OPTIONS ALL OTHER
PRINCIPAL POSITION SALARY(1) BONUS AWARDED(2) COMPENSATION(1)(3)
ON 12/31/96 YEAR ($) ($) (#) ($)
- ------------------------------- ----- ----------- ------ ------------- -------------------
<S> <C> <C> <C> <C> <C>
Robert M. Morrill(4)........... 1996 87,704 -- 125,000 --
President and Chief 1995 -- -- -- --
Executive Officer 1994 -- -- -- --
James J. Capeless(5)........... 1996 185,197 -- 57,500 350,828
1995 188,786 -- 20,000 77,175
1994 158,418 28,000 -- 78,503
Andrew Ridgers(6).............. 1996 165,000 -- 96,481 35,639
Executive Vice President, 1995 164,517 -- 15,000 37,827
Engineering 1994 152,438 28,000 -- 38,032
Jason E. Silvia................ 1996 165,000 -- 100,000 35,302
Executive Vice President, 1995 164,517 -- 15,000 38,920
Sales and Services 1994 152,438 28,000 -- 39,243
James K. Walsh................. 1996 175,000 -- 47,500 58,911
Executive Vice President, 1995 174,132 -- 15,000 65,531
Administration, New 1994 152,438 28,000 -- 66,593
Business Development and
General Counsel
Charles F. Kane(7)............. 1996 158,675 -- 25,000 38,798
Executive Vice President, 1995 11,540 -- 75,000 --
Finance and Chief 1994 -- -- --
Financial Officer
Thomas M. Palka(8)............. 1996 165,000 -- 40,000 130,570
1995 164,517 -- 15,000 59,794
1994 152,438 28,000 -- 60,571
</TABLE>
(1) Salary includes amounts deferred by the named executive officer, and All
Other Compensation includes the Company's contribution, under the Company's
deferred compensation and profit-sharing plan established pursuant to
Section 401(k) of the Internal Revenue Code. The plan covers substantially
all domestic employees of the Company and allows each participant to
contribute up to 15% of his or her base wage up to an amount not to exceed
an annual statutory maximum ($9,500 in 1996). The Company
5
<PAGE> 9
matches contributions in an amount equal to 25% of the contributions of each
participant in excess of 2% of such participant's annual compensation up to
4% of such participant's annual compensation.
(2) Includes shares under options issued in exchange for other options (see
Option Repricing Table below).
(3) All Other Compensation includes, for each of the executive officers except
Mr. Morrill, the value, projected on an actuarial basis, of the benefit to
the executive of the premium paid by the Company during the year on an
insurance policy on the life of the executive purchased in connection with a
split-dollar agreement. Each policy is a whole-life policy to be paid in ten
equal annual premiums, a portion of which the Company has agreed to pay so
long as the executive continues to be employed by the Company and, in
certain circumstances, including the occurrence of change-in-control events,
thereafter. The Company has certain rights to borrow against each policy and
the right to receive an amount equal to all premiums paid by it not later
than upon the death of the respective executive. The executives have the
right to borrow certain amounts under the policies and to receive the
respective death benefits net of premium amounts paid by the Company. The
benefits in 1996 were: Mr. Capeless, 66,481; Mr. Ridgers, 32,639; Mr.
Silvia, 35,302; Mr. Walsh, 55,911; Mr. Kane, 35,798; and Mr. Palka, 57,416.
(4) Commencing in March 1996, Mr. Morrill, the Chairman of the Board of
Directors, became President and Chief Executive Officer of the Company. He
ceased to be President and CEO on March 31, 1997.
(5) Mr. Capeless was President and Chief Executive Officer until February and
Executive Vice President/Major Accounts and OEM from February until May
1996, and thereafter was not an executive officer. In May 1996, the Company
entered into an agreement with Mr. Capeless pursuant to which he will remain
an employee until May 1998, subject to his earlier termination. The amount
set forth for him under All Other Compensation for 1996 includes $281,847
which was accrued in 1996 for amounts payable to him under the agreement in
1997 and 1998.
(6) Mr. Ridgers ceased to be an executive officer in January 1997.
(7) Mr. Kane was first employed by and became an executive officer of the
Company in November 1995.
(8) Mr. Palka was Vice President, Worldwide Marketing and Business Development
until May 1996 and thereafter was not an executive officer. In May 1996, the
Company entered into an agreement with Mr. Palka pursuant to which he will
remain an employee until May 1997, subject to his earlier termination. The
amount set forth for him under All Other Compensation for 1996 includes
$76,154 which was accrued in 1996 for amounts payable to him under the
agreement in 1997.
6
<PAGE> 10
OPTION GRANTS TABLE
The following option grants table sets forth information with respect to
stock options granted by the Company to the named executive officers in the
fiscal year ended December 31, 1996. All of such options were exercisable
immediately upon grant but the underlying shares were (except as otherwise
noted) subject to vesting over at least a three year period beginning on the
date of grant. If the options are exercised to purchase unvested shares, such
shares, until vested, may not be sold and are subject to repurchase by the
Company at the exercise price.
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
------------------------------------------------------------------- AT ASSUMED RATES
% OF TOTAL OF STOCK PRICE
OPTIONS APPRECIATION FOR
GRANTED TO OPTION TERM(1)
SHARES UNDER EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------------
NAME OPTIONS GRANTED(#) FISCAL YEAR ($/SH.) DATE 5%($) 10%($)
- ----------------------------- ------------------- ------------- --------------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Morrill............ 125,000 8.7 7.000 3/21/06 550,283 1,394,525
James J. Capeless............ 17,500(2) 1.2 6.375 8/31/98 49,771 70,520
40,000(2)(3) 2.8 8.750 8/31/98 42,311 87,596
Andrew Ridgers............... 61,841(3) 4.3 8.125 1/23/06 315,993 800,789
10,000 .7 6.375 1/23/06 68,598 146,992
10,000 .7 7.000 3/21/06 44,023 111,562
15,000(3) 1.1 8.750 4/23/06 82,542 209,179
Jason Silvia................. 50,000(3) 3.5 8.125 1/23/06 255,488 647,458
25,000 1.8 6.375 1/23/06 171,494 366,729
10,000 .7 7.000 3/21/06 44,023 111,562
15,000(3) 1.1 8.750 4/23/06 82,542 209,179
James K. Walsh............... 17,500 1.2 6.375 1/23/06 120,046 257,235
30,000(3) 2.1 8.750 4/23/06 165,084 418,358
Charles F. Kane.............. 25,000 1.7 7.000 3/21/06 110,057 278,905
Thomas M. Palka.............. 10,000(2) .7 6.375 8/31/97 28,441 40,297
30,000(2)(3) 2.1 8.750 8/31/97 31,673 65,697
</TABLE>
- ---------------
(1) As required by the rules of the Securities and Exchange Commission,
potential values are stated based on the prescribed assumption that the
common stock of the Company will appreciate in value from the date of grant
to the end of the option term at rates (compounded annually) of 5% and 10%,
respectively, and therefore do not reflect past results and are not intended
to forecast possible future appreciation, if any, in the price of the common
stock.
(2) Became fully vested in connection with the agreements noted under the
summary compensation table.
(3) Issued pursuant to an option exchange (see the option repricing table
below).
7
<PAGE> 11
OPTION EXERCISE AND YEAR-END VALUE TABLE
The following option exercise and year-end value table sets forth
information regarding the exercise of stock options by the named executive
officers during the fiscal year ended December 31, 1996 and the number and
unrealized value or spread (the difference between the exercise price and the
market value) of unexercised options held by such officers on December 31, 1996.
All of such options were then exercisable, but some of the underlying shares
were subject to vesting.
<TABLE>
<CAPTION>
SHARES UNDER UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE MONEY
SHARES END(#) OPTIONS AT FISCAL YEAR-END
ACQUIRED ON VALUE --------------------------- ----------------------------
NAME EXERCISE(1) REALIZED VESTED UNVESTED TOTAL VESTED UNVESTED TOTAL
- -------------------------------- ----------- -------- ------ -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert M. Morrill............... -- -- 38,917 98,416 137,333 19,459 43,041 62,500
James J. Capeless............... -- -- 46,541 40,959 87,500 153,609 16,079 169,688
Andrew Ridgers.................. -- -- 24,229 72,612 96,841 2,812 13,438 16,250
Jason E. Silvia................. -- -- 23,361 76,639 100,000 5,906 27,219 33,125
James K. Walsh.................. -- -- 27,208 10,292 67,500 103,610 16,079 119,689
Charles F. Kane................. -- -- 20,000 80,000 100,000 20,156 76,719 96,875
Thomas M. Palka................. 21,000 123,559 30,833 34,167 65,000 127,062 9,188 136,250
</TABLE>
- ---------------
(1) Does not include shares purchased under the Company's Employee Stock
Purchase Plan (see Description of the Stock Purchase Plan below).
OPTION REPRICING TABLE
As discussed in the Board Compensation Committee Report below, in 1996 the
Company gave certain holders of stock options, including certain executive
officers, the opportunity to exchange options for new options with a lower
exercise price and with a new vesting schedule beginning on the grant date of
the new option. The following option repricing table sets forth certain
information concerning such exchange of stock options by the executive officers
of the Company. Except for such repricing in 1996, the Company has never
repriced any stock options.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL TERM
OPTIONS MARKET PRICE OF EXERCISE REMAINING AT
REPRICED STOCK AT TIME OF PRICE AT TIME NEW EXERCISE DATE OF
NAME DATE (#SHARES) REPRICING OF REPRICING PRICE REPRICING
- ------------------------------ ------- --------- ---------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
James J. Capeless............. 4/23/96 20,000 8.750 13.000 8.750 2Y 8M
4/23/96 20,000 8.750 14.875 8.750 3Y 10M
Andrew Ridgers................ 1/23/96 50,000 8.125 9.500 8.125 2Y 1M
1/23/96 11,841 8.125 13.000 8.125 2Y 11M
4/23/96 15,000 8.750 14.875 8.750 3Y 10M
Jason E. Silvia............... 1/23/96 50,000 8.125 13.000 8.125 2Y 10M
4/23/96 15,000 8.750 14.875 8.750 3Y 10M
James K. Walsh................ 4/23/96 15,000 8.750 13.000 8.750 2Y 8M
4/23/96 15,000 8.750 14.875 8.750 3Y 10M
Thomas M. Palka............... 4/23/96 15,000 8.750 13.000 8.750 2Y 8M
4/23/96 15,000 8.750 14.875 8.750 3Y 10M
Peter L. Fiore................ 1/12/96 15,000 7.750 13.000 7.750 3Y 11M
James D. Foy.................. 1/12/96 10,000 7.750 17.875 7.750 3Y 3M
</TABLE>
DIRECTOR COMPENSATION
Each director who is not also an employee of the Company is paid a
quarterly fee of $2,000. Such directors are also paid $1,000 for each Board
meeting and $500 for each committee meeting attended. Directors also are
reimbursed for traveling costs and other out-of-pocket expenses incurred in
connection with meeting attendance. Under the Company's 1991 Director Stock
Option Plan, each non-employee director
8
<PAGE> 12
serving as such on January 31 of each year is automatically granted an option
exercisable (subject to a three year vesting period) for the purchase of 10,000
shares (previously 5,000 shares prior to an amendment which is subject to
approval of stockholders; see Approval of Amendment to Directors Stock Option
Plan below) of the Company's common stock at a price per share equal to fair
market value at the date of grant.
BOARD COMPENSATION COMMITTEE REPORT
The overall policy for compensating executive officers has been based upon
the following three principles:
1. Aggregate compensation should be sufficiently competitive within
the software industry to retain and, when necessary, attract executives
capable of leading the Company.
2. The executive officers of the Company should function and succeed
as a team and, therefore, there should not be significant differences in
compensation among those officers.
3. A significant portion of aggregate compensation should depend upon
the achievement of Company goals.
The main components of the Company's executive compensation program are
salary, bonuses and stock options. Executives are also eligible to participate
in various benefit programs provided to all full time employees, including
401(k) and employee stock purchase plans. In addition, the committee instituted
in early 1993 a split-dollar life insurance program for executive officers.
SALARY AND BONUSES. The Committee's objective has been to fix levels of
salary plus bonus opportunity for executive officers at the average levels for
comparable companies within the software industry. Based upon review of various
surveys of compensation within the industry, the Committee believes that this
objective has generally been achieved. Because one of the Company's overall
principles for compensating executive officers has been that there should not be
significant differences in compensation among those officers, the Committee's
comparison of the Company's compensation levels with those of other companies
has been done on an aggregate rather than position by position basis.
Executive salaries have been fixed based upon subjective consideration of
several factors, principally including the levels of executive compensation for
comparable companies in the industry. Each of the executives (except for Mr.
Morrill, see discussion below) has been paid a salary which differs by no more
than approximately 10% from the average executive salary. Except for the
incremental percentage based upon his position, Mr. Capeless's salary as
President and CEO was not independently determined and resulted solely from the
fixing of a common salary range for all executive officers.
At the beginning of each year, the Committee establishes a bonus pool
opportunity for certain employees (other than sales and certain sales support
personnel, who receive commissions and bonuses based upon sales). The actual
bonus pool is determined based upon pre-tax profits in excess of certain minimum
levels. No bonuses were awarded to executive officers for 1996.
STOCK OPTIONS. The Committee believes that equity ownership by executive
officers, as well as by other employees, provides an important long-term
incentive for retention and team-oriented performance. Executive officers, as
well as other employees of the Company, have historically been given, at the
time of initial hiring, some form of equity ownership opportunity, most recently
in the form of incentive stock options. Such equity has generally been subject
to vesting over several years. From time to time executive officers have been
granted additional stock options. The number of shares for which options were
granted to executive officers in 1996 was determined by the Committee based upon
consideration of several factors, including the performance of the officers, the
options previously granted to such officers, and the amount of options granted
to executive officers by comparable companies in the industry.
MR. MORRILL'S COMPENSATION. When Mr. Morrill became President and Chief
Executive Officer in March 1996, he stated to the Compensation Committee that
his objective was to increase the value of the stock in the Company and that he
did not require a salary or bonus opportunity within the range of the other
executive officers. His annual salary was fixed at $120,000 and he was not
included in the bonus plan. He did
9
<PAGE> 13
request a stock option which was competitive within the industry, and was
granted an option for 125,000 shares.
OPTION REPRICING. The Committee determined in January 1996 that the
exercise prices of many stock options previously granted were at such high
levels compared to existing market value that the incentive and retention powers
of the options had been substantially negated. Accordingly, the Committee
adopted a program whereby all option holders other than executive officers had
the opportunity to exchange options on a one-for-one basis for new options with
an exercise price equal to the market value as the effective date of the
exchange, which was January 12, 1996. The new options had new five year vesting
schedules. Messrs. Fiore and Foy, who are now executive officers but were not at
that time, participated in the exchange program. Although the Committee did not
permit executive officers to participate in the general exchange program, it did
recognize that, principally due to the different hiring dates of its executive
officers and the resulting differences in the exercise prices of their options,
the incentive power of their options varied substantially. In order to remove
this substantial variation, the Committee permitted Messrs. Ridgers, Silvia and
Walsh to exchange options on substantially the same basis as the non-executive
employees. Finally, in connection with negotiation of the agreements noted under
the Summary Compensation Table, Messrs. Capeless and Palka also exchanged
existing options for new options with an exercise price having a then current
market value.
COMPENSATION NOT QUALIFYING FOR TAX DEDUCTIBILITY. Section 162(m) of the
Internal Revenue Code provides in general that compensation to certain
individual executive officers during any year in excess of $1 million is not
deductible by a public company. The Committee believes that, given the general
range of salaries and bonuses for executive officers of the Company, and the
nature of the options generally held by them (certain options do not result in
income which is includable in the amounts which are non-deductible), the $1
million threshold of Section 162(m) will not be reached by any executive officer
of the Company in the foreseeable future. Accordingly, the Committee has not
considered what its policy regarding compensation not qualifying for federal tax
deductibility might be at such time, if ever, as that threshold is within range
of any executive officer.
Compensation Committee
Robert G. Claussen
James M. Dow*
Alphonse M. Lucchese*
* Mr. Dow and Mr. Lucchese were appointed to the Compensation Committee in July
and October 1996, respectively. Mr. Morrill served on the Committee from
January to March, 1996 and Messrs. Naylor and Robelen served on the Committee
from March through July, 1996.
10
<PAGE> 14
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
The following performance graph assumes an investment of $100 on May 14,
1992 (the effective date of the Company's initial public offering) and compares
the change to December 31, 1992, 1993, 1994, 1995 and 1996 in the market price
of the Company's common stock with a broad market index (S&P 500) and an
industry index (S&P Computer Software & Services). The Company paid no dividends
during the periods shown; the performance of the indexes is shown on a total
return (dividend reinvestment) basis. The graph lines merely connect the prices
on the dates indicated and do not reflect fluctuations between these dates.
<TABLE>
<CAPTION>
Measurement Period VMARK SOFTWARE, S & P SOFTWARE &
(Fiscal Year Covered) INC. S & P 500 SERVICES
<S> <C> <C> <C>
05/14/92 100 100 100
12/31/92 86.11 119.42 107.00
12/31/93 158.33 152.42 117.78
12/31/94 197.22 180.17 119.34
12/31/95 104.17 253.19 164.19
12/31/96 83.33 393.62 201.88
</TABLE>
The Compensation Committee Report and the Comparison of Cumulative Total
Stockholder Return above shall not be deemed to be "soliciting material" or
incorporated by reference into any of the Company's filings with the Securities
and Exchange Commission.
SECTION 16 REPORTING
Section 16(a) of the 1934 Act requires the Company's directors and officers
and persons who own more than ten percent of the Common Stock to file reports
with the Securities and Exchange Commission disclosing their ownership of stock
in the Company and changes in such ownership. Copies of such reports are also
required to be furnished to the Company. Based solely on a review of the copies
of such reports received by it, or a written representation from certain
reporting persons, the Company believes that all required filings were timely
made during 1996.
APPROVAL OF AMENDMENTS TO DIRECTOR STOCK OPTION PLAN
(ITEM 2 OF NOTICE)
The Board has adopted, subject to stockholder approval, amendments to the
Company's 1991 Director Stock Option Plan (the "Director Plan") which (i)
increase the number of shares authorized to be issued from 200,000 to 350,000,
(ii) increase the number of shares for which options are to be granted to non-
employee directors each year from 5,000 to 10,000, (iii) extend the time during
which holders may exercise options after ceasing to be a director from 90 days
to one year, (iv) accelerate vesting so that, in the event of certain changes of
control, options (which otherwise vest over three years) would become
immediately
11
<PAGE> 15
exercisable in full, and (v) extend the expiration date until December 31, 2005.
A copy of the Directors Plan which shows the amendments is included as Exhibit A
to this proxy statement. Approval of the stockholders is sought under the terms
of the Director Plan and in order to meet the stockholder approval requirements
of Rule 16b-3 of the 1934 Act which, in the case of certain option plans which
have been approved by stockholders, prevents the grant of options to directors
and certain other affiliates from being deemed "purchases" for purposes of the
profit recapture provisions of Section 16(b) of the 1934 Act. The amendments
will be voted upon as a single matter. The Board recommends approval of the
amendments because it believes that the continuing availability of options under
the Director Plan for a competitive number of shares is an important factor in
the Company's ability to attract and retain experienced directors.
DESCRIPTION OF DIRECTOR STOCK OPTION PLAN
The Director Plan currently provides for the grant of nonqualified stock
options to the non-employee directors of the Company for the purchase of up to
an aggregate of 350,000 shares (subject to approval of stockholders as described
above) of the Company's common stock. Under the plan, each non-employee director
is entitled to receive, when first elected to serve as a director, an option
exercisable for 15,000 shares. In addition, each non-employee director is
entitled to receive on January 31 of each year an option exercisable for 10,000
shares (also subject to approval of stockholders as described above). The
exercise price of all options granted under the plan is equal to the fair market
value of the common stock on the date of grant. The plan provides for the
payment of the exercise price in cash.
Options granted under the plan are non-transferable other than by will or
the laws of descent and distribution. The plan is administered by the
Compensation Committee.
Options granted under the plan may only be exercised with respect to vested
shares. One-third of the shares subject to an option vest on the first, second
and third anniversaries of the option grant date, except that (subject to
approval of stockholders as described above), options become immediately
exercisable in the event of certain changes of control. No option may be
exercised more than one year after the optionee ceases to serve as a director of
the Company or more than ten years after the date of grant.
For federal income tax purposes, ordinary compensation income is recognized
upon exercise by the optionee in the amount of any excess of the then fair
market value over the market price, and the Company is entitled to a
corresponding deduction.
In 1996, options exercisable for 5,000 shares were granted to each of
Messrs. Claussen, Morrill, Naylor, and Robelen at an exercise price of $8.38 per
share and options exercisable for 15,000 shares were granted to each of Messrs.
Dow and Lucchese at an exercise price of $9.63 per share. As of March 14, 1997,
options for the purchase of 49,865 shares had been granted under the Director
Plan and exercised, options for the purchase of 113,391 were outstanding, and
36,744 shares remained available for grant.
APPROVAL OF AMENDMENT TO THE COMPANY EMPLOYEE STOCK PURCHASE PLAN
(ITEM 3 OF NOTICE)
The Board has adopted, subject to approval of stockholders, an amendment to
the Company's Employee Stock Purchase Plan (the "Stock Purchase Plan") extending
the plan for a ten year period. Previously, no rights were to be granted under
the Plan after March 25, 1997. Approval of the stockholders is sought under the
terms of the Stock Purchase Plan and in order for the Stock Purchase Plan, as
amended thereby, to meet the stockholder approval requirements of (i) Section
423 of the Internal Revenue Code, and (ii) Rule
16(b)-3 of the 1934 Act, which, in the case of certain stock purchase plans
which have been approved by stockholders, prevents the purchase of stock by
officers and certain other affiliates from being deemed "purchases" for purposes
of the profit recapture provisions of Section 16(b) of the 1934 Act. The Board
recommends approval of the amendment because it believes that the continuing
availability of stock under the Stock Purchase Plan is an important factor in
the Company's ability to attract and retain experienced employees.
12
<PAGE> 16
DESCRIPTION OF THE STOCK PURCHASE PLAN
The Stock Purchase Plan is administered by the Compensation Committee. All
employees of the Company and its subsidiaries whose customary employment is 24
or more hours per week and more than five months per calendar year, other than
those employees who own 5% or more of the stock of the Company, are eligible to
participate in the Stock Purchase Plan (currently 310 persons). The Stock
Purchase Plan may be implemented by one or more offerings of such duration as
the Compensation Committee may determine, provided that no offering period may
be longer than 27 months. An eligible employee participating in an offering may
purchase common stock at a price equal to the lower of 85% of its fair market
value at the commencement of the offering period or 85% of its fair market value
on the last day of the offering period. Payment for common stock purchased under
the plan is made through regular payroll deduction or lump sum cash payment, as
determined by the Compensation Committee. The maximum value of common stock an
employee may purchase during an offering period is 6% of the employee's
compensation during such period, calculated on the basis of the employee's
compensation rate on the date the employee elects to participate in that
offering.
The following table sets forth the number of shares of VMARK Common Stock
issued under the Employee Purchase Plan during the fiscal year ended December
31, 1996 to the executive officers named in the summary compensation described
above, the current executive officers as a group, and the non-executive officer
employees.
<TABLE>
<S> <C>
Robert M. Morrill.............................................. --
James J. Capeless.............................................. 1,707
Andrew Ridgers................................................. 1,482
Jason E. Silvia................................................ --
James K. Walsh................................................. 1,571
Charles F. Kane................................................ 705
Thomas M. Palka................................................ 776
Current executive officers as a group.......................... 3,823
Non-executive officer employees................................ 153,767
</TABLE>
Of the 500,000 shares issuable under the Stock Purchase Plan, as of March
14, 1997 318,511 shares had been issued and 181,489 shares remained available
for issuance. As of the date of this Proxy Statement, there have been nine
completed offerings under the Stock Purchase Plan and a tenth offering is
scheduled to be completed in August 1997.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 4 OF NOTICE)
On the recommendation of the Audit Committee, the Board of Directors has
selected Deloitte & Touche LLP, independent certified public accountants, as
auditors of the Company for the year ending December 31, 1997. This firm has
audited the accounts and records of the Company since 1985. A representative of
Deloitte & Touche LLP will be present at the Annual Meeting to answer questions
from stockholders and will have an opportunity to make a statement if desired.
The selection of independent public accountants is not required to be
submitted to a vote of the stockholders. The Board believes, however, it is
appropriate as a matter of policy to request that the stockholders ratify the
appointment. If the stockholders do not ratify the appointment, the Board will
reconsider its selection.
13
<PAGE> 17
STOCKHOLDER PROPOSALS FOR 1998 MEETING
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received on or before December 5, 1997 for
inclusion in the proxy materials relating to that meeting. Any such proposals
should be sent to the Company at its principal offices addressed to the
Executive Vice President, Administration. Other requirements for inclusion are
set forth in Rule 14a-8 under the 1934 Act, as amended.
OTHER MATTERS
The Company has no knowledge of any matters to be presented for action by
the stockholders at the meeting other than as set forth above. However, the
enclosed proxy gives discretionary authority to the persons named therein to act
in accordance with their best judgment in the event that any additional matters
should be presented.
The Company will bear the cost of the solicitation of proxies by the
management, including the charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of common stock.
By order of the Board of Directors
R. N. HOEHN
Secretary
April 10, 1997
14
<PAGE> 18
EXHIBIT A
DELETIONS IN BRACKETS
ADDITIONS IN BOLD
VMARK SOFTWARE, INC.
1991 DIRECTOR STOCK OPTION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 28, 1997
1. Purpose
The purpose of this 1991 Director Stock Option Plan (the "Plan") of VMARK
Software, Inc. (the "Company") is to encourage ownership in the Company by
outside directors of the Company whose continued services are considered
essential to the Company's future progress and to provide them with a further
incentive to remain as directors of the Company.
2. Administration
The Board of Directors shall supervise and administer the Plan. Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic in accordance with Section 5. However, all questions
of interpretation of the Plan or of any options issued under it shall be
determined by the Board of Directors and such determination shall be final and
binding upon all persons having an interest in the Plan.
3. Participation in the Plan
Directors of the Company who are not employees of the Company or any
subsidiary of the Company shall be eligible to participate in the Plan.
4. Stock Subject to the Plan
a. The maximum number of shares which may be issued under the Plan shall
be [200,000] 350,000 shares of the Company's Common Stock ("Common
Stock"), subject to adjustment as provided in Section 9 of the Plan.
b. If any outstanding option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares allocable
to the unexercised portion of such option shall again become available
for grant pursuant to the Plan.
c. All options granted under the Plan shall be non- statutory options not
entitled to special tax treatment under Section 422A of the Internal
Revenue Code of 1986, as amended to-date and as it may be amended from
time to time (the "Code").
5. Terms, Conditions and Form of Options
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
a. Option Grant Dates
(i) Options shall be granted to all eligible directors when first
elected to serve as a director, or in the case of directors
serving at the time of approval of this Plan by the Board of
Directors, on the date of such approval.
15
<PAGE> 19
(ii) On January 31 of each year, commencing January, 1993, options
shall be granted to each eligible director then serving as a
director of the Company.
b. Shares Subject to Option
Each option granted pursuant to Section 5(a)(i) of the Plan shall be
exercisable for 15,000 shares of Common Stock. Each option granted pursuant to
Section 5(a)(ii) of the Plan shall be exercisable for [5,000] 10,000 shares of
Common Stock.
c. Option Exercise Price
The option exercise price per share for each option granted under the Plan
shall equal (i) the last reported sales price per share of the Company's Common
Stock on the NASDAQ National Market System (or, if the Company is traded on a
nationally recognized securities exchange on the date of grant, the reported
closing sales price per share of the Company's Common Stock by such exchange) on
the date of grant (or if no such price is reported on such date such price as
reported on the nearest preceding date) or (ii) if the grant occurs prior to the
initial public offering of the Common Stock, the fair market value per share of
Common Stock on the date of grant as determined by the Board of Directors.
d. Options Non-Transferable
Each option granted under the Plan by its terms shall not be transferable
by the optionee otherwise than by will, or by the laws of descent and
distribution, and shall be exercised during the lifetime of the optionee only by
him. No option or interest therein may be transferred, assigned, pledged or
hypothecated by the optionee during his lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.
e. Exercise Period
Each option may be exercised on a cumulative basis as to one-third of the
shares subject to the option on each of the first, second and third
anniversaries of the date of grant of such option, provided that, subject to the
provisions of Section 5(f), no option may be exercised more than [90 days] ONE
YEAR after the optionee ceases to serve as a director of the Company AND FURTHER
PROVIDED THAT, IN THE EVENT OF A CHANGE OF CONTROL OF THE COMPANY, SUCH OPTION
SHALL BECOME FULLY EXERCISABLE. FOR PURPOSES OF THE FOREGOING, A "CHANGE OF
CONTROL" SHALL MEAN (I) THE DIRECT OR INDIRECT ACQUISITION BY ANY PERSON, ENTITY
OR GROUP ACTING IN CONCERT OF MORE THAN 35% OF THE AGGREGATE VOTING POWER OF THE
OUTSTANDING SECURITIES OF THE COMPANY HAVING THE RIGHT TO VOTE AT ELECTIONS OF
DIRECTORS, (II) A MAJORITY OF THE BOARD OF DIRECTORS OF THE COMPANY CEASING TO
CONSIST OF INDIVIDUALS WHO ARE MEMBERS OF SUCH BOARD ON JULY 29, 1996 OR FOR
WHOSE NOMINATION FOR SUCH MEMBERSHIP A MAJORITY OF SUCH MEMBERS VOTED IN FAVOR,
OR (III) THE DISPOSITION BY THE COMPANY OF SUBSTANTIALLY ALL ITS BUSINESS, OTHER
THAN IN CONNECTION WITH A MERE CHANGE OF PLACE OF INCORPORATION OR SIMILAR MERE
CHANGE IN FORM. No option shall be exercisable after the expiration of ten years
from the date of grant.
f. Exercise Period Upon Disability or Death
Notwithstanding the provisions of Section 5(e), any option granted under
the Plan may be exercised, to the extent then exercisable, by an optionee who
becomes disabled (within the meaning of Section 22(e)(3) of the Code or any
successor provision thereto) while acting as a director of the Company, or may
be exercised, to the extent then exercisable, upon the death of such optionee
while a director of the Company by the person to whom it is transferred by will,
by the laws of descent and distribution, or by written notice filed pursuant to
Section 5(h), in each case within the period of one year after the date the
optionee ceases to be such a director by reason of such disability or death;
provided that, no option shall be exercisable after the expiration of ten years
from the date of grant.
16
<PAGE> 20
g. Exercise Procedure
Options may be exercised only by written notice to the Company at its
principal office accompanied by payment in cash of the full consideration for
the shares as to which they are exercised.
h. Exercise by Representative Following Death of Director
A director, by written notice to the Company, may designate one or more
persons (and from time to time change such designation) including his legal
representative, who, by reason of the director's death, shall acquire the right
to exercise all or a portion of the option. If the person or persons so
designated wish to exercise any portion of the option, they must do so within
the terms of the option as provided herein. Any exercise by a representative
shall be subject to the provisions of the plan.
6. Assignments
The rights and benefits under the Plan may not be assigned except for the
designation of a beneficiary as provided in Section 5.
7. Time for Granting Options
[All options for shares subject to the Plan shall be granted, if at all,
not later than five years after the approval of the plan by the Company's
stockholders.] NO OPTIONS UNDER THE PLAN SHALL BE GRANTED AFTER DECEMBER 31,
2005.
8. Limitation of Rights
a. No Right to Continue as a Director
Neither the Plan, nor the granting of an option nor any other action taken
pursuant to the Plan, shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will retain a director for
any period of time.
b. No Stockholders' Rights for Options
An optionee shall have no rights as a stockholder with respect to the
shares covered by his options until the date of the issuance to him of a stock
certificate therefor, and no adjustment will be made for dividends or other
rights (except as provided in Section 9) for which the record date is prior to
the date such certificate is issued.
9. Changes in Common Stock
a. If the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number of kind of shares or other securities, or if
additional shares of new or different shares or other securities are distributed
with respect to such shares of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other distribution with respect to such shares of Common
Stock, or other securities, an appropriate and proportionate adjustment will be
made in (i) the maximum number and kind of shares reserved for issuance under
the Plan, (ii) the number and kind of shares or other securities subject to then
outstanding options under the Plan and (iii) the price for each share subject to
any then outstanding options under the Plan, without changing the aggregate
purchase price as to which such options remain exercisable. No fractional shares
will be issued under the Plan on account of any such adjustments.
b. In the event that the Company is merged or consolidated into or with
another corporation (in which consolidation or merger the stockholders of the
Company receive distributions of cash or securities of another issuer as a
result thereof), or in the event that all or substantially all of the assets of
the Company is acquired by any other person or entity, or in the event of a
reorganization or liquidation of the Company, the Board of Directors of the
Company, or the board of directors of any corporation assuming the obligations
of the Company, shall, as to outstanding options, either (i) provide that such
options shall be assumed, or equivalent
17
<PAGE> 21
options shall be substituted, by the acquiring or successor corporation (or an
affiliate thereof), or (ii) upon written notice to the optionees, provide that
all unexercised options will terminate immediately prior to the consummation of
such merger, consolidation, acquisition, reorganization or liquidations unless
exercised by the optionee within a specified number of days following the date
of such notice.
10. Amendment of the Plan
The Board of Directors may suspend or discontinue the Plan or review or
amend it in any respect whatsoever; provided, however, that without approval of
the stockholders of the Company no revision or amendment shall change the number
of shares subject to the Plan (except as provided in Section 9), change the
designation of the class of directors eligible to receive options, or materially
increase the benefits accruing to participants under the Plan, and this Plan may
not be amended more than once in any six-month period.
11. Notice
Any written notice to the Company required by any of the provisions of the
plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.
12. Governing Law
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the Commonwealth of Massachusetts.
Amended by the Board of Directors on January 28, 1997, subject to
stockholder approval.
18
<PAGE> 22
<TABLE>
<CAPTION>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<S> <C> <C> <C> <C> <C> <C>
1. To elect two Directors.
With- For All
====================== For hold Except
VMARK SOFTWARE,INC. ROBERT G. CLAUSSEN [ ] [ ] [ ]
====================== JAMES M. DOW
NOTE: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line
through the nominee's name. Your shares will be voted for
the remaining nominee.
For Against Abstain
RECORD DATE SHARES: 2. Approve amendments to Directors Stock [ ] [ ] [ ]
Option Plan to (i) increase the
number of shares authorized to be issued,
(ii) increase the number of shares
included in the annual grant to non-
employee directors, (iii) extend the time
for exercise in certain circumstances,
(iv) accelerate vesting in the event of
a change in control, and (v) extend the
expiration date of such plan.
For Against Abstain
3. Approve amendment to Employee Stock [ ] [ ] [ ]
Purchase Plan to extend the expiration
date of such plan.
4. Ratify the selection of Deloitte & [ ] [ ] [ ]
Touche LLP as independent accountants.
------------ Mark box at right if comments or address change have [ ]
Please be sure to sign and date this Proxy Date been noted on the reverse side of this card.
--------------------------------------------------------------
------Stockholder sign here------------Co-owner sign here-----
DETACH CARD DETACH CARD
VMARK SOFTWARE, INC.
Dear Stockholder:
Please mark the boxes on the proxy card to indicate how your shares will be voted, then sign the card, detach it and
return your proxy card in the enclosed postage paid envelope.
Sincerely,
VMARK Software, Inc.
</TABLE>
<PAGE> 23
VMARK SOFTWARE, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - MAY 6, 1997
The undersigned hereby acknowledge(s) receipt of the notice and accompanying
Proxy Statement, revoke(s) any prior proxies, and appoint(s) Robert M. Morrill
and Peter Gyenes or either of them, with power of substitution in each,
attorneys for the undersigned to act for and vote, as specified below, all
shares of stock which the undersigned may be entitled to vote at the Annual
Meeting of the Stockholders of VMARK Software, Inc. to be held on May 6, 1997,
and at any adjourned sessions thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDERS. IF NO DIRECTION IS GIVEN, THIS PROXY CARD WILL
BE VOTED "FOR" THE NOMINEES FOR DIRECTOR AND "FOR" ALL OTHER PROPOSALS. THE
PROXY WILL BE VOTED IN ACCORDANCE WITH THE HOLDER'S BEST JUDGMENT AS TO ANY
OTHER MATTER.
----------------------------------------------------------------
- -------PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE---------
ENCLOSED ENVELOPE.
----------------------------------------------------------------
Please sign exactly as your name appears on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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<PAGE> 24
VMARK SOFTWARE, INC.
EMPLOYEE STOCK PURCHASE PLAN
Amended Effective as of January 28, 1997
l. PURPOSE. The purpose of this Employee Stock Purchase Plan (the "Plan") is
to provide employees of VMark Software, Inc. (the "Company"), and its
subsidiaries, who wish to become stockholders of the Company an opportunity
to purchase Common Stock of the Company (the "Shares"). The Plan is
intended to qualify as an "employee stock purchase plan" within the meaning
of Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. ELIGIBLE EMPLOYEES. Subject to provisions of Sections 7, 8 and 9 below, any
individual who is in the full-time employment (as defined below) of the
Company, or any of its subsidiaries (as defined in Section 424(f) of the
Code) the employees of which are designated by the Board of Directors as
eligible to participate in the Plan, is eligible to participate in any
Offering of Shares (as defined in Section 3 below) made by the Company
hereunder. Full-time employment shall include all employees whose customary
employment is:
(a) in excess of 20 hours per week; and
(b) more than five months in the relevant calendar year.
3. OFFERING DATES. From time to time the Company, by action of the Board of
Directors, will grant rights to purchase Shares to employees eligible to
participate in the Plan pursuant to one or more offerings (each of which is
an "Offering") on a date or series of dates (each of which is an "Offering
Date") designated for this purpose by the Board of Directors.
4. PRICES. The Price per share for each grant of rights hereunder shall be the
lesser of:
(a) eighty-five percent (85%) of the fair market value of a Share on the
Offering Date on which such right was granted; or
(b) eighty-five percent (85%) of the fair market value of a Share on the
date such right is exercised.
<PAGE> 25
VMARK SOFTWARE, INC.
EMPLOYEE STOCK PURCHASE PLAN
PAGE 2
At its discretion, the Board of Directors may determine a higher price for
a grant of rights.
5. EXERCISE OF RIGHTS AND METHOD OF PAYMENT.
(a) Rights granted under the Plan will be exercisable periodically on
specified dates as determined by the Board of Directors.
(b) The method of payment for Shares purchased upon exercise or rights
granted hereunder shall be through regular payroll deductions or by
lump sum cash payment, or both, as determined by the Board of
Directors; provided, however, that payment through regular payroll
deductions may in no event commence before the date on which a
prospectus with respect to the Offering of the Shares covered by the
Plan is provided to each participating employee. No interest shall be
paid upon payroll deductions unless specifically provided for by the
Board of Directors.
(c) Any payments received by the Company from a participating employee and
not utilized for the purchase of Shares upon exercise of a right
granted hereunder shall be promptly returned to such employee by the
Company after termination of the right to which the payment relates.
6. TERM OF RIGHTS. Rights granted on any Offering Date shall be exercisable
upon the expiration of such period ("Offering Period") as shall be
determined by the Board of Directors when it authorizes the Offering,
provided that such Offering Period shall in no event be longer than
twenty-seven (27) months.
7. SHARES SUBJECT TO THE PLAN. No more than 500,000 Shares may be sold
pursuant to rights granted under the Plan. Appropriate adjustments in the
above figure, in the number of Shares covered by outstanding rights granted
hereunder, in the exercise price of the rights and in the maximum number of
Shares which an employee may purchase (pursuant to Section 9 below) shall
be made to give effect to any mergers, consolidations, reorganizations,
recapitalizations, stock splits, stock dividends or other relevant changes
in the capitalization of the Company occurring after the effective date of
the Plan, provided that no fractional Shares shall be subject to a right
and each right shall be adjusted downward to the nearest full Share. Any
agreement of merger or consolidation will include provisions for protection
of
<PAGE> 26
VMARK SOFTWARE, INC.
EMPLOYEE STOCK PURCHASE PLAN
PAGE 3
the then existing rights of participating employees under the Plan. Either
authorized and unissued Shares or issued Shares heretofore or hereafter
reacquired by the Company may be made subject to rights under the Plan. If
for any reason any right under the Plan terminates in whole or in part,
Shares subject to such terminated right may again be subjected to a right
under the Plan.
8. LIMITATIONS ON GRANTS.
(a) No employee shall be granted a right hereunder if such employee,
immediately after the right is granted, would own stock or rights to
purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company,
or of any subsidiary, computed in accordance with Sections 423(b)(3)
and 424(d) of the Code.
(b) No employee shall be granted a right which permits his right to
purchase shares under all employee stock purchase plans of the Company
and its subsidiaries to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) (or such other maximum as may be prescribed
from time to time by the Code) of the fair market value of such Shares
(determined at the time such right is granted) for each calendar year
in which such right is outstanding at any time in accordance with the
provisions of Section 423(b)(8) of the Code.
(c) No right granted to any participating employee under a single Offering
shall cover more shares than may be purchased at an exercise price
equal to that percentage of the employee's annual rate of compensation
on the date the employee elects to participate in the Offering as
determined by the Board of Directors from time to time.
9. LIMIT ON PARTICIPATION. Participation in an Offering shall be limited to
eligible employees who elect to participate in such Offering in the manner,
and within the time limitation, established by the Board of Directors when
it authorizes the offering.
10. CANCELLATION OF ELECTION TO PARTICIPATE. An employee who has elected to
participate in an Offering may, unless the employee has waived this
cancellation right at the time of such election in a manner established by
the Board of Directors, cancel such election as to all (but not part) of
the rights granted under such Offering by giving written notice of such
cancellation to the Company before the expiration of the Offering Period.
Any amounts paid by the employee for the Shares or withheld for the
purchase of Shares from the employee's compensation through payroll
deductions shall be paid to the employee, without interest, upon such
cancellation.
<PAGE> 27
VMARK SOFTWARE, INC.
EMPLOYEE STOCK PURCHASE PLAN
PAGE 4
11. TERMINATION OF EMPLOYMENT. Upon termination of employment for any reason,
including the death of the employee, before the date on which any rights
granted under the Plan are exercisable, all such rights shall immediately
terminate and amounts paid by the employee for the Shares or withheld for
the purchase of Shares from the employee's compensation through payroll
deductions shall be paid to the employee or to the employee's estate,
without interest.
12. EMPLOYEE'S RIGHTS AS STOCKHOLDER. No participating employee shall have any
rights as a stockholder in the Shares covered by a right granted hereunder
until such rights has been exercised, full payment has been made for the
corresponding Shares and the Share certificate is actually issued.
13. RIGHTS NOT TRANSFERABLE. Rights under the Plan are not assignable or
transferable by a participating employee and are exercisable only by the
employee.
14. AMENDMENTS TO OR DISCONTINUANCE OF THE PLAN. The Board of Directors may at
any time terminate or amend this Plan without notice and without further
action on the part of stockholders of the Company, provided:
(a) that no such termination or amendment shall adversely affect the then
existing rights of any participating employee;
(b) that any such amendment which:
(i) increases the number of Shares subject to the Plan (subject to
the provisions of Section 7);
(ii) changes the class of persons eligible to participate under the
Plan; or
(iii) materially increases the benefits accruing to participants under
the Plan
shall be subject to approval of the stockholders of the Company.
15. EFFECTIVE DATE AND APPROVALS. The Plan was initially adopted by the Board
of Directors on March 25, 1992 and became effective as of said date. It was
approved by the stockholders in April 1992. The Plan was subsequently
amended to increase the number of shares subject thereto, which increases
were approved by the stockholders. The Plan was amended on January 28, 1996
to extend its term, which amendment is subject to stockholder approval
prior to January 28, 1998. The Company's obligation to offer, sell and
deliver its Shares under the Plan after March 25, 1997 is subject to such
approval.
<PAGE> 28
VMARK SOFTWARE, INC.
EMPLOYEE STOCK PURCHASE PLAN
PAGE 5
16. TERM OF PLAN. No rights shall be granted under the Plan after March 25,
2007.
17. ADMINISTRATION OF THE PLAN. The Board of Directors or any committee or
persons to whom it delegates its authority (the "Administrator") shall
administer, interpret and apply all provisions of the Plan. The
Administrator may waive such provisions of the Plan as it deems necessary
to meet special circumstances not anticipated or covered expressly by the
Plan. Nothing contained in this Section shall be deemed to authorize the
Administrator to alter or administer the provisions of the Plan in a manner
inconsistent with the provisions of Section 423 of the Code.
Amended by the Board of Directors on January 28, 1997, subject to
stockholder approval prior to January 28, 1998.
