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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 1997 OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-20059
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VMARK SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2818132
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 WASHINGTON STREET 01581-1021
WESTBORO, MASSACHUSETTS (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (508) 366-3888
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
The number of shares outstanding of each of the registrant's classes of
common stock as of:
DATE CLASS OUTSTANDING SHARES
September 28, 1997 Common stock, $.01 par value 8,270,919
The index to the Exhibits appears on page 14
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VMARK SOFTWARE, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 28, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBERING IN
SEQUENTIAL NUMBERING SYSTEM
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of
September 28, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations
for the three and nine months ended September 28, 1997
and September 29, 1996 4
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 28, 1997 and September 29, 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
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PART I FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
VMARK SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 31,
1997 1996
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $21,038 $14,733
ACCOUNTS RECEIVABLE - NET 8,710 14,860
INCOME TAX RECEIVABLE 955 771
PREPAID EXPENSES, DEFERRED INCOME TAXES AND OTHER
CURRENT ASSETS 4,813 6,049
------- -------
TOTAL CURRENT ASSETS 35,516 36,413
------- -------
PROPERTY AND EQUIPMENT - NET 12,635 14,205
------- -------
LONG-TERM ASSETS:
INTANGIBLE ASSETS - NET 3,469 3,667
OTHER LONG-TERM ASSETS 5,780 5,692
------- -------
TOTAL LONG-TERM ASSETS 9,249 9,359
------- -------
TOTAL ASSETS $57,400 $59,977
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
LINE OF CREDIT $ - $ 1,462
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND CURRENT
PORTION OF LONG-TERM DEBT 7,520 9,385
ACCRUED MERGER AND RESTRUCTURING COSTS 2,044 5,546
DEFERRED REVENUE 7,154 5,738
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TOTAL CURRENT LIABILITIES 16,718 22,131
------- -------
LONG-TERM LIABILITIES:
OBLIGATIONS UNDER CAPITAL LEASES 8,851 9,015
STOCKHOLDERS' EQUITY:
STOCKHOLDERS' EQUITY 34,787 31,787
COST OF TREASURY STOCK (2,956) (2,956)
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TOTAL STOCKHOLDERS' EQUITY 31,831 28,831
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $57,400 $59,977
======= =======
</TABLE>
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VMARK SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPT. 28, SEPT. 29, SEPT. 28, SEPT. 29,
1997 1996 1997 1996
-----------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE:
SOFTWARE $ 7,228 $ 8,150 $23,128 $26,475
SERVICES AND OTHER 6,542 8,538 19,403 25,907
------- ------- ------- -------
TOTAL REVENUE 13,770 16,688 42,531 52,382
------- ------- ------- -------
COSTS AND EXPENSES:
COST OF SOFTWARE 1,003 1,321 2,968 3,657
COST OF SERVICES AND OTHER 2,929 4,628 9,713 13,756
SELLING AND MARKETING 5,452 6,349 17,515 19,640
PRODUCT DEVELOPMENT 1,755 2,216 5,267 6,890
GENERAL AND ADMINISTRATIVE 1,252 1,858 3,986 5,559
RESTRUCTURING COSTS - - - 2,125
------- ------- ------- -------
TOTAL COSTS AND EXPENSES 12,391 16,372 39,449 51,627
------- ------- ------- -------
INCOME FROM OPERATIONS 1,379 316 3,082 755
OTHER INCOME (EXPENSE) - NET 13 (129) (147) (331)
------- ------- ------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,392 187 2,935 424
PROVISION FOR INCOME TAXES 528 56 1,115 459
------- ------- ------- -------
NET INCOME (LOSS) $ 864 $ 131 $ 1,820 $ (35)
======= ======= ======= =======
NET INCOME PER COMMON SHARE $ 0.10 $ 0.02 $ 0.22 $ 0.00
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 8,743 8,363 8,460 8,099
======= ======= ======= =======
</TABLE>
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VMARK SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPT. 28, SEPT. 29,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ 1,820 $ (35)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 3,142 4,621
AMORTIZATION OF RESTRICTED STOCK AWARDS 21 14
DEFERRED INCOME TAXES 374 (120)
INCREASE (DECREASE) IN CASH FROM:
CURRENT ASSETS 7,266 1,900
CURRENT LIABILITIES (3,672) (2,550)
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CASH PROVIDED BY OPERATING ACTIVITIES 8,951 3,830
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CASH FLOWS FROM INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY AND EQUIPMENT - NET (621) (1,399)
EXPENDITURES FOR CAPITALIZED SOFTWARE COSTS (1,029) (1,525)
DECREASE (INCREASE) IN CASH SURRENDER VALUE OF
OFFICERS' LIFE INSURANCE AND DEPOSITS AND OTHER (461) 81
------- -------
CASH USED IN INVESTING ACTIVITIES (2,111) (2,843)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
BORROWINGS (REPAYMENTS) UNDER LINE-OF-CREDIT (1,462) 1,462
SALE OF COMMON STOCK 1,197 1,496
REPURCHASE OF COMMON STOCK - (2,956)
REPAYMENTS UNDER CAPITAL LEASE AND OTHER OBLIGATIONS (164) (192)
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CASH USED IN FINANCING ACTIVITIES (429) (190)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH (106) (70)
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INCREASE IN CASH AND EQUIVALENTS 6,305 727
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 14,733 12,267
------- -------
CASH AND EQUIVALENTS, END OF PERIOD $21,038 $12,994
======= =======
</TABLE>
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission regarding interim financial reporting.
They should be read in conjunction with the audited financial statements
included in the Company's Annual Report to Stockholders for the year ended
December 31, 1996.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements have been prepared on the same basis as
the audited consolidated financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the interim periods presented. The operating results for
the interim periods presented are not necessarily indicative of the results
which would be expected for the full year.
2. Income Per Common Share
Income per common share is computed using the weighted average number of
common and common equivalent shares outstanding during each period
presented. Common stock equivalents consist of stock options converted
using the treasury stock method and are included in the calculation only if
dilutive.
In March, 1997, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share,"
which the Company will adopt in the fourth quarter of 1997. Had SFAS No.
128 been effective for the quarters ended September 28, 1997 and September
29, 1996, reported earning per share on a pro forma basis would have been
as follows:
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 28, September 29, September 28, September 29,
1997 1996 1997 1996
Basic $0.11 $0.02 $0.22 $0.00
Diluted $0.10 $0.02 $0.21 $0.00
3. Income Taxes
The Company provides for income taxes at the end of each interim period
based on the estimated effective tax rate for the full fiscal year.
Cumulative adjustments to the tax provision are recorded in the interim
period in which a change in the estimated annual effective rate is
determined.
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4. Subsequent Events
On October 7, 1997, the Company entered into a definitive agreement (the
"Merger Agreement") to merge (the "Merger") with Unidata, Inc. ("Unidata").
The Merger is intended to be accounted for as a pooling-of-interests for
financial reporting purposes. Under the terms of the Merger Agreement,
stockholders of Unidata will receive 0.44765 shares of the Company's common
stock for each share of Unidata common stock they own at the time the
Merger is consummated. In connection with the execution of the Merger
Agreement, the Company or Unidata has agreed to pay a termination fee of
$3,000,000 to the other upon the occurrence of certain events involving a
termination of the Merger Agreement. In addition to the termination fee,
the Company has granted to Unidata the right to purchase up to 1,624,988
shares of the Company's common stock, including the associated rights under
the Company's Preferred Share Purchase Rights Plan (the "Plan"), at a price
of $9.87 per share upon the occurrence of certain events giving rise to
Unidata's right to receive a termination fee from the Company. Unidata has
granted to the Company the right to purchase up to 2,310,862 shares of the
Unidata's common stock at a price of $4.42 per share upon the occurrence of
certain events giving rise to the Company's right to receive a termination
fee from Unidata. The Merger is expected to be completed in December, 1997,
subject to adoption of the Merger Agreement and the Merger by the
stockholders of the Company and the stockholders of Unidata as well as the
satisfaction or waiver of certain customary closing conditions. The Company
expects to incur costs associated with the transaction and integration of
the business of approximately $13.0 million ($10.0 million net of related
tax effects). Such costs will be charged to expense upon consummation of
the Merger. Prior to the execution of the Merger Agreement, the Company
amended its Plan to exclude the significant stockholders of Unidata from
the definition of an acquiring person under the Plan, and thus avoiding the
issuance of shares in the Merger from being a triggering event under the
Plan.
5. Litigation
The Company is a defendant, together with certain of its officers, in two
actions initially filed in October 1995 in the U.S. District Court for the
District of Massachusetts. Those actions have been consolidated through the
filing of a Consolidated Amended Complaint (the "Complaint"). The
plaintiffs allege in the Complaint that the Company and certain of its
officers, during July through October 1995, made certain untrue statements
and failed to disclose certain information regarding the Company's
prospective financial performance in violation of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder and that such
statements and omissions artificially inflated the market prices of the
Company's stock. The plaintiffs purport to bring the actions on behalf of
certain classes of stockholders and seek damages in unspecified amounts.
The Company has denied the allegations in its answer to the Complaint and
the proceeding is now in the discovery stage. Based upon its review to
date, management of the Company believes that the actions are without merit
and plans to oppose them vigorously.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
VMARK SOFTWARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
RESULTS OF OPERATIONS
The following table sets forth certain data as a percentage of total revenue for
the three and nine months ended September 28, 1997 and September 29, 1996.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
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Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenue:
Software 52.5% 48.8% 54.4% 50.5%
Services and other 47.5 51.2 45.6 49.5
----- ----- ----- -----
Total revenue 100.0 100.0 100.0 100.0
----- ----- ----- -----
Costs and expenses:
Costs of software 7.3 7.9 7.0 7.0
Costs of services and other 21.3 27.7 22.8 26.3
Selling and marketing 39.6 38.1 41.2 37.5
Product development 12.7 13.3 12.4 13.2
General and administrative 9.1 11.1 9.4 10.6
Merger integration and
restructuring costs - - - 4.0
----- ----- ----- -----
Total costs and expenses 90.0 98.1 92.8 98.6
----- ----- ----- -----
Income (loss) from operations 10.0% 1.9% 7.2% 1.4%
===== ===== ===== =====
</TABLE>
REVENUE
The Company's total revenue decreased 17% to $13,770,000 in the third quarter of
1997 from $16,688,000 in the third quarter of 1996 and decreased 19% to
$42,531,000 in the first nine months of 1997 as compared to $52,382,000 in the
first nine months of 1996. This decrease in revenue is primarily due to the
Company having exited non-strategic and unprofitable businesses in the fourth
quarter of 1996, including the Object Studio product line.
Software revenue decreased 11% to $7,228,000 and 13% to $23,128,000 respectively
for the third quarter and first nine months of 1997 from the comparable periods
in 1996. This decrease is due primarily to the elimination of sales of the
Object Studio product line in connection with the exit of certain businesses
noted above offset by the increase in sales of DataStage, the Company's data
warehouse product. This decrease is also the result of the decline in the value
of overseas revenues due to the strengthening of the US dollar in 1997 as
approximately 40% of software revenue for all periods presented was contributed
from foreign operations. Software revenue increased to 53% and 54% of total
revenue for the three months and nine months ended September 28, 1997 from 49%
and 51% of total revenue for the corresponding periods of 1996.
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Services and other revenue, consisting of consulting, training, and maintenance,
declined 23% and 25% respectively for the quarter and nine months ended
September 28, 1997 from the same periods of the prior year. This decrease is due
to the elimination of Object Studio related consulting and maintenance services,
which represented approximately 45% of consulting revenue in the third quarter
of 1996, and the disposition of the Company's third-party education business.
Services and other revenue decreased as a percentage of total revenue to 48% in
the third quarter of 1997 from 51% in the third quarter of 1996. In the first
nine months of 1997, services and other revenue decreased to 46% of total
revenue compared to 50% in the first nine months of 1996. The decrease in
services and other revenue as a percentage of total revenue in the quarter and
nine-month period was a result of increases in data warehousing software
revenues and the discontinuation of services related to the Object Studio
products somewhat offset by a decrease in the associated product revenue.
COSTS OF SOFTWARE
Costs of software, which consist of amortization of technology licenses and
capitalized software, product royalties, product documentation, packaging, media
and production costs, decreased 24% to $1,003,000 for the third quarter of 1997
from $1,321,000 for the third quarter of 1996 and decreased 19% to $2,968,000
for the nine months ended September 28, 1997 from $3,657,000 for the comparable
period in the prior year. Cost of software as a percentage of license revenue
decreased to 14% for the three months ended September 28, 1997 from 16% in the
third quarter of 1996 and declined slightly from 14% to 13% for the nine-month
periods presented. This decrease in costs of software is due to the write-off of
certain intangible assets in connection with the restructuring and extraordinary
charges recorded in December, 1996.
COSTS OF SERVICES AND OTHER
Costs of services and other, which consist of consulting, training, and other
customer support service costs, decreased 37% to $2,929,000 for the third
quarter and decreased 29% to $9,713,000 for the first nine months of 1997 as
compared to the same periods of the prior year due to the elimination of Object
Studio related consulting and maintenance costs. Costs of services and other as
a percentage of services and other revenue decreased to 45% and 50% for the
quarter and nine months ended September 28, 1997, respectively, compared to 54%
and 53% for the comparable periods in 1996. The profit margin associated with
services and other revenue increased slightly in 1997 due to a change in the mix
of services and other revenue. A higher percentage of services and other revenue
in 1997 is comprised of customer maintenance support revenue which typically has
a higher profit margin than revenue derived from training and consulting
services.
SELLING AND MARKETING
Selling and marketing expenses, which consist primarily of sales organization
costs and marketing programs, increased to 40% of total revenue or $5,452,000
and 41% of total revenue or $9,713,000 in the quarter and nine months ended
September 28, 1997 respectively as compared to 38% of total revenue in the
comparable periods of the prior year. The percentage increase is due to the
increase in DataStage marketing and program activities and the increase in the
data warehouse sales force. These increases were slightly offset by savings
associated with the elimination of Object Studio marketing activities.
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PRODUCT DEVELOPMENT
Product development expenses, which consist primarily of salaries and related
benefits of development personnel and facility costs, decreased 21% to
$1,755,000 in the third quarter of 1997 and decreased 24% to $5,267,000 in the
first nine months of 1997, as compared to the same periods of the prior year.
Product development expenses as a percentage of revenue were 13% and 12% for the
quarter and nine months ended September 28, 1997 compared to 13% of revenue for
the third quarter and the first nine months of 1996. The relative flat levels of
spending in 1997 over 1996 is due to the cost savings associated with the
elimination of development efforts previously dedicated to the Object Studio
product offset by an increase in spending on data warehouse product development.
GENERAL AND ADMINISTRATIVE
General and administrative expenses include the costs of finance, human
resources, legal, information systems, and administrative departments of the
Company. General and administrative expenses decreased 33% in the third quarter
of 1997 to $1,252,000 from $1,858,000 in the comparable period in 1996. General
and administrative expenses decreased 28% to $3,986,000 in the nine months ended
September 28, 1997, as compared to the same periods of 1996. The cost savings in
the comparable periods reflects efficiencies gained from the elimination of
administrative costs associated with the Company's Germany subsidiary, which is
currently inactive as it had previously sold Object Studio products and
services, as well as, a decrease in the bad debt provision. General and
administrative expenses decreased to 9% of revenue for both the third quarter
and first nine months of 1997, compared to 11% of revenue for the comparable
periods of the previous year, respectively.
INCOME TAXES
The Company recorded provisions for income taxes of $528,000 and $1,115,000 for
the third quarter and first nine months of 1997 respectively compared to $56,000
and $459,000 for the same periods in 1996. The Company's effective tax rate of
38% for the third quarter and first nine months of 1997 represents an estimate
of the annual rate based on the anticipated composition of earnings in the
Company's various taxing juridictions.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations to date primarily through sales of equity
securities and positive cash flow from operations. As of September 28, 1997 the
Company had $21,038,000 in cash and cash equivalents and $18,798,000
($25,952,000 excluding deferred revenue, the satisfaction of which will have no
significant cash impact) in working capital. The Company has a working capital
line of credit with a bank under which the Company may borrow up to the lesser
of $10,000,000 or 80% of eligible accounts receivable, conditioned upon meeting
certain financial covenants, including maintaining specified levels of tangible
net worth, working capital and liquidity. The line of credit also limits the
Company's ability to pay dividends. As of September 28, 1997 the Company's
accessible line of credit was $4,600,000 of which no borrowings were
outstanding.
The Company believes that its available cash, anticipated cash generated from
operations based upon its operating plan, and amounts available under its credit
facilities will be sufficient to finance the Company's operations and meet its
foreseeable cash requirements at least for the next twelve months.
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During the quarter, the Company transferred its rights to certain accounts
receivable to a finance company in exchange for cash payments from the finance
company. Total cash received by the company in the three months ended September
28, 1997 under these arrangements totaled approximately $2,400,000.
The Company, together with a third-party leasing company, offers a leasing
program available to current and potential customers. Under the program,
customers are able to purchase VMARK products through operating and capital
leases with a third party lessor. All sales under this program are subject to
the Company's normal revenue recognition policies and are made without recourse
to the Company. Sales under the program in the nine months ended September 28,
1997 totaled approximately $1,536,000.
CAUTIONARY STATEMENT
When used anywhere in the Form 10-Q and in future filings by the Company with
the Securities and Exchange Commission, in the Company's press releases and in
oral statements made with the approval of an authorized executive officer of the
Company, the words or phrases "will likely result", "are expected to", "will
continue", "is anticipated", "estimated", "project", or "outlook" or similar
expressions (including confirmations by an authorized executive officer of the
Company of any such expressions made by a third party with respect to the
Company) are intended to identify "forward-looking statements," which speak only
as of the date made. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Such risks and
uncertainties are set forth below and in Part 1 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1996. The Company specifically
declines any obligation to release publicly the result of any revisions which
may be made to any forward-looking statements to reflect events or circumstances
occurring after the date of such statements.
FACTORS AFFECTING FUTURE RESULTS
The Company operates in a rapidly changing environment that involves a number of
risks, many of which are beyond the Company's control. The following discussion
highlights some of these risks.
The Company's future operating results may vary substantially from period to
period. The timing and amount of the Company's license fee revenues are subject
to a number of factors that make estimation of revenues and operating results
prior to the end of the quarter extremely uncertain. Quarterly fluctuations may
be caused by several factors including but not limited to timing of customer
orders, adjustments of delivery schedules to accommodate customer or regulatory
requirements, timing and level of international sales, mix of products sold, and
timing of level of expenditures for sales, marketing and new product
development. The Company generally ships its products upon receipt of orders and
maintains no significant backlog. The Company has experienced a pattern of
recording 60 percent to 80 percent of its quarterly revenues in the third month
of the quarter, with a concentration of such revenues in the last two weeks of
that third month. The Company's operating expenses are based on projected annual
and quarterly revenue levels and a substantial portion of the Company's costs
and expenses, including costs of personnel and facilities, cannot be easily
reduced. As a result, if projected revenues are not achieved in the
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expected time frame, the Company's results of operations for that quarter would
be adversely affected. Accordingly, the results of any one period may not be
indicative of the operating results for future periods.
The market price of the Company's common stock is highly volatile. Failure to
achieve revenue, earnings, and other operating and financial results as
forecasted or anticipated by analysts could result in an immediate adverse
effect on the market price of the Company's stock.
The Company currently derives a substantial portion of its total revenue from
its core database product, UniVerse. The Company's future results will depend,
to a significant extent, on continued market acceptance of this product as well
as market acceptance of new products, such as DataStage. Any factor adversely
affecting the market for these products would have a material adverse effect of
the Company's business and financial results.
The market for the Company's products is characterized by ongoing technological
developments and changes in customer requirements and industry standards. If the
Company is unable to develop and introduce new products or enhancements in a
timely manner in response to changing market conditions or customer requirements
or if errors are found in products after commercial shipments, the Company's
business and results of operations will be adversely affected.
Approximately 38% of the Company's total revenue in the quarter ending September
28, 1997 was attributable to international sales made through international
subsidiaries. Because a substantial portion of the Company's total revenue is
derived from such international operations, which are conducted in foreign
currencies, changes in the value of those currencies relative to the United
States dollar may affect the Company's results of operations and financial
position. If, for any reason, exchange or price controls or other restrictions
on the conversion of foreign currencies were imposed, the Company's business
could be adversely affected. Other potential risks inherent in the Company's
international business generally include longer payment cycles, greater
difficulties in accounts receivable collection and the burdens of complying with
a wide variety of foreign laws and regulations.
The market for application development software is intensely competitive. The
Company competes with many companies offering alternative solutions to the needs
addressed by the Company's products. Many of these competitors may have greater
financial, marketing, or technical resources than the Company and may be able to
adapt more quickly to new or emerging technologies and standards or changes in
customer requirements or to devote greater resources to the promotion and sale
of their products than the Company.
The proposed Merger presents certain additional risks which will be described in
detail in the proxy statement that the Company will distribute to the
stockholders in connection with the meeting and vote on the Merger.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant, together with certain of its officers, in two
actions initially filed in October 1995 in the U.S. District Court in the
District of Massachusetts. Those actions have been consolidated through the
filing of a Consolidated Amended Complaint (the "Complaint"). The plaintiffs
allege in the Complaint that the Company and certain of its officers, during
July through October 1995, made certain untrue statements and failed to disclose
certain information regarding the Company's prospective financial performance in
violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder and that such statements and omissions artificially inflated the
market prices of the Company's stock. The plaintiffs purport to bring the
actions on behalf of certain classes of stockholders and seek damages in
unspecified amounts. The Company has denied the allegations in its answer to the
Complaint and the proceeding is now in the discovery stages. Based upon its
review to date, management believes that the actions are without merit and plans
to oppose them vigorously.
ITEM 2. NONE
ITEM 3. NONE
ITEM 4. NONE
ITEM 5. NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1 Agreement and Plan of Merger and Reorganization dated as of
October 7, 1997 between the Company and Unidata, Inc.
2.2 Amendment to Agreement and Plan of Merger and Reorganization
Dated as of November 7, 1997 between the Company and
Unidata, Inc.
4.2 First Amendment to Rights Agreement dated as of September
30, 1997 between the Company and State Street Bank and Trust
Company, as Rights Agent.
10.38 Second Loan Modification Agreement to the Loan and Security
Agreement (dated May 3, 1996) and the First Amendment to the
Amended and Restated Promissory Note (dated May 3, 1996),
dated September 9, 1997 between the Company and Silicon
Valley Bank.
21.1 Subsidiaries of the Company
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
The Company did not file a report on Form 8-K during the quarter
ended September 28, 1997.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
VMARK Software, Inc.
(Registrant)
Dated: November 10, 1997 /s/ Peter Gyenes
---------------------------------------
Peter Gyenes
President and Chief Executive Officer
(principal executive officer)
Dated: November 10, 1997 /s/ Charles F. Kane
---------------------------------------
Charles F. Kane
Executive Vice President, Finance,
Chief Financial Officer and Treasurer
(principal finance and accounting
officer)
14
<PAGE> 1
EXHIBIT 2.1.1
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND BETWEEN
VMARK SOFTWARE, INC.
and
UNIDATA, INC.
Dated as of October 7, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE MERGER.................................................................. 2
Section 1.01. Merger; Effective Time................................................ 2
Section 1.02. Closing............................................................... 2
Section 1.03. Effect of the Merger.................................................. 2
Section 1.04. Certificate of Incorporation; By-laws................................. 3
Section 1.05. Directors and Officers................................................ 3
Section 1.06. Effect on Capital Stock............................................... 3
Section 1.07. Exchange of Certificates.............................................. 4
Section 1.08. Stock Transfer Books.................................................. 6
Section 1.09. Dissenting Shares..................................................... 6
Section 1.10. No Further Ownership Rights in UNIDATA Common Stock................... 7
Section 1.11. Lost, Stolen or Destroyed Certificates................................ 7
Section 1.12. Tax and Accounting Consequences....................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF UNIDATA.................................. 7
Section 2.01. Organization.......................................................... 7
Section 2.02. Capitalization........................................................ 8
Section 2.03. Qualification in Foreign Jurisdictions................................ 8
Section 2.04. Authority Relative to this Agreement.................................. 9
Section 2.05. No Conflict: Required Filings and Consents............................ 9
Section 2.06. Compliance; Permits................................................... 10
Section 2.07. Financial Statements.................................................. 10
Section 2.08. Absence of Certain Changes or Events.................................. 10
Section 2.09. Material Contracts.................................................... 11
Section 2.10. Accounts Receivable................................................... 12
Section 2.11. No Undisclosed Liabilities............................................ 12
Section 2.12. Absence of Litigation................................................. 12
Section 2.13. Employee Benefit Plans; Employment Agreements......................... 12
Section 2.14. Labor Matters......................................................... 15
Section 2.15. Restrictions on Business Activities................................... 15
Section 2.16. Real Property......................................................... 16
Section 2.17. Taxes................................................................. 16
Section 2.18. Environmental Matters................................................. 19
Section 2.19. Brokers............................................................... 19
Section 2.20. Intellectual Property................................................. 19
Section 2.21. Interested Party Transactions......................................... 22
Section 2.22. Insurance............................................................. 22
Section 2.23. Vote Required......................................................... 22
Section 2.24. Pooling Matters....................................................... 22
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 2.25. Other Negotiations.................................................... 22
Section 2.26. Full Disclosure....................................................... 22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF VMARK................................... 23
Section 3.01. Organization.......................................................... 23
Section 3.02. Capitalization........................................................ 24
Section 3.03. Qualification in Foreign Jurisdictions................................ 24
Section 3.04. Authority Relative to this Agreement.................................. 24
Section 3.05. No Conflict: Required Filings and Consents............................ 25
Section 3.06. Compliance; Permits................................................... 25
Section 3.07. SEC Filings........................................................... 26
Section 3.08. Financial Statements.................................................. 26
Section 3.09. Absence of Certain Changes or Events.................................. 26
Section 3.10. Material Contracts.................................................... 27
Section 3.11. Accounts Receivable................................................... 28
Section 3.12. No Undisclosed Liabilities............................................ 28
Section 3.13. Absence of Litigation................................................. 28
Section 3.14. Employee Benefit Plans; Employment Agreements......................... 28
Section 3.15. Labor Matters......................................................... 31
Section 3.16. Restrictions on Business Activities................................... 31
Section 3.17. Real Property......................................................... 31
Section 3.18. Taxes................................................................. 32
Section 3.19. Environmental Matters................................................. 34
Section 3.20. Brokers............................................................... 34
Section 3.21. Intellectual Property................................................. 34
Section 3.22. Interested Party Transactions......................................... 37
Section 3.23. Insurance............................................................. 37
Section 3.24. Vote Required......................................................... 37
Section 3.25. Pooling Matters....................................................... 37
Section 3.26. Opinion of Financial Advisor.......................................... 37
Section 3.27. Other Negotiations.................................................... 37
Section 3.28. Full Disclosure....................................................... 37
Section 3.29. Rights Plan; Antitakeover Law......................................... 38
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER..................................... 38
Section 4.01. Conduct of Business by UNIDATA and VMARK Pending the Merger........... 38
Section 4.02. No Solicitation by UNIDATA or VMARK................................... 41
ARTICLE V ADDITIONAL AGREEMENTS....................................................... 42
Section 5.01. Joint Proxy Statement/Prospectus; Registration Statement.............. 42
Section 5.02. Stockholders' Meetings................................................ 43
Section 5.03. Access to Information: Confidentiality................................ 43
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 5.04. Consents, Approvals................................................... 43
Section 5.05. Stock Options......................................................... 43
Section 5.06. Warrants.............................................................. 44
Section 5.07. Notification of Certain Matters....................................... 45
Section 5.08. Further Action/Tax Treatment.......................................... 45
Section 5.09. Public Announcements.................................................. 45
Section 5.10. Quotation of VMARK Common Stock on Nasdaq............................. 46
Section 5.11. Accountant's Comfort Letters.......................................... 46
Section 5.12. Pooling Accounting Treatment.......................................... 46
Section 5.13. Indemnification; Directors' and Officers' Insurance................... 46
Section 5.14. Employee Benefits..................................................... 47
Section 5.15. Name of the Surviving Corporation..................................... 47
Section 5.16. Stockholder Litigation................................................ 48
Section 5.17. Consents.............................................................. 48
Section 5.18. Registration Rights................................................... 48
Section 5.19. Fairness Opinion; Restructuring....................................... 48
ARTICLE VI CONDITIONS TO THE MERGER................................................... 48
Section 6.01. Conditions to Obligation of Each Party to Effect the Merger........... 48
Section 6.02. Additional Conditions to Obligation of VMARK.......................... 49
Section 6.03. Additional Conditions to Obligation of UNIDATA........................ 49
ARTICLE VII TERMINATION............................................................... 50
Section 7.01. Termination........................................................... 50
Section 7.02. Effect of Termination................................................. 52
Section 7.03. Fees and Expenses..................................................... 52
ARTICLE VIII GENERAL PROVISIONS....................................................... 54
Section 8.01. Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc................................................................... 54
Section 8.02. Notices............................................................... 54
Section 8.03. Certain Definitions................................................... 55
Section 8.04. Amendment............................................................. 56
Section 8.05. Waiver................................................................ 57
Section 8.06. Severability.......................................................... 57
Section 8.07. Entire Agreement...................................................... 57
Section 8.08. Assignment............................................................ 57
Section 8.09. Parties in Interest................................................... 57
Section 8.10. Failure or Indulgence Not Waiver; Remedies Cumulative................. 57
Section 8.11. Governing Law......................................................... 58
Section 8.12. Counterparts.......................................................... 58
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
SCHEDULE
- --------
<C> <S>
1.05 Officers and Directors of Surviving Corporation
2.01(b) Subsidiaries
2.02 Capitalization; Stock Options
2.03 Qualification in Foreign Jurisdictions
2.05(a) Conflicts, Required Filings and Consents
2.06(a) Compliance
2.06(b) List of Licenses, Permits and Authorizations
2.08(b) Certain Changes or Events
2.09(a) UNIDATA Material Contracts
2.11 Undisclosed Liabilities
2.12 UNIDATA Litigation
2.13(a) List of Employee Benefit Plans
2.13(b) Matters Concerning Employee Benefit Plans
2.13(c) List of Outstanding Options and Option Holders
2.13(d) Certain Employment Agreements
2.14 Labor Matters
2.15 Restrictions on Business Activities
2.16(a) Real Property Owned by UNIDATA
2.16(b) Real Property Leased by UNIDATA
2.17(b) Tax Returns
2.17(c) Certain Tax Matters
2.18 Environmental Matters
2.20(a) List of UNIDATA Intellectual Property Rights
2.20(b) Certain Intellectual Property Rights Matters
2.20(d) Source Code
2.20(f) Protection of UNIDATA Intellectual Property Rights
2.20(g) Royalties
2.21 Interested Party Transactions
2.22 Insurance
2.25 UNIDATA's Other Negotiations
3.01(b) Subsidiaries
3.02 Capitalization; Stock Options
3.05(a) Conflicts, Required Filings and Consents
3.06(a) Compliance
3.06(b) List of Licenses, Permits and Authorizations
3.09 Certain Changes or Events
3.10(a) VMARK Material Contracts
3.12 Undisclosed Liabilities
3.13 VMARK Litigation
3.14(a) List of Employee Benefit Plans
3.14(b) Matters Concerning Employee Benefit Plans
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
SCHEDULE
- --------
<C> <S>
3.14(c) List of Outstanding Options and Option Holders
3.14(d) Certain Employment Agreements
3.15 Labor Matters
3.16 Restrictions on Business Activities
3.17(a) Real Property Owned by VMARK
3.17(b) Real Property Leased by VMARK
3.18(a) Tax Returns
3.18(b) Certain Tax Matters
3.19 Environmental Matters
3.21(a) List of VMARK Intellectual Property Rights
3.21(b) Certain Intellectual Property Rights Matters
3.21(d) Source Code
3.21(f) Protection of VMARK Intellectual Property Rights
3.21(g) Royalties
3.22 Interested Party Transactions
3.23 Insurance
3.27 VMARK's Other Negotiations
4.01 Permitted Transaction
5.14(d) Executives Provided Split-Dollar Insurance
</TABLE>
v
<PAGE> 7
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
SECTION
----------
<S> <C>
Acquisition Proposal............................................................. 4.02(a)
Affiliates....................................................................... 8.03(a)
Agreement........................................................................ Preamble
Articles of Merger............................................................... 1.01
Authorizations................................................................... 2.06(b)
Beneficial Owner................................................................. 8.03(b)
Blue Sky Laws.................................................................... 2.05(b)
Business Day..................................................................... 8.03(c)
Cancelled Shares................................................................. 1.06(b)
Certificate of Merger............................................................ 1.01
Certificates..................................................................... 1.07(b)
Code............................................................................. Recitals
Colorado Law..................................................................... Recitals
Confidentiality Agreements....................................................... 5.03
Control.......................................................................... 8.03(d)
Delaware Law..................................................................... Recitals
Dissenting Shares................................................................ 1.09(a)
Effective Time................................................................... 1.01
ERISA............................................................................ 2.13(a)
Escrow Agents.................................................................... 1.07(g)
Escrow Agreement................................................................. 1.07(g)
Escrowed Shares.................................................................. 1.07(g)
Exchange Act..................................................................... 2.09(a)
Exchange Agent................................................................... 1.07(a)
Exchange Ratio................................................................... 1.06(a)
Group Health Plan................................................................ 5.14(c)
Injunction....................................................................... 6.01(c)
ISO.............................................................................. 2.13(c)
Joint Proxy Statement/Prospectus................................................. 2.26(b)
Lost Certificate................................................................. 1.11
Material Adverse Effect.......................................................... 8.03(e)
Merger........................................................................... Recitals
Merger Consideration............................................................. 1.07(b)
O2............................................................................... 4.01
O2 Transaction................................................................... 4.01
Outside Date..................................................................... 7.01(b)
Person........................................................................... 8.03(f)
Registration Statement........................................................... 5.01
SEC.............................................................................. 2.09(a)
Securities Act................................................................... 2.05(b)
Share............................................................................ 1.06(a)
Stock Option..................................................................... 5.05(a)
Stock Option Agreements.......................................................... Recitals
Stockholders' Meetings........................................................... 2.25(b)
Subsidiary....................................................................... 8.03(g)
Surviving Corporation............................................................ 1.01
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
SECTION
----------
<S> <C>
Tax.............................................................................. 2.17(a)
Tax Returns...................................................................... 2.17(a)
Terminating Breach............................................................... 7.01(e)
UNIDATA.......................................................................... Preamble
UNIDATA Balance Sheet............................................................ 2.07(a)
UNIDATA Class A Common Stock..................................................... 1.06(a)
UNIDATA Class B Common Stock..................................................... 1.06(a)
UNIDATA Common Stock............................................................. 1.06(a)
UNIDATA Documentation............................................................ 2.20(a)
UNIDATA Employee Plans........................................................... 2.13(a)
UNIDATA ERISA Affiliate.......................................................... 2.13(a)
UNIDATA Intellectual Property Rights............................................. 2.20(a)
UNIDATA Material Contracts....................................................... 2.09(a)
UNIDATA software................................................................. 2.20(a)
UNIDATA Stock Option Plans....................................................... 5.05
UNIDATA Stockholder Support Agreement............................................ Recitals
UNIDATA Stockholders' Meeting.................................................... 2.26(b)
UNIDATA Stock Option Agreement................................................... Recitals
UNIDATA Third Party Intellectual Property Rights................................. 2.20(a)
VMARK............................................................................ Preamble
VMARK Authorizations............................................................. 3.06(b)
VMARK Certificates............................................................... 1.07(b)
VMARK Common Stock............................................................... 1.06(a)
VMARK Documentation.............................................................. 3.12(a)
VMARK Employee Plans............................................................. 3.14(a)
VMARK ERISA Affiliate............................................................ 3.14(a)
VMARK Intellectual Property Rights............................................... 3.21(a)
VMARK Material Contracts......................................................... 3.10(a)
VMARK Rights Plan................................................................ 3.29
VMARK SEC Reports................................................................ 3.07(a)
VMARK Software................................................................... 3.12(a)
VMARK Stockholders' Meeting...................................................... 2.26(b)
VMARK Stockholder Support Agreement.............................................. Recitals
VMARK Stock Option Agreement..................................................... Recitals
VMARK Third Party Intellectual Property Rights................................... 3.21(a)
</TABLE>
vii
<PAGE> 9
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of October 7,
1997 (this "Agreement"), between VMARK SOFTWARE, INC., a Delaware corporation
("VMARK"), and UNIDATA, INC., a Colorado corporation ("UNIDATA").
WITNESSETH:
WHEREAS, the Boards of Directors of VMARK and UNIDATA have determined that
it is advisable and in the best interests of their respective stockholders for
VMARK and UNIDATA to enter into a strategic business combination upon the terms
and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of VMARK has received an opinion from Volpe
Brown Whelan & Company, LLC, that the consideration to be paid in the Merger is
fair, from a financial point of view, to the stockholders of VMARK; and
WHEREAS, in furtherance of such combination, the Boards of Directors of
VMARK and UNIDATA have each approved the merger (the "Merger") of UNIDATA with
and into VMARK in accordance with the applicable provisions of the Delaware
General Corporation Law (the "Delaware Law") and the Colorado Business
Corporation Act (the "Colorado Law") and upon the terms and subject to the
conditions set forth herein; and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to each of UNIDATA's and VMARK's willingness to
enter into this Agreement, UNIDATA and VMARK have entered into (i) a Stock
Option Agreement dated as of the date of this Agreement and attached hereto as
Exhibit A (the "UNIDATA Stock Option Agreement"), pursuant to which VMARK
granted UNIDATA an option to purchase shares of common stock of VMARK under
certain circumstances, and (ii) a Stock Option Agreement dated as of the date of
this Agreement and attached hereto as Exhibit B (the "VMARK Stock Option
Agreement" and, together with the UNIDATA Stock Option Agreement, the "Stock
Option Agreements"), pursuant to which UNIDATA granted VMARK an option to
purchase shares of common stock of UNIDATA under certain circumstances; and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to each of UNIDATA's and VMARK's willingness to
enter into this Agreement, (i) certain stockholders of UNIDATA have entered into
Stockholder Support Agreements with VMARK dated as of the date of this
Agreement, (collectively, the "UNIDATA Stockholder Support Agreement"), pursuant
to which such stockholders have agreed, among other things, to vote all voting
securities of UNIDATA beneficially owned by them in favor of adoption of the
Merger and (ii) certain stockholders of VMARK have entered into a Stockholder
Support Agreement with UNIDATA dated as of the date of this Agreement, (the
"VMARK Stockholder Support Agreement"), pursuant to which such stockholders have
agreed, among other things, to vote all voting securities of VMARK beneficially
owned by them in favor of adoption of the Merger; and
WHEREAS, VMARK and UNIDATA intend this Agreement to be a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder; and
WHEREAS, for financial accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests transaction;
I-1
<PAGE> 10
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, VMARK and UNIDATA hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.01. Merger; Effective Time. At the Effective Time (as defined
below), and subject to and upon the terms and conditions of this Agreement, the
Delaware Law and the Colorado Law, UNIDATA shall be merged with and into VMARK
and VMARK shall continue as the surviving corporation. VMARK as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation." As promptly as practicable after the satisfaction or
waiver, as the case may be, of the conditions set forth in Article VI, UNIDATA
and VMARK shall cause the Merger to be consummated by filing (a) a certificate
of merger as contemplated by Section 252 of the Delaware Law (the "Certificate
of Merger"), together with any required related instruments, with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the applicable provisions of, the Delaware Law, and (b) articles
of merger as contemplated by Section 7-111-105 of the Colorado Law (the
"Articles of Merger"), together with any required related instruments, with the
Secretary of State of Colorado, in such form as required by, and executed in
accordance with the applicable provisions of, the Colorado Law (the time of the
later of such filings being referred to herein as the "Effective Time").
Section 1.02. Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.01, and subject to the satisfaction or waiver of all the conditions
set forth in Article VI, the consummation of the Merger shall take place as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VI, at the offices
of Choate, Hall & Stewart, Exchange Place, 53 State Street, Boston,
Massachusetts, unless another time or place is agreed to in writing by UNIDATA
and VMARK.
Section 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger,
the applicable provisions of the Delaware law, the Articles of Merger and the
applicable provisions of the Colorado Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of UNIDATA shall vest in the Surviving
Corporation, and all debts, liabilities and duties of UNIDATA shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.04. Certificate of Incorporation; By-laws.
(a) Certificate of Incorporation. The Certificate of Incorporation of
VMARK, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with the Delaware Law and said Certificate of
Incorporation except that said Certificate of Incorporation shall be
amended as of the Effective Time (i) to increase the number of shares of
VMARK Common Stock to 40,000,000 and (ii) to change its name if a name is
selected pursuant to Section 5.15 hereof.
(b) By-laws. The By-laws of VMARK, as in effect immediately prior to
the Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended in accordance with the Delaware Law, the Certificate of
Incorporation of the Surviving Corporation and said By-laws except that
said By-laws shall be amended as of the Effective Time to establish
separate corporate executive positions for the President and Chief
Executive Officer, the duties of such officers to be determined by the
directors of the Surviving Corporation after the Effective Time.
I-2
<PAGE> 11
Section 1.05. Directors and Officers.
(a) VMARK shall cause (i) the directors comprising the full Board of
Directors of VMARK immediately prior to the Effective Time to consist of
six persons, of whom three shall be designated by VMARK and three shall be
designated by UNIDATA, (ii) each Committee of the Board of Directors of
VMARK immediately prior to the Effective Time to be composed of an equal
number of directors designated by UNIDATA and by VMARK and, (iii) each
class of directors of VMARK immediately prior to the Effective Time to
consist of one designee of VMARK and one of UNIDATA, as designated by the
respective parties. The initial directors and committees of the Surviving
Corporation shall be the directors (each of whom shall retain his current
term) and committees of VMARK designated and elected or appointed pursuant
to the preceding sentence.
Immediately prior to the Effective Time, VMARK shall cause the persons
listed on Schedule 1.05(b) to be named officers of VMARK, holding the positions
herein indicated; provided, that if any such person is unwilling or unable to
serve in such position, such position shall remain unfilled unless and until
VMARK and UNIDATA agree on a replacement. The initial officers of the Surviving
Corporation shall be the officers elected pursuant to the preceding sentence.
Section 1.06. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of VMARK or UNIDATA or the holders
of any securities issued by either of them:
(a) Conversion of UNIDATA Common Stock. Each share (a "Share") of
UNIDATA's Class A common stock, no par value (the "UNIDATA Class A Common
Stock") and Class B Common Stock, no par value (the "UNIDATA Class B Common
Stock" and together with the UNIDATA Class A Common Stock, the "UNIDATA
Common Stock"), issued and outstanding immediately prior to the Effective
Time (excluding any Shares to be canceled pursuant to Section 1.06(b) and
any Dissenting Shares, as defined in Section 1.09) shall be converted,
subject to Sections 1.06(d) and 1.07(f) and (g), into the right to receive
0.44765 shares (the "Exchange Ratio") of validly issued, fully paid and
nonassessable shares of VMARK common stock, $.01 par value per share
("VMARK Common Stock") and a pro rata right under the VMARK Rights Plan (as
defined Section 3.29).
(b) Cancellation of UNIDATA Common Stock. Each Share held in the
treasury of UNIDATA and each Share owned by any direct or indirect
subsidiary of UNIDATA immediately prior to the Effective Time (the
"Cancelled Shares") shall, by virtue of the Merger and without any action
on the part of the holder thereof, cease to be outstanding and be canceled
and retired without payment of any consideration therefor.
(c) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any subdivision, combination, stock
dividend (including any dividend or distribution of securities convertible
into VMARK Common Stock or UNIDATA Common Stock), reorganization,
recapitalization or similar capital change with respect to VMARK Common
Stock or UNIDATA Common Stock occurring after the date hereof and prior to
the Effective Time, other than in connection with UNIDATA's consummation of
the O2 Acquisition (as defined in Section 4.01).
(d) Fractional Shares. No fraction of a share of VMARK Common Stock
shall be issued, but in lieu thereof each holder of UNIDATA Common Stock
who would otherwise be entitled to a fraction of a share of VMARK Common
Stock (after aggregating all fractional shares of VMARK Common Stock to be
received by such holder and providing for any amounts or shares to be
withheld or delivered into escrow pursuant to Section 1.07(f) and (g), it
being the intention of the parties that no holder of UNIDATA Common Stock
will receive cash in an amount equal to or greater than the value of one
full share of VMARK Common Stock) shall receive from VMARK an amount of
cash (rounded to the nearest cent), without interest, equal to the product
of (i) such fraction, multiplied by (ii) the closing price of VMARK Common
Stock on the Nasdaq National Market on the date of the Effective Time.
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<PAGE> 12
Section 1.07. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, VMARK shall supply, or
shall cause to be supplied, to or for the account of a bank or trust
company to be designated by VMARK (the "Exchange Agent"), in trust for the
benefit of the holders of UNIDATA Common Stock (other than Dissenting
Shares and Cancelled Shares), for exchange in accordance with this Section
1.07, certificates evidencing the VMARK Common Stock issuable pursuant to
Section 1.06 in exchange for outstanding Shares and all cash required to be
paid pursuant to Sections 1.06(d) and 1.07(c).
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, VMARK shall instruct the Exchange Agent to mail to each
holder of record of a certificate or certificates (the "Certificates")
which immediately prior to the Effective Time evidenced outstanding Shares,
other than Dissenting Shares and Cancelled Shares, (i) a letter of
transmittal, which letter shall specify, among other conditions, that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent, and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing shares of VMARK Common Stock (the
"VMARK Certificates") and, in lieu of any fractional shares thereof, cash.
Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such other
customary documents as may be reasonably required by VMARK or the Exchange
Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor (A) VMARK Certificates evidencing that whole number of
shares of VMARK Common Stock which such holder has the right to receive in
respect of the Shares formerly evidenced by such Certificate in accordance
with the Exchange Ratio and the other applicable provisions hereof,
together with an equal number of rights under the VMARK Shareholder Rights
Plan, (B) any dividends or other distributions to which such holder is
entitled pursuant to Section 1.07(c), and (C) cash in lieu of fractional
VMARK Common Stock to which such holder is entitled pursuant to Section
1.06(d) (such VMARK Common Stock, rights, dividends, distributions and cash
in lieu of fractional shares together with any amounts or shares to be
withheld or delivered into escrow pursuant to Sections 1.07(f) and (g)
being collectively referred to as the "Merger Consideration"), and the
Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Shares which is not registered in the transfer
records of UNIDATA as of the Effective Time, VMARK Common Stock and cash
may be issued and paid in accordance with this Article I to a transferee if
the Certificate evidencing such Shares is presented to the Exchange Agent,
accompanied by all documents required by law to evidence and effect such
transfer pursuant to this Section 1.07(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate which, prior to the Effective Time, represented
shares of UNIDATA Common Stock, shall be deemed from and after the
Effective Time, for all corporate purposes other than the payment of
dividends, to evidence the ownership of the number of full shares of VMARK
Common Stock into which such shares of UNIDATA Common Stock may be
exchanged in accordance herewith and the right to receive an amount in cash
in lieu of the issuance of any fractional shares in accordance with Section
1.06(d).
(c) Distributions With Respect to Unexchanged UNIDATA Common
Stock. No dividends or other distributions with respect to VMARK Common
Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the VMARK Common
Stock such holder is entitled to receive until such holder shall surrender
such Certificate. Subject to applicable law, following the surrender of any
such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of VMARK Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of VMARK
Common Stock.
(d) Transfers of Ownership. If any certificate evidencing shares of
VMARK Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall have paid to VMARK, or any agent
designated by VMARK, any transfer or other taxes required by
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reason of the issuance of a certificate for shares of VMARK Common Stock in
any name other than that of the registered holder of the Certificate
surrendered.
(e) No Liability. VMARK and UNIDATA shall have no liability to any
holder of UNIDATA Common Stock for any Merger Consideration (or dividends
or distributions with respect thereto) which are delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(f) Withholding Rights. VMARK or the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable to
any holder of UNIDATA Common Stock such amounts as VMARK or the Exchange
Agent may be required to deduct and withhold with respect to any provision
of Federal, state, local or foreign tax laws. To the extent that amounts
are so withheld by VMARK or the Exchange Agent, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made by VMARK or the Exchange Agent.
(g) Escrowed Shares. As of the Effective Time, VMARK shall issue
50,000 shares of VMARK Common Stock (the "Escrowed Shares") and deliver a
certificate or certificates therefor to Choate, Hall & Stewart (the "Escrow
Agent") to be held and distributed in accordance with an agreement
substantially in the form of Exhibit C (the "Escrow Agreement"). The
Escrowed Shares shall be deemed to be part of the Merger Consideration and
shall be allocated pro rata in accordance with the number of outstanding
shares immediately prior to the Effective Time among the holders of UNIDATA
Class A Common Stock and Class B Common Stock (treating shares of each
class equally), other than holders of Dissenting Shares. In the event the
Escrow Agent declines or is unable to serve prior to the Closing, it shall
be succeeded by such person or entity, as VMARK and UNIDATA shall agree.
Section 1.08. Stock Transfer Books. At the Effective Time, the stock
transfer books of UNIDATA shall be closed, and there shall be no further
registration of transfers of UNIDATA Common Stock on the records of UNIDATA.
Section 1.09. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of UNIDATA Common Stock held by a holder who has exercised
appraisal rights for such shares in accordance with the applicable
provisions of the Colorado Law and who, as of the Effective Time, has not
effectively withdrawn or lost such appraisal rights (the "Dissenting
Shares"), shall not be converted into, or represent a right to receive, the
Merger Consideration pursuant to Section 1.06, but the holder thereof shall
be entitled only to such rights as are granted by the Colorado Law with
respect to the Dissenting Shares.
(b) Notwithstanding the provisions of Section 1.09(a), if any holder
of Dissenting Shares shall effectively withdraw or lose (through failure to
perfect such rights or otherwise) such holder's appraisal rights, then, as
of the later of Effective Time or the occurrence of such withdrawal or
loss, such holder's shares shall automatically be converted into and
represent only the right to receive the Merger Consideration, without
interest thereon, upon surrender of the Certificate or Certificates in
accordance with the terms hereof.
(c) UNIDATA shall give VMARK prompt written notice of any demands
received by UNIDATA to require UNIDATA to purchase Dissenting Shares, the
withdrawal of any such demands, and any other notices or instruments served
pursuant to the Colorado Law and received by UNIDATA. UNIDATA shall not,
except with the prior written consent of VMARK, voluntarily make any
payment with respect to any Dissenting Shares or offer to settle, or
settle, any such demands with respect thereto.
Section 1.10. No Further Ownership Rights in UNIDATA Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been delivered in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares which were outstanding
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immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article I.
Section 1.11. Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed (a "Lost Certificate"),
the Exchange Agent shall, upon the making of an affidavit of that fact by the
registered owner thereof, deliver to such owner such Merger Consideration as may
be required pursuant to Section 1.06; provided, however, that VMARK may, in its
sole discretion and as a condition precedent to the delivery thereof, require
the registered owner of such Lost Certificate to deliver a bond in such sum as
it may reasonably direct as indemnity against any claim that may be made against
VMARK or the Exchange Agent with respect to the Lost Certificate.
Section 1.12. Tax and Accounting Consequences. It is intended by VMARK and
UNIDATA that the Merger shall (i) constitute a reorganization within the meaning
of Section 368(a) of the Code, and (ii) qualify for accounting treatment as a
pooling of interests. VMARK and UNIDATA hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF UNIDATA
UNIDATA hereby represents and warrants to VMARK that the following is true
and complete as of the date hereof:
Section 2.01. Organization.
(a) UNIDATA is a corporation duly organized, validly existing and in
good standing under the laws of Colorado. UNIDATA has full corporate power
and authority to own, lease and operate its properties and to carry on its
business as such business is now conducted and proposed to be conducted.
The copies of the Articles of Incorporation of UNIDATA, certified by the
Secretary of State of Colorado, and the By-laws of UNIDATA which have been
delivered to VMARK by UNIDATA are true and complete copies thereof.
(b) Subsidiaries. Except as set forth on Schedule 2.01(b), UNIDATA
has no subsidiaries and does not, directly or indirectly, own or have the
contractual right or obligation to acquire any equity interest in any other
corporation, partnership, joint venture, trust or other business
organization. Except as set forth on Schedule 2.01(b), UNIDATA is the
record and beneficial owner of all of the capital stock of each of the
corporations owned by it listed on Schedule 2.01(b), and there are no
outstanding options, warrants, convertible or exchangeable securities or
other rights that would obligate UNIDATA to issue shares of capital stock
in any of its subsidiaries. All shares of the capital stock of UNIDATA's
subsidiaries are duly authorized, validly issued, fully paid and
non-assessable, and all of such shares are owned by UNIDATA free and clear
of all security interests, liens, claims, pledges, agreements, limitations
of UNIDATA's voting rights, charges or other encumbrances of any nature
whatsoever. Except as disclosed on Schedule 2.02, UNIDATA has not made any
investment in, loan to, or advance of cash or other extension of credit to
any person other than in the ordinary course of its business.
Section 2.02. Capitalization. The authorized capital stock of UNIDATA
consists of 40,000,000 shares of UNIDATA Class A Common Stock, of which
11,662,430 shares are currently issued and outstanding, 3,000,000 shares of
UNIDATA Class B Common Stock, of which 500,000 shares are currently issued and
outstanding and 10,000,000 shares of Preferred Stock, no par value per share, of
which none are currently issued or outstanding. UNIDATA's issued and outstanding
shares of capital stock are held as set forth on Schedule 2.02. All of the
outstanding shares of capital stock of UNIDATA have been duly authorized, are
validly issued, fully paid and non-assessable, and the holders thereof are not
entitled to cumulative voting rights or preemptive rights. Except as set forth
on Schedule 2.02, there are no obligations, contingent or otherwise, of UNIDATA
or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares
of UNIDATA Common Stock or the capital stock of any subsidiary or to provide
funds to or make any
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investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. Except as set
forth on Schedule 2.02 or Schedule 2.13(c), there are no outstanding options to
purchase or warrants, privileges or rights to subscribe to or purchase any
shares of UNIDATA's capital stock or securities issued by UNIDATA convertible
into or exchangeable for shares of UNIDATA's capital stock or other securities
of UNIDATA or commitments, understandings or intentions to issue any additional
shares or options, warrants, privileges or rights to subscribe for shares of
UNIDATA's capital stock.
Section 2.03. Qualification in Foreign Jurisdictions. Except as set forth
in Schedule 2.03, UNIDATA and each of its subsidiaries is duly qualified or
licensed and in good standing as a foreign corporation duly authorized to do
business in each jurisdiction in which the character of the properties owned or
leased or the nature of the activities conducted by it makes such qualification
or licensing necessary, except for any jurisdiction(s) in which the failure to
so qualify would not have a material adverse effect upon UNIDATA.
Section 2.04. Authority Relative to this Agreement. UNIDATA has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by UNIDATA and
the consummation by UNIDATA of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of UNIDATA (other than the approval and
adoption of the Merger by the holders of at least a majority of the outstanding
shares of UNIDATA Common Stock entitled to vote in accordance with the Colorado
Law and UNIDATA's Articles of Organization and By-laws) are necessary to
authorize this Agreement or to consummate the transactions so contemplated. The
Board of Directors of UNIDATA has determined that it is advisable and in the
best interest of UNIDATA's stockholders for UNIDATA to enter into a merger with
VMARK upon the terms and subject to the conditions of this Agreement. This
Agreement has been duly and validly executed and delivered by UNIDATA and,
assuming the due authorization, execution and delivery by VMARK, constitutes a
legal, valid and binding obligation of UNIDATA enforceable in accordance with
its terms.
Section 2.05. No Conflict: Required Filings and Consents.
(a) Except as set forth on Schedule 2.05(a), the execution and
delivery of this Agreement by UNIDATA does not, and the performance of this
Agreement by UNIDATA will not, (i) conflict with or violate the Articles of
Incorporation or By-laws of UNIDATA, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to UNIDATA or any of
its subsidiaries or by which any of their respective properties is bound or
affected, (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would constitute a
default), or impair UNIDATA's or any of its subsidiaries' rights or alter
the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
UNIDATA Material Contract (as defined in Section 2.08), or (iv) result in
the creation of a lien or encumbrance on any of the properties or assets of
UNIDATA or any of its subsidiaries pursuant to any note, bond mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which UNIDATA or any of its subsidiaries is a
party or by which UNIDATA or any of its subsidiaries, or any of their
respective properties, is bound or affected, except in the case of clauses
(ii), (iii) or (iv), for such breaches, defaults or other occurrences that
would not, individually or in the aggregate, have a material adverse effect
on UNIDATA.
(b) The execution and delivery of this Agreement by UNIDATA does not,
and the performance of this Agreement and the transactions contemplated
hereby by UNIDATA will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act, state securities laws ("Blue Sky
Laws"), and the filing and recordation of appropriate merger or other
documents as required by the Colorado Law and the Delaware Law, and (ii)
where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
delay consummation of the Merger,
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or otherwise prevent or delay UNIDATA from performing its obligations under
this Agreement, or would not otherwise have a material adverse effect upon
UNIDATA.
Section 2.06. Compliance; Permits.
(a) Except as set forth on Schedule 2.06(a), UNIDATA and its
subsidiaries are in compliance in all material respects with all foreign,
Federal, state or local statutes, laws, ordinances, judgments, decrees,
orders or governmental rules, regulations, policies and guidelines
applicable to them, except where noncompliance would not have a material
adverse effect upon UNIDATA. UNIDATA and its subsidiaries have not received
any written notice from any governmental or regulatory authority or
otherwise of any alleged violation or noncompliance.
(b) Schedule 2.06(b) hereto sets forth a true and complete list of all
licenses, permits and authorizations of governmental authorities held by
UNIDATA or any of its subsidiaries which are material to their respective
businesses (collectively, the "Authorizations"). UNIDATA and its
subsidiaries are in material compliance with all Authorizations, and all of
the Authorizations are, in all material respects, in full force and effect
and valid and enforceable in accordance with their respective terms.
Section 2.07. Financial Statements.
(a) UNIDATA has delivered to VMARK audited, consolidated balance
sheets of UNIDATA and its Subsidiaries as at June 30, 1995, June 30, 1996
and June 30, 1997 (the "UNIDATA Balance Sheet") and audited, consolidated
statements of income and changes in financial position of UNIDATA and its
Subsidiaries for the years then ended (collectively, the "UNIDATA Financial
Statements"). Such financial statements and the notes thereto fairly
present in all material respects the consolidated financial condition of
UNIDATA and its Subsidiaries at the respective dates thereof and the
results of operations for the periods then ended, and were prepared in
accordance with the books and records of UNIDATA and its Subsidiaries in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis during the periods covered thereby.
Section 2.08. Absence of Certain Changes or Events.
Except as set forth on Schedule 2.08(b) or reflected in the UNIDATA
Financial Statements, since June 30, 1997 through the date of this Agreement,
UNIDATA has conducted its business in the ordinary course and there has not
occurred: (i) any amendments or changes in the Articles of Incorporation or
By-laws of UNIDATA; (ii) any damage to, destruction or loss of any assets of
UNIDATA or its subsidiaries, (whether or not covered by insurance) that could
have a material adverse effect upon UNIDATA; (iii) any change by UNIDATA in its
accounting methods, principles or practices, (iv) any revaluation by UNIDATA of
any of its assets, including, without limitation, the writing down of the value
of capitalized software or inventory or the writing off of promissory notes or
accounts receivable other than in the ordinary course of business in amounts
that would not individually or in the aggregate have a material adverse effect
on UNIDATA or as reflected in the UNIDATA Financial Statements, (v) any sale of
a material amount of property or assets of UNIDATA or its subsidiaries, or (vi)
any other action or event that would have required the consent of VMARK pursuant
to Section 4.01 had such action or event occurred after the date of this
Agreement.
Section 2.09. Material Contracts.
(a) Schedule 2.09(a) sets forth for UNIDATA and its subsidiaries a
true and complete list of (i) (A) all contracts with respect to which
UNIDATA or any of its subsidiaries have any liability or obligation,
contingent or otherwise, involving more than $100,000 other than agreements
with customers, end users, distributors, computer manufacturers or VARs
that are in the ordinary course of business of UNIDATA as of the date
hereof; or which place any material limitations on the method of conducting
or scope of their respective businesses; (B) all contracts of UNIDATA or
any of its subsidiaries pursuant to which benefits accrue to the other
parties to such contracts as a result of the Merger; (C) all contracts of
UNIDATA and its subsidiaries with their respective directors, officers,
employees, agents or consultants, or their "affiliates", as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended
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(the "Exchange Act"); (D) all agreements, contracts or instruments to which
UNIDATA or any of its subsidiaries is a party relating to the borrowing of
money, or the guaranty of any obligation for the borrowing of money; (E)
all agreements relating to any securities of UNIDATA and its subsidiaries
or rights in connection therewith, and (ii) all agreements which, as of the
date hereof, would be required to be filed by UNIDATA with the Securities
Exchange Commission (the "SEC"), assuming UNIDATA were subject to the
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended, pursuant to the requirements of the Exchange Act as "material
contracts" ((i) and (ii) being collectively referred to as the "UNIDATA
Material Contracts")). Neither UNIDATA nor any of its subsidiaries is a
party to any contract, agreement or other arrangement which, if reduced to
written form, would be required to be listed in Schedule 2.09(a).
(b) UNIDATA Material Contracts set forth the entire arrangement and
understanding between UNIDATA and its subsidiaries and the respective third
parties with respect to the subject matter thereof, and, except as
indicated on Schedule 2.09(a), there have been no material amendments or
side or supplemental arrangements to or in respect of any UNIDATA Material
Contract. UNIDATA has made available for review by VMARK and its
representatives true and correct copies of all UNIDATA Material Contracts
as currently in effect, and will furnish any further information that VMARK
may reasonably request in connection therewith. To the knowledge of
UNIDATA, each UNIDATA Material Contract is valid and in full force and
effect and UNIDATA and its subsidiaries have each performed all material
obligations required to be performed thereunder. Except as set forth on
Schedule 2.09(a), UNIDATA and its subsidiaries are not in default under or
in breach or violation of any material term of any UNIDATA Material
Contract and, to the knowledge of UNIDATA, no third party is in default
under any material provision of any UNIDATA Material Contract, except, in
each such case, for such defaults, breaches or violations which would not,
individually or in the aggregate, have a material adverse effect on
UNIDATA.
Section 2.10. Accounts Receivable. The accounts receivable of UNIDATA
reflected on the UNIDATA Balance Sheet are bona fide claims against debtors and,
to the knowledge of UNIDATA, are collectible in full in the ordinary course of
business subject to any amounts reserved on said balance sheet for doubtful
accounts, except for any amounts the failure of which to collect would not have,
individually or in the aggregate, a material adverse effect on UNIDATA.
Section 2.11. No Undisclosed Liabilities. Except as set forth on Schedule
2.11, neither UNIDATA nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) which are, in the aggregate, material to the
business, operations or financial condition of UNIDATA and its subsidiaries,
taken as a whole, except (a) liabilities adequately provided for in the UNIDATA
Balance Sheet, (b) contractual liabilities incurred in the ordinary course of
business and not required under GAAP to be reflected on the UNIDATA Balance
Sheet, (c) liabilities incurred in connection with this Agreement, or (d) other
liabilities incurred since June 30, 1997 in the ordinary course of business.
Section 2.12. Absence of Litigation. Except as set forth on Schedule 2.12,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of UNIDATA, overtly threatened against UNIDATA or any of its
subsidiaries, or any properties or rights of UNIDATA or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that, individually or in the aggregate,
could have a material adverse effect upon UNIDATA.
Section 2.13. Employee Benefit Plans; Employment Agreements.
(a) Schedule 2.13(a) sets forth a true and complete list of all
employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and any other
bonus, stock option, stock right, stock appreciation right, stock purchase,
incentive compensation, deferred compensation, supplemental retirement,
severance, salary continuation, death benefit, hospitalization, medical,
dental, vision, life insurance, disability, tuition, education or legal
assistance, dependent care assistance, day care, cafeteria, and other
similar fringe or employee benefit plans, programs or arrangements, and any
current or former employment or executive compensation or severance
agreements, written or otherwise (i) which are for the benefit of, or
relating to, any employee
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of UNIDATA, any trade or business (whether or not incorporated) which is or
was a member of a controlled group including UNIDATA or which is under
common control with UNIDATA within the meaning of Section 414 of the Code
(each a "UNIDATA ERISA Affiliate"), or any subsidiary of UNIDATA, (ii)
which are currently maintained, administered, or contributed to by UNIDATA
or any UNIDATA ERISA Affiliate, or (iii) under which UNIDATA or any UNIDATA
ERISA Affiliate has any present or future obligations (including each plan
with respect to which UNIDATA or a UNIDATA ERISA Affiliate could incur
liability under Section 4069 (if such plan has been or were terminated) or
Section 4212(c) of ERISA (together, the "UNIDATA Employee Plans"),
excluding agreements with former employees under which UNIDATA and its
subsidiaries have no remaining obligations.
A true and complete copy of each such written UNIDATA Employee Plan
that covers employees or former employees of UNIDATA, including each
amendment thereto and any trust agreement, insurance contract, collective
bargaining agreement, or other funding or investment arrangements for the
benefits under such UNIDATA Employee Plan, has been delivered to VMARK. In
addition, with respect to each such UNIDATA Employee Plan which is an
employee benefit plan as defined in Section 3(3) of ERISA, UNIDATA has
delivered to VMARK the three most recently filed Federal Forms 5500, the
most recent summary plan description (including any summaries of material
modifications), the most recent IRS determination letter, if applicable,
and all other material employee communications with respect to each such
employee benefit plan.
(b) Except as set forth on Schedule 2.13(b).
(i) none of the UNIDATA Employee Plans (A) promises or provides (or
previously promised or provided) retiree medical or other retiree
welfare benefits to any person, except as required in Section 4980B of
the Code (nor has UNIDATA or any UNIDATA ERISA Affiliate ever maintained
such a plan), (B) is subject to Title IV of ERISA or the funding
requirements of Section 412 of the Code, or (C) is a "multiemployer
plan" as such term is defined in Section 3(37) of ERISA;
(ii) to UNIDATA's knowledge, there has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA or Section
4975 of the Code (other than any such transaction which is exempt under
Section 408 of ERISA or 4975 of the Code, respectively), with respect to
any UNIDATA Employee Plan, which could result, directly or indirectly,
in any material liability of UNIDATA or any UNIDATA ERISA Affiliate;
(iii) all UNIDATA Employee Plans that cover or have covered
employees or former employees of UNIDATA have been maintained and
operated, and currently are, in compliance in all material respects with
their terms, the requirements prescribed by any and all applicable laws
(including ERISA and the Code), orders, or governmental rules and
regulations in effect with respect thereto, and UNIDATA and the UNIDATA
ERISA Affiliates have performed all material obligations required to be
performed by them under, are not in any material respect in default
under or in violation of, and have no knowledge of any default or
violation by any other party to, any of the UNIDATA Employee Plans;
(iv) each UNIDATA Employee Plan that covers or has covered
employees or former employees of UNIDATA and is intended to qualify
under Section 401(a) of the Code and each trust established pursuant to
each such UNIDATA Employee Plan that is intended to qualify under
Section 501(a) of the Code is the subject of a favorable determination
letter from the IRS, a copy of which has been delivered to VMARK, and,
to the knowledge of UNIDATA, nothing has occurred which may reasonably
be expected to impair such determination or otherwise adversely affect
the tax-qualified status of such UNIDATA Employee Plan;
(v) UNIDATA and the UNIDATA ERISA Affiliates have made full and
timely payment of all amounts required to be contributed under the terms
of each UNIDATA Employee Plan and applicable law or required to be paid
as expenses under such UNIDATA Employee Plan;
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(vi) there has been no amendment to, written interpretation of or
announcement (whether or not written) by UNIDATA or any of its UNIDATA
ERISA Affiliates relating to, or change in employee participation,
coverage or benefits under, any UNIDATA Employee Plan that covers or has
covered employees or former employees of UNIDATA that would increase
materially the expense of maintaining such UNIDATA Employee Plan above
the level of the expense incurred in respect thereof for the fiscal year
ended prior to the date hereof;
(vii) there is no contract, agreement, plan or arrangement covering
any employee, former employee, director or agent of UNIDATA or any
UNIDATA ERISA Affiliate that, individually or collectively, could give
rise to the payment of any amount that would not be deductible pursuant
to the terms of Section 280G of the Code;
(viii) no employee, former employee, director or agent of UNIDATA
will become entitled to any bonus, retirement, severance or similar
benefit or enhanced or accelerated benefit as a result of the
transactions contemplated hereby (either alone or upon the occurrence of
any additional or subsequent events);
(ix) there is no suit, action, dispute, claim, arbitration or
legal, administrative, or other proceeding or governmental investigation
pending, or, to the best knowledge of UNIDATA, threatened, alleging any
breach of the terms of any UNIDATA Employee Plan or of any fiduciary
duties thereunder or violation of any applicable law with respect to any
such UNIDATA Employee Plan;
(x) with respect to any UNIDATA Employee Plan that is self-funded
(in whole or in part), no material claims have been made that have not
yet been paid and, to the best knowledge of UNIDATA, no injury,
sickness, or other medical condition has been incurred with respect to
which material claims may be made pursuant to such UNIDATA Employee Plan
(such disclosure to include the amount thereof);
(xi) UNIDATA does not maintain or have any obligation to contribute
to any "voluntary employees' beneficiary association" (within the
meaning of Section 501(c)(9) of the Code) or to any "group health plan,"
within the meaning of Section 5001(b)(1) of the Code, that is funded by
any method other than by UNIDATA's purchase of one or more insurance
contracts;
(xii) since January 1, 1980, neither UNIDATA nor any UNIDATA ERISA
Affiliate has made or been obligated to make any contributions, or has
otherwise participated in, any employee benefit plan which is a
multiemployer plan as defined under Section 3(37) or Section 4001(a)(3)
of ERISA.
(c) Schedule 2.13(c) sets forth a true and complete list of each
outstanding option to purchase UNIDATA Common Stock as of the date hereof,
together with the identity of the holder of such option, the number of
shares of UNIDATA Common Stock subject to such option, the date of grant of
such option, the extent to which such option is or will become vested, the
option price of such option (to the extent determined as of the date
hereof), whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code (an "ISO"), and the
expiration date of such option. Schedule 2.13(c) also sets forth the total
number of such ISOs and such nonqualified options.
(d) UNIDATA has made available for review by VMARK and its
representatives and Schedule 2.13(d) sets forth a list of (i) true and
complete copies of all employment agreements with officers and Directors of
UNIDATA; (ii) true and complete copies of all agreements with consultants
where UNIDATA has obligations to make annual cash payments in an amount
exceeding $25,000; (iii) a schedule listing all officers of UNIDATA who
have executed a non-competition agreement with UNIDATA; (iv) true and
complete copies of all severance agreements, programs and policies of
UNIDATA with or relating to its employees, excluding programs and policies
required to be maintained by law; and (v) true and complete copies of all
plans, programs, agreements and other arrangements of UNIDATA with or
relating to its employees which contain change in control provisions.
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Section 2.14. Labor Matters. Except as set forth on Schedule 2.14, (i)
there are no controversies pending or, to the knowledge of UNIDATA, threatened,
between UNIDATA or its subsidiaries and any of their respective employees or
former employees, which controversies would have a material adverse effect upon
UNIDATA; (ii) neither UNIDATA nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by UNIDATA or its subsidiaries nor does UNIDATA or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither UNIDATA nor any of its
subsidiaries is subject to any labor strike, slowdown, work stoppage, lockout,
or, to the knowledge of UNIDATA, threats thereof, by or with respect to any
employees of UNIDATA or any of its subsidiaries.
Section 2.15. Restrictions on Business Activities. Except for this
Agreement or as set forth on Schedule 2.15, there is no material agreement,
judgment, injunction, order or decree binding upon UNIDATA or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any material business practice of UNIDATA or any of its
subsidiaries, the acquisition of property by UNIDATA or any of its subsidiaries
or the conduct of business by UNIDATA or any of its subsidiaries as currently
conducted or as proposed to be conducted by UNIDATA.
Section 2.16. Real Property.
(a) Schedule 2.16(a) describes each interest in real property owned by
UNIDATA and its subsidiaries, including the location and a brief
description thereof, the mortgagee of such property and the principal terms
of such mortgage. UNIDATA and each if its subsidiaries have good and
marketable title to all such property, free and clear of all liens, other
than the mortgages listed on Schedule 2.16(a) and except for liens for
taxes not yet due and payable and such liens or other imperfections of
title, if any, as do not materially detract from the value of or interfere
with the present use of the property affected thereby or which,
individually, or in the aggregate, would not have a material adverse effect
on UNIDATA or any of its subsidiaries. UNIDATA and its subsidiaries enjoy
peaceful and quiet possession of their respective real property in all
material respects and have not received any notice asserting the existence
of a default under any such mortgage.
(b) Schedule 2.16(b) describes each interest in real property leased
by UNIDATA and its subsidiaries, including the location and a brief
description thereof, the lessor of such leased property and the principal
terms of each lease or any other arrangement under which such property is
leased. UNIDATA and its subsidiaries enjoy peaceful and quiet possession of
their respective leased premises in all material respects and have not
received any notice asserting the existence of a default under any such
leasehold and are not aware of any default by the landlord of any such
leased premises of any material term of the applicable lease.
Section 2.17. Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean any
federal, state, local or foreign taxes, fees, levies, duties, tariffs,
imposts and governmental impositions or charges of any kind in the nature
of taxes, including (without limitation) (i) income, franchise, profits,
gross receipts, ad valorem, net worth, value added, sales, use, service,
real or personal property, special assessments, capital stock, license,
payroll, withholding, estimated, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production,
excise, stamp, premiums, windfall profits, transfer and gains taxes, and
(ii) interest, penalties, and additions to tax imposed with respect
thereto; and "Tax Returns" shall mean returns, reports, declarations,
information statements, refund claims, amended returns, or other statements
with respect to Taxes and schedules and attachments thereto, including,
without limitation, consolidated, combined and unitary tax returns.
(b) Except as set forth on Schedule 2.17(b), UNIDATA and its
subsidiaries have timely filed all Tax Returns required to be filed by
them, and UNIDATA and its subsidiaries have paid and discharged all
material Taxes due in connection with or with respect to the filing of all
Tax Returns and have paid all other material Taxes when due, and there are
no other Taxes that would be due if asserted by a taxing authority, except
such as are being contested in good faith by appropriate proceedings (to
the extent that
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any such proceedings are required) and with respect to which UNIDATA is
maintaining reserves to the extent currently required in all respects
adequate for their payment. As of the time of filing, all Tax Returns were
(and, as to Tax Returns not filed as of the date hereof, will be) complete
and correct in all material respects. UNIDATA and its subsidiaries have
complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes and have
timely withheld from employee wages or other payments to creditors or
independent contractors and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over. Except as
set forth on Schedule 2.17(b) no notice of claim has ever been made by a
government authority in a jurisdiction where UNIDATA does not file Returns
that it is or may be subject to Taxes in that jurisdiction. UNIDATA and
each of its subsidiaries have disclosed to the relevant taxing authority
any position taken where the failure to make such disclosure would enable
the taxing authority to subject such person to penalties or additions to
tax that would have a material adverse effect upon UNIDATA. Neither the IRS
nor any other taxing authority or agency is now asserting or, to UNIDATA's
knowledge, is threatening to assert against UNIDATA or any of its
subsidiaries any deficiency or claim for additional Taxes other than
additional Taxes with respect to which an adequate reserve (in conformity
with GAAP) has been established, as set forth in the UNIDATA Financial
Statements. Neither UNIDATA nor any of its subsidiaries is currently being
audited by any taxing authority. There are no Tax liens on any assets of
UNIDATA or any of its subsidiaries. No extension or waiver of a statute of
limitations with respect to assessment of Taxes is currently in effect for
UNIDATA or any of its subsidiaries. The accruals and reserves for Taxes
reflected in UNIDATA Balance Sheet are in all material respects adequate to
cover all Taxes accruable and unpaid through the date thereof (including
interest and penalties, if any, thereon and Taxes being contested) in
accordance with GAAP, consistently applied with past practice. Neither
UNIDATA nor any of its subsidiaries is required to include in income (i)
any amount in respect of any adjustment under Sections 263A or 481 of the
Code, or (ii) any installment sale gain. UNIDATA is not a party to any
joint venture, partnership, or other arrangement or contract treated as a
partnership for Federal income tax purposes. No material issues have been
raised by the relevant taxing authorities on audit that are of a recurring
nature and that would have a material adverse effect upon the Taxes of
UNIDATA or any of its subsidiaries. UNIDATA has made available for
inspection all Tax Returns of UNIDATA and its subsidiaries for which the
applicable statute of limitations has not expired. All material elections
with respect to Taxes affecting UNIDATA or its subsidiaries as of the date
hereof are set forth on Schedule 2.17(b).
(c) Except as set forth on Schedule 2.17(c), neither UNIDATA nor any
of its subsidiaries is a party to any agreement, contract or arrangement,
including this Agreement, that may result, separately or in the aggregate,
in the payment of any "excess parachute payment" within the meaning of
Section 280G of the Code. Neither UNIDATA nor any of its subsidiaries owns
stock in a passive foreign investment company within the meaning of Section
1296 of the Code. None of UNIDATA or its subsidiaries has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of any asset owned by UNIDATA or any
of its subsidiaries. Except as set forth on Schedule 2.17(c), no property
used by UNIDATA or its subsidiaries is property that UNIDATA or any such
subsidiary is or will be required to treat as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954 as it existed prior to the enactment of the Tax Reform Act of
1986 or is "tax-exempt use property" within the meaning of Section 168(h)
of the Code. Except as provided on Schedule 2.17(c), neither UNIDATA nor
any of its subsidiaries is obligated under any agreement with respect to
industrial development bonds or other obligations with respect to which the
excludability from gross income of the holder for Federal or state income
tax purposes could be affected by the transactions contemplated hereunder.
Except as provided on Schedule 2.17(c), neither UNIDATA nor any of its
subsidiaries has entered into any intercompany transaction within the
meaning of Section 1.1502-13(b)(1) of the United States Treasury
Regulations as to which deferred gains or loss has not been restored.
Except as provided on Schedule 2.17(c), no excess loss account within the
meaning of Section 1.1502-19(a)(2) of the United States Treasury
Regulations exists with respect to the stock of any of its subsidiaries.
Except as set forth on Schedule 2.17(c), UNIDATA does not have and has not
had a branch in any foreign country. UNIDATA has provided to VMARK or
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its representatives copies of all tax allocation or tax sharing agreements
to which it is a party, all of which are listed on Schedule 2.17(c), and
UNIDATA is not liable for the Taxes of any other person or entity under
United States Treasury Regulation Section 1.1502-6 (or any similar
provision of state, foreign or local law), or as a transferee or successor,
or by contract, or otherwise, except for Taxes of any subsidiaries that are
members at the time of closing of an affiliated group within the meaning of
Section 1504(a) of which UNIDATA is the common parent or Taxes which, in
the aggregate, are not expected to be a material amount.
(d) The Merger is intended to qualify as a reorganization under
Section 368(a)(1)(A) of the Code. In respect thereof, the following
representations are made: (i) there is no plan or intention on the part of
any shareholder of UNIDATA that owns 1% or more of the stock of UNIDATA,
and, to the best knowledge of management of UNIDATA, there is no plan or
intention on the part of any one or more of the shareholders of UNIDATA
that individually hold less than one percent of UNIDATA's outstanding
Shares to sell, exchange, or otherwise dispose of a number of shares of
VMARK stock received in the Merger that would reduce the ownership of VMARK
stock by all holders of UNIDATA Common Stock, in the aggregate, to a number
of shares having a value, as of the Effective Time, of less than 50 percent
of the value of all of the formerly outstanding Shares as of the same date;
for purposes of this representation (A) Shares exchanged for cash or other
property, surrendered by dissenters, or exchanged for cash in lieu of
fractional shares of VMARK stock will be treated as outstanding Shares on
the Effective Time, and (B) Shares and shares of VMARK stock held by
UNIDATA shareholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the transaction will be considered in making this
representation; (ii) the liabilities of UNIDATA to be assumed by VMARK and
the liabilities to which the transferred assets of UNIDATA are subject were
incurred by UNIDATA in the ordinary course of business; (iii) UNIDATA is
not under the jurisdiction of a court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code; (iv) the fair market value
of the assets of UNIDATA to be transferred to VMARK will equal or exceed
the sum of the liabilities assumed by VMARK plus the amount of liabilities,
if any, to which the transferred assets are subject; (v) there is no
intercorporate indebtedness existing between UNIDATA and VMARK that was
issued, acquired, or will be settled at a discount; (vi) UNIDATA operates
at least one significant historic business line, or owns at least a
significant portion of its historic business assets, in each case within
the meaning of Section 1.368-1(d) of the United States Treasury
Regulations; and (vii) UNIDATA is not an "investment company" as defined in
Section 368(a)(2)(F) of the Code.
Section 2.18. Environmental Matters. Except as set forth on Schedule 2.18,
UNIDATA and each of its subsidiaries (i) have obtained all material applicable
permits, licenses and other authorization which are required under Federal,
state or local laws relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants or hazardous or toxic materials or wastes
into ambient air, surface water, ground water or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by UNIDATA or its subsidiaries (or their respective agents);
(ii) are in substantial compliance with all material terms and conditions of
such required permits, licenses and authorization, and also are in substantial
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder;
(iii) as of the date hereof, are not aware of nor have received notice of any
event, condition, circumstance, activity, practice, incident, action or plan
which would interfere with or prevent continued compliance with or which would
give rise to any material common law or statutory liability, or otherwise form
the basis of any claim, action, suit or proceeding, based on or resulting from
UNIDATA's or any of its subsidiary's (or any of their respective agent's)
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste, and (iv) have taken all actions necessary under applicable requirements
of Federal, state or local laws, rules or regulations to register any products
or materials required to be registered by UNIDATA or its subsidiaries (or any of
their respective agents) thereunder.
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Section 2.19. Brokers. Except for Broadview Associates, no investment
bank, broker or finder is entitled to any fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of UNIDATA. UNIDATA has heretofore furnished to VMARK true and
complete copies of all agreements between UNIDATA and Broadview Associates
pursuant to which such firm would be entitled to any payment relating to the
transactions contemplated hereunder.
Section 2.20. Intellectual Property.
(a) UNIDATA and its subsidiaries own, are licensed to use or otherwise
possess legally enforceable rights to use all patents, trademarks, trade
names, service marks, copyrights and any applications therefor, technology,
know-how, UNIDATA Software (as defined below), and tangible or intangible
proprietary information or material that are used in the business of
UNIDATA and its subsidiaries as currently conducted. "UNIDATA Software"
means computer software programs or applications (in both source code and
object code form) and UNIDATA Documentation (as defined below) related
thereto with respect to the source and object code thereof and all other
aspects of all such programs, in each case including all present and
predecessor versions and all works in progress relating to the correction,
modification or enhancement of such programs. "UNIDATA Documentation" means
the documentation, specifications and other written technical data
(including without limitation all specifications and other documents
necessary for the use and maintenance of the UNIDATA Software (such as user
manuals, design specifications and installation guides), in each case
including all present and predecessor versions and all works in progress in
both machine-readable and human-readable form. Schedule 2.20(a) sets forth
a true and complete list (without extensive or revealing descriptions) of
the UNIDATA Software, the UNIDATA Documentation, registered and material
unregistered trademarks, design marks and service marks, patents,
registered copyrights, trade names and any applications therefor owned by
UNIDATA and its subsidiaries (the "UNIDATA Intellectual Property Rights"),
and specifies the jurisdictions in which each such UNIDATA Intellectual
Property Right has been issued or registered or in which an application for
such issuance and registration has been filed, including the respective
registration or application numbers and the names of all registered owners,
together with a list of all of UNIDATA's currently marketed software
products and an indication as to which, if any, of such software products
have been registered for copyright protection with the United States
Copyright Office and any foreign offices and by whom such items have been
registered. Schedule 2.20(a) sets forth a true and complete list of all
material third-party patents, trademarks or copyrights (including software)
(the "UNIDATA Third Party Intellectual Property Rights"), which are
incorporated in, are, or form a part of, any UNIDATA software product with
respect to which UNIDATA received in excess of $250,000 in the fiscal year
ending June 30, 1997. Schedule 2.20(a) sets forth a true and complete list
of (i) all material licenses, sublicenses and other agreements as to which
UNIDATA is a party and pursuant to which any person is authorized to use
any UNIDATA Intellectual Property Right, excluding those licenses,
sublicenses or other agreements that are in the ordinary course of business
of UNIDATA as of the date hereof, and (ii) all material licenses,
sublicenses and other agreements as to which UNIDATA is a party and
pursuant to which UNIDATA is authorized to use any UNIDATA Third Party
Intellectual Property Rights which involve the payment of more than
$100,000.
(b) Except as set forth on Schedule 2.20(b), UNIDATA and its
subsidiaries are not, nor will they be as a result of the execution and
delivery of this Agreement or the performance of their obligations
hereunder, in violation of any license, sublicense or agreement described
on Schedule 2.20(b), except for violations which would not, individually or
in the aggregate, have a material adverse effect on UNIDATA. Except as set
forth on Schedule 2.20(b), no claims with respect to UNIDATA Intellectual
Property Rights, any trade secret material to UNIDATA, or UNIDATA Third
Party Intellectual Property Rights to the extent arising out of any use,
reproduction or distribution of such UNIDATA Third Party Intellectual
Property Rights by or through UNIDATA or its subsidiaries, are currently
pending or, to the knowledge of UNIDATA, threatened by any person or
entity, nor does UNIDATA know of any valid grounds for any bona fide claims
(i) to the effect that the manufacture, sale, licensing or use of any
product as now used, sold or licensed or proposed for use, sale or license
by UNIDATA or its subsidiaries infringes on any copyright, patent,
trademark, service mark or trade secret; (ii) against the
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use by UNIDATA or its subsidiaries of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software
programs and applications used in their respective businesses as currently
conducted; (iii) challenging the ownership, validity or effectiveness of
any of UNIDATA Intellectual Property Rights or other trade secret material
to UNIDATA; or (iv) challenging UNIDATA's or its subsidiaries' license or
legally enforceable right to make use of UNIDATA Third Party Intellectual
Rights. To UNIDATA's knowledge, all patents, registered trademarks,
maskworks and copyrights held by UNIDATA and its subsidiaries are valid and
subsisting. Except as set forth on Schedule 2.20(b), to UNIDATA's
knowledge, there is no material unauthorized use, infringement or
misappropriation of any of UNIDATA Intellectual Property Right by any third
party, including any employee or former employee of UNIDATA or any of its
subsidiaries. Neither UNIDATA nor any of its subsidiaries has knowledge of
any material infringement liability with respect to, or infringement by,
UNIDATA or any of its subsidiaries of any trade secret, patent, trademark,
service mark, maskwork or copyright or another.
(c) All UNIDATA Documentation (with the exception of user manuals
distributed under license agreements) is located at the principal place of
business of UNIDATA. All artwork, manuals, guides and other written and
graphic material related to the Software are subject to copyrights owned by
UNIDATA, except for such copyrights covering software owned by third
parties which is embedded in or otherwise published with the UNIDATA
Software pursuant to licenses from such third parties.
(d) To the knowledge of UNIDATA, except as disclosed in Schedule
2.20(d), all copies of the source code for the UNIDATA Software are in
UNIDATA's possession and control and no officers, employees, agents or
actual or potential customers of UNIDATA, or any other third party, have
any rights to or possess such source code.
(e) To the knowledge of UNIDATA, there are no licenses or other
authorizations not possessed by UNIDATA which are required for the
Surviving Corporation to utilize, modify, market and distribute the UNIDATA
Software and UNIDATA Documentation to the same extent as UNIDATA prior to
the Effective Time.
(f) Except as disclosed in Schedule 2.20(f), UNIDATA (i) has taken
reasonable and appropriate actions to protect the secrecy and
confidentiality of the source code for the UNIDATA Software and the
non-public information included in the UNIDATA Documentation, and (ii) has
not received any written notice of infringement or other complaint and does
not otherwise have knowledge that its use or distribution of the UNIDATA
Software or UNIDATA Documentation infringes or constitutes a
misappropriation of rights under patents, copyrights, trade secrets, trade
names, licenses, or any other proprietary or confidential rights of others.
To the knowledge of UNIDATA, except as disclosed in Schedule 2.20(f),
UNIDATA Intellectual Property Rights are presently protectable and are not
part of the public domain or literature, nor have any material portion of
any UNIDATA Intellectual Property Rights been used, divulged or
appropriated for the benefit of any past or present employees or other
persons, or to the material detriment of UNIDATA. All persons who have been
involved in the development of the UNIDATA Softwareand UNIDATA
Documentation since the inception of UNIDATA and, to the knowledge of
UNIDATA, all persons who were involved in the development of the UNIDATA
Software prior thereto, have executed invention, confidentiality and
nondisclosure agreements covering source code and other non-public
information included in the UNIDATA Documentation in the forms previously
made available to VMARK.
(g) Except as disclosed in Schedule 2.20(g), UNIDATA pays no royalty
under any of UNIDATA Intellectual Property Rights and has the right to
bring actions for the infringement thereof. To the knowledge of UNIDATA,
the use, reproduction, distribution, sale, lease, or license of the UNIDATA
Software and the UNIDATA Documentation does not violate or infringe any
trademark, design mark, trade name, service mark, copyright, trade secret,
know-how or patent of any other party.
Section 2.21. Interested Party Transactions. Except as set forth on
Schedule 2.21, no event has occurred that would be required to be reported as a
Certain Relationship or Related Transaction, pursuant to Item 404 of Regulation
S-K promulgated by the SEC.
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Section 2.22. Insurance. UNIDATA and its business, properties and/or
employees are insured under the insurance policies set forth on Schedule 2.22,
all of which are valid and in full force.
Section 2.23. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding shares of each class of UNIDATA Common Stock
is the only vote of the holders of any class or series of UNIDATA's capital
stock necessary under its Articles of Incorporation and By-laws to approve the
Merger and the other transactions contemplated hereby.
Section 2.24. Pooling Matters. Neither UNIDATA nor any of its subsidiaries
or affiliates has, to UNIDATA's knowledge and based upon consultation with its
independent certified public accountants, taken or agreed to take any action
that (without giving effect to any action taken or agreed to be taken by VMARK
or any of its affiliates) would affect the ability of VMARK to account for the
business combination to be effected by the Merger as a pooling of interests.
Section 2.25. Other Negotiations. Except as set forth in Schedule 2.25,
UNIDATA is not actively engaged in discussions or negotiations with any person
or persons with respect to, and has not solicited or furnished any information
to any person or persons who, to UNIDATA's knowledge, is currently contemplating
negotiations or an offer regarding, a consolidation or merger or other business
combination, recapitalization, liquidation, or similar transaction, or any other
transaction which could be conditioned upon, or otherwise require, the
termination of this Agreement.
Section 2.26. Full Disclosure.
(a) No statement contained in this Agreement or in any certificate or
schedule furnished or to be furnished by or on behalf of UNIDATA or its
subsidiaries to VMARK pursuant to this Agreement, when taken together with
all other statements contained herein or in other certificates and
schedules furnished pursuant to this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary,
in the light of the circumstances under which it was made, in order to make
the statements herein or therein not misleading.
(b) The information supplied by UNIDATA for inclusion or incorporation
by reference in the joint proxy statement/prospectus to be sent to the
stockholders of UNIDATA in connection with the meeting of the stockholders
of UNIDATA to consider the Merger and related matters (the "UNIDATA
Stockholders' Meeting") and to be sent to the stockholders of VMARK in
connection with the meeting of the stockholders of VMARK to consider the
Merger and related matters (the "VMARK Stockholders' Meeting" and together
with the UNIDATA Stockholders' Meeting, the "Stockholders' Meetings") and
relating to the VMARK Common Stock to be issued in connection with the
Merger (such proxy statement/prospectus as amended or supplemented being
hereinafter referred to as the "Joint Proxy Statement/Prospectus") and the
Registration Statement (as defined in Section 5.01(a)) shall not (i) at the
time the Registration Statement is declared effective, (ii) at the time the
Joint Proxy Statement/Prospectus (or any amendment thereof or supplement
thereto) is first mailed to holders of UNIDATA Common Stock or holders of
VMARK Common Stock, (iii) at the time of the UNIDATA Stockholders' Meeting
or the VMARK Stockholder's Meeting and (iv) at the Effective Time, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to UNIDATA or any of its affiliates or its or their
respective officers or directors should be discovered by UNIDATA which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, UNIDATA shall promptly
inform VMARK of such event or circumstance.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VMARK
VMARK hereby represents and warrants to UNIDATA that the following is true
and complete as of the date hereof:
SECTION 3.01. Organization.
(a) VMARK is a corporation duly organized, validly existing and in
good standing under the laws of The State of Delaware. VMARK has full
corporate power and authority to own, lease and operate its properties and
to carry on its business as such business is now conducted and proposed to
be conducted. The copies of the Certificate of Incorporation of VMARK,
certified by the Secretary of State of The State of Delaware, and the
By-laws of VMARK which have been delivered to UNIDATA by VMARK are true and
complete copies thereof.
(b) Subsidiaries. Except as set forth on Schedule 3.01(b), VMARK has
no subsidiaries and does not, directly or indirectly, own or have the
contractual right or obligation to acquire any equity interest in any other
corporation, partnership, joint venture, trust or other business
organization. VMARK is the record and beneficial owner of all of the
capital stock of each of the corporations listed on Schedule 3.01(b). There
are no outstanding options, warrants, convertible or exchangeable
securities or other rights that would obligate VMARK to issue shares of
capital stock in any of its subsidiaries. All shares of the capital stock
of VMARK's subsidiaries are duly authorized, validly issued, fully paid and
non-assessable, and all of such shares are owned by VMARK free and clear of
all security interests, liens, claims, pledges, agreements, limitations of
VMARK's voting rights, charges or other encumbrances of any nature
whatsoever. Except as disclosed on Schedule 3.02, VMARK has not made any
investment in, loan to, or advance of cash or other extension of credit to
any person, other than in the ordinary course of its business.
Section 3.02. Capitalization. The authorized capital stock of VMARK
consists of 25,000,000 shares of VMARK Common Stock, of which 8,552,568 are
currently issued and outstanding, and 10,000,000 shares of Preferred Stock, $.01
par value per share, of which none are currently issued and outstanding. All of
the outstanding shares of capital stock of VMARK have been duly authorized, are
validly issued, fully paid and non-assessable, and the holders thereof are not
entitled to cumulative voting rights or preemptive rights. There are no
obligations, contingent or otherwise, of VMARK or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of VMARK Common Stock or the
capital stock of any subsidiary or to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any such
subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. Except as set
forth on Schedule 3.02 or Schedule 3.14(c), there are no outstanding options to
purchase or warrants, privileges or rights to subscribe to or purchase any
shares of VMARK's capital stock or securities issued by VMARK convertible into
or exchangeable for shares of VMARK's capital stock or other securities of VMARK
or commitments, understandings or intentions to issue any additional shares or
options, warrants, privileges or rights to subscribe for shares of VMARK's
capital stock.
Section 3.03. Qualification in Foreign Jurisdictions. VMARK and each of
its subsidiaries is duly qualified or licensed and in good standing as a foreign
corporation duly authorized to do business in each jurisdiction in which the
character of the properties owned or leased or the nature of the activities
conducted by it makes such qualification or licensing necessary, except for any
jurisdiction(s) in which the failure to so qualify would not have a material
adverse effect upon VMARK.
Section 3.04. Authority Relative to this Agreement. VMARK has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by VMARK and
the consummation by VMARK of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action and no other corporate
proceedings on the part of VMARK (other than the approval and adoption of the
Merger by the holders of at least 50% of the outstanding shares of VMARK Common
Stock entitled to vote in accordance with the Delaware Law and VMARK's
Certificate of
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Incorporation and By-laws) are necessary to authorize this Agreement or to
consummate the transactions so contemplated. The Board of Directors of VMARK has
determined that it is advisable and in the best interest of VMARK's stockholders
for VMARK to enter into a merger with UNIDATA upon the terms and subject to the
conditions of this Agreement. This Agreement has been duly and validly executed
and delivered by VMARK and, assuming the due authorization, execution and
delivery by UNIDATA, constitutes a legal, valid and binding obligation of VMARK,
enforceable in accordance with its terms.
Section 3.05. No Conflict: Required Filings and Consents.
(a) Except as set forth on Schedule 3.05(a), the execution and
delivery of this Agreement by VMARK does not, and the performance of this
Agreement by VMARK will not, (i) conflict with or violate the Certificate
of Incorporation or By-laws of VMARK; (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to VMARK or any
of its subsidiaries or by which any of their respective properties is bound
or affected; (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default), or
impair VMARK's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any VMARK Material
Contract (as defined in Section 3.08); or (iv) result in the creation of a
lien or encumbrance on any of the properties or assets of VMARK or any of
its subsidiaries pursuant to, any note, bond mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which VMARK or any of its subsidiaries is a party or by which
VMARK or any of its subsidiaries, or any of their respective properties, is
bound or affected, except in the case of clauses (ii), (iii) and (iv) for
such breaches, defaults or other occurrences that would not, individually
or in the aggregate, have a material adverse effect upon VMARK.
(b) The execution and delivery of this Agreement by VMARK does not,
and the performance of this Agreement and the transactions contemplated
hereby by VMARK will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, Blue Sky
Laws and the filing and recordation of appropriate merger or other
documents as required by the Delaware Law and the Colorado Law, and (ii)
where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
delay consummation of the Merger, or otherwise prevent or delay VMARK from
performing its obligations under this Agreement, or would not otherwise
have a material adverse effect on VMARK.
Section 3.06. Compliance; Permits.
(a) Except as set forth on Schedule 3.06(a), VMARK and its
subsidiaries are in compliance in all material respects with all foreign,
Federal, state or local statutes, laws, ordinances, judgments, decrees,
orders or governmental rules, regulations, policies and guidelines
applicable to them, except where noncompliance would not have a material
adverse effect upon VMARK. VMARK and its subsidiaries have not received any
written notice from any governmental or regulatory authority or otherwise
of any alleged violation or noncompliance.
(b) Schedule 3.06(b) hereto sets forth a true and complete list of all
licenses, permits and authorizations of governmental authorities held by
VMARK or any of its subsidiaries which are material to their respective
businesses (collectively, the "VMARK Authorizations"). VMARK and its
subsidiaries are in material compliance with all VMARK Authorizations, and
all of the VMARK Authorizations are, in all material respects, in full
force and effect and valid and enforceable in accordance with their
respective terms.
Section 3.07. SEC Filings.
(a) VMARK has filed all forms, reports and documents required to be
filed with the SEC since the date VMARK first registered the VMARK Common
Stock under the Exchange Act and has delivered to UNIDATA true and complete
copies of (i) its Annual Reports on Form 10-K for the fiscal years ended
December 31, 1995 and 1996, respectively, (ii) its Quarterly Reports on
Form 10-Q for the periods ended
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March 31 and June 30, 1997 (iii) all proxy statements relating to VMARK's
meetings of stockholders (whether annual or special) held since June 1,
1996, (iv) all other reports (other than those on Form 10-Q filed prior to
December 31, 1996) or registration statements filed by VMARK with the SEC
since June 1, 1996, and (v) all amendments, supplements and exhibits
(including, without duplication, exhibits incorporated by reference) to all
such reports and registration statements (collectively, the "VMARK SEC
Reports"). The VMARK SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statement therein, in the light of the circumstances under which they
were made, not misleading. None of VMARK's subsidiaries is required to file
any forms, reports or other documents with the SEC.
Section 3.08. Financial Statements. Each of the consolidated financial
statements (including, in each case, any notes thereto) contained in or
incorporated by reference into the VMARK SEC Reports was prepared in accordance
with SEC requirements and such consolidated financial statements (including the
notes thereto) were prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presented in all material respects the consolidated
financial position of VMARK and its subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which are not in the
aggregate material in amount.
Section 3.09. Absence of Certain Changes or Events. Except as set forth on
Schedule 3.09, since June 30, 1997 through the date of this Agreement, VMARK has
conducted its business in the ordinary course and there has not occurred: (i)
any amendments or changes in the Certificate of Incorporation or By-laws of
VMARK; (ii) any damage to, destruction or loss of any assets of VMARK or its
subsidiaries, (whether or not covered by insurance) that could have a material
adverse effect upon VMARK; (iii) any change by VMARK in its accounting methods,
principles or practices; (iv) any revaluation by VMARK of any of its assets,
including, without limitation, the writing down of the value of capitalized
software or inventory or the writing off of promissory notes or accounts
receivable other than in the ordinary course of business in amounts that would
not individually or in the aggregate have a material adverse effect on VMARK;
(v) any sale of a material amount of property or assets of VMARK or its
subsidiaries; or (vi) any other action or event that would have required the
consent of UNIDATA pursuant to Section 4.01 had such action or event occurred
after the date of this Agreement.
Section 3.10. Material Contracts.
(a) Schedule 3.10(a) sets forth for VMARK and its subsidiaries a true
and complete list of (i) (A) all contracts with respect to which VMARK or
any of its subsidiaries have any liability or obligation, contingent or
otherwise, involving more than $100,000 other than agreements with
customers, end users, distributors, computer manufacturers or VARs that are
in the ordinary course of business of VMARK as of the date hereof; or which
place any material limitations on the method of conducting or scope of
their respective businesses; (B) all contracts of VMARK or any of its
subsidiaries pursuant to which benefits accrue to the other parties to such
contracts as a result of the Merger; (C) all contracts of VMARK and its
subsidiaries with their respective directors, officers, employees, agents
or consultants, or their "affiliates", as defined in Rule 12b-2 under the
Exchange Act; (D) all agreements, contracts or instruments to which VMARK
or any of its subsidiaries is a party relating to the borrowing of money,
or the guaranty of any obligation for the borrowing of money; (E) all
agreements relating to any securities of VMARK and its subsidiaries or
rights in connection therewith, and (ii) all agreements which, as of the
date hereof, would be required to be filed by VMARK with the SEC pursuant
to the requirements of the Exchange Act as "material contracts" ((i) and
(ii) being collectively referred to as the "VMARK Material Contracts")).
Neither VMARK nor any of its subsidiaries is a party to any contract,
agreement or other arrangement which, if reduced to written form, would be
required to be listed in Schedule 3.10(a).
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(b) VMARK Material Contracts set forth the entire arrangement and
understanding between VMARK and its subsidiaries and the respective third
parties with respect to the subject matter thereof, and, except as
indicated on Schedule 3.10(a), there have been no material amendments or
side or supplemental arrangements to or in respect of any VMARK Material
Contract. VMARK has made available for review by UNIDATA and its
representatives true and correct copies of all VMARK Material Contracts as
currently in effect, and will furnish any further information that UNIDATA
may reasonably request in connection therewith. To the knowledge of VMARK,
each VMARK Material Contract is valid and in full force and effect and
VMARK and its subsidiaries have each performed all material obligations
required to be performed thereunder. Except as set forth on Schedule
3.10(a), VMARK and its subsidiaries are not in default under or in breach
or violation of any material term of any VMARK Material Contract and, to
the knowledge of VMARK, no third party is in default under any material
provision of any VMARK Material Contract, except, in each such case, for
such defaults, breaches or violations which would not, individually or in
the aggregate, have a material adverse effect on VMARK.
Section 3.11. Accounts Receivable. The accounts receivable of VMARK
reflected on the balance sheet included in the most recently filed VMARK SEC
Report are bona fide claims against debtors and, to the knowledge of VMARK, are
collectible in full in the ordinary course of business subject to any amounts
reserved on said balance sheet for doubtful accounts, except for any amounts the
failure of which to collect would not have, individually or in the aggregate, a
material adverse effect on VMARK.
Section 3.12. No Undisclosed Liabilities. Except as set forth on Schedule
3.12, neither VMARK nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) which are, in the aggregate, material to the
business, operations or financial condition of VMARK and its subsidiaries, taken
as a whole, except (a) liabilities adequately provided for in the VMARK Balance
Sheet, (b) contractual liabilities incurred in the ordinary course of business
and not required under GAAP to be reflected on the VMARK Balance Sheet, (c)
liabilities incurred in connection with this Agreement, or (d) other liabilities
incurred since June 30, 1997 in the ordinary course of business.
Section 3.13. Absence of Litigation. Except as set forth on Schedule 3.13,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of VMARK, overtly threatened against VMARK or any of its
subsidiaries, or any properties or rights of VMARK or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that, individually or in the aggregate,
could have a material adverse effect upon VMARK.
Section 3.14. Employee Benefit Plans; Employment Agreements.
(a) Schedule 3.14(a) sets forth a true and complete list of all
employee benefit plans (as defined in Section 3(3) of ERISA) and any other
bonus, stock option, stock right, stock appreciation right, stock purchase,
incentive compensation, deferred compensation, supplemental retirement,
severance, salary continuation, death benefit, hospitalization, medical,
dental, vision, life insurance, disability, tuition, education or legal
assistance, dependent care assistance, day care, cafeteria, and other
similar fringe or employee benefit plans, programs or arrangements, and any
current or former employment or executive compensation or severance
agreements, written or otherwise (i) which are for the benefit of, or
relating to, any employee of VMARK, any trade or business (whether or not
incorporated) which is or was a member of a controlled group including
VMARK or which is under common control with VMARK within the meaning of
Section 414 of the Code (each a "VMARK ERISA Affiliate"), or any subsidiary
of VMARK, (ii) which are currently maintained, administered, or contributed
to by VMARK or any VMARK ERISA Affiliate, or (iii) under which VMARK or any
VMARK ERISA Affiliate has any present or future obligations (including each
plan with respect to which VMARK or a VMARK ERISA Affiliate could incur
liability under Section 4069 (if such plan has been or were terminated) or
Section 4212(c) of ERISA (together, the "VMARK Employee Plans"), excluding
agreements with former employees under which VMARK and its subsidiaries
have no remaining obligations.
A true and complete copy of each such written VMARK Employee Plan that
covers employees or former employees of VMARK, including each amendment
thereto and any trust agreement, insurance
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contract, collective bargaining agreement, or other funding or investment
arrangements for the benefits under such VMARK Employee Plan, has been
delivered to UNIDATA. In addition, with respect to each such VMARK Employee
Plan which is an employee benefit plan as defined in Section 3(3) of ERISA,
VMARK has delivered to UNIDATA the three most recently filed Federal Forms
5500, the most recent summary plan description (including any summaries of
material modifications), the most recent IRS determination letter, if
applicable, and all other material employee communications with respect to
each such employee benefit plan.
(b) Except as set forth on Schedule 3.14(b).
(i) none of the VMARK Employee Plans (A) promises or provides (or
previously promised or provided) retiree medical or other retiree
welfare benefits to any person, except as required in Section 4980B of
the Code (nor has VMARK or any VMARK ERISA Affiliate ever maintained
such a plan), (B) is subject to Title IV of ERISA or the funding
requirements of Section 412 of the Code, or (C) is a "multiemployer
plan" as such term is defined in Section 3(37) of ERISA;
(ii) to VMARK's knowledge, there has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA or Section
4975 of the Code (other than any such transaction which is exempt under
Section 408 of ERISA or 4975 of the Code, respectively), with respect to
any VMARK Employee Plan, which could result, directly or indirectly, in
any material liability of VMARK or any VMARK ERISA Affiliate;
(iii) all VMARK Employee Plans that cover or have covered employees
or former employees of VMARK have been maintained and operated, and
currently are, in compliance in all material respects with their terms,
the requirements prescribed by any and all applicable laws (including
ERISA and the Code), orders, or governmental rules and regulations in
effect with respect thereto, and VMARK and the VMARK ERISA Affiliates
have performed all material obligations required to be performed by them
under, are not in any material respect in default under or in violation
of, and have no knowledge of any default or violation by any other party
to, any of the VMARK Employee Plans;
(iv) each VMARK Employee Plan that covers or has covered employees
or former employees of VMARK and is intended to qualify under Section
401(a) of the Code and each trust established pursuant to each such
VMARK Employee Plan that is intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination letter from the
IRS, a copy of which has been delivered to UNIDATA, and, to the
knowledge of VMARK, nothing has occurred which may reasonably be
expected to impair such determination or otherwise adversely affect the
tax-qualified status of such VMARK Employee Plan;
(v) VMARK and the VMARK ERISA Affiliates have made full and timely
payment of all amounts required to be contributed under the terms of
each VMARK Employee Plan and applicable law or required to be paid as
expenses under such VMARK Employee Plan;
(vi) there has been no amendment to, written interpretation of or
announcement (whether or not written) by VMARK or any of its VMARK ERISA
Affiliates relating to, or change in employee participation, coverage or
benefits under, any VMARK Employee Plan that covers or had covered
employees or former employees of VMARK that would increase materially
the expense of maintaining such VMARK Employee Plan above the level of
the expense incurred in respect thereof for the fiscal year ended prior
to the date hereof;
(vii) there is no contract, agreement, plan or arrangement covering
any employee, former employee, director or agent of VMARK or any VMARK
ERISA Affiliate that, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to the
terms of Section 280G of the Code;
(viii) no employee, former employee, director or agent of VMARK
will become entitled to any bonus, retirement, severance or similar
benefit or enhanced or accelerated benefit as a result of the
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transactions contemplated hereby (either alone or upon the occurrence of
any additional or subsequent events);
(ix) there is no suit, action, dispute, claim, arbitration or
legal, administrative, or other proceeding or governmental investigation
pending, or, to the best knowledge of VMARK, threatened, alleging any
breach of the terms of any VMARK Employee Plan or of any fiduciary
duties thereunder or violation of any applicable law with respect to any
such VMARK Employee Plan;
(x) with respect to any VMARK Employee Plan that is self-funded (in
whole or in part), no material claims have been made that have not yet
been paid and, to the best knowledge of VMARK, no injury, sickness, or
other medical condition has been incurred with respect to which material
claims may be made pursuant to such VMARK Employee Plan (such disclosure
to include the amount thereof);
(xi) VMARK does not maintain or have any obligation to contribute
to any "voluntary employees' beneficiary association" (within the
meaning of Section 501(c)(9) of the Code) or to any "group health plan,"
within the meaning of Section 5001(b)(1) of the Code, that is funded by
any method other than by VMARK's purchase of one or more insurance
contracts;
(xii) since January 1, 1980, neither VMARK nor any VMARK ERISA
Affiliate has made or been obligated to make any contributions, or has
otherwise participated in, any employee benefit plan which is a
multiemployer plan as defined under Section 3(37) or Section 4001(a)(3)
of ERISA.
(c) Schedule 3.14(c) sets forth a true and complete list of each
outstanding option to purchase VMARK Common Stock as of the date hereof,
together with the identity of the holder of such option, the number of
shares of VMARK Common Stock subject to such option, the date of grant of
such option, the extent to which such option is or will become vested, the
option price of such option (to the extent determined as of the date
hereof), whether such option is intended to qualify as an ISO within the
meaning of Section 422(b) of the Code, and the expiration date of such
option. Schedule 3.14(c) also sets forth the total number of such ISOs and
such nonqualified options.
(d) VMARK has made available for review by UNIDATA and its
representatives and Schedule 3.14(d) sets forth a list of (i) true and
complete copies of all employment agreements with officers and Directors of
VMARK; (ii) true and complete copies of all agreements with consultants
where VMARK has obligations to make annual cash payments in an amount
exceeding $25,000; (iii) a schedule listing all officers of VMARK who have
executed a non-competition agreement with VMARK; (iv) true and complete
copies of all severance agreements, programs and policies of VMARK with or
relating to its employees, excluding programs and policies required to be
maintained by law; and (v) true and complete copies of all plans, programs,
agreements and other arrangements of VMARK with or relating to its
employees which contain change in control provisions.
Section 3.15. Labor Matters. Except as set forth on Schedule 3.15, (i)
there are no controversies pending or, to the knowledge of VMARK, threatened,
between VMARK or its subsidiaries and any of their respective employees or
former employees, which controversies would have a material adverse effect upon
VMARK; (ii) neither VMARK nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by VMARK or its subsidiaries nor does VMARK or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither VMARK nor any of its subsidiaries
is subject to any labor strike, slowdown, work stoppage, lockout, or, to the
knowledge of VMARK, threats thereof, by or with respect to any employees of
VMARK or any of its subsidiaries.
Section 3.16. Restrictions on Business Activities. Except for this
Agreement or as set forth on Schedule 3.16, there is no material agreement,
judgment, injunction, order or decree binding upon VMARK or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any material business practice of VMARK or any of its
subsidiaries, the acquisition of property by VMARK
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or any of its subsidiaries or the conduct of business by VMARK or any of its
subsidiaries as currently conducted or as proposed to be conducted by VMARK.
Section 3.17. Real Property.
(a) Schedule 3.17(a) describes each interest in real property owned by
VMARK and its subsidiaries, including the location and a brief description
thereof, the mortgagee of such property and the principal terms of such
mortgage. VMARK and each if its subsidiaries have good and marketable title
to all such property, free and clear of all liens, other than the mortgages
listed on Schedule 3.17(a) and except for liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of
the property affected thereby or which, individually, or in the aggregate,
would not have a material adverse effect on VMARK or any of its
subsidiaries. VMARK and its subsidiaries enjoy peaceful and quiet
possession of their respective real property in all material respects and
have not received any notice asserting the existence of a default under any
such mortgage.
(b) Schedule 3.17(b) describes each interest in real property leased
by VMARK and its subsidiaries, including the location and a brief
description thereof, the lessor of such leased property and the principal
terms of each lease or any other arrangement under which such property is
leased. VMARK and its subsidiaries enjoy peaceful and quiet possession of
their respective leased premises in all material respects and have not
received any notice asserting the existence of a default under any such
leasehold and are not aware of any default by the landlord of any such
leased premises of any material term of the applicable lease.
Section 3.18. Taxes.
(a) Except as set forth on Schedule 3.18(a), VMARK and its
subsidiaries have timely filed Tax Returns required to be filed by them,
and VMARK and its subsidiaries have paid and discharged all material Taxes
due in connection with or with respect to the filing of all Tax Returns and
have paid all other material Taxes when due, and there are no other Taxes
that would be due if asserted by a taxing authority, except such as are
being contested in good faith by appropriate proceedings (to the extent
that any such proceedings are required) and with respect to which VMARK is
maintaining reserves to the extent currently required in all respects
adequate for their payment. As of the time of filing, all Tax Returns were
(and, as to Tax Returns not filed as of the date hereof, will be) complete
and correct in all material respects. VMARK and its subsidiaries have
complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes and have
timely withheld from employee wages or other payments to creditors or
independent contractors and paid over to the proper government authorities
all amounts required to be so withheld and paid over. Except as set forth
on Schedule 3.18(a), no notice of claim has ever been made by a government
authority in a jurisdiction where VMARK does not file Tax Returns that it
is or may be subject to Taxes in that jurisdiction. VMARK and each of its
subsidiaries have disclosed to the relevant taxing authority any position
taken where the failure to make such disclosure would enable the taxing
authority to subject such person to penalties or additions to tax that
would have a material adverse effect upon VMARK. Neither the IRS nor any
other taxing authority or agency is now asserting or, to VMARK's knowledge,
is threatening to assert against VMARK or any of its subsidiaries any
deficiency or claim for additional Taxes other than additional Taxes with
respect to which an adequate reserve (in conformity with GAAP) has been
established, as set forth in the financial statements included in the most
recently filed VMARK SEC Report. Neither VMARK nor any of its subsidiaries
is currently being audited by any taxing authority. There are no tax liens
on any assets of VMARK or any subsidiary. No extension or waiver of a
statute of limitations with respect to assessment of Taxes is currently in
effect for VMARK or any of its subsidiaries. The accruals and reserves for
Taxes reflected in the VMARK Balance Sheet are in all material respects
adequate to cover all Taxes accruable and unpaid through the date thereof
(including interest and penalties, if any, thereon and Taxes being
contested) in accordance with GAAP, consistently applied with past
practice. Neither VMARK nor any of its subsidiaries is required to include
in income (i) any amount in respect of any adjustment under Section 481 of
the Code, or (ii) any installment sale
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gain. VMARK is not a party to any joint venture, partnership, or other
arrangement or contract treated as a partnership for Federal income tax
purposes. No material issues have been raised by the relevant taxing
authorities on audit that are of a recurring nature and that would have a
material adverse effect upon the Taxes of VMARK or any of its subsidiaries.
VMARK has made available for inspection all Tax Returns of VMARK and its
subsidiaries for which the applicable statute of limitations has not
expired. All material elections with respect to Taxes affecting VMARK or
its subsidiaries as of the date hereof are set forth on Schedule 3.18 (a).
(b) None of VMARK or its subsidiaries has filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of any asset owned by VMARK or any of its
subsidiaries. Except as set forth on Schedule 3.18(b), neither VMARK nor
any of its subsidiaries is obligated under any agreement with respect to
industrial development bonds or other obligations with respect to which the
excludability from gross income of the holder for Federal or state income
tax purposes could be affected by the transactions contemplated hereunder.
Except as set forth on Schedule 3.18(b), neither VMARK nor any of its
subsidiaries has entered into any intercompany transaction within the
meaning of Section 1.1502-13(b)(1) of the United States Treasury
Regulations as to which deferred gains or loss has not been restored.
Except as set forth on Schedule 3.18(b), no excess loss account within the
meaning of Section 1.1502-19(a)(2) of the United States Treasury
Regulations exists with respect to the stock of any of its subsidiaries.
Except as set forth on Schedule 3.18(b), VMARK does not have and has not
had a branch in any foreign country. VMARK has provided to UNIDATA copies
of all tax allocation or tax sharing agreements to which it is a party, all
of which are listed on Schedule 3.18(a), and VMARK is not liable for the
Taxes of any other person or entity under United States Treasury Regulation
Section 1.1502-6 (or any similar provision of state, foreign or local law),
or as a transferee or successor, or by contract, or otherwise, except for
Taxes of any subsidiaries that are members at the time of closing of an
affiliated group within the meaning of Section 1504(a) of which VMARK is
the common parent, or Taxes which, in the aggregate, are not expected to be
a material amount.
(c) The Merger is intended to qualify as a reorganization under
Section 368(a)(1)(A) of the Code. In respect thereof, the following
representations are made: (i) VMARK has no plan or intention to reacquire
any of its stock issued in the Merger; (ii) VMARK has no plan or intention
to sell or otherwise dispose of any of the assets of UNIDATA acquired in
the Merger, except for dispositions made in the ordinary course of business
or transfers described in Section 368(a)(2)(C) of the Code; (iii) following
the Merger, VMARK will continue the historic business of UNIDATA or use a
significant portion of UNIDATA's historic business assets in a business;
(iv) the payment of cash in lieu of fractional shares of VMARK stock is
solely for the purpose of avoiding the expense and inconvenience to VMARK
of issuing fractional shares and does not represent separately bargained
for consideration; (v) the total cash consideration to be paid in the
Merger to the UNIDATA stockholders instead of issuing fractional shares of
VMARK stock will not exceed one percent of the total consideration that
will be issued in the Merger to the UNIDATA shareholders in exchange for
their Shares; (vi) VMARK will pay the expenses incurred in connection with
the Merger which are allocated to it pursuant to Section 7.03, if any;
(vii) there is no intercorporate indebtedness existing between UNIDATA and
VMARK that was issued, acquired or will be settled at a discount; and
(viii) VMARK is not an "investment company" as defined in Section
368(a)(2)(F) of the Code.
Section 3.19. Environmental Matters. Except as set forth on Schedule 3.19,
VMARK and each of its subsidiaries (i) have obtained all applicable permits,
licenses and other authorization which are required under Federal, state or
local laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous or toxic materials or wastes into ambient
air, surface water, ground water or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by VMARK or its subsidiaries (or their respective agents);
(ii) are in substantial compliance with all material terms and conditions of
such required permits, licenses and authorization, and also are in compliance
with all other limitations, restrictions, conditions,
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standards, prohibitions, requirements, obligations, schedules and timetables
contained in such laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) as of the date hereof, are not aware of nor have
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which would interfere with or prevent continued
compliance with or which would give rise to any material common law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding,
based on or resulting from VMARK's or any of its subsidiary's (or any of their
respective agent's) manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous or toxic
material or waste, and (iv) have taken all actions necessary under applicable
requirements of Federal, state or local laws, rules or regulations to register
any products or materials required to be registered by VMARK or its subsidiaries
(or any of their respective agents) thereunder.
Section 3.20. Brokers. Except for Volpe Brown Whelan & Company, LLC, no
investment bank, broker or finder is entitled to any fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of VMARK. VMARK has heretofore furnished to
UNIDATA true and complete copies of all agreements between VMARK and Volpe Brown
Whelan & Company, LLC pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereunder.
Section 3.21. Intellectual Property.
(a) VMARK and its subsidiaries own, are licensed to use or otherwise
possess legally enforceable rights to use all patents, trademarks, trade
names, service marks, copyrights and any applications therefor, technology,
know-how, VMARK Software (as defined in below), and tangible or intangible
proprietary information or material that are used in the business of VMARK
and its subsidiaries as currently conducted. "VMARK Software" means
computer software programs or applications (in both source code and object
code form) and VMARK Documentation (as defined below) related thereto with
respect to the source and object code thereof and all other aspects of all
such programs, in each case including all present and predecessor versions
and all works in progress relating to the correction, modification or
enhancement of such programs. "VMARK Documentation" means the
documentation, specifications and other written technical data (including
without limitation all specifications and other documents necessary for the
use and maintenance of the VMARK Software (such as user manuals, design
specifications and installation guides), in each case including all present
and predecessor versions and all works in progress in both machine-readable
and human-readable form. Schedule 3.21(a) sets forth a true and complete
list (without extensive or revealing descriptions) of the VMARK Software,
the VMARK Documentation, registered and material unregistered trademarks,
design marks and service marks, patents, registered copyrights, trade names
and any applications therefor owned by VMARK and its subsidiaries (the
"VMARK Intellectual Property Rights"), and specifies the jurisdictions in
which each such VMARK Intellectual Property Right has been issued or
registered or in which an application for such issuance and registration
has been filed, including the respective registration or application
numbers and the names of all registered owners, together with a list of all
of VMARK's currently marketed software products and an indication as to
which, if any, of such software products have been registered for copyright
protection with the United States Copyright Office and any foreign offices
and by whom such items have been registered. Schedule 3.21(a) sets forth a
true and complete list of all material third-party patents, trademarks or
copyrights (including software) (the "VMARK Third Party Intellectual
Property Rights"), which are incorporated in, are, or form a part of, any
VMARK software product with respect to which VMARK received in excess of
$250,000 in the fiscal year ending June 30, 1997. Schedule 3.21(a) sets
forth a true and complete list of (i) all material licenses, sublicenses
and other agreements as to which VMARK is a party and pursuant to which any
person is authorized to use any VMARK Intellectual Property Right excluding
those licenses, sublicenses or other agreements that are in the ordinary
course of business of VMARK as of the date hereof, and (ii) all material
licenses, sublicenses and other agreements as to which VMARK is a party and
pursuant to which VMARK is authorized to use any VMARK Third Party
Intellectual Property Rights which involve the payment of more than
$100,000.
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(b) Except as set forth on Schedule 3.21(b), VMARK and its
subsidiaries are not, nor will they be as a result of the execution and
delivery of this Agreement or the performance of their obligations
hereunder, in violation of any license, sublicense or agreement described
on Schedule 3.21(b), except for violations which would not, individually or
in the aggregate, have a material adverse effect on VMARK. Except as set
forth on Schedule 3.21(b), no claims with respect to VMARK Intellectual
Property Rights, any trade secret material to VMARK, or VMARK Third Party
Intellectual Property Rights to the extent arising out of any use,
reproduction or distribution of such VMARK Third Party Intellectual
Property Rights by or through VMARK or its subsidiaries, are currently
pending or, to the knowledge of VMARK, threatened by any person or entity,
nor does VMARK know of any valid grounds for any bona fide claims (i) to
the effect that the manufacture, sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by VMARK or
its subsidiaries infringes on any copyright, patent, trademark, service
mark or trade secret; (ii) against the use by VMARK or its subsidiaries of
any trademarks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and applications used in
their respective businesses as currently conducted; (iii) challenging the
ownership, validity or effectiveness of any of VMARK Intellectual Property
Rights or other trade secret material to VMARK; or (iv) challenging VMARK's
or its subsidiaries' license or legally enforceable right to make use of
VMARK Third Party Intellectual Rights. To VMARK's knowledge, all patents,
registered trademarks, maskworks and copyrights held by VMARK and its
subsidiaries are valid and subsisting. Except as set forth on Schedule
3.21(b), to VMARK's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of VMARK Intellectual Property
Right by any third party, including any employee or former employee of
VMARK or any of its subsidiaries. Neither VMARK nor any of its subsidiaries
has knowledge of any material infringement liability with respect to, or
infringement by, VMARK or any of its subsidiaries of any trade secret,
patent, trademark, service mark, maskwork or copyright or another.
(c) All VMARK Documentation (with the exception of user manuals
distributed under license agreements) is located at the principal place of
business of VMARK. All artwork, manuals, guides and other written and
graphic material related to the VMARK Software are subject to copyrights
owned by VMARK, except for such copyrights covering software owned by third
parties which is embedded in or otherwise published with the VMARK Software
pursuant to licenses from such third parties.
(d) To the knowledge of VMARK, except as disclosed in Schedule
3.21(d), all copies of the source code for the VMARK Software are in
VMARK's possession and control and no officers, employees, agents or actual
or potential customers of VMARK, or any other third party, have any rights
to or possess such source code.
(e) To the knowledge of VMARK, there are no licenses or other
authorizations not possessed by VMARK which are required for the Surviving
Corporation to utilize, modify, market and distribute the VMARK Software
and VMARK Documentation to the same extent as VMARK prior to the Effective
Time.
(f) Except as disclosed in Schedule 3.21(f), VMARK (i) has taken
reasonable and appropriate actions to protect the secrecy and
confidentiality of the source code for the VMARK Software and the
non-public information included in the VMARK Documentation, and (ii) has
not received any written notice of infringement or other complaint and does
not otherwise have knowledge that its use or distribution of the VMARK
Software or VMARK Documentation infringes or constitutes a misappropriation
of rights under patents, copyrights, trade secrets, trade names, licenses,
or any other proprietary or confidential rights of others. To the knowledge
of VMARK, except as disclosed in Schedule 3.21(f), VMARK Intellectual
Property Rights are presently protectable and are not part of the public
domain or literature, nor have any material portion of any VMARK
Intellectual Property Rights been used, divulged or appropriated for the
benefit of any past or present employees or other persons, or to the
material detriment of VMARK. All persons who have been involved in the
development of the VMARK Software and VMARK Documentation since the
inception of VMARK and, to the knowledge of VMARK, all persons who were
involved in the development of the VMARK Software prior thereto, have
executed invention, confidentiality and nondisclosure agreements covering
source code and other non-public
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information included in the VMARK Documentation in the forms previously
made available to UNIDATA.
(g) Except as disclosed in Schedule 3.21(g), VMARK pays no royalty
under any of VMARK Intellectual Property Rights and has the right to bring
actions for the infringement thereof. To the knowledge of VMARK, the use,
reproduction, distribution, sale, lease, or license of the VMARK Software
and the VMARK Documentation does not violate or infringe any trademark,
design mark, trade name, service mark, copyright, trade secret, know-how or
patent of any other party.
Section 3.22. Interested Party Transactions. Except as set forth on
Schedule 3.22, since the date of VMARK's proxy statement dated March 28, 1994,
no event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
Section 3.23. Insurance. VMARK and its business, properties and/or
employees are insured under the insurance policies listed on Schedule 3.23, all
of which are valid and in full force.
Section 3.24. Vote Required. The affirmative vote of the holders of at
least 50% of the outstanding shares of VMARK Common Stock is the only vote of
the holders of any class or series of VMARK's capital stock necessary under
applicable law or rules of the National Association of Securities Dealers, Inc.
to approve the Merger and the other transactions contemplated hereby.
Section 3.25. Pooling Matters. Neither VMARK nor any of its subsidiaries
or affiliates has, to VMARK's knowledge and based upon consultation with its
independent certified public accountants, taken or agreed to take any action
that (without giving effect to any action taken or agreed to be taken by UNIDATA
or any of its affiliates) would affect the ability of VMARK to account for the
business combination to be effected by the Merger as a pooling of interests.
Section 3.26. Opinion of Financial Advisor. VMARK has been advised by
Volpe Brown Whelan & Company, LLC that in its opinion the terms of the Merger
are fair to the stockholders of VMARK from a financial point of view, and that,
based on information it has as of the date hereof, it is prepared to deliver a
written opinion to that effect which may be included in the Joint Proxy
Statement/Prospectus.
Section 3.27. Other Negotiations. Except as set forth in Schedule 3.27,
VMARK is not actively engaged in discussions or negotiations with any person or
persons with respect to, and has not solicited or furnished any information to
any person or persons who, to VMARK's knowledge, is currently contemplating
negotiations or an offer regarding, a consolidation or merger or other business
combination, recapitalization, liquidation, or similar transaction, or any other
transaction which could be conditioned upon, or otherwise require, the
termination of this Agreement.
Section 3.28. Full Disclosure.
(a) No statement contained in this Agreement or in any certificate or
schedule furnished or to be furnished by or on behalf of VMARK or its
subsidiaries to UNIDATA pursuant to this Agreement, when taken together
with all other statements contained herein or in other certificates and
schedules furnished pursuant to this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary,
in the light of the circumstances under which it was made, in order to make
the statements herein or therein not misleading.
(b) The information supplied by VMARK for inclusion or incorporation
by reference in the Joint Proxy Statement/Prospectus and the Registration
Statement shall not (i) at the time the Registration Statement is declared
effective, (ii) at the time the Joint Proxy Statement/Prospectus (or any
amendment thereof or supplement thereto) is first mailed to holders of
UNIDATA Common Stock or holders of VMARK Common Stock, (iii) at the time of
the UNIDATA Stockholders' Meeting or the VMARK Stockholder's Meeting and
(iv) at the Effective Time, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they are made, not misleading. If at any time prior to the Effective
Time any event or circumstance relating to VMARK or any of its affiliates
or
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its or their respective officers or directors should be discovered by VMARK
which should be set forth in an amendment to the Registration Statement or
a supplement to the Joint Proxy Statement/Prospectus, VMARK shall promptly
inform UNIDATA of such event or circumstance.
Section 3.29. Rights Plan; Antitakeover Law. The entering into this
Agreement or consummation by VMARK of the transactions contemplated hereby (a)
will not cause a Distribution Date as such term is defined under the VMARK
rights plan (the "VMARK Rights Plan") pursuant to the Rights Agreement dated as
of June 12, 1996, as amended, between VMARK and State Street Bank and Trust
Company and (b) will not result in the prohibition of any business combination
pursuant to sec.203 of the Delaware Law.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
Section 4.01. Conduct of Business by UNIDATA and VMARK Pending the
Merger. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, unless
the other party shall otherwise agree in writing, UNIDATA and VMARK shall
conduct its business and shall cause the businesses of its subsidiaries to be
conducted only in, and each of UNIDATA and VMARK and its subsidiaries shall not
take any action except in, the ordinary course of business and in a manner
consistent with past practice; and each of UNIDATA and VMARK shall use
reasonable efforts to preserve the business organization of it and its
subsidiaries, to keep available the services of the present officers, key
employees and consultants of it and its subsidiaries and to preserve the present
relationships of it and its subsidiaries with customers, suppliers and other
persons with which it or any of its subsidiaries has significant business
relations. By way of amplification and not limitation, except as contemplated by
this Agreement, neither UNIDATA nor VMARK, nor any of their respective
subsidiaries shall, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time do, or propose to do, any of the following without the prior
written consent of the other party:
(a) amend or otherwise change its Articles or Certificate of
Incorporation, By-laws or Rights Plan;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class (other than the sale or issuance of common stock
upon the exercise of outstanding options listed on Schedule 2.03 or
Schedule 2.12(c) hereto (with respect to UNIDATA) or Schedule 3.03 or
3.12(c) hereto (with respect to VMARK) or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including, without
limitation, any phantom interest) of UNIDATA or VMARK, as the case may be,
or any of their respective subsidiaries (provided that consent for grants
of employee stock options to newly hired employees pursuant to existing
stock option plans consistent with past practice shall not be unreasonably
withheld);
(c) sell, pledge, dispose of or encumber any of its assets or any
assets of its subsidiaries, except for (i) sales of products (or licenses
thereto) and services in the ordinary course of business consistent with
past practice, (ii) dispositions of obsolete or worthless assets, and (iii)
sales of immaterial assets not in excess of $25,000 in the aggregate;
(d) except as is contemplated by Section 5.05 and Section 5.06, alter
the price or accelerate, amend or change the period (or permit any
acceleration, amendment or change) of exercisability of options or
restricted stock granted under the Employee Plans (including stock option
plans) or authorize cash payments in exchange for any options granted under
any of such plans;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of UNIDATA may declare and pay a dividend to UNIDATA and a
wholly owned subsidiary of VMARK may pay a dividend to a wholly owned
subsidiary of VMARK, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities
in
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respect of, in lieu of or in substitution for shares of its capital stock,
or (iii) amend the terms of, repurchase, redeem or otherwise acquire, or
permit any subsidiary to repurchase, redeem or otherwise acquire, any of
its securities or any securities of its subsidiaries, or propose to do any
of the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of any
UNIDATA Intellectual Property Rights or VMARK Intellectual Property Rights,
as the case may be, or amend or modify any existing agreements with respect
to any UNIDATA Intellectual Property Rights or VMARK Intellectual Property
Rights, as the case may be, or Third Party Intellectual Property Rights,
other than nonexclusive licenses in the ordinary course of business
consistent with past practice or amendments or modifications that would
not, individually or in the aggregate, have a material adverse effect on
UNIDATA or VMARK, as the case may be;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee (other than guarantees of bank
debt of such party's subsidiaries entered into in the ordinary course of
business) or endorse or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans or advances, except
in each case in the ordinary course of business consistent with past
practice; (iii) enter into or amend any UNIDATA Material Contract or VMARK
Material Contract, as the case may be, other than in the ordinary course of
business consistent with past practice; (iv) authorize any capital
expenditures or purchase of fixed assets which are, in the aggregate, in
excess of $25,000 for such party and its subsidiaries taken as a whole; or
(v) enter into or amend any contract, agreement, commitment or arrangement
to effect any of the matters prohibited by this Section 4.01;
(h) Except for increases in salary or wages of employees of such party
or its subsidiaries who are not officers of such party consistent with past
practice, increase the compensation payable or to become payable to its
officers or employees, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any director, officer
(except for officers who are terminated on an involuntary basis) or other
employee of such party or any of its subsidiaries, or establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, stock purchase,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any current or former directors, officers or employees,
except, in each case, as may be required by law, and except for ministerial
updating of plans and trusts which does not affect the benefits thereunder;
(i) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, the capitalization of software development costs, payments of
accounts payable and collection of accounts receivable);
(j) make any material tax election inconsistent with past practices or
settle or compromise any material Federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations except to
the extent the amount of any such settlement has been reserved for on the
UNIDATA Balance Sheet or balance sheet contained in the most recently filed
VMARK SEC Report, as the case may be;
(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
then the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of such party or incurred in
the ordinary course of business and consistent with past practice; or
(l) take any action which would make any of the representations or
warranties of such party contained in this Agreement materially untrue or
incorrect or prevent such party from performing in all material respects or
cause such party not to perform in all material respects its covenants
hereunder.
Notwithstanding the foregoing, (i) VMARK may, without the prior consent of
UNIDATA, consummate the transaction as set forth on Schedule 4.01 upon the terms
and conditions set forth thereon, and (ii) UNIDATA may, without the prior
consent of VMARK, acquire all of the shares of O2 Technology S.A.
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("O2") outstanding that are not currently owned by UNIDATA as of the date
hereof, provided that such acquisition is on terms substantially similar to the
terms set forth in several Share Purchase Agreements and an executed Letter of
Intent furnished to VMARK on October 6, 1997 (the "O2 Transaction").
Section 4.02. No Solicitation by UNIDATA or VMARK.
(a) During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective
Time, neither UNIDATA nor VMARK shall, directly or indirectly, through any
officer, director, employee, representative or agent of UNIDATA or VMARK,
as the case may be, or any of its subsidiaries, solicit, encourage, or,
subject to the applicable fiduciary duties of the respective directors of
UNIDATA and VMARK, as determined by such directors in good faith after
consultation with and based upon the advice of legal counsel, negotiate,
approve or recommend any inquiries or proposals regarding any merger, sale
of assets, sale of shares of capital stock (including without limitation by
way of a tender offer) or similar transactions involving UNIDATA or VMARK,
as the case may be, or any of their respective subsidiaries (any of the
foregoing inquiries or proposals being referred to herein as an
"Acquisition Proposal").
(b) Either party shall immediately notify the other party after
receipt of any Acquisition Proposal or any request for nonpublic
information relating to such party or any of its subsidiaries in connection
with an Acquisition Proposal or for access to the properties, books or
records of such party or any subsidiary by any person that informs the
Board of Directors or officers of such party or such subsidiary that it
intends to make, or has made, an Acquisition Proposal. Such notice to the
other party shall be made orally and in writing and shall indicate in
reasonable detail the identity of the offeror and the terms and conditions
of such proposal, inquiry or contact.
(c) Both parties shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties (other than with
the other party hereto) conducted heretofore with respect to any of the
foregoing. Neither party shall release any third party from any
confidentiality or standstill agreement to which such party is a party.
(d) Both parties shall use reasonable efforts to ensure that the
officers and directors of UNIDATA and VMARK and their respective
subsidiaries and any investment banker or other advisor or representative
retained by such party are aware of, and comply with, the restrictions
described in this Section 4.02.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01. Joint Proxy Statement/Prospectus; Registration Statement.
As promptly as practicable after the execution of this Agreement, VMARK
shall prepare and file with the SEC (with appropriate requests for confidential
treatment) a preliminary form of the Joint Proxy Statement/Prospectus and other
proxy materials related thereto. Following clearance of the Joint Proxy
Statement Prospectus by the SEC, VMARK shall prepare and file with the SEC a
registration statement on Form S-4, containing the prospectus which is a part of
the Joint Proxy Statement/Prospectus, in connection with the registration under
the Securities Act of the shares of VMARK Common Stock to be issued in the
Merger (the "Registration Statement"). UNIDATA and VMARK shall cause the
Registration Statement and the Joint Proxy Statement/Prospectus to comply in all
material respects with the Securities Act, the Exchange Act and the rules and
regulations thereunder. Each of UNIDATA and VMARK shall use reasonable efforts
to have or cause the Registration Statement to become effective (including
clearing the Joint Proxy Statement/Prospectus with the SEC) as promptly as
practicable, and shall take all actions required under any applicable federal or
state securities laws in connection with the issuance of shares of VMARK Common
Stock pursuant to the Merger. Without limiting the generality of the foregoing,
each of UNIDATA and VMARK agrees to use all reasonable efforts, after consulting
with the other party, to respond promptly to any comments made by the SEC with
respect to the Joint Proxy Statement/Prospectus (including each preliminary
version thereof) and the Registration Statement (including each amendment and
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supplement thereto). Each of UNIDATA and VMARK shall, and shall cause it
respective representatives to, fully cooperate with the other party and its
respective representatives in the preparation of the Joint Proxy
Statement/Prospectus and the Registration Statement, and shall, upon request,
furnish the other party with all information concerning it and its affiliates,
directors, officers and stockholders as the other may reasonably request in
connection with the preparation of the Joint Proxy Statement/Prospectus and the
Registration Statement. The Joint Proxy Statement/Prospectus shall include the
determination and recommendation of the Board of Directors of UNIDATA and VMARK
that their respective stockholders vote in favor of the approval and adoption of
this Agreement and the Merger; provided, however, that the Board of Directors of
UNIDATA or VMARK may withdraw, modify or change such respective recommendation
if either such Board of Directors determines in good faith, based upon the
advice of outside counsel, that making such recommendation, or the failure to so
withdraw, modify or change its recommendation, or the failure to recommend any
other offer or proposal, could reasonably be deemed to cause the members of such
Board of Directors to breach their fiduciary duties under applicable law. As
promptly as practicable after the Registration Statement shall have become
effective, UNIDATA and VMARK shall cause the Proxy Statement to be mailed to
their respective stockholders. Thereafter, UNIDATA and VMARK shall each notify
the other as promptly as practicable upon becoming aware of any event or
circumstance which should be described in an amendment of, or a supplement to,
the Joint Proxy Statement/Prospectus or the Registration Statement, and UNIDATA
and VMARK shall each notify the other as promptly as practicable after the
receipt by it of any written or oral comments of the SEC on, or of any written
or oral request by the SEC for amendments or supplements to, the Proxy Statement
or the Registration Statement, and shall promptly supply the other with copies
of all correspondence between it or any of its representatives and the SEC with
respect to any of the foregoing filings.
Section 5.02. Stockholders' Meetings. UNIDATA and VMARK shall call and
hold their respective Stockholders' Meetings as promptly as practicable for the
purpose of voting upon the approval of the Merger, and VMARK and UNIDATA shall
each use reasonable efforts to hold the Stockholders' Meetings as soon as
practicable after the date on which the Registration Statement becomes
effective. UNIDATA and VMARK shall each use reasonable efforts to solicit from
their respective stockholders proxies in favor of the approval of the Merger,
and subject to the applicable fiduciary duties of the respective directors of
UNIDATA and VMARK, as determined by such directors in good faith after
consultation with and based upon the advice of legal counsel shall take all
other action necessary or advisable to secure the vote or consent of
stockholders required by the Delaware Law and the Colorado Law to obtain such
approvals.
Section 5.03. Access to Information: Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which UNIDATA or VMARK may be subject (from which UNIDATA and VMARK shall each
use reasonable efforts to be released), UNIDATA and VMARK shall each (and shall
cause each of their subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of the other, reasonable access,
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, UNIDATA and VMARK
shall each (and shall cause each of their subsidiaries to) furnish promptly to
the other all information concerning its business, properties and personnel as
such other party may reasonably request, and UNIDATA and VMARK shall each make
available to the other the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the other's business,
properties and personnel as either VMARK or UNIDATA may reasonably request. Each
party shall keep such information confidential in accordance with the terms of
the Confidentiality and Standstill Agreements, dated February 19, 1997 and
February 26, 1997 (the "Confidentiality Agreements"), each between VMARK and
UNIDATA.
Section 5.04. Consents, Approvals. UNIDATA and VMARK shall each use
reasonable best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and UNIDATA and
VMARK shall make all filings (including, without limitation, all filings with
United States and foreign governmental or regulatory agencies) required in
connection with the authorization, execution and delivery of this Agreement by
UNIDATA and VMARK and the consummation by them of the transactions contemplated
hereby. UNIDATA and VMARK shall furnish all information required to be included
in the Joint Proxy
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Statement/Prospectus and the Registration Statement, or for any application or
other filing to be made pursuant to the rules and regulations of any United
States or foreign governmental body in connection with the transactions
contemplated by this Agreement.
Section 5.05. Stock Options.
(a) At the Effective Time, the obligation to issue shares under each
outstanding option to purchase UNIDATA Common Stock (each a "Stock Option")
granted under UNIDATA's 1992 Stock Option Plan, 1993 Stock Option Plan,
1994 Stock Option Plan, 1995 Stock Option Plan, 1996 Stock Option Plan, and
1997 Stock Option Plan, each as amended (collectively, the "UNIDATA Stock
Option Plans") and to former employees of O2 pursuant to the O2
Transaction, all of which shall be fully vested and exercisable at the
Effective Time pursuant to the terms of the applicable Stock Option, shall
be deemed assumed by VMARK and each such option shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Stock Option prior to the Effective Time, the whole
number (disregarding any fractional shares) of VMARK Common Stock as the
holder of such Stock Option would have been entitled to receive pursuant to
the Merger had such holder exercised such option in full immediately prior
to the Effective Time (not taking into account whether or not such option
was in fact exercisable), at a price per share equal to (x) the aggregate
exercise price for UNIDATA Common Stock otherwise purchasable pursuant to
such Stock Option, divided by (y) the number of shares of VMARK Common
Stock deemed purchasable pursuant to such Stock Option, provided, however,
that the exercisability or the other vesting of the assumed options and the
underlying stock shall continue to be determined by reference to stock
option agreements executed pursuant to UNIDATA's Stock Option Plans, and
provided, further, that references in any Stock Option to UNIDATA, the
board of directors of UNIDATA or any committee thereof, and any UNIDATA
Stock Option Plan shall, commencing at the Effective Time, unless
inconsistent with the context, be to VMARK, the board of directors of VMARK
or a committee thereof, and VMARK's 1986 Stock Option Plan (for officers)
or 1995 Non-Statutory Option Plan (for non-officers), respectively.
(b) As soon as practicable after the Effective Time, VMARK shall
deliver to each holder of an outstanding Stock Option an appropriate notice
setting forth such holder's rights pursuant thereto and such Stock Option
shall continue in effect on the same terms and conditions (including
further anti-dilution provisions and subject to the adjustments required by
this Section 5.05 after giving effect to the Merger). VMARK shall comply
with the terms of all such Stock Options and ensure, to the extent required
by, and subject to the provisions of, any such UNIDATA Stock Plan that
Stock Options which qualified for special tax treatment prior to the
Effective Time continue to so qualify after the Effective Time. VMARK shall
take all corporate action necessary to reserve for issuance a sufficient
number of VMARK Common Stock for delivery pursuant to the terms set forth
in this Section 5.05.
(c) VMARK shall use reasonable efforts after the Effective Time to
maintain the effectiveness of a registration statement under the Securities
Act with respect to the issuance by VMARK of shares of VMARK Common Stock
which may be issued pursuant to the UNIDATA Options as provided for above
in this Section 5.05.
Section 5.06 Warrants. At the Effective Time, VMARK shall assume in
writing all obligations under the UNIDATA Warrants (as defined below), and the
holders of the UNIDATA Warrants thereafter shall have the right to acquire, on
the same pricing and payment terms and conditions as are currently applicable
under the UNIDATA Warrants, the same number of shares of VMARK Common Stock as
the holders of the UNIDATA Warrants would have been entitled to receive in the
Merger had such holder exercised the UNIDATA Warrants in full immediately prior
to the Effective Time (rounded downward to the nearest whole number), at the
price per share (rounded downward to the nearest whole cent) equal to (y) the
aggregate exercise price for the shares of UNIDATA Common Stock purchasable
pursuant to each UNIDATA Warrant immediately prior to the Effective Time divided
by (z) the number of full shares of VMARK Common Stock deemed purchasable
pursuant to such UNIDATA Warrant in accordance with the foregoing. As of the
Effective Time, all of the UNIDATA warrants shall be fully vested and
exercisable according to their terms. The "UNIDATA Warrants" mean, collectively,
(i) the Warrant Agreements
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between UNIDATA and each of Massachusetts Mutual Life Insurance Company, Cudd &
Co., and Webell & Co. for warrants to purchase an aggregate of 250,000 shares of
UNIDATA Class B Common Stock and (ii) the Warrant Agreements between UNIDATA and
each of Derek Miller and Neil Miller for warrants to purchase an aggregate of
255,000 shares of UNIDATA Class A Common Stock.
Section 5.07. Notification of Certain Matters. UNIDATA shall give prompt
notice to VMARK, and VMARK shall give prompt notice to UNIDATA, of (i) the
occurrence or non-occurrence of any event which would cause any representation
or warranty made by the respective parties in this Agreement to be materially
untrue or inaccurate, and (ii) any failure of UNIDATA or VMARK, as the case may
be, to materially comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.07 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice, and provided further, that failure to give such notice shall not be
treated as a breach of covenant for the purposes of Sections 6.02(b) or 6.03(b)
unless the failure to give such notice results in material prejudice to the
other party.
Section 5.08. Further Action/Tax Treatment. Upon the terms and subject to
the conditions hereof, each of the parties hereto shall use reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and to otherwise satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement. The foregoing covenant shall not include any obligation by VMARK to
agree to divest, abandon, license or take similar action with respect to any
assets (tangible or intangible) of VMARK or UNIDATA. Both VMARK and UNIDATA
shall each use reasonable efforts to cause the Merger to qualify, and will not
(either before or after consummation of the Merger) take any actions which could
prevent the Merger from qualifying, as a reorganization within the meaning of
Section 368(a) of the Code.
Section 5.09. Public Announcements. VMARK and UNIDATA shall consult with
each other before issuing any press release or other public statement with
respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the other
party, which shall not be unreasonably withheld; provided, however, that a party
may, without the prior consent of the other party, issue such press release or
make such public statement as may upon the advice of counsel be required by law
if it has used reasonable efforts to consult first with the other party.
Section 5.10. Quotation of VMARK Common Stock on Nasdaq. VMARK shall use
reasonable efforts to cause the shares of VMARK Common Stock to be issued in the
Merger to be approved for quotation on the Nasdaq National Market prior to the
Effective Time.
Section 5.11. Accountant's Comfort Letters. UNIDATA and VMARK shall each
use reasonable efforts to cause Coopers & Lybrand LLP and Deloitte & Touche LLP
to deliver to VMARK or UNIDATA, as the case may be, a letter covering such
matters as may be requested by VMARK or UNIDATA, with respect to such matters as
are customarily addressed in certified public accountant's "comfort" letters
with respect to the type of transactions contemplated by this Agreement.
Section 5.12. Pooling Accounting Treatment. UNIDATA and VMARK shall use
reasonable efforts to avoid taking any action which would adversely affect the
ability of both parties to treat the Merger as a pooling of interests and shall
take such action as may be reasonably required to negate the impact of any past
actions which would adversely impact the ability of VMARK or UNIDATA, as the
case may be, to treat the Merger as a pooling of interests.
Section 5.13. Indemnification; Directors' and Officers' Insurance. All
rights to indemnification now existing in favor of the present or former
directors or officers of UNIDATA or any of its subsidiaries as provided in
UNIDATA's Articles of Incorporation and Bylaws, or in the certificate or
articles of incorporation, by-laws or similar documents of any such
subsidiaries, in effect as of the date hereof shall, with respect to matters
occurring prior to the Effective Time, survive the Merger and continue in full
force and effect after the Effective Time. All rights to indemnification in
respect of any such claim or claims shall continue until
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disposition of such claim or claims. VMARK and UNIDATA further agree that all
rights to indemnification now existing in favor of the present or former
directors or officers of UNIDATA or any of its subsidiaries in any
indemnification agreement between such person and UNIDATA or any such
subsidiary, as the case may be, shall survive the Merger and continue in full
force and effect in accordance with the terms of such agreement. Until the sixth
anniversary of the Effective Time, VMARK shall maintain in effect with respect
to matters occurring prior to the Effective Time, to the extent available, the
policy of directors' and officers' liability insurance currently maintained by
UNIDATA on behalf of its officers and directors and those of its subsidiaries;
provided, however, that VMARK may substitute therefor a policy containing
coverage, terms and conditions which are no less advantageous to the present or
former directors and officers of UNIDATA.
Notwithstanding anything to the contrary contained in this Agreement, the
provisions of this Section 5.13 shall survive the Effective Time and are
intended to be for the benefit of, and shall be enforceable by, each present and
former director and officer of UNIDATA.
Section 5.14. Employee Benefits
(a) VMARK will maintain without change for a period of twelve months
after the Effective Time each severance program and policy of UNIDATA
listed in Schedule 2.13(d) (including any such plan, program or policy that
is subject to the approval of the Board of Directors of UNIDATA as of the
date of this Agreement) with respect to each VMARK employee who was
employed by UNIDATA immediately prior to the Effective Time and for
purposes of any such severance program or policy and any severance program
and policy which UNIDATA was required to maintain by law; except as set
forth in Section 5.14(d) below, VMARK will give full credit to such VMARK
employee for all service performed for UNIDATA. VMARK will honor all
severance and retention agreements in effect as of the Effective Time.
(b) With respect to each VMARK Employee Plan, each VMARK employee
employed by UNIDATA immediately prior to the Effective Time shall receive
credit for all service performed for UNIDATA; such service credit shall
apply for all purposes, including but not limited to, any vacation, sick
time, insurance or other benefits and any eligibility or vesting
requirements under any VMARK Employee Plan.
(c) As of the Effective Time, each VMARK employee employed by UNIDATA
immediately prior to the Effective Time shall be enrolled in the Group
Health Benefit Plan for Employees of VMARK, or any successor plan thereto
("Group Health Plan") and shall be entitled to participate in the Group
Health Plan without limitation or exclusion for any preexisting conditions
applicable to any such employee or his enrolled dependents, except to the
extent that any such preexisting condition limitation or exclusion applied
to such individual under the group health plan provided by UNIDATA prior to
the Effective Time. For purposes of participation in the Group Health Plan,
each VMARK employee employed by UNIDATA immediately prior to the Effective
Time shall also receive credit for all payments made toward deductible,
co-payment and out-of-pocket limits under the group health plan of UNIDATA
in which such employee was a participant immediately prior to the Effective
Time for the plan year which includes the Effective Time as if such
payments had been made for similar purposes for such period under the Group
Health Plan by an employee employed by VMARK immediately prior to the
Effective Time.
(d) As soon as practicable after the Effective Time, VMARK will
provide to each executive officer of UNIDATA that VMARK employs after the
Merger (as listed on Schedule 5.14(d)) with a split-dollar insurance
arrangement that provides substantially similar economic and other terms to
those existing for current VMARK executives, provided, that for purposes of
vesting of these agreements, each employee shall be considered a new
employee of VMARK as of the Effective Time.
Section 5.15. Name of the Surviving Corporation. Each of VMARK and UNIDATA
shall use its best efforts to select a name for the Surviving Corporation prior
to the last practicable date on which such name can be included in the Joint
Proxy Statement/Prospectus to be mailed to the stockholders of VMARK. Provided
such name has been selected in accordance with the foregoing, at the Effective
Time, VMARK will
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change its name to a name mutually satisfactory to VMARK and UNIDATA, subject to
approval of VMARK's stockholders.
Section 5.16. Stockholder Litigation. Each of VMARK and UNIDATA shall give
the other the reasonable opportunity to participate in the defense of any
stockholder litigation arising in connection with the transactions contemplated
hereby against VMARK or UNIDATA, as applicable, and its directors.
Section 5.17. Registration Rights. VMARK will provide to James T. Dresher
registration rights with respect to his shares of VMARK Common Stock received at
the Effective Time provided such rights are mutually satisfactory to Mr. Dresher
and VMARK. Such rights shall be on standard, reasonable terms, including
unlimited "piggyback" rights, subject to standard underwriter cutbacks, and two
demand registrations on Form S-3, subject to reasonable blackout periods and
other restrictions, and such other terms as the parties shall mutually agree.
Section 5.18. Fairness Opinion; Restructuring. In the event that the
Merger is not to be treated as a pooling of interests for accounting purposes,
UNIDATA and VMARK shall each use its reasonable best efforts (a) to cause Volpe
Brown Whelan & Co, LLC, or such other financial advisor reasonably satisfactory
to VMARK, to deliver to VMARK an opinion that the consideration to be paid in
the Merger is fair, from a financial point of view, to the stockholders of
VMARK, and (b) to restructure the post-Merger operating plan for the Surviving
Corporation developed by VMARK and UNIDATA to the extent commercially reasonable
to permit the issuance of such opinion, provided that neither party shall have
an obligation hereunder if the reason that the Merger is not to be treated as a
pooling of interests for accounting purposes is due to a failure to observe the
covenants in Section 5.12 by the other party or a Stockholder Support Agreement
by the other party's affiliate signatory thereto, provided further that the
breaching party shall still be obligated to perform the covenants contained in
this section if the non-breaching party so requests.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.01. Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of the Joint Proxy
Statement/Prospectus shall have been initiated or threatened by the SEC;
(b) Stockholder Approval. The Agreement and the Merger shall have
been approved by the requisite vote of the stockholders of UNIDATA and
VMARK;
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
(each an "Injunction") (i) preventing the consummation of the Merger or
(ii) seeking to prohibit or limit the Surviving Corporation due to the
consummation of the Merger from exercising all material rights and
privileges pertaining to its ownership of all or a material portion of the
business or assets of UNIDATA, VMARK or any of their respective
subsidiaries, shall be in effect, nor shall any proceeding brought by any
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be
pending; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal; and
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(d) Tax Opinions. VMARK and UNIDATA shall have received written
opinions of Choate, Hall & Stewart and Latham & Watkins, respectively, in
form and substance reasonably satisfactory to them to the effect that the
Merger will constitute a reorganization within the meaning of Section
368(a) of the Code.
(e) Quotation of VMARK Common Stock on Nasdaq. The shares of VMARK
Common Stock to be issued in the Merger and upon exercise of UNIDATA
Options and the UNIDATA Warrants shall have been approved for quotation on
the Nasdaq National Market, subject to official notice of issuance.
Section 6.02. Additional Conditions to Obligation of VMARK. The
obligations of VMARK to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. The representations and
warranties of UNIDATA contained in this Agreement shall be true and correct
in all material respects on and as of the Effective Time, except for (i)
changes contemplated or permitted by this Agreement, (ii) those
representations and warranties which address matters only as of a specified
date (which shall remain true and correct as of such date), and (iii) where
the failure to be true and correct would not have a material adverse effect
upon VMARK, and VMARK shall have received a certificate to such effect at
the closing signed by the President and Chief Financial Officer of UNIDATA;
(b) Agreements and Covenants. UNIDATA shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by UNIDATA on
or prior to the Effective Time, and VMARK shall have received a certificate
to such effect signed by the President and Chief Financial Officer of
UNIDATA;
(c) Dissenting Shares. Not more than five percent of UNIDATA Common
Stock shall constitute Dissenting Shares as of the Effective Time.
Section 6.03. Additional Conditions to Obligation of UNIDATA. The
obligation of UNIDATA to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and
warranties of VMARK contained in this Agreement shall be true and correct
in all material respects on and as of the Effective Time, except for (i)
changes contemplated or permitted by this Agreement, (ii) those
representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date), and
(iii) where the failure to be true and correct would not have a material
adverse effect upon VMARK, and UNIDATA shall have received a certificate to
such effect signed by the President and Chief Financial Officer of VMARK;
(b) Agreements and Covenants. VMARK shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by VMARK on or prior to the
Effective Time, and UNIDATA shall have received a certificate to such
effect signed by the President and Chief Financial Officer of VMARK;
(c) No Trigger of VMARK Rights Plan. No event shall have occurred
that has or would result in the triggering of any right or entitlement of
stockholders of VMARK under the VMARK Rights Plan, or will occur as a
result of the consummation of the Merger.
ARTICLE VII
TERMINATION
Section 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of either UNIDATA or VMARK:
(a) by mutual written consent duly authorized by the Boards of
Directors of VMARK and UNIDATA; or
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(b) by either VMARK or UNIDATA if the Merger shall not have been
consummated by April 15 1998 (the "Outside Date"), provided that the right
to terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose willful failure to fulfill any obligation
under this Agreement has been the cause of or resulted in the failure of
the Merger to occur on or before such date; or
(c) by either VMARK or UNIDATA if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a non-appealable final order, decree or ruling or taken any other
action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger, except, if the party relying
on such order, decree or ruling or other action has not complied with its
obligations under Section 5.08; or
(d) by either VMARK or UNIDATA, if, at the VMARK or UNIDATA
Stockholders' Meetings (including any adjournment or postponement thereof),
the requisite vote of the stockholders of VMARK or UNIDATA shall not have
been obtained; or
(e) by VMARK or UNIDATA, upon a breach of any representation,
warranty, covenant or agreement on the part of UNIDATA or VMARK,
respectively, set forth in this Agreement such that the conditions set
forth in Section 6.02(a) or 6.02(b), or Section 6.03(a) or 6.03(b), would
not be satisfied (a "Terminating Breach"), provided, however, that if such
Terminating Breach is curable prior to April 15, 1998, by VMARK or UNIDATA,
as the case may be, through the exercise of its reasonable efforts and for
so long as VMARK or UNIDATA, as the case may be, continues to exercise such
reasonable efforts, neither UNIDATA nor the VMARK, respectively, may
terminate this Agreement under this Section 7.01(e); or
(f) by VMARK, if (i) the Board of Directors of UNIDATA shall fail to
recommend the Merger or shall withdraw, modify or change its recommendation
of the Merger in a manner adverse to VMARK or shall have resolved to do any
of the foregoing; (ii) after the receipt by UNIDATA of an Acquisition
Proposal, VMARK requests in writing that the Board of Directors of UNIDATA
reconfirm its recommendation of this Agreement and the Merger to the
stockholders of UNIDATA and the Board of Directors of UNIDATA fails to do
so within 10 business days after its receipt of VMARK's request; (iii) the
Board of Directors of UNIDATA shall have recommended to the stockholders of
UNIDATA an Alternative Transaction (as defined in Section 7.03(e)); (iv) a
tender offer or exchange offer for 20% or more of the outstanding shares of
UNIDATA Common Stock is commenced (other than by VMARK or an affiliate of
VMARK) and the Board of Directors of UNIDATA recommends that the
stockholders of UNIDATA tender their shares in such tender or exchange
offer; or (v) for any reason UNIDATA fails to call and hold the UNIDATA
Stockholders' Meeting by the Outside Date (provided that VMARK's right to
terminate this Agreement under such clause (v) shall not be available if at
such time UNIDATA would be entitled to terminate this Agreement under
Section 7.01(e) without giving effect to the cure period); or
(g) by UNIDATA, if (i) the Board of Directors of VMARK shall fail to
recommend the Merger or shall withdraw, modify or change its recommendation
of the Merger in a manner adverse to UNIDATA or shall have resolved to do
any of the foregoing (except for the sole reason of the failure of the
Board of Directors to receive a fairness opinion pursuant to Section 5.18);
(ii) after the receipt by VMARK of an Acquisition Proposal, UNIDATA
requests in writing that the Board of Directors of VMARK reconfirm its
recommendation of this Agreement and the Merger to the stockholders of
UNIDATA and the Board of Directors of VMARK fails to do so within 10
business days after its receipt of UNIDATA's request; (iii) the Board of
Directors of VMARK shall have recommended to the stockholders of VMARK an
Alternative Transaction (as defined in Section 7.03(e)); (iv) a tender
offer or exchange offer for 20% or more of the outstanding shares of VMARK
Common Stock is commenced (other than by UNIDATA or an affiliate of
UNIDATA) and the Board of Directors of VMARK recommends that the
stockholders of VMARK tender their shares in such tender or exchange offer;
or (v) for any reason VMARK fails to call and hold the VMARK Stockholders'
Meeting by the Outside Date (except for the sole reason of the failure of
the Board of Directors to receive a fairness opinion pursuant to Section
5.18) (provided that
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UNIDATA's right to terminate this Agreement under such clause (v) shall not
be available if at such time VMARK would be entitled to terminate this
Agreement under Section 7.01(e) without giving effect to the cure period);
or
(h) by VMARK or UNIDATA on or after February 28, 1998 if by such date
(i) the Merger is not to be treated as a pooling of interests for
accounting purposes, (ii) each of VMARK and UNIDATA has complied with its
obligation under Section 5.18, and (iii) VMARK is unable to cause Volpe
Brown Whelan & Company, LLC, or such other financial advisor reasonably
satisfactory to VMARK, to deliver an opinion to the effect that the
consideration to be paid in the Merger is fair, from a financial point of
view, to the stockholders of VMARK.
Section 7.02. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 7.03 and Section 8.01 hereof, and (ii) nothing herein shall relieve any
party from liability for any willful breach hereof.
Section 7.03. Fees and Expenses. (a) Except as set forth in this Section
7.03, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses if the Merger is not consummated and by the Surviving Corporation if
the Merger is consummated, to the extent such expenses are solely and directly
related to such Merger in accordance with the guidelines established in Revenue
Ruling 73-54, 1973-1 C.B. 187; provided, however, that, if the Merger is not
consummated, VMARK and UNIDATA shall share equally all fees and expenses, other
than attorneys' fees, incurred in relation to the printing of the Joint Proxy
Statement/Prospectus (including any preliminary materials related thereto) and
the Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) UNIDATA shall pay VMARK a termination fee of $3 million upon the
earliest to occur of the following events:
(i) the termination of this Agreement by either VMARK or UNIDATA
pursuant to Section 7.1(d) if (A) the requisite votes of the stockholders
of UNIDATA to approve the Merger shall not have been obtained, (B) a
proposal for an Alternative Transaction (as defined below) involving
UNIDATA shall have been publicly announced prior to the UNIDATA
Stockholders' Meeting, and (C) either a definitive agreement for an
Alternative Transaction involving UNIDATA is entered into, or an
Alternative Transaction involving UNIDATA is consummated, within eighteen
months of such termination;
(ii) the termination of this Agreement by VMARK pursuant to Section
7.1(f); or
(iii) the termination of this Agreement by either VMARK or UNIDATA
pursuant to Section 7.1(d) if (A) the requisite vote of the stockholders of
UNIDATA to approve the Merger shall not have been obtained, (B) one or more
of the stockholders of UNIDATA party to the UNIDATA Stockholder Support
Agreement failed to approve the Merger or otherwise breached such
agreement, and (C) if such stockholder had voted for the Merger or not
otherwise breached, the Merger would have been approved by the UNIDATA
stockholders.
UNIDATA's payment of a termination fee pursuant to this subsection shall be
the sole and exclusive remedy of VMARK against UNIDATA and any of its
subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment; provided that this limitation shall not apply in the event of a
willful breach of this Agreement by UNIDATA.
(c) VMARK shall pay UNIDATA a termination fee of $3 million upon the
earliest to occur of the following events:
(i) the termination of this Agreement by either VMARK or UNIDATA
pursuant to Section 7.1(d) if (A) the requisite vote of the stockholders of
VMARK to approve the Merger shall not have been obtained, (B) a proposal
for an Alternative Transaction (as defined below) involving VMARK shall
have been publicly announced prior to the VMARK Stockholders' Meeting, and
(C) either an Alternative
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Transaction involving VMARK is entered into, or an Alternative Transaction
involving VMARK is consummated, within eighteen months of such termination;
(ii) the termination of this Agreement by UNIDATA pursuant to Section
7.01(g);
(iii) the termination of this agreement by either VMARK or UNIDATA
pursuant to Section 7.1(d) if (A) the requisite vote of the stockholders of
VMARK to approve the Merger shall not have been obtained, (B) one or more
of the stockholders of party to the Stockholder Support Agreement failed to
approve the Merger or otherwise breached such agreement, and (C) if such
stockholder had voted for the Merger or not otherwise breached, the Merger
would have been approved by the VMARK stockholders; or
(iv) the termination of this Agreement by VMARK or UNIDATA pursuant to
Section 7.01(h).
VMARK's payment of a termination fee pursuant to this subsection shall be
the sole and exclusive remedy of UNIDATA against VMARK and any of its
subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment; provided that this limitation shall not apply in the event of a
willful breach of this Agreement by VMARK.
(d) The fees payable pursuant to Section 7.03(b)or 7.03(c) shall be paid
concurrently with the first to occur of the events described in Section
7.03(b)(i), (ii) or (iii) or 7.03(c)(i), (ii), (iii) or (iv) respectively.
(e) As used in this Agreement, "Alternative Transaction" means either (i) a
transaction pursuant to which any third party acquires more than 20% of the
outstanding shares of UNIDATA Common Stock or VMARK Common Stock, as the case
may be, pursuant to a tender offer or exchange offer or otherwise, (ii) a merger
or other business combination involving UNIDATA or VMARK pursuant to which any
third party (or the stockholders of a third party) acquires more than 20% of the
outstanding shares of UNIDATA Common Stock or VMARK Common Stock, as the case
may be, or the entity surviving such merger or business combination, (iii) any
other transaction pursuant to which any third party acquires control of assets
(including for this purpose the outstanding equity securities of Subsidiaries of
UNIDATA or VMARK, and the entity surviving any merger or business combination
including any of them) of UNIDATA or VMARK having a fair market value (as
determined by the Board of Directors of UNIDATA or VMARK, as the case may be, in
good faith) equal to more than 20% of the fair market value of all the assets of
UNIDATA or VMARK, as the case may be, and their respective subsidiaries, taken
as a whole, immediately prior to such transaction, or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc. Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, as the case may be, except that the agreements set
forth in Article I and Section 5.05 and 5.13 shall survive the Effective Time
indefinitely and those set forth in Section 7.02 and Section 7.03 shall survive
termination indefinitely. The Confidentiality Agreements shall survive
termination of this Agreement as therein provided.
Section 8.02. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered to the parties at the following addresses (or
at such other address for a party as shall be specified by like changes of
address shall
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be effective upon receipt) or sent by electronic transmission, with confirmation
received, to the telecopy number specified below:
(a) If to VMARK:
VMARK SOFTWARE, INC.
50 Washington Street
Westboro, MA 01581-1021
Telecopier No. (508) 389-8767
Attention: Peter Gyenes
President
With a copy to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02110
Telecopier No. (617) 248-4000
Attention: Richard N. Hoehn, Esq.
(b) If to UNIDATA, INC.:
UNIDATA, INC.
1099 18th Street
Suite 2500
Denver, CO 80202
Telecopier No. (303) 294-4758
Attention: David Brunel
President
With a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071-2007
Telecopier No. (213) 891-8763
Attention: Gary Olson, Esq.
Section 8.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person; including, without limitation,
any partnership or joint venture in which UNIDATA (either alone, or through
or together with any other subsidiary) has, directly or indirectly, an
interest of five percent of more;
(b) "beneficial owner" with respect to any shares of UNIDATA Common
Stock, means a person who shall be deemed to be the beneficial owner of
such shares (i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such person or any of
its affiliates or associates (as such term is defined in Rule 12b-2 of the
Exchange Act) has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or understanding
or upon the exercise of consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such person or any
of its affiliates or person with whom such
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person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of any shares;
(c) "business day" means any day other than a day on which banks in
Boston are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;
(e) "material adverse effect" shall mean any change or effect that,
individually or in the aggregate is, or is reasonably likely to be,
materially adverse to the business, assets, condition (financial or
otherwise), or results of operations of UNIDATA and its subsidiaries, or
VMARK and its subsidiaries, as the case may be, in each case taken as a
whole;
(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of UNIDATA, VMARK, the Surviving
Corporation or any other person means any corporation, partnership, joint
venture or other legal entity of which UNIDATA, the Surviving Corporation,
VMARK or such other person, as the case may be, (either alone or through or
together with any other subsidiary) owns, directly or indirectly, more than
50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.
Section 8.04. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that after approval
of the Merger by the stockholders of UNIDATA and VMARK, no amendment may be made
which by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by UNIDATA and VMARK.
Section 8.05. Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto, (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, and (c) waive compliance with any of the agreements
or conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
Section 8.06. Severability. If any term or other provision of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
Section 8.07. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreements), both written and oral, among the parties, or any of
them, through the date hereof with respect to the subject matter hereof and,
except as otherwise expressly provided herein, are not intended to confer upon
any other person any rights or remedies hereunder.
Section 8.08. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that VMARK may assign all or any of their
rights hereunder to any affiliate provided that no such assignment shall relieve
the assigning party of its obligations hereunder.
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Section 8.09. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement (other than Section 5.13), express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 8.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 8.11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware,
without regard to the choice of law provisions thereof.
Section 8.12. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, VMARK and UNIDATA have caused this Agreement to be
executed under seal as of the date first written above by their respective
officers thereunto duly authorized.
VMARK SOFTWARE, INC.
By: /s/ PETER GYENES
--------------------------------------
Name: Peter Gyenes
Title: President and Chief Executive
Officer
UNIDATA, INC.
By: /s/ DAVID BRUNEL
--------------------------------------
Name: David W. Brunel
Title: President and Chief Operating
Officer
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EXHIBIT A
STOCK OPTION AGREEMENT
(GRANTED TO UNIDATA)
STOCK OPTION AGREEMENT, dated as of October 7, 1997 (this "Agreement"),
between VMARK Software, Inc., a Delaware corporation ("VMARK"), and Unidata,
Inc., a Colorado corporation ("UNIDATA").
WHEREAS, VMARK and UNIDATA propose to enter into an Agreement and Plan of
Merger and Reorganization, of even date herewith (the "Merger Agreement"), which
provides that, among other things, upon the terms and subject to the conditions
thereof, UNIDATA will be merged with and into VMARK, with VMARK continuing as
the surviving corporation; and
WHEREAS, as a condition to the willingness of UNIDATA to enter into the
Merger Agreement, UNIDATA has required that VMARK agree, and in order to induce
UNIDATA to enter into the Merger Agreement VMARK has agreed, to grant UNIDATA an
option to purchase certain shares of common stock of VMARK, in accordance with
the terms of this Agreement; and
WHEREAS, pursuant to the terms of an agreement of even date herewith,
UNIDATA has granted VMARK an option to acquire certain shares of common stock of
UNIDATA.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE STOCK OPTION
Section 1.1. Grant of Stock Option. VMARK hereby grants to UNIDATA an
irrevocable option (the "Stock Option") to purchase up to 1,624,988 shares (the
"Option Shares") of common stock, par value $.01 per share, of VMARK ("VMARK
Common Stock"), including the associated rights (the "VMARK Rights") to purchase
shares of VMARK capital stock pursuant to the Rights Agreement (the "Rights
Plan"), dated as of June 12, 1996, between VMARK and State Street Bank and Trust
Company, in the manner set forth below at a price (the "Purchase Price") of
$9.87 per Option Share. All references in this Agreement to shares of VMARK
Common Stock issued to UNIDATA hereunder shall be deemed to include the VMARK
Rights associated therewith. Capitalized terms used herein but not defined
herein shall have the meanings set forth in the Merger Agreement.
Section 1.2. Exercise of Stock Option. (a) Subject to the satisfaction of
the conditions set forth in Section 1.3 hereof, the Stock Option may be
exercised by UNIDATA, in whole or in part, at any time or from time to time
after the occurrence of an Exercise Event (as defined below) and prior to the
Termination Date (as defined below).
(b) An "Exercise Event" shall occur for purposes of this Agreement upon the
occurrence of any event or circumstance which, pursuant to the terms of Section
7.03(c) of the Merger Agreement, would entitle UNIDATA, upon termination of the
Merger Agreement, to payment of the termination fee specified in clauses (i),
(ii) and (iii) Section 7.03(c) of the Merger Agreement (regardless of whether
the Merger Agreement has actually been terminated as a result of such event or
circumstance). Termination of the Merger Agreement pursuant to Section
7.03(c)(iv) of the Merger Agreement shall not be an Exercise Event.
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(c) The "Termination Date" shall occur for purposes of this Agreement upon
the first to occur of any of the following:
(i) the Effective Time;
(ii) the date on which the Merger Agreement is terminated pursuant to
Section 7.01 thereof, if an Exercise Event shall not have occurred on or
prior to such termination date; or
(iii) the date which is one year after the date on which the Merger
Agreement is terminated pursuant to Section 7.01 thereof, if an Exercise
Event shall have occurred on or prior to such termination date;
provided that, with respect to clause (iii) above, if the Stock Option cannot be
exercised as of such date by reason of any applicable judgment, decree, law,
regulation or order, then the Termination Date shall be extended until thirty
days after such impediment has been removed or such waiting period has expired.
(d) In the event UNIDATA wishes to exercise the Stock Option, UNIDATA shall
send a written notice (an "Exercise Notice") to VMARK specifying the total
number of Option Shares UNIDATA wishes to purchase, the denominations of the
certificate or certificates evidencing such Option Shares which UNIDATA wishes
to receive, a date (a "Closing Date"), which shall be a business day which is at
least five business days after delivery of such notice, and place for the
closing of such purchase (a "Closing").
(e) Upon receipt of an Exercise Notice, VMARK shall be obligated to deliver
to UNIDATA the number of Option Shares specified therein, in accordance with the
terms of this Agreement, on the later of (i) the Closing Date and (ii) the first
business day on which the conditions specified in Section 1.3 hereof shall be
satisfied.
Section 1.3. Conditions to Delivery of Option Shares. The obligation of
VMARK to deliver Option Shares upon any exercise of the Stock Option is subject
to the satisfaction of the following condition:
(a) There shall be no preliminary or permanent injunction or other
order by any court of competent jurisdiction preventing or prohibiting such
exercise of the Stock Option or the delivery of the Option Shares in
respect of such exercise.
Section 1.4. Closings. At each Closing, VMARK will deliver to UNIDATA a
certificate or certificates evidencing the number of Option Shares specified in
UNIDATA's Exercise Notice, registered in the name of UNIDATA or its nominee, and
UNIDATA will deliver to VMARK the aggregate Purchase Price for such Option
shares. All payments made by UNIDATA to VMARK pursuant to this Section 1.4 shall
be made, at the option of UNIDATA, (a) by wire transfer of immediately available
funds, or (b) by delivery to VMARK of a certified or bank check or checks
payable to or on the order of VMARK.
Section 1.5. Adjustments Upon Share Issuances, Changes in Capitalization,
etc. (a) In the event of any change in VMARK Common Stock or in the number of
outstanding shares of VMARK Common Stock by reason of a stock dividend, stock
split, reclassification, split-up, recapitalization, combination, exchange of
shares or similar transaction or any other change in the corporate or capital
structure of VMARK (including, without limitation, the declaration or payment of
an extraordinary dividend of cash, securities or other property or a dividend
under the Rights Plan), the type and number of shares or securities to be issued
by VMARK upon exercise of the Stock Option, the Purchase Price and the VMARK
Rights shall be adjusted appropriately, and proper provision shall be made in
the agreements governing such transaction, so that UNIDATA shall receive upon
exercise of the Stock Option the number and class of shares or other securities
or property that UNIDATA would have received in respect of VMARK Common Stock if
the Stock Option had been exercised immediately prior to such event, or the
record date therefor, as applicable, and an election had been made to the
fullest extent permitted to receive such securities, cash or other property.
(b) In the event that VMARK shall enter into an agreement (i) to
consolidate with or merge into any person, other than UNIDATA or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than UNIDATA or one of
its subsidiaries, to merge into VMARK and VMARK shall be the continuing or
surviving corporation, but, in
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connection with such merger, the then outstanding shares of VMARK Common Stock
shall be changed into or exchanged for stock or other securities of VMARK or any
other person or cash or any other property, or then outstanding shares of VMARK
Common Stock shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the surviving corporation or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than UNIDATA or one of its subsidiaries, then, and in each such case, proper
provision shall be made in the agreements governing such transaction so that
UNIDATA shall receive upon exercise of the Stock Option the number and class of
shares or other securities or property that UNIDATA would have received in
respect of VMARK Common Stock if the Stock Option had been exercised immediately
prior to such transaction, or the record date therefor, as applicable, and an
election had been made to the fullest extent permitted to receive such
securities, cash or other property.
(c) No adjustment made in accordance with this Section 1.5 shall constitute
or be deemed a waiver of any breach of any of VMARK's representations,
warranties, covenants, agreements or obligations contained in the Merger
Agreement.
(d) The provisions of this Agreement, including, without limitation,
Sections 1.1, 1.2, 1.4 and 3.2, shall apply with appropriate adjustments to any
securities for which the Stock Option becomes exercisable pursuant to this
Section 1.5.
Section 1.6. Restrictive Legend. Each certificate representing Option
Shares issued to UNIDATA hereunder shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
ARTICLE II
CASH EXERCISE
Section 2.1. Cash Exercise. If at any time the Stock Option is then
exercisable pursuant to the terms of Section 1.2 hereof, UNIDATA may elect, in
lieu of exercising the Stock Option to purchase Option Shares provided in
Section 1.1 hereof, to send a written notice to VMARK (the "Cash Exercise
Notice") specifying a date not later than 20 business days and not earlier than
10 business days following the date such notice is given on which date VMARK
shall pay to UNIDATA an amount in cash equal to the Spread (as hereinafter
defined) multiplied by all or such portion of the Option Shares subject to the
Stock Option as UNIDATA shall specify. As used herein "Spread" shall mean the
excess, if any, over the Purchase Price of the higher of (x) if applicable, the
highest price per share of UNIDATA Common Stock (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by any person in
an Alternative Transaction (as defined in clause (i), (ii) or (iii) of Section
7.03(e) of the Merger Agreement) (the "Alternative Purchase Price") or (y) the
closing sales price of the shares of VMARK Common Stock on the last trading day
immediately prior to the date of the Cash Exercise Notice as quoted on The
Nasdaq National Market (the "Closing Price"). If the Alternative Purchase Price
includes any property other than cash, the Alternative Purchase Price shall be
the sum of (i) the fixed cash amount, if any, included in the Alternative
Purchase Price plus (ii) the fair market value of such other property. If such
other property consists of securities with an existing public trading market,
the average of the closing sales prices (or the average of the closing bid and
asked prices if closing sales prices are unavailable) for such securities in
their principal public trading market on the five trading days ending five days
prior to the date of the Cash Exercise Notice shall be deemed to equal the fair
market value of such property. If such other property consists of something
other than cash or securities with an existing public trading market and, as of
the payment date for the Spread, agreement on the value of such other property
has not been reached, the Alternative Purchase Price shall be deemed to equal
the Closing Price. Upon exercise of UNIDATA's right to receive cash pursuant to
this Article II and the payment of such cash to UNIDATA, the obligations of
VMARK to deliver Option Shares pursuant to Section
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1.2(e) shall be terminated with respect to such number of Option Shares for
which UNIDATA shall have elected to be paid the Spread.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VMARK
Section 3.1. Representations and Warranties of VMARK. VMARK represents and
warrants to UNIDATA that (a) VMARK is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, (b) the execution
and delivery by VMARK of this Agreement and the consummation by VMARK of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of VMARK, (c) this Agreement has been
duly executed and delivered by VMARK and constitutes the valid and binding
obligation of VMARK, enforceable against VMARK in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles, (d) VMARK has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the Termination Date shall have
reserved, all the Option Shares issuable pursuant to this Agreement, and VMARK
will take all necessary corporate action to authorize and reserve and permit it
to issue all additional shares of VMARK Common Stock or other securities which
may be issued pursuant to Section 1.5 hereof, all of which, upon their issuance
and delivery in accordance with the term of this Agreement, shall be duly
authorized, validly issued, fully paid and nonassessable, shall be delivered
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitation on UNIDATA's voting rights,
charges and other encumbrances of any nature whatsoever (other than this
Agreement) and shall not be subject to any preemptive rights, and (e) the
execution and delivery of this Agreement by VMARK does not, and the consummation
by VMARK of the transactions contemplated by this Agreement will not, conflict
with, or result in a violation of, or default under (with or without notice or
lapse of time or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any provision of
the Certificate of Incorporation or Bylaws of VMARK or (ii) any mortgage,
indenture, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to VMARK or its
properties or assets.
ARTICLE IV
COVENANTS OF VMARK
Section 4.1. Listing; Other Action. (a) VMARK shall, at its expense, use
reasonable best efforts to cause the Option Shares to be approved for quotation
on The Nasdaq National Market System (the "NASDAQ/NMS"), subject to notice of
issuance, as promptly as practicable following the date of this Agreement, and
will provide prompt notice to the NASDAQ/NMS of the issuance of each Option
Share.
(b) VMARK shall use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereunder.
Section 4.2. Registration. (a) As used in this Agreement, "Registrable
Securities" means each of the Option Shares issued to UNIDATA hereunder and any
other securities issued in exchange for, or issued as dividends or otherwise on
or in respect of, any of such Option Shares.
(b) At any time or from time to time within two years of the first Closing,
UNIDATA may make a written request to VMARK for registration under and in
accordance with the provisions of the Securities Act of 1993, as amended (the
"Securities Act") with respect to all or part of the Registrable Securities (a
"Demand Registration"). A Demand Registration may be, at the option of UNIDATA,
a shelf registration or a registration involving an underwritten offering. As
soon as reasonably practicable after UNIDATA's request
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for a Demand Registration, VMARK shall file one or more registration statements
on any appropriate form with respect to all of the Registrable Securities
requested to be so registered; provided that VMARK will not be required to file
any such registration statement during any period of time (not to exceed 60 days
after such request in the case of clause (A) below or 90 days in the case of
clause (B) or (C) below) when (A) VMARK is in possession of material non-public
information which it reasonably believes would be detrimental to be disclosed at
such time and, in the written opinion of outside counsel to VMARK, such
information would have to be disclosed if a registration statement were filed at
that time, (B) VMARK is required under the Securities Act to include audited
financial statements for any period in such registration statement that are not
yet available for inclusion therein, or (C) VMARK determines, in its reasonable
judgment, that such registration would interfere with any financing, acquisition
or other material transaction involving VMARK or any of its affiliates. VMARK
shall use its best efforts to have the Demand Registration declared effective as
soon as reasonably practicable after such filing and to keep the Demand
Registration continuously effective for a period of at least ninety days
following the date on which the Demand Registration is declared effective, in
the case of an underwritten offering, or at least six months following the date
on which the Demand Registration is declared effective, in the case of a shelf
registration; provided that, if for any reason the effectiveness of any Demand
Registration is suspended, the required period of effectiveness shall be
extended by the aggregate number of days of each such suspension; and provided,
further, that the effectiveness of any Demand Registration may be terminated if
and when all of the Registrable Securities covered thereby shall have been sold.
UNIDATA shall be entitled to two Demand Registrations. If any Demand
Registration involves an underwritten offering, (i) UNIDATA shall have the right
to select the managing underwriter, which shall be reasonably acceptable to
VMARK, (ii) VMARK shall enter into an underwriting agreement in customary form
and (iii) unless the managing underwriter reasonably determines that such
restriction would materially and adversely affect the success of such offering,
the underwriter shall use its best efforts to prevent any person and its
affiliates from purchasing through such offering Registrable Securities
representing more than two percent of the outstanding shares of VMARK Common
Stock on a fully diluted basis. VMARK shall not include in any Demand
Registration any securities other than the Registrable Securities requested to
be registered therein by UNIDATA.
(c) If at any time within three years of the first Closing, VMARK proposes
to file a registration statement under the Securities Act with respect to any
shares of any class of its equity securities to be sold for the account of VMARK
(other than a registration statement on Form S-4 or Form S-8 or any successor
form), and the registration form to be used may be used for the registration of
Registrable Securities, then VMARK shall in each case give written notice of
such proposed filing to UNIDATA at least twenty days before the anticipated
filing date, and UNIDATA shall have the right to include in such registration
such number of Registrable Securities as UNIDATA may request (such request to be
made by written notice to VMARK within fifteen days following UNIDATA's receipt
from VMARK of such notice of proposed filing). VMARK shall use its best efforts
to cause the managing underwriter of any proposed underwritten offering to
permit UNIDATA to include in such offering all Registrable Securities requested
by UNIDATA to be included in the registration for such offering on the same
terms and conditions as any similar securities of VMARK included therein.
Notwithstanding the foregoing, if the managing underwriter of such offering
advises UNIDATA that, in the reasonable opinion of such underwriter, the amount
of Registrable Securities which UNIDATA requests to be included in such offering
would materially and adversely affect the success of such offering, then the
amount of Registrable Securities to be offered shall be reduced to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such underwriter, provided, however, that
if the amount of Registrable Securities shall be so reduced, VMARK shall not be
permitted to include in such registration any securities other than securities
to be issued by VMARK and Registrable Securities.
(d) In the event that Registrable Securities are included in a registration
statement pursuant to Section 4.2(c) hereof, UNIDATA agrees not to effect any
public sale or distribution of the issue being registered or a similar security
of VMARK, or any securities convertible into or exchangeable or exercisable for
such securities, including a sale pursuant to Rule 144 under the Securities Act,
during the ten business days prior to, and during the 90-day period beginning
on, the effective date of such registration statement (except as part of such
registration), if and to the extent timely notified in writing by VMARK, in the
case of a non-
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underwritten public offering, or by the managing underwriter, in the case of an
underwritten public offering. In the event that UNIDATA requests a Demand
Registration or if Registrable Securities are included in a registration
pursuant to Section 4.2(c) hereof, VMARK agrees not to effect any public sale or
distribution of the issue being registered or a similar security of VMARK, or
any securities convertible into or exchangeable for such securities, during the
period from such request until 90 days after the effective date of such
registration statement (except as part of such registration or pursuant to a
registration of securities on Form S-4 or Form S-8 or any successor form).
(e) Notwithstanding anything to the contrary contained herein, in the event
that UNIDATA requests a Demand Registration or a registration of Registrable
Securities pursuant to Section 4.2(b) or 4.2(c) hereof, respectively, VMARK
shall have the right to purchase all, but not less than all, of the Registrable
Securities requested to be so registered, upon the terms and subject to
conditions set forth in this Section 4.2(e). If VMARK wishes to exercise such
purchase right, then within two business days following receipt of UNIDATA's
request for such registration, VMARK shall send a written notice (a "Repurchase
Notice") to UNIDATA specifying that VMARK wishes to exercise such purchase
right, a date for the closing of such purchase, which shall not be more than
thirty days after delivery of such Repurchase Notice, and a place for the
closing of such purchase (a "Repurchase Closing"). Upon delivery of a Repurchase
Notice, a binding agreement shall be deemed to exist between UNIDATA and VMARK
providing for the purchase by VMARK of the Registrable Securities requested to
be registered by UNIDATA, upon the terms and subject to the conditions set forth
in this Section 4.2(e). The purchase price per share or other unit of
Registrable Securities (the "Repurchase Price") shall equal the average per
share or per unit closing price as quoted on the NASDAQ/NMS (or if not then
quoted thereon, on such other exchange or quotation system on which the
Registrable Securities are quoted) for the period of five trading days ending on
the trading day immediately prior to the date on which UNIDATA requests a
registration of the Registrable Securities which VMARK subsequently elects to
purchase. UNIDATA's obligation to deliver any Registrable Securities at a
Repurchasing Closing shall be subject to the conditions that, at such Repurchase
Closing. VMARK shall have delivered to UNIDATA a certificate signed on behalf of
VMARK by VMARK's chief executive officer and chief financial officer, which
certificate shall be reasonably satisfactory in form and substance to UNIDATA,
to the effect that the purchase by VMARK of such Registrable Securities (i) is
permitted under applicable Delaware corporate law and under the fraudulent
conveyance provisions of the federal bankruptcy code and (ii) does not violate
any material agreement to which VMARK or any of its subsidiaries is a party or
by which any of their properties or assets is bound. At any Repurchase Closing,
VMARK shall pay to UNIDATA the aggregate Repurchase Price for the Registrable
Securities being purchased by wire transfer of immediately available funds or by
delivering to UNIDATA a certified or bank check payable to or on the order of
UNIDATA in an amount equal to such aggregate Repurchase Price, and UNIDATA will
surrender to VMARK a certificate or certificates evidencing such Registrable
Securities. No purchase of Registrable Securities by VMARK pursuant to this
Section 4.2(e) shall reduce or otherwise modify VMARK's registration obligations
under this Section 4.2 (including, without limitation, the number of Demand
Registrations which VMARK is obligated to effect) with respect to any
Registrable Securities held by UNIDATA following such purchase.
(f) The registrations effected under this Section 4.2 shall be effected at
VMARK's expense except for underwriting commissions allocable to the Registrable
Securities and the fees and disbursements of UNIDATA's counsel. VMARK shall
indemnify and hold harmless UNIDATA, its affiliates and controlling persons and
their respective officers, directors, agents and representatives from and
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, all out-of-pocket expenses, investigation
expenses, expenses incurred with respect to any judgment and fees and
disbursements of counsel and accountants) arising out of or based upon any
statements contained in, or omissions or alleged omissions from, each
registration statement (and related prospectus) filed pursuant to this Section
4.2; provided, however, that VMARK shall not be liable in any such case to
UNIDATA or any affiliate or controlling person of UNIDATA or any of their
respective officers, directors, agents or representatives to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or omission or
alleged omission made in such registration statement or prospectus in reliance
upon,
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and in conformity with, written information furnished to VMARK specifically for
use in the preparation thereof by UNIDATA, such affiliate, controlling person,
officer, director, agent or representative, as the case may be.
ARTICLE V
COVENANTS OF UNIDATA
UNIDATA hereby covenant and agrees as follows:
Section 5.1. Distribution. UNIDATA shall acquire the Option Shares for
investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act and shall not sell any Option Shares purchased
pursuant to this Agreement except in compliance with the Securities Act.
ARTICLE VI
Section 6.1. Expenses. Except as otherwise provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
Section 6.2. Further Assurances. VMARK and UNIDATA will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
Section 6.3. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 6.4. Entire Agreement. This Agreement and the Merger Agreement
(together with the Exhibits, the VMARK Disclosure Schedules, the UNIDATA
Disclosure Schedules and the other documents delivered pursuant thereto)
constitute the entire agreement between the parties and supersede all prior
agreements and understandings, both written and oral, between the parties, or
any of them, with respect to the subject matter hereof.
Section 6.5. Assignment. This Agreement shall not be assigned by either
party without the prior written consent of the other party.
Section 6.6. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
or shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 6.7. Amendment; Waiver. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto. Either party hereto
may with respect to the other party (i) extend the time for the performance of
any obligation or other act, (ii) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any agreement or condition contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
Section 6.8. Severability. If any term or other provision of this
Agreement is held by a court or other competent authority to be invalid, illegal
or incapable of being enforced by any rule of law, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable law to the end
that the transaction contemplated hereby are fulfilled to the extent possible.
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Section 6.9. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, sent or transmitted if delivered personally,
sent by reputable overnight courier to the respective parties at their addresses
as specified in the Merger Agreement or sent by electronic transmission to the
respective parties at their telecopier numbers as specified in the Merger
Agreement.
Section 6.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
Section 6.11. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 6.12. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, UNIDATA and VMARK have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
VMARK SOFTWARE, INC.
By:
------------------------------------
Charles F. Kane
Executive Vice President, Finance,
Chief Financial Officer and
Treasurer
UNIDATA, INC.
By:
------------------------------------
David W. Brunel
President and Chief Operating
Officer
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EXHIBIT B
STOCK OPTION AGREEMENT
(GRANTED TO VMARK)
STOCK OPTION AGREEMENT, dated as of October 7, 1997 (this "Agreement"),
between VMARK Software, Inc., a Delaware corporation ("VMARK"), and Unidata,
Inc., a Colorado corporation ("UNIDATA").
WHEREAS, VMARK and UNIDATA propose to enter into an Agreement and Plan of
Merger and Reorganization, of even date herewith (the "Merger Agreement"), which
provides that, among other things, upon the terms and subject to the conditions
thereof, UNIDATA will be merged with and into VMARK, with VMARK continuing as
the surviving corporation; and
WHEREAS, as a condition to the willingness of VMARK to enter into the
Merger Agreement, VMARK has required that UNIDATA agree, and in order to induce
VMARK to enter into the Merger Agreement UNIDATA has agreed, to grant VMARK an
option to purchase certain shares of common stock of UNIDATA, in accordance with
the terms of this Agreement; and
WHEREAS, pursuant to the terms of an agreement of even date herewith, VMARK
has granted UNIDATA an option to acquire certain shares of common stock of
VMARK.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE STOCK OPTION
Section 1.1. Grant of Stock Option. UNIDATA hereby grants to VMARK an
irrevocable option (the "Stock Option") to purchase up to 2,310,862 shares (the
"Option Shares") of Class A common stock, no par value per share, of UNIDATA
("UNIDATA Common Stock"), in the manner set forth below at a price (the
"Purchase Price") of $4.42 per Option Share. Capitalized terms used herein but
not defined herein shall have the meanings set forth in the Merger Agreement.
Section 1.2. Exercise of Stock Option. (a) Subject to the satisfaction of
the conditions set forth in Section 1.3 hereof, the Stock Option may be
exercised by VMARK, in whole or in part, at any time or from time to time after
the occurrence of an Exercise Event (as defined below) and prior to the
Termination Date (as defined below).
(b) An "Exercise Event" shall occur for purposes of this Agreement upon the
occurrence of any event or circumstance which, pursuant to the terms of Section
7.03(b) of the Merger Agreement, would entitle VMARK, upon termination of the
Merger Agreement, to payment of the termination fee specified in Section 7.03(b)
of the Merger Agreement (regardless of whether the Merger Agreement has actually
been terminated as a result of such event or circumstance).
(c) The "Termination Date" shall occur for purposes of this Agreement upon
the first to occur of any of the following:
(i) the Effective Time;
(ii) the date on which the Merger Agreement is terminated pursuant to
Section 7.01 thereof, if an Exercise Event shall not have occurred on or
prior to such termination date; or
(iii) the date which is one year after the date on which the Merger
Agreement is terminated pursuant to Section 7.01 thereof, if an Exercise
Event shall have occurred on or prior to such termination date;
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provided that, with respect to clause (iii) above, if the Stock Option cannot be
exercised as of such date by reason of any applicable judgment, decree, law,
regulation or order, then the Termination Date shall be extended until thirty
days after such impediment has been removed or such waiting period has expired.
(d) In the event VMARK wishes to exercise the Stock Option, VMARK shall
send a written notice (an "Exercise Notice") to UNIDATA specifying the total
number of Option Shares VMARK wishes to purchase, the denominations of the
certificate or certificates evidencing such Option Shares which VMARK wishes to
receive, a date (a "Closing Date"), which shall be a business day which is at
least five business days after delivery of such notice, and place for the
closing of such purchase (a "Closing").
(e) Upon receipt of an Exercise Notice, UNIDATA shall be obligated to
deliver to VMARK the number of Option Shares specified therein, in accordance
with the terms of this Agreement, on the later of (i) the Closing Date and (ii)
the first business day on which the conditions specified in Section 1.3 hereof
shall be satisfied.
Section 1.3. Conditions to Delivery of Option Shares. The obligation of
UNIDATA to deliver Option Shares upon any exercise of the Stock Option is
subject to the satisfaction of the following condition:
(a) There shall be no preliminary or permanent injunction or other
order by any court of competent jurisdiction preventing or prohibiting such
exercise of the Stock Option or the delivery of the Option Shares in
respect of such exercise.
Section 1.4. Closings. At each Closing, UNIDATA will deliver to VMARK a
certificate or certificates evidencing the number of Option Shares specified in
VMARK's Exercise Notice, registered in the name of VMARK or its nominee, and
VMARK will deliver to UNIDATA the aggregate Purchase Price for such Option
shares. All payments made by VMARK to UNIDATA pursuant to this Section 1.4 shall
be made, at the option of VMARK, (a) by wire transfer of immediately available
funds, or (b) by delivery to UNIDATA of a certified or bank check or checks
payable to or on the order of UNIDATA.
Section 1.5. Adjustments Upon Share Issuances, Changes in Capitalization,
etc. (a) In the event of any change in UNIDATA Common Stock or in the number of
outstanding shares of UNIDATA Common Stock by reason of a stock dividend, stock
split, reclassification, split-up, recapitalization, combination, exchange of
shares or similar transaction or any other change in the corporate or capital
structure of UNIDATA (including, without limitation, the declaration or payment
of an extraordinary dividend of cash, securities or other property), the type
and number of shares or securities to be issued by UNIDATA upon exercise of the
Stock Option and the Purchase Price shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction, so that
VMARK shall receive upon exercise of the Stock Option the number and class of
shares or other securities or property that VMARK would have received in respect
of UNIDATA Common Stock if the Stock Option had been exercised immediately prior
to such event, or the record date therefor, as applicable, and an election had
been made to the fullest extent permitted to receive such securities, cash or
other property.
(b) In the event that UNIDATA shall enter into an agreement (i) to
consolidate with or merge into any person, other than VMARK or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than VMARK or one of
its subsidiaries, to merge into UNIDATA and UNIDATA shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of UNIDATA Common Stock shall be changed into or exchanged for stock or
other securities of UNIDATA or any other person or cash or any other property,
or then outstanding shares of UNIDATA Common Stock shall after such merger
represent less than 50% of the outstanding shares and share equivalents of the
surviving corporation or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than VMARK or one of its
subsidiaries, then, and in each such case, proper provision shall be made in the
agreements governing such transaction so that VMARK shall receive upon exercise
of the Stock Option the number and class of shares or other securities or
property that VMARK would have received in respect of UNIDATA Common Stock if
the Stock Option had been exercised immediately prior to such transaction, or
the record date therefor, as applicable, and an election had been made to the
fullest extent permitted to receive such securities, cash or other property.
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(c) No adjustment made in accordance with this Section 1.5 shall constitute
or be deemed a waiver of any breach of any of UNIDATA's representations,
warranties, covenants, agreements or obligations contained in the Merger
Agreement.
(d) The provisions of this Agreement, including, without limitation,
Sections 1.1, 1.2, 1.4 and 3.2, shall apply with appropriate adjustments to any
securities for which the Stock Option becomes exercisable pursuant to this
Section 1.5.
Section 1.6. Restrictive Legend. Each certificate representing Option
Shares issued to VMARK hereunder shall include a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
ARTICLE II
CASH EXERCISE
Section 2.1. Cash Exercise. If at any time the Stock Option is then
exercisable pursuant to the terms of Section 1.2 hereof, VMARK may elect, in
lieu of exercising the Stock Option to purchase Option Shares provided in
Section 1.1 hereof, to send a written notice to UNIDATA (the "Cash Exercise
Notice") specifying a date not later than 20 business days (except as set forth
in clause (b)(ii) below) and not earlier than 10 business days following the
date such notice is given on which date UNIDATA shall pay to VMARK an amount in
cash equal to the Spread (as hereinafter defined) multiplied by all or such
portion of the Option Shares subject to the Stock Option as VMARK shall specify.
As used herein "Spread" shall mean the excess, if any, over the Purchase Price
of, (a) if UNIDATA Common Stock is publicly traded on a national securities
exchange or The Nasdaq National Market (the "Exchange"), the higher of (i) if
applicable, the highest price per share of UNIDATA Common Stock (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by any
person in an Alternative Transaction (as defined in clause (i), (ii) or (iii) of
Section 7.03(e) of the Merger Agreement) (the "Alternative Purchase Price") or
(ii) the closing sales price of the shares of UNIDATA Common Stock on the last
trading day immediately prior to the date of the Cash Exercise Notice as quoted
on the Exchange (the "Closing Price"), or (b) if UNIDATA Common Stock is not
publicly traded on an Exchange, the higher of (i) if applicable, the Alternative
Purchase Price or (ii) the Fair Market Value (as defined below) of a share of
UNIDATA Common Stock; provided that in such case the Cash Exercise Notice shall
specify a date not later than 20 days beyond the determination of Fair Market
Value. If the Alternative Purchase Price includes any property other than cash,
the Alternative Purchase Price shall be the sum of (A) the fixed cash amount, if
any, included in the Alternative Purchase Price plus (B) the fair market value
of such other property. If such other property consists of securities with an
existing public trading market, the average of the closing sales prices (or the
average of the closing bid and asked prices if closing sales prices are
unavailable) for such securities in their principal public trading market on the
five trading days ending five days prior to the date of the Cash Exercise Notice
shall be deemed to equal the fair market value of such property. If such other
property consists of something other than cash or securities with an existing
public trading market and, as of the payment date for the Spread, agreement on
the value of such other property has not been reached, the Alternative Purchase
Price shall be deemed to equal the Closing Price. For purposes of this
Agreement, the "Fair Market Value" of a share of UNIDATA Common Stock shall be
determined by dividing the appraised value of UNIDATA, as determined by an
investment banker selected by and mutually satisfactory to UNIDATA and VMARK
(or, in the case the parties cannot agree, by a majority of a panel of three
investment bankers, one of which will be selected by UNIDATA, one of which will
be selected by VMARK, and one of which will be selected by the two previously
designated investment bankers), without discount for minority or illiquidity, by
(II) the number of issued and outstanding shares of UNIDATA Common Stock on the
date of the Cash Exercise Notice. Upon exercise of VMARK's right to receive cash
pursuant to this Article II and the payment of such cash to VMARK, the
obligations of
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UNIDATA to deliver Option Shares pursuant to Section 1.2(e) shall be terminated
with respect to such number of Option Shares for which VMARK shall have elected
to be paid the Spread.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UNIDATA
Section 3.1. Representations and Warranties of UNIDATA. UNIDATA represents
and warrants to VMARK that (a) UNIDATA is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado and has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, (b) the execution
and delivery by UNIDATA of this Agreement and the consummation by UNIDATA of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of UNIDATA, (c) this Agreement has been
duly executed and delivered by UNIDATA and constitutes the valid and binding
obligation of UNIDATA, enforceable against UNIDATA in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles, (d) UNIDATA has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the Termination Date shall have
reserved, all the Option Shares issuable pursuant to this Agreement, and UNIDATA
will take all necessary corporate action to authorize and reserve and permit it
to issue all additional shares of UNIDATA Common Stock or other securities which
may be issued pursuant to Section 1.5 hereof, all of which, upon their issuance
and delivery in accordance with the term of this Agreement, shall be duly
authorized, validly issued, fully paid and nonassessable, shall be delivered
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitation on VMARK's voting rights,
charges and other encumbrances of any nature whatsoever (other than this
Agreement) and shall not be subject to any preemptive rights, and (e) the
execution and delivery of this Agreement by UNIDATA does not, and the
consummation by UNIDATA of the transactions contemplated by this Agreement will
not, conflict with, or result in a violation of, or default under (with or
without notice or lapse of time or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Articles of Incorporation or Bylaws of
UNIDATA or (ii) any mortgage, indenture, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to UNIDATA or its properties or assets.
ARTICLE IV
COVENANTS OF UNIDATA
UNIDATA hereby covenant and agrees as follows:
Section 4.1. Required Actions. UNIDATA shall use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereunder.
Section 4.2. Registration. (a) As used in this Agreement, "Registrable
Securities" means each of the Option Shares issued to VMARK hereunder and any
other securities issued in exchange for, or issued as dividends or otherwise on
or in respect of, any of such Option Shares.
(b) At any time or from time to time within two years of the first Closing,
VMARK may make a written request to UNIDATA for registration under and in
accordance with the provisions of the Securities Act of 1993, as amended (the
"Securities Act") with respect to all or part of the Registrable Securities (a
"Demand Registration"). A Demand Registration may be, at the option of VMARK, a
shelf registration or a registration involving an underwritten offering. As soon
as reasonably practicable after VMARK's request for a Demand Registration,
UNIDATA shall file one or more registration statements on any appropriate form
with respect to all of the Registrable Securities requested to be so registered;
provided that UNIDATA will not be required to file any such registration
statement during any period of time (not to exceed 60 days after such request in
the
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case of clause (A) below or 90 days in the case of clause (B) or (C) below) when
(A) UNIDATA is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time and, in
the written opinion of outside counsel to UNIDATA, such information would have
to be disclosed if a registration statement were filed at that time, (B) UNIDATA
is required under the Securities Act to include audited financial statements for
any period in such registration statement that are not yet available for
inclusion therein, or (C) UNIDATA determines, in its reasonable judgment, that
such registration would interfere with any financing, acquisition or other
material transaction involving UNIDATA or any of its affiliates. UNIDATA shall
use its best efforts to have the Demand Registration declared effective as soon
as reasonably practicable after such filing and to keep the Demand Registration
continuously effective for a period of at least ninety days following the date
on which the Demand Registration is declared effective, in the case of an
underwritten offering, or at least six months following the date on which the
Demand Registration is declared effective, in the case of a shelf registration;
provided that, if for any reason the effectiveness of any Demand Registration is
suspended, the required period of effectiveness shall be extended by the
aggregate number of days of each such suspension; and provided, further, that
the effectiveness of any Demand Registration may be terminated if and when all
of the Registrable Securities covered thereby shall have been sold. VMARK shall
be entitled to two Demand Registrations. If any Demand Registration involves an
underwritten offering, (i) VMARK shall have the right to select the managing
underwriter, which shall be reasonably acceptable to UNIDATA, (ii) UNIDATA shall
enter into an underwriting agreement in customary form and (iii) unless the
managing underwriter reasonably determines that such restriction would
materially and adversely affect the success of such offering, the underwriter
shall use its best efforts to prevent any person and its affiliates from
purchasing through such offering Registrable Securities representing more than
two percent of the outstanding shares of UNIDATA Common Stock on a fully diluted
basis. UNIDATA shall not include in any Demand Registration any securities other
than the Registrable Securities requested to be registered therein by VMARK.
(c) If at any time within three years of the first Closing, UNIDATA
proposes to file a registration statement under the Securities Act with respect
to any shares of any class of its equity securities to be sold for the account
of UNIDATA (other than a registration statement on Form S-4 or Form S-8 or any
successor form), and the registration form to be used may be used for the
registration of Registrable Securities, then UNIDATA shall in each case give
written notice of such proposed filing to VMARK at least twenty days before the
anticipated filing date, and VMARK shall have the right to include in such
registration such number of Registrable Securities as VMARK may request (such
request to be made by written notice to UNIDATA within fifteen days following
VMARK's receipt from UNIDATA of such notice of proposed filing). UNIDATA shall
use its best efforts to cause the managing underwriter of any proposed
underwritten offering to permit VMARK to include in such offering all
Registrable Securities requested by VMARK to be included in the registration for
such offering on the same terms and conditions as any similar securities of
UNIDATA included therein. Notwithstanding the foregoing, if the managing
underwriter of such offering advises VMARK that, in the reasonable opinion of
such underwriter, the amount of Registrable Securities which VMARK requests to
be included in such offering would materially and adversely affect the success
of such offering, then the amount of Registrable Securities to be offered shall
be reduced to the extent necessary to reduce the total amount of securities to
be included in such offering to the amount recommended by such underwriter,
provided, however, that if the amount of Registrable Securities shall be so
reduced, UNIDATA shall not be permitted to include in such registration any
securities other than securities to be issued by UNIDATA and Registrable
Securities.
(d) In the event that Registrable Securities are included in a registration
statement pursuant to Section 4.2(c) hereof, VMARK agrees not to effect any
public sale or distribution of the issue being registered or a similar security
of UNIDATA, or any securities convertible into or exchangeable or exercisable
for such securities, including a sale pursuant to Rule 144 under the Securities
Act, during the ten business days prior to, and during the 90-day period
beginning on, the effective date of such registration statement (except as part
of such registration), if and to the extent timely notified in writing by
UNIDATA, in the case of a non-underwritten public offering, or by the managing
underwriter, in the case of an underwritten public offering. In the event that
VMARK requests a Demand Registration or if Registrable Securities are included
in a registration pursuant to Section 4.2(c) hereof, UNIDATA agrees not to
effect any public sale or distribution
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of the issue being registered or a similar security of UNIDATA, or any
securities convertible into or exchangeable for such securities, during the
period from such request until 90 days after the effective date of such
registration statement (except as part of such registration or pursuant to a
registration of securities on Form S-4 or Form S-8 or any successor form).
(e) Notwithstanding anything to the contrary contained herein, in the event
that VMARK requests a Demand Registration or a registration of Registrable
Securities pursuant to Section 4.2(b) or 4.2(c) hereof, respectively, UNIDATA
shall have the right to purchase all, but not less than all, of the Registrable
Securities requested to be so registered, upon the terms and subject to
conditions set forth in this Section 4.2(e). If UNIDATA wishes to exercise such
purchase right, then within two business days following receipt of VMARK's
request for such registration, UNIDATA shall send a written notice (a
"Repurchase Notice") to VMARK specifying that UNIDATA wishes to exercise such
purchase right, a date for the closing of such purchase, which shall not be more
than thirty days after delivery of such Repurchase Notice, and a place for the
closing of such purchase (a "Repurchase Closing"). Upon delivery of a Repurchase
Notice, a binding agreement shall be deemed to exist between VMARK and UNIDATA
providing for the purchase by UNIDATA of the Registrable Securities requested to
be registered by VMARK, upon the terms and subject to the conditions set forth
in this Section 4.2(e). The purchase price per share or other unit of
Registrable Securities (the "Repurchase Price") shall equal the average per
share or per unit closing price as quoted on the Exchange (or if not then quoted
thereon, on such other exchange or quotation system on which the Registrable
Securities are quoted) for the period of five trading days ending on the trading
day immediately prior to the date on which VMARK requests a registration of the
Registrable Securities which UNIDATA subsequently elects to purchase. VMARK's
obligation to deliver any Registrable Securities at a Repurchasing Closing shall
be subject to the conditions that, at such Repurchase Closing, UNIDATA shall
have delivered to VMARK a certificate signed on behalf of UNIDATA by UNIDATA's
chief executive officer and chief financial officer, which certificate shall be
reasonably satisfactory in form and substance to VMARK, to the effect that the
purchase by UNIDATA of such Registrable Securities (i) is permitted under
applicable Colorado corporate law and under the fraudulent conveyance provisions
of the federal bankruptcy code and (ii) does not violate any material agreement
to which UNIDATA or any of its subsidiaries is a party or by which any of their
properties or assets is bound. At any Repurchase Closing, UNIDATA shall pay to
VMARK the aggregate Repurchase Price for the Registrable Securities being
purchased by wire transfer of immediately available funds or by delivering to
VMARK a certified or bank check payable to or on the order of VMARK in an amount
equal to such aggregate Repurchase Price, and VMARK will surrender to UNIDATA a
certificate or certificates evidencing such Registrable Securities. No purchase
of Registrable Securities by UNIDATA pursuant to this Section 4.2(e) shall
reduce or otherwise modify UNIDATA's registration obligations under this Section
4.2 (including, without limitation, the number of Demand Registrations which
UNIDATA is obligated to effect) with respect to any Registrable Securities held
by VMARK following such purchase.
(f) The registrations effected under this Section 4.2 shall be effected at
UNIDATA's expense except for underwriting commissions allocable to the
Registrable Securities and the fees and disbursements of VMARK's counsel.
UNIDATA shall indemnify and hold harmless VMARK, its affiliates and controlling
persons and their respective officers, directors, agents and representatives
from and against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, all out-of-pocket expenses, investigation
expenses, expenses incurred with respect to any judgment and fees and
disbursements of counsel and accountants) arising out of or based upon any
statements contained in, or omissions or alleged omissions from, each
registration statement (and related prospectus) filed pursuant to this Section
4.2; provided, however, that UNIDATA shall not be liable in any such case to
VMARK or any affiliate or controlling person of VMARK or any of their respective
officers, directors, agents or representatives to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or omission or alleged
omission made in such registration statement or prospectus in reliance upon, and
in conformity with, written information furnished to UNIDATA specifically for
use in the preparation thereof by VMARK, such affiliate, controlling person,
officer, director, agent or representative, as the case may be.
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<PAGE> 66
ARTICLE V
COVENANTS OF VMARK
VMARK hereby covenant and agrees as follows:
Section 5.1. Distribution. VMARK shall acquire the Option Shares for
investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act and shall not sell any Option Shares purchased
pursuant to this Agreement except in compliance with the Securities Act.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Expenses. Except as otherwise provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
Section 6.2. Further Assurances. UNIDATA and VMARK will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
Section 6.3. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 6.4. Entire Agreement. This Agreement and the Merger Agreement
(together with the Exhibits, the UNIDATA Disclosure Schedules, the VMARK
Disclosure Schedules and the other documents delivered pursuant thereto)
constitute the entire agreement between the parties and supersede all prior
agreements and understandings, both written and oral, between the parties, or
any of them, with respect to the subject matter hereof.
Section 6.5. Assignment. This Agreement shall not be assigned by either
party without the prior written consent of the other party.
Section 6.6. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
or shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 6.7. Amendment; Waiver. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto. Either party hereto
may with respect to the other party (i) extend the time for the performance of
any obligation or other act, (ii) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any agreement or condition contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
Section 6.8. Severability. If any term or other provision of this
Agreement is held by a court or other competent authority to be invalid, illegal
or incapable of being enforced by any rule of law, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable law to the end
that the transaction contemplated hereby are fulfilled to the extent possible.
Section 6.9. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, sent or transmitted if delivered personally,
sent by reputable overnight courier to the respective parties at their addresses
as specified
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<PAGE> 67
in the Merger Agreement or sent by electronic transmission to the respective
parties at their telecopier numbers as specified in the Merger Agreement.
Section 6.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without giving
effect to the principles of conflicts of law thereof.
Section 6.11. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 6.12. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, VMARK and UNIDATA have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
UNIDATA, INC.
By:
-----------------------------------
David W. Brunel
President
VMARK SOFTWARE, INC.
By:
-----------------------------------
Charles F. Kane
Executive Vice President, Finance,
Chief Financial Officer and
Treasurer
I-59
<PAGE> 68
EXHIBIT C
ESCROW AGREEMENT
AGREEMENT made this day of December, 1997 by and among VMARK SOFTWARE,
INC., a Delaware corporation ("VMARK"), James T. Dresher and David W. Brunel
(together, the "Representatives") and CHOATE, HALL & STEWART (the "Escrow
Agent").
WHEREAS, VMARK is the surviving corporation of a merger effective this date
pursuant to an Agreement and Plan of Merger and Reorganization dated October 7,
1997 (the "Merger Agreement") between VMARK and Unidata, Inc., a Colorado
corporation ("UNIDATA"); and
WHEREAS, the Merger Agreement requires that a portion of the Merger
Consideration be paid to the Escrow Agent to be held and distributed in
accordance with an agreement substantially in the form hereof;
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. This Agreement is the Escrow Agreement to which reference
is made in the Merger Agreement. Capitalized terms used in this Agreement and
not defined herein shall have the same meaning as in the Merger Agreement.
2. Transfer of Escrowed Shares. Pursuant to Section 1.07(h) of the Merger
Agreement, a certificate or certificates representing 50,000 shares of VMARK
Common Stock registered in the name of the Escrow Agent (the "Escrowed Shares")
has been delivered to the Escrow Agent, and the Escrow Agent acknowledges
receipt of said certificate or certificates.
3. Investment Pending Distribution. The Escrowed Shares shall be held by
the Escrow Agent subject to the direction of the Representatives to sell all or
any portion thereof, provided that no sale thereof shall be made in violation of
applicable securities laws. In the event of any sale thereof, the resulting
funds shall be invested in short-term government securities or a mutual fund
invested substantially solely in such securities, as directed by the
Representatives. Interest and dividends shall not be added to or become part of
the escrow account and shall be promptly distributed from time to time to the
Stockholders (as defined in Section 5).
4. Distribution from Escrow Account. The Escrowed Shares and any other
assets in the escrow account shall be distributed out of escrow by the Escrow
Agent only as follows:
(a) In the event that VMARK shall incur any loss, damage or expense,
as a result of or in connection with any agreement between UNIDATA and
Advent International Corporation ("Advent"), it shall be entitled to be
indemnified and held harmless by the distribution, out of assets in the
escrow account, of amounts equal to such loss, damages or expense, provided
that (i) it shall not be entitled to indemnification hereunder in respect
of the reimbursement to Advent of certain expenses not in excess of
$100,000 or for costs and expenses, including legal fees, incurred in
defending any claim by Advent, and (ii) it shall, jointly with the
Representatives if they wish to participate therein (provided that in any
event VMARK shall bear all costs and expenses, including legal fees),
defend any claim by Advent (other than for the reimbursement of expenses up
to $100,000 referred to above) vigorously and shall not settle any such
claim without the consent of the Representatives.
(b) When any loss, damage or expense, as to which VMARK is entitled to
be indemnified and held harmless pursuant to (a) above, becomes reasonably
quantifiable, VMARK shall promptly notify the Representatives and the
Escrow Agent of the amount of the distribution it seeks out of the assets
in the escrow account, which notice shall include reasonable detail in
support of such amount. If the Representatives do not disagree with VMARK's
entitlement to such amount by notice to the Escrow Agent within 21 days
after receipt of such notice given by VMARK, the Escrow Agent shall
distribute to VMARK out of the escrow account assets equal to the amount
requested. If the Representatives do disagree with such entitlement by such
notice, and such disagreement is not promptly resolved by discussion
between VMARK and the Representatives, the matter shall be submitted to
arbitration as provided in Section 8.
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<PAGE> 69
(c) Upon the resolution (including pursuant to any applicable statute
of limitations) of all claims by Advent described in (a) above, all assets
remaining in the escrow account not subject to payment to VMARK shall be
promptly distributed to the Stockholders. VMARK shall, and the
Representatives may, notify the Escrow Agent and the other when it or they
believe all such claims have been resolved, which notice shall include
reasonable supporting detail. If the other party does not disagree with the
notice by notice to the Escrow Agent within 21 days after receipt of the
initial notice, then the Escrow Agent shall make the distribution to the
Stockholders as provided above. If the other party does disagree by such
notice, and such disagreement is not promptly resolved by discussion
between VMARK and the Representatives, the matter shall be submitted to
arbitration as provided in Section 8.
5. Allocation of Taxable Income. For purposes of taxation of any interest
and dividends earned on assets held in escrow hereunder, the escrowed assets
shall be deemed to have been placed in escrow by the holders of UNIDATA Class A
Common Stock and Class B Common Stock (other than holders of Dissenting Shares)
outstanding immediately prior to the Effective Time (the "Stockholders"), and
any interest and dividends thereon shall be allocated to the Stockholders as
provided in Section 6.
6. Distributions of Stockholders. All distributions to be made to the
Stockholders hereunder shall be made to them pro rata in accordance with their
respective holdings of UNIDATA Class A Common Stock of Class B Common Stock
outstanding immediately prior to the Effective Time (treating such shares
equally).
7. Matters relating to the Escrow Agents.
(a) The Escrow Agent shall be entitled to rely and shall be protected
in acting in reliance on any writing furnished to it by VMARK and the
Representatives. The Escrow Agent shall not be liable to any party hereto
by reason of any error of judgment, or any act taken or omitted in good
faith, or for any matter in connection herewith unless caused by or arising
out of its own gross negligence or bad faith.
(b) The reasonable fees and expenses of the Escrow Agent shall be
borne by VMARK.
8. Arbitration. Any dispute under this Agreement, including the
disagreements described in Sections 4(b) and 4(c), shall be submitted to binding
arbitration proceedings to be conducted in Boston, Massachusetts in accordance
with (except as otherwise provided in this Agreement) the then current
Commercial Arbitration Rules of the American Arbitration Association. There
shall be one arbitrator chosen from the lists of said Association in accordance
with its standard procedures. In addition to resolution of a matter, the
arbitrator will have the right to award injunctive relief and reimbursement of
arbitration costs. The award and decision of the arbitrator will be conclusive
and binding, judgment on the award may be entered and enforced in a court of
competent jurisdiction, and each party to this Agreement waives any right to
contest the validity or enforceability of such award. The foregoing shall not
prevent any party hereto from seeking temporary injunctive relief or other
interim remedy pending an arbitration award pursuant hereto.
9. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given, effective on receipt, if delivered personally
or mailed by certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to VMARK, to:
VMARK Software, Inc.
50 Washington Street
Westboro, MA 01581-1021
Attention: James K. Walsh, Esq.
Fax: 508-389-8767
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<PAGE> 70
If to the Representatives, to:
James T. Dresher
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
and
David Brunel
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
If to the Escrow Agent, to:
Choate, Hall & Stewart
Exchange Place
53 State Street, 35th Floor
Boston, MA 02109
Attention: Richard N. Hoehn, Esq.
Fax: (617) 227-7566
10. General.
(a) Amendments. This Agreement may be amended only by an instrument
in writing signed by each of the parties hereto.
(b) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties.
(c) Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement
with a valid and enforceable provision that will achieve, to the extent
possible, the economic, business and other purposes of the void or
unenforceable provision.
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<PAGE> 71
(d) Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of The
Commonwealth of Massachusetts (without giving effect to its choice of law
principles).
VMARK SOFTWARE, INC.
By
------------------------------------
Its
THE REPRESENTATIVES THE ESCROW AGENT
- --------------------------------- --------------------------------------
James T. Dresher Choate, Hall & Stewart
- ---------------------------------
David Brunel
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<PAGE> 1
EXHIBIT 2.2
AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
("Amendment"), dated as of November 7, 1997, is entered into by and between
VMARK Software, Inc., a Delaware corporation ("VMARK") and Unidata, Inc., a
Colorado corporation ("UNIDATA").
1. The parties hereto have agreed upon and entered into that
certain Agreement and Plan of Merger and Reorganization dated as of October 7,
1997 (the "Merger Agreement"), which provides for and sets forth the terms of
the merger of UNIDATA with and into VMARK. All terms used herein that are not
otherwise defined herein shall have the meaning ascribed to them in the Merger
Agreement.
2. The parties now desire to amend certain provisions of the Merger
Agreement as follows:
a. Section 5.17 is hereby amended and restated in its
entirety to read as follows:
"VMARK will enter into an agreement at the Effective Time to
provide registration rights to UNIDATA's stockholders with
respect to the shares of VMARK Common Stock received by them
in the Merger. Such agreement will provide each such holder of
VMARK Common Stock, for as long as such holder is unable to
sell, within any three month period, all of such holder's
shares of VMARK Common Stock received in the Merger under Rule
144 or Rule 145 under the Securities Act, unlimited
"piggyback" registration rights and two demand registrations
on Form S-3 (provided that a minimum number of shares are
registered in each demand registration), in each case on
customary terms and subject to reasonable blackout periods and
other restrictions."
b. Section 2.23 is hereby amended to delete the words "a
majority" where such words occur on the first and second line
thereof and insert in their place "two-thirds."
c. Section 3.02 is hereby amended to delete the number
"8,522,568" where such number occurs on the second line thereof
and insert in its place "8,272,486."
<PAGE> 2
d. Section 3 of the Escrow Agreement attached as Exhibit C
to the Merger Agreement is hereby amended and restated in its
entirety to read as follows:
"3. INVESTMENT AND VOTING PENDING DISTRIBUTION. The Escrowed
Shares shall be held by the Escrow Agent subject to the
written directions of the Representatives to sell all or any
portion thereof, provided that no sale thereof shall be made
in violation of applicable securities laws. In the event of
any sale thereof, the resulting funds shall be invested in
short-term government securities or a mutual fund invested
substantially solely in such securities, as directed by the
Representatives. Any interest or dividends shall not be added
to or become part of the escrow account and shall be promptly
distributed from time to time to the Stockholders (as defined
in Section 5). The Escrowed Shares, until distributed out of
this escrow, shall be voted by the Escrow Agent in accordance
with the written directions of the Representatives."
3. This Amendment may be executed in two or more counterparts, all
of which shall be considered the same instrument and shall become effective when
executed and delivered by each of the parties.
4. Other than as expressly amended in Section 2 above, the Merger
Agreement remains unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
signed by their respective officers, all as of the date first written above.
VMARK SOFTWARE, INC.
By: /s/ PETER GYENES
----------------------------------------
Peter Gyenes
President and Chief Executive Officer
UNIDATA, INC.
By: /s/ DAVID W. BRUNEL
----------------------------------------
David W. Brunel
President and Chief Operating Officer
<PAGE> 1
EXHIBIT 4.2
FIRST AMENDMENT TO RIGHTS AGREEMENT
FIRST AMENDMENT TO RIGHTS AGREEMENT, dated as of September 30, 1997,
between VMARK Software, Inc., a Delaware corporation (the "Company"), and State
Street Bank and Trust Company (the "Rights Agent"). Capitalized terms not
defined herein shall have the meanings assigned to such terms within the Rights
Agreement (as defined below).
RECITALS
A. The Company and the Rights Agent entered into a Rights Agreement
dated as of June 12, 1996 (the "Rights Agreement") relating to the declaration
of a dividend of one Preferred Share purchase right (a "Right") for each Common
Share of the Company outstanding as of the Close of Business on June 12, 1996
and for each Common Share of the Company that shall become outstanding between
the Record Date and the earlier of the Distribution Date and the Expiration
Date, and in certain circumstances after the Distribution Date.
B. The Rights Agreement sets forth, among other things, the terms and
conditions pursuant to which the holders of Rights may exercise such Rights.
C. The Company intends to enter into a Merger Agreement dated in
October, 1997 (the "Merger Agreement") with Unidata, Inc., a Colorado
corporation ("Unidata"), pursuant to which Unidata will merge with and into the
Company.
D. The Company and the Rights Agent have determined that the entering
into of the Merger Agreement by the Company and the transactions contemplated
thereby should not affect either party's rights under the Rights Agreement.
E. Pursuant to Section 27 of the Rights Agreement, the Company has
provided the Rights Agent with a certificate from an appropriate officer stating
that this Amendment is in compliance with such Section 27.
F. In connection with the transactions pursuant to the Merger
Agreement, the Company and the Rights Agent have agreed to amend the Rights
Agreement as set forth herein.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree to amend the Rights
Agreement as follows:
1. The definition of "Acquiring Person" appearing in Section 1(a) of
the Rights Agreement is hereby amended by inserting the phrase "or
an Exempt Person" immediately following the phrase "or an entity
holding Common Shares for or pursuant to the terms of any such
plan" in the first sentence of such definition.
<PAGE> 2
2. Section 1 of the Rights Agreement is hereby amended by inserting
the following definition immediately following the definition of
"Equivalent Shares" appearing in such Section:
"Exempt Person" shall mean, collectively and each separately,
James T. Dresher, Glenangus Holdings Corporation (so long as one
or more Exempt Persons jointly own at least 50% or more of the
voting securities of such corporation), Jeffrey M. Dresher, James
T. Dresher, Jr., the Joshua M. Dresher Irrevocable Trust, the
Marcie A. Dresher Irrevocable Trust, and the James T. Dresher, III
Irrevocable Trust. Notwithstanding the foregoing sentence, a
Person who would otherwise be an Exempt Person shall immediately
lose its status as an Exempt Person upon the occurrence of any of
the following: (i) such Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial
Owner of 40% or more of the Common Shares of the Company then
outstanding; (ii) such Person shall make a public announcement
that such Person, directly or indirectly, individually or
collectively with a group, intends to commence a tender or
exchange offer for any Common Shares of the Company then
outstanding if, assuming the successful consummation thereof, such
Person would be the Beneficial Owner of 30% or more of the shares
of Common Stock then outstanding; (iii) such Person shall enter
into any voting agreement or voting trust pursuant to which such
Person agrees to vote his shares with or for any other holder of
Common Shares of the Company (other than any voting agreement or
voting trust that is with other Exempt Persons); and (iv) such
Person shall grant a proxy or power of attorney to any other
Person (other than an officer, director, agent or employee of the
Company and other than to another Exempt Person) for the purpose
of voting such Person's Common Shares. The assignee, transferee or
successor to any Exempt Person shall not constitute an Exempt
Person (unless such assignee, transferee or successor was an
Exempt Person immediately prior to such assignment, transfer or
successor) without the prior written consent of the Company, which
consent may be withheld in the Company's absolute discretion.
Notwithstanding the foregoing, no Person shall be deemed to be an
Acquiring Person either (i) as the result of an acquisition of
Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares
beneficially owned by such Exempt Person to 40% or more of the
Common Shares of the Company then outstanding; PROVIDED, HOWEVER,
that if an Exempt Person shall become the Beneficial Owner of 40%
or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such
share purchases by the company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Exempt Person
shall be deemed to be an Acquiring Person, or (ii) if within eight
days after such Exempt Person would otherwise become an Acquiring
Person (but for the operation of this clause (ii)), such Person
notifies the Board of Directors that such Exempt Person did so
inadvertently and within
2
<PAGE> 3
two days after such notification such Exempt Person is the
Beneficial Owner of less than 40% of the outstanding Common
Shares.
3. The Definition of "Continuing Director" appearing in section 1(g)
of the Rights Agreement is hereby amended by inserting ", or (iii)
David Brunel, James T. Dresher, or John F. Schaefer" immediately
following the phrase "approved by a majority of the Continuing
Directors" in such definition.
4. Except to the extent specifically amended hereby, all terms of the
Rights Agreement shall remain in full force and effect.
5. This Amendment may be executed in any number of counterparts, all
of which taken together shall constitute one and the same
instrument.
6. This Agreement shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely
within such State.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
VMARK SOFTWARE, INC.
By /s/ Richard N. Hoehn
----------------------------
Name: Richard N. Hoehn
Title: Secretary
STATE STREET BANK AND TRUST
COMPANY
By /s/ Margaret Prentice
----------------------------
Name: Margaret Prentice
Title: Administration Manager
3
<PAGE> 1
EXHIBIT 10.38
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement is entered into as of September
9, 1997, by and between VMARK SOFTWARE, INC. ("Borrower"), whose address is 50
Washington Street, Westborough, MA 01581, and SILICON VALLEY BANK, a
California-based bank ("Bank"), with its principal place of business at 3003
Tasman Drive, Santa Clara, CA 95054 and with a loan production office located at
Wellesley Office Park, 40 William Street, Suite 350, Wellesley, MA 02181, doing
business under the name "Silicon Valley East."
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Borrower is indebted to Bank
pursuant to, among other documents, a certain Loan and Security Agreement dated
as of May 3, 1996, as amended by a Loan Modification Agreement dated as of March
26, 1997, as may be amended from time to time (the "Loan Agreement") and a
certain Amended and Restated Promissory Note dated as of May 3, 1996, as may be
amended from time to time, evidencing a Committed Revolving Line in the maximum
principal amount of Five Million Dollars ($5,000,000.00) (the "Revolving
Facility").
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness." Capitalized terms used but not otherwise defined herein
shall have the same meaning as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by
the Collateral as described in the Loan Agreement.
Hereinafter, the above-described Loan Agreement, together with all other
documents securing repayment of the Indebtedness shall be referred to as the
"Security Documents". Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Indebtedness shall be referred to as
the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. MODIFICATIONS TO LOAN AGREEMENT.
(i) The Loan Agreement shall be amended by deleting the
definition of "Committed Revolving Line" appearing in
Section 1.1 on Page 2 of the Loan Agreement, and
inserting in lieu thereof the following text:
""Committed Revolving Line" means Ten
Million Dollars ($10,000,000.00)."
-1-
<PAGE> 2
(ii) The Loan Agreement shall be amended by deleting the
definition of "Eligible Foreign Accounts" appearing in
Section 1.1 on Page 3 of the Loan Agreement, and
inserting in lieu thereof the following text:
""Eligible Foreign Accounts" means
Accounts with respect to which the account
debtor does not have its principal place of
business in the United States and that are (i)
covered by credit insurance in form and amount,
and by an insurer satisfactory to Bank, less the
amount of any deductible(s) which may be or
become owing thereon; or (ii) approved by the
Bank in writing on a case-by-case basis." (iii)
The Loan Agreement shall be amended by deleting
the definition of "Revolving Maturity Date"
appearing in Section 1.1 on Page 6 of the Loan
Agreement, and inserting in lieu thereof the
following text:
""Revolving Maturity Date" means June 5,
1998."
(iv) The Loan Agreement shall be amended by inserting after
the definition of "Schedule" appearing in Section 1.1 on
Page 6 the following text:
""Secured Foreign Accounts" means
Accounts with respect to which (i) the account
debtor does not have its principal place of
business in the United States; (ii) would
otherwise be Eligible Accounts; and (iii) are
secured by a first perfected security interest
acceptable to the Bank in all respects."
(v) The Loan Agreement shall be amended by deleting in the
first paragraph of Section 2.1 on Page 7 of the Loan
Agreement the following text:
"For purposes of this Agreement, "Borrowing
Base" shall mean an amount equal to Eighty
Percent (80%) of Eligible Accounts."
And substituting in lieu thereof the following text:
"For purposes of this Agreement, "Borrowing
Base" shall mean an amount equal to the sum of:
(i) eighty percent (80%) of Eligible Accounts;
(ii) eighty percent (80%) of Eligible Foreign
Accounts; and (iii) seventy percent (70%) of
Secured Foreign Accounts."
(vi) The Loan Agreement shall be amended by deleting in its
entirety Subsection 2.6(a) on Page 11 of the Loan
Agreement.
(vii) The Loan Agreement shall be amended by deleting the last
paragraph of Section 6.3 on Page 16 of the Loan
Agreement, and inserting in lieu thereof the following
text:
"Bank shall have a right from time to
time hereafter to audit Borrower's Accounts at
Borrower's expense, provided that such audits
will be conducted no more often than annually
unless an Event of Default has occurred and is
continuing."
-2-
<PAGE> 3
(viii) The Loan Agreement shall be amended by deleting Section
6.8 on Page 16 of the Loan Agreement, and inserting in
lieu thereof the following text:
"6.8 QUICK RATIO. Beginning on June 30, 1997,
Borrower shall maintain, as of the last day of
each calendar month, or as of the last day of
each quarter if there are no Obligations
outstanding, a ratio of Quick Assets to Current
Liabilities (net of current Deferred Revenues)
of at least 1.50 to 1.00."
(ix) The Loan Agreement shall be amended by deleting Section
6.9 on Page 16 of the Loan Agreement, and inserting in
lieu thereof the following text:
"6.9 TANGIBLE NET WORTH. Borrower shall
maintain, as of the last day of each calendar
month, or as of the last day of each quarter if
there are no Obligations outstanding, a Tangible
Net Worth of not less than Twenty Million
Dollars ($20,000,000.00) as of June 30, 1997,
which amount shall be increased at the end of
each quarter thereafter by: (i) fifty percent
(50%) of cumulative net income after June 30,
1997 PLUS (ii) one hundred percent (100%) of the
cumulative proceeds of the issuances of shares
of stock or other equity financings after June
30, 1997."
(x) The Loan Agreement shall be amended by inserting after
Section 6.12 on Page 17 of the Loan Agreement the
following text:
"6.13 MONEY MARKET ACCOUNT. Borrower
shall maintain a Money Market Account at the
Bank with a minimum balance, at all times, of
$2,000,000.00."
(xi) The Loan Agreement shall be amended by deleting the
notice provision appearing in Section 10 on Page 22 of
the Loan Agreement as it pertains to the address of the
Bank's counsel, and inserting in lieu thereof the
following text:
"Riemer & Braunstein
Three Center Plaza
Boston, MA 02108
Attn: David A. Ephraim, Esquire
FAX: (617)723-6831"
4. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness and Obligations secured thereby
includes, without limitation, the Indebtedness.
5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
6. NO DEFENSES OF BORROWER. Borrower agrees that it has no defenses against
the obligations to pay any amounts under the Indebtedness.
-3-
<PAGE> 4
7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying
the existing Indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Second Loan Modification Agreement, the
terms of the Existing Loan Documents remain unchanged and in full force and
effect. Bank's agreement to modifications to the existing Indebtedness pursuant
to this Second Loan Modification Agreement in no way shall obligate Bank to make
any future modifications to the Indebtedness. Nothing in this Second Loan
Modification Agreement shall constitute a satisfaction of the Indebtedness. It
is the intention of Bank and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released by
Bank in writing. No maker, endorser, or guarantor will be released by virtue of
this Second Loan Modification Agreement. The terms of this paragraph apply not
only to this Second Loan Modification Agreement, but also to all subsequent loan
modification agreements.
8. JURISDICTION/VENUE. Borrower accepts for itself and in connection with
its properties, unconditionally, the non-exclusive jurisdiction of any state or
federal court of competent jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Second Loan Modification Agreement; provided, however, that if
for any reason Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.
9. COUNTERSIGNATURE. This Second Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank (provided,
however, in no event shall this Second Loan Modification Agreement become
effective until signed by an officer of Bank in California).
This Second Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
VMARK SOFTWARE, INC. SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By: By:
---------------------------- ---------------------------------------
Name:Charles F. Kane Name:Andrew Tsao
Title:Chief Financial Officer Title:Vice President
SILICON VALLEY BANK
By:
---------------------------------------
Name:Michael E. Jordan
Title:Loan Officer
(signed in Santa Clara County, California)
TCP/
56120/13
241805.1
-4-
<PAGE> 5
FIRST AMENDMENT TO AMENDED AND RESTATED PROMISSORY NOTE
This First Amendment to Amended and Restated Promissory Note (the "First
Amendment") to a certain Amended and Restated Promissory Note dated as of May 3,
1996 (the "Note"), in the maximum principal amount of $5,000,000.00, made
payable by VMARK Software, Inc. (the "Borrower"), to Silicon Valley Bank, a
California-based bank ("Bank"), with its principal place of business at 3003
Tasman Drive, Santa Clara, California 95054 and with a loan production office
located at Wellesley Office Park, 40 William Street, Suite 350, Wellesley,
Massachusetts 02181, doing business under the name "Silicon Valley East", is
made this ninth day of September, 1997, in consideration of the covenants
contained herein and the mutual benefits to be derived herefrom.
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Bank amend certain terms of
the Note, including, without limitation, to increase the maximum principal
amount and to extend the "Maturity Date", as defined in the Note; and
WHEREAS, the Bank has agreed to amend certain terms of the Note, subject
to the terms and conditions stated herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Bank and the Borrower hereby
agree as follows:
1. The Note is hereby amended by deleting the following language
appearing on page one of the Note:
"For value received, the undersigned, VMARK
SOFTWARE, INC., a Delaware corporation (the "BORROWER"),
promises to pay to SILICON VALLEY BANK (the "BANK") at
the office of the Bank located at 3003 Tasman Drive,
Santa Clara, California 95054, or to its order, the
lesser of (a) FIVE MILLION DOLLARS ($5,000,000) or (b)
the outstanding principal amount hereunder, on June 5,
1997 (the "MATURITY DATE"), together with interest on
the principal amount hereof from time to time
outstanding at a fluctuating rate per annum equal to the
Prime Rate (as defined below) until the Maturity Date,
payable monthly in arrears on the fifth day of each
calendar month occurring after the date hereof and on
the Maturity Date." and by substituting therefor the
following:
"For value received, the undersigned, VMARK
SOFTWARE, INC., a Delaware corporation (the "BORROWER"),
promises to pay to SILICON VALLEY BANK (the "BANK") at
the office of the Bank located at 3003 Tasman Drive,
Santa Clara, California 95054, or to its order, the
lesser of (a) TEN MILLION DOLLARS ($10,000,000) or (b)
the outstanding principal amount hereunder, on June 5,
1998 (the "MATURITY DATE"), together with interest on
the principal amount hereof from time to time
outstanding at a fluctuating rate per annum equal to the
Prime Rate
-5-
<PAGE> 6
(as defined below) until the Maturity Date, payable
monthly in arrears on the fifth day of each calendar
month occurring after the date hereof and on the
Maturity Date."
2. Except as provided herein, all of the terms and conditions of
the Note remain in full force and effect. Without limiting the
foregoing, nothing contained herein shall be deemed to
constitute a modification or waiver of the Bank's right to
accelerate the payment of the Note upon the occurrence of an
event of default under the Note, as amended hereby.
3. The Borrower acknowledges, confirms, and agrees that the Bank
and its representatives, including, but not limited to, its
officers, employees and any independent contractors, has
fulfilled all of its obligations under the Note and that the
amount of principal recited herein, together with accrued
interest, is due and owing as of the date of this First
Amendment. The Borrower hereby represents and warrants that it
has no defenses, off-sets, set-offs, claims, or counterclaims to
the payment of its liabilities and obligations to the Bank as
set forth in the Note, as amended hereby, with respect to any
actions, inactions or statements of fact arising or existing
prior and up to the date of this First Amendment and to the
extent that the Borrower has any defense, off-sets, claims,
set-offs, or counterclaims, the Borrower affirmatively WAIVES
any such claim. The Borrower hereby RELEASES and forever
discharges the Bank and its representatives from any and all
claims, defenses, actions, causes of action, suits,
controversies, agreements, provisions and demands in law or in
equity which the Borrower ever had, now has or may have against
the Bank or its representatives, including, but not limited to,
claims relating to and arising out of the Note, as amended
hereby, or the administration of the Note to date.
4. THE BORROWER, TO THE EXTENT OTHERWISE ENTITLED THERETO, HEREBY
IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF THE BORROWER,
TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY INITIATED BY
THE BORROWER OR ANY GUARANTOR OF THE BORROWER'S LIABILITIES AND
OBLIGATIONS, WHICH CASE OR CONTROVERSY ARISES OUT OF, OR IS IN
RESPECT OF, ANY RELATIONSHIP BETWEEN THE BORROWER AND THE BANK.
5. The Borrower accepts for itself and in connection with its
properties, unconditionally, the non-exclusive jurisdiction of
any state or federal court of competent jurisdiction in the
Commonwealth of Massachusetts in any action, suit, or proceeding
of any kind against it which arises out of or by reason of this
First Amendment; provided, however, that if for any reason the
Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County,
California.
6. This First Amendment shall become effective only when it shall
have been executed by the Borrower and the Bank (provided,
however, in no event shall this First Amendment become effective
until signed by an officer of the Bank in California).
This First Amendment is executed as of the date first written above.
-6-
<PAGE> 7
BORROWER: BANK:
VMARK SOFTWARE, INC. SILICON VALLEY BANK, doing business as
SILICON VALLEY EAST
By: By:
---------------------------- ----------------------------------------
Name: Charles F. Kane Name: Andrew Tsao
Title: Chief Financial Officer Title: Vice President
SILICON VALLEY BANK
By:
----------------------------------------
Name: Michael E. Jordan
Title: Loan Officer
(signed in Santa Clara County,
California)
56120/13
242795.1
-7-
<PAGE> 1
EXHIBIT 21.1
VMARK Asia Pacific Pty. Ltd.
North Sydney, NSW
AUSTRALIA
VMARK Software Canada Company
Pickering, Ontario
CANADA
VMARK Software Ltd.
Bracknell, Berkshire
UNITED KINGDOM
VMARK Software Europe SA
Boulogne
FRANCE
VMARK Software GmbH
Stuttgart
GERMANY
VMARK Software Japan K.K.
Meguro-ku, Tokyo
JAPAN
VMARK Software Africa Pty. Ltd.
Parktown
SOUTH AFRICA
VMARK Canada, Inc.
VMARK Holding Corp.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APPEARING IN THE FORM 10-Q TO WHICH
THIS SCHEDULE IS AN EXHIBIT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-28-1997
<EXCHANGE-RATE> 1
<CASH> 21,038,000
<SECURITIES> 0
<RECEIVABLES> 10,539,000
<ALLOWANCES> 1,829,000
<INVENTORY> 0
<CURRENT-ASSETS> 35,516,000
<PP&E> 20,937,000
<DEPRECIATION> 8,302,000
<TOTAL-ASSETS> 57,400,000
<CURRENT-LIABILITIES> 16,718,000
<BONDS> 0
0
0
<COMMON> 85,000
<OTHER-SE> 31,746,000
<TOTAL-LIABILITY-AND-EQUITY> 57,400,000
<SALES> 23,128,000
<TOTAL-REVENUES> 42,531,000
<CGS> 2,968,000
<TOTAL-COSTS> 12,681,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 17,000
<INTEREST-EXPENSE> 796,000
<INCOME-PRETAX> 2,935,000
<INCOME-TAX> 1,115,000
<INCOME-CONTINUING> 1,820,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,820,000
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
