<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VMARK SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 7372 NO. 04-2818132
(State or other jurisdiction of (I.R.S. Employer Identification
(Primary Standard Industrial No.)
incorporation or organization) Classification Code Number)
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50 WASHINGTON STREET
WESTBORO, MASSACHUSETTS 01581-1021
(508) 366-3888
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
PETER GYENES
VMARK SOFTWARE, INC.
50 Washington Street
Westboro, Massachusetts 01581-1021
(508) 366-3888
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES OF ALL COMMUNICATIONS TO:
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JAMES K. WALSH, ESQ. RICHARD N. HOEHN, ESQ.
VMARK SOFTWARE, INC. CHOATE, HALL & STEWART
50 Washington Street Exchange Place, 53 State Street
Westboro, Massachusetts 01581-1021 Boston, MA 02109
(508) 366-3888 (617) 248-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective and certain other conditions under the applicable merger agreement are
met or waived.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
general instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------------------------
PROPOSED
AMOUNT TO BE PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF REGISTERED MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED (SHARES)(1) OFFERING PRICE(2) OFFERING PRICE(2) FEE(3)
- -------------------------------------------------------------------------------------------------
Common Stock, $.01 par
value...................... 7,114,212 $7.75 $55,135,143 $14,602.52
=================================================================================================
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(1) Based upon an estimate of the maximum number of shares of the Common Stock
of the Registrant, $.01 par value per share, issuable in the merger
described herein to holders of shares of capital stock of Unidata.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended (the
"Securities Act") and based upon prices on The Nasdaq Stock Market on
December 29, 1997.
(3) The registration fee for the securities registered hereby has been
calculated pursuant to Section 6(b) of the Securities Act of 1933, as
amended (the "Securities Act"), as 0.0295 of one percent of the proposed
maximum aggregate offering price. A fee of $1,662.35 was paid on October 22,
1997 pursuant to Rules 14(a)-6 and 0-11 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in respect of the
Merger upon filing by Unidata, Inc. and VMARK Software, Inc. of a
preliminary joint proxy statement relating thereto. Pursuant to Rule 457(b)
promulgated under the Securities Act and Section 14(g)(2) of the Exchange
Act and Rule 0-11 promulgated thereunder, the amount of such previously paid
fee has been credited against the registration fee payable in connection
with this filing.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
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LOGO LOGO
</TABLE>
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of VMARK Software, Inc. and Unidata, Inc. have
agreed to a merger of equals which they believe will result in a combined
computer software company capable of achieving significant operating synergies
and better exploiting the product and marketing strengths of the individual
companies. The merger agreement provides that UNIDATA will merge into VMARK,
which will change its name to Ardent Software, Inc. The combined company will be
headquartered in Westboro, Massachusetts.
If the merger is completed, UNIDATA stockholders will receive 0.44765 of a
share of Ardent common stock in exchange for each share of UNIDATA common stock
that they own. The shares of Ardent stock to be issued to UNIDATA stockholders
will represent approximately 40% of the outstanding stock of Ardent after the
merger, with the remainder being held by VMARK's existing stockholders.
The merger cannot be completed unless it is approved by both UNIDATA's and
VMARK's stockholders. UNIDATA has scheduled a special meeting of its
stockholders to vote on the merger. VMARK has scheduled a special meeting of its
stockholders to vote on both the merger and additional proposals to increase the
number of shares available under VMARK's stock option and employee stock
purchase plans. YOUR VOTE IS VERY IMPORTANT.
The Boards of Directors of VMARK and UNIDATA have unanimously determined
that the merger is in the best interests of their stockholders and recommend
that their stockholders vote in favor of the merger.
If you sign, date and mail your proxy card without indicating how you want
to vote, your proxy will be counted as a vote in favor of the merger and, in the
case of VMARK stockholders, the proposals to increase the number of shares
available under its stock option and employee stock purchase plans.
If you do not return your proxy card, the effect in most cases will be a
vote against the merger and any other proposals.
The dates, times and places of the meetings are as follows:
For VMARK Stockholders:
February 5, 1998
10:00 a.m.
VMARK Software, Inc.
50 Washington Street
Westboro, Massachusetts 01581
For UNIDATA Stockholders:
February 5, 1998
10:00 a.m.
Unidata, Inc.
1099 18th Street
Suite 2200
Denver, Colorado 80202
This Joint Proxy Statement/Prospectus provides you with detailed
information about the proposed merger. In addition, you may obtain information
about VMARK from documents that it has filed with the Securities and Exchange
Commission. We encourage you to read this entire document carefully.
LOGO
PETER GYENES
President and Chief Executive Officer
VMARK Software, Inc.
LOGO
DAVID W. BRUNEL
President and Chief Operating Officer
Unidata, Inc.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE ARDENT COMMON STOCK TO BE ISSUED UNDER THIS JOINT
PROXY STATEMENT/PROSPECTUS OR DETERMINED WHETHER THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Joint Proxy Statement/Prospectus dated December 31, 1997 and first mailed to
stockholders on January 6, 1998.
<PAGE> 3
VMARK SOFTWARE, INC.
50 WASHINGTON STREET
WESTBORO, MASSACHUSETTS 01581
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 5, 1998
YOU ARE HEREBY NOTIFIED that VMARK Software, Inc. ("VMARK") will hold a
Special Meeting of Stockholders on February 5, 1998, commencing at 10:00 A.M.,
local time, at 50 Washington Street, Westboro, Massachusetts, for the following
purposes:
1. To consider and vote upon a proposal to adopt the Agreement and
Plan of Merger and Reorganization dated as of October 7, 1997, as amended
on November 7, 1997 (the "Merger Agreement"), between VMARK and Unidata,
Inc., a Colorado corporation ("UNIDATA"), pursuant to which, among other
matters, (a) UNIDATA will be merged into VMARK (the "Merger"), (b) each
share of UNIDATA common stock which is outstanding immediately prior to the
effective time of the Merger will be converted into the right to receive,
and become exchangeable for, 0.44765 of a share of VMARK common stock and
(c) the authorized number of shares of VMARK's common stock will be
increased to 40,000,000.
2. To consider and vote upon a proposal to amend VMARK's 1986 Stock
Option Plan providing for an increase of the number of shares which may be
issued under the plan.
3. To consider and vote upon a proposal to amend VMARK's Employee
Stock Purchase Plan providing for an increase of the number of shares which
may be issued under the plan.
4. To transact such other business as may properly come before the
meeting and any adjournment or postponement thereof.
Stockholders of record as of the close of business on December 26, 1997
will be entitled to vote at the meeting.
The Merger and other important matters are explained in this Joint Proxy
Statement/Prospectus, which you are urged to read carefully. A copy of the
Merger Agreement is attached as Annex I.
By Order of the Board of Directors,
RICHARD N. HOEHN
Secretary
Dated: December 31, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
UNIDATA, INC.
1099 18TH STREET
SUITE 2200
DENVER, COLORADO 80202
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 5, 1998
To the Stockholders of Unidata, Inc.:
A Special Meeting of Stockholders of Unidata, Inc. ("UNIDATA") will be held
at the offices of UNIDATA, 1099 18th Street, Suite 2200, Denver, Colorado 80202,
on February 5, 1998, commencing at 10:00 A.M., local time, for the following
purposes:
1. To consider and vote on a proposal to adopt the Agreement and Plan
of Merger and Reorganization dated as of October 7, 1997, as amended on
November 7, 1997 (the "Merger Agreement"), between VMARK Software, Inc., a
Delaware corporation ("VMARK") and UNIDATA, pursuant to which, among other
matters (a) UNIDATA will be merged with and into VMARK (the "Merger"), (b)
each share of UNIDATA Class A common stock and Class B common stock
outstanding immediately prior to the effective time of the Merger, will be
converted into the right to receive, and become exchangeable for, 0.44765
of a share of VMARK common stock and (c) the authorized number of shares of
VMARK's common stock will be increased to 40,000,000.
2. To transact such other business as may properly come before the
meeting.
Stockholders of record as of the close of business on December 26, 1997
will be entitled to vote at the meeting and any adjournment or postponement
thereof.
The Merger and other important matters are explained in this Joint Proxy
Statement/Prospectus, which you are urged to read carefully. A copy of the
Merger Agreement is attached as Annex I.
By Order of the Board of Directors,
HAROLD NUSSENFELD
Vice President, General Counsel and
Secretary
Denver, Colorado
December 31, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 5
TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE
VMARK/UNIDATA MERGER................ 1
WHO CAN HELP ANSWER YOUR QUESTIONS.... 3
SUMMARY............................... 4
RISK FACTORS.......................... 15
THE VMARK SPECIAL MEETING............. 17
Date, Time and Place; Record Date... 17
Purpose of the Meeting.............. 17
Voting Rights....................... 17
Independent Auditors................ 18
THE UNIDATA SPECIAL MEETING........... 19
Date, Time and Place; Record Date... 19
Purpose of the Meeting.............. 19
Voting Rights....................... 19
Independent Accountants............. 20
THE PROPOSED MERGER................... 21
General............................. 21
Closing; Effective Time............. 21
Exchange of Stock Certificates...... 21
No Fractional Shares................ 22
Escrowed Shares..................... 22
Background of the Merger............ 23
Recommendation of the VMARK Board
and Reasons for the Merger....... 25
Recommendation of the UNIDATA Board
and Reasons for the Merger....... 26
Opinion of Financial Advisor........ 28
Interests of Certain Persons in the
Merger........................... 31
The Merger Agreement................ 33
Stock Option Agreements............. 41
Confidentiality Agreements.......... 42
Stockholder Support Agreements...... 42
Escrow Agreement.................... 43
Regulatory Filings and Approvals.... 43
Accounting Treatment of the
Merger........................... 43
Listing of New Shares of Ardent
Common Stock on The Nasdaq Stock
Market........................... 43
Appraisal Rights.................... 43
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS...................... 45
UNAUDITED PRO FORMA CONDENSED
COMBINING FINANCIAL STATEMENTS...... 47
THE BUSINESS OF UNIDATA............... 55
SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA OF UNIDATA........... 62
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PAGE
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UNIDATA MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............... 63
OWNERSHIP OF UNIDATA CAPITAL STOCK.... 73
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS OF UNIDATA............. 74
MANAGEMENT OF ARDENT FOLLOWING THE
MERGER.............................. 76
PRO FORMA OWNERSHIP OF ARDENT CAPITAL
STOCK............................... 79
COMPARISON OF RIGHTS OF HOLDERS OF
UNIDATA COMMON STOCK AND ARDENT
COMMON STOCK........................ 81
INFORMATION CONCERNING VMARK.......... 86
ADDITIONAL MATTERS BEING SUBMITTED TO
THE VOTE OF VMARK STOCKHOLDERS...... 87
Amendment to VMARK 1986 Stock Option
Plan............................. 87
Approval of Amendment to VMARK
Employee Stock Purchase Plan..... 89
STOCKHOLDER PROPOSALS FOR 1998
MEETING............................. 90
LEGAL MATTERS......................... 90
EXPERTS............................... 90
EXPENSES OF SOLICITATION.............. 90
OTHER MATTERS......................... 90
WHERE YOU CAN FIND MORE INFORMATION... 91
FINANCIAL INFORMATION OF UNIDATA AND
SUBSIDIARIES........................ F-1
Annex I: Agreement and Plan of
Merger and Reorganization
dated as of October 7,
1997, as amended on
November 7, 1997
Annex II: Fairness Opinion of Volpe
Brown Whelan & Company, LLC
Annex III: Sections 7-113-101 through
7-113-302 of the Colorado
Business Corporation Act
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i
<PAGE> 6
QUESTIONS AND ANSWERS ABOUT THE VMARK/UNIDATA MERGER
Q: WHY ARE THE TWO COMPANIES PROPOSING TO MERGE?
A: Our companies are proposing to merge because we believe the resulting
combination will create a stronger, more competitive computer software
company capable of achieving significant operating synergies and better
exploiting the product and marketing strengths of the individual companies.
The merger will combine the two companies' products and distribution
channels in the relational database market. It will also enable the combined
company to better exploit VMARK's strength in providing data warehousing
solutions and UNIDATA's strength in developing object oriented database
management software as strategies for producing future growth.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: UNIDATA stockholders will receive 0.44765 of a share of Ardent common stock
in exchange for each share of UNIDATA common stock they own. We will not
issue fractional shares. UNIDATA stockholders who would otherwise be
entitled to receive a fractional share will instead receive cash based on
the market value of the fractional share of Ardent stock. Each share of
VMARK common stock currently outstanding will be unaffected by the merger.
After the merger, the certificates previously representing shares of VMARK
common stock will represent the same number of shares of Ardent common
stock.
Example:
- - If you currently own 100 shares of UNIDATA common stock, then after the
merger you will be entitled to receive 44 shares of Ardent common stock and a
check for the market value of the .765 fractional share.
- - If you currently own 100 shares of VMARK common stock, then after the merger
you will continue to own 100 shares of Ardent common stock.
Q: WHAT DO I NEED TO DO NOW?
A: Just mail your signed proxy card in the enclosed return envelope as soon as
possible so that your shares will be counted at the special meeting of
VMARK's or UNIDATA's stockholders, as appropriate. If you sign and send in
your proxy and do not indicate how you want to vote, your proxy will be
counted as a vote in favor of the merger and, in the case of VMARK
stockholders, the proposals to increase the shares available under its stock
option and employee stock purchase plans. If you do not vote or if you
abstain, it will have the effect in most cases of a vote against the merger
and any other proposals.
VMARK's special meeting will take place on February 5, 1998 and UNIDATA's
special meeting will take place on February 5, 1998.
Q: DO THE COMPANIES RECOMMEND VOTING IN FAVOR OF THE MERGER?
A: The Boards of Directors of both VMARK and UNIDATA unanimously recommend
voting in favor of the approval and adoption of the merger agreement.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide the broker with
instructions as to how to vote your shares. If you do not instruct your
broker to vote your shares, your shares will not be voted. You should follow
the directions provided by your broker regarding how to instruct your broker
to vote your shares.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this three different ways. First, you can send a
written notice stating that you would like to revoke your proxy. Second, you
can complete and submit a new proxy card. VMARK stockholders choosing either
of these options should send their revocation letter or new proxy card to
the VMARK general counsel at the address provided on page 3. UNIDATA
stockholders choosing either of these options should send their revocation
letter or new proxy card to the UNIDATA corporate secretary at the address
provided on page 3. The third way you may change your vote is to attend your
special meeting and vote in person. Simply attending the meeting, how-
1
<PAGE> 7
ever, will not revoke your proxy. If you have instructed a broker to vote
your shares, you must follow the directions provided by your broker to
change those instructions.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, we will send UNIDATA stockholders written
instructions for exchanging their share certificates. VMARK stockholders may
keep their existing stock certificates.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: If the stockholders of both companies vote to adopt and approve the merger
at the respective special meetings, we expect the merger will be completed
by the end of February 1997.
2
<PAGE> 8
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the merger or would like additional copies
of this Joint Proxy Statement/Prospectus, you should contact:
VMARK Stockholders:
VMARK Software, Inc.
50 Washington Street
Westboro, Massachusetts 01581
Attention: General Counsel
(508) 366-3888
or
Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, NJ 07072
Attn: Corporate Services Group
(201) 896-1900
UNIDATA Stockholders:
Unidata, Inc.
1099 18th Street
Suite 2200
Denver, Colorado 80202
Attention: Corporate Secretary
(303) 294-0800
3
<PAGE> 9
SUMMARY
This summary only highlights selected information from this document and
may not contain all of the information that is important to you. To understand
the merger fully and for a more complete description of the legal terms of the
merger, you should carefully read this entire document and the documents to
which we have referred you. See "WHERE YOU CAN FIND MORE INFORMATION" on page
91.
THE COMPANIES
VMARK SOFTWARE, INC.
50 Washington Street
Westboro, Massachusetts 01581-1021
(508) 366-3888
VMARK designs, markets and supports computer software and services for
developing, deploying and maintaining business applications and data warehousing
solutions. VMARK's primary products are its uniVerse relational database
management systems for the creation, manipulation, and retrieval of diverse data
types, and Datastage, a data warehouse product which allows users to access,
manipulate, and organize data from multiple and different sources. VMARK
products are employed by over one million users worldwide.
UNIDATA, INC.
1099 18th Street
Suite 2200
Denver, Colorado 80202
(303) 294-0800
UNIDATA designs, develops and markets database management computer
software, application development tools and other software products to provide
complete database solutions for businesses worldwide. UNIDATA products allow
users to develop sophisticated applications for the creation, manipulation and
retrieval of diverse data types. In addition, UNIDATA is developing new object
oriented database management technology and application development products
and, on December 31, 1997, acquired O2 Technology SA, a leading French object
database developer.
OUR REASONS FOR THE MERGER (PAGE 25)
We believe that combining VMARK's and UNIDATA's strengths in developing and
marketing database management software, including UNIDATA's expertise in object
oriented databases and the World Wide Web and VMARK's expertise in data
warehousing, will create a stronger, more competitive computer software company.
We also believe that the merger will create immediate opportunities for savings
in operating costs. To review our reasons for the merger in greater detail, see
pages 25 through 27.
THE STOCKHOLDERS' MEETINGS (PAGE 17)
THE VMARK SPECIAL MEETING
The VMARK special meeting will be held at VMARK's offices at 50 Washington
Street, Westboro, Massachusetts, at 10:00 a.m., local time, on February 5, 1998.
At the VMARK special meeting, VMARK stockholders will be asked to:
- - adopt the merger agreement;
- - approve an amendment to VMARK's 1986 Stock Option Plan to increase the number
of shares available under the plan; and
- - approve an amendment to VMARK's Employee Stock Purchase Plan to increase the
number of shares available under the plan.
THE UNIDATA SPECIAL MEETING
The UNIDATA special meeting will be held at UNIDATA's offices at 1099 18th
Street, Suite 2200, Denver, Colorado, at 10:00 a.m., local time, on February 5,
1998. At the UNIDATA special meeting, UNIDATA stockholders will be asked to
adopt the merger agreement.
OUR RECOMMENDATIONS TO STOCKHOLDERS
TO VMARK STOCKHOLDERS:
The VMARK Board believes that the merger is fair to you and in your best
interest and unanimously recommends that you vote FOR the proposal to adopt the
merger agreement and FOR the proposals to increase the number of shares
available under its employee stock option and employee stock purchase plans. For
more information on why the VMARK Board recommends the merger and possible
conflicts of interest of certain VMARK directors, see pages 25 and 31,
respectively.
4
<PAGE> 10
TO UNIDATA STOCKHOLDERS:
The UNIDATA Board believes that the merger is fair to you and in your best
interest and unanimously recommends that you vote FOR the proposal to adopt the
merger agreement. For more information on why the UNIDATA Board recommends the
merger and possible conflicts of interest of certain UNIDATA directors, see
pages 26 and 31, respectively.
RECORD DATE; VOTING POWER
You are entitled to vote at your special meeting if you owned shares as of
the close of business on December 26, 1997 (which is the record date set for
both UNIDATA and VMARK).
On the record date, there were 8,291,358 outstanding shares of VMARK common
stock which will be entitled to vote at the VMARK special meeting. VMARK
stockholders will have one vote for each share of VMARK common stock they owned
on the record date for each of the proposals to be voted on.
On the record date, there were 11,820,430 shares of UNIDATA Class A common
stock and 500,000 shares of UNIDATA Class B common stock entitled to vote at the
UNIDATA special meeting. UNIDATA stockholders will have one vote for each share
of UNIDATA Class A and Class B common stock they owned on the record date for
the proposal to adopt the merger agreement.
VOTES REQUIRED
VMARK
In order to approve the merger, a majority of the outstanding shares of
VMARK common stock must vote in favor of adopting the merger agreement. The
directors and executive officers of VMARK, holding a total of 506,719 shares of
VMARK common stock, representing about 6% of the outstanding VMARK shares, have
agreed to vote their shares in favor of the merger. For more information on the
VMARK special meeting, see page 17.
UNIDATA
In order to approve the merger, two-thirds of the outstanding shares of
UNIDATA Class A common stock and two-thirds of the outstanding shares of UNIDATA
Class B common stock, voting as separate classes, must vote in favor of
approving and adopting the merger agreement. The directors and executive
officers of UNIDATA and certain holders of UNIDATA Class A common stock, which
together hold a total of 10,323,500 shares of UNIDATA Class A common stock,
representing over 87% of the outstanding shares of Class A UNIDATA common stock,
have agreed to vote their shares in favor of the merger. In addition, the
holders of all of the outstanding shares of UNIDATA Class B common stock have
agreed to vote their shares in favor of the merger. Accordingly, approval of the
merger by UNIDATA stockholders is assured. For more information on the UNIDATA
special meeting, see page 19.
THE MERGER
THE MERGER AGREEMENT IS ATTACHED TO THIS JOINT PROXY STATEMENT/PROSPECTUS
AS ANNEX I. WE ENCOURAGE YOU TO READ THE MERGER AGREEMENT CAREFULLY, AS IT IS
THE LEGAL DOCUMENT WHICH GOVERNS THE MERGER OF VMARK AND UNIDATA.
THE NEW NAME
Upon the merger, the name of VMARK, as the surviving corporation, will be
changed to "Ardent Software, Inc.," referred to in this proxy statement as
"Ardent" or as "the combined company."
OWNERSHIP OF ARDENT FOLLOWING THE MERGER (PAGE 79)
The shares of Ardent common stock issued to UNIDATA stockholders in the
merger will constitute approximately 40% of the outstanding common stock of
Ardent after the merger. As a result of the merger, James T. Dresher, UNIDATA's
current Chairman of the Board and Chief Executive Officer will beneficially own
approximately 21% of the outstanding common stock of Ardent. The shares of VMARK
common stock held by VMARK stockholders prior to the Merger will constitute
approximately 60% of the outstanding shares of Ardent common stock after the
merger.
5
<PAGE> 11
MANAGEMENT AND BOARD OF DIRECTORS OF
ARDENT FOLLOWING THE MERGER (PAGE 76)
If the merger is completed, the management of Ardent will be composed of
existing executive officers of VMARK and UNIDATA, including:
- - Peter Gyenes, Chief Executive Officer and Chairman of the Board (currently
President, Chief Executive Officer and a Director of VMARK);
- - David W. Brunel, President and Chief Operating Officer (currently President,
Chief Operating Officer and a Director of UNIDATA); and
- - Charles F. Kane, Chief Financial Officer (currently Chief Financial Officer of
VMARK).
The Board of Directors of Ardent immediately after the merger will consist
of six members, three designated by VMARK and three designated by UNIDATA.
INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER (PAGE 31)
In considering the Boards' recommendations that you vote in favor of the
merger, you should be aware that a number of officers and directors of UNIDATA
and VMARK have retention incentives, benefit plans or certain other benefits
that provide them with interests in the merger that are different from, or in
addition to, yours. Please refer to pages 31 through 33 for more information
concerning retention incentives, benefit plans and other benefits of such
officers and directors.
CONDITIONS TO THE MERGER (PAGE 39)
The completion of the merger depends upon meeting a number of conditions,
including the following:
- - VMARK's and UNIDATA's stockholders shall have voted in favor of the merger;
- - at the Closing, the representations and warranties of each of VMARK and
UNIDATA shall be true in all material respects and each of the companies shall
have performed their covenants in the merger agreement;
- - there shall have been no governmental action which effectively prohibits the
merger or limits the rights of Ardent because of the merger; and
- - we shall have received letters from each of our legal counsel regarding
certain federal income tax consequences of the merger.
Each of the conditions to the merger may be waived by the company entitled
to assert the condition.
TERMINATION OF THE MERGER AGREEMENT (PAGE 39)
UNIDATA and VMARK can mutually agree to terminate the merger agreement
without completing the merger, and either of us can terminate the merger
agreement if any of the following events occur:
- - the merger is not completed by April 15, 1998;
- - a court or other governmental authority permanently prohibits the merger;
- - the stockholders of VMARK or UNIDATA do not approve the merger;
- - the other company breaches or fails to comply with any of its material
representations or warranties or obligations under the merger agreement,
unless (i) such breach or failure to comply can be cured prior to April 15,
1998 and (ii) the other company continues to use its best efforts to remedy
such breach or failure to comply;
- - the board of directors of the other company (i) withdraws or modifies in any
adverse manner its recommendation of the merger; (ii) fails to reconfirm its
recommendation upon written request after such company receives a proposal to
be acquired by a third party; (iii) recommends an alternative transaction;
(iv) approves or recommends any tender offer for shares of its capital stock
by a third party; or (v) fails to hold its special stockholder meeting by
April 15, 1998; or
- - the merger is not to be treated as a pooling of interests for accounting
purposes and VMARK is unable to obtain a new fairness opinion from a financial
advisor.
TERMINATION FEES (PAGE 41)
The merger agreement generally requires VMARK or UNIDATA to pay the other a
termination fee of $3 million if the merger agreement terminates under certain
circumstances.
6
<PAGE> 12
RECIPROCAL STOCK OPTION AGREEMENTS (PAGE 41)
UNIDATA and VMARK have each granted an option to the other party to
purchase approximately 19% of its outstanding common stock if certain events
occur that entitle the party exercising the option to receive a termination fee
under the merger agreement. If the options become exercisable, VMARK would be
able to purchase shares of UNIDATA's common stock at a price per share of $4.42.
UNIDATA would be able to purchase shares of VMARK common stock at a price per
share of $9.87. The grants of these stock options may make it more difficult and
expensive for UNIDATA and VMARK to consummate an alternative transaction.
EFFECTIVE TIME (PAGE 21)
The merger will become effective when all necessary documentation has been
filed in both Colorado and Delaware. We plan on filing these documents
immediately after the VMARK special meeting and the UNIDATA special meeting.
EXCHANGE OF STOCK CERTIFICATES (PAGE 21)
After consummation of the merger, UNIDATA stockholders will no longer have
any rights as UNIDATA stockholders. UNIDATA stockholders who turn in their
UNIDATA stock certificates will receive Ardent stock certificates from the
exchange agent as quickly as is feasible.
ESCROWED SHARES (PAGE 22)
At the time of the merger, VMARK will deposit 50,000 shares of the total
shares issuable in the merger into an escrow. These shares will be used, if
necessary, to satisfy any claims that may be brought by a venture capital firm
which has demanded payment of certain financing fees related to a financing that
UNIDATA did not complete. All shares not so used will be allocated among the
UNIDATA stockholders and distributed at the end of the escrow period.
OPINION OF FINANCIAL ADVISOR (PAGE 28)
In deciding to approve the merger, the VMARK Board considered the opinion
of Volpe Brown Whelan & Company, LLC (VBW&C), its financial advisor, as to the
fairness to the VMARK stockholders from a financial point of view of the
consideration to be paid to the UNIDATA stockholders. A portion of the fee
payable to VBW&C is contingent upon completion of the merger. VBW&C's opinion is
attached as Annex II to this Joint Proxy Statement/Prospectus, and we encourage
you to read it.
COMPARISON OF RIGHTS UNDER APPLICABLE LAWS (PAGE 81)
The rights of UNIDATA stockholders are currently governed by Colorado law.
After the merger, UNIDATA stockholders will become stockholders in Ardent, and
their rights as stockholders will be governed by Delaware law. There are certain
differences between Colorado and Delaware law of which you should be aware. For
example, Colorado law requires the affirmative vote of holders to two-thirds of
the outstanding stock of the company to elect or remove directors, approve the
sale of substantially all of the company's assets, approve a merger involving
the company, or amend the company's charter. Delaware law requires only the vote
of a majority of stockholders for such actions. There are also fewer occasions
under Delaware law when stockholders are granted the right to dissent from an
action of the company and force the company to purchase the stockholder's
shares.
In addition, after the merger the rights of UNIDATA stockholders will be
governed by Ardent's Certificate of Incorporation and Bylaws. There are certain
differences between Ardent's and UNIDATA's governing documents of which you
should be aware.
ACCOUNTING TREATMENT (PAGE 43)
We expect the merger to qualify as a pooling of interests, which means that
we will treat our companies as if they had always been combined for accounting
and financial reporting purposes.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
(PAGE 45)
We have structured the merger so that VMARK, UNIDATA and their stockholders
should not recognize any gain or loss for federal income tax purposes as a
result of the merger (except for taxes on cash received by UNIDATA stockholders
for fractional shares).
Tax matters are very complicated and the tax consequences of the merger to
you will depend on the facts of your own situation. You should consult
7
<PAGE> 13
your tax advisors for a full understanding of the tax
consequences of the merger to you.
APPRAISAL RIGHTS (PAGE 43)
Under Delaware law, VMARK stockholders have no right to an appraisal of the
value of their shares in connection with the merger.
Under Colorado law, UNIDATA stockholders who do not vote in favor of the
merger and follow the procedures described on page 43 may receive the "fair
value" of their shares of UNIDATA stock in cash instead of shares of Ardent
stock. Any holder of UNIDATA Common Stock who votes in favor of the merger, or
is deemed to vote in favor of the merger (by, for example, returning a signed
proxy card without specifying a vote on the merger) will waive their appraisal
rights. One of the conditions to the merger is that less than 5% of UNIDATA
stockholders exercise their appraisal rights.
LISTING OF ARDENT COMMON STOCK
(PAGE 43)
Prior to the merger, VMARK will obtain approval to have the shares of
Ardent stock to be issued in the merger listed on The Nasdaq Stock Market.
FORWARD-LOOKING STATEMENTS MAY PROVE
INACCURATE
We each have made forward-looking statements in this document (and VMARK
has made forward-looking statements in documents that are incorporated by
reference) that are subject to risks and uncertainties. Forward-looking
statements include information concerning possible or anticipated future
results, such as cost savings and synergies relating to the merger. Also, when
we use words such as "believes," "expects," "anticipates" or similar
expressions, we are making forward-looking statements. You should note that many
factors could affect the future financial results of VMARK and UNIDATA and could
cause these results to differ materially from those expressed in our
forward-looking statements. These factors include the various risks described
under "RISK FACTORS" on page 15.
8
<PAGE> 14
- --------------------------------------------------------------------------------
SUMMARY HISTORICAL FINANCIAL DATA
VMARK and UNIDATA are providing the following financial information to aid
you in your analysis of the financial aspects of the merger. This information is
only a summary and you should read it in conjunction with the historical
financial statements and related notes contained elsewhere herein and in the
annual reports and other information that VMARK has filed with the SEC. See
"WHERE YOU CAN FIND MORE INFORMATION" on page 91.
VMARK prepares its financial statements on the basis of a fiscal year
ending on December 31. The financial data of VMARK for each of the five years
ended December 31, 1996 are derived from consolidated financial statements of
VMARK audited by Deloitte & Touche LLP. The financial data of VMARK for the nine
months ended September 28, 1997 and September 29, 1996 are unaudited, but in the
opinion of management are prepared on the same basis as the audited financial
statements.
UNIDATA prepares its financial statements on the basis of a fiscal year
ending on June 30. The financial data of UNIDATA for the three years ended June
30, 1997 are derived from consolidated financial statements of UNIDATA audited
by Coopers & Lybrand L.L.P. The financial data of UNIDATA for the three months
ended September 30, 1997 and 1996 and the two years ended June 30, 1994 are
derived from unaudited consolidated financial statements prepared by UNIDATA's
management, which in the opinion of management are prepared on the same basis as
the audited financial statements.
- --------------------------------------------------------------------------------
9
<PAGE> 15
SUMMARY HISTORICAL FINANCIAL DATA OF VMARK(1)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER YEAR ENDED DECEMBER 31,
28, 29, ---------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------------ ------------ ------- ------- ------- ------- -------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue...................... $ 42,531 $ 52,382 $69,266 $68,364 $65,452 $57,203 $51,777
Other charges(2)............. -- 2,125 4,322 7,381 5,100 4,800 2,100
Income (loss) from
operations................. 3,082 755 (1,508) (4,697) 2,202 (1,530) 287
Income (loss) before
extraordinary items and
change in accounting....... 1,820 (35) (2,641) (3,890) (221) (2,198) (251)
Net income (loss)(3)(4)(5)... 1,820 (35) (7,375) (3,890) (221) (1,548) 1,079
Income (loss) per common
share:
Income (loss) before
extraordinary item and
change in accounting..... $ .22 $ (.00) $ (.33) $ (.49) $ (.03) $ (.29) $ (.03)
Net income (loss).......... .22 (.00) (.91) (.49) (.03) (.21) .15
Shares used in calculation... 8,460 8,099 8,096 8,013 7,824 7,515 7,426
CONSOLIDATED BALANCE SHEET
DATA:
Cash and short-term
investments................ $ 21,038 $ 12,994 $14,733 $12,267 $16,017 $16,649 $20,266
Working capital.............. 18,798 18,151 14,282 17,566 22,668 19,233 22,274
Total assets................. 57,400 60,354 59,977 63,353 65,482 47,422 47,703
Total long-term
liabilities(6)............. 8,851 9,074 9,015 9,227 9,438 2 16
Stockholders' equity......... 31,831 35,327 28,831 37,167 39,338 33,701 36,203
</TABLE>
SUMMARY HISTORICAL FINANCIAL DATA OF UNIDATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED JUNE 30,
---------------------------- ---------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------------ ------------ ------- ------- ------- ------- -------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue........................ $ 9,810 $ 10,073 $49,112 $41,233 $24,357 $16,436 $11,374
Other charges(1)(2)(3)......... -- -- 602 4,900 -- 462 --
Income (loss) from
operations................... (1,975) (672) 1,389 (2,571) 1,678 323 1,230
Net income (loss).............. (1,618) (840) (559) (2,618) 1,264 73 835
Net income (loss) per common
share........................ (.13) (.07) (.05) (.23) .11 .01 .08
Shares used in calculation..... 12,157 12,083 12,133 11,498 11,281 10,656 10,477
CONSOLIDATED BALANCE SHEET
DATA:
Cash and short-term
investments.................. $ 826 $ 272 $ 623 $ 812 $ 387 $ 276 $ 307
Working capital................ 2,527 2,548 4,239 3,640 1,307 2,132 91
Total assets................... 31,826 33,597 34,380 34,480 16,480 10,297 7,464
Total long-term liabilities.... 12,429 12,691 12,462 12,689 2,858 2,653 271
Stockholders' equity........... 5,027 6,094 6,795 6,960 3,967 2,645 2,114
</TABLE>
See footnotes on following page.
10
<PAGE> 16
- --------------------------------------------------------------------------------
NOTES TO VMARK'S SUMMARY HISTORICAL FINANCIAL DATA
(1) VMARK merged with Easel Corporation in 1995. The merger qualified for
pooling-of-interests treatment and, accordingly, VMARK's financial
statements include the accounts of Easel for all periods presented.
(2) During the periods presented, VMARK recorded several one-time charges
related to restructurings, litigation, and/or mergers and acquisitions. In
1996, $4,322,000 was recorded related to restructurings of the business and
the exit of VMARK from certain unprofitable business lines. In 1995,
$6,882,000 was recorded related to the merger with Easel Corporation and the
restructuring activity which occurred during the year, and $499,000 in
litigation related charges were recorded. In 1994, $2,750,000 was recorded
representing the estimated amount of purchased research and development
acquired in a business combination, $650,000 in litigation related charges
were recorded, and $1,700,000 was recorded relating to restructuring of the
Easel operations prior to the merger. In 1993 and 1992, Easel recorded
certain charges associated with restructurings of its operations.
(3) In 1996, VMARK recorded an extraordinary loss of $4,734,000 related to the
discontinuance at the end of that year of certain product lines and
businesses present at the date of the merger with Easel. Generally accepted
accounting principles require such costs to be recorded as extraordinary
items, since the disposition of these assets was not contemplated at the
date VMARK merged with Easel.
(4) VMARK adopted Statement of Financial Accounting Standards No. 109 ("FAS No.
109"), "Accounting for Income Taxes", effective at the beginning of fiscal
1993. The adoption of FAS 109 had a $650,000 positive impact on the results
of operations in 1993.
(5) VMARK recorded extraordinary items for reduction of income taxes due to
carryforward of net operating losses of $1,330,000 in 1992.
(6) VMARK entered into an office lease in 1994 for its corporate office. The
lease was recorded as a capital lease for financial statement purposes.
NOTES TO UNIDATA'S SUMMARY HISTORICAL FINANCIAL DATA
(1) During fiscal year 1997, UNIDATA disposed of a wholly owned subsidiary and
recorded a loss on an investment in a joint venture. These items resulted in
losses totalling $602,000.
(2) Effective November 1, 1995, UNIDATA purchased substantially all of the
assets and assumed most of the liabilities of the System Builder group of
software tools development companies. The total net purchase price of
$14,343,000 was assigned to tangible and identifiable intangible assets,
including in-process research and development of $4,900,000. The in-process
research and development was expensed at acquisition.
(3) During fiscal year 1994, UNIDATA recorded a charge of $462,000 to write off
the carrying value of certain acquired technology.
- --------------------------------------------------------------------------------
11
<PAGE> 17
- --------------------------------------------------------------------------------
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
VMARK and UNIDATA expect that the merger will be accounted for as a
"pooling of interests," which means that for accounting and financial reporting
purposes we will treat our companies as if they had always been combined. For a
more detailed description of pooling of interests, see "THE PROPOSED MERGER --
Accounting Treatment" at page 43. VMARK and UNIDATA have presented below summary
unaudited pro forma financial data that reflects the pooling of interests method
of accounting and is intended to give you a better picture of what our
businesses might have looked like had they always been combined.
The pro forma statement of operations data assumes that the merger took
place as of the first day of the earliest financial period presented in the pro
forma financial information. VMARK prepares its financial statements on the
basis of a fiscal year ending on December 31. UNIDATA prepares its financial
statements on the basis of a fiscal year ending on June 30. The table below
combines VMARK's audited results of operations for its fiscal year ended
December 31, 1996 and the unaudited results of operations for the nine months
ended September 28, 1997 and September 29, 1996 with UNIDATA's unaudited results
of operations for the year ended December 31, 1996 and the nine months ended
September 30, 1997 and September 30, 1996. The table also combines, under the
columns for fiscal year 1995 and 1994, VMARK's audited results of operations for
each of the two years ended December 31, 1995 with UNIDATA's audited results of
operations for its fiscal year ended June 30, 1995 and UNIDATA's unaudited
results of operations for its fiscal year ended June 30, 1994. UNIDATA's revenue
and net loss for the six months ended December 31, 1995, not included in the pro
forma financial data below, were $16,511,000 and $3,762,000, respectively.
The pro forma balance sheet data combines VMARK's unaudited financial
position as of September 28, 1997 with UNIDATA's unaudited financial position as
of September 30, 1997.
The companies may have performed differently had they actually been
combined. You should not rely on the pro forma information as being indicative
of the historical results that we would have had or the future results that we
will experience after the merger. See "UNAUDITED PRO FORMA CONDENSED COMBINING
FINANCIAL STATEMENTS" on page 47.
<TABLE>
<CAPTION>
NINE MONTHS
NINE MONTHS ENDED YEAR ENDED FISCAL FISCAL
ENDED SEPTEMBER 29, DECEMBER 31, YEAR YEAR
SEPTEMBER 28, 1997 1996 1996 1995 1994
------------------ ------------- ------------ ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
PRO FORMA STATEMENT OF OPERATIONS
DATA:
Revenue............................. $78,707 $87,177 $116,735 $92,721 $81,888
Other charges....................... 602 2,125 4,322 7,381 5,562
Income (loss) from operations....... 2,308 2,545 1,143 (3,019) 2,525
Income (loss) before extraordinary
item and change in accounting..... 365 269 (2,219) (2,626) (148)
Net income (loss)................... 365 269 (6,953) (2,626) (148)
Income (loss) per common share:
Income (loss) before extraordinary
item and change in
accounting..................... $ .03 $ .02 $ (.16) $ (.20) $ (.01)
Net income (loss)................. .03 .02 (.49) (.20) (.01)
Shares used in calculation.......... 13,903 13,963 14,052 13,063 12,594
<CAPTION>
AS OF
SEPTEMBER 28, 1997(1)
---------------------
<S> <C>
PRO FORMA BALANCE SHEET DATA:
Cash and short-term investments...... $21,864
Working capital...................... 10,680
Total assets......................... 92,371
Total long-term liabilities.......... 21,280
Stockholders' equity................. 26,850
</TABLE>
- ---------------
(1) The pro forma balance sheet data has been adjusted to reflect the estimated
non-recurring costs of the merger, which are estimated at approximately
$14.1 million ($10.0 million net of tax). This estimate includes
approximately $10.8 million of costs associated with combining the
operations of the two companies, principally costs of severance and
facilities consolidation, and approximately $3.3 million for financial
advisor, legal, and accounting fees related to the merger.
- --------------------------------------------------------------------------------
12
<PAGE> 18
COMPARATIVE PER SHARE DATA
The following table sets forth selected per share data of VMARK and UNIDATA
on a historical, pro forma combined and pro forma equivalent basis. The
information presented in this table is derived from the financial information of
VMARK and UNIDATA as described in the notes below. The information set forth
below is only a summary and you should read it in conjunction with the financial
statements described above. This table is not necessarily indicative of the
results of future operations of Ardent or actual results that would have
occurred if the merger had taken place prior to the period indicated. See "WHERE
YOU CAN FIND MORE INFORMATION" on page 91.
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL HISTORICAL PRO FORMA UNIDATA
VMARK UNIDATA COMBINED EQUIVALENT(1)
---------- ------- --------- -------------
<S> <C> <C> <C> <C>
Book value per common share(2):
September 28, 1997/September 30, 1997....... $ 3.85 $ .41 $1.96 $ .88
Cash dividends per common share(3)............ -- -- -- --
Income (loss) per common share before
extraordinary items(4):
Nine months ended September 28/30, 1997..... .22 (.12) .03 .01
Nine months ended September 29/30, 1996..... (.00) .02 .02 .01
Year ended December 31, 1996................ (.33) .03 (.16) (.07)
Fiscal year ended 1995...................... (.49) .11 (.20) (.09)
Fiscal year ended 1994...................... (.03) .01 (.01) --
</TABLE>
- ---------------
(1) We computed the Pro Forma UNIDATA Equivalent per share amounts by
multiplying the Pro Forma Combined per share amounts by the exchange ratio
of 0.44765.
(2) We computed historical book value per share by dividing VMARK's unaudited
total stockholders' equity as of September 28, 1997 by the number of common
shares outstanding as of that date and UNIDATA's unaudited total
stockholders' equity as of September 30, 1997 by the number of common shares
outstanding as of that date. We computed the Pro Forma Combined book value
per share amounts by dividing pro forma stockholders' equity (See "UNAUDITED
PRO FORMA CONDENSED COMBINING BALANCE SHEET") by the pro forma number of
shares of common stock outstanding as of September 28, 1997 (without
including outstanding options). The pro forma number of shares of common
stock was calculated as the sum of total VMARK shares outstanding and
UNIDATA shares outstanding as adjusted for the exchange ratio of 0.44765.
(3) VMARK and UNIDATA have never paid dividends and it is not anticipated that
Ardent will do so in the foreseeable future.
(4) VMARK prepares its financial statements on the basis of a fiscal year ending
on December 31. UNIDATA prepares its financial statements on the basis of a
fiscal year ending on June 30. The table above combines VMARK's audited
results of operations for its fiscal year ended December 31, 1996 and the
unaudited results of operations for the nine months ended September 28, 1997
and September 29, 1996 with UNIDATA's unaudited results of operations for
the same periods. The table also combines, for fiscal years ended 1995 and
1994, VMARK's audited results of operations for each of the two years ended
December 31, 1995 with UNIDATA's audited results of operations for its
fiscal year ended June 30, 1995 and UNIDATA's unaudited results of
operations for its fiscal year ended June 30, 1994. UNIDATA's revenue and
net loss for the six months ended December 31, 1995, not included in the pro
forma financial data above, were $16,511,000 and $3,762,000, respectively.
The pro forma combined net income per share is based on the combined
weighted average number of common shares and common share equivalents,
after adjusting UNIDATA's weighted average number of common shares
outstanding and dilutive common share equivalents for the conversion into
Ardent common stock at a conversion ratio of 0.44765. Common share
equivalents consist of common stock issuable upon the exercise of
outstanding options and warrants.
13
<PAGE> 19
MARKET PRICE INFORMATION
The table below sets forth the high and low closing sales prices of VMARK
common stock as reported on The Nasdaq Stock Market for the calendar periods
indicated. VMARK has never paid any cash dividends on its common stock, and it
has a line of credit agreement with a bank which limits its ability to pay cash
dividends.
<TABLE>
<CAPTION>
$ PER SHARE OF
VMARK
COMMON STOCK
-------------------
HIGH LOW
------- -------
<S> <C> <C>
1995:
First Quarter.......................................... $ 19.25 $ 12.75
Second Quarter......................................... 19.00 10.75
Third Quarter.......................................... 21.50 13.25
Fourth Quarter......................................... 15.125 5.75
1996:
First Quarter.......................................... 9.875 6.50
Second Quarter......................................... 12.625 7.00
Third Quarter.......................................... 11.125 6.50
Fourth Quarter......................................... 10.00 5.50
1997:
First Quarter.......................................... 7.375 6.00
Second Quarter......................................... 8.625 5.875
Third Quarter.......................................... 10.25 7.828
Fourth Quarter (through December 29, 1997)............. 11.625 7.313
</TABLE>
On October 6, 1997, the last trading day prior to the public announcement
of the merger agreement, the reported high and low sales prices per share of
VMARK common stock on The Nasdaq Stock Market were $11.625 and $10.50,
respectively. On December 29, 1997, the last practicable trading date for which
results were available for inclusion in this Joint Proxy Statement/Prospectus,
the reported high and low sales prices per share of VMARK common stock on The
Nasdaq Stock Market were $8.063 and $7.50, respectively.
The market price of VMARK common stock is subject to fluctuation.
Therefore, the market value of the shares of Ardent common stock which UNIDATA
stockholders will receive in the merger may increase or decrease prior to the
merger.
As of December 26, 1997, there were approximately 311 stockholders of
record of VMARK.
UNIDATA common stock is not publicly traded. UNIDATA has never declared or
paid any cash dividends on its common stock or preferred stock.
14
<PAGE> 20
RISK FACTORS
In addition to general investment risks and those factors set forth
elsewhere herein, the following risks should be considered by UNIDATA
stockholders in deciding whether to approve and adopt the merger agreement and
thereby become stockholders of Ardent and by VMARK stockholders in deciding
whether to adopt the merger agreement. These risks should be considered together
with the factors set forth in "UNIDATA MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Factors That May Affect Future
Results" on page 71.
RISKS RELATING TO THE MERGER
Integration of Operations; Transaction Costs. We cannot guarantee that the
integration of VMARK and UNIDATA will be completed in a manner that is
efficient, effective and timely enough to achieve the anticipated benefits of
the merger. Integrating our companies will require the timely combination of
management, sales and marketing and research and development teams that are in
different geographic locations. Integration of the companies also will require
the combination of complex software technology, product lines and software
development plans. Additionally, the time-consuming task of integrating our
companies may distract attention from the day-to-day business of the combined
company.
Concentration of Ownership. When the merger is completed, James T. Dresher
will own beneficially approximately 21% of the outstanding common stock of the
combined company. Such concentration of ownership will give Mr. Dresher
substantial power to affect the outcome of the election of directors and other
matters requiring a stockholder vote and, in addition, may have the effect of
delaying or preventing a change in control of the combined company.
Risks Associated with Fixed Exchange Ratio. UNIDATA stockholders will
receive 0.44765 of a share of the combined company's common stock for each share
of UNIDATA common stock that they own at the time of the merger. This fraction
of a share of the combined company's stock, also known as the exchange ratio, is
fixed and will not change regardless of any fluctuation in the market price of
the combined company's common stock. Accordingly, the value of the combined
company's shares to be issued to UNIDATA stockholders will depend on the market
price of the combined company's common stock at the time of the merger.
RISKS RELATING TO THE BUSINESS OF THE COMBINED COMPANY
Need to Develop New Products and Adapt to Technological
Change. Technological developments, customer requirements and industry
standards change frequently in the computer software database market. As a
result, the combined company's success will depend upon our ability to enhance
current products and to develop or acquire new products which meet customer
needs and comply with industry standards. The possibility exists that the
combined company's products will be rendered obsolete by technological advances,
or that the combined company will not be able to develop and market the products
required to continue to be competitive. Certain of our planned products are in
various stages of development. It is possible that such products will prove not
to be commercially viable or that we will experience operational problems with
such products after commercial introduction that could delay or defeat the
ability of such products to generate revenue. The products to which the combined
company intends to devote substantial resources in the foreseeable future are
object oriented database products and data warehousing and datamart products.
There is no assurance that products in either of these two areas will be
commercially successful. In particular, object technology requires customers to
make a substantial investment in retraining application programmers. Several
companies have failed in attempts to introduce object technology and there is no
assurance that such technology will gain widespread customer acceptance. VMARK
and UNIDATA have experienced product delays and undetected errors or bugs in
their products in the past and the combined company may experience such problems
in the future. The combined company's success will also depend on the ability of
its products to interoperate and perform well with existing and future
industry-standard leading application software products intended to be used in
connection with relational database management systems.
Substantial Competition. The combined company will face intense
competition in the market for database management systems and related software
from many companies which offer alternative solutions to
15
<PAGE> 21
the needs addressed by our products and services. Many of the combined company's
direct competitors, such as Oracle Corporation, Sybase, Inc. and Informix
Software, Inc., as well as other large computer software companies that could
compete directly against the combined company in the future, have far greater
resources than UNIDATA and VMARK combined. Our competitors also may be able to
adapt more quickly to new or emerging technologies and standards or changes in
customer requirements or devote greater resources to the promotion and sale of
their products. Several of our competitors already have announced plans to
develop new technology that will compete with the object database and data
warehousing technology that will constitute the core of the combined company's
new product development efforts. There can be no assurance that the combined
company will be able to compete successfully in its markets against such
competitors.
Litigation. VMARK is a defendant in litigation with certain stockholders
who allege that members of VMARK's management made certain untrue statements and
failed to disclose information regarding VMARK's prospective financial
performance in violation of federal law. UNIDATA also is a party to a lawsuit
brought by one of UNIDATA's licensees which claims that UNIDATA violated such
licensee's purported exclusive license to certain UNIDATA products in Asia.
VMARK and UNIDATA deny the allegations against them and intend to vigorously
contest these lawsuits. Nonetheless, it is possible that one or both of these
matters could subject the combined company to substantial liability and thereby
adversely affect the combined company's financial performance.
Dependence on Key Personnel; Ability to Attract and Retain Qualified
Personnel. Our businesses are led by a number of key, highly skilled technical,
managerial and marketing personnel, the loss of which could adversely affect the
combined company. Competition for such personnel in the software industry is
intense. The success of the combined company will depend in large part upon its
ability to hire and retain such personnel.
Volatility of Stock Prices and Fluctuations in Quarterly Results. The
market price of VMARK common stock has been, and the market price of Ardent
common stock after the Merger may continue to be, highly volatile. Factors that
are difficult to predict such as quarterly revenue, statements and ratings by
financial analysts and overall market performance will have a significant impact
on the price for shares of Ardent common stock. Future sales of large amounts of
Ardent common stock also could adversely affect the stock price. Except for
long-term service and maintenance contracts, both VMARK and UNIDATA operate with
an insignificant backlog of orders and the bulk of customer purchase orders are
received at the end of quarterly periods, especially at the end of the year. As
a result, our operating results can vary substantially from period to period and
the results of individual quarters are extremely uncertain.
Risks Associated with International Operations. Fluctuations in foreign
currency prices relative to the United States dollar could reduce a substantial
portion of the combined company's total revenue expected to come from
international operations. 24% of UNIDATA's revenues for the nine months ended
September 30, 1997 and 37% of VMARK's revenues for the nine month period ended
September 28, 1997 are derived from sales outside the United States. If exchange
or price controls or other restrictions on the conversion of foreign currencies
are imposed, the combined company's businesses could be adversely affected.
Other potential risks inherent in the combined company's international business
generally will include longer payment cycles, greater difficulties in collecting
accounts receivable, the burdens of complying with a wide variety of foreign
laws and regulations, political uncertainties and differences in business
practices.
Protection of Intellectual Property Rights. We regard certain of our
technologies as proprietary and rely on a combination of copyright, trademark
and trade secret laws and contractual provisions to establish and protect our
proprietary rights. These steps may not be sufficient to prevent or deter others
from copying or stealing our proprietary rights and do not prevent competitors
from independently developing technology that is equivalent or superior to our
technology. In addition, while we do not believe that our products, trademarks
or other proprietary rights infringe upon the proprietary rights of others, it
is possible that others will assert that they do. The cost of responding to such
an assertion may be significant, even if the assertion is false. The software
market has traditionally experienced widespread unauthorized reproduction of
products in violation of intellectual property rights. Such activity is
difficult to detect and legal proceedings to enforce intellectual property
rights are often burdensome and involve a high degree of uncertainty and costs.
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<PAGE> 22
THE VMARK SPECIAL MEETING
DATE, TIME AND PLACE; RECORD DATE
VMARK Software, Inc., a Delaware corporation ("VMARK") has scheduled a
special meeting of the holders of VMARK common stock, $.01 par value ("VMARK
Common Stock"), to be held at 10:00 A.M., local time, on February 5, 1998, at
the executive offices of VMARK located at 50 Washington Street, Westboro,
Massachusetts (the "VMARK Special Meeting"). The Board of Directors of VMARK
(the "VMARK Board") has fixed the close of business on December 26, 1997 (the
"VMARK Record Date") for the determination of holders of record of VMARK Common
Stock entitled to notice of and to vote at the VMARK Special Meeting.
PURPOSE OF THE MEETING
At the VMARK Special Meeting, the holders of VMARK Common Stock outstanding
as of the VMARK Record Date will be asked to consider and vote upon the proposal
to adopt the Agreement and Plan of Merger and Reorganization, dated as of
October 7, 1997, between VMARK and UNIDATA, as amended on November 7, 1997 (the
"Merger Agreement"), pursuant to which, among other things, (i) Unidata, Inc.
("UNIDATA") will be merged into VMARK (the "Merger"), and (ii) each share of
UNIDATA Class A common stock, no par value ("UNIDATA Class A Common Stock") and
UNIDATA Class B common stock, no par value ("UNIDATA Class B Common Stock," and
together with the UNIDATA Class A Common Stock, "UNIDATA Common Stock")
outstanding immediately prior to the Effective Time (as defined below) will be
converted into the right to receive, and become exchangeable for, 0.44765 of a
share of common stock, $.01 par value ("Ardent Common Stock") of Ardent
Software, Inc. ("Ardent"), except that cash will be paid in lieu of any
fractional share of Ardent Common Stock which a stockholder of UNIDATA may
otherwise be entitled to receive and (iii) the number of authorized shares of
VMARK Common Stock will be increased from 25,000,000 shares to 40,000,000
shares. A copy of the Merger Agreement, as amended, is attached as Annex I to
this Joint Proxy Statement/Prospectus and is incorporated herein by reference.
At the VMARK Special Meeting, holders of VMARK Common Stock will also consider
and vote upon proposals to amend the 1986 Stock Option Plan to increase the
number of shares that may be issued thereunder and to amend the Employee Stock
Purchase Plan to increase the number of shares that may be issued thereunder.
See "ADDITIONAL MATTERS BEING SUBMITTED TO A VOTE OF VMARK STOCKHOLDERS."
The VMARK Board has approved the Merger Agreement and has declared
advisable the other proposals and unanimously recommends that the holders of
VMARK Common Stock vote "FOR" adoption of the Merger Agreement and "FOR" the
other proposals. See "THE PROPOSED MERGER -- Recommendation of the VMARK Board
and Reasons for the Merger", "-- Stockholder Support Agreements" and "ADDITIONAL
MATTERS BEING SUBMITTED TO A VOTE OF VMARK STOCKHOLDERS".
VOTING RIGHTS
Pursuant to the Delaware General Corporation Law (the "DGCL"), the
affirmative vote of the holders of at least a majority of the shares of VMARK
Common Stock outstanding as of the VMARK Record Date is required to adopt the
Merger Agreement and the affirmative vote of the holders of a majority of the
shares of VMARK Common Stock voting thereon is required to approve each of the
other proposals, assuming a quorum is present. The presence, either in person or
by proxy, of the holders of a majority of the shares of VMARK Common Stock
outstanding as of the VMARK Record Date is required to constitute a quorum at
the VMARK Special Meeting. At the VMARK Record Date, there were 8,291,358 shares
of VMARK Common Stock outstanding. As of the VMARK Record Date, VMARK's
directors and executive officers as a group held shares of VMARK Common Stock
representing approximately 6% of the votes entitled to be cast by holders of
VMARK Common Stock at the VMARK Special Meeting. Holders of record of VMARK
Common Stock outstanding as of the VMARK Record Date are entitled to one vote
per share at the VMARK Special Meeting. VMARK's directors and executive
officers, who collectively hold approximately 6% of the outstanding shares of
VMARK Common Stock, have each agreed, among other things, to vote their shares
in
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favor of the proposal to approve and adopt the Merger Agreement. See "THE
PROPOSED MERGER -- Stockholder Support Agreements".
The VMARK Board is soliciting proxies so that each holder of VMARK Common
Stock on the VMARK Record Date has the opportunity to vote on the proposals to
be considered at the VMARK Special Meeting. When a Proxy card is returned
properly signed and dated, the shares represented thereby will be voted in
accordance with the instructions on the Proxy card. If a stockholder does not
return a signed Proxy card, that stockholder's shares will not be voted and thus
will have the effect of a vote against the Merger Agreement. Shares which are
represented at the meeting but as to which the holder abstains from voting or
has no voting authority in respect of a particular matter (such as in the case
of a broker nonvote) will not be deemed to be voted on such matter. Since
adoption of the Merger Agreement requires the affirmative vote of a majority of
the outstanding shares of VMARK Common Stock, abstentions, including broker
non-votes, will have the effect of negative votes. Stockholders are urged to
mark the box on the Proxy card to indicate how their shares are to be voted. IF
A STOCKHOLDER RETURNS A SIGNED PROXY CARD, BUT DOES NOT INDICATE HOW HIS OR HER
SHARES ARE TO BE VOTED, THE SHARES REPRESENTED BY THE PROXY CARD WILL BE VOTED
"FOR" ADOPTION OF THE MERGER AGREEMENT AND "FOR" THE OTHER PROPOSALS. The Proxy
card also confers discretionary authority on the individuals appointed by the
VMARK Board and named on the Proxy card to vote the shares represented thereby
on any other matter which is properly presented for action at the VMARK Special
Meeting.
It is currently expected that on the scheduled date of the VMARK Special
Meeting, votes will be taken and the polls closed on the proposal to adopt the
Merger Agreement and the other proposals to be submitted to the stockholders at
the meeting. It is possible, however, that there could be proposals for one or
more adjournments of the meeting in order to permit further solicitation of
proxies with respect to adoption of the Merger Agreement or approval of other
proposals as may properly come before the meeting. The affirmative vote of a
majority of the shares voted on the question shall be necessary for approval of
any such adjournment proposal. An instruction to vote a proxy for adoption of
the Merger Agreement will also be deemed to constitute authority to vote at the
discretion of the holder of the proxy upon an adjournment proposal. No proxy,
regardless of the vote indicated thereon, will be voted or otherwise counted for
the other proposals if the Merger Agreement is not adopted. Consummation of the
Merger is not conditioned upon the approval of the other proposals.
Any holder of VMARK Common Stock who executes and returns a Proxy card may
revoke such Proxy at any time before it is voted by (i) notifying in writing the
General Counsel of VMARK at 50 Washington Street, Westboro, Massachusetts 01581,
(ii) granting a subsequent Proxy or (iii) appearing in person and voting at the
VMARK Special Meeting. Attendance at the VMARK Special Meeting will not in and
of itself constitute revocation of a Proxy.
INDEPENDENT AUDITORS
Representatives of Deloitte & Touche LLP, independent auditors for VMARK,
are expected to be present at the meeting to respond to appropriate questions
and will have an opportunity to make a statement if they desire to do so.
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<PAGE> 24
THE UNIDATA SPECIAL MEETING
DATE, TIME AND PLACE; RECORD DATE
UNIDATA, a Colorado corporation, has scheduled a special meeting of the
holders of shares of UNIDATA Common Stock, to be held at 10:00 A.M., local time,
on February 5, 1998, at the executive offices of UNIDATA, 1099 18th Street,
Suite 2200, Denver, Colorado (the "UNIDATA Special Meeting"). The Board of
Directors of UNIDATA (the "UNIDATA Board") has fixed the close of business on
December 26, 1997 (the "UNIDATA Record Date") for the determination of holders
of record of UNIDATA Common Stock entitled to notice of and to vote at the
UNIDATA Special Meeting.
PURPOSE OF THE MEETING
At the UNIDATA Special Meeting, the holders of UNIDATA Common Stock
outstanding as of the UNIDATA Record Date will be asked to consider and vote
upon the proposal to adopt the Merger Agreement, pursuant to which, among other
things, (i) UNIDATA will be merged with and into VMARK, and (ii) each share of
UNIDATA Common Stock outstanding immediately prior to the Effective Time (as
defined below) will be converted into the right to receive, and become
exchangeable for, 0.44765 of a share of Ardent Common Stock, except that cash
will be paid in lieu of any fractional share of Ardent Common Stock which a
stockholder of UNIDATA may otherwise be entitled to receive. A copy of the
Merger Agreement, as amended, is attached as Annex I to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference.
The UNIDATA Board has approved the Merger Agreement and unanimously
recommends that the holders of UNIDATA Common Stock vote "FOR" adoption of the
Merger Agreement. See "THE PROPOSED MERGER -- Recommendation of the UNIDATA
Board and Reasons for the Merger" and "THE PROPOSED MERGER -- Interests of
Certain Persons in the Merger" and "-- Stockholder Support Agreements".
VOTING RIGHTS
Pursuant to the Colorado Business Corporation Act (the "CBCA") and the
UNIDATA Articles of Incorporation, as amended (the "UNIDATA Charter"), the
affirmative vote of the holders of at least two-thirds of the shares of each of
the UNIDATA Class A Common Stock and the UNIDATA Class B Common Stock, voting as
separate classes, outstanding as of the UNIDATA Record Date is required to adopt
the Merger Agreement. At the UNIDATA Record Date, there were 12,320,430 shares
of UNIDATA Common Stock outstanding. As of the UNIDATA Record Date, UNIDATA's
directors and executive officers as a group held shares representing
approximately 62% of the votes entitled to be cast by holders of UNIDATA Class A
Common Stock at the UNIDATA Special Meeting and no shares of UNIDATA Class B
Common Stock. Holders of record of each of the UNIDATA Class A Common Stock and
UNIDATA Class B Common Stock outstanding as of the UNIDATA Record Date are
entitled to one vote per share at the UNIDATA Special Meeting. The presence,
either in person or by proxy, of the holders of a majority of the shares of
UNIDATA Common Stock outstanding as of the UNIDATA Record Date is necessary to
constitute a quorum at the UNIDATA Special Meeting. UNIDATA's directors and
officers and certain UNIDATA stockholders, who collectively hold approximately
87% of the outstanding shares of Class A Common Stock of UNIDATA and 100% of the
outstanding shares of Class B Common Stock of UNIDATA have each agreed, among
other things, to vote all of their shares of UNIDATA Common Stock in favor of
the proposal to adopt the Merger Agreement. See "THE PROPOSED
MERGER -- Stockholder Support Agreements".
The UNIDATA Board is soliciting proxies so that each holder of UNIDATA
Common Stock on the UNIDATA Record Date has the opportunity to vote on the
proposals to be considered at the UNIDATA Special Meeting. When a Proxy card is
returned properly signed and dated, the shares represented thereby will be voted
in accordance with the instructions on the Proxy card. If a stockholder does not
return a signed Proxy card, his or her shares will not be voted and thus will
have the effect of a vote against the Merger Agreement.
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<PAGE> 25
Shares which are represented at the meeting but as to which the holder abstains
from voting or has no voting authority in respect of a particular matter will
not be deemed to be voted on such matter. Since adoption of the Merger Agreement
requires the affirmative vote of at least two-thirds of the outstanding shares
of each of the UNIDATA Class A Common Stock and the UNIDATA Class B Common
Stock, abstentions will have the effect of negative votes. Holders of UNIDATA
Common Stock are urged to mark the box on the Proxy card to indicate how their
shares are to be voted. IF A STOCKHOLDER RETURNS A SIGNED PROXY CARD, BUT DOES
NOT INDICATE HOW HIS OR HER SHARES ARE TO BE VOTED, THE SHARES REPRESENTED BY
THE PROXY CARD WILL BE VOTED "FOR" ADOPTION OF THE MERGER AGREEMENT. The Proxy
card also confers discretionary authority on the individuals appointed by the
UNIDATA Board and named on the Proxy card to vote the shares represented thereby
on any other matter which is properly presented for action at the UNIDATA
Special Meeting.
It is currently expected that on the scheduled date of the UNIDATA Special
Meeting, votes will be taken and the polls closed on the proposal to adopt the
Merger Agreement. It is possible, however, that there could be proposals for one
or more adjournments of the meeting in order to permit further solicitation of
proxies with respect to approval of the Merger Agreement or other business as
may properly come before the meeting. The affirmative vote of a majority of the
shares voted on the question shall be necessary for adoption of any such
adjournment proposal. An instruction to vote a proxy for adoption of the Merger
Agreement will also be deemed to constitute authority to vote at the discretion
of the holder upon an adjournment proposal.
Any holder of UNIDATA Common Stock who executes and returns a Proxy card
may revoke such Proxy at any time before it is voted by (i) notifying in writing
the Corporate Secretary of UNIDATA at 1099 18th Street, Suite 2200, Denver,
Colorado 80202, (ii) granting a subsequent Proxy or (iii) appearing in person
and voting at the UNIDATA Special Meeting. Attendance at the UNIDATA Special
Meeting will not in and of itself constitute revocation of a Proxy.
Pursuant to the CBCA, holders of UNIDATA Common Stock will be entitled to
appraisal rights in connection with the merger of UNIDATA with and into VMARK
pursuant to the Merger Agreement (the "Merger"). See "THE PROPOSED
MERGER -- Appraisal Rights".
INDEPENDENT ACCOUNTANTS
Representatives of Coopers & Lybrand L.L.P., independent accountants for
UNIDATA, are expected to be present at the meeting to respond to appropriate
questions and will have an opportunity to make a statement if they desire to do
so.
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THE PROPOSED MERGER
The following description of certain aspects of the Merger does not purport
to be complete and is qualified in its entirety by reference to the complete
text of the Merger Agreement, which is attached to this Joint Proxy
Statement/Prospectus as Annex I and is incorporated herein by reference.
GENERAL
At the Effective Time, (as defined below) UNIDATA will be merged into
VMARK, and UNIDATA will cease to exist as a corporation. VMARK will be the
surviving corporation in the Merger and will be renamed Ardent Software, Inc.
At the Effective Time, each then outstanding share of UNIDATA Common Stock
will be converted into the right to receive, and become exchangeable for,
0.44765 of a share of Ardent Common Stock (the "Exchange Ratio") and a pro rata
right under the VMARK rights plan which is documented by the Rights Agreement
dated as of June 12, 1996, as amended, between VMARK and State Street Bank and
Trust Company. No fractional shares of Ardent Common Stock will be issued in the
Merger, and holders of UNIDATA Common Stock whose shares are converted in the
Merger will be entitled to a cash payment in lieu of fractional shares of Ardent
Common Stock. See "-- No Fractional Shares". For a description of the treatment
of the UNIDATA employee stock option plans and other rights to acquire UNIDATA
Common Stock in the Merger, see "-- The Merger Agreement -- UNIDATA Common Stock
Options and UNIDATA Stock Option Plans". VMARK Common Stock is currently listed
on The Nasdaq Stock Market. None of the shares of VMARK Common Stock issued and
outstanding immediately prior to the Effective Time will be converted or
otherwise modified in the Merger. All such shares will continue to be
outstanding capital stock of Ardent after the Effective Time.
A description of certain differences between the rights of holders of
Ardent Common Stock and UNIDATA Common Stock, is set forth under "COMPARISON OF
RIGHTS OF HOLDERS OF UNIDATA COMMON STOCK AND ARDENT COMMON STOCK".
CLOSING; EFFECTIVE TIME
The closing of the transactions contemplated by the Merger Agreement (the
"Closing") will take place as promptly as practicable (and in any event within
two business days) after the last of the conditions set forth in the Merger
Agreement is satisfied or waived, or at such other time as VMARK and UNIDATA
agree (the "Closing Date"). After all the conditions set forth in the Merger
Agreement have been satisfied or waived, the Merger will become effective at
such time (the "Effective Time") as both (i) the Certificate of Merger required
under the DGCL is filed with the Secretary of State of Delaware, and (ii) the
Articles of Merger required under the CBCA are filed with the Secretary of State
of Colorado, or at such later time as specified in such Certificate of Merger
and/or Articles of Merger. It presently is contemplated that such filings will
be made and the Merger will be consummated as soon as practicable following the
UNIDATA Special Meeting and the VMARK Special Meeting.
EXCHANGE OF STOCK CERTIFICATES
From and after the Effective Time, holders of UNIDATA Common Stock
immediately prior to the Effective Time will be entitled to receive 0.44765 of a
share of Ardent Common Stock in exchange for each share of UNIDATA Common Stock
held immediately prior to the Effective Time. See "-- General". Notwithstanding
the Exchange Ratio, no fractional shares of Ardent Common Stock will be issued.
See "-- No Fractional Shares". As soon as practicable after the Effective Time,
State Street Bank and Trust Company, the exchange agent for the Merger (the
"Exchange Agent"), will mail transmittal instructions and a form of letter of
transmittal to each person who was a holder of UNIDATA Common Stock immediately
prior to the Effective Time. The transmittal instructions will describe the
procedures for surrendering certificates that prior to the Merger represented
UNIDATA Common Stock ("UNIDATA Certificates") in exchange for the certificates
evidencing Ardent Common Stock ("Ardent Certificates"). The form of letter of
transmittal will specify that delivery shall be effected, and risk of loss to
the UNIDATA Certificates
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shall pass, only upon actual delivery of the UNIDATA Certificates to the
Exchange Agent. Upon surrender of the UNIDATA Certificates for cancellation to
the Exchange Agent, together with a duly executed letter of transmittal and such
other documents as the Exchange Agent may reasonably require, such UNIDATA
Certificates will be canceled and the holder of such UNIDATA Certificates will
receive a VMARK Certificate representing that number of whole shares of Ardent
Common Stock to which the former UNIDATA stockholder is entitled pursuant to the
provisions of the Merger Agreement, less such holder's pro rata share of the
Escrowed Shares (as defined below), which will be delivered, together with the
other Escrowed Shares, into an escrow, in addition to payment in cash for any
fractional share of Ardent Common Stock. See "-- Escrowed Shares" and "-- Escrow
Agreement". HOLDERS OF UNIDATA COMMON STOCK SHOULD NOT SUBMIT THEIR UNIDATA
CERTIFICATES FOR EXCHANGE UNLESS AND UNTIL THEY HAVE RECEIVED THE TRANSMITTAL
INSTRUCTIONS AND A FORM OF LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.
Holders of UNIDATA Common Stock will not be entitled to receive any
dividends or other distributions on Ardent Common Stock until the Merger has
been consummated and they have exchanged their UNIDATA Certificates for Ardent
Certificates. Subject to applicable laws, any such dividends and distributions
after the Effective Time, if any, will be accumulated and, at the time a former
UNIDATA stockholder surrenders his or her UNIDATA Certificates to the Exchange
Agent, all such accrued and unpaid dividends and distributions, together with
any cash payments in lieu of fractional shares of Ardent Common Stock, will be
paid without interest. It is not anticipated that any accrued and unpaid
dividends or distributions will exist at the Effective Time. See
"SUMMARY -- Market Price Information".
If any Ardent Certificate is to be issued in a name other than that in
which the corresponding UNIDATA Certificate is registered, it is a condition to
the exchange of the UNIDATA Certificate that the former UNIDATA stockholder
requesting such exchange comply with applicable transfer requirements and pay
any applicable transfer or other taxes, (or establish to the satisfaction of
Ardent that such tax has been paid or is not applicable), as well as any
associated costs and expenses. No transfers of UNIDATA Common Stock will be made
on the stock transfer books of UNIDATA after the close of business on the date
prior to the Effective Time.
Neither the Exchange Agent nor any party to the Merger Agreement will be
liable to any former UNIDATA stockholder for any shares of Ardent Common Stock
delivered to state authorities pursuant to applicable abandoned property,
escheat or other similar laws. At any time following 180 days after the
Effective Time, Ardent may require the Exchange Agent to return all Ardent
Common Stock and cash deposited with the Exchange Agent which has not been
disbursed to former UNIDATA stockholders and thereafter any such holders which
have not remitted their UNIDATA Certificates to the Exchange Agent may look to
Ardent only as a general creditor with respect thereto.
NO FRACTIONAL SHARES
No certificates for fractional shares of Ardent Common Stock will be issued
upon the surrender for exchange of UNIDATA Certificates in the Merger. No Ardent
Common Stock dividend, reclassification, stock split or interest will be paid
with respect to any fractional share of UNIDATA Common Stock, and such
fractional interests will not entitle the owner thereof to vote or to any of the
other rights of a holder of Ardent Common Stock. Instead, each former beneficial
owner of UNIDATA Common Stock who would otherwise have been entitled to a
fraction of a share of Ardent Common Stock upon surrender of UNIDATA
Certificates for exchange will be entitled to receive from the Exchange Agent a
cash payment (without interest) based on the closing price of VMARK Common Stock
on The Nasdaq Stock Market on the date of the Effective Time.
ESCROWED SHARES
At the Effective Time, 50,000 of the shares of Ardent Common Stock issuable
in the Merger (the "Escrowed Shares") will be deposited into an escrow to be
used, if necessary, to satisfy any loss, damage or expense incurred by Ardent as
a result of certain potential claims against UNIDATA or Ardent that may be
brought by a venture capital firm which has demanded payment of certain
financing fees related to a
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financing that UNIDATA did not complete. Upon the resolution of such claims, all
shares or other assets remaining in the escrow not subject to payment to Ardent
shall be promptly distributed to the former holders of UNIDATA Common Stock
(other than holders of Dissenting Shares), pro rata in accordance with their
respective holdings of UNIDATA Class A Common Stock and Class B Common Stock,
other than Dissenting Shares, outstanding immediately prior to the Effective
Time. See "-- Escrow Agreement".
BACKGROUND OF THE MERGER
For the past several years, VMARK and UNIDATA have offered similar,
competing products and each of the companies was generally well aware of the
other's business. In May 1996, Neill Miller, one of the members of the UNIDATA
Board, recognized the potential for both companies of achieving synergies by
operating jointly and suggested that UNIDATA consider the possibility of
acquiring or combining with VMARK. UNIDATA's management studied such possibility
and, after concluding that such an acquisition would be advantageous to UNIDATA,
explored various alternative means of obtaining the financing necessary to
complete such a transaction. A representative of UNIDATA contacted Mr. Morrill,
then the Chief Executive Officer of VMARK, in January 1997.
Mr. Morrill reported this initial contact to the VMARK Board at a regularly
scheduled meeting on January 28, 1997, and it was agreed at the meeting that Mr.
Morrill and other members of VMARK's management would explore the possibility of
a combination with UNIDATA. As a result of several telephone conversations
between Mr. Morrill and a representative of UNIDATA, Mr. Morrill met with Mr.
Dresher, a principal stockholder and UNIDATA's Chairman of the Board, in early
February 1997, and they agreed to review the possibility of such a combination
with the managements of the respective companies. The parties entered into
reciprocal confidentiality agreements in late February and thereafter began to
exchange financial information.
On February 27, Mr. Morrill and certain other members of VMARK's management
met in Denver with the UNIDATA Board. The VMARK representatives proposed that
UNIDATA be merged into VMARK with UNIDATA stockholders receiving stock of VMARK.
Neither company had completed a detailed pro forma financial analysis of the
combined company, but the representatives of VMARK generally believed that the
VMARK Common Stock to be received by UNIDATA stockholders should represent no
more than one-third of the stock of the combined company, whereas the UNIDATA
Board generally believed that UNIDATA stockholders should receive one-half of
the stock of the combined company. Although there ensued several additional
discussions between representatives of VMARK and UNIDATA regarding such a
merger, the parties generally concluded that further discussion would not be
fruitful, because the views of the respective parties as to the appropriate
number of VMARK shares to be issued to the UNIDATA stockholders differed so
widely. On April 1, Mr. Morrill advised the VMARK Board that the discussions
between VMARK and UNIDATA had terminated.
Having served as the Chairman of the VMARK Board from 1984 until 1997, Mr.
Morrill was elected in March 1996 to serve as VMARK's Chief Executive Officer on
an interim basis until an appropriate successor was found. In March 1997, Peter
Gyenes was selected as Mr. Morrill's successor and, at the April 1 meeting, Mr.
Morrill resigned, and Mr. Gyenes was elected, as Chief Executive Officer of
VMARK. Mr. Morrill continued as Chairman of the VMARK Board.
At a regularly scheduled meeting on April 30, the UNIDATA Board discussed
several strategic options and, although reference was made to a possible
combination with VMARK, the UNIDATA Board primarily discussed certain other
initiatives, including the acquisition of O2 Technology S.A. ("O2 Technology")
and a financing transaction with a venture capital firm.
On May 23, Mr. Gyenes called Mr. Dresher in an attempt to renew discussions
between the companies. Mr. Dresher was receptive to renewing such discussions,
and there ensued a meeting between Messrs. Gyenes and Dresher in Baltimore on
June 2 and a meeting in Boston between Mr. Gyenes and Mr. Brunel, the President
of UNIDATA, on June 17. Those meetings did not focus on relative values of the
companies, disagreement over which had terminated the earlier discussions, but
rather on the strategic benefits which might be achieved by combining the two
companies. At the conclusion of the June 17 meeting, Messrs. Gyenes and Brunel
generally agreed that a combination of UNIDATA and VMARK would be beneficial to
the stockholders of both companies if the valuation issues could be resolved.
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On June 30, Mr. Gyenes contacted a representative of Volpe Brown Whelan &
Company, LLC ("VBW&C") and, following several meetings between representatives
of VMARK and VBW&C, and, on July 11, VMARK engaged VBW&C to serve as financial
advisor to VMARK in connection with the Merger.
The UNIDATA Board met in a regularly scheduled meeting on July 9, at which
meeting Mr. Brunel informed the UNIDATA Board about his meetings with Mr. Gyenes
and his view of a possible merger with VMARK. After lengthy discussion, the
UNIDATA Board directed UNIDATA's management to further explore such a
transaction and to engage a financial advisor to assist UNIDATA in evaluating
its strategic alternatives. Immediately following this meeting, UNIDATA entered
into a formal engagement letter with its financial advisor, pursuant to which
UNIDATA agreed to pay a fee to such advisor upon the consummation of a
transaction like the Merger and such financial advisor agreed to assist UNIDATA
management in analyzing the proposed merger with VMARK and other possible
transactions (which fee will be approximately $770,000 based on a $7.75 per
share value of VMARK Common Stock).
Beginning on July 10, representatives of both VMARK and UNIDATA considered
various issues relating to the proposed Merger, including the composition the
management of the combined entity, the anticipated synergies of the combination,
and the benefits to the respective stockholders at various levels of valuation.
At a regularly scheduled meeting of the VMARK Board on July 23, Mr. Gyenes,
together with representatives of VBW&C, reported in detail on the proposed
combination. Following such presentation, the VMARK Board authorized Mr. Gyenes
to negotiate a combination with UNIDATA subject to further review by the VMARK
Board of a definitive agreement. It was the sense of the meeting, based
primarily upon discussion of levels of valuation in which the proposed Merger
was expected to be accretive to VMARK's earnings, that it would be appropriate
for stockholders of UNIDATA to receive approximately 40% of the stock of the
combined company.
On July 29, 1997, Messrs. Gyenes and Brunel, together with their companies'
respective financial advisors and chief financial officers, met in Baltimore to
discuss the specific terms of the proposed combination. The July 29 meeting was
followed by additional meetings on August 19 in Boston between Messrs. Gyenes
and Brunel and August 20 in Baltimore among Messrs. Gyenes, Brunel, Morrill and
Dresher. The participants at these meetings reached general agreement as to the
desirability of a merger, the composition of ongoing management, and the
relative valuations, and it was determined that the parties should conduct
detailed diligence and negotiate a definitive agreement. These activities
commenced during the week of August 25 and continued, with the assistance of
both companies' respective financial, accounting and legal advisors, over the
next several weeks.
On September 30, 1997, the UNIDATA Board and the VMARK Board held meetings
in Denver and Boston, respectively, at which both boards considered the Merger
contemplated by the Merger Agreement, the Stock Option Agreements (as defined
below) and the Stockholder Support Agreements (as defined below). Both of the
UNIDATA Board and the VMARK Board received presentations by their respective
managements, financial advisors and outside legal counsel with respect to the
benefits and risks of the Merger and the financial and legal terms of the Merger
Agreement. At the conclusion of its meeting, the UNIDATA Board directed its
management to further negotiate certain terms of the Merger Agreement, including
the method and timing of calculating the Exchange Ratio and certain conditions
to closing of the Merger. At the meeting of the VMARK Board, it approved the
Merger and all of the related transactions and authorized its management to
execute a definitive agreement. Over the next six days, the managements of both
UNIDATA and VMARK and their respective financial advisors and legal counsel
continued to negotiate remaining unresolved issues in the Merger Agreement,
which were primarily technical in nature and included the need for and the scope
of an escrow arrangement, the scope of the registration rights that VMARK would
provide to UNIDATA's stockholders, the composition of VMARK's management after
the Merger, and the method and timing of calculating the Exchange Ratio.
On October 5, the UNIDATA Board met telephonically in a special meeting to
further consider the proposed transaction. The UNIDATA Board received
presentations by management and outside legal counsel as to how certain issues
in the Merger Agreement had been resolved. At the conclusion of such meeting,
the
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UNIDATA Board voted unanimously to approve the Merger and authorized UNIDATA's
management to enter into definitive agreements to effectuate the Merger, the
Stock Option Agreement and the Stockholder Support Agreements.
The parties executed definitive agreements on October 7. On November 7,
1997, the parties amended the Merger Agreement to provide certain registration
rights to all of UNIDATA's stockholders, to correct certain representations and
warranties, and to provide in the form of Escrow Agreement a provision regarding
the voting of the Escrowed Shares. See "The Merger Agreement -- Registration
Rights" and "Escrow Agreement."
RECOMMENDATION OF THE VMARK BOARD AND REASONS FOR THE MERGER
The VMARK Board has approved the Merger Agreement and unanimously
recommends that the holders of VMARK Common Stock vote "FOR" adoption of the
Merger Agreement. The recommendation of the VMARK Board is based upon its
conclusion that the terms of the Merger Agreement are fair and in the best
interests of VMARK. In reaching such conclusion, the VMARK Board, in
consultation with its management and its financial and legal advisors and
accountants, considered and relied upon a number of factors, including the
following:
- Expanded Distribution; Customers. The benefit to VMARK of UNIDATA's
distribution channels and customer base, which are highly complementary to
VMARK's and would allow the combined company to distribute its DataStage
product to an increased customer base.
- Cost Savings. The cost savings potentially realizable by the
combined company in the consolidation of duplicate sales, marketing,
service, administrative and certain other functions. Management estimated
that the cost savings which could be achieved by combining the two
companies would range from $12 to $14 million annually, pre-tax. This
estimate was based on input from each of the functional departments and
principally incorporated savings resulting from reduced headcount due to
overlapping positions, consolidation of facilities, and elimination of
duplicate marketing efforts. This estimate excludes the one-time costs
associated with the Merger and the integration of the companies'
operations.
- Improved Services; Technological Adaptation; Increased
Resources. The increased size of the combined company, which would allow
it to provide improved service to customers and to respond more effectively
to technological change and increased competition, as well as to take
advantage of the greater financial, technical and commercial resources of
the combined company.
- Compatible Technologies. The complementary nature of the core
technologies of each company, which allow the combined company to create an
integrated, cohesive product strategy to solve customers' evolving needs
without duplicating investments in overlapping technology.
- Increased Customer Penetration. The potential for increased sales
to existing customers and to new accounts as a result of a broader,
integrated product line.
- Customers' Confidence. The potential for increased confidence of
large customers in dealing with a larger, more financially secure supplier.
- Opinion of Financial Advisor. The financial information and
comparative analysis presented by VMARK's financial advisor, VBW&C, and the
opinion of VBW&C to the VMARK Board to the effect that the consideration to
be paid under the Merger Agreement by VMARK to the holders of UNIDATA
Common Stock would be fair to VMARK stockholders from a financial point of
view. See "-- Opinion of Financial Advisor".
The VMARK Board, considered certain benefits that may accrue to the
officers and directors of VMARK as a result of the Merger. The VMARK Board also
identified and analyzed possible negative factors associated with the proposed
Merger. These included the risk that the issuance of Ardent Common Stock in the
Merger may be dilutive to the combined company's earnings per share if the
potential synergies and other benefits of the Merger are not realized, the risk
that the trading price of VMARK Common Stock may be adversely affected by the
announcement of the Merger, the significant costs and expenses anticipated in
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connection with the Merger, and certain other risks described above under "RISK
FACTORS". The VMARK Board did not consider these negative factors, either
individually or in the aggregate, to outweigh the merits of the proposed Merger.
The VMARK Board did not find it practical to and did not quantify or
otherwise assign relative values to the specific factors associated with the
Merger. The VMARK Board recognized that VMARK's stock price could fluctuate and
thus change the nominal value of the consideration to be paid for UNIDATA and
accordingly did not establish any range of value for UNIDATA but focused on the
Exchange Ratio and the ranges thereof in which the Merger would be accretive to
VMARK's earnings.
THE VMARK BOARD HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY AND BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO, AND
IN THE BEST INTERESTS OF, VMARK AND ITS STOCKHOLDERS. THE VMARK BOARD RECOMMENDS
A VOTE FOR ADOPTION OF THE MERGER AGREEMENT.
RECOMMENDATION OF THE UNIDATA BOARD AND REASONS FOR THE MERGER
The UNIDATA Board has determined and believes that the terms of the Merger
are fair to, and in the best interests of, UNIDATA and its stockholders.
Accordingly, the UNIDATA Board has approved the Merger Agreement and the
transactions contemplated thereby and recommends their approval and adoption by
the stockholders of UNIDATA. In reaching its determination, the UNIDATA Board
consulted with UNIDATA's management, as well as its legal counsel, financial
advisor and accountants, and considered a number of factors, including:
- UNIDATA's Business, Condition and Prospects. The UNIDATA Board
considered information with respect to the financial condition, results of
operations and business of UNIDATA, on both a historical and prospective
basis (including consideration of several alternatives to merging with
VMARK). The UNIDATA Board considered UNIDATA's existing capital resources
and the likelihood that UNIDATA would be able to obtain liquidity for its
stockholders on a standalone basis.
- VMARK's Business, Condition and Prospects. The UNIDATA Board
considered information with respect to the financial condition, results of
operations and business of VMARK, on both a historical and prospective
basis, and current industry, economic and market conditions. UNIDATA's
management made presentations to and provided the UNIDATA Board with
information regarding VMARK's financial condition and prospects after
conducting business, financial and legal due diligence. In evaluating
VMARK's prospects, the UNIDATA Board considered, among other things, the
quality of VMARK's existing and planned software products and services, the
strength of its management team, the reputation of VMARK in the database
management industry and the historical performance of VMARK's stock.
- Strategic Combination. The UNIDATA Board considered that the Merger
would consolidate two companies with similar technologies and create a
larger computer software company with the financial resources to invest in
and develop emerging technologies such as UNIDATA's object databases and
VMARK's data warehousing. The UNIDATA Board evaluated the comparative
strengths of the two companies in engineering, finance and accounting,
management, sales and service. The UNIDATA Board considered the likelihood
that the combination of UNIDATA and VMARK would create significant
opportunities for the development and growth of the companies on a combined
basis.
- Financial Conditions. The UNIDATA Board considered the likelihood
that the Merger would enable UNIDATA and VMARK to realize higher total
revenues and cash flows through a number of means, including new revenues
from sales of new data warehousing and object oriented database products
and modest growth in sales of each company's existing products attributable
to better cross-selling opportunities and an increased customer base. The
UNIDATA Board of Directors also considered the likelihood that a
combination with VMARK would allow the surviving corporation to enjoy
significant operating efficiencies, cost reductions and synergies as a
result of the Merger, particularly through the integration of the two
companies' engineering, finance and administration and sales functions.
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- Fixed Exchange Ratio. The UNIDATA Board considered that the
Exchange Ratio is a fixed number and will not be adjusted in the event of
any increases or decreases in the price of VMARK Common Stock. The UNIDATA
Board considered that the price of VMARK Common Stock at the Effective Time
may vary from its price at the date of this Joint Proxy
Statement/Prospectus and at the date of the Special Meetings. Such
variations may be the result of changes in the business, operations or
prospects of UNIDATA or VMARK, market assessments of the likelihood that
the Merger will be consummated, the timing thereof and the prospects of the
Merger and post-Merger operations, general market and economic conditions
and other factors.
- Terms of the Merger. The UNIDATA Board considered the terms and
conditions of the Merger Agreement, the Stock Option Agreements and the
Stockholder Support Agreements, including the terms of the Merger Agreement
that allow VMARK or UNIDATA to terminate the Merger Agreement under certain
circumstances upon payment to the other party of a $3 million termination
fee. The UNIDATA Board considered that, pursuant to the terms of the Stock
Option Agreements, each of UNIDATA and VMARK agreed to grant an option to
acquire approximately 19% of its outstanding common stock to the other
party, which option would become exercisable upon termination of the Merger
Agreement under certain circumstances. The UNIDATA Board also considered
that, pursuant to the Stockholder Support Agreements, the holders of
approximately 87% of the outstanding shares of UNIDATA Class A Common
Stock, the holders of 100% of the outstanding shares of UNIDATA Class B
Common Stock and the holders of approximately 6% of the outstanding shares
of VMARK Common Stock have agreed to vote their shares of UNIDATA Common
Stock or VMARK Common Stock, as the case may be, in favor of the Merger
Agreement. The UNIDATA Board also considered the fact that the Merger is
expected to be accomplished on a tax-free basis and to be accounted for as
a pooling of interests transaction. The UNIDATA Board also discussed and
took into consideration certain benefits that will accrue to certain
executive officers and directors of UNIDATA as a result of the Merger.
- Management of Ardent Following the Merger. The UNIDATA Board
considered that the combined company will have a Board of Directors
consisting of six members, with three members selected by each of UNIDATA
and VMARK, and a management team comprised of representatives of executive
management of both companies. The UNIDATA Board considered the likelihood
that the management teams of UNIDATA and VMARK will complement each other
and work well together in the combined company.
- Integration of Operations; Nonrealization of Synergies. The UNIDATA
Board considered the possibility that the surviving corporation will not be
able to integrate the respective operations of UNIDATA and VMARK without
encountering difficulties or experiencing the loss of key UNIDATA or VMARK
personnel due to relocation or other reasons and the possibility that the
benefits expected from such integration will not be realized. In addition,
the UNIDATA Board considered the possibility that the surviving corporation
will not be able to realize anticipated operating synergies and costs
reductions from the Merger.
The foregoing discussion of the information and factors considered and
given weight by the UNIDATA Board is not intended to be exhaustive but is
believed to include all material factors considered by UNIDATA. In addition, in
reaching the determination to approve and recommend approval and adoption of the
Merger Agreement, in view of the wide variety of factors considered in
connection with its evaluation thereof, the UNIDATA Board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to the different factors.
THE UNIDATA BOARD HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY AND BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO, AND
IN THE BEST INTERESTS OF, UNIDATA AND ITS STOCKHOLDERS. THE UNIDATA BOARD
RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
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OPINION OF FINANCIAL ADVISOR
VMARK has retained VBW&C to act as its financial advisor with respect to
the Merger. VBW&C rendered its opinion to VMARK's Board of Directors to the
effect that, as of September 30, 1997 and based on and subject to the matters
stated in the opinion, the consideration to be paid by VMARK to UNIDATA
stockholders (the "Consideration") in the Merger is fair from a financial point
of view to the stockholders of VMARK.
THE FULL TEXT OF VBW&C'S WRITTEN OPINION DATED SEPTEMBER 30, 1997 WHICH
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, AND LIMITATIONS ON THE
REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX II AND IS INCORPORATED HEREIN BY
REFERENCE. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF SUCH OPINION. HOLDERS OF VMARK COMMON STOCK ARE URGED TO, AND SHOULD,
READ THIS OPINION CAREFULLY IN ITS ENTIRETY. THE ENGAGEMENT OF VBW&C AND ITS
OPINION ARE FOR THE USE AND BENEFIT OF THE VMARK BOARD AND ITS OPINION WAS
DELIVERED TO THE VMARK BOARD IN CONNECTION WITH ITS CONSIDERATION OF THE MERGER.
VBW&C'S OPINION ADDRESSES ONLY THE FAIRNESS OF THE CONSIDERATION FROM A
FINANCIAL POINT OF VIEW TO THE STOCKHOLDERS OF VMARK, AND IT DOES NOT ADDRESS
ANY OTHER ASPECT OF THE MERGER NOR DOES IT CONSTITUTE A RECOMMENDATION TO ANY
HOLDER OF VMARK COMMON STOCK AS TO HOW TO VOTE WITH RESPECT TO THE MERGER.
In arriving at its opinion, VBW&C: (i) reviewed the September 17, 1997
draft of the Agreement and Plan of Merger and Reorganization (exclusive of
schedules), the September 19, 1997 draft of the UNIDATA Stockholder Support
Agreement, and the September 19, 1997 draft of the VMARK Stockholder Support
Agreement; (ii) discussed the proposed terms of UNIDATA's prospective
acquisition of O2 Technology with VMARK and UNIDATA management; (iii)
interviewed management of VMARK, UNIDATA and O2 Technology concerning the
business prospects, financial outlook and operating plans of each company
individually and combined; (iv) reviewed certain historical and projected
financial statements of VMARK, UNIDATA and O2 Technology and other financial and
operating data of VMARK, UNIDATA and O2 Technology prepared by the respective
company management teams; (v) reviewed the valuation of selected publicly-traded
companies VBW&C deemed comparable and relevant to the Merger; (vi) reviewed, to
the extent publicly-available, the financial terms of selected merger and
acquisition transactions that VBW&C deemed comparable and relevant to the
Merger; (vii) reviewed the relevant contribution each of VMARK and UNIDATA is
making to the combined company in terms of financial results and compared the
results of this analysis with the pro forma ownership of each respective
company; (viii) performed a discounted cash flow analysis of UNIDATA as a
stand-alone entity based upon financial projections of VMARK and UNIDATA; (ix)
performed a pro forma financial impact analysis of the combined entity, based
upon financial projections provided by VMARK and financial projections provided
by UNIDATA and O2 Technology and reviewed by VMARK; and (x) performed other such
studies, analyses and inquiries and considered other such information as VBW&C
deemed relevant.
In rendering its opinion, VBW&C relied without independent verification
upon the accuracy and completeness of all of the financial, accounting, legal,
tax, operating and other information provided to VBW&C by VMARK, UNIDATA and O2
Technology and relied upon the assurances of VMARK, UNIDATA and O2 Technology
that all such information provided by them, respectively, was complete and
accurate in all material respects and that there was no additional material
information known to any of them that would make any of the information made
available to VBW&C either incomplete or misleading. VMARK also retained outside
legal, accounting, tax and patent advisors to advise on matters relating to the
Merger. Accordingly, VBW&C relied on their advice and expresses no opinion on
such matters. With respect to the projected financial data of VMARK, UNIDATA and
O2 Technology, as well as the combined business plan (including cost savings
projected to result from the Merger), all of which was provided by the
management of VMARK or UNIDATA, VBW&C has relied upon assurances of each company
that such data was prepared in good faith on a reasonable basis reflecting the
best currently available estimates and judgments of VMARK and UNIDATA
managements as to the future financial performance of each company
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separately and as a combined company. VBW&C has not made any independent
appraisals or valuations of any assets of UNIDATA or O2 Technology, nor has
VBW&C been furnished with any such appraisals or valuations. In addition, VBW&C
assumed that the Merger would be accounted for as a pooling of interests
business combination for financial reporting purposes and as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended. VBW&C's opinion is necessarily based on economic, market
and other conditions as in effect on, and the information made available to
VBW&C as of, the date it rendered its opinion.
The following is a brief summary of the material analyses performed by
VBW&C and reviewed with the VMARK Board of Directors on September 30, 1997 in
connection with VBW&C's presentation and opinion to the Board of Directors of
VMARK on such date. Such analyses were based on the assumed exchange ratio as of
that date of 0.4459 shares of Ardent common stock for each share of UNIDATA
Class A Common Stock and UNIDATA Class B Common Stock and the closing stock
price for VMARK Common Stock on September 25, 1997 of $9.375 per share. None of
the analyses, other than the pro forma financial impact analysis, include the
financial results of O2 Technology. VBW&C, however, conducted a limited review
of historical and projected financial results of O2 Technology and concluded
that its opinion would not be affected by whether the proposed acquisition of O2
Technology is completed or whether it is completed before or after the Merger.
Comparable Publicly-Traded Company Analysis. VBW&C compared certain
financial information of UNIDATA with that of a group of publicly-traded
companies selected by VBW&C based on similarity of business lines, relative
operating size and profitability and market capitalization. The comparable
publicly-traded companies included Object Design, Inc., Platinum Technology,
Inc., Progress Software Corp., Sybase, Inc., Versant Object Technology Corp. and
VMARK (collectively the "Public Comparables"). The financial information
reviewed included stock price in relation to (i) earnings per share ("EPS") for
the latest twelve month period ended June 30, 1997 ("L12M"), (ii) forecasted
1997 EPS and (iii) forecasted 1998 EPS as well as enterprise value (defined as
market capitalization plus funded debt less cash) in relation to L12M revenue
and L12M earnings before interest and taxes ("EBIT"). Forecasted 1997 and 1998
EPS for the Public Comparables were based on published estimates by research
organizations, including those of VBW&C. VBW&C noted that, based on closing
stock prices and earnings estimates as of September 25, 1997, the Public
Comparables traded in a range of 63.6 to 95.5 times L12M earnings (with a median
of 64.9 times), 30.3 to 395.3 times 1997 forecasted earnings (with a median of
61.3 times) and 23.4 to 37.3 times 1998 forecasted earnings (with a median of
31.6 times). The enterprise value of the Public Comparables implied from the
stock prices provided a range of 0.9 to 6.1 times L12M revenues (with a median
of 2.7 times) and 35.1 to 139.3 times L12M EBIT (with a median of 43.8 times).
VBW&C believes that the three most important ratios of this analysis were stock
price to forecasted 1998 EPS, enterprise value to revenues and enterprise value
to EBIT. The implied range of values for UNIDATA based on the Public Comparables
stock prices in relation to forecasted 1998 EPS was $97.5 million to $155.3
million (with a median of $131.8 million). The implied range of values for
UNIDATA based on the enterprise value of the Public Comparables implied from the
stock prices was $29.3 million to $283.8 million (with a median of $119.9
million) in relation to L12M revenue and $55.3 million to $262.9 million (with a
median of $72.7 million) in relation to L12M EBIT. Because of the inherent
differences between the business, operations and prospects of UNIDATA and the
businesses, operations and prospects of the Public Comparables, VBW&C believed
that it was inappropriate to, and therefore did not, rely solely on the
quantitative results of the analysis and, accordingly, also made qualitative
judgments concerning differences between UNIDATA and the Public Comparables that
would affect the valuation.
In addition, VBW&C compared certain financial information of UNIDATA with
that of VMARK, which VBW&C considered to be the most comparable publicly-traded
company due to the fact that the two companies compete in the same extended
RDBMS market and have very similar distribution channels, although the
historical growth rates of UNIDATA generally have exceeded those of VMARK. VBW&C
noted that, based on the closing stock price and earnings estimates as of
September 25, 1997, VMARK traded at 19.1 times 1997 forecasted earnings and 13.0
times 1998 forecasted earnings. In addition, on an enterprise value basis VMARK
traded at 1.1 times L12M revenues and 35.1 times L12M EBIT. Due to a loss in the
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L12M period, multiples of L12M net income were not meaningful. The implied
values for UNIDATA based on these ratios was $11.3 million, $54.3 million, $40.7
million and $55.3 million, respectively, based on the September 25, 1997 closing
share price of VMARK common stock of $9.375 and a 0.4459 exchange ratio.
Comparable Merger and Acquisition Transactions. VBW&C reviewed the
financial terms, to the extent publicly available, of ten selected merger and
acquisition transactions that VBW&C deemed comparable and relevant to the
Merger. The transaction value of these transactions ranged from 7.4 to 232.0
times trailing net income. The enterprise value of these transactions ranged
from 0.8 to 20.3 times trailing revenue, and 6.9 to 371.1 times trailing EBIT.
The reasons for and circumstances surrounding each of the selected transactions
was specific to that transaction and as a result the range of values yielded by
this analysis was wide. Because none of the transactions was directly comparable
to the Merger, VBW&C did not rely solely on the quantitative results of this
analysis and, accordingly, also made qualitative judgments concerning
differences between the selected transactions and the Merger that would affect
the valuation.
Contribution Analysis. VBW&C reviewed certain historical and forecasted
financial information (including revenue, gross profit, EBITDA, EBIT, net income
and book value) for VMARK and UNIDATA and the pro form combined entity resulting
from the Merger. VBW&C adjusted the relative contributions of revenue, gross
profit, EBITDA and EBIT to reflect the differences in capital structures of the
two companies. VBW&C analyzed the relative contributions of VMARK and UNIDATA
based on historical financial performance for L12M and forecasted financial
performance for 1997 and 1998 provided by the management teams of VMARK and
UNIDATA. Based on the foregoing analysis, VBW&C concluded that UNIDATA would be
contributing a slightly lower percentage of revenue (33.4% in L12M, 37.0% in
forecasted 1997 and 39.9% in forecasted 1998) and gross profit (34.4% in L12M,
35.5% in forecasted 1997 and 38.5% in forecasted 1998) and a slightly higher
percentage of EBITDA (58.4% in L12M, 37.3% in forecasted 1997 and 47.1% in
forecasted 1998) and EBIT (42.3% in L12M, 16.4% in forecasted 1997 and 43.2% in
forecasted 1998) in comparison to an estimated 40% of the outstanding common
equity of the combined entity that UNIDATA stockholders would receive in the
Merger. VBW&C also noted that UNIDATA would be contributing a lower percentage
of net income (4.8% in L12M, 14.2% in forecasted 1997 and 43.7% in forecasted
1998) and book value (18.4% in L12M, 19.2% in forecasted 1997 and 24.5% in
forecasted 1998) in comparison to the 40% of the outstanding common equity of
the combined entity that the UNIDATA stockholders would receive in the Merger.
VBW&C determined that the following ratios implied the following levels of value
for UNIDATA: L12M revenue: $39.0 million; forecasted 1997 revenue: $47.4
million; forecasted 1998 revenue: $53.7 million; L12M gross profit: $42.5
million; forecasted 1997 gross profit: $44.6 million; forecasted 1998 gross
profit: $44.6 million; L12M EBITDA: $113.6 million; forecasted 1997 EBITDA:
$48.1 million; forecasted 1998 EBITDA: $72.1 million; L12M EBIT: $59.3 million;
forecasted 1997 EBIT: $15.9 million; forecasted 1998 EBIT: $61.7 million; L12M
net income: $4.0 million; forecasted 1997 net income: $13.4 million; forecasted
1998 net income: $62.9 million; L12M book value: $18.2 million; forecasted 1997
book value: $19.2 million; and forecasted 1998 book value: $26.2 million.
Discounted Cash Flow Analysis. VBW&C performed a discounted cash flow
analysis of UNIDATA based on certain financial projections provided by the
management teams of UNIDATA and VMARK for the periods 1997 through 2002.
Unlevered free cash flows were calculated as net income available to common
stockholders plus the sum of depreciation, amortization and other non-cash
charges minus capital expenditures and plus or minus changes in working capital
and minus tax adjusted interest expense. VBW&C calculated terminal values by
applying exit multiples of 2002 net income and the cash flow streams and
terminal values were then discounted to the present using a range of discount
rates representing an estimated range of the weighted average cost of capital
for UNIDATA. Based on this analysis, VBW&C calculated values of UNIDATA ranging
from $68.5 million to $100.8 million.
Pro Forma Financial Impact Analysis. VBW&C analyzed the pro forma impact
of the Merger on VMARK's earnings per share for the calendar years 1997 through
2002. The analysis was performed utilizing stand-alone operating estimates
provided by the management teams of VMARK and UNIDATA. The operating estimates
included stand-alone estimates for VMARK, UNIDATA and O2 Technology as well as
estimated transaction-related costs and projected cost savings resulting from
the Merger. The impact of including O2 Technology was dilutive to pro forma 1998
earnings because, while O2 Technology is forecasted
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to grow significantly in 1998, costs are expected to exceed revenues. VBW&C
noted that based on management projections, the Merger would be dilutive to
VMARK's 1997 earnings and significantly accretive to VMARK's 1998 and beyond
earnings, provided that the Merger were to be consummated in 1997. The analysis
assumed that the acquisition of O2 Technology was completed prior to the Merger.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, VBW&C considered the results of all of its analyses as
a whole and did not attribute any particular weight to any analysis or factor
considered by it. Furthermore, selecting any portion of the analysis, without
considering all of the analyses, would create an incomplete view of the process
underlying its opinion. In addition, VBW&C may have given various analyses and
factors more or less weight than other analyses and factors, and may have deemed
various assumptions more or less probable than other assumptions, so that the
ranges of valuations resulting from any particular analysis described above
should not be taken to be VBW&C's view of the actual value of UNIDATA.
The analyses performed by VBW&C are not necessarily indicative of actual
value, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as part of VBW&C's analysis of the
fairness of the Consideration from a financial point of view to the stockholders
of VMARK. The analyses do not purport to be appraisals or to reflect the prices
at which UNIDATA might actually be sold. Because such estimates are inherently
subject to uncertainty, none of UNIDATA, VMARK, O2 Technology, VBW&C or any
other person assumes responsibility for their accuracy. In addition, as
described above, VBW&C's opinion and presentation to the VMARK Board of
Directors was one of many factors taken into consideration by the VMARK Board of
Directors in making its determination to approve the Merger. Consequently, the
VBW&C analyses described herein should not be viewed as determinative of the
opinion of the VMARK Board of Directors or of whether the VMARK Board of
Directors would have been willing to agree to a different level of
consideration. Although VBW&C assisted VMARK in establishing a range for the
Consideration, it did not recommend a specific amount of Consideration and the
final determination of the Consideration was made by the VMARK Board.
VBW&C is a nationally recognized investment banking firm and was selected
by VMARK based on VBW&C's experience and expertise. VBW&C, as a customary part
of its investment banking business, engages in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements and
valuations for corporate and other purposes. In the ordinary course of its
business, VBW&C and its affiliates may actively trade the equity securities of
VMARK for its and their own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
VBW&C will receive a fee of $300,000 for rendering its opinion, no portion
of which is conditioned upon the opinion being favorable. The $300,000 fee and a
separate $50,000 retainer fee will be credited against an additional fee of
$750,000 to be paid to VBW&C upon the closing of the Merger. In addition, VMARK
has agreed to reimburse VBW&C for its out-of-pocket costs and expenses and to
indemnify VBW&C and its affiliates against certain liabilities and expenses.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations that the Merger Agreement be approved,
stockholders should be aware that the directors and executive officers of VMARK
and UNIDATA, respectively, have certain interests, described below, in
connection with the Merger. Each of the VMARK Board and the UNIDATA Board has
considered such interests of its directors and executive officers in addition to
the other matters described above under "-- Recommendation of the VMARK Board
and Reasons for the Merger" and "-- Recommendation of the UNIDATA Board and
Reasons for the Merger" in recommending the approval of the Merger Agreement.
Directors of the Surviving Corporation. As provided in the Merger
Agreement, at the Effective Time, the Ardent Board of Directors will consist of
six directors, three of which will be designated by UNIDATA and three of which
will be designated by VMARK. It currently is expected that Messrs. Brunel,
Dresher and
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Martin T. Hart will be designated by UNIDATA to serve as directors of Ardent and
that Messrs. Gyenes, Morrill and Robert G. Claussen will be designated by VMARK
to serve as directors of Ardent.
Continuing Indemnification of and Liability Insurance for UNIDATA Directors
and Officers. The Merger Agreement provides that all rights to indemnification
of present or former directors or officers of UNIDATA will survive the Merger.
The UNIDATA Charter requires that UNIDATA indemnify each director, officer and
any employee or agent of UNIDATA against any and all expenses or liability
reasonably incurred by him or her in connection with any action, suit or
proceeding to which he or she may be a party by reason of his or her being or
having been a director, officer, employee or agent of UNIDATA to the full extent
required or permitted under the CBCA. In addition, the Merger Agreement provides
that Ardent will maintain in effect with respect to matters occurring prior to
the Effective Time the current liability insurance policy for UNIDATA's officers
and directors until the sixth anniversary of the Effective Time.
Acceleration and Vesting of UNIDATA Stock Options and Warrants. As a
result of the Merger and pursuant to the terms of the outstanding stock options
issued pursuant to UNIDATA's employee stock option plans, and the terms of the
UNIDATA Warrants (as defined below), all such stock options and warrants will
accelerate at the Effective Time and be fully exercisable for shares of Ardent
Common Stock (adjusted in accordance with the Exchange Ratio). As of the record
date for the UNIDATA Special Meeting, there were 2,602,500 UNIDATA employee
stock options and warrants to purchase shares of UNIDATA Common Stock granted
and currently outstanding, of which 1,821,375 were not then exercisable. As of
such date, the executive officers and directors of UNIDATA (in the aggregate)
held 775,750 vested and 169,250 unvested options and warrants to purchase an
aggregate of 945,000 shares of UNIDATA Common Stock. The exercise prices of the
options and warrants held by the executive officers and directors range from
$.70 to $3.81, with a weighted average exercise price of $2.33 per share. The
treatment in the Merger of outstanding options to purchase UNIDATA Common Stock
is described under "-- The Merger Agreement -- UNIDATA Common Stock and UNIDATA
Stock Option Plans" and " -- The Merger Agreement -- UNIDATA Warrants".
Split Dollar Life Insurance Agreements. Each executive officer of VMARK is
a party to a split-dollar agreement with VMARK with respect to a life insurance
policy covering such executive and owned by such executive. Each policy is a
whole-life policy requiring payment of ten annual premiums, a portion of which
VMARK is required to pay for as long as the executive is employed by VMARK and,
in certain circumstances, following termination of employment if such
termination occurs after specified change of control events. Each executive
officer has the right under such agreements to borrow against and to receive the
death benefits of such executive's insurance policy, subject in each case to
VMARK's right to receive, upon the death of such executive, an amount equal to
all the premiums paid by VMARK. The Merger will constitute a change of control
event for purposes of policies issued prior to the Merger, thereby extending the
obligation of VMARK to pay premiums in the event of the termination of an
executive's employment. The Merger Agreement provides that Ardent will enter
into substantially similar split-dollar arrangements with each UNIDATA executive
officer who becomes an executive officer of Ardent.
UNIDATA Severance Plan. Executive officers of UNIDATA may benefit from a new
severance plan (the "Severance Plan") adopted by UNIDATA immediately prior to
entering into the Merger Agreement. UNIDATA adopted the Severance Plan to
provide benefits to UNIDATA employees that may be terminated in connection with
the consolidation of operations that is expected to follow consummation of the
Merger. The benefits under the Severance Plan will be available to all UNIDATA
employees and are comparable to the severance benefits provided by VMARK to its
employees. Under the Severance Plan, officers of UNIDATA at the level of Vice
President and above will be entitled to salary continuation, paid at the rate of
base salary at the date of termination, for a period equal to the greater of:
(i) one month plus one week of base pay for each year of continuous employment
with UNIDATA (prorated for partial years), or (ii) six months. At the discretion
of the UNIDATA Board of Directors, salary continuation for such officers may be
paid for a period of twelve months. During the period of salary continuation,
UNIDATA will reimburse the former employee for premiums paid for continued
coverage under UNIDATA's group health plan pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, to the
extent such coverage is
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elected and such former employee remains eligible therefor. The Severance Plan
also provides benefits to employees other than officers in accordance with a
specified formula for salary continuation.
THE MERGER AGREEMENT
General. The Merger Agreement provides that, following the approval of the
Merger by the stockholders of VMARK and UNIDATA and the satisfaction or waiver
of the other conditions to the Merger, UNIDATA shall be merged with and into
VMARK, which will change its name to Ardent Software, Inc. The Merger will take
place as soon as practicable (and in any event within two business days)
following the satisfaction or waiver of the conditions to the Merger, or at such
other time to which VMARK and UNIDATA agree in writing. On the date of the
consummation of the Merger, VMARK and UNIDATA will cause a certificate of merger
to be filed with the Secretary of State of the State of Delaware and articles of
merger to be filed with the Secretary of State of the State of Colorado. At the
Effective Time, all the property, rights, privileges, powers and franchises of
UNIDATA shall vest in Ardent, and all debts, liabilities and duties of UNIDATA
shall become the debts, liabilities and duties of Ardent. See "-- Conditions to
the Merger." Subject to the satisfaction (or waiver) of the other conditions to
the Merger, it is presently expected that the Merger will be consummated
immediately following the VMARK Special Meeting and the UNIDATA Special Meeting.
The Merger Agreement provides that, at the Effective Time, each outstanding
share of UNIDATA Class A Common Stock and each outstanding share of UNIDATA
Class B Common Stock will be converted into the right to receive, and become
exchangeable for, 0.44765 shares of Ardent Common Stock and a pro rata right
under the VMARK rights plan which is documented by the Rights Agreement dated as
of June 12, 1996, as amended, between VMARK and State Street Bank and Trust
Company (the "VMARK Rights Plan"). None of the shares of VMARK Common Stock
issued and outstanding immediately prior to the Merger will be converted or
otherwise modified in the Merger, with the sole exception that such shares shall
become outstanding capital stock of Ardent after the Effective Time. Each share
of UNIDATA Common Stock held in the treasury of UNIDATA or owned by any
subsidiary of UNIDATA at the Effective Time shall be canceled and retired
without the payment of any consideration. The Exchange Ratio shall be adjusted
to reflect the effect of any subdivision, combination, stock dividend,
reorganization, recapitalization or similar capital change with respect to VMARK
Common Stock or UNIDATA Common Stock occurring after the date of the Merger
Agreement and prior to the Effective Time, other than in connection with
UNIDATA's acquisition of all of the shares of O2 Technology.
No fraction of a share of Ardent Common Stock shall be issued pursuant to
the Merger. Instead, each holder of UNIDATA Common Stock who otherwise would be
entitled to a fraction of a share of Ardent Common Stock in the Merger shall
receive an amount of cash, without interest, equal to the market value of such
fractional share of Ardent Common Stock. See "THE PROPOSED MERGER -- No
Fractional Shares."
The Certificate of Incorporation of VMARK in effect immediately prior to
the Effective Time, as amended by the certificate of merger to increase the
authorized shares, shall be the Certificate of Incorporation of Ardent after the
Merger until thereafter amended in accordance with its terms. The By-Laws of
VMARK in effect immediately prior to the Effective Time, as amended to establish
separate positions for the President and the Chief Executive Officer, shall be
the By-Laws of Ardent after the Merger until thereafter amended. The Merger
Agreement provides that 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 Ardent after the Merger 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. VMARK shall name the
officers
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listed in the Merger Agreement to be officers of VMARK immediately prior to the
Effective Time and such persons shall be the initial officers of Ardent after
the Merger.
As soon as practicable after the Effective Time, the Exchange Agent will
mail transmittal instructions and a form of letter of transmittal to each holder
of UNIDATA Common Stock, to be used in forwarding his or her UNIDATA
Certificates for surrender and exchange for Ardent Certificates, rights under
the VMARK Rights Plan, and, if applicable, cash in lieu of a fractional share of
Ardent Common Stock. After receipt of such transmittal instructions and form of
transmittal letter, each former holder of UNIDATA Common Stock should surrender
his or her UNIDATA Certificates to the Exchange Agent in accordance with the
transmittal instructions. See "THE PROPOSED MERGER -- Exchange of Stock
Certificates" and "-- No Fractional Shares".
In the event that a UNIDATA Certificate is lost, stolen or destroyed, the
Exchange Agent shall, upon receiving an affidavit verifying ownership of such
lost UNIDATA Certificate, deliver to the holder of such lost UNIDATA Certificate
the number of shares of Ardent Common Stock (and cash in lieu of a fractional
share) that such holder is entitled to receive upon surrender of the UNIDATA
Certificate. The Exchange Agent shall deduct from the amounts otherwise payable
to any holder of UNIDATA Common Stock such amounts as Ardent or the Exchange
Agent may be required to deduct or withhold with respect to any provision of
Federal, state, local or foreign tax laws.
Dissenting Shares. In the event that the Merger is consummated, holders of
UNIDATA Common Stock who do not vote in favor of the Merger shall have the right
under Colorado law to have their shares appraised and receive the "fair value"
of their UNIDATA Common Stock rather than Ardent Common Stock. UNIDATA shall
give VMARK prompt written notice of any UNIDATA stockholders who exercise such
appraisal rights. If any holder of Dissenting Shares effectively withdraws or
loses such appraisal right (through failure to perfect such right or otherwise),
such holder shall receive the number of shares of Ardent Common Stock (and cash
in lieu of a fractional share) that such holder is entitled to receive upon
surrender of the UNIDATA Certificate.
Escrowed Shares. At the Effective Time, 50,000 of the shares of Ardent
Common Stock issuable in the Merger will be deposited into an escrow to be used,
if necessary, to reimburse Ardent for any losses resulting from certain
potential claims that may be brought by a venture capital firm which has
demanded payment of certain financing fees related to a financing that UNIDATA
did not complete. See "THE PROPOSED MERGER -- Escrowed Shares" and "-- The
Escrow Agreement."
Increase in Authorized Shares. The Certificate of Incorporation of VMARK
currently authorizes the issuance of 25,000,000 shares of VMARK Common Stock and
10,000,000 shares of preferred stock. As of December 26, 1997, there were
8,291,358 shares of VMARK Common Stock outstanding and 280,082 shares of VMARK
Common Stock held in treasury by VMARK. Therefore, 16,428,560 authorized shares
of VMARK Common Stock remained available for issuance without further action by
the stockholders of VMARK, of which 4,099,674 shares are currently reserved for
issuance, principally under VMARK's various stock option and stock purchase
plans and 7,114,212 shares will be reserved upon consummation of the Merger for
issuance in connection with the outstanding UNIDATA Common Stock, UNIDATA
Options and UNIDATA Warrants. No shares of preferred stock are outstanding.
The Merger Agreement provides that the number of authorized shares of
common stock of the surviving corporation shall be increased at the Effective
Time from 25,000,000 to 40,000,000.
The Board of Directors believes that the proposed increase in authorized
shares of VMARK Common Stock is desirable if the Merger is consummated to
enhance Ardent's flexibility in connection with possible future actions, such as
stock splits, financings, mergers or other corporate purposes. Having such
authorized shares available for issuance in the future would allow shares of
Ardent Common Stock to be issued for such purposes without the expense and delay
of further stockholder action.
The increased number of authorized shares could also be used to make more
difficult a change of control of Ardent which the Board of Directors determines
not to be in the best interests of its stockholders. For instance, such shares
could be issued in public or private transactions to persons who might side with
the
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Board of Directors in opposing a takeover bid. At the date of this Joint Proxy
Statement/Prospectus, VMARK has no agreements, commitments or plans with respect
to the sale, issuance or other use of additional shares of stock, except in
connection with its stock option and purchase plans and certain contingent
consideration to be paid in connection with an acquisition completed in 1994.
Furthermore, the VMARK Board of Directors is not currently aware of any efforts
by any person to gain control of VMARK.
Exchange of Stock Certificates. After the Effective Time, each UNIDATA
Certificate, until so surrendered and exchanged, will be deemed to evidence the
right to receive the number of shares of Ardent Common Stock that the former
holder of UNIDATA Common Stock is entitled to receive pursuant to the Merger
Agreement and the right to receive any cash payment in lieu of a fractional
share of Ardent Common Stock. The holder of such unexchanged UNIDATA
Certificates will not be entitled to receive any dividends or other
distributions payable on account of the amount of Ardent Common Stock that such
holder is entitled to receive upon surrender of UNIDATA Certificates until such
UNIDATA Certificates are surrendered. Subject to applicable laws, any such
dividends and distributions after the Effective Time, if any, will be
accumulated and, at the time a former UNIDATA stockholder surrenders his or her
UNIDATA Certificates to the Exchange Agent, all such accrued and unpaid
dividends and distributions, together with any cash payment in lieu of a
fractional share of Ardent Common Stock, will be paid without interest. See "THE
PROPOSED MERGER -- Exchange of Stock Certificates".
Tax and Accounting Consequences. UNIDATA and VMARK intend that the Merger
(i) constitute a reorganization within the meaning of Section 368(a) the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) qualify for
accounting treatment as a pooling of interests. See "CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS" and "-- Accounting Treatment of the Merger."
Representations and Warranties. The Merger Agreement contains various
representations and warranties of VMARK and UNIDATA relating to, among other
things: (i) due organization, power, standing and similar corporate matters;
(ii) subsidiaries; (iii) capital structure; (iv) qualification in foreign
jurisdictions; (v) authorization, execution, delivery, performance and
enforceability of the Merger Agreement and related matters; (vi) material
contracts; (vii) absence of conflicts under UNIDATA's material contracts, the
UNIDATA Charter or UNIDATA By-Laws, absence of violations of any instruments or
law and required governmental or regulatory authorizations, consents or
approvals; (viii) absence of certain material adverse events or changes; (ix)
absence of undisclosed liabilities; (x) litigation; (xi) employee benefit plans
and employment agreements; (xii) labor matters; (xiii) absence of restrictions
on business activities; (xiv) real property owned and leased; (xv) taxes; (xvi)
environmental matters; (xvii) brokers' and finders' fees with respect to the
Merger; (xviii) intellectual property and computer software; (xix) interested
party transactions; (xx) insurance; (xxi) vote required; (xxii) accounting
matters; and (xxiii) other negotiations regarding a merger or other transaction.
The Merger Agreement also contains representations and warranties of VMARK
relating to (i) documents filed with the SEC and financial statements relating
thereto and the accuracy of the information contained therein in accordance with
generally accepted accounting principles; (ii) VMARK's receipt of a fairness
opinion and (iii) the effect of the Merger on the VMARK Rights Plan. The Merger
Agreement also contains representations and warranties of UNIDATA relating to
its financial statements for the three most recent fiscal years and the accuracy
of the information contained therein in accordance with generally accepted
accounting principles.
UNIDATA Common Stock Options and UNIDATA Stock Option Plans. At the
Effective Time, the obligation to issue shares under each outstanding option to
purchase UNIDATA Common Stock (each, a "UNIDATA Stock Option") issued 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
(collectively, as amended, the "UNIDATA Stock Option Plans") and to former
employees of O2 Technology in connection with UNIDATA's acquisition of O2
Technology shall be assumed by Ardent. As of the Effective Time, each UNIDATA
Stock Option (a) shall be fully vested and exercisable by the holder thereof
pursuant to the terms of such UNIDATA Stock Option and (b) shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such UNIDATA Stock Option prior to the Effective Time, the
whole number (disregarding any fractional shares) of Ardent Common Stock as the
holder of such UNIDATA Stock Option would have been entitled to receive in the
Merger had such holder
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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 UNIDATA Stock Option, divided by
(y) the number of shares of Ardent Common Stock deemed purchasable pursuant to
such UNIDATA Stock Option. Notwithstanding the foregoing, the exercisability or
the other vesting of UNIDATA Stock Options issued under UNIDATA's Stock Option
Plans and the underlying stock shall continue to be determined by reference to
stock option agreements executed pursuant to UNIDATA's Stock Option Plans, and
references in any UNIDATA Stock Option to UNIDATA, the UNIDATA Board or any
committee thereof, and any UNIDATA Stock Option Plan shall, commencing at the
Effective Time, unless inconsistent with the context, be to Ardent, the Ardent
Board or a committee thereof, and VMARK's 1986 Stock Option Plan (for officers)
or 1995 Non-Statutory Option Plan (for non-officers), as amended, as applicable,
respectively. UNIDATA Employees who remain employed by Ardent following
consummation of the Merger will be eligible to participate in any Ardent
Employee Stock Purchase Plan, subject to the terms thereof.
UNIDATA Warrants. At the Effective Time, Ardent shall assume in writing
all obligations under the UNIDATA Warrants (as defined below), and each holder
of UNIDATA Warrants thereafter shall have the right to acquire, on the same
pricing and payment terms and conditions as are currently applicable under such
UNIDATA Warrants, the same number of shares of Ardent Common Stock as such
holder would have been entitled to receive in the Merger had such holder
exercised the UNIDATA Warrants held by such holder in full immediately prior to
the Effective Time (rounded downward to the nearest whole number). After the
Effective Time, the exercise price for the UNIDATA Warrants to purchase each
share of Ardent Common Stock shall be 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 Ardent Common Stock deemed purchasable pursuant to such UNIDATA
Warrant in accordance with the foregoing (rounded downward to the nearest whole
cent). 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 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 Neill Miller for warrants to purchase an aggregate of 105,000 and 150,000
shares of UNIDATA Class A Common Stock, respectively.
Business of VMARK and UNIDATA Pending the Merger. Pending the consummation
of the Merger, and except as otherwise consented to or approved in advance by
the other party in writing, VMARK and UNIDATA have agreed that they and their
subsidiaries will, among other things, operate their businesses in accordance
with their ordinary course of business and in a manner consistent with past
practices, and use reasonable efforts to preserve substantially intact their
respective business organizations, to keep available the services of their
present officers, key employees and consultants and to preserve their present
relationships with customers and suppliers and other persons with whom they have
significant business relationships.
In particular, VMARK and UNIDATA and their subsidiaries have agreed not to
take any of the following actions without the prior written consent of the other
party: (i) change or amend their Charter, By-Laws, or, in the case of VMARK, the
VMARK Rights Plan; (ii) issue, sell, pledge, dispose of or encumber any shares
of capital stock of any class (other than the issuance of common stock upon the
exercise of outstanding options), or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest of VMARK or UNIDATA, their subsidiaries or
affiliates (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); (iii) sell, pledge, dispose of or
encumber any assets of VMARK or UNIDATA (except for sales of assets in the
ordinary course of business, disposition of obsolete or worthless assets, and
sales of immaterial assets not in excess of $25,000 in the aggregate); (iv)
except as described above under "UNIDATA Common Stock Options and UNIDATA
Employee Stock Option Plans" and "UNIDATA Warrants," alter the price or
accelerate, change the period (or permit any acceleration, amendment or change)
of exercisability of options or restricted stock
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granted under their employee plans (including stock option plans) or authorize
cash payments in exchange for any options granted under any of such plans; (v)
declare, set aside, make, or pay any dividends or any other distribution with
respect to their common stock except for certain intracompany distributions;
(vi) split, combine, or reclassify any of their capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of, or in substitution for shares of their capital stock; or (vii) amend the
terms of, repurchase, redeem, or otherwise acquire or permit any subsidiary to
repurchase, redeem, or otherwise acquire, any of their securities or any
securities of their subsidiaries.
VMARK and UNIDATA and their subsidiaries have further agreed not to take
any of the following actions without the prior written consent of the other
party: (i) sell, transfer, license, sublicense or otherwise dispose of, or amend
or modify existing agreements with respect to, any of their intellectual
property, other than in the ordinary course of business consistent with past
practice and with respect to certain specified agreements or modifications that
would not, individually or in the aggregate, have a material effect on VMARK or
UNIDATA, as the case may be; (ii) acquire any business organization or division
thereof; (iii) incur any indebtedness for borrowed money, or issue any debt
securities, or assume, guarantee or otherwise become responsible for the
obligations of any person, or make any loans or advances, except in the ordinary
course of business consistent with past practice; (iv) enter into or amend any
material agreement other than in the ordinary course of business consistent with
past practice; (v) 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; (vi) enter into or amend and contract, agreement,
commitment, or arrangement to effect any of the matters prohibited under the
terms of the Merger Agreement; (vii) increase the compensation of its officers
or employees, except for increases in salary or wages of employees of such party
or its subsidiaries who are not officers of such party in accordance with past
practice, 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, employment or employee benefit agreement or plan or
arrangement for the benefit of any current or former directors, officers, or
employees, except, in each case, as may be required by law; (vii) take any
action to change accounting policies or procedures; (viii) make any material tax
election inconsistent with past practices or settle or compromise any material
tax liability, or agree to an extension on a statute of limitations except to
the extent the amount of any such settlement has been reserved for on UNIDATA's
most recently prepared balance sheet available at the time of the signing of the
Merger Agreement or the report that VMARK had most recently filed with the SEC
available at the time of the signing of the Merger Agreement, as the case may
be; (ix) pay, discharge or satisfy any claims, liabilities or obligations, other
than 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 (x) take any of the actions described above, or any action
which would make any of the representations or warranties of VMARK or UNIDATA
contained in the Merger 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 thereunder.
Notwithstanding the foregoing, VMARK and UNIDATA have agreed that UNIDATA
may, without the prior consent of VMARK, acquire all of the outstanding shares
of O2 Technology that are not currently owned by UNIDATA as of the date of the
Merger Agreement, provided that such acquisition is on terms substantially
similar to the terms set forth in drafts of purchase agreements furnished to
VMARK prior to the Effective Time, and that VMARK may consummate a certain
transaction on terms substantially similar to those previously disclosed to
UNIDATA.
No Solicitation of Alternative Transactions. The Merger Agreement provides
that VMARK and UNIDATA shall not prior to the Effective Time or the termination
of the Merger Agreement, directly or indirectly, 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 or stock, or similar
transaction involving such party or any of their respective subsidiaries.
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Additional Covenants. VMARK and UNIDATA have further agreed within the
Merger Agreement to, among other things,: (i) use reasonable efforts to obtain
all consents, waivers, approvals, authorizations, or orders, and to make all
filings required in connection with the execution and consummation of the Merger
Agreement; (ii) call and hold their respective stockholders' meetings as
promptly as practicable after the date upon which the Registration Statement (as
defined below) becomes effective for the purpose of voting upon the approval of
the Merger, and to 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, to take such other action necessary to secure
the vote or consent of their respective stockholders to the Merger; (iii) afford
to each other reasonable access, during the period prior to the Effective Time,
upon reasonable notice, and subject to restrictions contained in confidentiality
agreements, to their properties, books, contracts, commitments, and records;
(iv) consult with each other and obtain consent from each other prior to issuing
any press release, other than such releases which may be required by law; (v)
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
the Merger Agreement and to cause the Merger to qualify, and will not take any
actions (either before or after consummation of the Merger) which could prevent
the Merger from qualifying, as a reorganization within the meaning of Section
368(a) of the Code; (vi) use reasonable efforts to avoid taking any action which
would adversely affect the ability of both parties to account for the Merger as
a pooling of interests and to take such action as may be reasonably required to
negate the impact of any past actions which would adversely affect the ability
of the parties to treat the Merger as a pooling of interests; (vii) permit the
survival of all rights to indemnification now existing in favor of the present
or former directors or officers of UNIDATA or any of its subsidiaries and
maintain, until the sixth anniversary of the Effective Time, the policy of
director's and officers' liability insurance currently maintained by UNIDATA;
(viii) maintain without change for twelve months after the Effective Time each
severance program and policy of UNIDATA giving each employee of Ardent who was
employed by UNIDATA immediately prior to the Effective Time credit for all
service performed for UNIDATA for purposes of any such severance program or
policy; (ix) grant credit for all service performed for UNIDATA by each employee
of Ardent who was employed by UNIDATA immediately prior to the Effective Time
for all purposes under any employee plan of Ardent other than the Policies
granted to certain executive officers; (x) enroll all employees of Ardent who
were employees of UNIDATA immediately prior to the Effective Time to be eligible
to participate in the Ardent health plan without limitation for preexisting
conditions; (xi) provide to each executive officer of Ardent who was an employee
of UNIDATA immediately prior to the Effective Time a split-dollar insurance
arrangement similar to those existing for current VMARK executives; (xii) give
each other the reasonable opportunity to participate in the defense of any
stockholder litigation arising in connection with the Merger against VMARK or
UNIDATA; (xiii) use their reasonable best efforts, in the event that the Merger
is not treated as a pooling of interests for accounting purposes, to cause
VMARK's financial advisor 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 to use their reasonable best efforts to restructure
the post-Merger operating plan for Ardent, to the extent commercially
reasonable, to permit the issuance of such opinion; (xiv) give prompt notice to
the other of the occurrence or non-occurrence of any event which would cause any
representation or warranty to be materially untrue or inaccurate or any failure
to materially comply with or satisfy any covenant, condition or agreement to be
complied with under the Merger Agreement; and (xv) use their best efforts to
select a new name for the combined company.
Joint Proxy Statement/Prospectus; Registration Statement. VMARK agreed to
prepare and file with the SEC a preliminary form of this Joint Proxy
Statement/Prospectus and the proxy material related thereto, and following
clearance of such materials by the SEC, prepare and file with the SEC a
registration statement on Form S-4 to register with the SEC the Ardent Common
Stock to be issued in the Merger (the "Registration Statement"). Both VMARK and
UNIDATA have agreed to cooperate fully with the other in the preparation of this
Joint Proxy Statement/Prospectus and the Registration Statement and to take
other actions necessary for the issuance of Ardent Common Stock in the Merger in
accordance with applicable laws.
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Registration Rights. VMARK has agreed to enter into an agreement at the
Effective Time to provide registration rights to UNIDATA's stockholders with
respect to the shares of Ardent Common Stock received by them in the Merger.
Such agreement will provide each such holder of Ardent Common Stock, for as long
as such holder is unable to sell, within any three month period, all of such
holder's shares of Ardent 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.
Conditions to the Merger. Consummation of the Merger is subject to the
satisfaction of various conditions, including (i) the effectiveness of the
Registration Statement and the absence of any stop order or proceedings seeking
a stop order relating to the Registration Statement; (ii) the approval and
adoption of the Merger Agreement and the Merger by the requisite vote of the
stockholders of both VMARK and UNIDATA; (iii) the absence of any temporary
restraining order, preliminary or permanent injunction or other legal
restraints, or prohibitions, statutes, rules, regulations or orders preventing
consummation of the Merger, and of any proceedings brought by any governmental
authority seeking to make consummation of the Merger illegal, or seeking to
prohibit or limit Ardent 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; (iv) the approval for quotation on the Nasdaq Stock
Market (subject to official notice of issuance) of the shares of Ardent Common
Stock to be issued in the Merger and upon exercise of the UNIDATA Options and
the UNIDATA Warrants; (v) the receipt of an officer's certificate by each of
VMARK and UNIDATA from the other party to the effect that representations and
warranties made by the respective party in the Merger Agreement are true and
correct in all respects on and as of the Effective Time, except for changes
contemplated or permitted by the Merger Agreement, representations or warranties
which address matters only as of a specified date (which shall remain true and
correct as of such date), or where the failure to be true and correct would not
have a "material adverse effect" (as defined in the Merger Agreement), and to
the effect that the respective party has performed or complied in all material
respects with all agreements and covenants required by the Merger Agreement on
or prior to the Effective Time; (vi) the receipt by VMARK and UNIDATA of 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 of the Code; (vii)
not more than five percent of UNIDATA Common Stock shall constitute shares as to
which the holder thereof has exercised appraisal rights in accordance with the
CBCA and has not effectively withdrawn or lost such appraisal rights as of the
Effective Time (a condition which only VMARK may waive); and (viii) 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 (a condition which only UNIDATA
may waive). Neither party currently intends to waive any of the conditions to
the Merger.
Termination; Amendment and Waiver. The Merger Agreement may be terminated
and the Merger may be abandoned prior to the Effective Time under the
circumstances specified therein, including (i) by mutual written consent duly
authorized by the Boards of Directors of VMARK and UNIDATA; (ii) by either VMARK
or UNIDATA, if the Merger shall not have been consummated by April 15, 1998 and
if the terminating party has not caused the failure of the Merger to be
consummated by its own willful failure to fulfill any of its obligations under
the Merger Agreement by that date; (iii) by either VMARK or UNIDATA if a court
or a governmental, regulatory, or administrative agency shall have issued a
non-appealable final order, decree, ruling or taken any other action permanently
prohibiting the Merger, provided that the terminating party has complied with
certain obligations under the Merger Agreement; (iv) by either VMARK or UNIDATA,
if the stockholders of either VMARK or UNIDATA fail to approve the Merger
Agreement; (v) by VMARK or UNIDATA, upon a breach of any representation,
warranty, covenant or agreement set forth in the Merger Agreement on the part of
the other which would have a material adverse effect on such party or result in
a failure to comply in any material respect with the Merger Agreement (provided
that if such breach or failure to perform is curable by the exercise of
reasonable efforts by the breaching party before April 15, 1998, neither VMARK
nor UNIDATA may terminate the Merger Agreement on such basis as long
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as the other party continues to exercise reasonable efforts to cure such breach
or failure); or (vi) by VMARK or UNIDATA on or after February 28, 1998 if by
such date the Merger is not to be treated as a pooling of interests for
accounting purposes, each of VMARK and UNIDATA has used its reasonable best
efforts to have the Merger treated as a pooling of interest for accounting
purposes, and VMARK is unable to cause its financial advisor to deliver an
opinion to VMARK 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 (with any
such termination under this section (vi) being a "Pooling Termination").
VMARK may terminate the Merger Agreement and abandon the Merger prior to
the Effective Time, if: (i) the UNIDATA Board of Directors fails to recommend
the Merger, or withdraws, modifies, or changes its recommendation of the Merger
in a manner adverse to VMARK, or resolves to do the same; (ii) after the receipt
by UNIDATA of an Acquisition Proposal, VMARK requests in writing that the
UNIDATA Board of Directors reconfirm its recommendation of the Merger and the
UNIDATA Board fails to do so within 10 days after receipt of such request; (iii)
the UNIDATA Board recommends an Alternative Transaction (as defined below); (iv)
a tender offer or exchange offer for 20% or more of the outstanding UNIDATA
Common Stock is commenced and the UNIDATA Board recommends that the UNIDATA
stockholders tender their shares in such tender or exchange offer; or (v) for
any reason, UNIDATA fails to call and hold the UNIDATA Special Meeting by April
15, 1998 (provided that VMARK may not terminate the Merger Agreement pursuant to
such failure if at the time UNIDATA would be entitled to terminate the Merger
Agreement due to a breach of any representation, warranty, covenant, or
agreement on the part of VMARK) (each a "VMARK Termination").
UNIDATA may terminate the Merger Agreement and abandon the Merger prior to
the Effective Time, if: (i) the VMARK Board of Directors fails to recommend the
Merger, or withdraws, modifies, or changes its recommendation of the Merger in a
manner adverse to UNIDATA, or resolves to do the same; (ii) after the receipt by
VMARK of an Acquisition Proposal, UNIDATA requests in writing that the VMARK
Board of Directors reconfirm its recommendation of the Merger and the VMARK
Board fails to do so within 10 days after receipt of such request; (iii) the
VMARK Board shall have recommended an Alternative Transaction; (iv) a tender
offer or exchange offer for 20% or more of the outstanding VMARK Common Stock is
commenced and the Board recommends that the VMARK stockholders tender their
shares in such tender or exchange offer; or (v) for any reason, VMARK fails to
call and hold the VMARK Special Meeting by April 15, 1995 (provided that UNIDATA
may not terminate the Merger Agreement pursuant to such failure if at the time
VMARK would be entitled to terminate the Merger Agreement due to a breach of any
representation, warranty, covenant, or agreement on the part of UNIDATA) (each,
a "UNIDATA Termination").
At any time prior to the Effective Time, VMARK and UNIDATA may (i) extend
the time for the performance of any of the obligations or other acts to be
performed by the other party pursuant to the Merger Agreement, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
in the Merger Agreement or in any documents delivered pursuant to the Merger
Agreement and (iii) waive compliance with any of the agreements or conditions of
the other party contained in the Merger Agreement. The Merger Agreement may be
amended by an agreement in writing among the parties thereto at any time prior
to the Effective Time; provided, however, that, after approval of the Merger by
the stockholders of UNIDATA or VMARK, respectively, no amendment may be made
which by law requires further approval of such stockholders, without securing
such further approval.
Fees and Expenses. Except as described below, all fees and expenses
incurred in connection with the Merger Agreement will be paid by the party
incurring such expenses if the Merger is not consummated and by Ardent if the
Merger is consummated, to the extent such expenses are solely and directly
related to the Merger. If the Merger is not consummated, VMARK and UNIDATA will
share equally all fees and expenses, other than attorneys' fees, incurred in
relation to the printing of this Joint Proxy Statement/Prospectus, the
Registration Statement of which this Joint Proxy Statement/Prospectus is a part
and any amendments or supplements thereto.
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VMARK has agreed to pay UNIDATA a termination fee of $3,000,000 if the
Merger Agreement is terminated, pursuant to its terms, because (i) the requisite
vote of the stockholders of VMARK to approve the Merger shall not have been
obtained, a proposal for an Alternative Transaction involving VMARK shall have
been publicly announced prior to the VMARK Stockholders' Meeting, and either an
Alternative Transaction involving VMARK is entered into, or an Alternative
Transaction involving VMARK is consummated within eighteen months of such
termination; (ii) of any UNIDATA Termination; (iii) the requisite vote of the
stockholders of VMARK to approve the Merger shall not have been obtained, one or
more stockholders of party to the Stockholder Support Agreement failed to
approve the Merger or otherwise breached such agreement, and if such stockholder
had voted for the Merger or not otherwise breached, the Merger would have been
approved by the VMARK stockholders or (iv) of any Pooling Termination.
UNIDATA has agreed to pay VMARK a termination fee of $3,000,000 if the
Merger Agreement is terminated, pursuant to its terms, because (i) the requisite
vote of the stockholders of UNIDATA to approve the Merger shall not have been
obtained, a proposal for an Alternative Transaction involving UNIDATA shall have
been publicly announced prior to the UNIDATA Stockholders' Meeting, and either
an Alternative Transaction involving UNIDATA is entered into, or an Alternative
Transaction involving UNIDATA is consummated within eighteen months of such
termination; (ii) of any VMARK Termination or (iii) the requisite vote of the
stockholders of UNIDATA to approve the Merger shall not have been obtained, one
or more stockholders of party to the Stockholder Support Agreement failed to
approve the Merger or otherwise breached such agreement, and if such stockholder
had voted for the Merger or not otherwise breached, the Merger would have been
approved by the UNIDATA stockholders.
"Alternative Transaction" is defined in the Merger Agreement to mean either
(i) a transaction pursuant to which any third party acquires more than twenty
percent of the outstanding shares of UNIDATA Common Stock or VMARK Common Stock,
as the case may be, whether 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 acquires more than twenty percent of the
outstanding common stock of UNIDATA or VMARK, 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 the 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
UNIDATA Board or the VMARK Board, as the case may be, in good faith) equal to
more than twenty percent 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.
STOCK OPTION AGREEMENTS
VMARK has granted to UNIDATA an irrevocable option (the "UNIDATA Stock
Option") to purchase up to 1,624,988 shares of VMARK Common Stock, including the
associated rights under the VMARK Stockholder Rights Plan, at a price of $9.87
per share. Subject to the terms and conditions set forth within the UNIDATA
Stock Option, the UNIDATA Stock Option is exercisable prior to the Effective
Time, upon the occurrence of any event (other than a Pooling Termination) giving
rise to UNIDATA's right to receive a termination fee from VMARK.
UNIDATA has granted to VMARK an irrevocable option (the "VMARK Stock
Option") to purchase up to 2,310,862 shares of UNIDATA Common Stock, at a price)
of $4.42 per share. Subject to the terms and conditions set forth within the
VMARK Stock Option, the VMARK Stock Option is exercisable prior to the Effective
Time, upon the occurrence of any event giving rise to VMARK's right to receive a
termination fee from UNIDATA.
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CONFIDENTIALITY AGREEMENTS
Each party to the Merger Agreement has agreed to keep confidential,
pursuant to the Confidentiality and Standstill Agreements dated February 14,
1997 and February 26, 1997 (collectively, the "Confidentiality Agreements")
between VMARK and UNIDATA, information provided to the other party with respect
to the business, properties and personnel of the party furnishing such
information. The Confidentiality Agreements contain terms restricting the
disclosure and use of confidential information exchanged between the two parties
in evaluating the Merger and otherwise for a period of two years from the date
the confidential information was disclosed.
STOCKHOLDER SUPPORT AGREEMENTS
Concurrent with the execution and delivery of the Merger Agreement, VMARK
entered into Stockholder Support Agreements with the executive officers and
directors of UNIDATA and certain affiliates thereof (a total of 14 persons) and
with all of the holders of UNIDATA Class B Common Stock, each of which was
amended and restated as of October 31, 1997 (collectively, as amended and
restated, the "UNIDATA Support Agreements") and UNIDATA entered into a
Stockholder Support Agreement with the directors and executive officers of VMARK
(a total of 13 persons), each of which was amended and restated as of October
31, 1997 (as amended and restated, the "VMARK Support Agreements" and
collectively with the UNIDATA Support Agreements, the "Support Agreements").
Pursuant to the Support Agreements, the respective executive officers, directors
and stockholders of UNIDATA and VMARK have each agreed to vote any and all
shares of VMARK Common Stock or UNIDATA Common Stock, as the case may be, held
or to be acquired by each of them in favor of approval of the Merger Agreement
and the Merger and any matter that could reasonably be expected to facilitate
the Merger. Each of the respective executive officers, directors and
stockholders of UNIDATA and VMARK who are parties to the Support Agreements
(other than the holders of UNIDATA CLASS B Common Stock) also have agreed to use
reasonable efforts to cause the stockholders of UNIDATA and VMARK, respectively,
to approve the Merger, and each of the holders of UNIDATA Class B Common Stock
have agreed that they will not take any action to cause the other stockholders
of UNIDATA not to approve the Merger.
The Support Agreements also provide that each executive officer, director
and/or stockholder who is a party thereto will not, and will not permit any
entity under his or her control to (i) solicit proxies or become a "participant"
in a "solicitation" (as such terms are defined in Regulation 14A under the
Exchange Act) with respect to any proposal to acquire any business which would
materially delay or interfere with the Merger (an "Alternative Proposal"), or
otherwise encourage or assist any party in any action that would interfere with
the timely consummation of the Merger; (ii) initiate a stockholders' vote or
action by written consent of stockholders with respect to an Alternative
Proposal; or (iii) become a member of a "group" (as such term is used in Section
13(d) of the Exchange Act) with respect to any voting securities of UNIDATA or
VMARK, as the case may be, with respect to an Alternative Proposal.
The Support Agreements also provide that each executive officer, director
and stockholder that is a party thereto will not sell their shares of VMARK
Common Stock (in the case of executive officers, directors, and stockholders of
VMARK) or shares of Ardent Common Stock received in the Merger (in the case of
executive officers, directors, and stockholders of UNIDATA) during the period
commencing thirty days prior to the consummation of the Merger and ending at
such times as financial results covering at least thirty days of the combined
operations of UNIDATA and VMARK have been published. In addition, each of the
executive officers, directors and shareholders of UNIDATA that are parties to
the Support Agreements (who may be deemed to be "affiliates" of UNIDATA for
purposes of Rule 145 under the Securities Act) agreed not to sell their shares
of Ardent Common Stock received in the Merger in violation of the rules and
regulations of the Securities Act and to sell such shares only pursuant to Rule
145(d) or an effective registration statement or exemption under the Securities
Act.
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ESCROW AGREEMENT
At Closing, VMARK will enter into an Escrow Agreement with certain
representatives of UNIDATA (the "Representatives") and Choate, Hall & Stewart
(the "Escrow Agent"), pursuant to which VMARK, at the Effective Time, will
deliver a certificate or certificates representing the Escrowed Shares to the
Escrow Agent. The Escrowed Shares are considered part of the consideration given
to holders of shares of UNIDATA Common Stock in the Merger, and shall be
allocated pro rata from all holders of UNIDATA Common Stock (other than holders
of Dissenting Shares) in accordance with the number of outstanding shares held
immediately prior to the Effective Time (treating UNIDATA Class A and UNIDATA
Class B shares equally). Interest and dividends shall not be added to or become
part of the escrow account and shall promptly be distributed from time to time
in accordance with the number of outstanding shares of UNIDATA Common Stock held
immediately prior to the Effective Time.
The Escrowed Shares will be held by the Escrow Agent in connection with
certain potential claims that may be brought by a party to an existing contract
with UNIDATA. In the event that Ardent shall incur any loss, damage, or expense
as a result of such claims (other than the first $100,000 of Ardent's costs and
expenses in defending against such claims), the Escrowed Shares shall be used to
hold Ardent harmless from such loss, damage or expense. Upon resolution of such
claims, all assets remaining in the escrow account and not subject to payment to
Ardent shall be promptly distributed to the former holders of UNIDATA Common
Stock (other than holders of Dissenting Shares), pro rata in accordance with
their respective holdings UNIDATA Common Stock immediately prior to the
Effective Time.
At the discretion of the Representatives, the Escrowed Shares may be sold
in accordance with applicable securities laws, with the proceeds from any such
sale to be invested in short-term government securities or a mutual fund
invested solely in such securities. The Escrow Agent will vote the Escrowed
Shares at the direction of the Representatives. 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. If the Escrow Agent declines
or is unable to serve prior to the Effective Time, it shall be succeeded by such
person or entity as VMARK and UNIDATA shall agree.
REGULATORY FILINGS AND APPROVALS
VMARK and UNIDATA are not aware of any governmental or regulatory
requirements for consummation of the Merger other than compliance with
applicable state corporate laws and federal and state securities laws.
ACCOUNTING TREATMENT OF THE MERGER
The Merger is intended to qualify as a pooling of interests for accounting
and financial reporting purposes. Under this method of accounting, the recorded
assets and liabilities of VMARK and UNIDATA will be carried forward to Ardent
following the Merger at their recorded amounts, the operating results of Ardent
following the Merger will include the operating results of VMARK and UNIDATA for
the entire fiscal year in which the Merger occurs and the reported operating
results of the separate companies for prior periods will be combined and
restated as the operating results of Ardent following the Merger.
LISTING OF NEW SHARES OF ARDENT COMMON STOCK ON THE NASDAQ STOCK MARKET
Prior to the Merger, VMARK will obtain approval to list on The Nasdaq Stock
Market the shares of Ardent Common Stock to be issued (i) in the Merger and (ii)
upon the exercise of the UNIDATA Stock Options or UNIDATA Warrants. This listing
is a condition to the consummation of the Merger.
APPRAISAL RIGHTS
Holders of VMARK Common Stock are not entitled to appraisal rights under
the DGCL in connection with the Merger. If the Merger becomes effective, a
holder of UNIDATA Common Stock who does not vote in favor of the Merger and who
follows the procedures prescribed under Colorado law may require Ardent as the
surviving corporation to pay the "fair value", determined as provided under the
CBCA, for the shares
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held by such stockholder. The following is a summary of certain features of the
relevant sections of the CBCA, the provisions of which are set forth in full in
Annex III hereto, and such summary is subject to and qualified in its entirety
by reference to such law. In order to exercise such statutory appraisal rights,
strict adherence to the statutory provisions is required, and each stockholder
who may desire to exercise such rights should carefully review and adhere to
such provisions. Any holder of UNIDATA Common Stock who votes in favor of the
Merger, or is deemed to vote in favor of the Merger (by, for example, returning
a signed proxy card without specifying a vote on the Merger) will waive their
appraisal rights.
A holder of UNIDATA Common Stock who desires to pursue the appraisal rights
available to such stockholder must: (i) file a written objection to the Merger
with UNIDATA pursuant to Section 7-113-202 of the CBCA before the taking of the
stockholders' vote on the Merger Agreement, stating the intention of such
stockholder to demand payment for shares owned by such stockholder if the Merger
is approved and the Merger is consummated; (ii) refrain from voting in favor of
the Merger; (iii) make written demand (the "Demand") to Ardent, as the surviving
corporation in the Merger, for payment for said stockholder's shares on or
before the time set within the notice sent by Ardent to objecting stockholders
(which time must be at least 30 days after the giving of such notice); and (iv)
deposit the stockholder's share certificates with Ardent. Such written objection
and written demand should be delivered to Ardent, 50 Washington Street,
Westboro, Massachusetts 01581, Attention: James K. Walsh, General Counsel, and
it is recommended that such objection and demand be sent by registered or
certified mail, return receipt requested.
The obligations of VMARK under the Merger Agreement are subject to the
condition that the holders of not more than five percent in the aggregate of the
outstanding shares of UNIDATA Common Stock shall have filed written objections
to the Merger pursuant to Section 7-113-202 of the CBCA (such shares held by a
holder who has exercised appraisal rights in accordance with the CBCA, the
"Dissenting Shares"). If holders of more than five percent of the outstanding
shares have filed such objections, VMARK shall have the right to (i) waive this
condition and close, or (ii) terminate the Merger Agreement.
A stockholder who files the required written objection with UNIDATA prior
to the stockholder vote need not vote against the Merger, but a vote in favor of
the Merger will constitute a waiver of such stockholder's statutory appraisal
rights. If a stockholder returns a proxy which is signed but on which no vote is
specified as to the proposal on the Merger Agreement, and thereafter does not
revoke such proxy, it will be voted in favor of the Merger, and the stockholder
will be deemed to have waived his or her appraisal rights. In addition, a vote
against the Merger does not, alone, constitute a written objection.
The value of the UNIDATA Common Stock will be determined initially by
Ardent as the surviving corporation and the dissenting stockholder. Upon the
later of the effective date of the Merger and the date upon which Ardent
receives a valid Demand, Ardent shall pay a dissenting stockholder who complies
with the above the fair value of the stockholder's shares, plus accrued
interest, if any. Such payment shall be accompanied by (i) Ardent's balance
sheet as of the end of its most recent fiscal year, (ii) a statement of Ardent's
estimate of the fair value of the shares, (iii) an explanation of how interest
was calculated, (iv) a statement of the dissenter's right to demand greater
payment if the dissenter believes that Ardent's payment does not accurately
reflect the fair value of the shares, and (v) a copy of Article 7 of the CBCA.
If the dissenter believes that Ardent's payment does not accurately reflect the
fair value of the shares, or if Ardent fails to make its payment within 60 days
of receipt of the Demand, the dissenter may give written notice to Ardent of the
dissenter's estimate of the fair value of the shares and the interest thereon,
and demand payment of such amount, less any amount previously received from
Ardent on account of the shares. The dissenter shall waive any right to propose
a fair value for the shares if written notice is not given to Ardent within 30
days of the dissenter's receipt of payment from Ardent.
If a demand from a dissenter for greater payment than that offered by
Ardent remains unresolved, Ardent may, within 60 days of receiving such demand,
commence a judicial proceeding to determine the fair value of the shares. If
Ardent does not commence a judicial proceeding within 60 days of receiving such
demand, it shall pay the amount demanded by the dissenting stockholder. Each
dissenting stockholder whose demands remain unresolved shall be made parties to
such action. Upon a judicial determination of the fair value of the shares, each
dissenter shall be entitled to the amount, if any, by which the value found
through the judicial proceeding exceeds the payment made by Ardent, plus
interest. The court costs of such a proceeding shall be borne by
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Ardent, except to the extent that the court finds that dissenters acted
arbitrarily, vexatiously, or not in good faith in demanding payment beyond that
offered by Ardent. The court may also assess counsel fees and expenses upon the
respective parties, to the extent that the court finds such assessment fair and
equitable.
The "fair value" of the UNIDATA Common Stock could be more than, the same
as or less than the consideration to be received by the UNIDATA stockholders in
the Merger. For appraisal proceeding purposes, value is determined as of the day
before the approval of the Merger Agreement by stockholders, excluding any
element of value arising from the expectation or accomplishment of the Merger.
The enforcement by a stockholder of his or her request to receive payment
for shares of UNIDATA Common Stock as provided under the applicable statutory
provisions shall be an exclusive remedy except that such remedy shall not
exclude the right of a stockholder to bring or maintain an appropriate
proceeding to obtain relief on the ground that said corporate action will be or
is illegal or fraudulent as to said stockholder.
A final judgment by the court or an appraiser appointed by the court
determining the fair value of the UNIDATA Common Stock would be binding on and
enforceable by UNIDATA stockholders who have perfected their statutory appraisal
rights, even if such fair value were determined to be less than the
consideration to be received by the UNIDATA stockholders in the Merger. A
stockholder who perfects his rights as a dissenting stockholder will not, after
the Effective Date, be entitled to notices of meetings, to vote, or to receive
dividends.
Each share of UNIDATA Common Stock held by stockholders who seek to
exercise appraisal rights and, after the Effective Time, fail to perfect or lose
any such right to appraisal, shall be treated as a share that had been converted
as of the Effective Time into the right to receive Ardent Common Stock as
provided in the Merger Agreement.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material federal income tax
consequences of the Merger under the Internal Revenue Code of 1986, as amended
(the "Code"), assuming that the Merger is consummated as contemplated herein.
The expectations reflected in the following discussion are based on certain
assumptions and representations concerning the Merger and the actions of the
corporations and stockholders involved. Also, the following discussion does not
describe all potentially relevant tax considerations, does not address tax
consequences arising under state, local, or foreign laws, and does not address
the circumstances of special classes or individual circumstances of taxpayers,
including, without limitation, foreign persons, UNIDATA stockholders who
acquired their UNIDATA Common Stock pursuant to the exercise of stock options or
otherwise as compensation, holders of UNIDATA stock options and warrants,
dealers in securities, banks, insurance companies, and tax-exempt organizations.
ACCORDINGLY, EACH HOLDER OF UNIDATA COMMON STOCK SHOULD CONSULT A TAX ADVISOR
REGARDING THE TAX CONSEQUENCES OF THE MERGER IN LIGHT OF THE HOLDER'S OWN
SITUATION, INCLUDING THE APPLICATION AND EFFECT OF ANY FEDERAL, STATE, LOCAL, OR
FOREIGN INCOME AND OTHER TAX LAWS. The following discussion is based upon
federal income tax laws as in effect on the date hereof, which are subject to
change, possibly retroactively; future legislation, regulations, administrative
rulings, or court decisions may affect these expectations as to federal income
tax consequences.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO UNIDATA STOCKHOLDERS
It is a condition to the obligations of UNIDATA and VMARK to consummate the
Merger that UNIDATA and VMARK receive opinions from their respective counsel,
Latham & Watkins for UNIDATA and Choate, Hall & Stewart for VMARK, that the
Merger will be treated for federal income tax purposes as a "reorganization"
within the meaning of Section 368(a) of the Code. Upon the advice of its
counsel, Latham & Watkins, UNIDATA expects that the stockholders of UNIDATA will
not recognize gain or loss as a result of the exchange of shares of UNIDATA
Common Stock for shares of Ardent Common Stock in the Merger (except with
respect to any cash received in lieu of a fractional share of Ardent Common
Stock), and that the tax basis of the Ardent Common Stock received by such
UNIDATA stockholders in the Merger
45
<PAGE> 51
will be the same, in each instance, as the tax basis of the UNIDATA Common Stock
surrendered in exchange therefor, excluding any basis allocable to fractional
shares of Ardent Common Stock for which cash is received. In addition, it is
expected that the holding period of the shares of Ardent Common Stock received
in the Merger by UNIDATA stockholders will include the period during which the
shares of UNIDATA Common Stock surrendered in exchange therefor were held,
provided that such shares of UNIDATA Common Stock were held as capital assets at
the Effective Time.
Either company may waive the condition to receive its respective counsel's
tax opinion and proceed with the Merger without such opinion. If either VMARK or
UNIDATA waive the receipt of such opinion, such waiving company will resolicit
proxies from its stockholders after informing them about the company's
expectations of changes in the tax consequences to its stockholders or material
changes in tax consequences to the company, if any, as a result of the Merger.
Holders of UNIDATA Common Stock who receive cash in the Merger in lieu of
fractional shares of Ardent Common Stock will be treated, in each instance, as
having received the fractional share and then as having received the cash in
redemption of such fractional share. Such redemption will generally result in
the recognition of gain or loss for federal income tax purposes, measured by the
difference between the amount of cash received and the portion of the tax basis
of the holder's share of UNIDATA Common Stock allocable to such fractional
share. Assuming such redemption meets the "not essentially equivalent to a
dividend" test under Section 302 of the Code, such gain or loss generally will
be capital gain or loss, provided that the holder's UNIDATA Common Stock was
held as a capital asset at the Effective Time, and will be long-term capital
gain or loss if the UNIDATA Common Stock has been held for more than one year.
Long-term capital gain realized by an individual U.S. holder is generally
subject to a maximum tax rate of 28% in respect of property held for a period
exceeding one year but not exceeding 18 months and to a maximum rate of 20% in
respect of property held for a period exceeding 18 months. A minority
stockholder in a publicly held corporation who exercises no control with respect
to corporate affairs is generally considered to meet such "not essentially
equivalent to a dividend" test if he or she has any actual reduction in his or
her percentage stock ownership.
A holder of shares of UNIDATA Common Stock who has exercised appraisal
rights in accordance with the CBCA and has not effectively withdrawn or lost
such appraisal rights will recognize gain or loss equal to the difference
between the amount of cash received therefor and the adjusted tax basis of the
UNIDATA Common Stock surrendered. Such gain or loss will be long-term capital
gain or loss if such UNIDATA Common Stock had been held as a capital asset for
more than one year at the Effective Time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO UNIDATA AND VMARK
Upon the advice of its counsel, Latham & Watkins, UNIDATA expects that it
will not recognize any gain or loss as a result of the Merger. Upon the advice
of its counsel, Choate, Hall & Stewart, VMARK expects that it also will not
recognize any gain or loss as a result of the Merger, and that its tax basis in
the assets which it acquires in the Merger from UNIDATA will be equal to
UNIDATA's tax basis in such assets immediately prior to the Effective Time. In
addition, Ardent's holding period in the assets which it acquires in the Merger
from UNIDATA is generally expected to include the period during which UNIDATA
held such assets prior to the Merger.
46
<PAGE> 52
UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
The following unaudited Pro Forma Condensed Combining Balance Sheet at
September 28, 1997 and Pro Forma Condensed Combining Statements of Operations
for the years ended December 31, 1996, 1995 and 1994 and the nine months ended
September 28, 1997 and September 29, 1996 (the "Pro Forma Condensed Combining
Financial Statements") illustrate the effect of the Merger as if the Merger had
occurred as of the beginning of the earliest period presented. Pursuant to the
terms of the Merger, each holder of UNIDATA Common Stock will be entitled to
receive shares of Ardent Common Stock based on an exchange ratio of 0.44765 of a
share of Ardent Common Stock for each share of UNIDATA Common Stock. VMARK
prepares its financial statements on the basis of a fiscal year ending on
December 31. UNIDATA prepares its financial statements on the basis of a fiscal
year ending on June 30. The Pro Forma Condensed Combining Balance Sheet combines
VMARK's unaudited balance sheet as of September 28, 1997 with UNIDATA's
unaudited balance sheet as of September 30, 1997. The Pro Forma Condensed
Combining Statements of Operations combine VMARK's audited results of operations
for its fiscal year ended December 31, 1996 and the unaudited results of
operations for the nine months ended September 28, 1997 and September 29, 1996
with UNIDATA's unaudited results of operations for the year ended December 31,
1996 and the nine months ended September 30, 1997 and September 30, 1996. The
Pro Forma Condensed Combining Statements of Operations also combine, for the
fiscal years ended 1995 and 1994, VMARK's audited results of operations for each
of the two years ended December 31, 1995 with UNIDATA's audited results of
operations for its fiscal year ended June 30, 1995 and UNIDATA's unaudited
results of operations for its fiscal year ended June 30, 1994. UNIDATA's revenue
and net loss for the six months ended December 31, 1995, excluded from the pro
forma financial data was $16,511,000 and $3,762,000, respectively. The Pro Forma
Condensed Combining Statements of Operations do not give effect to any
transaction charges associated with the consummation of the Merger. The Pro
Forma Condensed Combining Balance Sheet has been adjusted to reflect these
estimated obligations. All such costs are estimated to aggregate $14.1 million,
$10.0 million net of tax. The Pro Forma Combining Condensed Financial Statements
have been prepared on the basis that the Merger will be accounted for as a
pooling of interests. There are no intercompany transactions or balances
included in the Pro Forma Condensed Combining Financial Statements and no
adjustments are required to conform the accounting policies of VMARK and
UNIDATA.
The Pro Forma Condensed Combining Financial Statements should be read in
conjunction with the consolidated financial statements of UNIDATA appearing
elsewhere in this Joint Proxy Statement/ Prospectus and the consolidated
financial statements of VMARK incorporated by reference herein. The Pro Forma
Condensed Combining Financial Statements are presented for comparative purposes
only and are not intended to be indicative of actual results had the
transactions occurred as of the dates indicated above or of results which may be
attained in the future.
47
<PAGE> 53
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO
VMARK UNIDATA PRO FORMA FORMA
AS OF SEPTEMBER 28, 1997 AS OF SEPTEMBER 30, 1997 ADJUSTMENTS COMBINED
------------------------ ------------------------ ----------- --------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and equivalents....... $21,038 $ 826 $ $21,864
Accounts
receivable -- net....... 8,710 14,179 22,889
Prepaid expenses and other
current assets.......... 4,437 1,433 5,870
Deferred income taxes...... 1,331 459 2,508 (1) 4,298
------- ------- -------- --------
Total current
assets........... 35,516 16,897 2,508 54,921
------- ------- -------- --------
Property and
equipment -- net........... 12,635 4,344 16,979
------- ------- -------- --------
OTHER LONG-TERM ASSETS:
Intangible assets -- net... 3,469 6,559 10,028
Deferred income taxes...... 3,676 2,044 637 (1) 6,357
Other long-term assets..... 2,104 1,982 4,086
------- ------- -------- --------
Total long-term
assets........... 9,249 10,585 637 20,471
------- ------- -------- --------
TOTAL.............. $57,400 $31,826 $ 3,145 $92,371
======= ======= ======== ========
CURRENT LIABILITIES:
Line of credit............. $ -- $ 2,400 $ $ 2,400
Current portion of capital
lease obligations....... 218 158 376
Accounts payable, accrued
expenses and income
taxes payable........... 7,302 6,811 (947)(1) 13,166
Accrued merger and
restructuring........... 2,044 -- 14,100 (1) 16,144
Deferred revenue........... 7,154 5,001 12,155
------- ------- -------- --------
Total current
liabilities...... 16,718 14,370 13,153 44,241
Long-term notes payable.... -- 12,350 12,350
Long-term capital leases,
less current portion.... 8,851 79 8,930
------- ------- -------- --------
Total
liabilities...... 25,569 26,799 13,153 65,521
------- ------- -------- --------
Common stock................. 85 -- 55 (2) 140
Capital in excess of par
value...................... 47,490 6,862 (55)(2) 54,297
Accumulated deficit.......... 12,763) (1,643) (10,008)(1) (24,414)
Cumulative translation
adjustment, treasury stock
and other equity........... (2,981) (192) -- (3,173)
------- ------- -------- --------
Total stockholders'
equity........... 31,831 5,027 (10,008) 26,850
------- ------- -------- --------
TOTAL.............. $57,400 $31,826 $ 3,145 $92,371
======= ======= ======== ========
</TABLE>
48
<PAGE> 54
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
VMARK UNIDATA PRO FORMA
NINE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED
SEPTEMBER 28, 1997 SEPTEMBER 30, 1997 SEPTEMBER 28, 1997(3)
------------------ ------------------ ---------------------
<S> <C> <C> <C>
Revenue............................ $42,531 $36,176 $78,707
Costs and expenses:
Cost of software................. 2,968 3,293 6,261
Cost of services and other....... 9,713 9,688 19,401
Selling and marketing............ 17,515 10,737 28,252
Product development.............. 5,267 7,471 12,738
General and administrative....... 3,986 5,159 9,145
Other charges(4)................. -- 602 602
------- ------- -------
Total costs and expenses........... 39,449 36,950 76,399
------- ------- -------
Income (loss) from operations...... 3,082 (774) 2,308
Other expense...................... (147) (1,372) (1,519)
------- ------- -------
Income (loss) before provision for
income taxes..................... 2,935 (2,146) 789
Provision for (benefit from) income
taxes............................ 1,115 (691) 424
------- ------- -------
Net income (loss).................. $ 1,820 $(1,455) $ 365
======= ======= =======
Net income (loss) per common
share......................... $ .22 $ (.12) $ .03
======= ======= =======
Weighted average number of common
and common equivalent shares
outstanding...................... 8,460 12,158 13,903
</TABLE>
49
<PAGE> 55
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
VMARK UNIDATA PRO FORMA
NINE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED
SEPTEMBER 29, 1996 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
------------------ ------------------ ------------------
<S> <C> <C> <C>
Revenue.............................. $52,382 $34,795 $87,177
Costs and expenses:
Cost of software................... 3,657 3,636 7,293
Cost of services and other......... 13,756 7,289 21,045
Selling and marketing.............. 19,640 11,056 30,696
Product development................ 6,890 6,477 13,367
General and administrative......... 5,559 4,547 10,106
Other charges(6)................... 2,125 -- 2,125
------- ------- -------
Total costs and expenses............. 51,627 33,005 84,632
------- ------- -------
Income from operations............... 755 1,790 2,545
Other expense........................ (331) (1,308) (1,639)
------- ------- -------
Income before provision for income
taxes.............................. 424 482 906
Provision for income taxes........... 459 178 637
------- ------- -------
Net income (loss).................... $ (35) $ 304 $ 269
======= ======= =======
Net income (loss) per common
share........................... $ (.00) $ .02 $ .02(5)
======= ======= =======
Weighted average number of common and
common equivalent shares
outstanding........................ 8,099 13,100 13,963
</TABLE>
50
<PAGE> 56
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
VMARK UNIDATA PRO FORMA
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1996 DECEMBER 31, 1996(3)
----------------- ----------------- --------------------
<S> <C> <C> <C>
Revenue................................. $69,266 $47,469 $116,735
Costs and expenses:
Cost of software...................... 4,745 4,602 9,347
Cost of services and other............ 18,552 10,241 28,793
Selling and marketing................. 26,929 14,791 41,720
Product development................... 8,875 8,836 17,711
General and administrative............ 7,351 6,348 13,699
Other charges(6)...................... 4,322 -- 4,322
------- ------- --------
Total costs and expenses................ 70,774 44,818 115,592
------- ------- --------
Income (loss) from operations........... (1,508) 2,651 1,143
Other expense........................... (573) (1,681) (2,254)
------- ------- --------
Income (loss) before provision for
income taxes and extraordinary item... (2,081) 970 (1,111)
Provision for income taxes.............. 560 548 1,108
------- ------- --------
Income (loss) before extraordinary
item.................................. (2,641) 422 (2,219)
Extraordinary item(7)................... (4,734) -- (4,734)
------- ------- --------
Net income (loss)....................... $(7,375) $ 422 $ (6,953)
======= ======= ========
Income (loss) per common share:
Income (loss) from operations before
extraordinary item................. $ (.33) $ .03 $ (.16)(5)
Net income (loss)..................... $ (.91) $ .03 $ (.49)(5)
Weighted average number of common and
common equivalent shares
outstanding........................... 8,096 13,306 14,052
</TABLE>
51
<PAGE> 57
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
VMARK UNIDATA PRO FORMA
YEAR ENDED YEAR ENDED FISCAL YEAR
DECEMBER 31, 1995 JUNE 30, 1995 1995
----------------- ------------- -----------
<S> <C> <C> <C>
Revenue................................ $68,364 $24,357 $92,721
Costs and expenses:
Cost of software..................... 5,040 1,409 6,449
Cost of services and other........... 16,539 4,864 21,403
Selling and marketing................ 26,082 8,875 34,957
Product development.................. 10,111 4,265 14,376
General and administrative........... 7,908 3,266 11,174
Other charges(6)..................... 7,381 -- 7,381
------- ------- -------
Total costs and expenses............... 73,061 22,679 95,740
------- ------- -------
Income (loss) from operations.......... (4,697) 1,678 (3,019)
Other expense.......................... (326) (277) (603)
------- ------- -------
Income (loss) before provision for
income taxes......................... (5,023) 1,401 (3,622)
Provision (credit) for income taxes.... (1,133) 137 (996)
------- ------- -------
Net income (loss)...................... $(3,890) $ 1,264 $(2,626)
======= ======= =======
Net income (loss) per common share... $ (.49) $ .11 $ (.20)(5)
======= ======= =======
Weighted average number of common and
common equivalent shares
outstanding.......................... 8,013 11,281 13,063
</TABLE>
52
<PAGE> 58
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
VMARK UNIDATA PRO FORMA
YEAR ENDED YEAR ENDED FISCAL YEAR
DECEMBER 31, 1994 JUNE 30, 1994 1994
----------------- ------------- -----------
<S> <C> <C> <C>
Revenue................................ $65,452 $16,436 $81,888
Costs and expenses:
Cost of software..................... 4,989 910 5,899
Cost of services and other........... 11,870 2,117 13,987
Selling and marketing................ 23,885 7,056 30,941
Product development.................. 10,605 2,933 13,538
General and administrative........... 6,801 2,635 9,436
Other charges(4)(6).................. 5,100 462 5,562
------- ------- -------
Total costs and expenses............... 63,250 16,113 79,363
------- ------- -------
Income from operations................. 2,202 323 2,525
Other income (expense)................. 521 (210) 311
------- ------- -------
Income before provision for income
taxes................................ 2,723 113 2,836
Provision (credit) for income taxes.... 2,944 40 2,984
------- ------- -------
Net income (loss)...................... $ (221) $ 73 $ (148)
======= ======= =======
Net income (loss) per common share... $ (0.03) $ 0.01 $ (0.01)(5)
======= ======= =======
Weighted average number of common and
common equivalent shares
outstanding.......................... 7,824 10,656 12,594
</TABLE>
53
<PAGE> 59
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
(1) The Pro Forma Condensed Combining Statements of Operations exclude the
nonrecurring costs of the Merger, which are estimated at $14,100,000
($10,008,000 net of tax effects). This estimate includes $3,300,000 for
financial advisor, legal, and accounting fees related to the merger and
$10,800,000 of costs associated with combining the operations of the two
companies including estimated cash expenditures of $5,500,000 for severance
and benefits in connection with the expected elimination of 170 positions,
$2,300,000 for closure of facilities and $3,000,000 of non-cash charges for
the write off of redundant assets. The Pro Forma Condensed Combining Balance
Sheet has been adjusted to reflect these estimated obligations. The
nonrecurring cost estimate is an estimate only, although it is not likely
that material additional costs will be incurred. The nonrecurring expenses
will be charged to operations upon the consummation of the Merger.
Accumulated deficit as of September 28, 1997 has been adjusted to reflect
the after-tax impact of the estimated costs of the merger ($10,008,000).
Accrued merger and restructuring has been adjusted to reflect the accrual of
such estimated costs, pre-tax ($14,100,000). Deferred taxes and income taxes
payable have been adjusted to reflect the estimated current and deferred tax
benefits associated with the estimated charge.
(2) Stockholder's equity as of September 28, 1997 has been adjusted to reflect
the issuance of 5,440,290 shares of Ardent Common Stock in exchange for all
of the issued and outstanding shares of UNIDATA Stock resulting in
13,711,209 shares issued and outstanding on a pro forma basis. The Pro Forma
Condensed Combining Financial Statements do not reflect the exercise of
outstanding stock options.
(3) On December 31, 1997, Unidata completed its acquisition of O2 Technology.
The Pro Forma Condensed Combining Financial Statements do not include the
results of operations and financial position of O2 Technology for the
periods presented. O2 Technology's revenue and net loss for the six months
ended June 30, 1997 were $2,128,000 and $1,143,000, respectively. O2
Technology's revenue and net loss for the year ended December 31, 1996 were
$5,811,000 and $651,000, respectively.
(4) In the nine months ended September 30, 1997, UNIDATA disposed of a
wholly-owned subsidiary and recorded a loss on an investment in a joint
venture. These items resulted in losses totalling $602,000. In the fiscal
year ended June 30, 1994, UNIDATA recorded a charge of $462,000 to write off
the carrying value of certain acquired technology.
(5) The pro forma combined net income per share is based on the combined
weighted average number of common and common equivalent shares, after
adjusting UNIDATA's weighted average number of common shares outstanding and
dilutive common share equivalents for the conversion into Ardent Common
Stock at a conversion ratio of 0.44765. Common share equivalents consist of
common stock issuable upon the exercise of outstanding options.
(6) During the periods presented, VMARK on occasion recorded several one-time
charges related to restructurings, litigation, and/or mergers and
acquisitions. In 1996, $4,322,000 was recorded related to restructurings of
the business and the exit of VMARK from certain unprofitable business lines.
In 1995, $6,882,000 was recorded related to the merger with Easel
Corporation and the restructuring activity which occurred during the year;
in addition, $499,000 in litigation related charges were recorded. In 1994,
$2,750,000 was recorded representing the estimated amount of purchased
research and development acquired in a business combination; in addition,
$650,000 in litigation related charges were recorded and $1,700,000 was
recorded relating to restructuring of the Easel operations prior to the
merger.
(7) In 1996, VMARK recorded an extraordinary loss of $4,734,000 related to the
discontinuance at the end of that year of certain product lines and
businesses present at the date of the merger with Easel. Generally accepted
accounting principles require such costs to be recorded as extraordinary
items, since the disposition of these assets was not contemplated at the
date VMARK merged with Easel.
54
<PAGE> 60
THE BUSINESS OF UNIDATA
GENERAL
UNIDATA designs, develops and markets database management software,
application development tools and associated middleware for database solutions
which are used by businesses worldwide. UNIDATA's tools and nested relational
database environment enable development of sophisticated applications for the
creation, manipulation and retrieval of diverse data types. UNIDATA's core
business focuses on its high performance client/server relational database
management system. Other products complement the database system, including
tools for application development, application re-engineering, systems
management, interoperability and Internet support. Much of UNIDATA's revenue is
generated by licensing software products through its network of over 400
value-added resellers who incorporate UNIDATA software and applications created
with UNIDATA development tools into information systems for specific industries
and business functions. Many UNIDATA customers also use UNIDATA software
products and services to update existing database management systems and
applications created in outdated or "legacy" computing environments.
In anticipation of changing requirements in data management, and as a
logical evolution of its existing database product, UNIDATA identified the
object database market as a key area for future growth as well as for preserving
and enhancing the value of legacy computing systems. On December 31, 1997,
UNIDATA completed its acquisition of O2 Technology, one of the leading object
database developers, and, with O2 Technology, UNIDATA will continue its
development of new object oriented database management products. See
"-- Acquisition of O2 Technology" below. Over the past two years, UNIDATA and O2
Technology have developed a product that combines the benefits of object
technology with support for Structured Query Language ("SQL") and which supports
large numbers of users in a secure transaction environment. UNIDATA believes
that its resellers, installed base of customers, geographic coverage, and
expertise in delivering complex database software provide UNIDATA with the
resources to become a leader in the emerging object database market. UNIDATA's
acquisition of O2 Technology will further advance UNIDATA's object database
strategy by allowing UNIDATA to capitalize on O2 Technology's object expertise,
its established market position in Europe, and the performance of its object
oriented technology.
MARKET OVERVIEW
The computer database market currently generates over $9.3 billion in
revenues, including revenues from software licensing, sales of application
development and other software tools, and consulting, training and maintenance
services. The 19 year old relational database segment is the most important part
of the database market, accounting for approximately 62% (representing
approximately $5.8 billion in revenues) of the overall market. Relational
databases store numbers and words in the form of tables with rows and columns,
allowing users to access such data quickly, share the data among a large number
of users, and protect the data from hardware or software failures and
unauthorized access. The relational segment is dominated by large corporations,
including Oracle Corporation, Sybase, Inc. and Informix Software, Inc., but
smaller enterprises, including UNIDATA, Progress Software Co. and VMARK have
developed substantial businesses selling relational database systems to small
and medium sized companies and organizations around the world.
The five year old object database segment is a much smaller market segment,
accounting for about $140 million of worldwide revenue in 1996, up from $100
million in 1995. Object databases provide easier development and faster access
to data when dealing with complex or multimedia data. Object databases perform
all the basic functions of relational databases, storing and retrieving large
amounts of data securely shared by large numbers of users. They also facilitate
the storage, retrieval and manipulation of different types of information,
including text, sounds, images, spatial data, graphics and video.
Moreover, object databases rely on a new programming method, object
programming, in which the developer assembles objects and builds large
applications from smaller components. According to International Data
Corporation, an industry and publication group covering high technology and data
processing companies, the object database market segment is expected to grow
significantly over the next few years, fueled by the increasing need for
management of larger and more complex data, data types and relationships
55
<PAGE> 61
among data, the increasing complexity in computing environments, the recent
maturity of object database products, the success of early adapters of the
technology, and the synergy of object database technology with the World Wide
Web and the Java programming language.
PRODUCTS
UNIDATA's core competency in data management has led to the successful
development and marketing of a broad range of products for secure data storage
and retrieval, application development and connectivity between disparate
computing systems. UNIDATA software is deployed by users of the UNIX(R),
Microsoft Windows NT(R), and Microsoft Windows 95(R) operating systems.
Relational Database Management System. UNIDATA provides a reliable,
scalable, relational database management system which implements a nested
relational model. The nested relational database allows users to store tables
within tables, which offers a technological advantage by providing a mechanism
for storing complex data as a single structure rather than as a series of
tables. The more intuitive data structures offered by nested relations, coupled
with the fact that the "relationship-relation" tables mandatory in conventional
relational database models are unnecessary, make UNIDATA's nested database
system less complex and easier to administer. UNIDATA databases use less disk
storage, require fewer tables and can support over 1,000 simultaneous users in
on-line transaction processing environments on a single computer, resulting in a
very competitive total cost of ownership.
UNIDATA products support the industry-standard SQL language for database
queries. UNIDATA also provides software used for connecting query tools which
run on personal computers to the UNIDATA database, as well as other "middleware"
software products used for connectivity.
Emulation and Mapping Environments. UNIDATA also markets middleware tools
that permit data in UNIDATA databases to be accessed by applications written for
other databases, and UNIDATA applications to retrieve data in non-UNIDATA
databases. With UNIDATA emulation and mapping environments for BASIC, COBOL and
SQL, applications written in these programming languages can easily access data
stored in a UNIDATA database. UNIDATA also provides database server-to-server
middleware which allows applications written using UNIDATA application
development tools to translate or "map" nested relationships among data created
for UNIDATA databases into flat (i.e. non-nested) relations used by conventional
relational databases. Thus, using UNIDATA products, BASIC applications can be
migrated to run on Oracle Corporation's relational database. UNIDATA and
Microsoft have also announced a joint effort to enable BASIC applications to run
on Microsoft's SQL Server database.
Tools for Database Development and Management. UNIDATA develops and
distributes a suite of programming tool products designed to work in concert
with its data management technologies. UNIDATA's product set comprises tools for
database administration, interoperability, analysis and reporting, application
development and application revitalization. This includes 4GL Application
Development tools which are high level, easy to use tools for building complex
client server or Internet based applications. These applications can support
both character based and Graphical User Interfaces ("GUIs")from a single set of
source code. In addition UNIDATA offers tools which allow connectivity between
client machines (e.g. desktop computers running Microsoft Windows) and servers
which run existing applications. This enables not only connectivity but also the
ability to down load data to desktop productivity tools (such as Microsoft Word
and Excel) and the ability to modernize the user interface with a GUI look.
World Wide Web Support Products. In December 1996, UNIDATA released a
World Wide Web application development tool kit, named RedBack, which allows
customers to build transaction-oriented applications for use on the Internet.
For example, using RedBack, a retail company can develop an application to
enable Internet users to interface with the company's database to learn about
the company's products, determine product availability and place orders. RedBack
features a WYSIWYG ("what you see is what you get"), object-oriented forms
editor, which allows developers to produce Web pages with complex forms, and
that utilize ActiveX or JavaScript for business logic. The product supports both
client and server-side programming languages as well as several different
commercial database systems.
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Third Party Arrangements. UNIDATA has development or reseller
relationships with other software companies, including Microsoft Corporation,
Sybase, Inc., Business Objects, Arbor Software and Interactive Software Inc.,
and resells some products under license agreements with those companies. UNIDATA
also is working with Microsoft on a number of projects to integrate UNIDATA's
product offerings with Microsoft Windows NT Server.
O2 Technology Products. O2 Technology shipped its first object oriented
database management system in 1991, the year of O2 Technology's founding. Today,
O2 Technology's products include (i) a database engine, (ii) a programming
language, (iii) interfaces for the object development languages C++, Smalltalk
and Java, (iv) a 4GL, (v) a query language, (vi) graphical user interface tools
for object manipulation, graph manipulation and report writing, (vii)
development tools (environment and toolbox) and (viii) connectivity tools to the
World Wide Web, relational databases and to CORBA compliant object request
brokers.
The core O2 Technology product is the ODMG O2 Database System, the first
object database system offering complete compliance with the standards set by
the Object Database Management Group ("ODMG"), an independent standards body.
ODMG guarantees portability of object oriented database applications from one
compliant system to another, in the same manner that SQL does for relational
database systems. The O2 Technology System also supports object query language
("OQL") and a complete C++ binding. It consists of 4 modules: a database engine;
a C++ interface, a Smalltalk interface and an OQL interpreter. Other tools are
available that turn the basic object database engine into a complete and
elaborate development and run time environment.
Future Products of the Combined UNIDATA/O2 Technology. UNIDATA and O2
Technology are developing an object oriented database capable of supporting a
high volume of transactions for commercial, educational and governmental
customers. This object database is expected to be among only a few that will
have a strong database engine together with next generation object oriented and
object relational data management capabilities. Further, the product will
feature native support for complex data, such as spatial data, time series and
pictures, and for applications built with C++, Java or Smalltalk object oriented
programming languages. UNIDATA anticipates that the capacities of its object
database will be very competitive with offerings from current competitors.
SALES AND MARKETING
Marketing Through Value Added Resellers. UNIDATA generates approximately
75% of its product revenue from new end users which license software through
UNIDATA's worldwide network of value-added resellers. The resellers provide
applications to the small to medium enterprise market, meaning that the
customers typically are companies with annual revenues of $25 million to $500
million, divisions of Fortune 1000 companies, or similarly sized institutions.
Value-added resellers use UNIDATA's products in designing and implementing
computer software solutions for specific business or industry applications.
These solutions are commonly referred to as "packaged" software, because the
customer can acquire a specific, tested, pre-existing solution rather than
building one. Value added reseller solutions are typically marketed to
middle-market end-users in specific types of industries such as manufacturing,
distribution, health care, or higher education, or for specific business or
institutional functions, including equipment leasing, municipal housing, police
and firefighter dispatch, credit unions, telemarketing, and catalog sales. In
the last six years, UNIDATA's sales effort has generated nearly 10,000 installed
customer sites with over 500,000 end-users. UNIDATA's resellers look to UNIDATA
to provide them with tools for the next generation in database technology and
many of such resellers already have begun, or plan to begin, writing new
applications in object-oriented languages such as Java and extending their
existing applications to manage and exploit more complex data.
End-User Sales and Professional Services. Although three fourths of
UNIDATA's revenues are generated through resellers, the growth of UNIDATA's
business has enabled it to pursue the growing direct to end-user segment of its
business. The increase of UNIDATA's customer base has also established growing
revenue streams from customer requirements for maintenance, professional
services, and sales of layered and new products.
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Legacy Conversion Market. A significant amount of UNIDATA's business,
representing approximately 20% of UNIDATA's total revenues in fiscal 1997, is
the migration of database systems originally created on legacy computer systems
into a modern relational database environment. UNIDATA has simplified the
mapping of legacy data into a relational database environment as well as the
conversion of legacy applications to open systems such as UNIX and Microsoft
Windows NT. UNIDATA also provides other tools, including its own 4GL,
application revitalization tools, and middleware, which allow customers to
redevelop existing applications, add graphical user interfaces to them and
deploy them in client-server environments.
O2 Technology Sales and Marketing. O2 Technology presently has 400
customers worldwide representing more than 4,000 installed software development
users, primarily in the telecommunication, finance, nuclear power, utilities,
manufacturing and defense industries. O2 Technology's customers include Alcatel,
Southwestern Bell, Ford, Lockheed-Martin, Renault, Clarks, British Telecomm and
France Telecom. O2 Technology has licensed distributors in Japan, Korea,
Australia and Italy and is adding resellers, original equipment manufacturers
and consulting firms as customers. O2 Technology seeks to deliver database
solutions to the growing market of C++, Java and Smalltalk developers and
adopters of object-oriented analysis and design methods and tools.
BUSINESS STRATEGY
UNIDATA intends to maintain its concentration on database and development
tool technology, using two different approaches. For its existing resellers and
end-users, UNIDATA plans to continue to provide relational data management
technology, incorporating support for complex data and objects. For the object
database market, UNIDATA intends to exploit its acquisition of O2 Technology to
provide new object oriented database technology. UNIDATA anticipates that
existing relational applications will, over time, be adapted to operate on
UNIDATA's object database, and UNIDATA plans to provide tools that allow for
incorporation of new functionality into existing relational applications.
UNIDATA's existing end users will adopt new technology according to their own
business requirements, and UNIDATA expects substantial product and service
business from its installed base.
REVENUE
UNIDATA has built a solid revenue stream from complementary activities:
license revenue from products, upgrade and service revenue from maintenance
agreements with its installed base, and revenue for providing follow-on
installation, training, application development, and other services. Worldwide
licenses represent about 61% of total UNIDATA revenue. Of UNIDATA's licensing
revenue, approximately 56% is derived from licensing its database management
system and the remaining 44% is derived from licensing other software products.
UNIDATA has a large installed base of end-users that consistently renew their
license agreements and purchase new releases of UNIDATA's products.
Consulting, training and support services generate approximately 39% of
UNIDATA's total revenue stream. The bulk of UNIDATA's service revenue is
associated with integrating, installing, tuning, training, and building
applications around the UNIDATA database, often including products from other
vendors. Recently, UNIDATA has been unable to grow its service business rapidly
enough to meet the existing demand. The controlling factor for growth in this
business sector has been, and likely will remain, the ability to hire, train,
and deploy quality people within corporate guidelines.
Geographically, approximately 69% of UNIDATA's revenues are from end-users
located in North America. The remaining end-users of UNIDATA products and
services are located in approximately 25 countries throughout the world, with
concentrations in the United Kingdom, France and Australia.
O2 Technology derives 65% of its revenues from the sales of products and
services in France, 30% of its revenue from the United States and small amounts
of revenue from the United Kingdom and Germany.
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COMPETITION
The data management marketplace is highly competitive. Companies in the
database market compete primarily with respect to price, performance
characteristics, name recognition and technical support, training and consulting
services. The principal competitors with UNIDATA's current products and
middle-market position are Informix Software, Inc., Progress Software Co. and
VMARK. UNIDATA's value added resellers also compete with vendors of other
database software and service providers. The database market also includes such
competitors as IBM Corporation, Oracle Corporation and Sybase, Inc., companies
that tend to focus on large accounts and have far greater financial, technical
and marketing resources than UNIDATA and O2 Technology.
Versant Object Technology and Object Design, Inc. are the current key
competitors for O2 Technology and UNIDATA expects that these companies will also
compete with UNIDATA's new object database products. UNIDATA's and O2
Technology's object database strategy also faces competition from established
relational database companies that will try to prevent a new object data
management industry from emerging and will position their products with
additional features and marketing to maintain their market position as they
respond to changes in database technology. All of the major suppliers of
relational data management products, including Oracle Corporation, Informix
Software, Inc., Sybase, Inc., Computer Associates International, Inc., Microsoft
Corporation, and IBM Corporation, have announced plans to enhance their products
with object features. Other object competitors include Poet Software, and
GemStone Systems, Inc.
PRODUCT PROTECTION
UNIDATA relies on a combination of (i) contracts, license agreements and
copy protection schemes, (ii) copyright, trade secret, and trademark laws and
(iii) technical measures to protect its proprietary rights in its software
products. UNIDATA has registered US copyrights for a number of its products and
includes copyright notices on all its products. UNIDATA maintains trademark and
service mark registrations in the United States and other foreign jurisdictions.
UNIDATA's products are generally licensed to end users on a non-exclusive
right-to-use basis under a license agreement that restricts the use of the
products to the customer's internal business purposes and prohibits unauthorized
reproduction or transfer of UNIDATA's products. UNIDATA also relies on "shrink-
wrap" licenses which include a prominently displayed notice informing the
end-user that, by opening the product packaging, the end-user agrees to be bound
by UNIDATA's license agreement printed on the package. Copyright and trade
secret protection for source and object code versions of software products may
be unavailable in certain foreign countries. In addition, "shrink-wrap" licenses
may be wholly or partially unenforceable under the laws of certain
jurisdictions.
UNIDATA protects the human readable, source code version of its products as
trade secrets and as unpublished copyrighted works. UNIDATA has licensed the
source code of its products to certain customers under certain circumstances,
and for restricted uses. In addition, UNIDATA has entered into source code
escrow agreements with several of its customers that may require release of the
source code to the customer in the event there is a bankruptcy or similar
proceeding by or against UNIDATA, UNIDATA ceases to do business or UNIDATA
ceases to support the product. If source code is provided to a customer, the
customer is required to maintain its confidentiality and, in general, to use the
source code solely for internal business purposes or for the purpose of
providing maintenance and support to its customers, and, in certain
circumstances, to embed it in customer products.
Despite the precautions described above, it may be possible for certain
unauthorized parties to copy UNIDATA's products or obtain certain of UNIDATA's
proprietary information. UNIDATA believes that, because of the rapid pace of
technological change in the computer software industry, patent, trade secret and
copyright protection are less significant than factors such as the experience
and capabilities of UNIDATA's employees and UNIDATA's innovative product
introductions and reliable product enhancement and support.
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EMPLOYEES
UNIDATA currently has 243 employees in the United States, most of whom are
located at company headquarters in Denver, with the balance located in
California, Washington, Texas, New Jersey, Georgia, and Florida. UNIDATA also
has 55 employees in the United Kingdom, 9 employees in France, and 47 employees
in Australia. UNIDATA has distribution in most industrialized countries around
the world. O2 Technology has approximately 60 employees, of which 50 are located
in France, one is located in the United Kingdom and 10 are located in the United
States.
PROPERTIES
UNIDATA's corporate headquarters is located in Denver, Colorado. UNIDATA
also maintains offices in Smyrna and Atlanta, Georgia, El Segundo and Irvine,
California, West Windsor, New Jersey, Bel Air, Maryland, and Tampa, Florida.
UNIDATA's Australian, British and French subsidiaries maintain offices in
Sydney, Australia, London, England, and Paris, France, respectively.
The corporate headquarters of O2 Technology is located in Versailles,
France, with an additional office in Palo Alto, California. O2 Technology
operates in Germany through a joint venture with offices in Frankfurt, Germany
and UNIDATA currently manages O2 Technology's United Kingdom operations from
UNIDATA's offices in London.
LEGAL PROCEEDINGS
In addition to the matters discussed below, UNIDATA is involved in several
legal proceedings that arose in the ordinary course of business, are routine in
nature and the resolution of which UNIDATA's management believes will not have a
material adverse effect on UNIDATA's consolidated financial position or
consolidated results of operations.
On May 14, 1996, an action was commenced by Pacific Unidata, Ltd.
("Pacific"), an unrelated third party, against Jenkon Data Systems, Inc.
("Jenkon"), a UNIDATA value added reseller, and Avon Products, Inc. ("Avon"), an
end-user of UNIDATA software in United States District Court for the Western
District of Washington (the "Washington Action"). The complaint alleges that,
pursuant to an agreement with UNIDATA, Pacific has the exclusive right to
distribute certain of UNIDATA's software products in China, Taiwan and Hong Kong
and that Jenkon's and Avon's use of one of UNIDATA's products in China violates
this exclusive right. Pacific has sought injunctive relief and has moved for a
preliminary injunction, and alleges damages in excess of $11 million for lost
license fees and $6 million it allegedly agreed to pay if it could not enforce
its exclusive rights to UNIDATA products in China. In June of 1996, Jenkon filed
a cross-complaint against UNIDATA, alleging that, to the extent Jenkon may be
found liable to Pacific, UNIDATA is liable to Jenkon. Avon has similar
contentions, but has not lodged a formal complaint or counterclaim.
In early July 1996, UNIDATA commenced an arbitration proceeding against
Pacific pursuant to the arbitration clause contained in the agreement between
Pacific and UNIDATA. UNIDATA alleges that Pacific is in breach of the parties'
agreement for a number of reasons, including its bad faith in connection with
the Jenkon/Avon matter. Shortly after commencing the arbitration proceeding,
UNIDATA filed a motion to stay Pacific's lawsuit and compel arbitration of
Pacific's claims pursuant to the arbitration clause. On August 12, 1996, the
Court granted UNIDATA's motion and ordered Pacific to pursue its claims in
arbitration. On November 12, 1996, the Court reconsidered and withdrew its
August 12 order. However, on January 17, 1997, the Court ordered Pacific's
action to remain stayed pending a ruling on Pacific's motion for a preliminary
injunction in a second action filed by Pacific against UNIDATA and its
President, David Brunel, in United States District Court for the District of
Colorado (the "Colorado Action") and required the parties to file a monthly
status report in Washington concerning the Colorado suit. To date, Pacific has
refused to participate in an arbitration proceeding.
The Colorado Action, filed and served on or about September 6, 1996, also
alleges that the events regarding Jenkon and Avon's use of a UNIDATA product in
China are improper and demonstrate UNIDATA's plan to deprive Pacific of its
exclusive rights in China. The action asserts claims for fraud,
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breach of contract, unfair competition, RICO violations, and trademark and
copyright infringement. Pacific also alleges that other actions of UNIDATA,
including UNIDATA's alleged recruiting of personnel in China and promotion of
products in China, constitute and confirm UNIDATA's pattern of improper conduct.
Pacific seeks injunctive relief and damages in excess of $17 million, rescission
of the parties' current and former agreements, and rescission of the sale of
UNIDATA Common Stock by Pacific's founder, Ming Yue, together with other relief.
UNIDATA has moved to dismiss the Colorado Action, and to secure a court order
compelling Pacific to pursue any surviving claims in arbitration in accordance
with the parties' arbitration agreement. Pacific has moved for a preliminary
injunction seeking to enjoin UNIDATA from using or authorizing the use of
certain UNIDATA products in any manner in China, Taiwan or Hong Kong.
On August 29, 1997, Avon sent to UNIDATA's counsel a copy of a complaint
recently filed by Pacific against Avon in China, seeking $30 million in damages
based on the same wrongful conduct alleged in the above referenced actions. This
action is a follow-on to an administrative proceeding also pending against Avon
in China brought or prompted by Pacific. Avon has indicated that it may seek
indemnity from UNIDATA for any costs, fees or liability, but Avon has not filed
any formal action against UNIDATA in this regard. UNIDATA and Avon have entered
into a tolling agreement regarding potential indemnity claims by each against
the other.
Although UNIDATA denies the allegations made in the above described actions
and intends to vigorously contest them, it is unable to predict the final
outcome of these matters at this time and it is possible that any of these
matters could subject UNIDATA to substantial liability.
ACQUISITION OF O2 TECHNOLOGY
On December 31, 1997, UNIDATA completed its acquisition of the outstanding
capital stock of O2 Technology from its stockholders. UNIDATA paid the
stockholders of O2 Technology an aggregate of approximately $3.8 million and
issued to them 556,864 shares of UNIDATA Class A Common Stock in exchange for
their shares. In addition, UNIDATA granted to certain employees of O2 Technology
options to acquire an aggregate of 1,210,870 shares of UNIDATA Class A Common
Stock, which options will be converted into options to acquire shares of Ardent
Common Stock upon consummation of the Merger.
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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF UNIDATA
The following selected consolidated financial data of UNIDATA as of and for
each of the five fiscal years ended June 30, 1997 are derived from the
consolidated financial statements of UNIDATA. The financial statements for the
three fiscal years ended June 30, 1997 have been audited by Coopers & Lybrand
L.L.P., independent public accountants. The financial data of UNIDATA for the
three months ended September 30, 1997 and 1996 and the two years ended June 30,
1994 are derived from unaudited consolidated financial statements prepared by
UNIDATA's management, which in the opinion of management are prepared on the
same basis as the audited financial statements. This data is qualified in its
entirety by, and should be read in conjunction with, the UNIDATA Financial
Statements and related notes thereto appearing elsewhere herein. See "FINANCIAL
INFORMATION OF UNIDATA AND SUBSIDIARIES" and "UNIDATA MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SEPTEMBER
30, FISCAL YEAR ENDED JUNE 30,
----------------- -----------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Licenses............................................. $ 4,949 $ 6,059 $29,887 $26,656 $16,853 $11,653 $ 8,735
Services............................................. 4,861 4,014 19,225 14,577 7,504 4,783 2,639
------- ------- ------- ------- ------- ------- -------
Total revenues................................. 9,810 10,073 49,112 41,233 24,357 16,436 11,374
------- ------- ------- ------- ------- ------- -------
Expenses:
Cost of licenses..................................... 684 797 3,259 3,584 1,409 910 549
Cost of services..................................... 3,209 2,547 11,978 8,255 4,864 2,117 1,489
Purchased research and development................... -- -- -- 4,900 -- -- --
Goodwill amortization................................ 260 227 1,079 535 -- -- --
General and administrative........................... 1,878 1,700 6,786 5,569 3,266 2,635 1,692
Sales and marketing.................................. 3,444 3,455 14,480 13,187 8,875 7,056 4,308
Product development and engineering.................. 2,309 2,019 9,539 7,774 4,265 2,933 2,106
Loss on write-off of software........................ -- -- -- -- -- 462 --
Loss on disposal of subsidiary and joint venture..... -- -- 602 -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total costs and expenses....................... 11,785 10,745 47,723 43,804 22,679 16,113 10,144
------- ------- ------- ------- ------- ------- -------
Operating income (loss)................................ (1,975) (672) 1,389 (2,571) 1,678 323 1,230
------- ------- ------- ------- ------- ------- -------
Other income (expense):
Interest income...................................... 19 3 30 14 18 20 7
Interest expense..................................... (451) (422) (1,786) (1,231) (364) (228) (121)
Other income (expense), net.......................... 5 3 21 (25) 69 (2) (8)
------- ------- ------- ------- ------- ------- -------
Total other income (expense)................... (426) (416) (1,735) (1,242) (277) (210) (122)
------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes...................... (2,401) (1,088) (346) (3,813) 1,401 113 1,108
------- ------- ------- ------- ------- ------- -------
(Provision for) benefit from income taxes:
Current.............................................. 722 11 (1,050) (805) (198) (31) 177
Deferred............................................. 61 237 837 2,000 61 (9) 96
------- ------- ------- ------- ------- ------- -------
Total (provision for) benefit from income
taxes........................................ 783 248 (213) 1,195 (137) (40) 273
Net income (loss)...................................... $(1,618) $ (840) $ (559) $(2,618) $ 1,264 $ 73 $ 835
======= ======= ======= ======= ======= ======= =======
Earnings (loss) per share.............................. $ (.13) $ (.07) $ (.05) $ (.23) $ .11 $ .01 $ .08
Shares used in calculation............................. 12,158 12,083 12,133 11,498 11,281 10,656 10,477
BALANCE SHEET DATA:
Working capital........................................ $ 2,527 $ 2,548 $ 4,239 $ 3,640 $ 1,307 $ 2,132 $ 91
Total assets........................................... 31,826 33,597 34,380 34,480 16,480 10,297 7,464
Total long-term liabilities............................ 12,429 12,691 12,462 12,689 2,858 2,653 271
Stockholders' equity................................... 5,027 6,094 6,795 6,960 3,967 2,645 2,114
</TABLE>
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UNIDATA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
UNIDATA's total revenue increased 19.1% in the fiscal year ended June 30,
1997 ("fiscal 1997") compared to the fiscal year ended June 30, 1996 ("fiscal
1996") and increased 69.3% in fiscal 1996 compared to the fiscal year ended June
30, 1995 ("fiscal 1995"). In the second quarter of fiscal 1996, UNIDATA recorded
a non-recurring charge of $4.9 million for purchase of in-process software
development costs related to UNIDATA's acquisition of the System Builder group
of companies ("System Builder"). Excluding the non-recurring charge during
fiscal 1996, UNIDATA's net loss would have been a net profit of $.5 million or a
decrease of $.8 million from fiscal 1995. Fiscal 1997 net income would have
represented a $1.0 million decline from the fiscal 1996 net income without the
non-recurring charge.
UNIDATA's total revenue decreased 2.6% or $.3 million in the quarter ended
September 30, 1997 relative to the same quarter in 1996. This quarter is
historically the weakest quarter for UNIDATA given the summer vacation season
and the fact that it is the beginning of a new fiscal year. License revenue
declined $1.1 million and was offset by a $.8 million increase in service
revenue. The license revenue declined in all geographic areas and was
attributable to the absence of any large end user sales relative to the same
period last year, mergers at some of UNIDATA's value added resellers that have
delayed orders, and management's focus on the Merger. The operating loss
increased from $.7 million in the first quarter last year to $2.0 million in the
first quarter of the fiscal year ended June 30, 1998 ("fiscal 1998") because of
the decrease in revenue, the shift to service revenue at lower gross margins,
and an increase of approximately $.5 million in operating expenses. These
changes resulted in a net $1.6 million loss during the three months ended
September 30, 1997 versus a $.8 million loss during the three month period ended
September 30, 1996.
REVENUES
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
1997 CHANGE 1996 CHANGE 1995
----------- ------ ----------- ------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Software licenses....................... $29,887 12.1% $26,656 58.2% $16,853
% of revenues........................... 60.9% 64.6% 69.2%
Service revenues........................ $19,225 31.9% $14,577 94.3% $ 7,504
% of revenues........................... 39.1% 35.4% 30.8%
Total revenues.......................... $49,112 19.1% $41,233 69.3% $24,357
% of revenues........................... 100.0% 100.0% 100.0%
Net income.............................. $ (559) 78.6% $(2,618) (307.1)% $ 1,264
% of total revenues..................... (1.1)% (6.3)% 5.2%
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 CHANGE 1996
------------- ------ -------------
<S> <C> <C> <C>
Software licenses........................................ $ 4,949 (18.3)% $ 6,059
% of revenues............................................ 50.4% 60.2%
Service revenues......................................... $ 4,861 21.1 % $ 4,014
% of revenues............................................ 49.6% 39.8%
Total revenues........................................... $ 9,810 (2.6)% $10,073
% of revenues............................................ 100.0% 100.0%
Net income............................................... $(1,618) (92.6)% $ (840)
% of total revenues...................................... (16.5)% (8.3)%
</TABLE>
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UNIDATA derives revenues principally from licensing its software
development tools and database software, and from providing technical services
to customers. License revenues may involve the shipment of product by UNIDATA or
the granting of a license to a customer to manufacture products. Service
revenues are composed of fees for customer telephone or direct support, update
rights for new product versions, consulting and training. UNIDATA's products are
sold directly to end-user customers or through value added resellers ("VARs").
UNIDATA estimates that less than one month's supply of licenses sold to VARs in
fiscal 1997 were not resold to end users prior to June 30, 1997, and between one
and two months supply of licenses sold to VARs in fiscal 1996 were not resold to
end users prior to June 30, 1996. UNIDATA's license sales transactions can be
relatively large in size and difficult to forecast both in timing and dollar
value. As a result, these transactions have caused fluctuations in net revenues
and net income because of the relatively high gross margin on such revenues. As
is common in the industry, a disproportionate amount of UNIDATA's license
revenue is derived from transactions that close in the last few weeks of a
quarter. The timing of closing large license agreements increases the risk of
quarter to quarter fluctuations. UNIDATA expects that these types of
transactions and the resulting fluctuations will continue.
During fiscal 1997, UNIDATA increased its allowance for returns by
approximately $721,000 due to the fact that several customers refused to remit
their total outstanding balances because of technical or invoicing issues.
UNIDATA occasionally experiences technical issues at key value-added reseller or
end-user sites for which UNIDATA accepts product returns or grants partial
credit. However, UNIDATA is not contractually obligated to provide such a
credit.
License Revenues. The growth in UNIDATA's license revenues in fiscal 1997
compared to fiscal 1996 reflects the continued growth of wIntegrate and other
middleware products and inclusion of a full year of System Builder license
revenues, partially offset by a decline in third party product sales and an
overall flattening of sales opportunities in UNIDATA's traditional niche
marketplace. The growth in license revenue in fiscal 1996 compared to fiscal
1995 reflects the strong acceptance of UNIDATA's wIntegrate product and a set of
third party products, as well as inclusion of System Builder license revenue for
eight months of fiscal 1996. UNIDATA's license revenue declined in the first
quarter of fiscal 1998 as compared to the same period in fiscal 1997 with
weakness in all major regions. In the North and South American markets, value
added reseller volume was flat and no major end user sales materialized in the
first quarter of fiscal 1998. Europe experienced a 25% license revenue decline
across all major channels in the same period. Most of the first quarter decline
in license revenue is attributable to lower sales of UNIDATA's database
products. Such decrease is consistent with the overall flattening or slowdown of
sales opportunities in UNIDATA's traditional niche marketplace. UNIDATA expects
that future growth will depend upon continued demand for existing products and
increased demand for object database management system solutions and internet
tools.
Service Revenues. UNIDATA's revenues from both support and consulting
services increased in fiscal 1997 and fiscal 1996 over the corresponding prior
year levels. UNIDATA's support revenues grew 48% and 63% in fiscal 1997 and
fiscal 1996, respectively. This growth reflects the continued increase in the
installed base of UNIDATA's products under support contracts, as well as the
inclusion of support revenue from System Builder's installed base for eight
months of fiscal 1996, and a full year in fiscal 1997. Consulting revenues are
significantly dependent upon major product license sales to direct end user
customers. Such license sales frequently lead to the engagement of consulting
services. One major customer represented approximately 21% and 56% of consulting
revenue for fiscal 1997 and fiscal 1996, respectively. Consulting revenue grew
19% and 129% in fiscal 1997 and fiscal 1996, respectively. The decline in the
growth rate of service revenues in fiscal 1997 tracks the flattening in the rate
of license sales growth.
Support and consulting services revenues increased 26% and 16%,
respectively, from the first quarter of fiscal 1997 to the first quarter of
1998. The growth in support revenue is attributable to the continued expansion
of the installed base of UNIDATA's products under support contracts as customer
retention has remained very high. UNIDATA continues to see a decline in the
growth rate for consulting services, which is reflected in the continued
flattening of license sales growth.
International Revenues. Approximately 31%, 27%, and 27% of UNIDATA's net
revenues for fiscal 1997, fiscal 1996 and fiscal 1995, respectively, were
attributable to international operations. Overseas sales also
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<PAGE> 70
represented approximately 24% and 30% of UNIDATA's net revenues for the quarters
ended September 30, 1997 and 1996, respectively. UNIDATA expects that its
foreign revenues will continue to provide a significant portion of its total
revenues. Because a substantial portion of UNIDATA's total revenues are derived
from transactions conducted in foreign currencies, changes in the value of these
foreign currencies relative to the United States dollar may affect UNIDATA's
results of operations and financial position.
OPERATING EXPENSES
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
1997 CHANGE 1996 CHANGE 1995
----------- ------- ----------- ------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cost of licenses....................... $ 3,259 (9.1)% $ 3,584 154.4 % $ 1,409
% of license revenues.................. 10.9% 13.4% 8.4%
Cost of services....................... $11,978 45.1% $ 8,255 69.7 % $ 4,864
% of service revenues.................. 62.3% 56.6% 64.8%
Sales and marketing.................... $14,480 9.8% $13,187 48.6 % $ 8,875
% of total revenues.................... 29.5% 32.0% 36.4%
Product development(1)................. $ 9,539 22.7% $ 7,774 82.3 % $ 4,265
% or total revenues.................... 19.4% 18.9% 17.5%
General and administrative............. $ 6,786 21.9% $ 5,569 70.5 % $ 3,266
% of total revenues.................... 13.8% 13.5% 13.4%
Purchase of in-process software
development.......................... -- (100.0)% $ 4,900 100.0 % --
% of total revenues.................... -- 11.9% --
Loss on disposal of subsidiary......... $ 602 100.0% -- -- --
% of total revenues.................... 1.2% -- --
Amortization of acquired intangibles... $ 1,079 101.7% $ 535 100.0 % --
% of total revenues.................... 2.2% 1.3% --
Total costs and expenses............... $47,723 8.9% $43,804 93.1 % $22,679
% of total revenues.................... 97.2% 106.2% 93.1%
</TABLE>
- ---------------
(1) Pursuant to Statement of Financial Accounting Standards No. 86, UNIDATA
capitalized software development costs equal to $624, $665 and $877 during
fiscal 1997, fiscal 1996, and fiscal 1995, respectively.
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 CHANGE 1996
------------- ------ -------------
<S> <C> <C> <C>
Cost of licenses......................................... $ 684 (14.2)% $ 797
% of license revenues.................................... 13.8% 13.2%
Cost of services......................................... $ 3,209 26.0 % $ 2,547
% of service revenues.................................... 66.0% 63.4%
Sales and marketing...................................... $ 3,444 (.3)% $ 3,455
% of total revenues...................................... 35.1% 34.3%
Product development(1)................................... $ 2,309 14.4 % $ 2,019
% of total revenues...................................... 23.5% 20.0%
</TABLE>
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<PAGE> 71
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 CHANGE 1996
------------ ------ ------------
<S> <C> <C> <C>
General & Administrative................................. $ 1,878 10.5 % $ 1,700
% of total revenues...................................... 19.2% 16.9%
Amortization of acquired intangibles..................... $ 260 14.5 % $ 227
% of total revenues...................................... 2.7% 2.3%
Total costs and expenses................................. $11,785 9.7 % $10,745
% of total revenues...................................... 120.1% 106.7%
</TABLE>
- ---------------
(1) Pursuant to Statement of Financial Accounting Standards No. 86, the Company
capitalized software development costs equal to 0% and 21% of the September
30, 1997 and 1996 product development costs.
Cost of Licenses. UNIDATA's cost of software licenses consists primarily
of personnel costs of production and shipping, and costs of product media,
documentation, duplication, packaging, royalties and amortization of capitalized
software costs. Cost of licenses decreased 9% in fiscal 1997 compared to fiscal
1996 principally due to a reduction in outside production costs and royalties
related to sales of certain third party products and decreased cost of
documentation realized by providing documentation on compact disc as opposed to
printed media. These cost decreases were largely offset by increased
amortization of software development costs, including a $382,000 increase
resulting from the reduction from five years to three years for the estimated
useful life of internally-developed capitalized software. This change in
estimate was made pursuant to management's belief that the three-year life more
appropriately matches the development costs with the related revenue streams.
The 154% increase in costs of licenses in fiscal 1996 compared to fiscal 1995
was primarily due to increased production costs, royalties related to third
party products, amortization of previously software development costs and
amortization of purchased software. Cost of licenses decreased 14% in the first
quarter of fiscal 1998 compared to the first quarter of fiscal 1997 principally
due to a reduction in personnel costs, costs of documentation realized by
providing documentation on compact disk instead of printed media and lower
amortization of software development costs.
Cost of Services. UNIDATA's cost of services consists primarily of
personnel costs of providing customer technical support, education and
consulting. Support costs increased 38% and 24% in fiscal 1997 and fiscal 1996,
respectively compared to the prior years. Support costs as a percentage of
support revenue have decreased from 53% in fiscal 1995 to 40% in fiscal 1996 and
to 38% in fiscal 1997. This decrease is principally due to efficiencies of scale
related to providing support to UNIDATA's expanding installed base of customers.
The actual dollar cost of providing consulting and education services increased
48% and 104% in fiscal 1997 and fiscal 1996, respectively, compared to the
respective prior years, as a result of the expansion of UNIDATA's consulting and
education staff needed to provide an increased level of consulting services as
UNIDATA's product line has broadened and become more complex. UNIDATA's cost of
providing consulting and education services as a percentage of revenues from
consulting and education services has fluctuated from 87% in fiscal 1997 to 70%
in fiscal 1996 and 78% in fiscal 1995. These fluctuations are principally due to
margin variances resulting from the actual performance associated with fixed
price contracts, the hourly rate volume concessions on time and materials
consulting contracts, and the lag between the hiring and training of personnel
and the future revenues generated by those individuals. The increase in fiscal
1997 is largely attributable to foreign subsidiary losses incurred on certain
fixed price consulting projects.
In the first quarter of fiscal 1998, support costs decreased 8%, which
decrease is primarily attributable to the consolidation of the former System
Builder technical support function into UNIDATA's existing facilities in Denver,
Colorado. The actual dollar cost of providing consulting and education services
increased 43% in the first quarter of fiscal 1998 compared to the same period in
the prior year as a result of an increase in consulting and education staff
needed to support UNIDATA's expanded product line. UNIDATA's cost of providing
consulting and education services as a percentage of consulting and education
revenues increased from 84% in the first quarter of fiscal 1997 to 103% in the
first quarter of fiscal 1998. These fluctuations are
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principally due to margin variances resulting from performance on fixed price
contracts and differences in the negotiated hourly rate on time and materials
consulting contracts.
Sales and Marketing Expenses. UNIDATA's sales and marketing expenses
increased in absolute dollars in all three periods while decreasing as a
percentage of total revenue to 30% in fiscal 1997 from 32% in fiscal 1996 and
36% in fiscal 1995. The decrease of sales and marketing expense as a percentage
of revenue was principally attributable to diminished selling expense which was
reduced to 19.8% in fiscal 1997 from 22.5% in 1996 and 25.8% in 1995. The
decrease in selling expense as a percentage of revenue in fiscal 1997 is
primarily attributable to a reduction in sales expenditures in the United States
resulting from planned attrition of overlapping sales personnel acquired in the
System Builder acquisition. This savings was offset by expenditure growth in
foreign subsidiaries, but a net reduction as a percentage of revenue was still
achieved. The decrease in selling expense as a percentage of revenue in fiscal
1996 is principally due to increased productivity of UNIDATA's European sales
force. European sales increased by more than 100% in fiscal 1996 from fiscal
1995 with only a 19% comparable increase in selling expenses. Marketing expense
as a percentage of revenue has held nearly constant over the three years at
approximately 10%.
UNIDATA's sales and marketing expenses remained constant in absolute
dollars in the first quarter of fiscal 1998 compared to the same period in the
prior year while increasing as a percentage of total revenue to 35% from 34% in
the first quarter of fiscal 1997. Sales expense has declined in absolute dollars
in the United States due to personnel turnover, but such decrease has been
offset by increases in costs of marketing UNIDATA's new Redback and object
oriented products. UNIDATA's foreign subsidiaries also continued to invest more
dollars in sales and marketing.
Product Development and Engineering Costs. UNIDATA's product development
and engineering expenses consist primarily of engineering personnel costs,
equipment and development software costs, an allocation of information systems
support costs, and outside development costs. Product development and
engineering expenses would have been 21% of total revenues in each of fiscal
1997, fiscal 1996 and fiscal 1995, without the capitalization of software
development costs in accordance with Statement of Financial Accounting Standards
No. 86. Excluding the impact of software capitalization, product development and
engineering expenses increased 20% and 64% in fiscal 1997 and fiscal 1996,
respectively. The increase in fiscal 1997 was principally due to inclusion of a
full year's expense related to engineering staff retained in connection with the
acquisition of System Builder and continued growth in the development staff.
Development staff increases during fiscal 1996, and the cost of engineering
staff retained in connection with the acquisition of System Builder included in
fiscal 1996 for eight months, represent the majority of the increase in expense
for that year. UNIDATA capitalized $.6 million, $.6 million and $.9 million of
internal software development costs in fiscal 1997, fiscal 1996, and fiscal
1995, respectively, which represented 6%, 8% and 17%, respectively, of total
expenditures for product development and engineering in such years. The decline
in capitalization rate is principally due to shortening of time required for
BETA testing periods. UNIDATA also capitalizes certain amounts paid for
purchased software and outside development of products which have reached
technological feasibility. Amortization of capitalized software development
costs and purchased software are charged to cost of licenses and totaled $1.8
million, $1.1 million and $.4 million in fiscal 1997, fiscal 1996 and fiscal
1995, respectively. UNIDATA reduced the expected life of capitalized software
from five years to three years and recorded a charge of $.4 million in cost of
sales in fiscal 1997. In fiscal 1996, previously capitalized software with a net
book value of $.5 million was determined to have no future usefulness and
accordingly this amount was expensed.
In each of the first quarters of fiscal 1998 and fiscal 1997, UNIDATA's
product development and engineering expenses would have been 24% of total
revenues when excluding the effects of the capitalization of software
development costs in accordance with Statement of Financial Accounting Standards
No. 86. UNIDATA continues to invest resources in its core products, web tools,
and object oriented database software.
General and Administrative Expenses. UNIDATA's general and administrative
expenses, which include the costs of its finance, human resources, legal and
administrative departments and an allocation of its information systems
department, increased 22% and 70% in fiscal 1997 and fiscal 1996, respectively,
over the
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prior year. As a percentage of total revenue, general and administrative
expenses were constant at 14% in fiscal 1997 and fiscal 1996, an increase of 1%
from 13% in fiscal 1995. The increase of $1.2 million in fiscal 1997 is
principally due to incremental staff additions in the United States and Asia and
increased legal and accounting costs associated with potential acquisition and
financing activities. UNIDATA also increased its allowance for doubtful accounts
by approximately $269,000 during fiscal 1997, primarily due to concerns over the
collectibility of certain receivables at international locations. The increase
of $2.3 million in fiscal 1996 was principally due to increased cost associated
with the acquisition and assimilation of System Builder as well as termination
costs for certain members of European management staff, and a bad debt charge of
$.4 million.
General and administrative expenses increased 10% in the first quarter of
fiscal 1997 compared to the same period in the prior year. As a percentage of
total revenue, general and administrative expenses increased to 19% in the first
quarter of fiscal 1998 compared to 17% in the first quarter of fiscal 1997. Most
of this increase is the result of UNIDATA's decision to invest in information
technology infrastructure and upgrade finance personnel overseas.
Purchase of In Process Software Development. UNIDATA recorded a special
charge of $4.9 million in fiscal 1996 to expense in-process software research
and development costs related to the acquisition of System Builder. In the
opinion of management, the acquired in-process software development had not yet
reached technological feasibility and had no alternative future uses. See Note 8
to UNIDATA's consolidated financial statements included elsewhere herein.
Loss on Disposal of Foreign Subsidiaries. In fiscal 1997, UNIDATA sold the
stock of its subsidiary in Spain and wrote off its investment in its joint
venture in India, and recorded non-recurring charges of $602,000 related to
these transactions. Since these charges are of a capital loss nature, for income
tax purposes they are deductible only to the extent that they can be offset
against capital gains. As no capital gains were realized in fiscal 1997, no
current tax benefit is available to offset this loss.
Amortization of Acquired Intangibles. Effective November 1, 1995, UNIDATA
acquired substantially all the assets and assumed certain liabilities of System
Builder, a software tools development company. The acquisition was accounted for
under the purchase method of accounting. Of the $14.3 million total purchase
price, $4.1 million was allocated to goodwill. No significant accrued
liabilities stemming from the System Builder acquisition remain at June 30,
1997. During fiscal 1997, $.4 million was added to goodwill. These additions
consisted primarily of goodwill related to the Marine, S.A. acquisition, and
preacquisition costs associated with UNIDATA's acquisition of O2 Technology.
These costs are amortized on a straight line basis, over their useful lives,
estimated to be five years. Amortization charges were $1.1 million and $.5
million in fiscal 1997 and fiscal 1996, respectively. The increase in fiscal
1997 is due to the inclusion of a full year's amortization of the System Builder
goodwill amount, amortization of the incremental goodwill acquired in fiscal
1997 and the impairment of System Builder goodwill related to the Canadian
subsidiary. UNIDATA recorded amortization charges of $.3 million and $.2 million
in the first quarters of fiscal year 1998 and fiscal year 1997, respectively.
OTHER INCOME (EXPENSE)
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
1997 CHANGE 1996 CHANGE 1995
----------- ------- -------------- ------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Other income (expense).......... $(1,735) 39.8% $ (1,242) 384.4% $ (277)
% of total revenues............. (3.5)% (3.0)% (1.1)%
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1997 CHANGE SEPTEMBER 30, 1996
------------------ -------------- ------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Other income (expense)...................... $ (426) (2.4)% $ (416)
% of total revenues......................... (4.3)% (4.1)%
</TABLE>
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<PAGE> 74
UNIDATA's other income and expense consists principally of interest expense
on notes payable and a revolving bank credit line. In December 1995, in
connection with the System Builder acquisition, UNIDATA entered into a $10.0
million eight year note that accrues interest at a rate of 11.50%. The increase
in interest expense in fiscal 1997 is principally due to the inclusion of a full
year's interest on the $10.0 million note compared to only seven months of
interest in fiscal 1996. The fiscal 1996 increase is due to seven months
interest expense on the $10.0 million note and interest associated with higher
outstanding balances on the bank revolving credit line. See Note 2 to UNIDATA's
consolidated financial statements included elsewhere herein. UNIDATA's debt
balance and related interest expense remained constant over the first quarters
of fiscal years 1998 and 1997, respectively.
PROVISION FOR (BENEFIT FROM) INCOME TAXES
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
1997 CHANGE 1996 CHANGE 1995
----------- ------- ----------- ------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Provision for (benefit from) income
taxes............................... $ 213 (117.8)% $(1,195) (972.3)% $ 137
Effective tax rate.................... 61.6% (31.3)% 9.8%
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 CHANGE 1996
------------- ------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for (benefit from) income taxes............. $ (783) 215.7% $ (248)
Effective tax rate.................................... 32.6% 22.8%
</TABLE>
UNIDATA's effective tax rates have historically differed from the federal
statutory rate primarily because of tax credits, foreign income tax rates that
differ from the U.S. federal statutory rate, state taxes, net of federal
benefit, and foreign losses that could not be utilized. The unusually high
effective tax rate for fiscal 1997 is principally due to the non-deductibility
of losses associated with the disposal of foreign subsidiaries. See Note 5 to
UNIDATA's consolidated financial statements included elsewhere herein. UNIDATA's
provision for income taxes for the first quarter of fiscal 1998 reflects its
expectation that UNIDATA's overseas subsidiaries will be more likely than not to
realize enough profits to utilize the net operating losses incurred.
IMPACT OF INFLATION
The effect of inflation on UNIDATA's financial position and results of
operations has not been significant.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
AS OF AS OF AS OF AS OF
SEPTEMBER 30, JUNE 30, JUNE 30, JUNE 30,
1997 CHANGE 1997 CHANGE 1996 CHANGE 1995
------------ ------ -------- ------ -------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Working capital....................... $ 2,527 (40.4)% $ 4,239 16.5 % $ 3,640 178.5 % $ 1,307
Cash and cash equivalents............. $ 826 32.6 % $ 623 (23.3)% $ 812 109.8 % $ 387
Cash provided by operating
activities.......................... $ 1,505 (64.2)% $ 4,200 463.5 % $ 745 684.2 % $ 95
Cash used for investing activities.... $ 986 (67.1)% $ 2,998 (76.9)% $12,979 421.0 % $ 2,491
Net cash provided by (used in)
financing activities................ $ (155) (88.8)% $(1,390) (111.0)% $12,656 405.0 % $ 2,506
</TABLE>
UNIDATA's working capital increased in both fiscal 1997 and fiscal 1996 as
compared to the corresponding prior year periods due primarily to increases in
trade receivables resulting from increased revenue levels. In the first quarter
of fiscal 1998, UNIDATA's working capital dropped by $1.7 million primarily due
to the loss in the quarter. Cash improved despite funding of $.8 million of
leasehold improvements and capital equipment and the $.1 million reduction in
the bank line of credit. This occurred due to the collection of several large
user receivables outstanding on June 30, 1997. Days sales outstanding in
accounts receivable decreased to 122 days at the end of fiscal 1997 after
declining to 140 days at the end of
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<PAGE> 75
fiscal 1996 from 143 days at the end of fiscal 1995. As of September 30, 1997,
days sales outstanding in accounts receivable was 132 days.
UNIDATA generated higher positive cash flows from operations in both fiscal
1997 and fiscal 1996 primarily due to improved profitability before non-cash
charges.
Cash used for investing activities in fiscal 1997 was principally related
to the purchase of equipment and software and the acquisition of a small
European distributor business. The principal uses of cash for investing in
fiscal 1996 related to the purchase of equipment and software, and the
acquisition of System Builder. UNIDATA paid cash of $10.0 million for the
acquisition of System Builder and $.5 million in related transaction costs. Cash
used for investing activities of $1.0 million in the first quarter of fiscal
1998 was principally related to the purchase of equipment and software. UNIDATA
expects to continue to invest in capital assets and capitalized software
development activities to support its growth and, on December 31, 1997,
completed its acquisition of O2 Technology in exchange for a combination of
UNIDATA Class A Common Stock valued at $1.9 million, UNIDATA stock options
valued at $1.1 million and cash of approximately $3.8 million. UNIDATA incurred
an additional $.4 million in transaction costs in connection with its
acquisition of O2 Technology. UNIDATA has financed the cash portion of the
acquisition by drawing against UNIDATA's revolving line of credit with UNIDATA's
existing bank. To facilitate UNIDATA's acquisition of O2 Technology, the bank
increased the line from $7 million to $8 million with interest at 1% above the
bank's prime lending rate. The line of credit is secured by substantially all of
the assets of the corporation. Up to a maximum of $2.5 million of any amounts
drawn in excess of the Borrowing Base (as defined) are personally guaranteed by
James Dresher.
During fiscal 1997, UNIDATA reduced the outstanding balance under its bank
line of credit by $1.4 million which represents the principal amount of cash
used in financing activities for the year. In fiscal 1996, UNIDATA increased its
outstanding balance under its bank line of credit by $1.2 million, entered into
a $10.0 million eight year note agreement and also sold 500,000 shares of its
Class B common stock for $2.0 million to the holder of the note. See Notes 2, 6
and 8 to UNIDATA's consolidated financial statements included elsewhere herein.
Given the usual weak performance in the first quarter of each fiscal year,
UNIDATA typically pays off a small amount ($.1 to $.2 million) on its line of
credit. Historically, the second quarter of each fiscal year has yielded much
better financial results as this is the year end for several of UNIDATA's larger
value added resellers. Such an improvement will be necessary this year to
preserve solid liquidity in the second quarter. UNIDATA also has a $10 million
note (shown as a long term liability) with a major insurance company pursuant to
which UNIDATA is subject to various financial covenants. The lender under the
$10.0 million note has amended the financial covenants effective September 30,
1997 through October 2, 1998 so as to waive compliance with certain financial
covenants. Although UNIDATA's management is optimistic about the prospects of
UNIDATA and projects compliance with the financial covenants, there can be no
assurance that the future financial performance will be sufficient to bring
UNIDATA into compliance with the financial covenants contained in such note.
Subsequent to September 30, 1997, UNIDATA announced its entry into an agreement
to merge with VMARK, which is expected to be consummated by the end of January
1998. The combined companies are expected to generate operating synergies and
are expected to have sufficient liquidity to operate for the next year without
any additional financing.
FACTORS THAT MAY AFFECT FUTURE RESULTS
While UNIDATA's management is optimistic about UNIDATA's long-term
prospects, UNIDATA operates in a rapidly changing environment that involves
certain risks and uncertainties, many of which are beyond UNIDATA's control. The
following discussion highlights some of these risks:
Uneven Patterns of Quarterly Operating Results. UNIDATA may experience
significant fluctuations in future quarterly operating results that may be
caused by many factors, including changes in demand for UNIDATA's products, size
and timing of significant orders, budgeting cycles of customers, mix of
distribution channels, mix of products and services sold, mix of international
and North American revenues, changes in the level of operating expenses, changes
in UNIDATA's sales incentive plans, customer order deferrals in
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anticipation of new products announced by UNIDATA or its competitors and general
economic conditions. Revenue forecasting is uncertain, in large part because
UNIDATA generally ships its products upon receipt of orders. This uncertainty is
compounded because each quarter's revenue is derived disproportionately from
orders booked and shipped during the third month, and disproportionately in the
latter half of that month. In contrast, most of UNIDATA's expenses are
relatively fixed, including costs of personnel and facilities, and are not
easily reduced. Thus, an unexpected reduction in UNIDATA's revenue, or a
decrease in the rate of growth of such revenue, would have a material adverse
effect on the profitability of UNIDATA.
Competitive Environment. The computer software industry is an intensely
competitive industry with several large vendors that develop and market
databases, applications, development tools or decision support products. Certain
of these vendors have significantly more financial and technical resources than
UNIDATA. The introduction of new competitive products into one or more of
UNIDATA's various markets could have a material adverse effect on UNIDATA's
business, results of operations or financial condition.
Pricing. Intense competition in the markets in which UNIDATA competes may
put pressure on UNIDATA to reduce prices on certain products, particularly in
the database marketplace where certain vendors offer deep discounts in an effort
to recapture or gain marketshare. In addition, the bundling of software products
for promotional purposes or as a long-term pricing strategy by certain of
UNIDATA's competitors could have the effect over time of significantly reducing
the prices that UNIDATA can charge for its products. Shifts toward the use of
operating systems on which UNIDATA experiences relatively greater price
competition could result in lower average license prices, thereby reducing
license revenues for UNIDATA. Any such price reductions and resulting lower
license revenues could have a material adverse effect on UNIDATA's business,
results of operations or financial condition if UNIDATA cannot offset these
price reductions with a corresponding increase in sales volumes.
Industry Growth and Economic Conditions. The strength and profitability of
UNIDATA's business depends on the overall demand for computer software and
growth in the computer industry. Because UNIDATA's sales are distributed to
major corporate, government, education and other business customers, UNIDATA's
business also partly depends on general economic and business conditions. A
softening of demand for computer software, caused by a weakening of the economy
or otherwise, may result in decreased revenues or declining revenue growth rates
for UNIDATA.
New Products. Overlaying the risks associated with UNIDATA's existing
products and enhancements are ongoing technological developments and rapid
changes in customer requirements. UNIDATA's future success will depend upon its
ability to develop and introduce in a timely manner new products that take
advantage of technological advances and respond to new customer requirements.
The development of new products is increasingly complex and uncertain, which
increases the risk of delays. There can be no assurance that UNIDATA will be
successful in developing new products incorporating new technology on a timely
basis, or that its new products will adequately address the changing needs of
the marketplace. The marketplace for these new products is intensely competitive
and characterized by low barriers to entry. As a result, new competitors
possessing technological, marketing or other competitive advantages may emerge
and rapidly acquire market share.
Significant undetected errors or delays in new products or new versions of
a product may affect market acceptance of UNIDATA's products and could have a
material adverse effect on UNIDATA's business, results of operations or
financial condition. If UNIDATA were to experience delays in the
commercialization and introduction of new or enhanced products, if customers
were to experience significant problems with the implementation and installation
of products or if customers were dissatisfied with product functionality or
performance, this could have a material adverse effect on UNIDATA's business,
results of operations or financial position.
International Sales. A significant portion of UNIDATA's revenue is derived
from international subsidiaries whose business is generally conducted in local
currencies and is therefore subject to the risks attendant thereto, including
the general economic conditions in each country, the overlap of different tax
structures, the difficulty of managing an organization spread over various
countries, changes in regulatory requirements, compliance with a variety of
foreign laws and regulations and longer payment cycles in certain countries.
UNIDATA has experienced relatively slower growth rates in certain countries
during the last several years, primarily as a result of weaker economies
relative to the rest of the world, slower adoption of information technology, a
strong U.S. dollar which negatively affects reported revenue growth in U.S.
dollars,
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<PAGE> 77
and senior management changes in certain major countries. There can be no
assurance that UNIDATA will be able to successfully address each of these
challenges in the near term. Other risks associated with international
operations include import and export licensing requirements, trade restrictions
and changes in tariff rates. Changes in the value of major foreign currencies
relative to the U.S. dollar could adversely affect future revenues and operating
results.
Hiring and Retention of Employees. UNIDATA's future success will depend to
a significant extent upon its ability to attract and retain highly skilled
technical, managerial and marketing personnel. Competition for such personnel in
the software industry is intense. There can be no assurance that UNIDATA will
continue to be successful in attracting and retaining the personnel it requires
to successfully develop new and enhanced products and to continue to grow and
operate profitably.
Enforcement of UNIDATA's Intellectual Property Rights. UNIDATA's success
is heavily dependent upon its proprietary software technology. UNIDATA relies
principally on a combination of contract provisions and copyright, trademark and
trade secret laws to protect its proprietary technology. Despite UNIDATA's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of UNIDATA's products or to obtain and use information that UNIDATA
regards as proprietary. Policing unauthorized use of UNIDATA's products is
difficult. There can be no assurance that the steps taken by UNIDATA to protect
its proprietary rights will be adequate to prevent misappropriation of its
technology or independent development by others of similar technology. In
addition, litigation may be necessary in the future to enforce UNIDATA's
intellectual property rights, to protect UNIDATA's trade secrets, to determine
the validity and scope of the proprietary rights of others, or to defend against
claim of infringement or invalidity. Although UNIDATA believes that its products
and technology do not infringe on any existing proprietary rights of others,
there can be no assurance that third parties will not assert infringement claims
in the future. Such litigation could result in substantial costs and diversion
of resources and could have a material adverse effect on UNIDATA's business,
operating results or financial condition.
UNIDATA also utilizes certain technology which it licenses from third
parties, including software which is integrated with internally developed
software and used in UNIDATA's products to perform key functions. There can be
no assurance that functionally similar technology will be available on
commercially reasonable terms in the future.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement
on Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". SFAS
128 is effective for periods ending after December 15, 1997. Had SFAS No. 128
been effective during 1997 and 1996, UNIDATA would have presented "basic" and
"dilutive" net loss per share. UNIDATA believes that the "basic" and "dilutive"
computations under SFAS No. 128 would not have been materially different from
the net loss per common share as reported by UNIDATA.
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<PAGE> 78
OWNERSHIP OF UNIDATA CAPITAL STOCK
The following table sets forth, as of December 1, 1997, information as to
the number of shares of UNIDATA Class A Common Stock And UNIDATA Class B Common
Stock that are owned by (i) each director of UNIDATA, (ii) the Chief Executive
Officer and each of the four other most highly compensated executive officers of
UNIDATA based on UNIDATA's fiscal year 1997 compensation and (iii) each person
or entity (or group of affiliated persons) known by UNIDATA to beneficially own
5% or more of UNIDATA's outstanding shares of either class of UNIDATA Common
Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF SHARES OF UNIDATA OF SHARES OF UNIDATA
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------ ------------------------
NAME OF BENEFICIAL OWNER(1) NUMBER PERCENTAGE NUMBER PERCENTAGE
- -------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
James T. Dresher(2)(3)........................ 6,520,000 55.6% -- --%
Glenangus Holdings Corp.(2)................... 4,000,000 34.1 -- --
System Builder Corp.(2)....................... 981,169 8.4 -- --
Virginia D. Meoli(2).......................... 670,000 5.7 -- --
Jeanne D. Butcher(2).......................... 670,000 5.7 -- --
Jeffrey M. Dresher(2)......................... 670,000 5.7
James T. Dresher, Jr.(2)...................... 655,000 5.6
Massachusetts Mutual Life Insurance
Company(4)(5)............................... -- -- 349,925 56.7
MassMutual Corporate Investors(4)(6).......... -- -- 187,500 33.3
MassMutual Participation Investors(4)(7)...... -- -- 93,750 17.7
MassMutual Corporate Value Partners
Limited(5)(8)............................... -- -- 118,825 22.0
David W. Brunel(2)(9)......................... 774,500 6.6 -- --
John G. Akers(9).............................. 189,000 1.6 -- --
Honor Guiney(10).............................. 72,500 * -- --
Arlene Lacharite(9)........................... 100,000 * -- --
Martin T. Hart(11)............................ 150,000 1.3 -- --
Gary Olson(11)................................ 100,000 * -- --
John F. Schaefer(11).......................... 150,000 1.3 -- --
Neill D. Miller(12)........................... 112,500 * -- --
All executive officers and directors as a
group (12 persons).......................... 8,457,250 67.5
</TABLE>
- ---------------
* Less than 1%
(1) For purposes of this table, beneficial ownership of securities is defined in
accordance with the rules of the Securities and Exchange Commission and
means generally the power to vote or exercise investment discretion with
respect to securities, regardless of any economic interests therein. Except
as otherwise indicated, UNIDATA believes that the beneficial owners of
shares of UNIDATA Common Stock listed below have sole investment and voting
power with respect to such shares, subject to community property laws where
applicable. In addition, for purposes of this table, a person or group is
deemed to have "beneficial ownership" of any shares which such person has
the right to acquire within 60 days after December 1, 1997. For purposes of
calculating the percentage of outstanding shares held by each person named
above, any shares which such person has the right to acquire within 60 days
after December 1, 1997 are deemed to be outstanding, but not for the purpose
of calculating the percentage ownership of any other person.
(2) The address of such entity or person is c/o Unidata, Inc., 1099 18th Street,
Suite 2200, Denver, Colorado.
(3) Includes 4,000,000 shares of UNIDATA Class A Common Stock owned by Glenangus
Holdings Corp., a holding company of which Mr. Dresher is the sole
stockholder and President and Treasurer.
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<PAGE> 79
(4) The address of such entity is c/o Massachusetts Mutual Life Insurance
Company, 1295 State Street, Springfield, Massachusetts 01111.
(5) Includes 116,675 shares of UNIDATA Class B Common Stock issuable upon
exercise of warrants that are exercisable within 60 days.
(6) Includes 62,500 shares of UNIDATA Class B Common Stock issuable upon
exercise of warrants that are exercisable within 60 days.
(7) Includes 31,250 shares of UNIDATA Class B Common Stock issuable upon
exercise of warrants that are exercisable within 60 days.
(8) Includes 39,575 shares of UNIDATA Class B Common Stock issuable upon
exercise of warrants that are exercisable within 60 days. The address of
such entity is P.O. Box 1096, George Town, Grand Cayman, Cayman Islands,
British Virgin Islands.
(9) Includes 100,000 shares of UNIDATA Class A Common Stock issuable upon
exercise of stock options that are currently exercisable.
(10) Constitutes shares of UNIDATA Class A Common Stock issuable upon exercise
of stock options that are currently exercisable, but does not include
27,500 shares that are presently not exercisable.
(11) Includes 50,000 shares of UNIDATA Class A Common Stock issuable upon
exercise of stock options that are currently exercisable.
(12) Constitutes shares of UNIDATA Class A Common Stock issuable upon exercise
of warrants that are currently exercisable, but does not include 42,500
options to acquire shares that are presently not exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF UNIDATA
In 1992, James T. Dresher, Chairman of the Board of Directors of UNIDATA
and its majority stockholder, loaned to UNIDATA $1,350,000 at an interest rate
of 1% per year over floating prime. In 1992, Glenangus Holdings Corp., an
affiliate of Mr. Dresher that owns 34.3% of UNIDATA Class A Common Stock, also
loaned $1,000,000 to UNIDATA at an interest rate of 1% per year over floating
prime. The terms of these loans by Mr. Dresher and Glenangus Holdings Corp. have
been extended through December 31, 2003, and UNIDATA has paid interest at
regular six-month intervals but has not made any principal payments. UNIDATA
believes that these loans are on terms at least as favorable to UNIDATA as terms
that could be obtained from nonaffiliated lenders.
Gary Olson, a Director of UNIDATA, is a partner in Latham & Watkins, a law
firm with headquarters in Los Angeles which has represented UNIDATA in various
matters since 1994. Latham & Watkins has been paid approximately $279,000,
$298,000 and $1,000 for its legal services during fiscal 1997, 1996 and 1995,
respectively, and is representing UNIDATA in connection with the Merger and
UNIDATA's acquisition of O2 Technology.
In November 1995, as part of the acquisition by UNIDATA of the System
Builder group of companies, Neill D. Miller, currently a Director of UNIDATA,
entered into an employment agreement with UNIDATA for a two-year period with
compensation of $240,000 per year and received a grant of warrants to acquire
150,000 shares of UNIDATA Common Stock. In addition, Mr. Miller is a beneficiary
of Integro Fiduciare SARL and an affiliate of System Builder Corporation, which
are record owners of 981,169 and 232,291 shares of UNIDATA Class A Common Stock,
respectively. Mr. Miller also owns equity interests in each of MasterPack, Inc.,
SB Tech AG (Europe) and SB Tech South Africa, Pty, entities that license
software from UNIDATA for certain fees. In fiscal 1997 and 1996, UNIDATA billed
Masterpack, SBTech AG (Europe) and SB Tech South Africa for products and
services an aggregate amount of approximately $539,000 and $455,000,
respectively. At the end of fiscal 1997 and 1996, UNIDATA's aggregate accounts
receivable for these three entities totaled approximately $349,000 and $301,000,
respectively.
Martin T. Hart, a Director of UNIDATA, presently serves on the Boards of
Directors of MassMutual Corporate Investors and MassMutual Participation
Investors, companies who beneficially own 187,500 and 93,750 shares of UNIDATA
Class B Common Stock, including warrants to purchase such stock, respectively.
UNIDATA has issued a $10.0 million note payable to an affiliate of these
companies, Massachusetts Mutual
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<PAGE> 80
Life Insurance Company, and has engaged this company to provide medical and life
insurance for UNIDATA employees as well as administer UNIDATA's 401K plan.
During fiscal 1997 and 1996, payments to Massachusetts Mutual Life Insurance
Company for interest on the note totaled $1,150,000 and $582,000, respectively,
and payments for insurance benefits totaled $809,000 and $251,000, respectively.
75
<PAGE> 81
MANAGEMENT OF ARDENT FOLLOWING THE MERGER
Following the Merger, it is expected that the persons listed below will
serve as directors and executive officers of Ardent. It is expected that James
T. Dresher, David W. Brunel and Martin T. Hart will be the three persons
designated by UNIDATA to serve as directors of Ardent, will be appointed as of
the Effective Time to fill the vacancies created by resigning directors of
VMARK, and will serve as directors until the annual meetings in 1998, 1999 and
2000, respectively.
<TABLE>
<CAPTION>
AGE
ON NOVEMBER 10,
NAME 1997 POSITION
- ---- -------------- --------
<S> <C> <C>
Peter Gyenes................... 52 Chief Executive Officer, Director and Chairman of
the Board
David W. Brunel................ 42 President, Chief Operating Officer and Director
Robert G. Claussen............. 61 Director
James T. Dresher............... 78 Director
Martin T. Hart................. 61 Director
Robert M. Morrill.............. 60 Director
Francois Bancilhon............. 49 Executive Vice President, Object Technologies
Peter L. Fiore................. 40 Executive Vice President, Data Warehousing
James D. Foy................... 50 Executive Vice President, Engineering
Charles F. Kane................ 40 Executive Vice President, CFO, and Treasurer
Cornelius P. McMullan.......... 57 Executive Vice President, International Operations
Harold Nussenfeld.............. 49 Executive Vice President, Administration
Jason E. Silvia................ 48 Executive Vice President, Services
James K. Walsh................. 59 Executive Vice President and General Counsel
John G. Akers.................. 49 Vice President, American Sales
</TABLE>
Peter Gyenes has been an executive officer of VMARK since May 1996, serving
as Executive Vice President, International Operations through October 1996,
Executive Vice President, Worldwide Sales through March 1997, and, commencing
April 1, 1997, President and Chief Executive Officer. From May 1995 to May 1996,
Mr. Gyenes was President and Chief Executive Officer of Racal InterLan Inc., a
supplier of local area networking products. From 1994 to May 1995, he was
President of the American Division of Fibronics International, Inc. and from
1990 to 1993 he was Vice President and General Manager of the international
operations and minicomputer business unit of Data General Corporation. Mr.
Gyenes serves as a Director of Enteractive, Inc., a supplier of multimedia
software, and of Axis Computer Systems, a privately-held supplier of software
for manufacturing companies. Mr. Gyenes received a Bachelor of Arts degree in
Mathematics and a Masters of Business Administration from Columbia University.
David W. Brunel co-founded UNIDATA and is currently President and Chief
Operating Officer and a Director of UNIDATA, positions he has held since
UNIDATA's inception in 1988. Mr. Brunel currently also is a Director of Paradigm
Technology, Inc., a private company that distributes information systems to the
oil and gas industry. Mr. Brunel studied economics and received a master's
degree from the University of Denver.
Robert G. Claussen has been, since 1989, the Chairman of the Board and
Chief Executive Officer of Claussen Co., a real estate development company, and
managing general partner of several real estate development partnerships
affiliated with Claussen Co.
James T. Dresher is presently Chairman of the Board and Chief Executive
Officer of UNIDATA, positions he has held since 1991, when he purchased a
controlling interest in UNIDATA. Prior to joining UNIDATA, Mr. Dresher was
Chairman of the Board and Chief Executive Officer of York International Corp.
from 1988 to 1991. In addition, from 1989 to 1996, Mr. Dresher was also Chairman
of DW Zimmerman Manufacturing Co., a material handling equipment manufacturer.
Mr. Dresher is a Director of National
76
<PAGE> 82
Dilwell, a publicly traded corporation, Chief Executive Officer and a Director
of Edgewood Corporation, a private land development company, and President,
Treasurer and sole shareholder of Glenangus Holdings Corp., a private holding
company. A Certified Public Accountant by training, Mr. Dresher has served as
chief financial officer of five companies with publicly traded securities, as
well as a senior executive and director of several other private and public
companies.
Martin T. Hart joined the UNIDATA Board in 1993. Mr. Hart is presently
serving on the Board of Directors of P.J. America, MassMutual Corporate
Investors, MassMutual Participation Investors, Schuler Homes, Inc., Optical
Securities Corporation and Pacific National Financing Group. He was also
Chairman of the Board and Chief Executive Officer of the Steamboat Ski
Corporation from 1980 to 1989 and, upon the sale of that company in 1989,
continued as Chairman of the Board of the newly formed company until 1991. Mr.
Hart received a degree in accounting from Regis College in 1956.
Robert M. Morrill was Chairman of the Board of VMARK from 1984 until 1997,
and was Chief Executive Officer and President of VMARK from March 1996 through
March 1997. He has been a private investor since 1991. He is a Director of
Stratus Computer, Inc., a manufacturer of fault-tolerant computers.
Francois Bancilhon founded and is currently Chief Executive Officer of O2
Technology. Prior to founding O2 Technology in 1991, Mr. Bancilhon was manager
of the Altair R&D consortium, which was involved in the design and development
of an object database management system. Mr. Bancilhon graduated from Ecole des
Mines de Paris in 1970, received a Ph.D. in Computer Science from the University
of Michigan in 1976 and received a These d'Etat in Computer Science from the
University of Paris XI in 1980.
Peter L. Fiore joined VMARK in 1994 and became Vice President and General
Manager of VMARK's newly-formed Data Warehousing Division in June 1996. Mr.
Fiore has over 17 years of experience in high-tech sales, marketing, engineering
and business development-related activities. Prior to joining VMARK, he was
senior director of channel marketing at Cross Comm Corp. and also held sales and
marketing management positions at Stratus Computer, Inc. Mr. Fiore received a
Bachelor of Arts degree in Engineering and Applied Sciences from Harvard
College.
James D. Foy joined VMARK in February 1994. He started in his current
position in April 1996. Mr. Foy was the founder, president and CEO of
Constellation Software, Inc. prior to VMARK's acquisition of the company. Mr.
Foy was instrumental in establishing the Object Management Group, an industry
consortium with the goal of developing standards for distributed and
interoperating object systems. He also held significant management positions at
Prime Computer, Inc., including senior executive of Prime's Unix development
business unit, senior executive of international research and development, and
was the executive responsible for the development of Prime INFORMATION. During
that time he also served on the Board of Directors of X/open and UNIX
International.
Charles F. Kane joined VMARK in December 1995 and is responsible for
directing all of VMARK's worldwide financial activities. Mr. Kane began his
career in 1979 at Deloitte, Haskins and Sells working out of its Boston and New
York offices. He joined Prime Computer, Inc. in 1984 serving as treasury manager
for its International Finance Operations directing all aspects of international
treasury operations and foreign exchange management. In 1989 Mr. Kane joined
Stratus Computer, Inc. holding increasingly-responsible positions including
European controller, international controller and finance director, mergers and
acquisitions. Mr. Kane received a BBA degree in Accountancy from the University
of Notre Dame and an MBA degree from Babson College. He is a Certified Public
Accountant and adjunct professor of International Finance at the Boston College
Graduate School of Management.
Cornelius P. McMullan assumed his current position in April 1997. Mr.
McMullan joined VMARK in January, 1997 as executive vice president North
American sales. Mr. McMullan is responsible for all aspects of VMARK's worldwide
sales and international business activities. Mr. McMullan brings to VMARK
significant experience in sales and marketing, as well as in worldwide general
management. Prior to joining VMARK, Mr. McMullan was President and CEO of
Sequoia Systems. He began his career at Honeywell Information Systems and later
ICL in Europe. He joined Prime Computer as the managing director of Prime
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<PAGE> 83
UK, served as vice president Asia-Pacific, and was later appointed president of
the commercial systems division of Prime/Computervision. Mr. McMullan serves on
the Board of Directors of Andataco/IPC.
Harold Nussenfeld is presently Vice President, Secretary and General
Counsel of UNIDATA. Mr. Nussenfeld joined UNIDATA in 1991, before which he had
been in private legal practice. He received a Bachelor of Arts degree from The
Johns Hopkins University and was awarded a Juris Doctor degree from the
University of Maryland School of Law. Mr. Nussenfeld joined UNIDATA in 1991,
before which he had been in private legal practice. Mr. Nussenfeld is also Vice
President and Secretary of Glenangus Holdings Company, a private holding
company.
Jason E. Silvia joined VMARK in November 1993 to build its consulting,
service, and educational business. Prior to joining VMARK, Mr. Silvia was vice
president of worldwide services at Computervision Corporation, where he
previously held several senior management positions including vice president of
open service solutions and vice president of worldwide operations. Mr. Silvia
received a Bachelor of Science degree in Electrical Engineering from Lowell
University and a Bachelor of Arts degree in Business Administration from
Northeastern University.
James K. Walsh joined VMARK in July 1984 and undertook his current position
in March 1996. Mr. Walsh is responsible for new business development activities
and also serves as the company's general counsel. Prior to joining VMARK, Mr.
Walsh was vice president, administration and general counsel at Stratus
Computer, Inc. Mr. Walsh received a Bachelor of Science degree in Education from
Boston State College and was awarded his Juris Doctor degree from Suffolk
University Law School, Boston.
John G. Akers joined UNIDATA in 1989 and is currently Vice President of
American Operations of UNIDATA.
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<PAGE> 84
PRO FORMA OWNERSHIP OF ARDENT CAPITAL STOCK
The following table sets forth information as to the number of shares of
Ardent Common Stock that will be owned immediately after giving effect to the
Merger by (i) each person expected to be a director of Ardent, (ii) the person
expected to be the Chief Executive Officer and the persons expected to be the
four other most highly compensated executive officers of Ardent, (iii) all
persons expected to be Ardent directors and executive officers, as a group, and
(iv) each person or entity (or group of affiliated persons) expected to
beneficially own more than 5% of Ardent's Common Stock, based on such person's
or entity's ownership of UNIDATA Common Stock and VMARK Common Stock as of
December 1, 1997.
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP PERCENTAGE
OF SHARES OF ARDENT OWNERSHIP OF
NAME OF BENEFICIAL OWNER COMMON STOCK(1)(2) ARDENT
- --------------------------------------------------------------- ------------------- ------------
<S> <C> <C>
Directors and Officers
Peter Gyenes(3)................................................ 203,823 1.5%
David W. Brunel(4)............................................. 346,705 2.5%
Robert G. Claussen(3).......................................... 119,593 *
James T. Dresher(4)(5)......................................... 2,918,678 21.2%
Martin T. Hart(4).............................................. 67,148 *
Robert M. Morrill(3)........................................... 345,843 2.5%
Charles F. Kane(3)............................................. 102,357 *
Cornelius P. McMullan(3)....................................... 100,000 *
James K. Walsh(3).............................................. 139,113 1.0%
All executive officers and directors as a group (15 persons)... 4,830,002 32.5%
5% Stockholders
Glenangus Holdings Corp.(4).................................... 1,790,600 13.0%
T. Rowe Price Associates, Inc.(6)(7)........................... 730,001 5.3%
Merrill Lynch & Co., Inc.(6)(8)................................ 705,000 5.1%
</TABLE>
- ---------------
* Less than 1%
(1) For purposes of this table, beneficial ownership of securities is defined
in accordance with the rules of the Securities and Exchange Commission and
means generally the power to vote or exercise investment discretion with
respect to securities, regardless of any economic interests therein. Except
as otherwise indicated, VMARK and UNIDATA believe that the beneficial
owners of shares of Ardent Common Stock listed below will have sole
investment and voting power with respect to such shares, subject to
community property laws where applicable. In addition, for purposes of this
table, a person or group is deemed to have "beneficial ownership" of any
shares which such person has the right to acquire within 60 days after the
date as of which these data are presented. For purposes of calculating the
percentage of outstanding shares held by each person named above, any
shares which such person has the right to acquire within 60 days after the
date as of which these data are presented are deemed to be outstanding, but
not for the purpose of calculating the percentage ownership of any other
person. Includes shares which may be acquired by exercise of stock options
within sixty days after December 1, 1997 by the directors and executive
officers individually and as a group as follows: Mr. Brunel, 44,765; Mr.
Claussen, 14,667; Mr. Gyenes, 200,000; Mr. Hart, 22,383; Mr. Morrill,
150,667; Mr. Kane, 102,357; Mr. McMullan, 100,000; Mr. Walsh, 82,500; and
all current directors and executive officers as a group, 1,097,969. Of
those shares, 477,235 would be fully vested as to all directors and
executive officers as a group, and the holders would have investment and
voting powers; the remaining shares would be subject to vesting, and the
holders would have voting, but not investment powers until the shares
vested.
(2) This table does not give effect to the issuance of any shares of UNIDATA
Common Stock or options therefor upon the consummation of the acquisition
of O2 Technology.
(3) The address of such entity or person is c/o VMARK Software, Inc., 50
Washington Street, Westboro, Massachusetts 01581.
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<PAGE> 85
(4) The address of such entity or person is c/o UNIDATA, Inc., 1099 18th
Street, Suite 2200, Denver, Colorado.
(5) Includes 1,790,600 shares of Ardent Common Stock owned by Glenangus
Holdings Corp., a holding company of which Mr. Dresher is the sole
stockholder and President and Treasurer.
(6) This information is as of October 1, 1997 and is based solely on Schedule
13G filings made with the Securities and Exchange Commission.
(7) The address of such entity is T. Rowe Price Associates, Inc., 100 E. Pratt
Street, Baltimore, MD 21202. Shares are held by various investors,
including T. Rowe Price Small Cap Value Fund ("TRP Fund"), a registered
investment company, for which T. Rowe Price Associates Inc. ("TRP") serves
as advisor. TRP has sole voting power with respect to 46,000 and sole
dispositive power with respect to all such shares. TRP Fund has sole voting
power with respect to 650,000 of such shares.
(8) The address of such entity is Merrill Lynch & Co., Inc., 250 Vesey Street,
New York, NY 10281. Shares are held by registered investment companies and
other investors whose investment advisors have as general partner Princeton
Services, Inc., a subsidiary of Merrill Lynch Group, Inc., which is a
subsidiary of Merrill Lynch & Co., Inc. ("ML&Co."). ML&Co. has shared
voting and dispositive powers with respect to all such shares.
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<PAGE> 86
COMPARISON OF RIGHTS OF HOLDERS
OF UNIDATA COMMON STOCK AND ARDENT COMMON STOCK
After consummation of the Merger, the holders of UNIDATA Common Stock who
receive Ardent Common Stock in the Merger will become stockholders of Ardent. As
stockholders of UNIDATA, their rights are presently governed by the CBCA and by
UNIDATA's Articles of Incorporation (the "UNIDATA Charter") and By-laws. As
stockholders of Ardent, their rights will be governed by the DGCL and by VMARK's
Certificate of Incorporation (the "VMARK Charter") and By-laws. The following
discussion summarizes the material differences between the rights of holders of
Ardent capital stock and holders of UNIDATA capital stock and differences
between the VMARK Charter and VMARK By-laws and the UNIDATA Charter and UNIDATA
By-laws. This summary does not purport to be complete and is qualified in its
entirety by reference to the VMARK Charter and By-laws, the UNIDATA Charter and
By-laws and the relevant provisions of the DGCL and the CBCA.
SPECIAL MEETING OF STOCKHOLDERS
The DGCL provides that special meetings of stockholders may be called by
the directors or by any other person as may be authorized by the corporation's
certificate of incorporation or by-laws. The VMARK Charter provides that special
meetings may only be called by the Chairman of the Board of Directors, the Chief
Executive Officer or the President or by the Secretary within 10 days after a
written request by a majority of the directors. The CBCA provides that special
meetings of stockholders of a corporation may be called by the directors or by
any other person authorized by the corporation's by-laws or by resolution of the
directors. The CBCA also provides that a special meeting shall be called if the
corporation receives one or more written demands for a meeting, stating the
purpose or purposes for which the meeting is to be held, signed and dated by
stockholders representing at least ten percent of all votes entitled to be cast
on any issue proposed to be considered at the special meeting. The By-laws of
UNIDATA provide that special meetings may be called at any time by the President
or any two directors of the corporation, or by the holders of at least ten
percent of all of the shares entitled to vote at the special meeting.
INSPECTION RIGHTS
Under the DGCL, stockholders, upon the demonstration of a proper purpose,
have the right to inspect a corporation's stock ledger, stockholder list, and
other books and records. The VMARK By-laws provide that a stockholder list
prepared for a stockholder meeting shall be open to the examination of any
stockholder, for any purpose germane to the meeting. Under the CBCA, a
corporation's stockholders have the right to inspect, during regular business
hours, the corporation's articles of incorporation, by-laws, records of all
meetings of stockholders, records of actions taken by stockholders without a
meeting within the prior three years, all written communications within the
prior three years to all stockholders as a group or to holders of any class or
series of stock as a group, a list of the names and business addresses of the
corporation's current officers and directors, the most recent corporate report
delivered to the Colorado Secretary of State, and all financial statements
prepared for periods ending during the prior three years, upon written demand
given at least five business days before the date upon which such stockholder
wishes to inspect and copy such records. Pursuant to the CBCA, stockholders also
may, upon written demand at least five days prior to such inspection and during
regular business hours, inspect excerpts from minutes of any directors' meeting
or action of directors taken without a meeting, records of any action taken by
stockholders without a meeting, excerpts of any action taken by a committee of
the directors while such committee was acting in place of the directors, waivers
of notices of any meeting of stockholders, directors, or a committee of
directors, accounting records of the corporation and the records of
stockholders, provided that the stockholder meets the following conditions: (i)
the demand for such inspection is made in good faith for a proper purpose, (ii)
the stockholder has been a stockholder of the corporation for at least three
months immediately proceeding the demand, or holds at least five percent of all
outstanding shares of any class of stock, (iii) the purpose and the records
which the stockholder wishes to inspect are described with reasonable
particularity, and (iv) the records to be inspected are directly connected with
the described purpose. The UNIDATA By-laws provide that the records of the
corporation shall be available as specified under the CBCA.
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<PAGE> 87
ACTION BY CONSENT OF STOCKHOLDERS
Under the DGCL, unless the certificate of incorporation provides otherwise,
any action to be taken by stockholders may be taken without a meeting, without
prior notice, and without a vote, if the stockholders having the number of votes
that would be necessary to take such action at a meeting at which all
stockholders were present and voted consent to the action in writing. The VMARK
Charter, however, provides that subject to the rights of holders of preferred
stock, if any, any action required or permitted to be taken by the stockholders
cannot be effected by written consent, but must be effected at a duly called
annual or special meeting of stockholders. Under the CBCA, unless the Articles
of Incorporation require that such action be taken at a stockholder meeting, any
action to be taken by stockholders may be taken without a meeting if all
stockholders entitled to vote on the matter consent to the action in writing.
The UNIDATA Charter contains no such restriction on actions without a meeting.
CUMULATIVE VOTING AND ELECTION OF DIRECTORS
Under the DGCL, a corporation may provide in its certificate of
incorporation for cumulative voting by stockholders in elections of directors
(i.e., each stockholder casts as many votes for directors as he has shares of
stock multiplied by the number of directors to be elected). The VMARK Charter
does not provide for cumulative voting. The CBCA provides that there shall be
cumulative voting by stockholders in elections of directors unless the articles
of incorporation expressly state otherwise. The UNIDATA Charter does expressly
state that there shall be no cumulative voting by stockholders for the election
of directors, or for any other purpose.
In the absence of cumulative voting, the CBCA provides that, unless
otherwise provided in the corporation's articles of incorporation or by-laws,
the number of candidates equaling the number of directors to be elected, having
the highest number of votes cast in their favor, are elected to be directors.
The UNIDATA By-laws provide that each director must be elected by the receipt of
the affirmative vote of the holders of two-thirds of the shares entitled to vote
thereon. The DGCL provides that, in the absence of cumulative voting, directors
shall be elected by the majority vote of holders of shares entitled to vote
thereon, unless otherwise specified within the corporation's certificate of
incorporation. The VMARK Charter does not specify a greater requirement for the
election of directors.
DIVIDENDS AND REPURCHASES OF STOCK
Under the DGCL, a corporation generally is permitted to declare and pay
dividends out of any surplus or out of net profits for the current and/or
preceding fiscal year, provided that such dividends will not reduce capital
below the amount of capital represented by all classes of stock having a
preference upon the distribution of assets. Also under the DGCL, a corporation
may generally redeem or repurchase shares of its stock if such redemption or
repurchase will not impair the capital of the corporation. Under the CBCA, the
payment of distributions, including the repurchase of stock, is generally
permissible unless after giving effect to the dividend or distribution, the
corporation would be unable to pay its debts as they became due in the usual
course of business, or if the total assets of the corporation would be less than
the sum of its total liabilities plus the amount that would be needed, if the
corporation were dissolved at the time the dividend was paid, to satisfy the
preferential rights of stockholders whose preferential rights upon dissolution
of the corporation are greater than those of the stockholders receiving the
dividend.
CLASSIFICATION OF THE BOARD OF DIRECTORS
The DGCL permits (but does not require) classifications of a corporation's
board of directors into one, two or three classes. The VMARK Charter provides
for three classes of directors with the directors of each class being elected to
staggered three year terms. The CBCA also permits, but does not require,
classification of a corporation's board of directors into one, two, or three
classes, with each class composed of as equal a number of directors as is
possible. In the event of multiple classes of directors, the CBCA provides for
staggered terms of two years if there are two classes of directors or three
years if there are three classes of directors. The UNIDATA Charter does not
provide for multiple classes of directors.
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REMOVAL OF DIRECTORS
Under the DGCL, although stockholders may generally remove directors with
or without cause by a majority vote, stockholders may remove members of
classified boards only for cause unless the certificate of incorporation
provides otherwise. The VMARK Charter provides that directors may only be
removed for cause and only upon a vote of a majority of outstanding shares of
capital stock entitled to vote generally in the election of the directors.
Neither the DGCL nor the CBCA permits directors to remove other directors. Under
the CBCA, stockholders may remove one or more directors with or without cause by
a majority vote of the stockholders entitled to elect such director(s), unless
the articles provide that directors may only be removed for cause. The CBCA
permits the removal of a director by stockholders only at a meeting called for
that purpose, upon notice of the meeting which states that the purpose or one of
the purposes thereof is the removal of the director. The UNIDATA Charter
provides that directors may be removed only upon the affirmative vote of holders
of two-thirds of the outstanding shares of stock entitled to vote on the removal
of directors.
VACANCIES ON THE BOARD OF DIRECTORS
Under the DGCL, unless otherwise provided in the certificate of
incorporation or by-laws, vacancies on the board of directors and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by the remaining directors. The VMARK Charter provides that
vacancies shall be filled solely by the affirmative vote of a majority of the
remaining directors then in office. The CBCA provides that, unless otherwise
provided in the corporation's articles of incorporation, vacancies on the board
of directors and newly created directorships resulting from an increase in the
authorized number of directors may be filled either by the directors or the
stockholders. Under the CBCA, directors may fill a vacancy by majority vote,
even if the directors remaining in office constitute less than a quorum. The
CBCA also specifically provides that, unless otherwise provided in the
corporation's articles of incorporation, if a vacant office was held by a
director elected by holders of a specific class or series of stock, only such
stockholders or directors also elected by holders of that class or series of
stock, may fill the vacancy. The UNIDATA Charter provides that, if stockholders
elect a director to fill a vacant position, such election must be by the
affirmative vote of holders of two-thirds of the outstanding shares of stock
entitled to vote on the election of directors.
EXCULPATION OF DIRECTORS
The DGCL and the CBCA have substantially similar provisions relating to
exculpation of directors. Each state's law permits, and the VMARK Charter and
the UNIDATA Charter provide, that no director shall be personally liable to
VMARK and UNIDATA, respectively, or their respective stockholders for monetary
damages for breaches of fiduciary duty except where such exculpation is
expressly prohibited by law. The circumstances under which exculpation is
prohibited are substantially similar in Delaware and Colorado, except that in
the CBCA, a director may not be exculpated from liability for dealings relating
to unauthorized distributions or from any transaction from which the director
directly or indirectly received an improper personal benefit, while in Delaware,
a director may not be exculpated from liability arising from transactions
relating to unlawful payments of dividends, any unlawful stock purchases or
redemptions.
The VMARK Charter also contains certain enumerated circumstances in which
exculpation is not permissible. The VMARK Charter does not eliminate the
liability of directors to the extent that such liability is provided by
applicable law, (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of Title 8 of the Delaware Code, or (iv) for any transaction from
which the director derived an improper personal benefit. The UNIDATA Charter
exculpates directors from all monetary damages for breach of fiduciary duty as a
director, except to the extent prohibited by the CBCA.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Both Delaware and the CBCA generally permit indemnification of directors
and officers for expenses incurred by them by reason of their position with the
corporation, if the director or officer has acted in good faith and with the
reasonable belief that his conduct was in the best interests of the corporation.
Both
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Delaware and the CBCA mandate that directors shall be indemnified for their
reasonable expenses in the event that a director is successful in the defense of
any proceeding in which the director was a party due to his status as director.
Both the DGCL and the CBCA do not permit a corporation to indemnify persons
against judgments in actions brought by or in the right of the corporation
(although the DGCL does permit indemnification in such situations if approved by
the Delaware Court of Chancery, and both permit indemnification for expenses of
such actions). Unlike the DGCL, the CBCA also permits indemnification of an
officer, employee, fiduciary, or agent who is not a director, to any greater
extent than the indemnification of a director, if not inconsistent with public
policy, and if provided for in the by-laws, by action of the board of directors
or by contract. The VMARK Charter provides for indemnification to the maximum
extent legally permissible of its officers and directors. The UNIDATA Charter
provides that all directors, officers, employees, and agents of UNIDATA shall be
indemnified to the maximum extent permissible under the CBCA. The UNIDATA
By-laws provide that officers may be indemnified to a greater extent than
directors, if consistent with applicable law and if provided for in a resolution
of stockholders or directors or if provided for within a contract.
INTERESTED DIRECTOR TRANSACTIONS
Both the DGCL and the CBCA provide that no transaction between a
corporation and one or more of its directors or officers or any entity in which
one or more of its directors or officers are directors or officers or have a
financial interest, shall be void or voidable solely for that reason. In
addition, no such transaction shall be void or voidable solely because the
director or officer is present at, participates in, or votes at the meeting of
the board of directors or committee which authorizes the transaction. In order
that such a transaction not be found void or voidable, it must, after disclosure
of material facts, be approved by the disinterested directors, a committee of
disinterested directors, or the stockholders, or the transaction must be fair as
to the corporation. The VMARK Charter or By-laws do not address this issue. The
UNIDATA By-laws closely resemble the Delaware and Colorado statutory provisions.
SALES, LEASE OR EXCHANGE OF ASSETS AND MERGERS
The DGCL requires the approval of the directors and the vote of the holders
of a majority of the outstanding stock entitled to vote thereon for the sale,
lease, or exchange of all or substantially all of a corporation's property and
assets or a merger or consolidation of the corporation into any other
corporation, although the certificate of incorporation may require a higher
stockholder vote. The VMARK Charter does not require any higher vote.
The CBCA provides that the sale, lease, or exchange of all or any portion
of a corporation's assets in the corporation's usual and regular course of
business may be authorized by the corporation's directors, without approval of
the corporation's stockholders. Sale, lease, or exchange of all or substantially
all of a corporation's assets other than in the usual and regular course of the
corporation's business, or a merger or consolidation of the corporation into any
other corporation, requires approval of the directors and the vote of the
holders of two-thirds of each class of outstanding stock entitled to vote
thereon, although the corporation's articles of incorporation or by-laws may
require a higher vote. The UNIDATA Charter does not require a higher vote.
AMENDMENTS TO CHARTER
Under the DGCL, charter amendments require the approval of the directors
and the vote of the holders of a majority of the outstanding stock and a
majority of each class of stock outstanding and entitled to vote thereon as a
class, unless the certificate of incorporation requires a greater proportion.
The VMARK Charter requires a two-thirds vote, unless such amendment is proposed
and declared advisable by the board of directors. In addition, the DGCL requires
a class vote when, among other things, an amendment will adversely affect the
powers, preferences or special rights of a class of stock. Under the CBCA, for
corporations in existence on June 30, 1994 (as UNIDATA was), charter amendments
other than ministerial amendments, which may be authorized by the directors
without stockholder action, require the approval of the directors and the vote
of the holders of two-thirds of the outstanding stock of each voting group
entitled to vote thereon as a class, unless the articles of incorporation or
by-laws require a different proportion. The UNIDATA Charter
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provides that amendments to the Charter require approval of holders of
two-thirds of the outstanding shares of stock of the corporation, if such
amendment adversely affects the contract rights of any stockholder.
AMENDMENTS TO BY-LAWS
The DGCL provides that stockholders may amend the by-laws and, if provided
in its certificate of incorporation, the board of directors also has this power.
Under the DGCL, the power to adopt, amend or repeal by-laws lies in stockholders
entitled to vote; provided, however, that any corporation may, in its
certificate of incorporation, confer the power to adopt, amend or repeal by-laws
upon the directors. The VMARK Charter gives the board of directors the power to
make, alter, amend or repeal by-laws. Under the CBCA, stockholders may amend the
by-laws. Unless otherwise specified in the corporation's articles of
incorporation, directors are also permitted to amend the by-laws, other than
by-laws establishing greater quorums or voting requirements for stockholders or
directors, unless the by-laws prohibit the directors from doing so. Directors
may not amend the by-laws to change the quorum or voting requirements for
stockholders, and directors may amend the by-laws to change the quorum or voting
requirements for directors only if such provision was originally adopted by the
directors or if such provision specifies that it may be amended by the
directors. The UNIDATA Charter provides that the UNIDATA by-laws may be amended
only after approval of the board of directors, provided that the affirmative
vote of the holders of two-thirds of the outstanding shares of stock of the
corporation is also required if such amendment adversely affects the contract
rights of any stockholder.
APPRAISAL RIGHTS
Dissenting stockholders have the right to obtain the fair value of their
shares (so-called "appraisal rights") in more circumstances under the CBCA than
under the DGCL. Under the DGCL, appraisal rights are available in connection
with a statutory merger or consolidation in certain specified situations.
Appraisal rights are not available when a corporation is to be the surviving
corporation and no vote of its stockholders is required to approve the merger.
Appraisal rights are not available under the DGCL in the event of the sale,
lease, or exchange of all or substantially all of a corporation's assets or the
adoption of an amendment to its certificate of incorporation, unless such rights
are granted in the corporation's certificate of incorporation. The VMARK Charter
does not grant such rights.
Under the CBCA, a properly dissenting stockholder is entitled to receive
the appraised value of the shares owned by the stockholder when the corporation
votes (i) to sell, lease, or exchange all or substantially all of its property
and assets other than in the regular course of the corporation's business, (ii)
to merge or consolidate with another corporation, or (iii) to conduct a reverse
split of the corporation's stock which would result in a reduction of the number
of shares owned by the stockholder to a fraction of a share, if such fraction of
a share is to be acquired for cash. A right to dissent and receive the appraised
value of a stockholder's shares may also be granted within the by-laws of the
corporation or by a resolution of the directors.
Both Delaware and the CBCA provide that, unless otherwise provided in the
corporation's charter, no appraisal rights are available to holders of shares of
any class of stock which is either: (a) listed on a national securities exchange
or designated as a national market system security on an inter-dealer quotation
system by the National Association of Securities Dealers, Inc. or (b) held of
record by more than 2,000 stockholders. The above limitations do not apply if
the stockholders are required by the terms of the merger to accept anything
other than: (i) shares of stock of the surviving corporation; (ii) shares of
stock of another corporation which are or will be so listed on a national
securities exchange or designated as a national market system security on an
inter-dealer quotation system by Nasdaq or held of record by more than 2,000
stockholders; (iii) cash in lieu of fractional shares of such stock; or (iv) any
combination thereof.
BUSINESS COMBINATION STATUTE
The DGCL has a "business combination" statute which provides that, if a
person acquires 15% or more of the stock of a Delaware corporation without the
approval of the board of directors of that corporation (an "interested
stockholder"), he may not engage in certain transactions with the corporation
for a period of three
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years. The DGCL includes certain exceptions to this prohibition; for example, if
the board of directors approves the acquisition of stock or the transaction
prior to the time that the person became an interested stockholder, or if the
interested stockholder acquires 85% of the voting stock of the corporation
(excluding voting stock owned by directors who are also officers and certain
employee stock plans) in one transaction, or if the transaction is approved by
the board of directors and by the affirmative vote of two-thirds of the
outstanding voting stock which is not owned by the interested stockholder. There
is no similar provision limiting business combinations with interested
stockholders in the CBCA, but for corporations in existence on June 30, 1994 (as
UNIDATA was), the CBCA requires the vote of two-thirds of the outstanding shares
of each class of shares entitled to vote thereon to approve any merger or the
sale, lease, exchange, or other disposition of all, or substantially all, of the
assets of the corporation, unless the articles of incorporation contain a
provision establishing a different proportion.
STOCKHOLDER PREEMPTIVE RIGHTS
Unlike Colorado, the DGCL does not specifically authorize the granting to
stockholders of a preemptive right to acquire proportional amounts of unissued
shares of stock which are offered for sale by the corporation. The CBCA provides
that, for corporations in existence on June 30, 1994 (as UNIDATA was), except to
the extent the articles of incorporation limit or deny preemptive rights,
shareholders have a preemptive right to acquire unissued shares or securities
convertible into such shares, except that preemptive rights do not exist (i) to
acquire any shares issued to directors, officers, or employees pursuant to
approval by the affirmative vote of the holders of a majority of the shares
entitled to vote thereon or when authorized by and not inconsistent with a plan
theretofore approved by such a vote of the stockholders; or (ii) to acquire any
shares sold otherwise than for cash. The UNIDATA Charter provides that, unless
otherwise determined by the directors or agreed to in writing by the
corporation, there shall be no preemptive rights for UNIDATA stock.
CONSIDERATION OF SOCIETAL FACTORS
The Delaware Supreme Court has held that, in discharging their
responsibilities, directors may consider constituencies other than stockholders,
such as creditors, customers, employees and perhaps even the community in
general, as long as there are rationally related benefits accruing to
stockholders as well. The Delaware Supreme Court has held, however, the concern
for non-stockholder interests is inappropriate when a sale of the company is
inevitable and an auction among active bidders is in progress. The VMARK Charter
and VMARK By-laws do not directly discuss consideration of societal factors.
INFORMATION CONCERNING VMARK
Information concerning VMARK's business, operations, products, management,
stock ownership, executive and director compensation, certain related party
transactions, financial information and certain other matters, in addition to
that provided herein, is incorporated by reference herein. See "WHERE YOU CAN
FIND MORE INFORMATION".
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ADDITIONAL MATTERS BEING SUBMITTED TO THE VOTE OF VMARK STOCKHOLDERS
The following two matters are also being submitted for the vote of the
VMARK stockholders. Although each will be voted upon as a separate matter, each
has been proposed in connection with the Merger, and no proxy, regardless of the
vote indicated thereon, will be voted for or otherwise counted for these
proposals if the Merger Agreement is not adopted.
If the Merger Agreement is adopted by the VMARK stockholders, the failure
to approve these proposals will not prevent the consummation of the Merger.
The VMARK Board recommends a vote "FOR" both of the following proposals.
Subject to the foregoing, if the enclosed proxy card is returned, the shares
represented by the proxy will be voted to approve each proposed amendment unless
the proxy indicates to the contrary, and may be voted in favor of adjournment of
the meeting in order to permit further solicitation of proxies with respect to
each proposed amendment if sufficient votes in favor of the proposed amendment
have not been received.
AMENDMENT TO VMARK 1986 STOCK OPTION PLAN
(ITEM 2 OF VMARK NOTICE)
Pursuant to the Merger Agreement, certain options for the purchase of
UNIDATA common stock will, upon consummation of the Merger, become options to
purchase approximately 416,700 shares of Ardent common stock under VMARK's 1986
Stock Option Plan (as amended and restated, the "Employee Option Plan"). There
are currently 2,916,000 shares issuable under the Employee Option Plan. As of
December 1, 1997 1,222,567 shares had been issued upon exercise of options,
1,268,116 shares were reserved for issuance upon exercise of outstanding
options, and only 425,317 shares remained available for issuance pursuant to
future stock option grants. Following the Merger, therefore, there will not be
sufficient shares to reserve for issuance upon exercise of the UNIDATA Options
and there will be no shares available for issuance pursuant to future option
grants. In view of the foregoing, the VMARK Board has adopted, subject to
stockholder approval, an amendment to the Employee Option Plan increasing the
total number of shares issuable thereunder (subject to adjustment for capital
changes) from 2,916,000 to 4,500,000. Approval of the stockholders is sought in
order to meet the stockholder approval requirements of (i) Section 422 of the
Code, which requires stockholder approval of any increase in the number of
shares which may be issued under an incentive stock option plan, (ii) Section
162(m) of the Code, which among other qualifications requires stockholder
approval of certain provisions of an option plan in order to exempt certain
amounts from limitations on deductability for tax purposes, (iii) certain
requirements for stockholder approval of an option plan in connection with the
listing of shares on The Nasdaq Stock Market, and (iv) the provisions for
amendment set forth in the Employee Option Plan. The VMARK Board recommends
approval of the amendment in order to have sufficient shares to reserve for
issuance upon exercise of the UNIDATA Options and because it believes that the
continuing availability of options under the Employee Option Plan is an
important factor in Ardent's ability to attract and retain experienced
employees.
The affirmative vote of the holders of a majority of the shares of VMARK
Common Stock voting thereon is required to approve this proposal, assuming a
quorum of shares entitled to vote is present.
DESCRIPTION OF THE EMPLOYEE OPTION PLAN
The Employee Option Plan is administered by the Compensation Committee of
the VMARK Board and provides for the grant to employees (currently,
approximately 327 persons) and consultants (currently none) of VMARK and its
subsidiaries of incentive stock options ("ISOs") and nonqualified stock options
("NSOs"). ISOs may only be granted to employees. The exercise price for ISOs
granted under the plan must be at least equal to the fair market value of the
underlying shares of common stock at the time of grant, and the exercise price
of NSOs granted under the plan may be any price established by the Compensation
Committee which administers the plan. The fair market value of VMARK Common
Stock on December 29, 1997 (the closing price thereof as reported on The Nasdaq
Stock Market) was $7.75 per share. The term of each option under the Employee
Option Plan may not exceed ten years. The Employee Option Plan provides
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that payment of the exercise price shall be made in cash, or, in the discretion
of the Compensation Committee, with common stock or with a combination of cash
and common stock.
Options granted under the Employee Option Plan are non-transferable (except
by will or the laws of descent and distribution) and are exercisable either in
full immediately, or in installments, as the Compensation Committee may
determine at the time it grants such options. The terms of each option generally
are determined by the provisions of the stock option agreement entered into at
the time the option is granted. In general, the shares acquired by exercising
the options vest ratably over five years from the date the options first became
exercisable. Any such shares that are not vested at the time the optionee ceases
to be employed by VMARK are subject to repurchase by VMARK at the price
originally paid for the shares by the optionee. All unexercised options granted
terminate if the holder thereof ceases for any reason to be an employee of
VMARK; provided, however, that an option may be exercised within a period
specified by the Employee Option Plan following a termination of employment with
VMARK for any reason except termination for cause or resignation before
retirement. The exercisability and vesting of the UNIDATA Options converted into
Ardent Stock Options pursuant to the Merger Agreement and the shares acquired
pursuant thereto will continue to be determined with reference to the stock
option agreements executed pursuant to UNIDATA's Stock Option Plans.
Accordingly, any shares acquired upon the exercise of such converted options
will be fully vested upon exercise and are not subject to repurchase by Ardent.
For federal tax purposes, no taxable income is recognized by the optionee
upon grant of any option. No taxable income is recognized by the optionee upon
exercise of an ISO so long as the shares acquired are held for at least two
years from the date of grant and one year from the date of exercise and,
correspondingly, there is no compensation deductible by Ardent. Upon sale of the
shares by the optionee after such holding periods, any gain or loss over the
exercise price is long-term capital gain or loss. Long-term capital gain
realized by an individual U.S. optionee will generally be subject to a maximum
tax rate of 28% in respect of property held for a period exceeding one year but
not exceeding 18 months and to a maximum rate of 20% in respect of property held
for a period exceeding 18 months. In the case of NSOs, ordinary compensation
income is recognized by the optionee upon exercise in the amount of any excess
of the then fair market value over the exercise price, and Ardent is entitled to
a corresponding deduction. In the event an optionee disposes of shares purchased
under an ISO before the holding periods referred to above are met, the
disposition is treated similarly to the exercise of an NSO. The foregoing
general summary is not intended to be exhaustive, does not address certain
special federal tax provisions (including the alternative minimum tax), and does
not address state, municipal or foreign tax laws.
Commencing in 1996, options under the Employee Option Plan have been
granted only to officers, and another option plan has been used for grants to
other employees of VMARK. During 1996, ISOs for the purchase of 244,389 shares
and NSOs for the purchase of 225,611 shares were issued under the Employee
Option Plan. The exercise prices of 390,000 of such options were equal to the
fair market value of the underlying shares at the time of grant. The exercise
prices of 80,000 of such options were $1.75 below market value, each or an
aggregate of $140,000 below market value. The following table sets forth the
number of shares for which options were granted under the Employee Option Plan
during the fiscal year ended December 31, 1996 to the named executive officers,
the current executive officers as a group and the non-executive officer
employees:
<TABLE>
<CAPTION>
DOLLAR
ISO'S NSO'S VALUE
------- ------- -------
<S> <C> <C> <C>
Robert M. Morrill............................. -- -- $ --
James J. Capeless............................. -- 17,500 30,625
Andrew Ridgers................................ -- 35,000 17,500
Jason Silvia.................................. -- 50,000 43,750
James K. Walsh................................ -- 17,500 30,625
Charles F. Kane............................... 3,125 21,875
Thomas M. Palka............................... -- 10,000 17,500
Current executive officers as a group......... 164,223 225,611 --
Non-executive officer employees............... 80,166 -- --
</TABLE>
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There are no current plans or proposals to grant awards under the Employee
Option Plan other than grants made to new employees in the ordinary course of
business.
APPROVAL OF AMENDMENT TO VMARK EMPLOYEE STOCK PURCHASE PLAN
(ITEM 3 OF VMARK NOTICE)
There are currently 500,000 shares issuable under VMARK's Employee Stock
Purchase Plan (as amended and restated, the "Stock Purchase Plan"). As of
December 1, 1997, 365,367 shares had been issued and 134,633 shares remained
available for issuance. Shares are currently being issued to participants in the
Stock Purchase Plan at the rate of approximately 100,000 per year, and it is
believed that the rate will increase by approximately 75% following the Merger.
In view of the foregoing, the VMARK Board has adopted, subject to stockholder
approval, an amendment to the Stock Purchase Plan increasing the total number of
shares issuable thereunder from 500,000 to 700,000. Approval of the stockholders
is sought in order for the Stock Purchase Plan to meet the stockholder approval
requirements of (i) Section 423 of the Code (ii) certain requirements for
stockholder approval of a stock purchase plan in connection with the listing of
shares on The Nasdaq Stock Market, and (iii) the provisions for amendment set
forth in the Stock Purchase Plan. The VMARK Board recommends approval of the
amendment because it believes that the continuing availability of stock under
the Stock Purchase Plan is an important factor in the Company's ability to
attract and retain experienced employees and because the Merger, if approved,
will substantially increase the number of employees eligible to participate in
the Stock Purchase Plan.
The affirmative vote of the holders of a majority of the shares of VMARK
Common Stock voting thereon is required to approve this proposal, assuming a
quorum of shares entitled to vote is present.
DESCRIPTION OF THE STOCK PURCHASE PLAN
The Stock Purchase Plan is administered by the Compensation Committee of
the VMARK Board. All employees of the Company and its subsidiaries whose
customary employment is 20 or more hours per week and more than five months per
calendar year, other than those employees who own 5% or more of the stock of the
Company, are eligible to participate in the Stock Purchase Plan (currently, 318
persons). The Stock Purchase Plan may be implemented by one or more offerings of
such duration as the Compensation Committee may determine, provided that no
offering period may be longer than 27 months. An eligible employee participating
in an offering may purchase common stock at a price equal to the lower of 85% of
its fair market value at the commencement of the offering period or 85% of its
fair market value on the last day of the offering period. Payment for common
stock purchased under the plan is made through regular payroll deduction or lump
sum cash payment, as determined by the Compensation Committee. The maximum value
of common stock an employee may purchase during an offering period is 6% of the
employee's compensation during such period, calculated on the basis of the
employee's compensation rate on the date the employee elects to participate in
that offering.
The following table sets forth the number of shares of VMARK Common Stock
issued under the Employee Purchase Plan during the fiscal year ended December
31, 1996 to the named executive officers, the current executive officers as a
group and the non-executive officer employees.
<TABLE>
<S> <C>
Robert M. Morrill.................................................. 0
James J. Capeless.................................................. 1,707
Andrew Ridgers..................................................... 1,482
James K. Walsh..................................................... 1,571
Thomas M. Palka.................................................... 776
Jason Silvia....................................................... 0
Current executive officers as a group.............................. 3,823
Non-executive officer employees.................................... 153,767
</TABLE>
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There are no current plans or proposals to grant awards under the Stock
Purchase Plan other than grants made to eligible employees at six month
intervals in the ordinary course of business.
LEGAL MATTERS
The validity of the shares of Ardent Common Stock offered to holders of
UNIDATA Common Stock by this Joint Proxy Statement/Prospectus will be passed
upon for VMARK by Choate, Hall & Stewart. Certain of the tax consequences of the
Merger will be passed upon by Latham & Watkins, New York, with respect to
UNIDATA and its stockholders, and by Choate, Hall & Stewart with respect to
VMARK and its stockholders. See "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS".
EXPERTS
The consolidated financial statements of VMARK and the related financial
statement schedule incorporated in this Joint Proxy Statement/Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports which are incorporated in this Joint Proxy
Statement/Prospectus by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
The consolidated balance sheets of UNIDATA as of June 30, 1997 and 1996 and
the consolidated statements of operations, stockholders' equity and cash flows
for each of the three years in the period ended June 30, 1997, included in this
Joint Proxy Statement/Prospectus and in the Registration Statement, have been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
EXPENSES OF SOLICITATION
VMARK and UNIDATA will share equally the expenses incurred in connection
with the printing of this Joint Proxy Statement/Prospectus and each company
shall bear the cost of distributing this Joint Proxy Statement/Prospectus to its
respective stockholders. UNIDATA and VMARK will each reimburse brokers,
fiduciaries, custodians and other nominees for reasonable out-of-pocket expenses
incurred in sending this Joint Proxy Statement/Prospectus and other proxy
materials to, and obtaining instructions relating to such materials from,
beneficial owners of UNIDATA Common Stock and VMARK Common Stock, respectively.
Stockholder proxies may be solicited by directors, officers or employees of
UNIDATA or VMARK, respectively, in person, by letter or by telephone or
telegram. VMARK has retained Corporate Investor Communications, Inc., a proxy
solicitation firm, in connection with the solicitation of proxies for the VMARK
Special Meeting, at a cost of approximately $5,000 plus reimbursement of
reasonable out-of-pocket expenses.
OTHER MATTERS
Neither the VMARK Board nor the UNIDATA Board intends to bring any matters
before the VMARK Special Meeting or the UNIDATA Special Meeting, respectively,
other than those specifically set forth in the notices of such meetings and
neither knows of any matters to be brought before such meetings by others. If
any other matters properly come before the VMARK Special Meeting or the UNIDATA
Special Meeting, respectively, it is the intention of the persons named in the
accompanying proxies to vote such proxies in accordance with the judgment of the
VMARK Board and the UNIDATA Board, respectively.
90
<PAGE> 96
WHERE YOU CAN FIND MORE INFORMATION
VMARK files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements or
other information filed by VMARK at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. VMARK's
SEC filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
VMARK filed a Registration Statement on Form S-4 to register with the SEC
the Ardent Common Stock to be issued to UNIDATA stockholders in the Merger. This
Joint Proxy Statement/Prospectus is a part of that Registration Statement and
constitutes a prospectus of Ardent in addition to being a proxy statement of
VMARK and UNIDATA for the Special Meetings. As allowed by SEC rules, this Joint
Proxy Statement/Prospectus does not contain all the information you can find in
the Registration Statement or the exhibits to the Registration Statement.
The SEC allows VMARK to "incorporate by reference" information into this
Joint Proxy Statement/Prospectus, which means that VMARK can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
Joint Proxy Statement/Prospectus, except for any information superseded by
information in this Joint Proxy Statement/Prospectus. This Joint Proxy
Statement/Prospectus incorporates by reference the documents set forth below
that VMARK has previously filed with the SEC. These documents contain important
information about VMARK and its finances.
<TABLE>
<CAPTION>
VMARK SEC FILINGS (FILE NO. 0-20059) PERIOD
----------------------------------- ------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1996
Quarterly Reports on Form 10-Q Quarters ended March 30, 1997,
June 29, 1997 and September 28,
1997
Description of VMARK's common stock, Filed on April 8, 1992
contained in VMARK's Registration Statement
on Form 8-A, including all amendments and all
reports amending such description
Description of VMARK's Junior Preferred Stock Filed on July 29, 1996
Purchase Rights attached to each share of VMARK
common stock, contained in VMARK's Registration
Statement on Form 8-A
</TABLE>
We also are incorporating by reference additional documents that VMARK may
file with the SEC between the date of this Joint Proxy Statement/Prospectus and
the dates of the Special Meeting of VMARK's stockholders.
VMARK has supplied all information contained or incorporated by reference
in this Joint Proxy Statement/Prospectus relating to VMARK and UNIDATA has
supplied all such information relating to UNIDATA.
91
<PAGE> 97
If you are a VMARK stockholder, VMARK may have previously sent you some of
the documents incorporated by reference, but anyone may obtain any of them
through us or the SEC. Documents incorporated by reference are available from us
without charge, excluding all exhibits unless we have specifically incorporated
by reference an exhibit in this Joint Proxy Statement/Prospectus. Stockholders
may obtain documents incorporated by reference in this Joint Proxy
Statement/Prospectus by requesting them in writing or by telephone at the
following address:
VMARK Software, Inc.
50 Washington Street
Westboro, Massachusetts 01581
Attention: General Counsel
(508) 366-3888
If you would like to request documents from us, please do so by January 30,
1998 to receive them before the special meetings.
You should rely only on the information contained or incorporated by
reference in this Joint Proxy Statement/Prospectus to vote on the Merger and the
other proposals to be voted on at the VMARK Special Meeting. We have not
authorized anyone to provide you with information that is different from what is
contained in this Joint Proxy Statement/Prospectus. This Joint Proxy
Statement/Prospectus is dated December 31, 1997. You should not assume that the
information contained in this Joint Proxy Statement/Prospectus is accurate as of
any date other than December 31, 1997, and neither the mailing of the Joint
Proxy Statement/Prospectus to stockholders nor the issuance of Ardent Common
Stock in the Merger shall create any implication to the contrary.
92
<PAGE> 98
UNIDATA, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants....................................... F-2
Consolidated Balance Sheets as of September 30, 1997 and
June 30, 1997 and 1996....... F-3
Consolidated Statements of Operations for the three months
ended September 30, 1997 and 1996 and for the years ended
June 30, 1997, 1996 and 1995.......................................... F-5
Consolidated Statements of Stockholders' Equity......................... F-6
Consolidated Statements of Cash Flows................................... F-7
Notes to Consolidated Financial Statements.............................. F-8
</TABLE>
F-1
<PAGE> 99
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Unidata, Inc. and Subsidiaries:
We have audited the consolidated balance sheets of Unidata, Inc. and
Subsidiaries (the "Company") as of June 30, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended June 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Unidata,
Inc. and Subsidiaries as of June 30, 1997 and 1996, and the results of their
operations and cash flows for each of the three years in the period ended June
30, 1997 in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
- --------------------------------------
Denver, Colorado
September 26, 1997 (except for note 3,
for which the date is
September 30, 1997)
F-2
<PAGE> 100
UNIDATA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1997 1997 1996
------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 826 $ 623 $ 812
Accounts receivable, net of allowance for doubtful 14,179 16,652 16,013
accounts of $395, $407 and $138 and allowance for
returns of $2,319, $1,687 and $966..................
Prepaid expenses....................................... 625 461 1,114
Deferred tax assets.................................... 459 459 19
Other.................................................. 808 1,167 513
------- ------- -------
Total current assets........................... 16,897 19,362 18,471
------- ------- -------
Property and equipment:
Equipment.............................................. 6,072 5,607 4,918
Furniture and fixtures................................. 1,931 1,593 1,585
Vehicles............................................... 546 611 679
Software............................................... 834 821 827
------- ------- -------
9,383 8,632 8,009
Accumulated depreciation and amortization.............. (5,039) (4,582) (3,020)
------- ------- -------
Property and equipment, net......................... 4,344 4,050 4,989
------- ------- -------
Other assets:
Purchased software, net of accumulated amortization of 3,025 3,282 4,298
$2,238, $1,981 and $953.............................
Software development costs, net of accumulated
amortization of $1,141, $1,045 and $308............. 831 927 1,052
Deferred income taxes.................................. 2,044 1,983 1,563
Goodwill, net of accumulated amortization of $1,874,
$1,614 and $535..................................... 2,703 2,930 3,561
Other.................................................. 1,982 1,846 546
------- ------- -------
Total other assets............................. 10,585 10,968 11,020
------- ------- -------
Total assets................................. $31,826 $34,380 $34,480
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 101
UNIDATA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30,
1997 1997 1996
------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable.......................................... $ 2,400 $ 2,500 $ 3,850
Accounts payable....................................... 2,664 2,795 3,282
Deferred revenue....................................... 5,001 4,078 3,364
Accrued liabilities.................................... 3,001 3,436 2,863
Income taxes payable................................... -- 1,054 563
Obligations under capital leases....................... 158 191 275
Other.................................................. 1,146 1,069 634
------- ------- -------
Total current liabilities...................... 14,370 15,123 14,831
------- ------- -------
Long-term liabilities:
Note payable........................................... 10,000 10,000 10,000
Stockholder notes payable.............................. 2,350 2,350 2,350
Obligations under capital leases....................... 79 112 339
------- ------- -------
Total long-term liabilities.................... 12,429 12,462 12,689
------- ------- -------
Total liabilities.............................. 26,799 27,585 27,520
------- ------- -------
Commitments and contingencies (Note 4)
Stockholders' equity:
Preferred stock, no par value: 10,000 shares -- -- --
authorized; no shares issued or outstanding.........
Common stock, no par value: 40,000 Class A and 3,000
Class B shares authorized; 11,663, 11,653 and 11,583
shares of Class A shares issued and outstanding at
September 30, 1997 and June 30, 1997 and 1996,
respectively, and 500 shares of Class B shares
issued and outstanding at September 30, 1997 and
June 30, 1997 and 1996, respectively................ 6,862 6,851 6,584
(Accumulated deficit) retained earnings................ (1,643) (25) 534
Foreign currency translation adjustment................ (137) 24 (99)
Stockholder notes receivable........................... (55) (55) (59)
------- ------- -------
Total stockholders' equity..................... 5,027 6,795 6,960
------- ------- -------
Total liabilities and stockholders'
equity.................................. $31,826 $34,380 $34,480
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 102
UNIDATA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------- FISCAL YEARS ENDED JUNE 30,
SEPTEMBER 30, SEPTEMBER 30, -------------------------------
1997 1996 1997 1996 1995
------------- ------------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Licenses......................... $ 4,949 $ 6,059 $29,887 $26,656 $16,853
Services......................... 4,861 4,014 19,225 14,577 7,504
------- ------- ------- ------- -------
Total revenue............ 9,810 10,073 49,112 41,233 24,357
------- ------- ------- ------- -------
Expenses:
Cost of licenses................. 684 797 3,259 3,584 1,409
Cost of services................. 3,209 2,547 11,978 8,255 4,864
Purchased research and
development (Note 8).......... -- -- -- 4,900 --
Goodwill amortization............ 260 227 1,079 535 --
General and administrative....... 1,879 1,700 6,786 5,569 3,266
Sales and marketing.............. 3,444 3,455 14,480 13,187 8,875
Product development and
engineering................... 2,309 2,019 9,539 7,774 4,265
Loss on disposal of subsidiary
and joint venture............. -- -- 602 -- --
------- ------- ------- ------- -------
Total costs and
expenses............... 11,785 10,745 47,723 43,804 22,679
------- ------- ------- ------- -------
Operating income (loss)............ (1,975) (672) 1,389 (2,571) 1,678
------- ------- ------- ------- -------
Other income (expense):
Interest income.................. 19 3 30 14 18
Interest expense................. (450) (422) (1,786) (1,231) (364)
Other income (expense), net...... 5 3 21 (25) 69
------- ------- ------- ------- -------
Total other expense...... (426) (416) (1,735) (1,242) (277)
------- ------- ------- ------- -------
Income (loss) before income
taxes............................ (2,401) (1,088) (346) (3,813) 1,401
------- ------- ------- ------- -------
(Provision for) benefit from income
taxes:
Current.......................... 722 10 (1,050) (805) (198)
Deferred......................... 61 238 837 2,000 61
------- ------- ------- ------- -------
Total (provision
for)benefit from income
taxes.................. 783 248 (213) 1,195 (137)
------- ------- ------- ------- -------
Net income (loss).................. $(1,618) $ (840) $ (559) $(2,618) $ 1,264
======= ======= ======= ======= =======
Earnings (loss) per share.......... $ (0.13) $ (0.07) $ (0.05) $ (0.23) $ 0.11
Weighted average number of common
shares and common share
equivalents outstanding.......... 12,157 12,083 12,133 11,498 11,281
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 103
UNIDATA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK FOREIGN
----------------------------------- CURRENCY STOCKHOLDER
CLASS A CLASS B RETAINED TRANSLATION NOTES
SHARES AMOUNT SHARES AMOUNT EARNINGS ADJUSTMENT RECEIVABLE TOTAL
------- ------ ------- ------ -------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1994......... 10,388 $ 801 -- $ -- $ 2,143 $ (64) $ (236) $ 2,644
Net income................... -- -- -- -- 1,264 -- -- 1,264
Stock issued for cash........ 55 91 -- -- -- -- -- 91
Purchase and cancellation of
stock...................... (30) (33) -- -- (16) -- -- (49)
Payments received on
stockholder notes.......... -- -- -- -- -- -- 55 55
Foreign currency
translation................ -- -- -- -- -- (38) -- (38)
------ ------ --- ------ ------- ----- ------ -------
Balance, June 30, 1995......... 10,413 859 -- -- 3,391 (102) (181) 3,967
Net loss..................... -- -- -- -- (2,618) -- -- (2,618)
Stock issued................. 1,285 3,856 500 2,000 -- -- -- 5,856
Purchase and cancellation of
stock...................... (115) (131) -- -- (239) -- -- (370)
Payments received on
stockholder notes.......... -- -- -- -- -- -- 122 122
Foreign currency
translation................ -- -- -- -- -- 3 -- 3
------ ------ --- ------ ------- ----- ------ -------
Balance, June 30, 1996......... 11,583 4,584 500 2,000 534 (99) (59) 6,960
Net loss..................... -- -- -- -- (559) -- -- (559)
Stock issued for cash........ 80 307 -- -- -- -- -- 307
Purchase and cancellation of
stock...................... (10) (40) -- -- -- -- -- (40)
Payments received on
stockholder notes.......... -- -- -- -- -- -- 4 4
Foreign currency
translation................ -- -- -- -- -- 123 -- 123
------ ------ --- ------ ------- ----- ------ -------
Balance, June 30, 1997......... 11,653 4,851 500 2,000 (25) 24 (55) 6,795
Net loss....................... -- -- -- -- (1,618) -- -- (1,618)
Stock issued for cash.......... 10 11 -- -- -- -- -- 11
Foreign currency translation... -- -- -- -- -- (161) -- (161)
------ ------ --- ------ ------- ----- ------ -------
Balance, September 30, 1997
(Unaudited).................. 11,663 $4,862 500 $2,000 $(1,643) $(137) $ (55) $ 5,027
====== ====== === ====== ======= ===== ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 104
UNIDATA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------- FISCAL YEAR ENDED JUNE 30,
SEPTEMBER 30, SEPTEMBER 30, ----------------------------
1997 1996 1997 1996 1995
------------- ------------- ------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................ $(1,618) $ (840) $ (559) $ (2,618) $ 1,264
Adjustments to reconcile net income
(loss) to net cash flows provided by
operating activities:
Purchased research and development..... -- -- -- 4,900 --
Consulting services exchanged for
equipment........................... -- -- -- -- (607)
Depreciation and amortization.......... 1,136 1,100 4,752 3,085 1,229
Provision for doubtful accounts or
returns............................. 879 352 2,129 1,169 574
Deferred tax benefit................... (61) (238) (837) (2,000) (61)
Loss on disposal of subsidiary and
joint venture....................... -- -- 602 -- --
Loss on disposal of fixed assets....... -- 88 251 33 --
Net change in assets and liabilities (net
of business acquired):
Accounts receivable.................... 1,594 695 (2,894) (5,130) (3,957)
Prepaids and other current assets...... 195 (96) 463 (415) (342)
Other assets........................... -- -- (1,229) 481 (455)
Accounts payable....................... (131) (580) (599) (317) 1,358
Income taxes payable................... (1,054) (112) 531 332 144
Accrued liabilities.................... (435) (736) 470 644 (31)
Deferred revenue....................... 923 664 727 222 762
Other current liabilities.............. 77 989 393 359 217
------- ------- ------- -------- -------
Net cash provided by operating
activities..................... 1,505 1,286 4,200 745 95
------- ------- ------- -------- -------
Cash flows from investing activities:
Purchase of equipment and software....... (816) (471) (1,169) (1,802) (1,114)
Capitalization of software costs......... -- (416) (624) (665) (877)
Purchase of distribution rights.......... -- -- (314) -- (500)
Purchase of business, net of cash
acquired............................... -- (561) (561) (10,512) --
Purchase of other long-term assets....... (170) (78) (330) -- --
------- ------- ------- -------- -------
Net cash used in investing
activities..................... (986) (1,526) (2,998) (12,979) (2,491)
------- ------- ------- -------- -------
Cash flows from financing activities:
Proceeds from issuance of notes
payable................................ -- -- -- 11,550 2,650
Repayments of stockholder loans.......... -- 4 4 122 55
Payments on bank line of credit.......... (100) (200) (1,350) (350) --
Payments on obligations under capital
leases................................. (66) (73) (311) (321) (241)
Proceeds from the issuance of common
stock.................................. 11 -- 307 2,025 91
Repurchase of common stock............... -- -- (40) (370) (49)
------- ------- ------- -------- -------
Net cash provided by (used in)
financing activities........... (155) (269) (1,390) 12,656 2,506
------- ------- ------- -------- -------
Effect of exchange rates on cash........... (161) (31) (1) 3 1
------- ------- ------- -------- -------
Net increase (decrease) in cash and cash
equivalents.............................. 203 (540) (189) 425 111
Cash and cash equivalents, beginning of
period................................... 623 812 812 387 276
------- ------- ------- -------- -------
Cash and cash equivalents, end of period... $ 826 $ 272 $ 623 $ 812 $ 387
======= ======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE> 105
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Unidata, Inc., a Colorado corporation, and Subsidiaries (the "Company")
develops, markets and supports relational database management software products
and services for worldwide on-line applications in networked computing
environments. The Company also offers training, consulting and integration
services.
Basis of Presentation
The consolidated financial statements include the accounts of Unidata, Inc.
and its wholly owned subsidiaries, Unidata Asia Pacific Pty. Limited ("Unidata
Australasia"), Unidata France S.A. ("Unidata France"), Unidata (UK) Limited
("Unidata UK"), Unidata Spain, S.A. ("Unidata Spain"), and Unidata Canada Inc.
("Unidata Canada"). Effective November 1, 1995, the Company acquired
substantially all of the assets and assumed certain liabilities of the System
Builder group of companies ("System Builder") -- see Note 8. The acquired assets
and operations of System Builder were combined with the Company's operations in
the United States ("U.S."), United Kingdom ("UK"), and Australia. The Company
purchased the stock and assumed control of the Marine S.A. group of companies
known as Patio on July 1, 1996 -- see Note 8. In April 1997, the Company
disposed of its subsidiary in Spain for a loss of $488.
Interim Financial Data
In the opinion of the Company, the accompanying consolidated financial
statements include all adjustments which are of a normal recurring nature
necessary to present fairly the Company's financial position at September 30,
1997, and the results of its operations and its cash flows for the three month
periods ended September 30, 1997 and September 30, 1996. Although the Company
believes that this disclosure is adequate to make the information presented not
misleading, certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the applicable
rules and regulations of the Securities and Exchange Commission. The results of
operations for the three month periods ended September 30, 1997 and 1996 are not
necessarily indicative of the results to be expected for the full year.
Information as of September 30, 1997 and 1996 and for the three-month periods
then ended is unaudited.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less at the date of purchase to be cash equivalents.
Prepaid Expenses
The Company pays various software vendors for royalties in advance of
actual sales of the vendor's products. Such payments are deferred and recognized
as expenses as the related products are sold. The Company estimates amounts
expected to be expensed during the next fiscal year and classifies such amounts
as part of current prepaid assets and any remaining balance as other noncurrent
assets. Total advance royalties as of September 30, 1997 and June 30, 1997 and
1996 are $1,569, $1,327 and $883, respectively, of which $357, $106 and $883 are
current assets.
Property and Equipment
Property and equipment are stated at cost and are depreciated by use of the
straight-line method over estimated useful lives ranging from two to five years.
Upon retirement or sale, the asset cost and related accumulated depreciation are
removed from the accounts, and any related gain or loss is reflected in
F-8
<PAGE> 106
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
operations. Depreciation expense for the three months ended September 30, 1997
and 1996 and for the years ended June 30, 1997, 1996 and 1995 was $522, $439,
$1,641, $1,331, and $804, respectively.
Leasehold improvements are amortized over the shorter of their estimated
useful lives or the remaining terms of the leases. Repair and maintenance costs
are expensed as incurred.
Software Development Costs
The cost of establishing the technological feasibility of new products or
product enhancements are expensed as incurred as research and development costs
($2,309 and $2,019 for the three months ended September 30, 1997 and 1996,
respectively, and $9,539 in fiscal 1997, $7,774 in fiscal 1996 and $4,265 in
fiscal 1995). The costs incurred subsequent to the establishment of the
technological feasibility of the product and prior to its general release are
capitalized. Capitalized costs are amortized on a product-by-product basis using
the greater of (a) the ratio that current revenues for a product bear to the
total current and anticipated future revenues or (b) the straight-line method
over the estimated useful life of three years. Effective July 1, 1996, the
Company reduced from five years to three years the estimated useful life of
capitalized software development costs. Amortization expense related to
capitalized software development costs is included in cost of licenses in the
accompanying consolidated statements of operations and was $96, $170, $737, $181
and $128 during the three months ended September 30, 1997 and 1996 and the years
ended June 30, 1997, 1996 and 1995, respectively. This change in estimate added
$382 in expense to 1997. Without this adjustment, the consolidated statements of
operations would have reflected income before income taxes of $36, a net loss of
$320, and a loss per share of $0.03.
Purchased Software
The Company has purchased source code from various software vendors for
inclusion in the Company's products. As part of the System Builder acquisition,
$4,500 of the purchase price was assigned to the existing set of products. The
Company amortizes these costs over an estimated useful life of five years.
Amortization expense related to purchased software is included in cost of
licenses in the accompanying consolidated statements of operations and was $257,
$264, $1,028, $928 and $297 during the three months ended September 30, 1997 and
1996 and the years ended June 30, 1997, 1996 and 1995, respectively.
Foreign Currency Translation
The local currency is the functional currency for all of the Company's
foreign subsidiaries. The translation of the functional currencies into U.S.
dollars is performed at the exchange rate in effect at the balance sheet date
for balance sheet accounts, and at the weighted average exchange rate for
revenue and expense accounts. Exchange gains or losses resulting from such
translation are included as a separate component of stockholders' equity. The
Company does not engage in hedging of currency risks.
Revenue Recognition
The Company licenses software directly to end-users and through Value Added
Resellers. Revenue from licenses are recognized upon delivery and completion of
significant vendor obligations. Prepaid amounts for post-contract customer
support are deferred at the time of receipt and are recognized as revenue over
the term of the contract on a straight-line basis. Revenue from contracts to
provide consulting and other services are recognized primarily on a time and
materials basis. For contracts that contain performance milestones, revenue is
recognized upon completion of the related milestone. Losses on contracts are
recognized when determinable. Sales returns are provided for based on historical
rates of return and treated as a reduction of sales and trade receivables.
F-9
<PAGE> 107
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Product Development and Engineering
Product development and engineering costs, other than capitalized software
costs, are charged to operations when incurred.
Income Taxes
The provision for income taxes includes U.S. federal, state, and foreign
taxes. Deferred income tax assets and liabilities arise from temporary
differences between the tax basis of assets and liabilities and their reported
amounts in the financial statements that will result in taxable or deductible
amounts in future years. The effects of changes in tax rates on deferred tax
assets and liabilities are recognized in the period in which the tax rate change
is enacted.
Distribution Rights
The Company has purchased the right to exclusively market certain products
in the Asian marketplace. The cost of distribution rights are capitalized and
amortized on a straight-line basis over the five-year estimated useful life of
the rights.
Earnings (Loss) Per Share
Earnings (loss) per share is computed using the weighted average number of
common shares outstanding plus, when dilutive, the weighted average of
outstanding stock options and warrants are included using the treasury stock
method. The difference between the primary and fully diluted shares has not been
material.
SFAS No. 128, "Earnings Per Share," issued in February 1997, is effective
for periods ending after December 15, 1997. Had SFAS No. 128 been effective
during 1997 and 1996, the Company would have presented "basic" and "dilutive"
net loss per share. The Company believes that the "basic" and "dilutive"
computations under SFAS No. 128 would not have been materially different from
the net loss per common share as reported by the Company.
Accounting for Stock-Based Compensation
Effective July 1, 1996, the Company adopted the disclosure provisions of
Financial Accounting Standards No. 123 ("SFAS No. 123"), Accounting for
Stock-Based Compensation. In accordance with the provisions of SFAS No. 123, the
Company applies Accounting Principles Board Opinion 25 and related
interpretations in accounting for its employee stock option plans. Note 6 to the
Consolidated Financial Statements contains a summary of the pro forma effects on
reported net income (loss) and earnings (loss) per share for fiscal year 1997
and 1996 based on the fair value of options and shares granted as prescribed by
SFAS No. 123.
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of
Effective July 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 ("SFAS No. 121"), Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. The adoption of
SFAS No. 121 did not have a material impact on the results of operations or
financial position of the Company.
Goodwill
Goodwill is amortized on a straight-line basis over the estimated useful
life of five years. Management periodically assesses the recoverability of
goodwill using qualitative factors. Impairment losses are measured using a
discounted cash flow methodology and are recognized when identified.
F-10
<PAGE> 108
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Concentration of Credit Risk
Financial instruments which subject the Company to concentration of credit
risk consist primarily of trade receivables. The Company extends credit to a
diverse industry base both in the U.S. and overseas. The Company's policy is to
evaluate each customer's financial condition to determine the credit terms to be
extended, which are generally 30 days. There are no customers that represent
more than 10% of the total trade receivable balance.
The Company maintains cash balances with various high quality bank
institutions. Balances on deposit with such institutions are sometimes in excess
of federally insured amounts.
Advertising
Costs associated with advertising are expensed as incurred.
Fair Value of Financial Instruments
The Company believes that the carrying value of its notes payable
approximate fair value based on the borrowing rates currently available for
loans similar in terms and average maturities.
Use of Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. These estimates involve judgments with respect to, among other things,
various future economic factors which are difficult to predict and are beyond
the control of the Company. Actual amounts could differ from these estimates.
2. STOCKHOLDER NOTES PAYABLE
The Company had stockholder notes payable totaling $2,350 at September 30,
1997 and June 30, 1997 and 1996. The loan agreements require quarterly interest
payments at a national bank's prime lending rate (8.5% at September 30, 1997 and
June 30, 1997 and 8.25% at June 30, 1996) plus 1%. The notes had an original due
date of December 31, 1996 and have been extended to December 31, 2003. The notes
are not collateralized and have various restrictive covenants which include
restrictions on payment of dividends. These notes are subordinated to the notes
payable described in Note 3.
3. NOTES PAYABLE
The Company has a credit agreement with a bank that provides a revolving
line of credit in the amount of $8,000 for working capital needs and the
purchase of O2 Technology S.A. (Note 8). Interest accrues at the bank's prime
rate (8.5% at September 30, 1997 and June 30, 1997 and 8.25% at June 30, 1996)
plus 1%. The agreement provides for a borrowing base in an amount equal to 80%
of eligible accounts receivable, as defined, and is collateralized by
substantially all of the assets of the Company and a personal guarantee for
amounts drawn in excess of the borrowing base. At September 30, 1997 and June
30, 1997 and 1996, advances of $2,400, $2,500 and $3,850, respectively, had been
made against the credit line, with $5,600, $3,616 and $1,704, respectively,
remaining available. The Company is required to pay a commitment fee at a rate
of .25% per annum on the average daily unused portion of the line. The line is
scheduled to expire on February 28, 1998, at which time the Company expects to
evaluate the need for the line of credit.
F-11
<PAGE> 109
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
The revolving credit agreement includes various restrictive covenants, the
most restrictive of which prohibit or limit the Company's capacity to incur
additional indebtedness, and require maintenance of certain financial
requirements including tangible net worth, fixed charge coverage and current
ratio, as defined in the agreement. The revolving credit agreement also requires
the Company to furnish audited financial statements within 90 days after year
end. During fiscal 1996, the Company dropped below the minimum net working
capital and current ratio requirements, and did not provide audited financial
statements within 90 days. The bank waived these covenants as of June 30, 1996
and established new minimum levels for the financial ratios. The Company is
currently in compliance with both the original and revised covenant levels at
September 30, 1997 and at June 30, 1997.
The Company has entered into a $10,000 eight-year note with an insurance
company that matures in December 2003. Interest accrues at a rate of 11.50% per
annum, payable semiannually, with $383 accrued at September 30, 1997 and $96
accrued at June 30, 1997 and 1996. The note is subordinated to all senior debt,
as defined. Principal payments of $1,500 are due each year beginning in December
1998 with the balance due at maturity. The Company has the right to prepay
$5,000 without a premium. The note agreement includes various restrictive
covenants, the most restrictive of which prohibit or limit the Company's
capacity to declare dividends or incur additional indebtedness and require
maintenance of certain financial requirements including a minimum current ratio,
working capital requirement, debt to total capitalization and fixed charges
coverage as defined in the agreement. During fiscal 1996, the Company dropped
below the minimum net working capital and current ratio requirements. The lender
waived compliance with these covenants as of June 30, 1996 and through October
25, 1997, and established new minimum levels. The Company was in compliance with
both the original and revised covenant levels at June 30, 1997 but has exceeded
the debt to total capitalization limits as of September 30, 1997. The lender has
amended the covenants effective September 30, 1997. The Company was in
compliance with the amended covenants as of September 30, 1997.
4. COMMITMENTS AND CONTINGENCIES
The Company leases property and equipment under various operating leases.
Certain of the Company's equipment leases contain fair market value purchase
options and renewal terms of varying lengths. The Company's domestic office
facility lease requires the Company to pay operating costs, including property
taxes, insurance and maintenance and includes a five-year renewal option. Rent
expense was $377, $390, $1,715, $1,239 and $756 for the three months ended
September 30, 1997 and 1996 and the years ended June 30, 1997, 1996 and 1995,
respectively.
The Company leases property and equipment under capital leases at an
average interest rate of 13% at June 30, 1997 and 1996. Property and equipment
held by the Company under capitalized leases consists of equipment of $1,341,
less accumulated amortization of $912, $845 and $577 at September 30, 1997 and
June 30, 1997 and 1996, respectively.
F-12
<PAGE> 110
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
At June 30, 1997 minimum annual lease commitments are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
Fiscal year ending June 30:
1998.................................................... $201 $2,031
1999.................................................... 121 2,009
2000.................................................... -- 1,337
2001.................................................... -- 1,226
2202 and thereafter..................................... -- 636
---- ------
Total lease payments...................................... 322 $7,239
======
Less interest amounts..................................... 19
----
Total present value....................................... 303
Less current portion...................................... 191
----
Long-term portion......................................... $112
====
</TABLE>
The Company is a defendant in a lawsuit filed by a former stockholder
related to one sale made by a Unidata value-added reseller in the former
stockholder's exclusive territory. In separate legal filings, the plaintiff has
claimed damages of $17,000 to $50,000 based on the purported wrongful conduct.
The plaintiff claims damages based on the allegation that it agreed to pay a
company owned by a relative a $6,000 penalty if unable to ensure its exclusive
rights. The plaintiff also claims that future royalties of $11,000 on product
sales are at risk as a result of the alleged violation of the exclusive rights.
The basis for the $50,000 claim is unknown at this time. The Company has moved
to dismiss these actions and compel arbitration pursuant to the agreement
between the two parties. The Company denies any wrong doing and intends to
vigorously defend against this lawsuit. Given the early stages of the
proceeding, the outcome of this claim and the range of loss, if any, cannot be
predicted with certainty and no provision for loss has been recorded.
The Company is subject to other various legal proceedings and claims,
either asserted or unasserted, which arise in the ordinary course of business.
The outcome of these claims cannot be predicted with certainty.
5. INCOME TAXES
Income (loss) before taxes for the three months ended September 30, 1997
and 1996 and for the years ended June 30, 1997, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996 1995
------------- ------------- ------ ------- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
U.S. ........................ $(1,178) $ (917) $ 519 $(3,814) $ 640
Non-U.S. .................... (1,223) (171) (865) 1 761
------- ------- ----- ------- ------
$(2,401) $(1,088) $(346) $(3,813) $1,401
======= ======= ===== ======= ======
</TABLE>
F-13
<PAGE> 111
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
The provision for (benefit from) income taxes charged (credited) to
operations during the three months ended September 30, 1997 and 1996 and for the
years ended June 30, 1997, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996 1995
------------- ------------- ------ ------- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
U.S. federal............... $ (309) $ 11 $ 610 $ 553 $ 154
State and local............ (30) 1 106 35 12
Foreign.................... (383) (22) 334 217 32
------ ------- ------ ------- ------
Total current...... (722) (10) 1,050 805 198
------ ------- ------ ------- ------
Deferred:
U.S. federal............... (56) (182) (640) (1,645) (24)
State and local............ (5) (18) (62) (265) (31)
Foreign.................... -- (38) (135) (90) (6)
------ ------- ------ ------- ------
Total deferred..... (61) (238) (837) (2,000) (61)
------ ------- ------ ------- ------
Total provision
(benefit)........ $ (783) $ (248) $ 213 $(1,195) $ 137
====== ======= ====== ======= ======
</TABLE>
F-14
<PAGE> 112
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Temporary differences which result in deferred tax assets and liabilities
at June 30, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Current:
Deferred tax assets:
Allowance for doubtful accounts and returns.............. $ 505 $ 224
Accrued vacation......................................... 231 92
Accrued incentive compensation........................... 52 38
Other accrued items...................................... 53 --
------ ------
Deferred tax assets...................................... 841 354
Deferred tax liabilities:
Section 481 deferral..................................... (335) (335)
Other.................................................... (47) --
------ ------
Net current deferred tax asset............................. $ 459 $ 19
====== ======
Noncurrent:
Deferred tax assets:
Research and development and other credit
carryforwards......................................... $ 255 $ 417
Foreign loss carryforwards............................... 405 --
Acquired intangibles and distribution rights............. 1,945 1,926
------ ------
2,605 2,343
Valuation allowance...................................... (405) --
------ ------
2,200 2,343
------ ------
Deferred tax liabilities:
Section 481 deferral..................................... -- (335)
Property and equipment................................... (184) (208)
Capitalized software development costs................... (33) (237)
------ ------
(217) (780)
------ ------
Net noncurrent deferred tax asset.......................... $1,983 $1,563
====== ======
</TABLE>
Management has provided a valuation allowance on a foreign NOL created by
the sale of its subsidiary in Spain and the Operating losses incurred by its
subsidiary in France as these amounts are not believed to be realizable. The
Company has not provided valuation allowances in other jurisdictions with a
history of taxable income and taxes paid because future tax losses could be
carried back for tax refunds or continued taxable income will more likely than
not result in realization of the recorded assets.
Deferred income taxes are not provided for undistributed earnings of the
Company's foreign subsidiaries as it is management's intention to reinvest such
earnings in those subsidiaries' operations indefinitely. The Company's
cumulative undistributed earnings (loss) from consolidated foreign subsidiaries
is approximately $(1,736), $(872) and $277 as of September 30, 1997 and June 30,
1997 and 1996, respectively.
F-15
<PAGE> 113
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
A reconciliation of federal statutory taxes to the Company's effective tax
provision follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------- ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Income taxes at federal statutory
rate.............................. $(118) (34.0)% $(1,296) (34.0)% $ 476 34.0%
Increase (decrease) in taxes
resulting from:
Foreign income tax rate
difference...................... 18 5.3 127 3.3 -- --
State taxes, net of federal
benefit......................... 70 20.3 (125) (3.3) 7 0.5
Research and development and other
credits......................... (202) (58.2) 73 1.9 (267) (19.1)
Amortization of goodwill in
foreign locations............... 87 25.2 -- -- -- --
Change in valuation allowance
attributed to foreign loss
carryforwards................... 405 116.7 (32) (1.0) (213) (15.2)
----- ----- -------- ----- ----- -----
Other, net........................ (47) (13.7) 58 1.8 134 9.6
----- ----- -------- ----- ----- -----
Total provision for (benefit
from) income taxes............ $ 213 61.6% $(1,195) (31.3)% $ 137 9.8%
===== ===== ======== ===== ===== =====
</TABLE>
At June 30, 1997 and 1996, the Company had approximately $68 and $288,
respectively, in research and development tax credit carryforwards. These
credits expire through 2010.
6. STOCKHOLDERS' EQUITY
Common and Preferred Stock
During fiscal 1996, the Board of Directors authorized an additional
3,000,000 shares of nonvoting Class B common stock of which 500,000 shares have
been issued. Class B common stock is convertible into Class A common stock at
the option of the holder on a one-for-one basis. Also during fiscal 1996, the
Company issued 1,278,000 shares of Class A common stock as partial consideration
for a purchase of the technology and net assets of System Builder. The Company
has authorized 40,000,000 shares of Class A common stock, 3,000,000 shares of
Class B common stock and 10,000,000 shares of preferred stock all with no par
value assigned. The Company has not declared or paid any dividends during the
last three fiscal years.
Stock Option Plans
The Company has adopted stock option plans (the "Plans") for officers,
directors and employees. The Company typically reserves 800,000 shares of its
common stock each year for issuance under the Plans. Any shares reserved for but
not granted in the year are canceled. The Plans provide that options must not
have a term of more than ten years after the date of the grant, and will vest at
rates ranging from 25% to 33 1/3% per year from the date of grant. Option
exercise prices equal or exceed estimated fair value of the stock at the date of
grant as determined by the Board of Directors.
During 1996, an employee exercised options to purchase 150,000 shares of
common stock at the exercise price of $1.125 per share and simultaneously sold
these shares back to the Company for $3.52 per share, in connection with the
employee's termination. The buyback price represented the estimated fair value
of the stock at the date of the transaction. Compensation expense of $359 was
recognized pursuant to this transaction.
F-16
<PAGE> 114
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Changes in options outstanding under the Plans for the three months ended
September 30, 1997, and the the fiscal years ended June 30, 1997, 1996 and 1995
are as follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
SHARES AVERAGE AVERAGE
UNDER EXERCISE OPTION REMAINING
OPTION PRICE PRICE LIVES
--------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Balance at June 30, 1994.................... 1,404,000 $0.70 - $1.72
Granted................................... 372,000 $2.40 - $3.40
Canceled.................................. (8,000) $0.70 - $1.72
---------
Balance at June 30, 1995.................... 1,768,000 $0.70 - $3.40 $1.54
Granted................................... 550,000 $3.02 - $4.00 3.56
Canceled.................................. (394,000) $1.13 - $4.00 1.48
---------
Balance at June 30, 1996.................... 1,924,000 2.11
Granted................................... 300,000 $4.00 4.00
Canceled.................................. (161,000) $1.72 - $4.00 3.08
Exercised................................. (6,000) $1.13 - $2.40 1.78
---------
Balance at June 30, 1997.................... 2,057,000 $0.70 - $4.00 2.30 7.00 years
Granted................................... 129,500 $4.00 4.00
Canceled.................................. (2,000) $4.00 4.00
Exercised................................. (9,500) $1.12 - $3.02 $1.22
---------
Balance at September 30, 1997............... 2,175,000 $0.70 - $4.00 $2.40
=========
</TABLE>
Of the shares under option at June 30, 1997, 1,355,000 were vested and
exercisable as of June 30, 1997 at exercise prices ranging from $0.70 to $4.00
with a weighted average exercise price of $1.69.
The options granted during 1997 had a weighted average exercise price of
$4.00 and an estimated market value of $2.94 per share.
The options granted during 1996 had a weighted average exercise price of
$3.56 and an estimated market value of $2.61 per share.
Had compensation cost been determined based on the fair value at grant
dates for stock option awards consistent with SFAS No. 123, the Company's net
loss and loss per share for the years ended June 30, 1997 and 1996, would have
been increased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1997 1996
------ -------
<S> <C> <C>
Net loss:
As reported............................................. $ (559) $(2,618)
Pro forma............................................... $ (647) $(2,658)
Net loss per share:
As reported............................................. $(0.05) $ (0.23)
Pro forma............................................... $(0.05) $ (0.23)
</TABLE>
The pro forma compensation expense based on the fair value of the options
is estimated on the grant date using the minimum value method with the following
assumptions used for grants: no dividend yield per share, a risk free rate of
return of 6.35% and an expected life of the options of five years.
F-17
<PAGE> 115
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Executive Stock Purchase Program
The Company adopted an Executive Stock Purchase Program for key employees
during fiscal 1993. The Company has issued 383,000 shares of common stock for
$431 under the program. All stock purchases have been at prices equal to the
estimated fair value (as determined by the Board of Directors). Loans in the
form of notes receivable, bearing interest at 5%, were issued to finance a
portion of the common stock. The loans are for a term of three years and require
repayment in three equal annual installments plus accrued interest. Loans
granted under the programs are full recourse loans and are collateralized by the
related common stock. Notes receivable of $55, $55 and $59 are recorded as a
reduction of stockholders' equity at September 30, 1997 and June 30, 1997 and
1996, respectively.
Warrants
The Company has issued warrants to existing stockholders to acquire 505,000
shares of its common stock. The warrants are exercisable after December 1997 but
before December 2004 at exercise prices ranging from $1 to $3.83.
7. THE EMPLOYEE SAVINGS PLAN
The Company adopted a 401(k) Employee Retirement Savings Plan (the "Plan")
in fiscal 1993. The Plan is a defined contribution savings plan available to all
U.S. employees of the Company who have attained the minimum eligibility
requirements.
Participants may elect to contribute to the Plan, subject to limitations
imposed by provisions of the tax law. The Company matches 50% of the first 6% of
the individual participant contributions. The Company's contribution vests at a
rate of 25% after two years of service, 50% after three years, 75% after four
years and 100% after five years. The Company contributed $87, $77, $283, $223
and $152 to the Plan for the three months ended September 30, 1997 and 1996 and
the fiscal years ended June 30, 1997, 1996 and 1995, respectively.
8. ASSET ACQUISITION
Effective November 1, 1995, the Company acquired substantially all the
assets and assumed $2,981 in liabilities of System Builder, a software tools
development company. The Company paid cash of $10,000 and issued 1,278,000
shares of Class A common stock. The shares were valued at approximately $3 per
share, determined on a basis consistent with the Company's valuation methodology
used for its stock option plans (Note 6). The cash for this acquisition was
provided by an insurance company pursuant to a lending agreement (Note 3).
Transaction costs totaling $512 net of cash acquired of approximately $60 were
also included as part of the purchase price.
F-18
<PAGE> 116
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
The System Builder acquisition was accounted for under the purchase method
of accounting. The total net purchase price of $14,343 was allocated to tangible
and identifiable intangible assets acquired and liabilities assumed based upon
an outside appraisal of the estimated fair values on the acquisition date. The
purchase price allocation was as follows:
<TABLE>
<S> <C>
Current assets..................................................... $ 2,699
Liabilities assumed................................................ (2,981)
Property and equipment............................................. 1,087
Other noncurrent assets............................................ 42
Capitalized software............................................... 4,500
In-process research and development................................ 4,900
Goodwill........................................................... 4,096
-------
$14,343
=======
</TABLE>
The in-process research and development of $4,900 was expensed at
acquisition as the technological feasibility of the related products had not
been demonstrated as of that date and this technology had no alternative future
use.
For fiscal 1996 and 1995, the unaudited pro forma information of the
Company as if the acquisition with System Builder had occurred at the beginning
of the year, is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR
1996 1995
----------- -----------
<S> <C> <C>
Sales................................................. $44,458 $34,964
Net income (loss)..................................... $(3,182) $ 525
Shares outstanding.................................... $12,132 $13,564
Earnings (loss) per share............................. $ (0.26) $ 0.04
</TABLE>
Effective July 1, 1996, the Company acquired the stock of Marine S.A., a
French software distributor, known as Patio ("Patio"). The Company paid cash of
$400 and a future amount payable of the greater of $267 or an amount equal to
1.47 times calendar 1997 and 1998 earnings of the related subsidiary.
Transaction costs totaling $88 net of cash acquired of approximately $194 were
also included as part of the purchase price.
The Patio acquisition was accounted for under the purchase method of
accounting. The total purchase price of $561 was allocated to tangible and
intangible assets acquired and liabilities assumed based upon estimated fair
values on the acquisition date. The purchase price allocation was as follows:
<TABLE>
<S> <C>
Current Assets....................................... $ 379
Liabilities Assumed.................................. (299)
Property and Equipment............................... 425
Other Noncurrent Assets.............................. 24
Goodwill............................................. 32
-----
$ 561
=====
</TABLE>
The Patio acquisition took place on the first day of fiscal 1997, and the
results of the combined operation are included in the consolidated statements of
operations for all of fiscal 1997.
F-19
<PAGE> 117
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
For fiscal 1996, the unaudited pro forma information of the Company as if
the acquisition with Patio had occurred at the beginning of the year, is as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR
1996
-----------
<S> <C>
Sales............................................. $44,026
Net (loss)........................................ $(2,397)
Shares outstanding................................ $11,498
(Loss) per share.................................. $ (0.21)
</TABLE>
During fiscal 1997, the Company entered into a letter of intent to acquire,
as a purchase, the stock of O2 Technology S.A., a leading provider of
object-oriented databases.
9. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Noncash Investing and Financing Activities
Capital lease obligations were incurred for property and equipment of $420
and $259 in fiscal years 1996 and 1995, respectively.
In connection with the acquisition of System Builder during 1996, the
Company issued 1,278,000 shares of Class A common stock, valued at approximately
$3 per share (Note 8).
Supplemental Cash Flow Information
The Company paid $769, $116, $651, $286 and $53 in income taxes in the
quarters ended September 30, 1997 and 1996 and the fiscal years 1997, 1996 and
1995, respectively, and paid $108, $79, $1,786, $1,135 and $451 for interest on
debt in the quarters ended September 30, 1997 and 1996 and the fiscal years
1997, 1996 and 1995, respectively. No amounts of interest were capitalized in
either fiscal year.
10. DISTRIBUTION RIGHTS
The Company acquired rights to market, distribute and/or sublicense certain
of its software products in 1995 for $500, as well as rights to market,
distribute and/or sublicense the System Builder suite of products in 1997 for
$312. Such costs, net of amortization, are included in other assets in the
accompanying consolidated balance sheet.
F-20
<PAGE> 118
UNIDATA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
11. GEOGRAPHIC DATA
The Company operates in one industry segment consisting of the development,
marketing and support of software for the development and execution of
commercial applications for standard operating systems. Financial information by
geographic region for the years ended June 30, 1997, 1996 and 1995 is as
follows:
<TABLE>
<CAPTION>
NORTH UNITED KINGDOM/ AUSTRALIA/
AMERICA FRANCE REST OF EUROPE ASIA ELIMINATION TOTAL
------- ------ --------------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended
September 30, 1997:
Sales................... $ 8,162 $ 204 $ 1,381 $ 749 $ (686) $ 9,810
Net income (loss)....... $ (777) (118) (480) (266) 23 (1,618)
Assets.................. 27,719 1,313 5,226 2,557 (4,989) 31,826
Fiscal Year 1997:
Sales................... $37,110 $1,127 $ 9,739 $4,355 $(3,219) $49,112
Net income (loss)....... 446 (339) (740) 78 (4) (559)
Assets.................. 28,168 1,391 6,990 2,629 (4,798) 34,380
Fiscal Year 1996:
Sales................... $32,743 $ 563 $ 8,533 $1,928 $(2,534) $41,233
Net income (loss)....... (2,416) (337) 148 (9) (4) (2,618)
Assets.................. 31,326 622 6,625 2,084 (6,177) 34,480
Fiscal Year 1995:
Sales................... $17,909 $ 845 $ 3,834 $1,887 $ (118) $24,357
Net income (loss)....... 528 519 53 168 (4) 1,264
Net assets.............. 13,958 234 3,594 803 (2,109) 16,480
</TABLE>
12. RELATED PARTIES
During 1996, the Company issued a note payable to an insurance company and
affiliates (see Note 3). The insurance company is a stockholder and holds
warrants to purchase 250,000 shares of common stock. The Company has engaged
this insurance company to provide medical and life insurance for employees as
well as administer the Company's 401K plan. During fiscal 1997 and 1996,
payments to the insurance company for interest on the note totaled $1,150 and
$582, respectively. Payments for insurance benefits totaled $177, $147, $809 and
$251, for the three months ended September 30, 1997 and 1996 and the year ended
June 30, 1997 and 1996, respectively.
During 1996, the Company issued warrants to purchase 255,000 shares of
common stock to a director and his brother, both of whom are stockholders of the
Company (Note 6).
The Company has paid $222, $228 and $223 in interest to a stockholder and
director during fiscal 1997, 1996 and 1995, respectively, on an outstanding loan
of $2,350. The rate charged is the same as those paid to another unaffiliated
bank for working capital loans.
Included in other current assets and stockholders' equity are note
receivables from officers of the Company of $128 as of September 30, 1997 and
$113 as of June 30, 1997 and 1996, respectively. The majority of these notes are
demand notes and bear interest at 5% to 10%.
A director and stockholder of the Company is a partner in a law firm
engaged by the Company to provide legal services. The Company has paid $57, $43,
$279, $298 and $1 in legal services to this law firm during the three months
ended September 30, 1997 and 1996 and the fiscal years ending 1997, 1996 and
1995, respectively. Outstanding legal fees to this law firm were $47, $33 and
$31 as of September 30, 1997 and June 30, 1997 and 1996, respectively.
A stockholder of two of the Company's customers has also been a director
and stockholder of the Company since 1995. Total billings to these customers
were $115, $106, $539 and $454 during the three months ended September 30, 1997
and 1996 and the fiscal years ending 1997 and 1996, respectively. Accounts
receivable due from these customers were $252, $349 and $302 as of June 30, 1997
and 1996, respectively.
F-21
<PAGE> 119
ANNEX I
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND BETWEEN
VMARK SOFTWARE, INC.
and
UNIDATA, INC.
Dated as of October 7, 1997,
as amended on November 7, 1997
<PAGE> 120
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................................. 2
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.................................................. 5
Section 1.09. Dissenting Shares..................................................... 5
Section 1.10. No Further Ownership Rights in UNIDATA Common Stock................... 5
Section 1.11. Lost, Stolen or Destroyed Certificates................................ 6
Section 1.12. Tax and Accounting Consequences....................................... 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF UNIDATA.................................. 6
Section 2.01. Organization.......................................................... 6
Section 2.02. Capitalization........................................................ 6
Section 2.03. Qualification in Foreign Jurisdictions................................ 7
Section 2.04. Authority Relative to this Agreement.................................. 7
Section 2.05. No Conflict: Required Filings and Consents............................ 7
Section 2.06. Compliance; Permits................................................... 8
Section 2.07. Financial Statements.................................................. 8
Section 2.08. Absence of Certain Changes or Events.................................. 8
Section 2.09. Material Contracts.................................................... 8
Section 2.10. Accounts Receivable................................................... 9
Section 2.11. No Undisclosed Liabilities............................................ 9
Section 2.12. Absence of Litigation................................................. 9
Section 2.13. Employee Benefit Plans; Employment Agreements......................... 9
Section 2.14. Labor Matters......................................................... 12
Section 2.15. Restrictions on Business Activities................................... 12
Section 2.16. Real Property......................................................... 12
Section 2.17. Taxes................................................................. 12
Section 2.18. Environmental Matters................................................. 14
Section 2.19. Brokers............................................................... 15
Section 2.20. Intellectual Property................................................. 15
Section 2.21. Interested Party Transactions......................................... 16
Section 2.22. Insurance............................................................. 17
Section 2.23. Vote Required......................................................... 17
Section 2.24. Pooling Matters....................................................... 17
</TABLE>
i
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Section 2.25. Other Negotiations.................................................... 17
Section 2.26. Full Disclosure....................................................... 17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF VMARK................................... 18
Section 3.01. Organization.......................................................... 18
Section 3.02. Capitalization........................................................ 18
Section 3.03. Qualification in Foreign Jurisdictions................................ 18
Section 3.04. Authority Relative to this Agreement.................................. 18
Section 3.05. No Conflict: Required Filings and Consents............................ 19
Section 3.06. Compliance; Permits................................................... 19
Section 3.07. SEC Filings........................................................... 19
Section 3.08. Financial Statements.................................................. 20
Section 3.09. Absence of Certain Changes or Events.................................. 20
Section 3.10. Material Contracts.................................................... 20
Section 3.11. Accounts Receivable................................................... 21
Section 3.12. No Undisclosed Liabilities............................................ 21
Section 3.13. Absence of Litigation................................................. 21
Section 3.14. Employee Benefit Plans; Employment Agreements......................... 21
Section 3.15. Labor Matters......................................................... 23
Section 3.16. Restrictions on Business Activities................................... 23
Section 3.17. Real Property......................................................... 24
Section 3.18. Taxes................................................................. 24
Section 3.19. Environmental Matters................................................. 25
Section 3.20. Brokers............................................................... 26
Section 3.21. Intellectual Property................................................. 26
Section 3.22. Interested Party Transactions......................................... 28
Section 3.23. Insurance............................................................. 28
Section 3.24. Vote Required......................................................... 28
Section 3.25. Pooling Matters....................................................... 28
Section 3.26. Opinion of Financial Advisor.......................................... 28
Section 3.27. Other Negotiations.................................................... 28
Section 3.28. Full Disclosure....................................................... 28
Section 3.29. Rights Plan; Antitakeover Law......................................... 29
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER..................................... 29
Section 4.01. Conduct of Business by UNIDATA and VMARK Pending the Merger........... 29
Section 4.02. No Solicitation by UNIDATA or VMARK................................... 31
ARTICLE V ADDITIONAL AGREEMENTS....................................................... 31
Section 5.01. Joint Proxy Statement/Prospectus; Registration Statement.............. 31
Section 5.02. Stockholders' Meetings................................................ 32
Section 5.03. Access to Information: Confidentiality................................ 32
</TABLE>
ii
<PAGE> 122
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 5.04. Consents, Approvals................................................... 32
Section 5.05. Stock Options......................................................... 33
Section 5.06. Warrants.............................................................. 33
Section 5.07. Notification of Certain Matters....................................... 34
Section 5.08. Further Action/Tax Treatment.......................................... 34
Section 5.09. Public Announcements.................................................. 34
Section 5.10. Quotation of VMARK Common Stock on Nasdaq............................. 34
Section 5.11. Accountant's Comfort Letters.......................................... 34
Section 5.12. Pooling Accounting Treatment.......................................... 34
Section 5.13. Indemnification; Directors' and Officers' Insurance................... 34
Section 5.14. Employee Benefits..................................................... 35
Section 5.15. Name of the Surviving Corporation..................................... 35
Section 5.16. Stockholder Litigation................................................ 36
Section 5.17. Registration Rights................................................... 36
Section 5.18. Fairness Opinion; Restructuring....................................... 36
ARTICLE VI CONDITIONS TO THE MERGER................................................... 36
Section 6.01. Conditions to Obligation of Each Party to Effect the Merger........... 36
Section 6.02. Additional Conditions to Obligation of VMARK.......................... 37
Section 6.03. Additional Conditions to Obligation of UNIDATA........................ 37
ARTICLE VII TERMINATION............................................................... 37
Section 7.01. Termination........................................................... 37
Section 7.02. Effect of Termination................................................. 39
Section 7.03. Fees and Expenses..................................................... 39
ARTICLE VIII GENERAL PROVISIONS....................................................... 40
Section 8.01. Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc................................................................... 40
Section 8.02. Notices............................................................... 40
Section 8.03. Certain Definitions................................................... 41
Section 8.04. Amendment............................................................. 42
Section 8.05. Waiver................................................................ 42
Section 8.06. Severability.......................................................... 42
Section 8.07. Entire Agreement...................................................... 42
Section 8.08. Assignment............................................................ 42
Section 8.09. Parties in Interest................................................... 43
Section 8.10. Failure or Indulgence Not Waiver; Remedies Cumulative................. 43
Section 8.11. Governing Law......................................................... 43
Section 8.12. Counterparts.......................................................... 43
</TABLE>
iii
<PAGE> 123
<TABLE>
<CAPTION>
SCHEDULE
- --------
<S> <C>
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
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<TABLE>
<CAPTION>
SCHEDULE
- --------
<S> <C>
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> 125
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> 126
<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> 127
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of October 7,
1997, as amended on November 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;
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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.
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<PAGE> 129
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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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 two-thirds 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 8,272,486 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 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.
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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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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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
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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 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.
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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(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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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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(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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ANNEX II
VOLPE BROWN WHELAN & COMPANY, LLC
INVESTMENT BANKERS
ONE MARITIME PLAZA, SAN FRANCISCO, CA 94111
(415) 956-8120 FAX (415) 986-6754
September 30, 1997
The Board of Directors
VMARK Software, Inc.
50 Washington Street
Westboro, MA 01581-1021
Members of the Board:
You have requested our opinion (the "Opinion") as to the fairness, from a
financial point of view, to the stockholders of VMARK Software, Inc. ("VMARK" or
the "Company") of the consideration to be paid (the "Consideration") in the
proposed merger (the "Merger") with Unidata, Inc. ("Unidata") pursuant to an
Agreement and Plan of Merger and Reorganization between VMARK and Unidata (the
"Agreement"). The Agreement provides, among other things, that each share of
Unidata Class A common stock and Unidata Class B common stock (together the
"Unidata Common Stock") will be converted into the right to receive an agreed
number of shares of VMARK common stock (the "Exchange Ratio"). As of the date
hereof, the Exchange Ratio is 0.4459. It is our understanding that VMARK intends
to account for the Merger as a pooling of interests for financial reporting
purposes and as a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended.
Volpe Brown Whelan & Company, LLC ("VBW&C"), as a customary part of its
investment banking business, engages in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements and
valuations for corporate and other purposes. In the ordinary course of its
business, VBW&C and its affiliates may actively trade the equity securities of
VMARK for their own account and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities. VBW&C has been
retained by VMARK to act as its financial advisor in negotiations with Unidata
and, upon conclusion of successful negotiations with Unidata, to opine as to the
fairness, from a financial point of view, of the Consideration. VBW&C will
receive a fee of $300,000 for rendering its Opinion, no portion of which is
conditioned upon the Opinion being favorable. The $300,000 fee and a separate
$50,000 retainer fee will be credited against an additional fee to be paid to
VBW&C upon the closing of the Merger.
For the purposes of formulating the Opinion, we have, among other things:
(i) Reviewed the September 17, 1997 draft of the Agreement (exclusive
of schedules), the September 19, 1997 draft of the Unidata
Stockholder Support Agreement, and the September 19, 1997 draft of
the VMARK Stockholder Support Agreement;
(ii) Discussed the proposed terms of Unidata's prospective acquisition
of O(2) Technology S.A. ("O(2)") with VMARK and Unidata
management;
(iii) Interviewed management of VMARK, Unidata and O(2) concerning the
business prospects, financial outlook and operating plans of
each company individually and combined;
(iv) Reviewed certain historical and projected VMARK, Unidata and O(2)
financial statements and other relevant financial and operating
data of VMARK, Unidata and O(2) prepared by the respective
company management teams;
(v) Reviewed the valuation of selected publicly-traded companies we
deemed comparable and relevant to the Merger;
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(vi) Reviewed, to the extent publicly-available, the financial terms
of selected merger and acquisition transactions that we deemed
comparable and relevant to the Merger;
(vii) Reviewed the relevant contribution each of VMARK and Unidata is
making to the combined company in terms of financial results and
compared the results of this analysis with the pro forma
ownership of each respective company;
(viii) Performed a discounted cash flow analysis of Unidata as a
stand-alone entity based upon financial projections of Unidata
and VMARK management;
(ix) Performed a pro forma financial impact analysis of the combined
entity, based upon financial projections provided by VMARK and
financial projections provided by Unidata and O(2) and reviewed
by VMARK; and
(x) Performed other such studies, analyses and inquiries and
considered other such information as we deemed relevant.
VBW&C relied without independent verification upon the accuracy and
completeness of all of the financial, accounting, legal, tax, operating and
other information provided to VBW&C by VMARK, Unidata and O(2) and has relied
upon the assurances of VMARK, Unidata and O(2) that all such information
provided by them, respectively, is complete and accurate in all material
respects and that there is no additional material information known to any of
them that would make any of the information made available to VBW&C either
incomplete or misleading. VMARK has also retained outside legal, accounting, tax
and patent advisors to advise on matters relating to the Merger. Accordingly,
VBW&C has relied on their advice and expresses no opinion on such matters.
With respect to the projected financial data of VMARK, Unidata and O(2),
all of which has been provided by the management of VMARK or Unidata, as well as
the combined business plan, VBW&C has relied upon assurances of each company
that such data has been prepared in good faith on a reasonable basis reflecting
the best currently available estimates and judgments of VMARK and Unidata
managements as to the future financial performance of each company separately
and as a combined company. Our Opinion is based, in large part, on these
projected financial data and estimates.
VBW&C is relying upon the information provided to it by VMARK, Unidata and
O(2) for the purposes of rendering the Opinion. VBW&C expresses no opinion and
has made no investigation with respect to the validity, accuracy or completeness
of the information provided to it and does not warrant any projections included
in such information. Actual results that VMARK, Unidata or O(2) might achieve in
the future as stand-alone entities or as a combined company may vary materially
from those used in VBW&C's analysis.
VBW&C has assumed that the Merger will be consummated in accordance with
the terms of the September 17, 1997 draft of the Agreement, that the Exchange
Ratio and other terms of the Merger as agreed as of the close of business on
September 25, 1997 will not change materially prior to the closing, that the
schedules to the Agreement will not contain any unanticipated material adverse
disclosure and that the terms of the O(2) acquisition will not change materially
from those agreed as of September 25, 1997.
VBW&C has reviewed a term sheet from a prospective lender to VMARK for an
increased line of credit in the amount of $25 million. VBW&C has assumed that
this line of credit will be in place prior to closing. VBW&C has not had any
discussions with the prospective lender.
VBW&C has, furthermore, not made any independent appraisals or valuations
of any assets of Unidata or O(2), nor has VBW&C been furnished with any such
appraisals or valuations. VBW&C has performed no investigations relating to the
representations and warranties made by VMARK, Unidata or O(2) with respect to
its intellectual property and status of any litigation pending or threatened
against any company. VBW&C has not visited the operations of O(2). While VBW&C
believes that its review, as described herein, is an adequate basis for the
Opinion it has expressed, the Opinion is necessarily based upon market, economic
and other conditions (including, without limitation, adjustments to foreign
exchange and currency rates) that exist and can be evaluated as of the date of
the Opinion, and any change in such conditions would require a re-evaluation of
the Opinion.
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The Opinion addresses only the financial fairness of the Consideration and
does not address the relative merits of the Merger and any alternatives to the
Merger, VMARK's decision to proceed with or the effect of the Merger, or any
other aspect of the Merger. VBW&C did not validate the quality, scalability or
robustness of any of Unidata's or O(2)'s products and has instead relied upon
assurances of VMARK that Unidata's and O(2)'s products meet VMARK's
expected/required capabilities.
The preparation of a fairness opinion involves various judgments as to
appropriate and relevant quantitative and qualitative methods of financial
analyses and the application of those methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to summary
description. Accordingly, we believe our analyses and the factors utilized in
such analyses must be considered as a whole and that considering any portion of
such analyses or factors, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying the Opinion. In
our analyses, we made numerous assumptions with respect to industry performance,
general business and other conditions and matters, many of which are beyond
VMARK's or Unidata's control and are not susceptible to accurate prediction. No
opinion is expressed herein as to the future trading price or range of prices of
any securities of VMARK issued prior to or in conjunction with the Merger.
Furthermore, the Opinion does not constitute a recommendation on whether to vote
in favor of the Merger. The Opinion and related materials have been prepared for
the use and benefit of the Board of Directors of VMARK and is rendered to the
Board of Directors in connection with its consideration of the Merger.
Based upon and subject to the foregoing limitations and restrictions and
after considering such other matters as we deem relevant, it is our opinion
that, as of the date hereof, the Consideration in the Merger is fair, from a
financial point of view, to the stockholders of VMARK.
Very truly yours,
VOLPE BROWN WHELAN & COMPANY, LLC
By: /s/ STEVE PIPER
----------------------------------
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ANNEX III
COLORADO BUSINESS CORPORATION ACT
ARTICLE 113
DISSENTERS' RIGHTS
PART 1
RIGHT OF DISSENT --PAYMENT FOR SHARES
7-113-101 DEFINITIONS. For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at the legal rate as
specified in section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section
7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
7-113-102 RIGHT TO DISSENT. (1) A shareholder, whether or not entitled to
vote, is entitled to dissent and obtain payment of the fair value of the
shareholder's shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party if:
(I) Approval by the shareholders of that corporation is required
for the merger by section 7-111-103 or 7-111-104 or by the articles of
incorporation; or
(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of the corporation for which a
shareholder vote is required under section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote
upon the consent of the corporation to the disposition pursuant to section
7-112-102(2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national
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market system of the National Association of Securities Dealers Automated
Quotation System, or were held of record by more than two thousand shareholders,
at the time of:
(a) The record date fixed under section 7-107-107 to determine the
shareholders entitled to receive notice of the shareholders' meeting at
which the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine
shareholders entitled to sign writings consenting to the corporate action;
or
(c) The effective date of the corporate action if the corporate action
is authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall
not apply if the shareholder will receive for the shareholder's shares, pursuant
to the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan
of merger or share exchange;
(b) Shares of any other corporation which at the effective date of the
plan of merger or share exchange either will be listed on a national
securities exchange registered under the federal "Securities Exchange Act
of 1934", as amended, or on the national market system of the National
Association of Securities Dealers Automated Quotation System, or will be
held of record by more than two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu
of fractional shares.
(2)
(2.5) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of a reverse split that reduces the number of shares owned by the
shareholder to a fraction of a share or to scrip if the fractional share or
scrip so created is to be acquired for cash or the scrip is to be voided under
section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
7-113-103 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in the record shareholder's name only if the record shareholder
dissents with respect to all shares beneficially owned by any one person and
causes the corporation to receive written notice which states such dissent and
the name, address, and federal taxpayer identification number, if any, of each
person on whose behalf the record shareholder asserts dissenters' rights. The
rights of a record shareholder under this subsection (1) are determined as if
the shares as to which the record shareholder dissents and the other shares of
the record shareholder were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time
the beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
such beneficial shareholder must certify to the corporation
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that the beneficial shareholder and the record shareholder or record
shareholders of all shares owned beneficially by the beneficial shareholder have
asserted, or will timely assert, dissenters' rights as to all such shares as to
which there is no limitation on the ability to exercise dissenters' rights. Any
such requirement shall be stated in the dissenters' notice given pursuant to
section 7-113-203.
PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
7-113-201 NOTICE OF DISSENTERS' RIGHTS. (1) If a proposed corporate action
creating dissenters' rights under section 7-113-102 is submitted to a vote at a
shareholders' meeting, the notice of the meeting shall be given to all
shareholders, whether or not entitled to vote. The notice shall state that
shareholders are or may be entitled to assert dissenters' rights under this
article and shall be accompanied by a copy of this article and the materials, if
any, that, under articles 101 to 117 of this title, are required to be given to
shareholders entitled to vote on the proposed action at the meeting. Failure to
give notice as provided by this subsection (1) shall not affect any action taken
at the shareholders' meeting for which the notice was to have been given, but
any shareholder who was entitled to dissent but who was not given such notice
shall not be precluded from demanding payment for the shareholder's shares under
this article by reason of the shareholder's failure to comply with the
provisions of section 7-113-202(1).
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken pursuant to section 7-107-104 for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202(2).
7-113-202 NOTICE OF INTENT TO DEMAND PAYMENT. (1) If a proposed corporate
action creating dissenters' rights under section 7-113-102 is submitted to a
vote at a shareholders' meeting and if notice of dissenters' rights has been
given to such shareholder in connection with the action pursuant to section
7-113-201(1), a shareholder who wishes to assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken,
written notice of the shareholder's intention to demand payment for the
shareholder's shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104 and if notice of dissenters' rights has been given to such
shareholder in connection with the action pursuant to section 7-113-201(2) a
shareholder who wishes to assert dissenters' rights shall not execute a writing
consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1)
or (2) of this section is not entitled to demand payment for the shareholder's
shares under this article.
7-113-203 DISSENTERS' NOTICE. (1) If a proposed corporate action creating
dissenters' rights under section 7-113-102 is authorized, the corporation shall
give a written dissenters' notice to all shareholders who are entitled to demand
payment for their shares under this article.
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(2) The dissenters' notice required by subsection (1) of this section shall
be given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the
effective date or proposed effective date of the corporate action:
(b) State an address at which the corporation will receive payment
demands and the address of a place where certificates for certificated
shares must be deposited;
(c) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment
demand and certificates for certificated shares, which date shall not be
less than thirty days after the date the notice required by subsection (1)
of this section is given;
(f) State the requirement contemplated in section 7-113-103(3), if
such requirement is imposed; and
(g) Be accompanied by a copy of this article.
7-113-204 PROCEDURE TO DEMAND PAYMENT. (1) A shareholder who is given a
dissenters' notice pursuant to section 7-113-203 and who wishes to assert
dissenters' rights shall, in accordance with the terms of the dissenters'
notice:
(a) Cause the corporation to receive a payment demand, which may be
the payment demand form contemplated in section 7-113-203(2)(d), duly
completed, or may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of
this section retains all rights of a shareholder, except the right to transfer
the shares, until the effective date of the proposed corporate action giving
rise to the shareholder's exercise of dissenters' rights and has only the right
to receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209(1)(b), the demand
for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
7.113-205 UNCERTIFICATED SHARES. (1) Upon receipt of a demand for payment
under section 7-113-204 from a shareholder holding uncertificated shares, and in
lieu of the deposit of certificates representing the shares, the corporation may
restrict the transfer thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206 PAYMENT. (1) Except as provided in section 7-113-208, upon the
effective date of the corporate action creating dissenters' rights under section
7-113-102 or upon receipt of a payment demand pursuant to section 7-113-204,
whichever is later, the corporation shall pay each dissenter who complied with
section 7-113-204, at the address stated in the payment demand, or if no such
address is stated in the payment demand, at the address shown on the
corporation's current record of shareholders for the record shareholder holding
the dissenter's shares, the amount the corporation estimates to be the fair
value of the dissenter's shares, plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent
fiscal year or, if that is not available, the corporation's balance sheet
as of the end of a fiscal year ending not more than sixteen months before
the date of payment, an income statement for that year, and, if the
corporation customarily
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provides such statements to shareholders, a statement of changes in
shareholders' equity for that year and a statement of cash flow for that
year, which balance sheet and statements shall have been audited if the
corporation customarily provides audited financial statements to
shareholders, as well as the latest available financial statements, if any,
for the interim or full-year period, which financial statements need not be
audited.
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under
section 7-113-209; and
(e) A copy of this article.
7-113-207 FAILURE TO TAKE ACTION. (1) If the effective date of the
corporate action creating dissenters' rights under section 7-113-102 does not
occur within sixty days after the date set by the corporation by which the
corporation must receive the payment demand as provided in section 7-113-203,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(2) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice, as provided in section 7-113-203, and the provisions of sections
7-113-204 to 7-113-209 shall again be applicable.
7-113-208 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER ANNOUNCEMENT
OF PROPOSED CORPORATE ACTION. (1) The corporation may, in or with the
dissenters' notice given pursuant to section 7-113-203, state the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action creating dissenters' rights under section 7-113-102 and state
that the dissenter shall certify in writing, in or with the dissenter's payment
demand under section 7-113-204, whether or not the dissenter (or the person on
whose behalf dissenters' rights are asserted) acquired beneficial ownership of
the shares before that date. With respect to any dissenter who does not so
certify in writing, in or with the payment demand, that the dissenter or the
person on whose behalf the dissenter asserts dissenters' rights acquired
beneficial ownership of the shares before such date, the corporation may, in
lieu of making the payment provided in section 7-113-206, offer to make such
payment if the dissenter agrees to accept it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206(2).
7-113-209 PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may give notice to the corporation in writing of the dissenter's
estimate of the fair value of the dissenter's shares and of the amount of
interest due and may demand payment of such estimate, less any payment made
under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section
7-113-206 or offered under section 7-113-208 is less than the fair value of
the shares or that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206
within sixty days after the date set by the corporation by which the
corporation must receive the payment demand; or
(c) The corporation does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares as
required by section 7-113-207(1).
(2) A dissenter waives the right to demand payment under this section
unless the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
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PART 3
JUDICIAL APPRAISAL OF SHARES
7-113-301 COURT ACTION. (1) If a demand for payment under section
7-113-209 remains unresolved, the corporation may, within sixty days after
receiving the payment demand, commence a proceeding and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty-day period, it shall pay to
each dissenter whose demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection
(1) of this section in the district court of the county in this state where the
corporation's principal office is located or, if the corporation has no
principal office in this state, in the district court of the county in which its
registered office is located. If the corporation is a foreign corporation
without a registered office, it shall commence the proceeding in the county
where the registered office of the domestic corporation merged into, or whose
shares were acquired by, the foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unresolved parties to the proceeding commenced
under subsection (2) of this section as in an action against their shares, and
all parties shall be served with a copy of the petition. Service on each
dissenter shall be by registered or certified mail, to the address stated in
such dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record or shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to such order. The parties to
the proceeding are entitled to the same discovery rights as parties in other
civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
7-113-302 COURT COSTS AND COUNSEL FEES. (1) The court in an appraisal
proceeding commenced under section 7-113-301 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation; except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the
court finds the corporation did not substantially comply with the
requirements of part 2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor
of any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to said counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefitted.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit, or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fees)
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that he
acted in any of the capacities set forth above, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted under similar
standards, except that no indemnification may be made in respect to any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the Court of Chancery or the
court in which the action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnification
for such expenses which the Court of Chancery or such other court shall deem
proper.
Section 145 of the DGCL further provides that, to the extent that a
director or officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by him in connection therewith; and that
indemnification provided by, or granted pursuant to, Section 145 shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled. Section 145 further empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liabilities under Section 145 of the DGCL.
Article X of the Registrant's Second Restated Certificate of Incorporation
provides that the corporation shall, to the fullest extent permitted from time
to time under the DGCL, indemnify each of its directors and officers against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement in respect of any action, suit or proceeding in which such director
or officer may be involved or with which he may be threatened, while in office
or thereafter, by reason of his or her actions or omissions in connection with
services to the corporation, such indemnification to include prompt payment of
expenses in advance of the final disposition of any such action, suit or
proceeding.
Section 102(b)(7) of the DGCL enables a Delaware corporation to provide in
its certificate of incorporation for the elimination or limitation of the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. Any such provision
cannot eliminate or limit a director's liability (1) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (2) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (3) under Section 174 of the DGCL (which imposes
liability on directors for unlawful payment of dividends or unlawful stock
purchase or redemption); or (4) for any transaction from which the director
derived an improper personal benefit.
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Article IX of the Registrant's Second Restated Certificate of Incorporation
provides that the corporation shall eliminate personal liability of directors to
the fullest extent permitted by Section 102(b)(7).
The Merger Agreement provides that all rights to indemnification of present
or former directors or officers of UNIDATA will survive the Merger. In addition,
the Merger Agreement provides that VMARK will maintain the current liability
insurance policy for UNIDATA's officers and directors until the sixty
anniversary of the date that the merger becomes effective. See "THE PROPOSED
MERGER--Interests of Certain Persons in the Merger."
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
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2.1 -- Agreement and Plan of Merger and Reorganization dated as of October 7, 1997
between VMARK and UNIDATA. (1)
2.2 -- Amendment to Agreement and Plan of Merger and Reorganization dated as of
November 7, 1997 between VMARK and UNIDATA. (1)
3.2 -- Second Restated Certificate of Incorporation of the Company. (5)
3.3 -- By-laws of the Company, as amended and restated effective as of March 17,
1992. (5)
3.3a -- Amendment to By-laws effective February 10, 1994. (7)
3.4 -- Certificate of Designations, Rights, Preferences and Privileges of Series A
Junior Preferred Stock. (2)
4.1 -- Rights Agreement dated as of June 12, 1996 between the Company and State
Street Bank and Trust Company, as Rights Agent. (2)
4.2 -- First Amendment to Rights Agreement dated as of September 30, 1997 between
the Company, as Rights Agent. (1)
5.1 -- Legality Opinion of Choate, Hall & Stewart.
8.1 -- Tax Opinion of Choate, Hall & Stewart.
8.2 -- Tax Opinion of Latham & Watkins.
10.1a -- 1986 Stock Option Plan, as amended and restated. (3)
10.1d -- Amendment to 1986 Stock Option Plan effective January 28, 1997. (4)
10.2 -- 1991 Director Stock Option Plan, as amended and restated.(3)
10.2b -- Amendment to 1991 Director Stock Option Plan effective January 31, 1997. (4)
10.2c -- Amendment to 1991 Director Stock Option Plan effective July 29, 1996. (4)
10.6 -- Restated Registration Rights Agreement dated as of April 10, 1992 between the
Company and certain of its stockholders. (5)
10.11a -- Lease dated as of May 5, 1994 between the Company and 50 Washington Street
Associated Limited Partnership. (6)
10.18a -- Employee Stock Purchase Plan, as amended and restated. (3)
10.23 -- Split Dollar Life Insurance Agreement between the Company and James K. Walsh
dated as of October 12, 1993. (7)
10.27 -- Split Dollar Life Insurance Agreement between the Company and Jason E. Silvia
dated as of April 27, 1994. (8)
10.28 -- Asset Purchase Agreement between the Company and Constellation Software, Inc.
dated February 15, 1994. (9)
10.31 -- 1995 Non-Statutory Stock Option Plan, as amended and restated effective as of
January 7, 1996. (4)
10.32 -- Split Dollar Life Insurance Agreement between the Company and Charles F. Kane
dated as of December 15, 1995. (4)
10.33 -- Split Dollar Life Insurance Agreement between the Company and Peter L. Fiore
dated as of September 15, 1996. (4)
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10.34 -- Split Dollar Life Insurance Agreement between the Company and Peter Gyenes
dated as of June 15, 1996. (4)
10.35 -- Loan and Security Agreement dated as of May 3, 1996 by and between Silicon
Valley Bank and the Company. (4)
10.36 -- Amended and Restated Promissory Note -- Revolving Line of Credit loans by the
Company to Silicon Valley Bank, dated May 3, 1996. (4)
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 by and between Silicon
Valley Bank and the Company. (1)
10.39 -- Split Dollar Life Insurance Agreement between the Company and James D. Foy
dated as of April 15, 1997.
21.1 -- Subsidiaries of VMARK. (1)
23.1 -- Consent of Deloitte & Touche LLP regarding VMARK.
23.2 -- Consent of Coopers & Lybrand L.L.P. regarding UNIDATA.
23.3 -- Consent of Choate, Hall & Stewart (included in Exhibits 5.1 and 8.1).
23.4 -- Consent of Latham & Watkins (included in Exhibit 8.2).
23.5 -- Consent of Volpe Brown Whelan & Company, LLC.
24.1 -- Power of Attorney (see page II-6).
27.1 -- Financial Data Schedule. (1)
99.1 -- Opinion of Volpe Brown Whelan & Company, LLC.(10)
99.2 -- Form of Proxy Card of VMARK.
99.3 -- Amended and Restated Stockholder Support Agreement between VMARK and certain
of UNIDATA's affiliates.
99.4 -- Amended and Restated Stockholder Support Agreement between VMARK and certain
of UNIDATA's affiliates.
99.5 -- Amended and Restated Stockholder Support Agreement between UNIDATA and
certain of VMARK's affiliates.
99.6 -- Consent of David W. Brunel.
99.7 -- Consent of James T. Dresher.
99.8 -- Consent of Martin T. Hart.
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(1) Incorporated by reference to the exhibit filed with the Company's Form 10-Q
dated November 12, 1997.
(2) Incorporated by reference to the respective exhibit of the Company's
Registration Statement on Form
8-A dated July 17, 1996, File No. 000-20059, filed on July 29, 1996.
(3) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form
S-8, File No. 333-00218, filed on January 5, 1996.
(4) Incorporated by reference to the exhibit filed with the Company's Form 10-K
dated March 31, 1997.
(5) Incorporated by reference to the respective exhibit filed with the
Company's Registration Statement on Form S-1, File No. 33-46533, initially
filed on March 19, 1992.
(6) Incorporated by reference to the exhibit filed with the Company's Form 8-K
dated May 19, 1994.
(7) Incorporated by reference to the exhibit filed with the Company's Form 10-K
dated March 28, 1994.
(8) Incorporated by reference to the exhibit with the Company's Form 8-K dated
March 29, 1996.
(9) Incorporated by reference to the exhibit filed with the Company's Form 8-K
dated March 1, 1994.
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(10) Incorporated by reference to Annex II of the Joint Proxy
Statement/Prospectus constituting part of this Registration Statement.
(B) FINANCIAL STATEMENT SCHEDULES
VMARK
The following schedule is incorporated by reference to Item 14 of VMARK's
Annual Report on Form
10-K for the fiscal year ended December 31, 1996:
VIII. Valuation and Qualifying Accounts.
Other financial statement schedules have been omitted since they are either
not required, not applicable, or the required information is shown in the
consolidated financial statements or notes thereto.
(C) REPORTS, OPINIONS AND APPRAISALS
The opinion of Volpe Whelan Brown & Company, LLC (attached as Annex II to
the Joint Proxy Statement/Prospectus included as a part of this Registration
Statement).
ITEM 22. UNDERTAKINGS
A. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is therefore, unenforceable in the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
B. The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. The Registrant hereby undertakes as follows:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to this Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 203
D. The Registrant hereby undertakes to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11, or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of this Registration Statement through the date
of responding to the request.
E. The Registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in this
Registration Statement when it became effective.
F. The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-5
<PAGE> 204
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Westboro, Commonwealth of
Massachusetts, on November 12, 1997.
VMARK SOFTWARE, INC.
BY: /s/ PETER GYENES
-----------------------------------
PETER GYENES, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter Gyenes and James K. Walsh, jointly
and severally, his true and lawful attorneys-in-fact and agents with full powers
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be in and about the premises, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities
indicated and on the dates indicated.
<TABLE>
<CAPTION>
Name Capacity Date
---- -------- ----
<S> <C> <C>
/s/ PETER GYENES President, Chief Executive November 12, 1997
- ------------------------------------------ Officer and Director
PETER GYENES (Principal Executive Officer)
/s/ CHARLES F. KANE Executive Vice President, November 7, 1997
- ------------------------------------------ Finance and Chief Financial
CHARLES F. KANE Officer (Principal Financial
and Accounting Officer)
/s/ RANDOLPH S. NAYLOR Director November 5, 1997
- ------------------------------------------
RANDOLPH S. NAYLOR
/s/ ROBERT G. CLAUSSEN Director November 7, 1997
- ------------------------------------------
ROBERT G. CLAUSSEN
/s/ ROBERT M. MORRILL Director November 6, 1997
- ------------------------------------------
ROBERT M. MORRILL
/s/ BENJAMIN F. ROBELEN Director November 5, 1997
- ------------------------------------------
BENJAMIN F. ROBELEN
/s/ JAMES M. DOW Director November 5, 1997
- ------------------------------------------
JAMES M. DOW
/s/ ALPHONSE M. LUCCHESE Director November 6, 1997
- ------------------------------------------
ALPHONSE M. LUCCHESE
</TABLE>
II-6
<PAGE> 205
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Page No.
------- --------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger and Reorganization dated as of October
7, 1997 between VMARK and UNIDATA................................... Note 1
2.2 -- Amendment to Agreement and Plan of Merger and Reorganization dated
as of November 7, 1997 between VMARK and UNIDATA.................... Note 1
3.2 -- Second Restated Certificate of Incorporation of the Company......... Note 5
3.3 -- By-laws of the Company, as amended and restated effective as of
March 17, 1992...................................................... Note 5
3.3a -- Amendment to By-laws effective February 10, 1994.................... Note 7
3.4 -- Certificate of Designations, Rights, Preferences and Privileges of
Series A Junior Preferred Stock..................................... Note 2
4.1 -- Rights Agreement dated as of June 12, 1996 between the Company and
State Street Bank and Trust Company, as Rights Agent................ Note 2
4.2 -- First Amendment to Rights Agreement dated as of September 30, 1997
between the Company, as Rights Agent................................ Note 1
5.1 -- Legality Opinion of Choate, Hall & Stewart..........................
8.1 -- Tax Opinion of Choate, Hall & Stewart...............................
8.2 -- Tax Opinion of Latham & Watkins.....................................
10.1a -- 1986 Stock Option Plan, as amended and restated..................... Note 3
10.1d -- Amendment to 1986 Stock Option Plan effective January 28, 1997...... Note 4
10.2 -- 1991 Director Stock Option Plan, as amended and restated............ Note 3
10.2b -- Amendment to 1991 Director Stock Option Plan effective January 31,
1997................................................................ Note 4
10.2c -- Amendment to 1991 Director Stock Option Plan effective July 29,
1996................................................................ Note 4
10.6 -- Restated Registration Rights Agreement dated as of April 10, 1992
between the Company and certain of its stockholders................. Note 5
10.11a -- Lease dated as of May 5, 1994 between the Company and 50 Washington
Street Associated Limited Partnership............................... Note 6
10.18a -- Employee Stock Purchase Plan, as amended and restated............... Note 3
10.23 -- Split Dollar Life Insurance Agreement between the Company and James
K. Walsh dated as of October 12, 1993............................... Note 7
10.27 -- Split Dollar Life Insurance Agreement between the Company and Jason
E. Silvia dated as of April 27, 1994................................ Note 8
10.28 -- Asset Purchase Agreement between the Company and Constellation
Software, Inc. dated February 15, 1994.............................. Note 9
10.31 -- 1995 Non-Statutory Stock Option Plan, as amended and restated
effective as of January 7, 1996..................................... Note 4
10.32 -- Split Dollar Life Insurance Agreement between the Company and
Charles F. Kane dated as of December 15, 1995....................... Note 4
10.33 -- Split Dollar Life Insurance Agreement between the Company and Peter
L. Fiore dated as of September 15, 1996............................. Note 4
10.34 -- Split Dollar Life Insurance Agreement between the Company and Peter
Gyenes dated as of June 15, 1996.................................... Note 4
10.35 -- Loan and Security Agreement dated as of May 3, 1996 by and between
Silicon Valley Bank and the Company................................. Note 4
10.36 -- Amended and Restated Promissory Note -- Revolving Line of Credit
loans by the Company to Silicon Valley Bank, dated May 3, 1996...... Note 4
</TABLE>
<PAGE> 206
<TABLE>
<CAPTION>
EXHIBIT
NUMBER PAGE NO.
- ---------- --------
<C> <S> <C> <C>
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 by and between Silicon Valley Bank and the Company............. Note 1
10.39 -- Split Dollar Life Insurance Agreement between the Company and James
D. Foy dated as of April 15, 1997...................................
21.1 -- Subsidiaries of VMARK............................................... Note 1
23.1 -- Consent of Deloitte & Touche LLP regarding VMARK....................
23.2 -- Consent of Coopers & Lybrand L.L.P. regarding UNIDATA...............
23.3 -- Consent of Choate, Hall & Stewart (included in Exhibits 5.1 and
8.1)................................................................ n/a
23.4 -- Consent of Latham & Watkins (included in Exhibit 8.2)............... n/a
23.5 -- Consent of Volpe Brown Whelan & Company, LLC........................
24.1 -- Power of Attorney (see page II-6)................................... n/a
27.1 -- Financial Data Schedule............................................. Note 1
99.1 -- Opinion of Volpe Brown Whelan & Company, LLC........................ Note 10
99.2 -- Form of Proxy Card of VMARK.........................................
99.3 -- Amended and Restated Stockholder Support Agreement between VMARK and
certain of UNIDATA's affiliates.....................................
99.4 -- Amended and Restated Stockholder Support Agreement between VMARK and
certain of UNIDATA's affiliates.....................................
99.5 -- Amended and Restated Stockholder Support Agreement between UNIDATA
and certain of VMARK's affiliates...................................
99.6 -- Consent of David W. Brunel..........................................
99.7 -- Consent of James T. Dresher.........................................
99.8 -- Consent of Martin T. Hart...........................................
</TABLE>
- ---------------
(1) Incorporated by reference to the exhibit filed with the Company's Form 10-Q
dated November 12, 1997.
(2) Incorporated by reference to the respective exhibit of the Company's
Registration Statement on Form
8-A dated July 17, 1996, File No. 000-20059, filed on July 29, 1996.
(3) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form
S-8, File No. 333-00218, filed on January 5, 1996.
(4) Incorporated by reference to the exhibit filed with the Company's Form 10-K
dated March 31, 1997.
(5) Incorporated by reference to the respective exhibit filed with the
Company's Registration Statement on Form S-1, File No. 33-46533, initially
filed on March 19, 1992.
(6) Incorporated by reference to the exhibit filed with the Company's Form 8-K
dated May 19, 1994.
(7) Incorporated by reference to the exhibit filed with the Company's Form 10-K
dated March 28, 1994.
(8) Incorporated by reference to the exhibit with the Company's Form 8-K dated
March 29, 1996.
(9) Incorporated by reference to the exhibit filed with the Company's Form 8-K
dated March 1, 1994.
(10) Incorporated by reference to Annex II of the Joint Proxy
Statement/Prospectus constituting part of this Registration Statement.
<PAGE> 1
Exhibit 5.1
CHOATE, HALL & STEWART
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
ATTORNEYS AT LAW
EXCHANGE PLACE
53 STATE STREET
BOSTON, MASSACHUSETTS 02109
---------------
TELEPHONE (617) 248-5000
FAX (617) 248-4000
TELEX 49615860
December 30, 1997
VMARK Software, Inc.
50 Washington Street
Westboro, Massachusetts 01581-1021
Re: VMARK Software, Inc.
Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
As counsel to VMARK Software, Inc., a Delaware corporation (the
"Company"), we are rendering this opinion in connection with the registration
by the Company pursuant to a registration statement on Form S-4 (the
"Registration Statement") under the Securities Act of 1933, as amended, of the
shares of the Company's common stock, $.01 par value (the "Shares"), to be
issued in connection with the merger of Unidata, Inc., a Colorado corporation
("UNIDATA"), with and into the Company, pursuant to an Agreement and Plan of
Merger and Reorganization (as amended, the "Merger Agreement"), between the
Company and UNIDATA, dated as of October 7, 1997, as amended as of November 7,
1997.
As such counsel and in connection with the opinion expressed below, we
have examined copies of the Registration Statement, the Company's Second
Restated Certificate of Incorporation, the Company's by-laws, the Merger
Agreement, certificates of public officials and officers of the Company, and
such other documents, instruments and records as we have deemed necessary or
appropriate as a basis for the opinion expressed below. In such examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as copies.
Based upon the foregoing, we are of the opinion that the Shares have been
validly authorized and, when issued pursuant to the terms of the Merger
Agreement, will be validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" therein.
Very truly yours,
CHOATE, HALL & STEWART
<PAGE> 1
EXHIBIT 8.1
CHOATE, HALL & STEWART
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
ATTORNEYS AT LAW
EXCHANGE PLACE
53 STATE STREET
BOSTON, MASSACHUSETTS 02109
-------------------------
TELEPHONE (617) 248-5000
FAX (617) 248-4000
TELEX 49615860
December 30, 1997
VMARK Software, Inc.
50 Washington Street
Westboro, Massachusetts 01581
Ladies and Gentlemen:
We have acted as counsel to VMARK Software, Inc., a Delaware corporation
("VMARK"), in connection with a proposed transaction (the "Merger") in which
Unidata, Inc., a Colorado corporation ("UNIDATA"), will merge with and into
VMARK pursuant to an Agreement and Plan of Merger and Reorganization (as
amended, the "Merger Agreement") dated October 7, 1997, as amended on November
7, 1997. This opinion letter is delivered to you pursuant to section 6.01(d) of
the Merger Agreement, and sets forth our opinion as to certain federal income
tax matters relating to VMARK as of the Effective Time. All capitalized terms
not otherwise defined in this letter shall have the meaning ascribed to them in
the Merger Agreement.
The opinions set forth below are based upon the Internal Revenue Code of
1986, as amended (the "Code"), judicial decisions, and administrative
regulations and published rulings and other pronouncements, all as in effect and
existing on the date hereof. The law expressed in the Code and in such
decisions, regulations, and rulings is subject to change at any time (and any
such change could have retroactive effect), and future legislative, judicial, or
administrative actions could affect the opinions expressed herein. These
opinions are not binding on the Internal Revenue Service or the courts. By
rendering these opinions we undertake no responsibility to advise you of any
developments in the application or interpretation of the federal income tax
laws.
We have formed our opinions after review of and in reliance upon the Merger
Agreement, including all exhibits and attachments thereto, the Amended and
Restated Stockholder Support Agreement dated October 31, 1997 between certain
holders of UNIDATA Class A Common Stock and VMARK, the Amended and Restated
Stockholder Support Agreement dated October 31, 1997 between certain holders of
UNIDATA Class B Common Stock and VMARK (together, the "Stockholder Support
Agreements"), and the Form S-4 Registration Statement to be filed by VMARK with
the Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"). We have assumed that all documents presented to us as
originals are authentic, that all signatures are genuine, and that all copies of
documents fully conform to authentic original documents. We have further assumed
that all facts, representations, and warranties set forth in the Merger
Agreement, Stockholder Support Agreements and Registration Statement are true
and accurate and will continue to be true and accurate at the Effective Time,
that all conditions to closing set forth in the Merger Agreement and pertinent
to these opinions will be met and will not be waived, and that all other
documents provided for in the Merger Agreement will be properly executed and
delivered prior to the Effective Time.
<PAGE> 2
Our opinions are limited to the specific federal income tax matters
described below. We intend to offer no other opinions and no other opinions
should be inferred. In particular, these opinions do not address any issues
relating to any state, local, or foreign taxes or to any other federal taxes.
These opinions also do not address the tax consequences of the Merger for any
taxpayer other than VMARK, including UNIDATA and the stockholders thereof, as to
whom counsel for UNIDATA is rendering tax opinions.
Based on and subject to the foregoing, we are of the opinion that for
federal income tax purposes:
- The Merger will qualify as a "reorganization" within the meaning of
section 368(a)(1)(A) the Code;
- No gain or loss will be recognized by VMARK as a result of the Merger;
- VMARK's tax basis in the assets which it acquires in the Merger from
UNIDATA will be equal to UNIDATA's tax basis in such assets immediately
prior to the Effective Time, increased by any gain recognized by UNIDATA
as a result of the Merger (which we understand will be zero in the
opinion of UNIDATA's counsel); and
- VMARK's holding period in the assets which it acquires in the Merger
from UNIDATA will include the period during which UNIDATA held such
assets prior to the Merger;
- To the extent it addresses matters of law or legal conclusions, the
discussion of federal income tax consequences concerning VMARK set forth
in the Registration Statement is accurate in all material respects,
subject to the limitations and qualifications set forth in the
Registration Statement and this letter.
These opinions are intended solely for the benefit of VMARK and its
stockholders and not for the benefit of any other person or entity, and may not
be made available to or relied upon by any other person or entity without our
prior written consent. We hereby consent to the inclusion of a copy of this
opinion as an Exhibit to the Registration Statement and to all references to us
and to this opinion in the Registration Statement.
Very truly yours,
CHOATE, HALL & STEWART
2
<PAGE> 1
EXHIBIT 8.2
LATHAM & WATKINS
ATTORNEYS AT LAW
53RD AT THIRD, SUITE 1000
885 THIRD AVENUE
NEW YORK, NEW YORK 10022-4802
TELEPHONE (212) 906-1200
FAX (212) 751-4884
______
PAUL R. WATKINS (1899-1973)
DANA LATHAM (1898-1974)
______
December 31, 1997
Unidata, Inc.
1099 18th Street, Suite 2200
Denver, Colorado 80202
Re: Tax Consequences of Merger of Unidata, Inc. and
VMARK Software, Inc.
Gentlemen:
You have requested our opinion with respect to certain federal income tax
consequences of the proposed merger and reorganization pursuant to the
Agreement and Plan of Merger and Reorganization, dated as of October 7, 1997,
between Unidata, Inc., a Colorado corporation ("Unidata") and VMARK Software,
Inc., a Delaware corporation ("VMARK") (the "Agreement"), as described in the
Joint Proxy Statement/Prospectus filed by VMARK and Unidata (the "Proxy
Statement") forming part of the Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, as filed by VMARK and Unidata with the
Securities and Exchange Commission, dated December 31, 1997 (the "Registration
Statement"). Specifically, you have requested our opinion as to whether, for
federal income tax purposes, the Merger qualifies as a reorganization within
the meaning of section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"). This option is being furnished pursuant to section 6.01(d) of the
Agreement.
In rendering our opinion, we have examined and relied upon the accuracy
and completeness of the facts, information and representations contained in the
Agreement, the Registration Statement and the Proxy Statement. In connection
with this opinion, VMARK and Unidata have made representations with respect to
certain factual matters in Section 2.18 and 3.18 of the Agreement. The opinions
expressed herein are conditioned on the initial and continuing accuracy of the
facts, information and representations set forth in the documents referred to
above. In our examination, we have assumed the genuineness of all signatures,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
documents.
<PAGE> 2
In rendering our opinion, we have considered the applicable provisions of
the Code, the Treasury Regulations promulgated thereunder, pertinent judicial
authorities and published rulings and other pronouncements of the Internal
Revenue Service, all as of the date hereof.
Based solely on the foregoing and provided that the Merger is consummated
in the manner set forth in the Proxy Statement, we are of the opinion that,
assuming the Merger qualifies as a merger under state law, for federal income
tax purposes, the Merger will be treated as a reorganization within the meaning
of section 368(a) of the Code. Accordingly: (a) no gain or loss will be
recognized by VMARK or Unidata as a result of the Merger; (b) a holder of
Unidata Common Stock will not recognize gain or loss as a result of the Merger,
except that gain or loss will be recognized by holders of Unidata Common Stock
as a result of the receipt of cash, if any, in lieu of fractional shares of
VMARK Common Stock; (c) provided that Unidata Common Stock is held as a capital
asset at the Effective Time, the holding period of VMARK Common Stock received
in the Merger will include the holding period of such Unidata Common Stock; and
(d) the aggregate tax basis of the VMARK Common Stock received in exchange for
the Unidata Common Stock will be the same as the aggregate tax basis of the
Unidata Common Stock surrendered thereof (reduced by the amount of such tax
basis allocable to the fractional shares, if any, for which cash is received).
Except as set forth above, we express no other opinion as to the tax
consequences of the Merger and related transactions to any party under federal,
state, local or foreign laws. Our opinion is not binding on the Internal
Revenue Service or the courts, and there is no assurance that the Internal
Revenue Service will not assert a contrary position. Furthermore, no assurance
can be given that future legislative, judicial or administrative changes, on
either a prospective or retroactive basis would not adversely affect the
accuracy of the conclusions herein. If all the transactions described in the
Agreement are not consummated in accordance with the terms of such Agreement or
if all of the representations, warranties, statements and assumptions upon
which we relied are not true and accurate at all relevant times, our opinion
might be adversely affected and may not be relied upon.
We are furnishing this opinion to Unidata and its shareholders solely in
connection with the Merger, and this opinion is not to be relied upon by any
other person for any other purpose. We consent to the filing of this opinion as
an exhibit to the Registration Statement and to the use of our name under the
caption "The Merger -- Certain Federal Income Tax Consequences" in the
Registration Statement.
Very truly yours,
Latham & Watkins
<PAGE> 1
EXHIBIT 10.39
SPLIT DOLLAR
LIFE INSURANCE AGREEMENT
AGREEMENT made as of the 15th day of April, 1997 by and between VMARK
SOFTWARE, INC., a Delaware corporation ("VMARK") and James D. Foy (the
"Insured").
WHEREAS, the Insured is an executive officer and key employee of VMARK;
and
WHEREAS, VMARK wishes to provide an incentive for the Insured's continued
performance of services to VMARK by making available to him a split-dollar life
insurance program; and
WHEREAS, the Insured wishes to participate in such program; and
WHEREAS, the Insured and VMARK have arranged for the purchase of Policy
No. 11510556 in the face amount of $1,542,082 on the life of the Insured (the
"Policy") issued by Massachusetts Mutual Life Insurance Company (the "Insurance
Company"); and
WHEREAS, the Policy is a whole-life policy which will be fully paid upon
the payment of 10 consecutive annual premiums of $84,355.62 each (if the annual
installment option is elected).
Now, THEREFORE, the parties agree as follows:
1. $63,081.00 of each annual premium due on the Policy (or a
proportionate amount of any other premium installment) shall be paid when due by
VMARK until such obligation shall terminate in accordance with the provisions of
paragraph 2 or 13 below, provided that VMARK shall have no obligation to any pay
premiums in respect of benefits hereafter added to the Policy by the Insured.
<PAGE> 2
2. VMARK's obligation to make premium payments pursuant to paragraph
1 above shall be subject to the following:
(a) In the event the employment of the Insured by VMARK is terminated
for any reason, VMARK's obligation to make premium payments shall
terminate immediately unless, prior to such termination of employment,
there has been a Change of Control (as defined in paragraph 17(c) below),
in which event VMARK's obligation to make premium payments shall
terminate on the fifth anniversary of such termination of employment,
subject to (b) below.
(b) In the event the Insured voluntarily terminates his employment
with VMARK following a Change of Control and, within the 24 month period
immediately following such termination, directly or indirectly engages in
any activity which is in competition with the business of VMARK, VMARK's
obligation to make premium payments shall immediately terminate.
(c) In the event, and to the extent, the board of directors of VMARK
determines, in its sole reasonable judgement, that any premium payment
would have a materially detrimental effect upon its financial condition,
such payment or a portion thereof may be deferred until such time or
times as the payment of all or a portion of the deferred amount may be
paid without such effect. Payment of deferred amounts shall be applied,
as appropriate, to (i) make the premium payment, (ii) repay the amount
borrowed against the Policy to make such payment, or (iii) reimburse the
Insured for making such payment. Any such deferrals and subsequent
payments shall be effected pro rata in
<PAGE> 3
respect of the Policy and other policies issued in connection with
similar executive split-dollar life insurance programs.
3. VMARK acknowledges that ownership of the Policy is held by the
Insured, including without limitation the rights to transfer such ownership,
designate beneficiaries and borrow against the Policy, subject only to the
Collateral Assignment (as defined in paragraph 5 below) and other limitations
specifically described herein.
4. The Insured acknowledges that VMARK makes no representations or
warranties regarding the Policy, including without limitation regarding the
amounts which may become available for borrowing against the Policy or the tax
treatment of any proceeds of or other matters in connection with the Policy.
5. The Insured has executed and delivered to VMARK an assignment (the
"Collateral Assignment") of certain rights in the Policy in order to secure the
right of VMARK to receive, not later than the death of the Insured, an amount
equal to the aggregate of all premiums thereon paid by VMARK, including any
amounts paid or reimbursed pursuant to paragraph 2(c)(ii) or (iii) above ("2-c
Amounts"). A copy of the Collateral Assignment is attached, as amended, as
Exhibit A hereto.
6. In the event either party wishes to exercise a right which under
the Policy, subject to the provisions hereof and of the Collateral Assignment,
may be exercised by such party alone, the other party shall co-sign any
documents and take such other steps as may be required by the Insurance Company
to effect the exercise of such right.
<PAGE> 4
7. VMARK acknowledges that any borrowing by it against the Policy
could materially reduce the intended benefits to the Insured pursuant to this
Agreement. Any such borrowing shall be subject to the following:
(a) No such borrowings shall be made except to the extent that the
board of directors of VMARK determines, in its sole reasonable judgment,
that alternative sources of funds are not available on reasonably
satisfactory terms and that the failure to make such borrowing would have
a materially detrimental effect upon VMARK.
(b) VMARK shall pay all interest due on any such borrowings in such
timely manner that the intended benefits to the Insured pursuant hereto
are, to the extent possible by reason of prompt interest payments,
preserved.
(c) Any such borrowings shall be made substantially pro rata, in
accordance with the aggregate premiums paid by the Company, against the
Policy and all other similar policies of the Company on the lives of its
executive officers. Any repayment of principal on such borrowings against
the Policy and other such policies shall be allocated in such manner as
the Company, in its reasonable discretion, deems will ensure, to the
extent possible by reason of such allocation, that the intended benefits
to the respective insureds are preserved, and otherwise pro rata as set
forth above.
8. The Insured shall not surrender the Policy unless the cash value
thereof at the time of surrender, net of any then outstanding borrowings against
the Policy, exceeds the aggregate amount of all premiums thereon paid by VMARK
through such time, including any 2-c Amounts.
<PAGE> 5
9. The Insured shall not borrow against the Policy if the aggregate
amount of (a) such borrowing and any other borrowings against the Policy by the
Insured or his assigns other than VMARK, including interest accrued and expected
to be accrued thereon ("Borrowings") and (b) all premiums thereon paid by VMARK
through such time, including any 2-c Amounts, shall exceed (i) prior to January
1, 2012, the cash value of the Policy without regard to any Borrowings, or (ii)
on or after said date, the death benefit of the Policy (including any additions
thereto) without regard to any Borrowings, provided that the foregoing shall not
prevent any borrowing to pay premiums not paid by VMARK pursuant to paragraph
2(c) above.
10. The Insured shall elect to have premiums paid on an annual
installment basis unless VMARK agrees in writing to the election of another
installment option.
11. Upon the death of the Insured while the Policy is in effect, but
prior to the exercise by either the Insured or VMARK of his or its respective
rights to acquire full ownership of the Policy pursuant to paragraph 12 below,
VMARK shall promptly furnish the Insurance Company an affidavit specifying the
amount of proceeds payable to it pursuant to the Collateral Assignment.
12. The Insured shall have the right after April 15, 2002 to reacquire
from VMARK the rights assigned pursuant to the Collateral Assignment. Such right
may be exercised (a) at any time, by payment to VMARK in cash or by certified or
bank check of an amount equal to the aggregate of all premiums on the Policy
paid by VMARK through such time, including any 2-c Amounts, or (b) on or after
April 15, 2007 if VMARK's obligation to make premium payments has not terminated
pursuant to paragraph 2(a) or (b) above due to the Insured's voluntary
termination of his employment (as limited by paragraph 17(a) below), by delivery
to VMARK
<PAGE> 6
of a non-interest bearing promissory note in such amount payable not later than
the death of the Insured and secured by a pledge of collateral, provided that
the board of directors of VMARK at the time may reject such method of exercise
if, in its sole reasonable discretion, it deems such note and collateral to
provide repayment arrangements less secure or otherwise not commercially
equivalent to the arrangements otherwise provided herein. Against receipt of
such payment or delivery, VMARK shall execute and deliver to the Insured a full
release of the Collateral Assignment satisfactory in form to the Insurance
Company. In the event that (i) VMARK's obligation to make premium payments has
terminated pursuant to paragraph 2(a) or (b) above due to the Insured's
voluntary termination of his employment (as limited by paragraph 17(a) below),
and (ii) the Insured does not exercise his rights under this paragraph 12 within
sixty days following such termination of VMARK's obligation, then his rights
under this paragraph 12 shall lapse. Upon the lapse of such rights, VMARK shall
have the right from time to time to acquire from the Insured all rights and
other incidents of ownership in and under the Policy upon payment of ten dollars
to the Insured. Against receipt of such payment the Insured shall execute and
deliver such documents and take such other steps to effect the transfer of such
ownership to VMARK as may be satisfactory in form to the Insurance Company.
13. VMARK's obligation to make premium payments pursuant to paragraph
1 above shall, if not previously terminated pursuant to the provisions of
paragraph 2 above, terminate upon the exercise of the Insured's rights or the
lapse thereof under paragraph 12 above.
14. Nothing herein shall be construed to obligate VMARK to continue
the employment of the Insured or to pay any benefits under the Policy under any
circumstances.
<PAGE> 7
15. In the event VMARK shall sell or otherwise dispose of
substantially all its business and assets, it shall (a) cause the acquiring
party to deliver to the Insured a written assumption of all the respective
obligations of VMARK hereunder and under the Policy and Collateral Assignment or
(b) retain sufficient assets to pay premiums on the Policy to the extent
required. In the event of an assumption under (a) above, the word "VMARK" shall
mean or include, as the context indicates, any such acquiring party.
16. The Insured may assign all its rights hereunder and under the
Policy and Collateral Assignment, provided that the assignee shall deliver to
VMARK a written assumption of all the respective obligations of the Insured
hereunder and thereunder. In the event of such assignment and assumption, the
word "Insured" shall mean or include, as the context indicates, any such
assignee, provided that the Policy shall insure the life of the initial Insured
only and not of any assignee or other successor.
17. For purposes of paragraph 2 above:
(a) The Insured shall not be deemed to have voluntarily
terminated his employment with VMARK if the termination occurs within
nine months following (i) a reduction of his salary other than a
reduction applicable to executives generally, (ii) a material demotion in
the level of his duties, or (iii) a material change of the location of
his employment;
(b) "Cause" shall mean (i) commission by the Insured of a
willful, wrongful act, such as embezzlement, against VMARK, (ii)
conviction of the Insured of a felony involving moral turpitude, (iii)
willful, gross and repeated neglect by the Insured of his executive
employment duties, or (iv) intentional and repeated failure of the
Insured to
<PAGE> 8
observe specific directives or policies of the board of directors of
VMARK applicable to his executive employment duties; and
(c) "Change of Control" shall mean (i) the direct or indirect
acquisition by any person, entity or group acting in concert of more than
35% of the aggregate voting power of the outstanding securities of VMARK
having the right to vote at elections of directors, (ii) a majority of
the board of directors of VMARK ceasing to consist of individuals who are
currently members of such board or for whose nomination for such
membership a majority of such current members voted in favor, or (iii)
the disposition by VMARK of substantially all its business, other than in
connection with a mere change of place of incorporation or similar mere
change in form.
18. This Agreement shall be construed and enforced under the laws of
Massachusetts. Except as provided by paragraphs 15 and 16 above, no rights or
obligations hereunder or under the Policy or Collateral Assignment shall be
voluntarily assigned without the prior written consent of the other party, which
consent shall not be unreasonably withheld. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors, assigns, heirs and legal representatives. This
Agreement may not be amended or otherwise modified without the prior written
consent of the parties.
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
VMARK Software, Inc.
/s/ R.N. Hoehn By /s/ Robert M. Morrill
- ----------------------------- -----------------------------------
(Witness) Its Chairman
/s/ R.N. Hoehn /s/ James D. Foy
- ----------------------------- -----------------------------------
(Witness) James D. Foy
<PAGE> 10
EXHIBIT A
POLICY NO. 11510556
INSURER: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
ASSIGNOR: JAMES D. FOY
ASSIGNEE: VMARK SOFTWARE, INC.
For Value Received, the Assignor hereby assigns to the Assignee certain
rights in the policy issued by the Insurer numbered as set forth above (the
"Policy"), subject to any superior liens which the Insurer may have against the
Policy, and the Assignor and the Assignee hereby agree as follows:
1. This assignment is made to secure certain rights, either now
existing or that may hereafter arise, of the Assignee to receive
payments pursuant to a split dollar life insurance agreement with
regard to the Policy (the "Agreement").
2. The Assignee shall have the following rights in the Policy:
a. The right to receive from the death proceeds an amount
equal to all premiums on the Policy paid by the Assignee
until the date of the Insured's death;
b. The right to receive the cash values of the Policy, up to
an amount equal to all premiums paid by the Assignee, if
the policy is surrendered or lapses;
c. The right to release this assignment; and
d. The right to borrow against the Policy for the Assignee's
own account, in amounts which do not exceed in the
aggregate the aggregate amount of premiums paid on the
Policy at the time of any such borrowing.
3. All other rights in the Policy, including the rights to designate
beneficiaries, to borrow against the Policy any amounts available
therefor in excess of amounts which have been or may be borrowed
by the Assignee, to surrender the Policy, and to transfer
ownership thereof, are excluded from this assignment
<PAGE> 11
and, subject to the terms of the Agreement, reserved to and
exercisable by the Assignor alone.
4. Nothing herein shall affect the right of the Insurer to charge
interest on any loan under the Policy and, if interest is not paid
thereon pursuant to the Policy, to add such interest to the unpaid
balance of the loan and secure such amounts with corresponding
cash values, even if such security shall reduce amounts available
for payment to the Assignee hereunder.
5. The Insurer shall be entitled to rely conclusively and without any
further investigation upon an affidavit of an officer of the
Assignee regarding the amount of proceeds due it from any death or
surrender proceeds of the Policy, and payment of such amount shall
be a full discharge of the Insurer's obligations hereunder in
respect thereof.
6. Subject to the Agreement, the rights and obligations of the
parties hereunder shall be binding upon and inure to the benefit
of their respective successors, assigns, heirs and legal
representatives.
DATE: April 15, 1997 ----------------------------------------
JAMES D. FOY
----------------------------------------
VMARK SOFTWARE, INC.
ACCEPTED BY ----------------------------------------
ON:__________________ MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Joint Proxy
Statement/Registration Statement of VMARK Software, Inc. on Form S-4 of our
report dated January 27, 1997, appearing in the Annual Report on Form 10-K of
VMARK Software, Inc. for the year ended December 31, 1996 and to the references
to us under the headings "Summary Historical Financial Data" and "Experts" in
the Prospectus, which is part of this Registration Statement.
Deloitte & Touche, LLP
Boston, Massachusetts
Dated: December 31, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-4 of our
report dated September 26, 1997, except for Note 3, for which the date is
September 30, 1997, on our audits of the consolidated financial
statements of Unidata, Inc. and Subsidiaries. We also consent to the reference
to our firm under the captions "Experts" and "Summary Historical Financial
Data."
Coopers & Lybrand L.L.P.
Denver, Colorado
December 30, 1997
<PAGE> 1
Exhibit 23.5
CONSENT OF FINANCIAL ADVISOR
We consent to the filing of our opinion dated September 30, 1997 to the VMARK
Software, Inc. Board of Directors attached as Annex II to the Prospectus, which
is part of this Registration Statement, and to the references to our firm name
under the headings "Opinion of Financial Advisor," "Background of the Merger,"
and "Recommendation of the VMARK Board and Reasons for the Merger."
Volpe Brown Whelan & Company, LLC
San Francisco, California
Dated: November 4, 1997
<PAGE> 1
PRELIMINARY PROXY MATERIAL
P VMARK SOFTWARE, INC.
R PROXY SOLICITED BY BOARD OF DIRECTORS
O SPECIAL MEETING OF STOCKHOLDERS - FEBRUARY 5, 1998
X
Y
The undersigned hereby acknowledge(s) receipt of the Notice and
accompanying Joint Proxy Statement/Prospectus, revoke(s) any prior proxies, and
appoint(s) Peter Gyenes and James K. Walsh, or either of them, with power of
substitution in each, attorneys for the undersigned to act for and vote, as
specified below, all shares of stock which the undersigned may be entitled to
vote at the Special Meeting of the Stockholders of VMARK Software, Inc. to be
held on February 5, 1998, and at any adjourned sessions thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
INSTRUCTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTION IS GIVEN,
THIS PROXY CARD WILL BE VOTED "FOR" THE ADOPTION OF MERGER AGREEMENT WITH
UNIDATA, INC. AND "FOR" ALL OTHER PROPOSALS. AN INSTRUCTION TO VOTE FOR APPROVAL
OF THE MERGER AGREEMENT SHALL BE DEEMED TO CONSTITUTE AUTHORITY TO VOTE IN
ACCORDANCE WITH THE HOLDER'S BEST JUDGMENT UPON A PROPOSAL TO ADJOURN THE
MEETING FOR THE PURPOSE OF SOLICITING ADDITIONAL PROXIES. THE PROXY WILL BE
VOTED IN ACCORDANCE WITH THE HOLDER'S BEST JUDGMENT AS TO ANY OTHER MATTER.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
Detach Card Before Mailing Detach Card Before Mailing
- ------------------------------------------------------------------------------
Dear Stockholder:
Please mark the boxes on this proxy card to indicate how your
shares will be voted. Then, sign the card, detach it and return
your proxy card in the enclosed postage paid envelope.
Sincerely,
VMARK Software, Inc.
<PAGE> 2
Proposal(1): Adopt the Merger Agreement between VMARK Software, Inc. and
Unidata, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If Proposal 1 is not adopted because insufficient affirmative votes are received
from the VMARK stockholders, the shares represented by this proxy will be voted
"AGAINST" each of Proposals 2 and 3 notwithstanding any other instructions.
Proposal(2): Approve amendment to Employee Stock Option Plan to increase the
total number of shares authorized for issuance to 4,500,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal(3): Approve amendment to Employee Stock Purchase Plan to increase
the total number of shares authorized for issuance to 700,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please sign exactly as your name(s) _________________ Date_______, 1998
appear(s) hereon. Joint owners should Signature
each sign. If acting as attorney,
executor, trustee or in other _________________ Date_______, 1998
representative capacity, sign name Signature
and title.
Mark box at right if address change has
been noted.
New Address:____________________________
<PAGE> 1
EXHIBIT 99.3
------------
AMENDED AND RESTATED
STOCKHOLDER SUPPORT AGREEMENT
(UNIDATA Affiliates)
AMENDED AND RESTATED STOCKHOLDER SUPPORT AGREEMENT, dated as of October
31, 1997, between the undersigned holders (collectively, the "Holders") of
shares of the Class A common stock, no par value, and Class B common stock, no
par value (collectively, "UNIDATA Common Stock"), of Unidata, Inc., a Colorado
corporation ("UNIDATA") and VMARK Software, Inc., a Delaware corporation
("VMARK").
RECITALS
A. VMARK and UNIDATA are parties to an Agreement and Plan of
Merger and Reorganization dated as of October 7, 1997 (the "Merger Agreement,"
capitalized terms not otherwise defined herein being used herein as therein
defined), pursuant to which UNIDATA will be merged with and into VMARK (the
"Merger"), and each outstanding share of UNIDATA Common Stock will be converted
into the right to receive shares of the common stock, $.01 par value, of VMARK
(the "VMARK Common Stock");
B. Each Holder, individually or as trustee or custodian, is
the owner of the number of shares of UNIDATA Common Stock set forth next to such
Holder's name on SCHEDULE 1 to this Agreement (with respect to each Holder, the
"UNIDATA Shares") and is an executive officer, director and/or significant
stockholder of UNIDATA;
C. Pursuant to the Merger, each Holder will receive shares of
VMARK Common Stock (such shares, together with any securities which may be paid
as a dividend or otherwise issued or delivered in exchange or substitution
therefor, hereinafter collectively referred to as the "VMARK Shares") in
exchange for the UNIDATA Shares owned by such Holder in accordance with Article
I of the Merger Agreement.
D. Each Holder has been advised that, as of the date hereof,
such Holder may be an "affiliate" of UNIDATA, as that term is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act");
E. VMARK, UNIDATA and the Holders wish to ensure that the
Merger is accounted for as a pooling of interests and constitutes, for federal
tax purposes, a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, as amended;
<PAGE> 2
F. VMARK has requested the Holders to agree, and the Holders
have agreed, to vote the UNIDATA Shares upon the terms and subject to the
conditions specified herein and to agree to such other restrictions and
conditions set forth herein; and
G. VMARK and the Holders hereby amend and restate in its
entirety the Stockholder Support Agreement among them dated as of October 7,
1997.
AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which is acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO VOTE UNIDATA SHARES. Until the consummation of
the Merger or the termination of the Merger Agreement in accordance with its
terms, at every meeting of the stockholders of UNIDATA called with respect
thereto, and at every adjournment thereof, and on every action or approval by
written consent of the stockholders of UNIDATA with respect thereto, each Holder
shall vote the UNIDATA Shares in favor of approval of the Merger Agreement and
the Merger and any matter that could reasonably be expected to facilitate the
Merger and each Holder shall use his or her reasonable efforts to cause the
stockholders of UNIDATA to approve the Merger.
2. REPRESENTATIONS AND WARRANTIES OF HOLDER. Each Holder hereby
represents and warrants to VMARK that:
2.1 This Agreement has been duly executed and delivered by such
Holder, and is the legal, valid and binding obligation of such Holder.
2.2 No consent of any court, governmental authority, beneficiary,
co-trustee or other person is necessary for the execution, delivery and
performance of this Agreement by such Holder.
2.3 The UNIDATA Shares of such Holder have been duly authorized
and validly issued, and are fully paid and nonassessable. The UNIDATA Shares are
owned by such Holder free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind, other than this Agreement.
2.4. The Holder has been advised that the issuance of the VMARK
Shares to the Holder pursuant to the Merger will be registered with the SEC on a
registration statement on Form S-4. However, the Holder has also been advised
that, since the Holder may be an "affiliate" of UNIDATA at the time the Merger
is submitted for a vote of the shareholders of UNIDATA and the distribution by
the Holder of the VMARK Shares will not be registered under the Act, Rule 145(d)
under the Act will restrict the Holder's sales of VMARK Shares received in the
Merger.
2.5 The Holder understands that the Merger is intended to qualify
as a generally tax-free reorganization for federal income tax purposes and that
such a reorganization
2
<PAGE> 3
requires that UNIDATA shareholders maintain a substantial and meaningful
continuing equity ownership interest in VMARK after the Merger. The Holder does
not now, and will not at the time of the Merger, have any plan or intent to
engage in a sale, exchange, transfer, pledge, disposition or any other
transaction which results in a reduction in the risk of ownership (any such
transaction, a "Sale") with respect to any of the VMARK Shares to be received by
the Holder in the Merger, other than any fractional VMARK Shares for which the
Holder will receive cash pursuant to the Merger Agreement. The Holder is neither
aware of nor participating in currently, and will not at the time of the Merger
be aware of or participating in, any written or oral plan pursuant to which the
holders of UNIDATA Shares intend to engage in Sales of VMARK Shares to be
received in the Merger, other than fractional VMARK Shares for which such
holders will receive cash pursuant to the Merger Agreement.
2.6 The Holder has carefully read this Agreement and the Merger
Agreement and has discussed the requirements of each and the limitations upon
the disposition of the VMARK Shares received by the Holder, to the extent
considered necessary, with counsel for the Holder or with counsel for UNIDATA.
2.7 Such Holder does not now, and will not at the time of the
Merger, have any intention, directly or indirectly, to (a) sell, assign,
transfer (including by merger, testamentary disposition, interspousal
disposition pursuant to a domestic relations proceeding or otherwise by
operation of law), pledge, encumber or otherwise dispose of any of the UNIDATA
Shares, (b) deposit any of the UNIDATA Shares into a voting trust or enter into
a voting agreement or arrangement with respect to the UNIDATA Shares or grant
any proxy or power of attorney with respect thereto which is inconsistent with
this Agreement or (c) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect sale, assignment, transfer
(including by merger, testamentary disposition, interspousal disposition
pursuant to a domestic relations proceeding or otherwise by operation of law) or
other disposition of the UNIDATA Shares.
3. COVENANTS OF THE HOLDERS. Each Holder hereby acknowledges,
agrees and covenants that:
3.1 Until the consummation of the Merger or the termination of the
Merger Agreement in accordance with its terms, subject to the applicable
fiduciary duties of a director of UNIDATA, as determined by such director in
good faith after consultation with and based upon the advice of legal counsel,
he will not, and will not permit any entity under his control, to: (i) solicit
proxies or become a "participant" in a "solicitation" (as such terms are defined
in Regulation 14A under the Exchange Act) with respect to an Alternative
Transaction or otherwise encourage or assist any party in taking or planning any
action that would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the terms of
the Merger Agreement; (ii) initiate a stockholders' vote or action by written
consent of UNIDATA's stockholders with respect to an Alternative Transaction; or
(iii) become a member of a "group" (as such term
3
<PAGE> 4
is used in Section 13d of the Exchange Act) with respect to any voting
securities of UNIDATA with respect to an Alternative Transaction.
3.2 Any shares of UNIDATA Common Stock that such Holder purchases
or with respect to which such Holder otherwise acquires beneficial ownership
after the date of this Agreement shall be considered "UNIDATA Shares" and
subject to each of the terms and conditions of this Agreement.
3.3 The Holder shall not sell, transfer or otherwise dispose of,
or reduce the Holder's interest in or risk relating to, any UNIDATA Shares that
the Holder owns beneficially during the thirty (30) day period immediately
preceding consummation of the Merger and the Holder shall not sell, transfer or
otherwise dispose of, or reduce the Holder's interest in or risk relating to,
any VMARK Shares issued to the Holder pursuant to the Merger, or any VMARK
securities issued to the Holder upon exercise of any stock options until
financial results covering at least thirty (30) days of the combined operations
of UNIDATA and VMARK have been published (within the meaning of Accounting
Series Release 130, as amended, of the SEC).
3.4 The Holder shall not make any sale, transfer or other
disposition of the VMARK Shares in violation of the Act or the rules and
regulations of the SEC thereunder.
3.5 The Holder will not sell or otherwise dispose of any VMARK
Shares, except pursuant to Rule 145(d) or an effective registration statement or
exemption under the Act (provided that the Holder may make bona fide gifts or
distributions without consideration so long as the recipients thereof agree not
to sell, transfer or otherwise dispose of VMARK Shares except as provided
herein).
3.6 Except pursuant to specific written agreements with a Holder,
VMARK is under no further obligation to register the sale, transfer or other
disposition of the VMARK Shares to be received by the Holder or to take any
action necessary in order to make an exemption from registration available.
3.7 Stop transfer instructions will be given to the transfer agent
of VMARK with respect to the VMARK Shares the Holder will receive, and there
will be placed on the certificates representing such stock, or any certificates
delivered in substitution therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY
BE TRANSFERRED IN ACCORDANCE WITH RULE 145(D) OR AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION UNDER THE ACT."
4
<PAGE> 5
If the Holder requests that VMARK remove such legend and such request
is accompanied by an opinion from counsel satisfactory to VMARK to the effect
that such legend is no longer applicable under federal and state securities
laws, VMARK will cause such stock certificate to be issued without such legend.
3.8 Unless the transfer by the Holder of his or its VMARK Shares
is a sale made in conformity with the provisions of Rule 145(d), or made
pursuant to a registration under the Act, VMARK reserves the right to put an
appropriate legend on the certificates issued to the Holder's transferee.
4. ASSIGNMENT PROHIBITED. This Agreement shall not be assignable
by any party hereto without the prior written consent of the other parties. This
Agreement shall be binding upon and enforceable against administrators,
executors, representatives, heirs, legatees, devisees, permitted successors and
assigns of each Holder and any pledgee holding the UNIDATA Share or the VMARK
Shares as collateral.
5. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given (and shall be deemed
to have been duly received if so given) if personally delivered or sent by
facsimile, or registered or certified mail, postage prepaid, addressed to the
respective parties as follows:
If to a Holder, to the Holder at the address appearing on the signature
page beneath such Holder's name, with a copy to:
5
<PAGE> 6
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071-2007
Attention: Gary Olson, Esq.
If to VMARK:
VMARK Software, Inc.
50 Washington Street
Westboro, MA 01581-1021
Attention: Chief Financial Officer
With a copy to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109
Attention: Richard N. Hoehn, Esq.
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.
6. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state thereof having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
7. INDEMNIFICATION. Each Holder shall indemnify VMARK against any loss,
damage or expense VMARK may incur as a result of any breach by such Holder of
the foregoing representations, warranty and agreements contained herein.
8. AMENDMENT; ENTIRE AGREEMENT. This Agreement may not be amended,
except by an instrument in writing signed on behalf of each of the parties
hereto. This Agreement is the entire agreement among the parties and supersedes
any prior agreements with respect to the subject matter hereof.
9. GOVERNING LAW/CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Each Holder hereby
6
<PAGE> 7
irrevocable submits to the jurisdiction of any Delaware state or federal court
sitting in the City of Wilmington, Delaware, in any action or proceeding arising
out of or related to this Agreement, and hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such state or federal court. Each Holder hereby irrevocably consents to the
service of process which may be served in any such action or proceeding by
certified mail, return receipt requested, by delivering a copy of such process
to such Holder at his or her address specified on the signature page hereof or
by any other method permitted by law.
10. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
* * * * * *
7
<PAGE> 8
[SIGNATURE PAGE TO AMENDED AND RESTATED
STOCKHOLDER SUPPORT AGREEMENT - UNIDATA AFFILIATES]
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties hereto individually, by its duly authorized officer or in its capacity
as a duly authorized trustee or custodian, all as of the date first above
written.
VMARK SOFTWARE, INC.
By: /s/ Charles F. Kane
------------------------------------
Charles F. Kane
Executive Vice President,
Finance, Chief Financial Officer
and Treasurer
GLENANGUS HOLDINGS CORP.
/s/ James T. Dresher
- ----------------------------------
Its: President
Attested to:
/s/ Harold Nussenfeld
- ----------------------------------
Its: Secretary
/s/ James T. Dresher /s/ James T. Dresher, Jr.
- ---------------------------------- ----------------------------------------
James T. Dresher James T. Dresher, Jr.
/s/ Jeffrey M. Dresher /s/ Jeanne D. Butcher
- ---------------------------------- ----------------------------------------
Jeffrey M. Dresher Jeanne D. Butcher
/s/ Virginia D. Meoli /s/ James T. Dresher III
- ---------------------------------- ----------------------------------------
Virginia D. Meoli James T. Dresher III
Trustee of the James Dresher
Irrevocable Trust
8
<PAGE> 9
/s/ Marcie Dresher /s/ Joshua Dresher
- ---------------------------------- ----------------------------------------
Marcie Dresher Joshua Dresher
Trustee of the Marcie Dresher Trustee of the Joshua Dresher
Irrevocable Trust Irrevocable Trust
/s/ David Brunel /s/ Martin T. Hart
- ---------------------------------- ----------------------------------------
David Brunel Martin T. Hart
/s/ Gary Olson /S/ John Schaefer
- ---------------------------------- ----------------------------------------
Gary Olson John Schaefer
/s/ Harold Nussenfeld /s/ John G. Akers
- ---------------------------------- ----------------------------------------
Harold Nussenfeld John G. Akers
9
<PAGE> 10
SCHEDULE 1
SHAREHOLDER NUMBER OF SHARES
----------- ----------------
Akers, Nick 89,000
Brunel, David 674,500
Butcher, Jeanne D. 670,000
Dresher, Jeffrey M. 670,000
Dresher, James T. 2,520,000
Dresher, James T. Jr. 655,000
Dresher, Marcie 5,000
Dresher, Joshua 5,000
Glenangus Holdings Corp. 4,000,000
Hart, Martin T. 100,000
Meoli, Virginia D. 670,000
Nussenfeld, Harold 75,000
Olson, Gary 50,000
Schaefer, John 100,000
10
<PAGE> 1
EXHIBIT 99.4
------------
AMENDED AND RESTATED
STOCKHOLDER SUPPORT AGREEMENT
(UNIDATA Affiliates - B)
AMENDED AND RESTATED STOCKHOLDER SUPPORT AGREEMENT, dated as of
October 31, 1997, between the undersigned holders (collectively, the "Holders")
of shares of the Class B common stock, no par value ("UNIDATA Common Stock"), of
Unidata, Inc., a Colorado corporation ("UNIDATA") and VMARK Software, Inc., a
Delaware corporation ("VMARK").
RECITALS
A. VMARK and UNIDATA are parties to an Agreement and Plan of
Merger and Reorganization dated as of October 7, 1997 (the "Merger Agreement,"
capitalized terms not otherwise defined herein being used herein as therein
defined), pursuant to which UNIDATA will be merged with and into VMARK (the
"Merger"), and each outstanding share of UNIDATA Common Stock will be converted
into the right to receive shares of the common stock, $.01 par value, of VMARK
(the "VMARK Common Stock");
B. Each Holder, individually or as trustee or custodian, is
the owner of the number of shares of UNIDATA Common Stock set forth next to such
Holder's name on SCHEDULE 1 to this Agreement (with respect to each Holder, the
"UNIDATA Shares") and is a significant stockholder of UNIDATA;
C. An agreement with similar covenants to this Agreement has
been executed by each of the executive officers and directors of UNIDATA (the
"Affiliate Agreement");
D. Pursuant to the Merger, each Holder will receive shares of
VMARK Common Stock (such shares, together with any securities which may be paid
as a dividend or otherwise issued or delivered in exchange or substitution
therefor, hereinafter collectively referred to as the "VMARK Shares") in
exchange for the UNIDATA Shares owned by such Holder in accordance with Article
I of the Merger Agreement.
E. Each Holder has been advised that, as of the date hereof,
such Holder may be an "affiliate" of UNIDATA, as that term is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act");
F. VMARK, UNIDATA and the Holders wish to ensure that the
Merger is accounted for as a pooling of interests and constitutes, for federal
tax purposes, a
<PAGE> 2
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, as amended;
G. VMARK has requested the Holders to agree, and the Holders
have agreed, to vote the UNIDATA Shares upon the terms and subject to the
conditions specified herein and to agree to such other restrictions and
conditions set forth herein; and
H. VMARK and the Holders hereby amend and restate in its
entirety the Stockholder Support Agreement among them dated as of October 7,
1997.
AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which is acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO VOTE UNIDATA SHARES. Until the consummation of
the Merger or the termination of the Merger Agreement in accordance with its
terms, at every meeting of the stockholders of UNIDATA called with respect
thereto, and at every adjournment thereof, and on every action or approval by
written consent of the stockholders of UNIDATA with respect thereto, in each
case occurring on or prior to April 15, 1998, each Holder shall vote the UNIDATA
Shares in favor of approval of the Merger Agreement and the Merger and any
matter that could reasonably be expected to facilitate the Merger. No Holder
will take any action to cause the other stockholders of UNIDATA not to approve
the Merger. Notwithstanding the foregoing, the Holders' obligations under this
Section will terminate if the obligations of the parties to the Affiliate
Agreement are terminated.
2. REPRESENTATIONS AND WARRANTIES OF HOLDER. Each Holder hereby
represents and warrants to VMARK that:
2.1 This Agreement has been duly executed and delivered by such
Holder, and is the legal, valid and binding obligation of such Holder.
2.2 No consent of any court, governmental authority, beneficiary,
co-trustee or other person is necessary for the execution, delivery and
performance of this Agreement by such Holder.
2.3 The UNIDATA Shares are owned by such Holder free and clear of
any pledge, lien, security interest, charge, claim, equity or encumbrance of any
kind, other than this Agreement, except for pledges or liens upon the shares of
MassMutual Corporate Value Partners Limited the existence of which would not
prevent such Holder from performing its obligations hereunder provided there is
no default under the agreement pursuant to which such pledges and liens were
granted.
2
<PAGE> 3
2.4. The Holder has been advised that the issuance of the VMARK
Shares to the Holder pursuant to the Merger will be registered with the SEC on a
registration statement on Form S-4. However, the Holder has also been advised
that, since the Holder may be an "affiliate" of UNIDATA at the time the Merger
is submitted for a vote of the shareholders of UNIDATA and the distribution by
the Holder of the VMARK Shares will not be registered under the Act, in such
event Rule 145(d) under the Act will restrict the Holder's sales of VMARK Shares
received in the Merger.
2.5 The Holder understands that the Merger is intended to qualify
as a generally tax-free reorganization for federal income tax purposes and that
such a reorganization requires that UNIDATA shareholders maintain a substantial
and meaningful continuing equity ownership interest in VMARK after the Merger.
The Holder does not now, and will not at the time of the Merger, have any plan
or intent to engage in a sale, exchange, transfer, pledge, disposition or any
other transaction which results in a reduction in the risk of ownership (any
such transaction, a "Sale") with respect to any of the VMARK Shares to be
received by the Holder in the Merger, other than any fractional VMARK Shares for
which the Holder will receive cash pursuant to the Merger Agreement. The Holder
is neither aware of nor participating in currently, and will not at the time of
the Merger be aware of or be participating in, any written or oral plan pursuant
to which the holders of UNIDATA Shares intend to engage in Sales of VMARK Shares
to be received in the Merger, other than fractional VMARK Shares for which such
holders will receive cash pursuant to the Merger Agreement.
2.6 Such Holder does not now, and at the time of the Merger will
not, have any intention, directly or indirectly, to (a) sell, assign, transfer
(including by merger, testamentary disposition, interspousal disposition
pursuant to a domestic relations proceeding or otherwise by operation of law),
pledge, encumber or otherwise dispose of any of the UNIDATA Shares, (b) deposit
any of the UNIDATA Shares into a voting trust or enter into a voting agreement
or arrangement with respect to the UNIDATA Shares or grant any proxy or power of
attorney with respect thereto which is inconsistent with this Agreement or (c)
enter into any contract, option or other arrangement or undertaking with respect
to the direct or indirect sale, assignment, transfer (including by merger,
testamentary disposition, interspousal disposition pursuant to a domestic
relations proceeding or otherwise by operation of law) or other disposition of
the UNIDATA Shares.
3. COVENANTS OF THE HOLDERS. Each Holder hereby acknowledges,
agrees and covenants that:
3.1 Until the earliest to occur of (a) April 15, 1998, (b) the
consummation of the Merger, or (c) the termination of the Merger Agreement in
accordance with its terms, it will not, and will not take any action through any
entity under its control, to: (i) solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the Exchange
Act) with respect to an Alternative Transaction or otherwise encourage or assist
any party in taking or planning any action that would compete with, restrain or
otherwise serve to interfere with or inhibit the timely consummation of the
Merger in accordance with the terms of the Merger Agreement; (ii) initiate a
stockholders' vote or action by written consent of UNIDATA's stockholders with
respect to an Alternative
3
<PAGE> 4
Transaction; or (iii) become a member of a "group" (as such term is used in
Section 13d of the Exchange Act) with respect to any voting securities of
UNIDATA with respect to an Alternative Transaction. For purposes of this
paragraph, an entity under a Holder's control shall not be deemed to include an
investor or minority beneficial owner of such Holder. Notwithstanding the
foregoing, the Holders' obligations under this Section will terminate if the
obligations of the parties to the Affiliate Agreement are terminated.
3.2 Any shares of UNIDATA Common Stock that such Holder purchases
or with respect to which such Holder otherwise acquires beneficial ownership
after the date of this Agreement shall be considered "UNIDATA Shares" and
subject to each of the terms and conditions of this Agreement.
3.3 Provided the Merger becomes effective by April 15, 1998, the
Holder shall not sell, transfer or otherwise dispose of, or reduce the Holder's
interest in or risk relating to, any UNIDATA Shares that the Holder owns
beneficially during the thirty (30) day period immediately preceding
consummation of the Merger and the Holder shall not sell, transfer or otherwise
dispose of, or reduce the Holder's interest in or risk relating to, any VMARK
Shares issued to the Holder pursuant to the Merger, or any VMARK securities
issued to the Holder upon exercise of any stock options until financial results
covering at least thirty (30) days of the combined operations of UNIDATA and
VMARK have been published (within the meaning of Accounting Series Release 130,
as amended, of the SEC). Notwithstanding the foregoing, the Holders' obligations
under this Section will terminate if the obligations of the parties to the
Affiliate Agreement are terminated.
3.4 The Holder shall not make any sale, transfer or other
disposition of the VMARK Shares in violation of the Act or the rules and
regulations of the SEC thereunder.
3.5 The Holder will not sell or otherwise dispose of any VMARK
Shares, except pursuant to Rule 145(d) or an effective registration statement or
exemption under the Act (provided that the Holder may make bona fide gifts or
distributions without consideration so long as the recipients thereof agree not
to sell, transfer or otherwise dispose of VMARK Shares except as provided
herein).
3.6 Except pursuant to the surviving terms of that certain
Registration Rights Agreement dated as of December 1, 1995 and any other
specific written agreements with a Holder, VMARK is under no further obligation
to register the sale, transfer or other disposition of the VMARK Shares to be
received by the Holder or to take any action necessary in order to make an
exemption from registration available.
3.7 Stop transfer instructions will be given to the transfer agent
of VMARK with respect to the VMARK Shares the Holder will receive, and there
will be placed on the certificates representing such stock, or any certificates
delivered in substitution therefor, a legend stating in substance:
4
<PAGE> 5
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY
BE TRANSFERRED IN ACCORDANCE WITH RULE 145(D) OR AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION UNDER THE ACT."
If the Holder requests that VMARK remove such legend and VMARK obtains
an opinion from its counsel to the effect that such legend is no longer
applicable under federal and state securities laws, VMARK will cause such stock
certificate to be issued without such legend. The Holder may not make such
request more than once in any three month period.
3.8 Unless the transfer by the Holder of his or its VMARK Shares
is a sale made in conformity with the provisions of Rule 145(d), or made
pursuant to a registration under the Act, VMARK reserves the right to put an
appropriate legend on the certificates issued to the Holder's transferee.
4. ASSIGNMENT PROHIBITED. This Agreement shall not be assignable
by any party hereto without the prior written consent of the other parties. This
Agreement shall be binding upon and enforceable against administrators,
executors, representatives, heirs, legatees, devisees, permitted successors and
assigns of each Holder and any pledgee holding the UNIDATA Share or the VMARK
Shares as collateral.
5. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given (and shall be deemed
to have been duly received if so given) if personally delivered or sent by
facsimile, or registered or certified mail, postage prepaid, addressed to the
respective parties as follows:
If to a Holder, to the Holder at the address appearing on the signature
page beneath such Holder's name, with a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071-2007
Attention: Gary Olson, Esq.
If to VMARK:
VMARK Software, Inc.
50 Washington Street
Westboro, MA 01581-1021
Attention: Chief Financial Officer
5
<PAGE> 6
With a copy to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109
Attention: Richard N. Hoehn, Esq.
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.
6. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
7. INDEMNIFICATION. Each Holder shall indemnify VMARK against any
loss, damage or expense VMARK may incur as a result of any breach by such Holder
of the foregoing representations, warranty and agreements contained herein.
8. AMENDMENT; ENTIRE AGREEMENT. This Agreement may not be
amended, except by an instrument in writing signed on behalf of each of the
parties hereto. This Agreement is the entire agreement among the parties and
supersedes any prior agreements with respect to the subject matter hereof.
9. CONDITION. The Holders' obligations under this Agreement shall
not become effective until the execution of the Affiliate Agreement by the
executive officers and directors of UNIDATA.
10. GOVERNING LAW/CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Each Holder hereby irrevocable submits to the jurisdiction of any Massachusetts
state or federal court sitting in the City of Springfield, Massachusetts, in any
action or proceeding arising out of or related to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such state or federal court. Each Holder hereby
irrevocably consents to the service of process which may be served in any such
action or proceeding by certified mail, return receipt requested, by delivering
a copy of such process to such Holder at his or her address specified on the
signature page hereof or by any other method permitted by law.
6
<PAGE> 7
11. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
* * * * * *
7
<PAGE> 8
[SIGNATURE PAGE TO AMENDED AND RESTATED
STOCKHOLDER SUPPORT AGREEMENT - UNIDATA AFFILIATES - B]
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties hereto individually, by its duly authorized officer or in its capacity
as a duly authorized trustee or custodian, all as of the date first above
written.
VMARK SOFTWARE, INC.
By: /s/ Charles F. Kane
------------------------------------
Charles F. Kane
Executive Vice President,
Finance, Chief Financial Officer
and Treasurer
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ Richard C. Morrison
------------------------------
Its Managing Director
This Agreement is executed on behalf of MassMutual Corporate Investors,
organized under a Declaration of Trust, dated September 13, 1985, as amended
from time to time. The obligations of such trust are not personally binding
upon, nor shall resort be had to the property of, any of the trustees,
shareholders, officers, employees or agents of such trust, but the trust
property only shall be bound.
MASSMUTUAL CORPORATE INVESTORS
By: /s/ Richard C. Morrison
------------------------------
Its Vice President
This Agreement is executed on behalf of MassMutual Participation, organized
under a Declaration of Trust, dated April 7, 1988, as amended from time to time.
The obligations of such trust are not personally binding upon, nor shall resort
be had to the property of, any of the trustees, shareholders, officers,
employees or agents of such trust, but the trust property only shall be bound.
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ Richard C. Morrison
------------------------------
Its Vice President
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
By: Massachusetts Mutual Life Insurance Company, as Investment Manager
By: /s/ Richard C. Morrison
------------------------------
Its Managing Director
8
<PAGE> 9
SCHEDULE 1
SHAREHOLDER NUMBER OF SHARES
- ----------- ----------------
Massachusetts Mutual Life Insurance 233,250
Company
MassMutual Corporate Investors 125,000
MassMutual Participation Investors 62,500
MassMutual Corporate Value Partners 79,250
Limited
9
<PAGE> 1
EXHIBIT 99.5
------------
AMENDED AND RESTATED
STOCKHOLDER SUPPORT AGREEMENT
(VMARK Affiliates)
AMENDED AND RESTATED STOCKHOLDER SUPPORT AGREEMENT, dated
as of October 31, 1997, between the undersigned holders (collectively, the
"Holders") of shares of the common stock, $.01 par value ("VMARK Common Stock"),
of VMARK Software, Inc., a Delaware corporation ("VMARK"), and Unidata, Inc., a
Colorado corporation ("UNIDATA").
RECITALS
A. VMARK and UNIDATA are parties to an Agreement and Plan of
Merger and Reorganization dated as of October 7, 1997 (the "Merger Agreement,"
capitalized terms not otherwise defined herein being used herein as therein
defined), pursuant to which UNIDATA will be merged with and into VMARK (the
"Merger");
B. Each Holder, individually or as trustee or custodian, is
the owner of the number of shares of VMARK Common Stock set forth next to such
Holder's name on SCHEDULE 1 to this Agreement (with respect to each Holder, the
"Shares") and is an executive officer and/or director of VMARK;
C. Each Holder has been advised that, as of the date hereof,
such Holder may be an "affiliate" of VMARK, as that term is defined for purposes
of paragraphs (c) and (d) of Rule 145 of the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "Act");
D. VMARK, UNIDATA and the Holders wish to ensure that the
Merger is accounted for as a pooling of interests and constitutes, for federal
tax purposes, a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, as amended;
E. UNIDATA has requested the Holders to agree, and the Holders
have agreed, to vote the Shares upon the terms and subject to the conditions
specified herein and to agree to such other restrictions and conditions set
forth herein; and
F. UNIDATA and the Holders hereby amend and restate in its
entirety the Stockholder Support Agreement among them dated as of October 7,
1997.
AGREEMENT
<PAGE> 2
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which is acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO VOTE SHARES. Until the consummation of the Merger
or the termination of the Merger Agreement in accordance with its terms, at
every meeting of the stockholders of VMARK called with respect thereto, and at
every adjournment thereof, and on every action or approval by written consent of
the stockholders of VMARK with respect thereto, each Holder shall vote the
Shares in favor of approval of the Merger Agreement and the Merger and any
matter that could reasonably be expected to facilitate the Merger and each
Holder shall use his or her reasonable efforts to cause the stockholders of
VMARK to approve the Merger.
2. REPRESENTATIONS AND WARRANTIES OF HOLDER. Each Holder hereby
represents and warrants to UNIDATA that:
2.1 This Agreement has been duly executed and delivered by such
Holder, and is the legal, valid and binding obligation of such Holder.
2.2 No consent of any court, governmental authority, beneficiary,
co-trustee or other person is necessary for the execution, delivery and
performance of this Agreement by such Holder.
2.3 The Shares of such Holder have been duly authorized and
validly issued, and are fully paid and nonassessable. Except for pledges of the
Shares on margin, the Shares are owned by such Holder free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance of any
kind, other than this Agreement.
2.4 Such Holder does not now, and will not at the time of the
Merger, have any intention, directly or indirectly, to (a) sell, assign,
transfer (including by merger, testamentary disposition, interspousal
disposition pursuant to a domestic relations proceeding or otherwise by
operation of law), pledge, encumber or otherwise dispose of any of the Shares,
(b) deposit any of the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Shares or grant any proxy or power
of attorney with respect thereto which is inconsistent with this Agreement or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect sale, assignment, transfer (including by
merger, testamentary disposition, interspousal disposition pursuant to a
domestic relations proceeding or otherwise by operation of law) or other
disposition of the Shares.
3. COVENANTS OF THE HOLDERS. Each Holder hereby agrees and
covenants that:
3.1 Until the consummation of the Merger or the termination of the
Merger Agreement in accordance with its terms, subject to the applicable
fiduciary duties of a director of VMARK, as determined by such director in good
faith after consultation with and
2
<PAGE> 3
based upon the advice of legal counsel, he will not, and will not permit any
entity under his control, to: (i) solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the Exchange
Act) with respect to an Alternative Transaction or otherwise encourage or assist
any party in taking or planning any action that would compete with, restrain or
otherwise serve to interfere with or inhibit the timely consummation of the
Merger in accordance with the terms of the Merger Agreement; (ii) initiate a
stockholders' vote or action by written consent of VMARK's stockholders with
respect to an Alternative Transaction; or (iii) become a member of a "group" (as
such term is used in Section 13d of the Exchange Act) with respect to any voting
securities of VMARK with respect to an Alternative Transaction.
3.2 Any shares of VMARK Common Stock that such Holder purchases or
with respect to which such Holder otherwise acquires beneficial ownership after
the date of this Agreement shall be considered "Shares" and subject to each of
the terms and conditions of this Agreement.
3.3 Such Holder shall not sell, transfer or otherwise dispose of,
or reduce the Holder's interest in or risk relating to, the Shares during the
period commencing thirty (30) days prior to the consummation of the Merger and
ending at such time as financial results covering at least thirty (30) days of
the combined operations of UNIDATA and VMARK have been published (within the
meaning of Accounting Series Release 130, as amended, of the SEC).
4. ASSIGNMENT PROHIBITED. This Agreement shall not be assignable
by any party hereto without the prior written consent of the other parties. This
Agreement shall be binding upon and enforceable against administrators,
executors, representatives, heirs, legatees, devisees, permitted successors and
assigns of each Holder and any pledgee holding the Shares as collateral.
5. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given (and shall be deemed
to have been duly received if so given) if personally delivered or sent by
facsimile, or registered or certified mail, postage prepaid, addressed to the
respective parties as follows:
If to a Holder, to the Holder at the address appearing on the signature
page beneath such Holder's name, with a copy to:
Richard N. Hoehn, Esq.
Choate, Hall & Stewart
Exchange Place, 53 State Street
Boston, MA 02109
If to UNIDATA:
3
<PAGE> 4
Unidata, Inc.
1099 18th Street
Suite 2500
Denver, CO 80202
Attention: Secretary and General Counsel
With a copy to:
Gary Olson, Esq.
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071-2007
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.
6. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
7. INDEMNIFICATION. Each Holder shall indemnify UNIDATA against
any loss, damage or expense UNIDATA may incur as a result of any breach by such
Holder of the foregoing representations, warranty and agreements contained
herein.
8. AMENDMENT; ENTIRE AGREEMENT. This Agreement may not be
amended, except by an instrument in writing signed on behalf of each of the
parties hereto. This Agreement is the entire agreement among the parties and
supersedes any prior agreements with respect to the subject matter hereof.
9. GOVERNING LAW/CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
Each Holder hereby irrevocable submits to the jurisdiction of any Delaware state
or federal court sitting in the City of Wilmington, Delaware, in any action or
proceeding arising out of or related to this Agreement, and hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such state or federal court. Each Holder hereby irrevocably
consents to the service of process which may be served in any such action or
proceeding by certified mail, return receipt requested, by delivering a copy of
such process
4
<PAGE> 5
to such Holder at his or her address specified on the signature page hereof or
by any other method permitted by law.
10. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
* * * * * *
5
<PAGE> 6
[SIGNATURE PAGE TO AMENDED AND RESTATED
STOCKHOLDER SUPPORT AGREEMENT - VMARK AFFILIATES]
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties hereto individually, by its duly authorized officer or in its capacity
as a duly authorized trustee or custodian, all as of the date first above
written.
UNIDATA, INC.
By: /s/ David W. Brunel
------------------------------------
Title: President
THE HOLDERS
/s/ Peter Gyenes /s/ Peter L. Fiore
- ---------------------------------- ----------------------------------------
Peter Gyenes Peter L. Fiore
/s/ James Foy /s/ Charles F. Kane
- ---------------------------------- ----------------------------------------
James Foy Charles F. Kane
/s/ Cornelius McMullan /s/ Jason E. Silvia
- ---------------------------------- ----------------------------------------
Cornelius McMullan Jason E. Silvia
/s/ James K. Walsh /s/ Robert M. Morrill
- ---------------------------------- ----------------------------------------
James K. Walsh Robert M. Morrill
/s/ Robert G. Claussen /s/ James M. Dow
- ---------------------------------- ----------------------------------------
Robert G. Claussen James M. Dow
/s/ Alphonse M. Lucchese /s/ Randolph S. Naylor
- ---------------------------------- ----------------------------------------
Alphonse M. Lucchese Randolph S. Naylor
/s/ Benjamin F. Robelen
- ----------------------------------
Benjamin F. Robelen
6
<PAGE> 7
SCHEDULE 1
HOLDER NUMBER OF SHARES
- ------ ----------------
Peter Gyenes 3,823
James Foy 10,984
Cornelius McMullan 0
James Walsh 58,116
Robert G. Claussen 104,926
Alphonse Lucchese 0
Benjamin F. Robelen 54,991
Peter Fiore 646
Charles Kane 2,357
Jason Silvia 0
Robert M. Morrill 195,176
James Dow 19,500
Randolph S. Naylor 56,200
7
<PAGE> 1
EXHIBIT 99.6
CONSENT OF DAVID W. BRUNEL
I hereby consent to the use of my name in the Registration Statement on
Form S-4 of VMARK Software, Inc. and any amendment thereto, as the same appears
therein under the caption "Management of VMARK Following the Merger" with
respect to my becoming a director of VMARK.
November 13, 1997
/s/ DAVID W. BRUNEL
------------------------------------
DAVID W. BRUNEL
<PAGE> 1
EXHIBIT 99.7
CONSENT OF JAMES T. DRESHER
I hereby consent to the use of my name in the Registration Statement on
Form S-4 of VMARK Software, Inc. and any amendment thereto, as the same appears
therein under the caption "Management of VMARK Following the Merger" with
respect to my becoming a director of VMARK.
November 13, 1997
/s/ JAMES T. DRESHER
------------------------------------
JAMES T. DRESHER
<PAGE> 1
EXHIBIT 99.8
CONSENT OF MARTIN D. HART
I hereby consent to the use of my name in the Registration Statement on
Form S-4 of VMARK Software, Inc. and any amendment thereto, as the same appears
therein under the caption "Management of VMARK Following the Merger" with
respect to my becoming a director of VMARK.
November 13, 1997
/s/ MARTIN D. HART
------------------------------------
MARTIN D. HART
