<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [X]
Filed by the Party other than the Registrant [_] Check the appropriate box:
[ ] Preliminary Proxy Statement [_] Confidential, for Use of
[X] Definitive Proxy Statement the Commission Only (as
[ ] Definitive Additional Materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
VERSANT OBJECT TECHNOLOGY CORPORATION
(Name of Registrant as Specified in Its Charter)
----------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE> 2
April 30, 1997
To Our Shareholders:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders of Versant Object Technology Corporation to be held at the Hotel
Sofitel located at 223 Twin Dolphin Drive, Redwood City, California, on
Thursday, June 5, 1997, at 2:00 p.m., Pacific Time.
The matters expected to be acted upon at the meeting are described in
detail in the following Notice of Annual Meeting of Shareholders and Proxy
Statement.
It is important that you use this opportunity to take part in the
affairs of your Company by voting on the business to come before this meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. Returning the Proxy does not
deprive you of your right to attend the meeting and to vote your shares in
person.
We look forward to seeing you at the meeting.
Sincerely,
/s/ David Banks
David Banks
President and Chief Executive Officer
<PAGE> 3
VERSANT OBJECT TECHNOLOGY CORPORATION
1380 WILLOW ROAD
MENLO PARK, CALIFORNIA 94025
-----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 1997
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Versant
Object Technology Corporation (the "Company") will be held at the Hotel Sofitel
located at 223 Twin Dolphin Drive, Redwood City, California, on Thursday, June
5, 1997, at 2:00 p.m., Pacific Time for the following purposes:
1. To elect five (5) directors of the Company, each to serve until the
next Annual Meeting of Shareholders and until his successor has been
elected and qualified or until his earlier resignation or removal.
The Company's Board of Directors intends to present the following
nominees for election as directors:
David Banks Mark Leslie
Stephen J. Gaal Lawrence K. Orr
James Simpson
2. To consider and vote upon a proposal to amend the Company's 1996
Directors Stock Option Plan to increase the number of shares of
Common Stock reserved for issuance thereunder by 50,000 shares, from
75,000 shares to 125,000 shares.
3. To consider and vote upon a proposal to amend the Company's 1996
Employee Stock Purchase Plan to increase the number of shares of
Common Stock reserved for issuance thereunder by 200,000 shares,
from 125,000 shares to 325,000 shares.
4. To consider and vote upon a proposal to amend the Company's 1996
Equity Incentive Plan to increase the number of shares of Common
Stock reserved for issuance thereunder by 800,000 shares, from
850,000 shares plus any shares remaining under the Company's 1989
Stock Option Plan to 1,650,000 shares plus any shares remaining
under the Company's 1989 Stock Option Plan.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 22, 1997 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Richard I. Kadet
Secretary
Menlo Park, California
April 30, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE> 4
VERSANT OBJECT TECHNOLOGY CORPORATION
1380 WILLOW ROAD
MENLO PARK, CALIFORNIA 94025
-----------
PROXY STATEMENT
April 30, 1997
The accompanying Proxy is solicited on behalf of the Board of Directors
(the "Board") of Versant Object Technology Corporation, a California corporation
(the "Company"), for use at the Annual Meeting of Shareholders of the Company to
be held at the Hotel Sofitel located at 223 Twin Dolphin Drive, Redwood City,
California, on Thursday, June 5, 1997, at 2:00 p.m., Pacific Time (the
"Meeting"). This Proxy Statement and the accompanying form of Proxy were first
mailed or delivered to shareholders on or about May 6, 1997. An annual report
for the year ended December 31, 1996 is enclosed with this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Only holders of record of the Company's Common Stock at the close of
business on April 22, 1997 (the "Record Date") will be entitled to vote at the
Meeting. At the close of business on the Record Date, the Company had 8,961,345
shares of Common Stock outstanding and entitled to vote. A majority of the
shares outstanding on the Record Date will constitute a quorum for the
transaction of business.
Holders of Common Stock are entitled to one vote for each share held as of
the above record date, except that in the election of directors each shareholder
has cumulative voting rights and is entitled to a number of votes equal to the
number of shares held by such shareholder multiplied by the number of directors
to be elected (five). The shareholder may cast these votes all for a single
candidate or distribute the votes among any or all of the candidates. No
shareholder will be entitled to cumulate votes for a candidate, however, unless
that candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the Meeting, prior to
the voting, of an intention to cumulate votes. In such an event, the Proxy
holder may allocate the votes represented by Proxies among the nominees of the
Board of Directors in the Proxy holder's sole discretion.
In the event that a broker, bank, custodian, nominee or other record
holder of the Company's Common Stock indicates on a proxy that it does not have
discretionary authority to vote certain shares on a particular matter (a "broker
non-vote"), those shares will not be considered present and entitled to vote
with respect to that matter, although they will be counted in determining the
presence of a quorum.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Meeting that are
voted on the election of directors. Approval of Proposal Nos. 2, 3 and 4
requires the affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the Meeting that are voted "for" or
"against" the proposal. In addition, for Proposal Nos. 2, 3 and 4, the
affirmative votes must constitute at least a majority of the required quorum.
Neither an abstention nor a broker non-vote will be counted as a vote "for" or
"against" Proposal Nos. 2, 3 or 4. All votes will be tabulated by the inspector
of elections appointed for the Meeting. Each of the Company's proposals
described in this Proxy Statement requires that a quorum be present at the
Meeting.
Unless otherwise instructed, each valid returned Proxy in the form
accompanying this Proxy Statement that is not revoked will be voted in the
election of directors "FOR" the nominees of the Board of Directors and "FOR"
Proposal Nos. 2, 3 and 4 described in this Proxy Statement, and at the Proxy
holder's discretion, on such other matters, if any, that may come before the
Meeting (including any proposal to adjourn the Meeting).
<PAGE> 5
In the event that sufficient votes in favor of the proposals are not
received by the date of the Meeting, the persons named as Proxies may propose
one or more adjournments of the Meeting to permit further solicitations of
Proxies. Any such adjournment would require the affirmative vote of the majority
of the shares present in person or represented by Proxy at the Meeting and
entitled to vote.
The expenses of soliciting Proxies in the enclosed form will be paid by
the Company. Following the original mailing of the Proxy Statement, the Proxy
and other soliciting materials, the Company will request brokers, custodians,
nominees and other record holders to forward copies of the Proxy Statement, the
Proxy and other soliciting materials to persons for whom they hold shares of
Common Stock and to request authority for the exercise of Proxies. In such
cases, the Company, upon the request of the record holders, will reimburse such
holders for their reasonable expenses. Proxies may also be solicited by certain
of the Company's directors, officers and regular employees, without additional
compensation, in person or by telephone or telegram.
REVOCABILITY OF PROXIES
Any person signing a Proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Meeting or at the Meeting prior to the
vote pursuant to the Proxy. A Proxy may be revoked by a writing delivered to the
Company stating that the Proxy is revoked, by a subsequent Proxy that is signed
by the person who signed the earlier Proxy and is presented at the Meeting, or
by attendance at the Meeting and voting in person. Please note, however, that if
a shareholder's shares are held of record by a broker, bank or other nominee and
that shareholder wishes to vote at the Meeting, the shareholder must bring to
the Meeting a letter from the broker, bank or other nominee confirming that
shareholder's beneficial ownership of the shares.
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PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
DIRECTORS/NOMINEES
At the Meeting, shareholders will elect five directors, which is the
current number of directors authorized in the Company's Bylaws, to hold office
until the next Annual Meeting of Shareholders and until their respective
successors have been elected and qualified, or until such directors' earlier
resignation or removal. Shares represented by the accompanying Proxy will be
voted for the election of five nominees (recommended by the Board) who are named
in the following table, unless the Proxy is marked in such a manner as to
withhold authority so to vote. Directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the Meeting
that are voted on the election of directors. The Company has no reason to
believe that the nominees for election will not be available to serve their
prescribed terms. However, if any nominee for any reason is unable to serve or
will not serve, the Proxy may be voted for such substitute nominee as the
persons appointed in the Proxy may in their discretion determine.
The following table sets forth certain information concerning the nominees
(each of whom is currently a director of the Company), which is based on data
furnished by them:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- -----
<S> <C> <C> <C>
David Banks 51 President and Chief Executive Officer of the Company 1993
Mark Leslie (1) 51 President and Chief Executive Officer of VERITAS 1988
Software Corporation
Stephen J. Gaal (2) 53 Principal of TA Associates Inc. 1988
Lawrence K. Orr (1) 40 General Partner of Trinity TVL Partners 1995
James Simpson (2) 59 Chairman and Chief Executive Officer of Wall Data 1995
Incorporated
</TABLE>
- -------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Mr. Banks has served as President, Chief Executive Officer and as a
director of the Company since he joined the Company in April 1993. From January
1985 to January 1989, Mr. Banks served as Chief Executive Officer and President
of Cadre Technologies Incorporated ("Cadre"), a software development company. In
January 1989, following a merger of MicroCase Inc. and Cadre, Mr. Banks was
named President of Cadre, a position he held until mid-1992, when he became
Executive Vice President of Cadre. Mr. Banks served in this position until
December 1992. Mr. Banks received a Bachelor of Science in Chemistry from
Indiana University in 1967, a Master of Science in Chemistry from University of
California, San Diego in 1968 and a Masters of Business Administration from
Purdue University in 1969.
Mr. Leslie has served as Chairman of the Board of Directors of the
Company since October 1988. Mr. Leslie has served as President and Chief
Executive Officer of VERITAS Software Corporation ("Veritas"), a systems
software company, since February 1990. Mr. Leslie received a Bachelor or Arts in
Physics and Mathematics from New York University in 1966 and completed Harvard
Business School's Program for Management Development in 1980. Mr. Leslie is also
a director of Veritas and Aurum Software Inc.
Mr. Gaal has served as a director of the Company since October 1988.
Mr. Gaal has been a Principal of TA Associates Inc. ("TA"), a venture capital
firm, since January 1995. From October 1987 to December 1994, Mr. Gaal was a
Managing Director -- Investments of TA. Mr. Gaal received a Bachelor of Science
in Electrical Engineering from Princeton University in 1966 and a Master of
Science in Electrical Engineering
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and Computer Science from University of California, Berkeley in 1967. He also
completed Harvard Business School's Program for Management Development in 1974.
Mr. Gaal is also a director of Workgroup Technology Corporation.
Mr. Orr has served as a director of the Company since January 1995.
Since 1991, Mr. Orr has been a general partner of Trinity TVL Partners
("Trinity"), the general partner of a privately held family of venture capital
partnerships, and was an employee of Trinity from 1989 to 1991. Mr. Orr received
a Bachelor of Arts in Mathematics from Harvard University in 1978 and a Masters
of Business Administration from Stanford University in 1982.
Mr. Simpson has served as a director of the Company since April 1995.
Since June 1988, Mr. Simpson has been Chief Executive Officer of Wall Data
Incorporated, a computer software company, where he is also Chairman of the
Board of Directors. Mr. Simpson was also President of Wall Data Incorporated
from June 1988 to May 1996. Mr. Simpson studied medicine and surgery at the
University of Edinburgh, Scotland.
There is no family relationship between any of the foregoing nominees or
between any of such nominees and any of the Company's executive officers. The
Company's executive officers serve at the discretion of the Board.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board met six times, including telephone conference meetings, during
1996, and acted by written consent two times. Standing committees of the Board
include an Audit Committee and a Compensation Committee. The Board does not have
a nominating committee or a committee performing similar functions.
The Audit Committee is comprised of Messrs. Gaal and Simpson, who are
non-employee directors. The Audit Committee met two times during 1996. The Audit
Committee has the following powers: (i) to meet with the Company's independent
accountants to review the adequacy of the Company's internal control systems and
financial reporting procedures; (ii) to review the general scope of the
Company's annual audit and the fees charged by the independent accountants;
(iii) to review and monitor the performance of non-audit services by the
Company's auditors; and (iv) to review the fairness of any proposed transaction
between any officer, director or other affiliate of the Company and the Company,
and after such review, make recommendations to the full Board.
The Compensation Committee is comprised of Messrs. Leslie and Orr, who are
non-employee directors. The Compensation Committee met two times during 1996.
The Compensation Committee is responsible for determining compensation policies
for the Company's executive officers. The Committee also administers the
Company's 1996 Equity Incentive Plan and 1996 Employee Stock Purchase Plan.
No director attended fewer than 75% of the aggregate of the total number
of meetings of the Board (held during the period for which he was a director)
and the total number of meetings held by all committees of the Board on which he
served (during the period that he served).
DIRECTORS COMPENSATION
Directors of the Company do not receive cash compensation for their
services as directors but are reimbursed for their reasonable expenses in
attending meetings of the Board.
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<PAGE> 8
Directors who are not officers of the Company participate in one
compensation plan, the 1996 Directors Stock Option Plan, which is described
under Proposal No. 2 below. On July 18, 1996, the Company granted to each of
Messrs. Leslie, Gaal, Orr and Simpson an option to purchase 10,000 shares of the
Company's Common Stock at an exercise price of $8.00 per share pursuant to this
plan.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINATED DIRECTORS.
PROPOSAL NO. 2 -- APPROVAL OF AMENDMENT TO
1996 DIRECTORS STOCK OPTION PLAN
Shareholders are being asked to approve an amendment to the Company's 1996
Directors Stock Option Plan (the "Directors Plan") to provide for an increase in
the number of shares of Common Stock reserved for issuance thereunder by 50,000
shares, from 75,000 shares to 125,000 shares. The Board believes that adding
shares to the Directors Plan is in the best interests of the Company because it
will enable the Company to attract and retain non-employee directors.
In May 1996, the Board adopted the 1996 Directors Stock Option Plan (the
"Directors Plan") and reserved a total of 75,000 shares of the Company's Common
Stock for issuance thereunder. The Company's shareholders approved the Directors
Plan in June 1996. The Board approved the proposed amendment to the Directors
Plan on April 22, 1997, to be effective upon shareholder approval. Set forth
below is a summary of the principal features of the Directors Plan, which
summary is qualified in its entirety by reference to the terms and conditions of
the Directors Plan. The Company will provide, without charge, to each person to
whom a Proxy Statement is delivered, upon request of such person and by first
class mail within one business day of receipt of such request, a copy of the
Directors Plan. Any such request should be directed as follows: Secretary,
Versant Object Technology Corporation, 1380 Willow Road, Menlo Park, California
94025; telephone number (415) 329-7500; facsimile (415) 325-2380.
PURPOSE. The purpose of the Directors Plan is to provide incentive for
members of the Board who are not also employees of the Company or any parent,
subsidiary or affiliate of the Company ("Outside Directors") by providing such
persons with an opportunity to purchase shares of Common Stock of the Company.
NUMBER OF SHARES. The maximum number of shares that currently may be
issued pursuant to options granted under the Directors Plan is 75,000 shares. If
the Company's shareholders approve this Proposal, the maximum number of shares
that may be issued pursuant to options granted under the Directors Plan will be
125,000 shares.
ADMINISTRATION. The Directors Plan is administered by the Board. The
Board's interpretation of any provision of the Directors Plan or any option
granted thereunder shall be final and binding upon the Company and all persons
having an interest in any such option or any shares purchased pursuant to such
an option. The members of the Board do not receive any compensation for
administering the Directors Plan. The Company bears all expenses in connection
with administration of the Directors Plan.
ELIGIBILITY. Only Outside Directors may be granted options under the
Directors Plan.
AWARD FORMULAS. On July 17, 1996, the effective date for the Company's
initial public offering, each eligible director was automatically granted an
option to purchase 10,000 shares. Under the Directors Plan, each eligible
director who becomes a member of the Board will automatically be granted an
option to purchase 10,000 shares upon joining the Board. In addition, each
eligible director will automatically be granted an option to purchase 5,000
shares on each anniversary date of such director's initial option grant under
the
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Directors Plan if such director has served continuously as a member of the
Board since the date such director was first granted an option under the
Directors Plan.
VESTING. All options issued under the Directors Plan will vest as to
50% of the shares on each of the first two anniversaries follow the date of
grant, provided the optionee continues as a member of the Board or as a
consultant to the Company.
EXERCISE PRICE. The exercise price of all options granted under the
Directors Plan will be the fair market value of the Common Stock on the date of
grant.
TERMINATION OF OPTIONS. Except as provided below, each option expires
ten years after the date of grant. Options cease to vest if the Outside Director
ceases to be a member of the Board or a consultant to the Company. If the
Outside Director ceases to be a member of the Board or a consultant to the
Company for any reason except death or disability, the option, to the extent
(and only to the extent) that it would have been exercisable by the Outside
Director on the date such Outside Director ceases to be a member of the Board or
a consultant to the Company (the "Termination Date"), may be exercised by the
Outside Director within seven months after the Termination Date, but in no event
later than the expiration date of the option. If the Outside Director ceases to
be a member of the Board or a consultant to the Company because of his or her
death or disability within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), each option, to the extent (and
only to the extent) that it would have been exercisable by the Outside Director
on the Termination Date, may be exercised by the Outside Director or his or her
legal representative within twelve months after the Termination Date, but in no
event later than the expiration date of the option. If any option expires or
terminates for any reason without being exercised in whole or in part, the
shares thereby released from such option will be available for grant and
purchase under other options subsequently granted under the Directors Plan.
ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of Common Stock is changed by a stock dividend, stock split,
reverse stock split, combination, reclassification or similar change in the
capital structure of the Company without consideration, the number of shares of
Common Stock available for grant under the Directors Plan, the number of shares
of Common Stock subject to outstanding options under the Directors Plan and the
exercise price per share of such options shall be proportionately adjusted,
subject to any required action by the Board or the shareholders of the Company
and compliance with applicable securities laws.
ASSUMPTION OF OPTIONS BY SUCCESSORS. In the event of a dissolution or
liquidation of the Company, a merger or consolidation in which the Company is
not the surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction or other transaction in which there is no substantial change in the
shareholders of the Company or their relative stock holdings and the options
granted under the Directors Plan are assumed or replaced by the successor
corporation, which assumption will be binding on all optionees), a merger in
which the Company is the surviving corporation but after which the shareholders
of the Company (other than any shareholder which merges (or which owns or
controls another corporation which merges) with the Company in such merger) own
less than 50% of the shares or other equity interests in the Company, the sale
of substantially all of the assets of the Company or the acquisition, sale or
transfer of a majority of the outstanding shares of the Company by tender offer
or similar transaction, the vesting of all options granted pursuant to the
Directors Plan will accelerate and the options will become exercisable in full
prior to the consummation of such event at such times and on such conditions as
the Board determines, and if such options are not exercised prior to the
consummation of the corporate transaction, they shall terminate in accordance
with the provisions of the Directors Plan.
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<PAGE> 10
RESTRICTIONS ON SHARES. The Company may reserve to itself or its
assignee(s), in the option grant, a right to repurchase any or all unvested
shares held by an Outside Director upon his or her termination of service with
the Company for any reason at the Outside Director's original exercise price.
AMENDMENT AND TERMINATION OF THE DIRECTORS PLAN. The Board may at any
time terminate or amend the Directors Plan but not the terms of any outstanding
option; provided, however, that the Board shall not, without the approval of the
shareholders of the Company, increase the total number of shares of Common Stock
available for grant under the Directors Plan (except by adjustment in the event
of stock dividend, stock split or the like) or change the class of persons
eligible to receive options. In any case, no amendment to the Directors Plan may
adversely affect any then outstanding options or any unexercised portions
thereof without the written consent of the optionee. Unless terminated earlier
as provided in the Directors Plan, the Directors Plan will terminate in May
2006, ten years from the date the Directors Plan was adopted by the Board.
OUTSTANDING OPTIONS UNDER THE DIRECTORS PLAN. The following information
about outstanding options under the Directors Plan is provided as of April 22,
1997. Four persons held options under the Directors Plan to purchase an
aggregate of 40,000 shares of Common Stock with a weighted average exercise
price of $8.00 per share, and there were 35,000 shares of Common Stock available
for future grants under the Directors Plan. The Fair Market Value (as defined in
the Directors Plan and determined as the closing price of the Company's Common
Stock on the National Market System of the Nasdaq Stock Market, Inc. ("Nasdaq")
on April 21, 1997, the last trading day prior to the Record Date) was $5.625 per
share. Over the term of the Directors Plan, the following current Outside
Directors have been granted options to purchase shares of Common Stock under the
Directors Plan: Mark Leslie, 10,000 shares; Stephen J. Gaal, 10,000 shares;
Lawrence K. Orr, 10,000 shares; and James Simpson, 10,000 shares. The
outstanding options under the Directors Plan expire in 2006 (subject to earlier
termination if an Outside Director is no longer a member of the Board or a
consultant to the Company).
FUTURE OPTIONS UNDER THE DIRECTORS PLAN. Only Outside Directors are
eligible to receive options under the Directors Plan. No current executive
officers or employees of the Company have received options under the Directors
Plan. Each nominee for election as a director who is an Outside Director will
receive options as described under "Award Formulas" above.
FEDERAL INCOME TAX INFORMATION. THE FOLLOWING IS A GENERAL SUMMARY AS
OF THE DATE OF THIS PROXY STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO
THE COMPANY AND DIRECTORS PARTICIPATING IN THE DIRECTORS PLAN. FEDERAL TAX LAWS
MAY CHANGE AND THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY DIRECTOR
WILL DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH DIRECTOR HAS BEEN AND
IS ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISER REGARDING THE TAX
CONSEQUENCES OF PARTICIPATION IN THE DIRECTORS PLAN.
Options granted under the Directors Plan are nonqualified stock options
("NQSOs"). Any tax effects that accrue to foreign optionees as a result of
participation in the Directors Plan are governed solely by the tax laws of the
countries in which such optionees reside.
Tax Treatment of the Optionee. An optionee will not recognize any
taxable income at the time an NQSO is granted. However, upon exercise of an
NQSO, the optionee must include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the optionee's purchase price. The included amount must be treated as
ordinary income by the optionee and may be subject to income tax withholding by
the Company (by payment in cash). However, where the Company holds a right to
repurchase shares issued upon exercise at the option exercise price if the
optionee leaves the Company before the vesting schedule is satisfied, the shares
will be treated as subject to a substantial risk of forfeiture for the duration
of the vesting period, unless within thirty days after the exercise of the
option the optionee elects to be taxed currently on the difference between fair
market value on the date of
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<PAGE> 11
exercise and the option exercise price. Upon resale of the shares by the
optionee, any subsequent appreciation or depreciation in the value of the shares
will be treated as capital gain or loss.
The Omnibus Budget Reconciliation Act of 1993, enacted in August
1993, provides that the maximum tax rate applicable to ordinary income is 39.6%.
Long-term capital gain will be taxed at a maximum rate of 28%. For this purpose,
in order to receive long-term capital gain treatment, the stock must be held for
more than one year. Capital gains will continue to be offset by capital losses
and up to $3,000 of capital losses may be offset annually against ordinary
income.
Estimated tax payments may be due on amounts an optionee includes
in income if the income recognition event occurs before the last month of his or
her taxable year and no other exceptions to the underpayment of estimated tax
penalties applies.
Tax Treatment of the Company. The Company will be entitled to a
deduction in connection with the exercise of an NQSO by a domestic director to
the extent that the optionee recognizes ordinary income.
ERISA INFORMATION. The Company believes that the Directors Plan is not
subject to any of the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA") .
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1996 DIRECTORS STOCK OPTION PLAN
PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT TO
1996 EMPLOYEE STOCK PURCHASE PLAN
Shareholders are being asked to approve an amendment to the Company's 1996
Employee Stock Purchase Plan (the "Purchase Plan") to increase the number of
shares of Common Stock reserved for issuance under the Purchase Plan by 200,000
shares, from 125,000 shares to 325,000 shares. The Board believes that adding
shares to the Purchase Plan is in the best interests of the Company because it
will permit the Company to attract and retain key employees by providing them
with appropriate equity incentives. The Purchase Plan plays an important role in
the Company's efforts to attract and retain employees of outstanding ability.
In May 1996, the Board adopted the Purchase Plan and reserved a total of
125,000 shares of the company's Common Stock for issuance thereunder. The
Company's shareholders approved the Purchase Plan in June 1996. The Board
approved the proposed amendment to the Purchase Plan on April 29, 1997, to be
effective upon shareholder approval. Set forth below is a summary of the
principal features of the Purchase Plan, which summary is qualified in its
entirety by reference to the terms and conditions of the Purchase Plan. The
Company will provide, without charge, to each person to whom a Proxy Statement
is delivered, upon request of such person and by first class mail within one
business day of receipt of such request, a copy of the Purchase Plan. Any such
request should be directed as follows: Secretary, Versant Object Technology
Corporation, 1380 Willow Road, Menlo Park, California 94025; telephone number
(415) 329-7500; facsimile (415) 325-2380.
PURPOSE. The Purchase Plan has been established to provide employees of
the Company and its subsidiaries designated by the Board as eligible to
participate in the Purchase Plan ("Participating Employees") with a convenient
means of acquiring an equity interest in the Company, to enhance such employees'
sense of participation in the affairs of the Company and to provide an incentive
for continued employment. The Purchase Plan accomplishes this purpose by
permitting Participating Employees to purchase from the Company shares of Common
Stock of the Company at a discount from the market price and to pay for such
shares through payroll deductions.
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NUMBER OF SHARES. The maximum member of shares that currently may be
issued under the Purchase Plan is 125,000 shares. If the Company's shareholders
adopt this Proposal, the maximum number of shares that may be issued under the
Purchase Plan will be 325,000 shares.
ADMINISTRATION. The Purchase Plan is administered by the Compensation
Committee of the Board (the "Committee"), the members of which are appointed by
the Board. The Committee currently consists of Mark Leslie and Lawrence K. Orr,
both of whom are "non-employee directors," as defined in Rule 16b-3 promulgated
under the Exchange Act, and "outside directors," as defined pursuant to Section
162(m) of the Code. The interpretation or construction by the Committee of any
provisions of the Purchase Plan will be final and binding on all Participating
Employees. The members of the Committee do not receive any compensation for
administering the Plan. The Company bears all expenses in connection with
administration of the Plan.
ELIGIBILITY. All employees of the Company, or any parent or
subsidiary, are eligible to participate in an Offering Period (as defined below)
under the Purchase Plan, except the following:
(a) employees who are not employed by the Company 15 days
before the beginning of such Offering Period;
(b) employees who are customarily employed for less than
20 hours per week;
(c) employees who are customarily employed for less than five
months in a calendar year; and
(d) employees who own stock or hold options to purchase
stock or who, as a result of participation in the
Purchase Plan, would own stock or hold options to
purchase stock, possessing 5% or more of the total
combined voting power or value of all classes of
stock of the Company.
As of April 22, 1997, approximately 104 persons were eligible to
participate in the Purchase Plan and 61,069 shares had been issued pursuant to
the Purchase Plan. As of that date, 63,931 shares were available for future
issuance under the Purchase Plan, not including the proposed amendment to the
Purchase Plan. As of April 21, 1997, the last trading day prior to the Record
Date, the closing price of the Company's Common Stock on Nasdaq was $5.625 per
share.
Participating Employees participate in the Purchase Plan through
payroll deductions. A Participating Employee sets the rate of such payroll
deductions, which may not be less than 2% nor more than 10% of the Participating
Employee's W-2 compensation, including, but not limited to, base salary or
wages, bonuses, overtime and commissions, including any deductions authorized
for plans under Sections 125 or 401(k) of the Code. No Participating Employee is
permitted to purchase shares under the Purchase Plan at a rate which, when
aggregated with such employee's rights to purchase stock under all similar
purchase plans of the Company, exceeds $25,000 in fair market value determined
as of the Offering Date for each calendar year.
OFFERING PERIOD. Each offering of Common Stock under the Purchase Plan
is for a period of 24 months (the "Offering Period"). Offering Periods are
planned to commence on February 1 and August 1 of each year and end on January
31 and July 31 of each year, respectively; provided, however, that the initial
Offering Period commenced on July 18, 1996 and will expire on July 31, 1998.
Each Offering Period shall consist of four six-month purchase periods
(individually, a "Purchase Period") during which payroll deductions of the
Participating Employees are accumulated under the Purchase Plan. The Board has
the power to set the beginning of any Offering Period and to change dates or the
duration of Offering Periods or Purchase Periods without shareholder approval if
such change is announced at least 15 days before the scheduled beginning of the
first Offering Period or Purchase Period to be affected. The first day of each
Offering Period is the
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<PAGE> 13
"Offering Date" for such Offering Period and the last business day of each
Purchase Period is the "Purchase Date" for such Purchase Period.
Participating Employees will participate in the Purchase Plan during
each Offering Period through regular payroll deductions as described above.
Participating Employees may elect to participate in any Offering Period by
enrolling as provided under the terms of the Purchase Plan. Once enrolled, a
Participating Employee will automatically participate in each succeeding
Offering Period unless the Participating Employee withdraws from the Offering
Period or the Purchase Plan is terminated. After the rate of payroll deductions
for an Offering Period has been set by a Participating Employee, that rate will
continue to be effective for the remainder of the Offering Period (and for all
subsequent Offering Periods in which the Participating Employee is automatically
enrolled) unless otherwise changed by the Participating Employee. The
Participating Employee may increase or lower the rate of payroll deductions for
any subsequent Offering Period, but may only lower the rate of payroll
deductions for an ongoing Offering Period. No more than one change may be made
during a single Offering Period.
PURCHASE PRICE. The purchase price of shares that may be acquired in
any Purchase Period under the Purchase Plan will be 85% of the lesser of: (i)
the fair market value of the shares on the Offering Date; or (ii) the fair
market value of the shares on the Purchase Date. The fair market value of a
share of the Company's Common Stock is deemed to be the closing price of the
Company's Common Stock on Nasdaq on the date of determination as reported in The
Wall Street Journal, except that the fair market value of a share of the
Company's Common Stock on the Offering Date of the first Offering Period was the
price per share at which shares of the Company's Common Stock were offered for
sale to the public in the Company's initial public offering of shares of its
Common Stock pursuant to a registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
PURCHASE OF STOCK UNDER THE PURCHASE PLAN. The number of whole shares a
Participating Employee will be able to purchase in any Purchase Period will be
determined by dividing the total payroll amount withheld from the Participating
Employee during the Purchase Period pursuant to the Purchase Plan by the
purchase price for each share determined as described above. The purchase will
take place automatically on the Purchase Date of such Purchase Period.
WITHDRAWAL. A Participating Employee may withdraw from any Offering
Period. Upon withdrawal, the accumulated payroll deductions will be returned to
the withdrawn Participating Employee, without interest, provided that the
withdrawal occurs at least 15 days before the related Purchase Date. If the
withdrawal occurs less than 15 days before such Purchase Date, payroll
deductions will continue for the remainder of that Purchase Period. No further
payroll deductions for the purchase of shares will be made for the succeeding
Offering Period unless the Participating Employee enrolls in the new Offering
Period at least 15 days before the Offering Date.
AMENDMENT OF THE PURCHASE PLAN. The Board may at any time amend,
terminate or extend the term of the Purchase Plan, except that any such
termination cannot affect the terms of shares previously granted under the
Purchase Plan, nor may any amendment make any change in the terms of shares
previously granted which would adversely affect the right of any participant,
nor may any amendment be made without shareholder approval if such amendment
would: (a) increase the number of shares that may be issued under the Purchase
Plan; (b) change the designation of the employees (or class of employees)
eligible for participation in the Purchase Plan; or (c) constitute an amendment
for which shareholder approval is required in order to comply with Rule 16b-3
(or any successor rule) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
TERM OF THE PURCHASE PLAN. The Purchase Plan will continue until the
earlier to occur of: (i) termination of the Purchase Plan by the Board; (ii) the
issuance of all the shares of Common Stock reserved for
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issuance under the Purchase Plan; or (iii) May 2006, ten years after the date
the Purchase Plan was adopted by the Board.
FEDERAL INCOME TAX INFORMATION. THE FOLLOWING IS A GENERAL SUMMARY AS
OF THE DATE OF THIS PROXY STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO
THE COMPANY AND EMPLOYEES PARTICIPATING IN THE PURCHASE PLAN. FEDERAL TAX LAWS
MAY CHANGE AND THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY
PARTICIPATING EMPLOYEE WILL DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES.
EACH PARTICIPATING EMPLOYEE HAS BEEN AND IS ENCOURAGED TO SEEK THE ADVICE OF A
QUALIFIED TAX ADVISER REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN THE
STOCK PURCHASE PLAN.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code.
Tax Treatment of the Participating Employee. Participating
Employees will not recognize income for federal income tax purposes either upon
enrollment in the Purchase Plan or upon the purchase of shares. All tax
consequences are deferred until a Participating Employee sells the shares,
disposes of the shares by gift or dies.
If shares are held for more than one year after the date of
purchase and more than two years from the beginning of the applicable Offering
Period, or if the Participating Employee dies while owning the shares, the
Participating Employee realizes ordinary income on a sale (or a disposition by
way of gift or upon death) to the extent of the lesser of: (i) 15% of the fair
market value of the shares at the beginning of the Offering Period; or (ii) the
actual gain (the amount by which the market value of the shares on the date of
sale, gift or death exceeds the purchase price). All additional gain upon the
sale of shares is treated as long-term capital gain. If the shares are sold and
the sale price is less than the purchase price, there is no ordinary income and
the Participating Employee has a long-term capital loss for the difference
between the sale price and the purchase price.
If the shares are sold or are otherwise disposed of including by
way of gift (but not death, bequest or inheritance) (in any case, a
"disqualifying disposition") within either the one-year or the two-year holding
periods described above, the Participating Employee realizes ordinary income at
the time of sale or other disposition, taxable to the extent that the fair
market value of the shares at the date of purchase is greater than the purchase
price. This excess will constitute ordinary income (not currently subject to
withholding) in the year of the sale or other disposition even if no gain is
realized on the sale or if a gratuitous transfer is made. The difference, if
any, between the proceeds of sale and the aggregate fair market value of the
shares at the date of purchase is a capital gain or loss. Capital gains may be
offset by capital losses, and up to $3,000 of capital losses may be used
annually against ordinary income.
Tax Treatment of the Company. The Company will be entitled to a
deduction in connection with the disposition of shares acquired under the
Purchase Plan only to the extent that the Participating Employee recognizes
ordinary income on a disqualifying disposition of the shares. The Company will
treat any transfer of record ownership of shares as a disposition, unless it is
notified to the contrary. In order to enable the Company to learn of
disqualifying dispositions and ascertain the amount of the deductions to which
it is entitled, Participating Employees will be required to notify the Company
in writing of the date and terms of any disposition of shares purchased under
the Purchase Plan.
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<PAGE> 15
ERISA. The Purchase Plan is not subject to any of the provisions of
ERISA nor is it qualified under Section 401(a) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1996 EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL NO. 4 -- APPROVAL OF AMENDMENT TO
1996 EQUITY INCENTIVE PLAN
Shareholders are being asked to approve an amendment to the Company's 1996
Equity Incentive Plan (the "Incentive Plan") to provide for an increase in the
number of shares of Common Stock reserved for issuance thereunder by 800,000
shares, from 850,000 shares plus any shares remaining under the Company's 1989
Stock Option Plan (the "Prior Plan") to 1,650,000 shares plus any shares
remaining under the Prior Plan. As of April 22, 1997, there were 179,036 shares
remaining under the Prior Plan and available for grant under the Incentive Plan.
The Board believes that adding shares to the Incentive Plan is in the best
interests of the Company because it will permit the Company to attract and
retain employees by providing them with appropriate equity incentives. The
Incentive Plan plays an important role in the Company's efforts to attract and
retain employees of outstanding ability.
The Incentive Plan was adopted by the Board in May 1996 and approved by
the shareholders of the Company in June 1996. The Board approved the proposed
amendment to the Incentive Plan on April 29, 1997, to be effective upon
shareholder approval. Set forth below is a summary of the principal features of
the Incentive Plan, which summary is qualified in its entirety by reference to
the terms and conditions of the Incentive Plan. The Company will provide,
without charge, to each person to whom a Proxy Statement is delivered, a copy of
the Incentive Plan. Any such request should be directed as follows: Secretary,
Versant Object Technology Corporation, 1380 Willow Road, Menlo Park, California
94025; telephone number (415) 329-7500; facsimile (415) 325-2380.
SHARES SUBJECT TO THE INCENTIVE PLAN. The stock subject to issuance
under the Incentive Plan consists of shares of the Company's authorized but
unissued Common Stock. The Board reserved an aggregate of 850,000 shares of
Common Stock for issuance under the Incentive Plan. In addition, any shares
remaining unissued under the Prior Plan on the effective date of the Incentive
Plan, any shares repurchased at the original issuance price under the Prior
Plan, and any shares issuable upon exercise of options granted pursuant to the
Prior Plan that expire or become unexercisable for any reason without having
been exercised in full, will no longer be available for distribution under the
Prior Plan but shall be available for distribution under the Incentive Plan.
Shares subject to an option granted pursuant to the Incentive Plan that expires
or terminates for any reason without being exercised or shares subject to an
award granted pursuant to the Incentive Plan that are forfeited or are
repurchased by the Company at the original issue price or are subject to an
award granted pursuant to the Incentive Plan that otherwise terminates without
shares being issued, will again become available for grant and issuance pursuant
to awards under the Incentive Plan. This number of shares is subject to
proportional adjustment to reflect stock splits, stock dividends and other
similar events. If the Company's shareholders adopt this Proposal, the maximum
number of shares that may be issued under the Incentive Plan will be 1,650,000
shares plus any shares remaining under the Prior Plan (179,036 shares as of
April 22, 1997).
ELIGIBILITY. Employees, officers, directors, consultants, independent
contractors and advisors of the Company (and of any subsidiaries and affiliates)
are eligible to receive awards under the Incentive Plan (the "Participants"). No
Participant is eligible to receive more than 400,000 shares of Common Stock in
any calendar year under the Incentive Plan, other than new employees of the
Company (including directors and officers who are also new employees) who are
eligible to receive up to a maximum of 600,000 shares of Common Stock in the
calendar year in which they commence their employment with the Company. As of
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<PAGE> 16
April 22, 1997, approximately 137 persons were in the class of persons eligible
to participate in the Incentive Plan, no shares had been issued upon exercise of
options, 784,037 shares were subject to outstanding options and no shares had
been issued pursuant to stock bonus awards. As of that date, 244,999 shares were
available for future grant, after taking into account any shares issuable upon
exercise of options granted pursuant to the Prior Plan that have expired or
become unexercisable without having been exercised in full and that have become
available for distribution under the Incentive Plan. The closing price of the
Company's Common Stock on Nasdaq was $5.625 per share as of April 21, 1997, the
last trading day before the Record Date.
Over the term of the Incentive Plan through April 22, 1997, the
following executive officers have been granted the following options to purchase
shares under the Incentive Plan: David Banks (President and Chief Executive
Officer), 120,000 shares; James R. Lochry (Vice President World Wide Sales),
10,000 shares; Lawrence J. Pulkownik (Vice President Business Development),
35,000 shares; and George C. Franzen (Vice President Engineering), 15,000
shares. During this period, the Corporation's executive officers as a group have
been granted options to purchase an aggregate of 250,000 shares under the
Incentive Plan, and all employees as a group (excluding executive officers) have
been granted options to purchase an aggregate of 552,066 shares under the
Incentive Plan. During this period, none of the Company's current directors
(excluding executive officers) have been granted options under the Incentive
Plan.
ADMINISTRATION. The Incentive Plan is administered by the Compensation
Committee (the "Committee"), the members of which are appointed by the Board.
The Committee currently consists of Mark Leslie and Lawrence K. Orr, both of
whom are "non-employee directors," as defined in Rule 16b-3 promulgated under
the Exchange Act, and "outside directors," as defined pursuant to Section 162(m)
of the Code. Subject to the terms of the Incentive Plan, the Committee
determines the persons who are to receive awards, the number of shares subject
to each such award, and the terms and conditions of such awards. The Committee
also has the authority to construe and interpret any of the provisions of the
Incentive Plan or any awards granted thereunder.
STOCK OPTIONS. The Incentive Plan permits the granting of options that
are intended to qualify either as Incentive Stock Options ("ISOs") or NQSOs.
ISOs may be granted only to employees (including officers and directors who are
also employees) of the Company or any parent or subsidiary of the Company. The
option exercise price for each ISO share must be no less than 100% of the "fair
market value" (as defined in the Incentive Plan) of a share of Common Stock at
the time the ISO is granted. The per share exercise price of an ISO granted to a
10% shareholder must be no less than 110% of the fair market value of a share of
Common Stock at the time the ISO is granted. The option exercise price for each
NQSO share must be no less than 85% of the fair market value of a share of
Common Stock at the time of grant. The Company has not granted options under the
Incentive Plan at less than fair market value and does not intend to do so in
the foreseeable future.
The exercise price of options granted under the Incentive Plan may be
paid as approved by the Committee at the time of grant: (1) in cash (by check);
(2) by cancellation of indebtedness of the Company to the Participant; (3) by
surrender of shares of the Company's Common Stock owned by the Participant for
at least six months and having a fair market value on the date of surrender
equal to the aggregate exercise price of the option; (4) by tender of a full
recourse promissory note; (5) by waiver of compensation due to or accrued by the
Participant for services rendered; (6) by a "same-day sale" commitment from the
Participant and a National Association of Securities Dealers, Inc. ("NASD")
broker; (7) by a "margin" commitment from the Participant and a NASD broker; or
(8) by any combination of the foregoing.
TERMINATION OF OPTIONS. Except as provided below, each option expires
ten years after the date of grant. Options granted to a 10% shareholder expire
five years after the date of grant. In the event an optionee's relationship with
the Company is terminated for any reason other than death or disability, the
optionee will have the right to exercise the option at any time within three
months (or such shorter or longer time period not exceeding five years as may be
determined by the Committee, with any exercise beyond three months after
termination deemed to be an NQSO) after such termination to the extent the right
to exercise such
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<PAGE> 17
option has accrued and had not previously been exercised at the date of
termination, but in any event no later than the option expiration date. In the
event an optionee's relationship terminates due to death or disability, as
defined in Section 22(e)(3) of the Code (or if the optionee dies within three
months after termination), the three-month period mentioned above will be twelve
months (or such shorter or longer time period not exceeding five years as may be
determined by the Committee, with any such exercise beyond twelve months after
termination due to death or disability deemed to be an NQSO) after death or
disability to the extent the right to exercise such option has accrued and had
not previously been exercised at the date of death or disability, but in any
event no later than the option expiration date.
RESTRICTED STOCK AWARDS. The Committee may grant Participants
restricted stock awards to purchase stock either separately from, or in tandem
with, other awards under the Incentive Plan, under such terms, conditions and
restrictions as the Committee may determine. The purchase price for such awards
must be no less than 85% of the fair market value of the Company's Common Stock
on the date of the award (and in the case of an award granted to a 10%
shareholder, the purchase price shall be 100% of fair market value) and can be
paid for in any of the forms of consideration listed in items (1) through (5) in
"Stock Options" above, or any combination thereof, as are approved by the
Committee at the time of grant. The Company has not granted any restricted stock
awards under the Incentive Plan.
STOCK BONUS AWARDS. The Committee may grant Participants stock bonus
awards either separately from, or in tandem with, other awards under the
Incentive Plan, under such terms, conditions and restrictions as the Committee
may determine. As of December 31, 1996, no shares had been issued pursuant to
stock bonus awards.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger,
consolidation, dissolution or liquidation of the Company, the sale of
substantially all of the assets of the Company or any other similar corporate
transaction, the successor corporation may assume, replace or substitute
equivalent awards in exchange for those granted under the Incentive Plan or
provide substantially similar consideration, shares or other property as was
provided to shareholders of the Company (after taking into account provisions of
the awards). In the event that the successor corporation does not assume or
substitute awards, such awards will expire upon the closing of such transaction
at the time and upon the conditions as the Board determines.
AMENDMENT OF THE INCENTIVE PLAN. The Board may at any time terminate or
amend the Incentive Plan, including amending any form of award agreement or
instrument to be executed pursuant to the Incentive Plan. However, the Board may
not amend the Incentive Plan in any manner that requires shareholder approval
pursuant to the Code or the regulations promulgated thereunder, or pursuant to
the Exchange Act or Rule 16b-3 (or its successor) promulgated thereunder.
TERM OF THE INCENTIVE PLAN. Unless terminated earlier as provided in
the Incentive Plan, the Incentive Plan will expire in May 2006, ten years from
the date the Incentive Plan was adopted by the Board.
1997 OPTION REPRICING PROGRAM. In April 1997, to respond to the
substantial increase in competitive attempts to recruit employees essential to
the Company's success, the Committee elected to reprice employee options. This
repricing did not apply to officers of the Company, except for Walter L. Brown,
the Company's Vice President Services, who had only recently joined the Company
in January 1997. Competition for skilled engineers and other key employees in
the software industry is intense, and the use of significant stock options for
retention and motivation of such personnel is pervasive in the software
industry. The Company believes that stock options are a critical component of
the compensation offered by the Company to promote long-term retention of
employees, motivate high levels of performance and recognize employee
contributions to the success of the Company. The market price of the Company's
common stock decreased substantially from a closing high price of $27.625 in
September 1996 to a closing low price of $4.50 in April 1997. In light of this
substantial decline in the market price, the Company determined that the large
numbers of outstanding stock options with an exercise
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<PAGE> 18
price in excess of the actual market price were no longer an effective tool to
encourage employee retention or to motivate high levels of performance.
The Company is currently implementing the repricing. In general, each
eligible Company employee is being provided the opportunity to exchange any
option granted to them after July 18, 1996, the date of the Company's initial
public offering, with a new option with identical terms as the old option,
except that (i) the new option will have an exercise price equal to the closing
price of the Company's common stock on Nasdaq on May 23, 1997 and (ii) the
vesting schedule of the new option will commence on May 23, 1997.
FEDERAL INCOME TAX INFORMATION. THE FOLLOWING IS A GENERAL SUMMARY AS
OF THE DATE OF THIS PROXY STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO
THE COMPANY AND PARTICIPANTS UNDER THE INCENTIVE PLAN. FEDERAL TAX LAWS MAY
CHANGE AND THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPANT
WILL DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN
AND IS ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE
TAX CONSEQUENCES OF PARTICIPATION IN THE INCENTIVE PLAN.
Incentive Stock Options. A Participant will recognize no income
upon grant of an ISO and incur no tax on its exercise (unless the Participant is
subject to the alternative minimum tax ("AMT")). If the Participant holds shares
acquired upon exercise of an ISO (the "ISO Shares") for more than one year after
the date the option was exercised and for more than two years after the date the
option was granted, the Participant generally will realize long-term capital
gain or loss (rather than ordinary income or loss) upon disposition of the ISO
Shares. This gain or loss will be equal to the difference between the amount
realized upon such disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration
of either required holding period (a "disqualifying disposition"), the gain
realized upon such disposition, up to the difference between the fair market
value of the ISO Shares on the date of exercise (or, if less, the amount
realized on a sale of such shares) and the option exercise price, will be
treated as ordinary income. Any additional gain will be long-term or short-term
capital gain, depending upon the amount of time the ISO Shares were held by the
Participant.
Alternative Minimum Tax. The difference between the fair market
value of the ISO Shares on the date of exercise and the exercise price is an
adjustment to income for purposes of AMT. The AMT (imposed to the extent it
exceeds the taxpayer's regular tax) is 26% of an individual taxpayer's
alternative minimum taxable income (28% in the case of alternative minimum
taxable income in excess of $175,000). Alternative minimum taxable income is
determined by adjusting regular taxable income for certain items, increasing
that income by certain tax preference items (including the difference between
the fair market value of the ISO Shares on the date of exercise and the exercise
price), and reducing this amount by the applicable exemption amount ($45,000 in
case of a joint return, subject to reduction under certain circumstances). If a
disqualifying disposition of the ISO Shares occurs in the same calendar year as
exercise of the ISO, there is no AMT adjustment with respect to those ISO
Shares. Also, upon a sale of ISO Shares that is not a disqualifying disposition,
alternative minimum taxable income is reduced in the year of sale by the excess
of the fair market value of the ISO Shares at exercise over the amount paid for
the ISO Shares.
Nonqualified Stock Options. A Participant will not recognize any
taxable income at the time an NQSO is granted. However, upon exercise of an
NQSO, the Participant must include in income as compensation an amount equal to
the difference between the fair market value of the shares on the date of
exercise and the Participant's exercise price. The included amount must be
treated as ordinary income by the Participant and may be subject to withholding
by the Company (either by payment in cash or withholding out of the
Participant's salary). Upon resale of the shares by the Participant, any
subsequent appreciation or depreciation in the value of the shares will be
treated as capital gain or loss.
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Restricted Stock and Stock Bonus Awards. Restricted stock and
stock bonus awards will generally be subject to tax at the time of receipt,
unless there are restrictions that enable the Participant to defer tax. At the
time the tax is incurred, the tax treatment will be similar to that discussed
above for NQSOs.
Omnibus Budget Reconciliation Act of 1993. The Omnibus Budget
Reconciliation Act of 1993 provides that the maximum tax rate applicable to
ordinary income is 39.6%. Long-term capital gain will be taxed at a maximum of
28%. For this purpose, in order to receive long-term capital gain treatment, the
shares must be held for more than one year. Capital gains may be offset by
capital losses and up to $3,000 of capital losses may be offset annually against
ordinary income.
Tax Treatment of the Company. The Company generally will be
entitled to a deduction in connection with the exercise of an NQSO by a
Participant or the receipt of restricted stock or stock bonuses by a Participant
to the extent that the Participant recognizes ordinary income and the Company
withholds tax. The Company will be entitled to a deduction in connection with
the disposition of ISO Shares only to the extent that the Participant recognizes
ordinary income on a disqualifying disposition of the ISO Shares.
ERISA. The Incentive Plan is not subject to any of the provisions of
ERISA and is not qualified under Section 401(a) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1996 EQUITY INCENTIVE PLAN.
NEW PLAN BENEFITS
The amounts of future option grants under the Incentive Plan are not
determinable because, under the terms of the Incentive Plan, such grants are
made in the discretion of the Committee. Future option exercise prices are not
determinable because they are based upon fair market value of the Company's
Common Stock on the date of grant. Similarly, the amounts of future stock
purchases under the Purchase Plan are not determinable because, under the terms
of the Purchase Plan, purchases are based upon elections made by Participating
Employees. Future purchase prices are not determinable because they are based
upon fair market value of the Company's Common Stock.
Only non-employee directors of the Company are eligible to participate in
the Directors Plan. The grant of options under the Directors Plan is not
discretionary. Under the Directors Plan, each outside director who has served
continuously from the effective date of the Company's initial public offering on
July 17, 1996 will automatically be granted an option to purchase 5,000 shares
of the Company's Common Stock on each anniversary of this date if such director
has served continuously as a member of the Board since the date of such
director's initial option grant. Any outside director who first joins the Board
during and after 1997 will automatically be granted an option to purchase 10,000
shares of the Company's Common Stock on the date of his or her first appointment
to the Board and will thereafter be granted an option to purchase 5,000 shares
of the Company's Common Stock on each anniversary date of such director's
initial option grant under the Directors Plan if such director has served
continuously as a member of the Board since the date of such director's initial
option grant. The exercise prices of these options are not determinable because
they are equal to fair market value of the Company's Common Stock on the date of
grant.
16
<PAGE> 20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 22, 1997,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to be the beneficial owner of more than 5% of
the Company's Common Stock, (ii) each of the Company's current directors, (iii)
the Chief Executive Officer and each of the Company's four other most highly
compensated executive officers (these five officers shall be referred to as the
"Named Executive Officers") and (iv) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
5% SHAREHOLDERS, DIRECTORS AND OFFICERS NUMBER PERCENT (1)
- --------------------------------------- ---------- -----------
<S> <C> <C>
5% SHAREHOLDERS:
Vertex Investment (2)................................................ 514,767 5.7%
Atlas Venture (3).................................................... 494,333 5.5
NON-EMPLOYEE DIRECTORS:
TA Associates Group and Stephen J. Gaal (4).......................... 1,070,513 11.9
Trinity Ventures and Lawrence K. Orr (5)............................. 659,742 7.4
Mark Leslie (6)...................................................... 48,458 *
James Simpson (7).................................................... 13,792 *
NAMED EXECUTIVE OFFICERS:
David Banks (8)...................................................... 284,631 3.2
James R. Lochry (9).................................................. 111,897 1.2
Lawrence J. Pulkownik (10)........................................... 82,419 *
George C. Franzen (11)............................................... 81,459 *
Robert M. Freeman (12)............................................... 96,819 1.1
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (11 PERSONS) (13)......................................... 2,482,677 27.6
</TABLE>
* Represents less than 1%
(1) Percent ownership is based on 8,961,345 shares outstanding as of April
22, 1997. Unless otherwise indicated below, the persons and entities
named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property
laws where applicable. Shares of Common Stock subject to options that
are currently exercisable or exercisable within 60 days of April 22,
1997 are deemed to be outstanding and to be beneficially owned by the
person holding such options for the purpose of computing the percentage
ownership of such person but are not deemed to be outstanding and to be
beneficially owned for the purpose of computing the percentage ownership
of any other person.
(2) Vertex Investment is wholly owned by Singapore Technologies Pte. Ltd.
The address of Vertex Investment is 77 Science Park Drive, #02-15
Cintech III, Singapore Science Park, Singapore 0511.
(3) Represents 247,167 shares, 123,583 shares and 123,583 shares held of
record by Atlas Venture Fund, L.P., Atlas Venture Europe Fund B.V. and
Atlas Venture Beheer II B.V., respectively. The shares of each of these
three funds may be deemed to be beneficially owned by the others because
the parent entity of Atlas Venture Europe Fund B.V. and Atlas Venture
Beheer II B.V., Atlas InvesteringsGroep N.V., (i) shares common managing
directors with a general partner of Atlas Venture Fund, L.P. and (ii)
owns 100% of a limited partner of Atlas Venture Fund, L.P., which holds
an approximately 50% interest in Atlas Venture Fund, L.P. Each of Atlas
Venture Fund, L.P. Atlas Venture Europe Fund
17
<PAGE> 21
B.V. and Atlas Venture Beheer II B.V. disclaims beneficial ownership of
the shares held of record by the others. The general partner of Atlas
Venture Fund, L.P. is Atlas Venture Associates L.P. The general partners
of Atlas Venture Associates, L.P. are Christopher J. Spray, Barry J.
Fidelman and Atlas Venture Partners III, B.V., whose managing directors
are Michiel A. de Haan and Evert H. Smid. Because none of these
individuals may act independently and a majority of them must act in
concert to exercise voting or investment power over the beneficial
holdings of Atlas Venture Fund, L.P., individually, none of these
persons is deemed to share such voting or investment power. Atlas
Venture Europe Fund B.V. and Atlas Venture Beheer II B.V. are
corporations wholly and 95% owned, respectively, controlled and managed
by Atlas InvesteringsGroep N.V. The managing directors of Atlas
InvesteringsGroep N.V. are Michiel A. de Haan and Evert H. Smid. Three
officers of Atlas InvesteringsGroep N.V., Gerard Montanus, Hans Bosman
and Jaap van Hellemond, share voting and investment power with these two
managing directors over the shares held by Atlas Venture Europe Fund
B.V. and Atlas Venture Beheer II B.V. Because none of these individuals
may act independently and a majority of them must act in concern to
exercise voting or investment power. The U.S. address of Atlas Venture
is 222 Berkeley Street, 19th Floor, Boston, MA 02116, attention: Barry
Fidelman.
(4) Represents 801,543 shares, 256,937 shares, 9,626 shares and 2,407 shares
held of record by Advent VI L.P., Advent Atlantic & Pacific Limited
Partnership, TA Venture Investors, L.P. and TA Associates Partners
Profit Sharing Trust FBO Henry Koerner, respectively. Advent VI L.P.,
Advent Atlantic & Pacific Limited Partnership, TA Venture Investors,
L.P. and TA Associates Partners Profit Sharing Trust FBO Henry Koerner
are part of an affiliated group of investment partnerships referred to,
collectively, as the TA Associates Group. The general partner of Advent
VI, L.P. is TA Associates VI, L.P. The general partner of Advent
Atlantic & Pacific Limited Partnership is TA Associates AAP, L.P. The
general partner of TA Associates, L.P. is TA Associates AAP Ventures,
L.P. The general partner of each of TA Associates VI, L.P. and TA
Associates AAP Ventures, L.P. is TA Associates, Inc. In such capacity,
TA Associates, Inc. exercises sole voting and investment power with
respect to all of the shares held of record by the named investment
partnerships, with the exception of those shares held by TA Venture
Investors, L.P. Because TA Associates, Inc. exercise voting and
investment power over the shares it beneficially owns in the Company
through a three-person investment committee appointed by its board of
directors, no member of which may act independently and a majority of
whom must act in concert to exercise such voting and investment power,
individually, no shareholder, director or officer of TA Associates, Inc.
is deemed to have or share such voting or investment power. Principals
and employees of TA Associates, Inc. (including Mr. Gaal, a director of
the Company) comprise the general partners of TA Venture Investors, L.P.
In such capacity, Mr. Gaal may be deemed to share voting and investment
power with respect to the 9,626 shares held of record by TA Venture
Investors, L.P. Mr. Gaal disclaims beneficial ownership of such shares,
except to the extent of 4,814 shares as to which he holds a pecuniary
interest. In additional, Mr. Gaal disclaims beneficial ownership of the
801,543 shares, 256,937 shares and 2,407 shares held of record by Advent
VI L.P., Advent Atlantic & Pacific Limited Partnership and TA Associates
Partners Profit Sharing Trust FBO Henry Koerner. Principals and
employees of TA Associates, Inc. as trustees of TA Associates Partners
Profit Sharing Trust FBO Henry Koerner; such principals and employees
disclaim beneficial ownership of such shares. The address of TA
Associates Group is High Street Tower, Suite 2500, 125 High Street,
Boston, MA 02110.
(5) Represents 622,948 shares and 36,794 shares held of record by Trinity
Ventures IV, L.P. and Trinity IV Side-By-Side Fund, respectively.
Trinity is a general partner of these two entities. In such capacity,
Trinity exercises sole voting and investment power with respect to all
share held of record by the named investment partnerships. Because
Trinity is controlled by a group of four persons, namely Noel Fenton,
David Nierenberg, Lawrence K. Orr and James G. Schennan, Jr., none of
whom may act the beneficial holdings of such entity, individually, no
general partner of Trinity is deemed to share such voting or investment
power. Mr. Orr, a general partner of Trinity, is a director of the
Company. Mr. Orr has an interest in certain of the 659,742 shares shown
in the table as owned by Trinity; however,
18
<PAGE> 22
the extent of that interest cannot be calculated until such shares are
distributed. The address of Trinity is 155 Bovet Road, Suite 660, San
Mateo, CA 94402.
(6) Includes 3,542 shares that the Company has the right to repurchase at
the issuance price as of April 22, 1997 and 10,000 shares subject to
options exercisable within 60 days of April 22, 1997. Mr. Leslie is
Chairman of the Board of Directors of the Company.
(7) Represents 13,972 shares subject to options exercisable within 60 days
of April 22, 1997. Mr. Simpson is a director of the Company.
(8) Includes 72,085 shares that the Company has the right to repurchase at
the issuance price as of April 22, 1997. Mr. Banks is President, Chief
Executive Officer and a director of the Company.
(9) Includes 68,333 shares that the Company has the right to repurchase at
the issuance price as of April 22, 1997 and 9,067 shares subject to
options exercisable within 60 days of April 22, 1997. Mr. Lochry is Vice
President World Wide Sales of the Company.
(10) Includes 26,531 shares that the Company has the right to repurchase at
the issuance price as of April 22, 1997. Mr. Pulkownik is Vice President
Business Development of the Company.
(11) Includes 15,181 shares that the Company has the right to repurchase at
the issuance price as of April 22, 1997. Mr. Franzen is Vice President
Engineering of the Company.
(12) Includes 58,200 shares that the Company has the right to repurchase at
the issuance price as of April 22, 1997. Mr. Freeman is Vice President
Marketing of the Company.
(13) Represents the shares beneficially owned by the individuals identified
in footnotes (4) through (12), 29,613 additional shares and 3,334
additional shares subject to options exercisable within 60 days of April
22, 1997.
19
<PAGE> 23
MANAGEMENT
The names of the present executive officers of the Company and certain
information about them are set forth below:
<TABLE>
<CAPTION>
NAME OF EXECUTIVE OFFICER AGE POSITION WITH THE COMPANY
------------------------- --- -------------------------
<S> <C> <C>
David Banks 51 President and Chief Executive Officer
Walter L. Brown 49 Vice President Services
George C. Franzen 53 Vice President Engineering
Robert M. Freeman 43 Vice President Marketing
Richard I. Kadet 53 Vice President Finance and Administration, Chief
Financial Officer, Treasurer and Secretary
James R. Lochry 42 Vice President World Wide Sales
Lawrence J. Pulkownik 39 Vice President Business Development
</TABLE>
For information regarding Mr. Banks, please refer to the discussion
regarding nominees for election as directors in "Directors/Nominees" under
Proposal No. 1 above.
Mr. Brown has served as Vice President Services of the Company since he
joined the Company in January 1997. From February 1995 to January 1997, Mr.
Brown served first as Vice President Customer Service and then as Vice President
World Wide Field Operations of Make Systems, a software company. From 1991 to
February 1995, Mr. Brown served as Director - Worldwide Support Services at
SunSoft, a software company. Mr. Brown received a Bachelor of Science in Nuclear
Engineering from Lowell Technical Institute in 1969 and a Master of Science in
Industrial Management from Polytechnic Institute of Brooklyn in 1971.
Mr. Franzen has served as Vice President Engineering and Technical
Services of the Company since he joined the Company in January 1992, and until
January 1997, he served as Vice President Engineering and Technical Services of
the Company. From July 1988 to January 1992, Mr. Franzen served as Vice
President of Engineering of Plexus Software, a division of Recognition Equipment
Corporation, where he was involved in developing one of the first extended
relational database systems. Mr. Franzen received a Bachelor of Arts in
Chemistry from the University of Minnesota in 1965.
Mr. Freeman has served as Vice President Marketing of the Company since he
joined the Company in August 1995. From March 1994 to August 1995, Mr. Freeman
was President of Amazing Business Travel, Inc., a travel company that he
founded. From March 1992 to March 1994, Mr. Freeman served first as Director,
International Marketing, and later as Vice President, International Marketing,
of Sybase, a database and data management software development company. From
August 1988 to March 1992, Mr. Freeman held management positions in
international sales and business development at 3Com Corporation, a networking
company. Mr. Freeman received a Bachelor of Science in Economics from Santa
Clara University in 1981 and a Masters of Business Administration from Stanford
University in 1988.
Mr. Kadet has served as Vice President Finance and Administration,
Chief Financial Officer, Treasurer and Secretary of the Company since he joined
the Company in September 1994. From August 1992 to January 1994, Mr. Kadet
served as Vice President Finance and Business Management and acting Chief
Executive Officer of InfoSpan Corporation, a software development company. From
January 1989 to January 1992, Mr. Kadet served as Vice President Corporate
Operations of Cadre. From July 1985 to January 1989, Mr. Kadet
20
<PAGE> 24
served as Vice President Finance and Administration of Cadre. Mr. Kadet received
a Bachelor of Arts in Economics and Political Science from Arizona State
University in 1966.
Mr. Lochry has served as Vice President World Wide Sales of the Company
since he joined the Company in August 1995. From July 1994 to August 1995, Mr.
Lochry served as Vice President North American Sales of nCube Corporation, a
super computer company. From July 1989 to July 1994, Mr. Lochry held sales
management positions at Oracle Corporation, a database software company. Mr.
Lochry received a Bachelor of Business Administration in Finance from Southern
Methodist University in 1977 and a Masters of Business Administration from the
University of Detroit in 1982.
Mr. Pulkownik has served as Vice President Business Development of the
Company since April 1995. From June 1992, when he joined the Company, to April
1995, Mr. Pulkownik held various sales and marketing management positions,
including Vice President Telecommunications and Vice President Vertical
Marketing, at the Company. From June 1990 to June 1992, Mr. Pulkownik was
managing partner of Rainmakers, a consulting firm that he co-founded to provide
market development and initial customer introductions for early stage companies.
Mr. Pulkownik received a Bachelor of Science in Industrial Engineering, a
Bachelor of Science in Electrical Engineering and a Master of Science in
Computer Science from the University of Michigan in 1980.
21
<PAGE> 25
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to or earned or
paid for services rendered in all capacities to the Company during each of 1995
and 1996 by "Named Executive Officers." This information includes the dollar
values of base salaries and bonus awards, the number of shares subject to stock
options granted and certain other compensation, whether paid or deferred.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------- SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION ($)(2) OPTIONS (#)
- ------------------ ---- ------------ ------------ ------------------- -------------
<S> <C> <C> <C> <C> <C>
David Banks................. 1996 $150,000 $116,000 $ 588 100,000
President and Chief 1995 150,000 17,000 1,906 60,292
Executive Officer
James R. Lochry............. 1996 130,000 140,965 (3) 504 32,000
Vice President World 1995 45,333 85,000 214 100,000
Wide Sales
Lawrence J. Pulkownik....... 1996 127,500 63,227 (4) 479 25,000
Vice President 1995 100,000 83,096 (5) 358 26,230
Business Development
George C. Franzen........... 1996 144,583 35,100 588 5,000
Vice President 1995 134,333 28,000 1,966 56,654
Engineering
Robert M. Freeman........... 1996 130,000 40,600 504 -
Vice President 1995 43,333 20,000 214 132,000
Marketing
</TABLE>
- ------------------------
(1) For 1995, bonuses were paid at the discretion of the Board. For 1996,
bonuses were paid to David Banks, Lawrence J. Pulkownik and Robert M.
Freeman at the discretion of the Board and to James R. Lochry and George
C. Franzen pursuant to individual 1996 Versant Executive Compensation
Plans. Each of these plans contemplates bonuses that vary with the annual
operating profit of the Company.
(2) Represents payment for life insurance premiums.
(3) Represents $23,200 in bonus and $117,765 in commissions earned in 1996.
(4) Represents $58,000 in bonus and $5,227 in commissions earned in 1996.
(5) Represents $20,000 in bonus and $63,096 in commissions earned in 1995.
22
<PAGE> 26
OPTION GRANTS IN 1996
The following table contains information concerning stock option grants
pursuant to the Company's 1989 Stock Option Plan and 1996 Equity Incentive Plan
during 1996 to each of the Named Executive Officers. In accordance with the
rules of the Securities and Exchange Commission, the table sets forth the
hypothetical gains or "option spreads" that would exist for the options at the
end of their respective ten-year terms, except as otherwise noted. These gains
are based on assumed annual rates of stock price appreciation of 5% and 10% from
the date the option was granted to the end of the option term.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------
NUMBER OF % OF TOTAL ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION OPTION TERM (3)
NAME GRANTED (#)(1) 1996 (2) PER SHARE DATE 5% 10%
- ---- -------------- --------- --------- ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
David Banks........... 100,000 18.0% $8.00 7/17/06 $503,116 $1,274,994
James R. Lochry....... 32,000 5.8 1.25 1/18/06 30,187 76,500
Lawrence J. Pulkownik.
5,000 0.9 1.50 1/18/06 4,717 11,953
10,000 1.8 8.00 7/17/06 50,312 127,499
5,000 0.9 8.125 7/22/06 25,549 64,746
5,000 0.9 18.75 10/21/06 58,959 149,413
George C. Franzen..... 5,000 0.9 8.00 7/17/06 25,156 63,750
Robert M. Freeman..... -- -- -- -- -- --
</TABLE>
- ------------------------
(1) The options shown in the table are incentive stock options that vest with
respect to 25% of the shares on the first anniversary of the date of
grant and thereafter for three years at the rate of 1/48th of the shares
for each full month that the optionee renders services to the Company.
These options expire ten years from the date of grant.
(2) The Company grants options to purchase an aggregate of 555,365 shares to
employees in 1996.
(3) The 5% and 10% assumed annual rates of stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of future Common
Stock prices.
23
<PAGE> 27
AGGREGATE OPTION EXERCISES IN 1996 AND YEAR-END VALUES
The following table sets forth information concerning the shares acquired
and the value realized upon the exercise of stock options during 1996, the
number of shares of Common Stock underlying exercisable and unexercisable
options held by each of the Named Officers at December 31, 1996 and the values
of unexercised "in-the-money" options as of that date.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
SHARES UNEXERCISED OPTIONS OPTIONS AT
ACQUIRED ON VALUE AT DECEMBER 31, 1996 (#) FISCAL YEAR END (1)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David Banks.......... 276,365 $304,207 -- 186,642 (2) -- $2,624,984
James R. Lochry...... 100,000 50,000 -- 105,334 (3) -- 1,840,512
Lawrence J. Pulkownik
60,419 54,274 -- 51,142 (4) -- 713,735
George C. Franzen.... 78,128 78,910 -- 49,600 (5) -- 845,775
Robert M. Freeman.... 100,000 50,000 -- 96,800 (6) -- 1,706,100
</TABLE>
- ------------------------
(1) These values, unlike the amounts set forth in the "Value Realized"
column, have not been and may never be realized and represent the
positive spread between the respective exercise prices of outstanding
stock options and the fair market value of the Company's Common Stock
based on the closing trade on Nasdaq on December 31, 1996 ($18.625).
(2) Includes 86,642 shares acquired or exercised during 1996 but subject to
a right of repurchase as of December 31, 1996.
(3) Includes 73,334 shares acquired or exercised during 1996 but subject to
a right of repurchase as of December 31, 1996.
(4) Includes 31,142 shares acquired or exercised during 1996 but subject to
a right of repurchase as of December 31, 1996.
(5) Includes 44,600 shares acquired or exercised during 1996 but subject to
a right of repurchase as of December 31, 1996.
(6) Includes 64,800 shares acquired or exercised during 1996 but subject to
a right of repurchase as of December 31, 1996.
The Company has entered into agreements with its executive officers that
provide for acceleration of two additional years of vesting of shares subject to
options or restricted stock upon certain acquisitions or changes in control of
the Company.
24
<PAGE> 28
CERTAIN TRANSACTIONS
Since January 1, 1995, there has not been, nor is there currently
proposed, any transaction or series of similar transactions to which the Company
was or is to be a party in which the amount involved exceeded or will exceed
$60,000 and in which any director, executive officer or holder of more than 5%
of the Common Stock of the Company had or will have a direct or indirect
material interest.
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP is the Company's independent public accounting firm
and has been since 1990. Representatives of Arthur Andersen LLP are expected to
be present at the Meeting. They will be given an opportunity to make a statement
and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1998
Annual Meeting of Shareholders must be received by the Company at its principal
executive offices no later than January 6, 1998, in order to be included in the
Company's Proxy Statement and form of proxy relating to the meeting.
COMPLIANCE UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the SEC. Such persons are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors of
the Company, the Company believes that all Section 16(a) filing requirements
were met during 1996.
ADDITIONAL INFORMATION
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996 is being mailed with this Proxy Statement to shareholders of
the Company.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the Notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended that
Proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such Proxies.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POST-AGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
25
<PAGE> 29
VERSANT OBJECT TECHNOLOGY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
June 5, 1997
The undersigned hereby appoints David Banks and Daniel Brush, or either
of them, each with full power of substitution, to represent the undersigned at
the Annual Meeting of Shareholders of Versant Object Technology Corporation (the
"Company") to be held at 2:00 p.m. on Thursday, June 5, 1997, at the Hotel
Sofitel, located at 223 Twin Dolphin Drive, Redwood City, California, and at any
adjournments or postponements thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present at the meeting on
the following matters:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as indicated to vote for all nominees
to the contrary below) listed below
Nominees: David Banks, Mark Leslie, Stephen J. Gaal,
Lawrence K. Orr and James Simpson
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:
-------------------------------------------------------------------------
2. AMENDMENT TO THE COMPANY'S 1996 EMPLOYEE STOCK PURCHASE PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
THEREUNDER BY 200,000 SHARES, FROM 125,000 SHARES TO 325,000 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. AMENDMENT TO THE COMPANY'S 1996 DIRECTORS STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
THEREUNDER BY 50,000 SHARES, FROM 75,000 SHARES TO 125,000 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. AMENDMENT TO THE COMPANY'S 1996 EQUITY INCENTIVE PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
THEREUNDER BY 800,000 SHARES, FROM 850,000 PLUS ANY SHARES
REMAINING UNDER THE COMPANY'S 1989 STOCK OPTION PLAN TO 1,650,000
SHARES PLUS ANY SHARES REMAINING UNDER THE COMPANY'S 1989 STOCK
OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends that you vote FOR the election of
the five nominees and FOR proposals 2, 3 and 4.
(Continued and to be signed and dated on the reverse side.)
<PAGE> 30
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. WHEN NO CHOICE IS
INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE FIVE NOMINEES AND
FOR PROPOSALS 2, 3 AND 4. In their discretion, the proxy holders are authorized
to vote upon such other business as may properly come before the meeting or any
adjustments or postponements thereof to the extent authorized by Rule 14a-4(c)
promulgated under the Securities Exchange Act of 1934, as amended.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF VERSANT OBJECT
TECHNOLOGY CORPORATION.
Signature(s) of Shareholder(s):
Name: Name:
----------------------------- --------------------------------
By: By:
------------------------------- ---------------------------------
Title: Title:
---------------------------- -------------------------------
Dated: , 1997 Dated: , 1997
----------- -------------
Please sign exactly as your name(s) appear(s) on your stock
certificate. If shares of stock stand of record in the names of two or more
persons or in the name of husband and wife, whether as joint tenants or
otherwise, both or all of such persons should sign the proxy. If shares of
stock are held of record by a corporation, the proxy should be executed by the
president or vice president and the secretary or assistant secretary.
Executors, administrators or other fiduciaries who execute the above proxy for
a deceased Shareholder should give their full title. Please date the proxy.
Please check the following box if you plan to attend the meeting: [ ]
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
