<PAGE> 1
As filed with the Securities and Exchange Commission on May 12, 1999
Registration No. 333-76045
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VERSANT CORPORATION
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-3079392
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
6539 DUMBARTON CIRCLE
FREMONT, CALIFORNIA 94555
(510) 789-1500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
--------------------
GARY RHEA
CHIEF FINANCIAL OFFICER
VERSANT CORPORATION
6539 DUMBARTON CIRCLE
FREMONT, CALIFORNIA 94555
(510) 789-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
BARRY J. KRAMER, ESQ.
JAMES GIVEN, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE, SUITE 800
PALO ALTO, CALIFORNIA 94306
(650) 494-0600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
(1) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(c) under the Securities Act, based
on the average of the high and low prices of the Common Stock on the Nasdaq
National Market on April 6, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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SUBJECT TO COMPLETION DATED MAY 12, 1999
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PROSPECTUS
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3,175,586 SHARES
VERSANT CORPORATION
COMMON STOCK
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OUR COMMON STOCK CURRENTLY TRADES ON THE NASDAQ NATIONAL MARKET.
LAST REPORTED SALE PRICE ON APRIL 8, 1999: $2.00 PER SHARE.
TRADING SYMBOL: VSNT
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THE OFFERING
o The shares offered in this prospectus will be sold from time to time at
then prevailing market prices, at prices relating to market prices or at
negotiated prices. We are not aware of any underwriting discounts or
commissions in connection with this offering.
o All of the shares of common stock offered in this prospectus are being sold
by the selling security holders named on page 12 of this prospectus. We
will not receive any of the proceeds from the sale of these shares. These
shares are being offered on a continuous basis under Rule 415 of the
Securities Act until at least December 28, 2002 or the earlier sale of the
shares offered hereby.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. PLEASE CAREFULLY CONSIDER THE
"RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITY HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
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THE DATE OF THIS PROSPECTUS IS , 1999.
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PROSPECTUS SUMMARY
We issued the shares that may be offered using this prospectus in three
transactions in 1998. In July 1998, we acquired Soft Mountain S.A. and issued
245,586 shares of our common stock to the shareholders of Soft Mountain. These
Soft Mountain selling security holders may offer some or all of these shares
using this prospectus. In October 1998, we issued a $3.6 million convertible
secured subordinated promissory note to Vertex Technology Fund Ltd. This note is
convertible into 1,880,000 shares of our common stock, at a rate of $1.925 per
share. If Vertex converts all or a portion of its note into common stock, Vertex
may offer some or all of the conversion shares using this prospectus. In
December 1998, we issued 700,000 shares of our common stock and warrants to
purchase 350,000 shares of our common stock to three Special Situations Funds.
The warrants may be exercised for common stock at an exercise price of $2.25 per
share. The Special Situations Funds may offer some or all of their common stock,
including shares that may be issued upon exercise of their warrants, using this
prospectus.
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TABLE OF CONTENTS
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<TABLE>
<S> <C> <C> <C>
Prospectus Summary...................... 2 Selling Security Holders................ 12
Risk Factors............................ 3 Plan of Distribution.................... 13
Use of Proceeds......................... 10 Legal Matters........................... 14
Dividend Policy......................... 10 Experts................................. 14
Where You Can Find More Information..... 10
</TABLE>
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the following risk factors and the other information
in this prospectus before investing in our common stock. Our business and
results of operations could be seriously harmed by any of the following risks.
The trading price of our common stock could decline due to any of these risks,
and you may lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
OUR LIMITED WORKING CAPITAL MAY PREVENT US FROM CONTINUING AS A GOING
CONCERN. We incurred a significant reduction in working capital in 1998. To
date, we have not achieved business volume sufficient to restore profitability
and a positive cash flow. We operated at a net loss of $20 million in 1998 and
since December 31, 1998 have continued to experience operating losses. Our
available cash and credit facilities may not be sufficient to fund our
operations and successfully implement our business plan, part of which consists
of pursuing potential strategic relationships, acquisitions of companies,
products and technologies. Also, the Soft Mountain Selling Security Holders have
demanded that we repurchase for approximately $1.1 million the 245,586 shares of
the Company's stock issued to them in connection with the Company's purchase all
Soft Mountain shares as a result of the Company's inability to register the
shares by December 31, 1998. Our ability to continue as a going concern is
therefore dependent upon future events, including our ability to obtain
additional debt or equity financing. We recently raised $3.6 million through the
sale of a convertible secured subordinated promissory note to Vertex Technology
Fund, and $1.4 million through the sale of equity securities to Special
Situations Fund. We may raise additional funds through the sale of equity
securities or other means in the near future. However, funds may not be
available on favorable terms, if at all. If we are unable to raise additional
funds, we will be dependent on cash flow from operations to fund operations and
to repay outstanding bank debt. Unless we generate consistent positive cash
flows from operations for the immediate and foreseeable future, we will be
required to cease or substantially reduce operations. The sale of additional
equity or convertible debt securities would result in dilution to our
shareholders.
OUR COMMON STOCK MAY BE DELISTED FROM NASDAQ. Our common stock is listed on
the Nasdaq National Market. Nasdaq has continued listing requirements which we
must meet to avoid delisting. Currently, we do not meet the $4 million minimum
tangible net assets requirement and have been so notified by Nasdaq. We believe
that we will be able to meet this requirement if Vertex converts its note into
common shares and if additional equity can be raised in time to satisfy Nasdaq.
We may be unable to timely secure or conclude these commitments, however.
Companies traded on the Nasdaq Markets are also required to maintain a minimum
bid price of $1.00 per share. Our stock price may decline below this
requirement. There are other requirements as well. If our common stock is
delisted, we may not be able to satisfy the higher requirements for a new
listing on either the Nasdaq National or SmallCap Market. After delisting,
trading in our common stock may be conducted in the over-the-counter market in
what are commonly referred to as the "pink sheets." As a results, investors
would find it more difficult to buy, sell or quote our common stock.
OUR EXISTING DEBT BURDEN IS SUBSTANTIAL, AND WE MAY DEFAULT ON OUR LOANS.
At December 31, 1998, we had the following outstanding borrowings:
(1) $2.4 million under a bank revolving loan, which expires on May 31,
1999;
(2) $2.3 million under a bank term loan, which expires on March 18, 2001;
and
(3) $3.6 million under our convertible subordinated secured promissory
note, which is due in October 2001.
Because we were not in compliance with the covenants that apply to the bank
revolving loan and the bank term loan at December 31, 1998, the bank has the
ability to declare a default on these loans and demand immediate payment of
approximately $4.1 million in currently outstanding borrowings. Therefore,
unless we are able to renegotiate our covenants and extend or refinance this
debt, we will need to generate a significant amount of cash in the immediate
future, and in any event by the May 31, 1999 expiration date of the bank
revolving loan. As in previous quarters in which we were not in compliance with
our financial covenants, we are currently pursuing discussions with the bank to
amend the terms of our loans, including their repayment schedules and financial
covenants. However, we may not be successful in this endeavor. Even if we are
successful amending the terms of or refinancing our loans, the new terms could
be significantly less attractive than our current financing arrangements and
could significantly restrict our operating activities.
OUR REVENUE LEVELS ARE UNPREDICTABLE. Our revenue has fluctuated
dramatically on a quarterly and annual basis, and we expect this trend to
continue. These dramatic fluctuations result from a number of factors,
including:
(1) the lengthy and highly consultative sales cycle associated with our
products
(2) uncertainty regarding the timing and scope of customer deployment
schedules of applications based on the Versant ODBMS
(3) fluctuations in domestic and foreign demand for our products and
services, particularly in the telecommunications and financial
services markets
(4) the impact of new product introductions by us and our competitors
(5) our unwillingness to significantly lower prices to meet prices set by
our competitors
(6) the effect of publications of opinions about us and our competitors
and their respective products
(7) customer order deferrals in anticipation of product enhancements or
new product offerings by us or our competitors
(8) potential customers unwillingness to invest in our products given our
financial instability
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A number of other factors make it impossible to predict our operating
results for any period prior to the end of that period. We ship our software to
a customer at receipt of the customer's order, and consequently, we have little
order backlog. As a result, license revenue in any quarter is substantially
dependent on orders booked and shipped in that quarter. Historically, we record
most of our revenue and book most of our orders in the third month of each
quarter, with a concentration of such revenue and orders in the last few days of
the quarter. We expect this trend to continue. Many of these factors are beyond
our control.
WE MAY NOT BE ABLE TO MANAGE COSTS GIVEN THE UNPREDICTABILITY OF OUR
REVENUE. We expended significant resources in 1997 and 1998 to build our
infrastructure and hire personnel, before reductions, particularly in the
services and sales and marketing sectors, in expectation of higher revenue
growth than actually occurred. Although we have restructured our operations to
reduce operating expenses, we continue to plan for revenue growth in 1999
compared to 1998. Consequently, we will continue to incur a relatively high
level of fixed expenses. Although, in January 1999, we reduced significantly our
worldwide headcount and implemented controls on spending in order to achieve
expense reductions, if expense controls are not achieved or planned revenue
growth does not materialize, our business, financial condition and results of
operations will be materially harmed.
WE RELY ON TELECOMMUNICATIONS AND FINANCIAL SERVICES MARKETS CHARACTERIZED
BY COMPLEXITY AND INTENSE COMPETITION. Historically, we have been highly
dependent upon the telecommunications industry and are becoming increasingly
dependent upon the financial services market. Our success in the
telecommunications and financial service markets is dependent, in part, on our
ability to compete with alternative technology providers and on whether our
customers and potential customers believe we have the expertise necessary to
provide effective solutions in these markets. If these conditions, among others,
are not satisfied, we may not be successful in generating additional
opportunities in these markets. The need for and type of applications and
commercial products for the telecommunications and financial services markets is
continuing to develop, is rapidly changing, and is characterized by an
increasing number of new entrants whose products may compete with those of ours.
As a result, we cannot predict the future growth of these markets, and demand
for object-oriented databases in these markets may not develop or be
sustainable. We also may not be successful in attaining a significant share of
these markets. In addition, organizations in these markets generally develop
sophisticated and complex applications that require substantial customization of
our products. Although we seek to generate consulting revenue in connection with
these customization efforts, we have offered, and may, under certain
circumstances continue to offer, free or reduced price consulting. This practice
has impacted, and will continue to impact, our service margins and will require
that we maintain a highly skilled service infrastructure with specific expertise
in these markets.
OUR PRODUCTS HAVE A LENGTHY SALES CYCLE. Our sales cycle, which varies
substantially from customer to customer, often exceeds nine months and can
sometimes extend to a year or more. Due in part to the strategic nature of our
products and associated expenditures, potential customers are typically cautious
in making product acquisition decisions. The decision to license our products
generally requires us to provide a significant level of education to prospective
customers regarding the uses and benefits of our products, and we must
frequently commit no-fee pre-sales support resources, such as assistance in
performing bench marking and application prototype development. Because of the
lengthy sales cycle and the relatively large average dollar size of individual
licenses, a lost or delayed sale could have a significant impact on our
operating results for a particular period. Although we seek to develop
relationships with best-of-class value-added resellers in the telecommunications
and financial services markets in order to strengthen our indirect sales
activity, we have not yet entered into such relationships and may not be
successful in developing such relationships. In addition, our value-added
resellers may be subject to a lengthy sales cycle for our products.
OUR CUSTOMER CONCENTRATION INCREASES THE POTENTIAL VOLATILITY OF OUR
OPERATING RESULTS. Notwithstanding our recent efforts to develop new customers,
typically through the use of relatively small licenses, a significant portion of
our total revenue has been, and we believe will continue to be, derived from a
limited number of orders placed by large organizations. The timing of such
orders and their fulfillment has caused, and is likely to cause in the future,
material fluctuations in our operating results, particularly on a quarterly
basis. In addition, our major customers tend to change from year to year. The
loss of any one or more of our major customers or our inability to replace a
customer that has become less significant in a given year with a different major
customer could have a material adverse effect on our business.
WE DEPEND ON OUR INTERNATIONAL OPERATIONS. A significant portion of our
revenue is derived from customers located outside the United States. This
requires that we operate internationally and maintain a significant presence in
international markets. However, our international operations are subject to a
number of risks. These risks include:
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(1) longer receivable collection periods
(2) changes in regulatory requirements
(3) dependence on independent resellers
(4) multiple and conflicting regulations and technology standards
(5) import and export restrictions and tariffs
(6) difficulties and costs of staffing and managing foreign operations
(7) potentially adverse tax consequences
(8) foreign exchange fluctuations
(9) the burdens of complying with a variety of foreign laws
(10) the impact of business cycles and economic instability outside the
United States, including the current economic instability in Asia.
WE MUST DEFEND AGAINST SECURITIES LITIGATION. We and certain of our present
and former officers and directors were named as defendants in four class action
lawsuits filed in the United States District Court for the Northern District of
California, filed on January 26, 1998, February 5, 1998, March 11, 1998 and
March 18, 1998, respectively. On June 19, 1998, a consolidated amended complaint
was filed in this court by the lead plaintiff named by the court. The amended
complaint alleges violations of Sections 10(b) and 20(a) of the Securities
Exchange Act, and Securities and Exchange Commission Rule 10b-5 promulgated
under the Exchange Act, in connection with public statements about our expected
financial performance. The complaint seeks an unspecified amount of damages. We
vigorously deny the plaintiff's claims and have moved to dismiss the
allegations. The plaintiff has filed a response to our motion to dismiss, and we
have filed an opposition to plaintiff's response. The motion to dismiss was
submitted to the court for consideration on November 13, 1998, and the court has
not yet issued a decision. Securities litigation can be expensive to defend,
consume significant amounts of management time and result in adverse judgments
or settlements that could have a material adverse effect on our results of
operations and financial condition.
OUR STOCK PRICE IS VOLATILE. Our revenue, operating results and stock price
have been and may continue to be subject to significant volatility, particularly
on a quarterly basis. We have previously experienced significant shortfalls in
revenue and earnings from levels expected by securities analysts and investors,
which has had an immediate and significant adverse effect on the trading price
of our common stock. This may occur again in the future. Additionally, as a
significant portion of our revenue often occurs late in the quarter, we may not
learn of revenue shortfalls until late in the quarter, which could result in an
even more immediate and adverse effect on the trading price of our common stock.
OUR BUSINESS MAY BE HARMED BY YEAR 2000 PROBLEMS. We and our customers and
suppliers are aware and concerned about the risks associated with Year 2000
computer issues. If our systems do not recognize the correct date when the year
changes to 2000, there could be a material adverse effect on our operations. We
are at risk from both internal and external areas. We have categorized our risk
into the following categories:
(1) internal systems required to operate our business (e.g. operational,
financial, product development, safety and environmental controls);
(2) external supplier systems that are necessary to support our business
requirements (e.g. raw materials, supplies, shipping and delivery
systems, banking, payroll and government systems); and
(3) product warranty exposure with our customer base.
We are currently evaluating our exposure in all these areas. We have been
reviewing our facility, financial and operating systems to identify and assess
the requirements to bring hardware systems and software applications to Year
2000 compliance. We expect to conclude our estimate of exposure to Year 2000
problems, associated costs and required correction plans by the end of July 1999
and to correct any Year 2000 problems by October 31, 1999. We have not
identified any alternative remediation plans in the event Year 2000 issues can
not be adequately corrected. We will define any alternative plans if and when we
discover systems that can not be made Year 2000 compliant. If implementation of
upgrade or replacement systems is delayed or if significant new non-compliance
issues are discovered, our operations could be materially adversely affected.
We have and will continue to make certain investments in software
applications and systems to ensure that we are Year 2000 compliant with respect
to our internal systems. In particular, our purchase of $9 million of property
and equipment during 1997 and 1998 included substantial investments in
management and information systems designed to be Year 2000 compliant.
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We have contracted with an outside independent consulting firm to provide
internal Year 2000 equipment testing and consulting services to assist us in the
process of defining and implementing a Year 2000 compliance project. This
compliance project includes the following phases:
<TABLE>
<CAPTION>
Expected
completion
Name of phase: Description: Status: date:
- -------------- ------------ ------- ----------
<S> <C> <C> <C>
Awareness and Educate the company on the Year 2000 In progress April 1999
Assessment Phase project, the potential problems associated
with this date issue, inventory our systems
and products that require compliance testing.
Testing and Test our systems and products and identify Begins March July 1999
Validation Phase the non-compliant areas, develop remediation 1999
plans, map the conversion process to correct
non-compliant areas and validate the changes
that need to be made to correct non-compliant
areas.
Implementation and Convert non-compliant areas with compliant Begins August October
Certification Phase products (hardware or software), verify that 1999 1999
all intended changes have been made successfully
and that all planned Year 2000 compliance
changes have been made.
Maintenance Phase This phase puts processes and procedures in Begins December
place to minimize the likelihood that Year 1999
2000 compliance problems will be November 1999
reintroduced into the compliant systems and
products.
</TABLE>
Status:
Awareness and Assessment Phase: We are in the process of writing an
awareness statement to educate our employees, vendors and customers about
the Year 2000 issues and potential problems associated with the Year 2000
rollover problem and what effect this will have on our company and
customers. We have identified all internal systems (products and software)
that need to be tested for Year 2000 compliance.
Testing and Validation Phase: We have tested the personal computers and
servers used by our employees to complete their daily work assignments. The
results are being analyzed and will be assessed by April 1999. We will be
testing or seeking validation with respect to Year 2000 compliance
regarding external providers for phone service, security service, utility
service, internet service and air conditioning service. We will then
develop remediation plans to correct non-compliant systems.
In addition to the internal testing, evaluation and remediation project, we
will implement a program that will query our suppliers and providers of
third-party technology that may be integrated with our products to determine if
the suppliers operations', products and services are Year 2000 compliant. We
expect these questionnaires to be sent to our third party providers and key
suppliers by the end of April 1999 and conclude our review by the end of June
1999. Where practical, we will take the necessary actions to reduce our exposure
to suppliers that are not Year 2000 compliant by finding alternative suppliers.
However, there may be critical suppliers that cannot be substituted and this
could have a material adverse effect on our operations.
We believe our products are Year 2000 compliant. However, not every
customer situation can be anticipated, especially in areas that involve third
party products. Extensive testing has been performed on our products and
additional testing will continue as we become aware of our customer's Year 2000
needs and issues. We may see an increase in customer demands for warranty
service. This may create additional service costs that can not be recovered. In
addition, if our products are not Year 2000 compliant, we could face litigation
regarding Year 2000 compliance issues.
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The process to insure our systems and our supplier systems are Year 2000
compliant is expected to be significantly completed by October 31, 1999, with
testing to be done through the remainder of 1999. In addition, we could face
reduced demand for our products through 1999 if customers focus on purchasing
solutions to their Year 2000 problems rather than purchasing our products, which
are not designed to solve Year 2000 problems.
Customer's purchasing plans could be affected by the Year 2000 problem if
they need to expend significant resources to correct their existing systems.
This situation may result in reduced funds available to implement solutions
based upon our products. In addition, some customers may defer the license of
our products until after the Year 2000 while they complete remediation and
testing of their current systems to ensure Year 2000 compliance. A decrease in
demand for our products due to customers' Year 2000 issues would seriously harm
our business and results of operations.
RISKS RELATED TO OUR INDUSTRY
WE FACE INTENSE COMPETITION. The market for our products is intensely
competitive. We believe that the primary competitive factors in our market
include:
(1) database performance, including the speed at which operations can be
executed and the ability to support large amounts of different
information
(2) vendor reputation
(3) the ability to handle abstract data types and complex data
relationships
(4) ease of use
(5) database scalability
(6) the reliability, availability and serviceability of the database
(7) compatibility with customers' existing technology platforms
(8) the ease and speed with which applications can be developed
(9) price and
(10) service and support.
Our current and prospective competitors include companies that offer a
variety of database solutions using various technologies including object
database, object-relational database and relational database technologies.
Competitors offering object and object-relational database management systems
include Oracle Corporation, Computer Associates International, Inc., Object
Design, Inc., Informix and its Illustra Information Technologies, Inc.
subsidiary, Objectivity, Inc., Gemstone Systems, Inc., Poet Software
Corporation, ONTOS, Inc. In addition, our products compete with traditional
relational database management systems, many of which have been or are expected
to be modified to incorporate object-oriented interface and other functionality,
and to leverage Java. The principal competitors in the relational database
market are Oracle, Sybase, Informix, IBM and Microsoft. We expect to face
additional competition from other established and emerging companies as the
object database market continues to develop and expand. In 1997, Oracle released
its Oracle8 product, which, with its object option, provides object-relational
database capabilities, and Computer Associates released their Jasmine ODBMS,
which is a pure object-oriented database. Although we believe that the decision
of relational database vendors to pursue object-relational or object-oriented
approaches validates our belief that object-oriented database solutions will be
increasingly demanded by today's business organizations, we are facing
heightened competition. During the last year we have seen a major shift away
from Smalltalk towards JAVA. In addition Versant is used more and more as a
middle tier persistence layer in multi tier applications This brings us in
direct competition with some of the more established companies in these markets.
These are companies like IBM, SUN and BEA selling Java based tools and
solutions. There is also some movement in the market to buy as much middleware
components as possible from one or just a few suppliers. Because we are offering
just a ODBMS for the time being we may not be able to compete in some of these
situations. This could result and would continue to result in fewer customer
orders, price reductions, reduced transaction size, reduced gross margins and
loss of market share, any of which could have a material adverse effect on our
business, operating results and financial condition and on the market price of
our common stock. Due to the introduction by Oracle and Computer Associates of
competing products with lower prices than the Versant ODBMS, we may not be able
to maintain prices for our products at levels that will enable us to market our
products profitably. Any decrease in per unit prices, as a result of competition
or otherwise, could have a material adverse effect on our business, operating
results and financial condition.
In addition our poor financial performance during 1998 may influence
customers to delay orders or cancel projects to wait and see how we are
performing during the next foreseeable future.
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We are also indirectly facing competition from developers of middleware
products that allow users to connect object-oriented applications to existing
legacy data and RDBMSs. To the extent that these products gain market
acceptance, they may reduce the market for the Versant ODBMS for less complex
object-oriented applications.
Many of our competitors, and especially Oracle and Computer Associates,
have longer operating histories, significantly greater financial, technical,
marketing, service and other resources, significantly greater name recognition,
broader product offerings and a larger installed base of customers than ours. In
addition, many of our competitors have well-established relationships with
current and potential customers of ours. As a result, our competitors may be
able to devote greater resources to the development, promotion and sale of their
products, may have more direct access to corporate decision-makers based on
previous relationships and may be able to respond more quickly to new or
emerging technologies and changes in customer requirements. We may not be able
to compete successfully against current or future competitors, and competitive
pressures could have a material adverse effect on our business, operating
results and financial condition.
WE DEPEND ON SUCCESSFUL TECHNOLOGY DEVELOPMENT. We believe that significant
research and development expenditures will be necessary to remain competitive.
While we believe our research and development expenditures will improve the
Versant ODBMS and result in successful peripheral product introductions, due to
the uncertainty of software development projects, these expenditures will not
necessarily result in successful product introductions. Uncertainties impacting
the success of software development project introductions include technical
difficulties, market conditions, competitive products and consumer acceptance of
new products and operating systems. In particular, we note that we have not yet
achieved commercial acceptance for our Versant Multimedia Access product.
We also face certain challenges in integrating third-party technology with
our products. These challenges include the technological challenges of
integration, which may result in development delays, and uncertainty regarding
the economic terms of our relationship with the third-party technology provider,
which may result in delays of the commercial release of new products.
We face further technology development challenges associated with our
acquisition of Soft Mountain. The Soft Mountain R'Net product offering is still
under development, and there is uncertainty in both the timing of the release
and the market acceptance of the product. Soft Mountain's geographic location in
France generates additional management and integration challenges, because our
product development to date has been performed in California and India.
Developing and marketing our new Versant Enterprise Container for Java
Beans creates new challenges for us. This product, which has not yet been
commercially introduced, represents our first attempt to provide solutions to
the application server market. Although we have worked with BEA to develop
technology that will allow the Versant Enterprise Container to support the BEA
WebLogic application server family, undiscovered bugs or errors may exist that
prevent us from achieving the functionality we seek with the Versant Enterprise
Container. In addition, because Java Bean containers are specific to each
application server vendor and no standards have been adopted for such
containers, we may not be able to take advantage of our development work with
the BEA application server family when developing solutions for other
application server vendors. We do not currently have any agreements or
relationships regarding the Versant Enterprise Container with other application
server vendors, and when our new product is introduced, customers will only be
able to use it with BEA application servers.
WE MUST PROTECT OUR INTELLECTUAL PROPERTY. Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy aspects of our
products, obtain or use information that we regard as proprietary or use or make
copies of our products in violation of license agreements. Policing unauthorized
use of our products is difficult. In addition, the laws of many jurisdictions do
not protect our proprietary rights to as great an extent as do the laws of the
United States. Shrink-wrap licenses may be wholly or partially unenforceable
under the laws of certain jurisdictions, and copyright and trade secret
protection for software may be unavailable in certain foreign countries. Our
means of protecting our proprietary rights may not be adequate, and our
competitors may independently develop similar technology.
To date, we have not been notified that our products infringe the
proprietary rights of third parties, but third parties could claim that our
current or future products infringe such rights. We expect that developers of
object-oriented technology will increasingly be subject to infringement claims
as the number of products, competitors and patents in our industry segment
grows. Any such claim, whether meritorious or not, could be time-consuming,
result in costly litigation, cause product shipment delays or require us to
enter into royalty or licensing agreements.
8
<PAGE> 10
Such royalty or licensing agreements might not be available on terms acceptable
to us or at all, which could have a material adverse effect upon our business,
operating results and financial condition.
Our future success will depend in part on our ability to integrate our
products with those of vendors providing complementary products. The Versant
ODBMS must be integrated with compilers, development tools, operating systems
and other software and hardware components to produce a complete end-user
solution. We may not receive the support of these third-party vendors, some of
which may compete with us, to integrate our products with the vendors' products.
WE DEPEND ON OUR PERSONNEL FOR WHOM COMPETITION IS INTENSE. Our future
performance depends in significant part upon the continued service of our key
technical, sales and senior management personnel. The loss of the services of
one or more of our key employees could have a material adverse effect on our
business. Our future success also depends on our continuing ability to attract,
train and motivate highly qualified technical, sales and managerial personnel.
Competition for such personnel is intense, especially in Silicon Valley where
our headquarters are located, and we may not be able to attract, train and
motivate such personnel.
RISKS RELATED TO THIS OFFERING
SALES OF THE SHARES INCLUDED IN THIS PROSPECTUS COULD AFFECT OUR STOCK
PRICE. If the selling security holders sell substantial amounts of our common
stock in the public market using this prospectus, the market price of our common
stock could fall.
EXISTING SHAREHOLDERS COULD INCUR DILUTION AS A RESULT OF FUTURE ISSUANCES
OF OUR COMMON STOCK. To the extent the selling security holders exercise
warrants or convert convertible securities into shares of our common stock,
existing shareholders could experience dilution.
THIS PROSPECTUS CONTAINS FORWARD LOOKING STATEMENTS. These statements
defined by federal securities laws usually contain expressions like "believes",
"expects", "intends" and "anticipates" and involve significant uncertainty.
Actual results may differ significantly.
9
<PAGE> 11
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the
selling security holders.
DIVIDEND POLICY
We have never paid any cash dividends on our stock and we anticipate that,
for the foreseeable future, we will continue to retain any earnings for use in
the operation of our business and do not intend to pay dividends.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 under the Securities Act of 1933 with respect to the
shares of common stock offered hereby. This prospectus does not contain all of
the information set forth in the registration statement, certain parts of which
are omitted in accordance with the rules and regulations of the Securities and
Exchange Commission. For further information with respect to us and the common
stock offered by this prospectus, please refer to the registration statement.
Statements in this prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of the contract or document filed as an exhibit to the registration
statement. Each such statement is qualified in all respects by such reference.
Copies of the registration statement may be inspected, without charge, at the
offices of the Securities and Exchange Commission, or obtained at prescribed
rates from the Public Reference Section of the Securities and Exchange
Commission at the address set forth below.
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and, in accordance therewith, we file reports, proxy statements and
other information with the Securities and Exchange Commission. Reports, proxy
statements and other information that we have filed can be inspected and copied
at the public reference facilities of the Securities and Exchange Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain copies of these materials from the Public Reference
Section of the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The public may obtain information on
the operation of the Public Reference Room by calling the Securities and
Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission
also maintains a World Wide Web site that contains reports, proxy and
information statements and other information that is filed electronically with
it. This Web site can be accessed at http://www.sec.gov.
We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon such person's written or oral request, a copy of
any and all of the information that has been incorporated by reference into this
prospectus, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference as well. Requests for such copies should
be directed to Versant Corporation, 6539 Dumbarton Circle, Fremont, CA 94555,
Attention: Gary Rhea, Vice President and Chief Financial Officer, telephone:
(510) 789-1500.
IN CONNECTION WITH THIS OFFERING, NO PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF
SUCH INFORMATION IS GIVEN OR REPRESENTATIONS MADE, YOU MAY NOT RELY ON SUCH
INFORMATION OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS
IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THOSE REGISTERED HEREBY, NOR IS IT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SECURITIES WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. YOU MAY NOT IMPLY FROM THE DELIVERY OF THIS PROSPECTUS, NOR FROM ANY
SALE MADE UNDER THIS PROSPECTUS, THAT OUR AFFAIRS ARE UNCHANGED SINCE THE DATE
OF THIS PROSPECTUS OR THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
CORRECT AS OF ANY TIME AFTER THE DATE OF THIS PROSPECTUS.
10
<PAGE> 12
The following documents that we have filed with the Securities and Exchange
Commission are incorporated by reference into this prospectus:
o The registration statement on Form S-3 of which this prospectus is a
part, and the exhibits filed and incorporated by reference with the
Form S-3.
o Our Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 1998.
o Our Quarterly Report on Form 10-QSB filed with the Securities and
Exchange Commission for the fiscal quarter ended march 31, 1999.
o The description of our common stock contained in our registration
statement on Form 8-A filed with the Securities and Exchange
Commission on May 31, 1996.
o All other documents we file with the Securities and Exchange
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act on or after the date of this prospectus and
prior to the termination of this offering.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus or the
registration statement.
11
<PAGE> 13
SELLING SECURITY HOLDERS
Special Situations Fund III LP, Special Situations Cayman LP and Special
Situations Technology Fund LP acquired 700,000 shares of common stock, which
they may offer pursuant to this prospectus on December 28, 1998, when they
provided us with $1,443,750 in a private financing. At that time, these funds
also acquired warrants to purchase 350,000 shares of our common stock, and their
share numbers in the following table include the shares issuable upon exercise
of these warrants. None of these funds has had any position, office or other
material relationship with us within the past three years, except that these
funds collectively own more than 10% of our common stock.
Vertex Technology Fund Ltd. acquired its convertible secured subordinated
promissory note, which is convertible into the 1,880,000 shares of our common
stock that Vertex may offer pursuant to this prospectus, when it provided us
with $3.6 million in an October 16, 1998 private financing. An affiliate of
Vertex initially became a shareholder of ours in November 1989 and had a
representative on our board of directors from August 1991 to February 1997.
The former shareholders of Soft Mountain, listed in the table below as Soft
Mountain Selling Security Holders, acquired the shares of our common stock that
they may offer pursuant to this prospectus in connection with our acquisition of
Soft Mountain, when they sold their Soft Mountain securities for our common
stock. None of these security holders has had any position, office or other
material relationship with us within the past three years.
The following table sets forth certain information known to us with respect
to the beneficial ownership of the our Common Stock as of March 31, 1999 by each
of the selling security holders named below. The following table assumes each
selling security holder sells all of the shares offered hereby. The selling
security holders may from time to time offer and sell any or all of the shares
pursuant to this prospectus. Because the selling security holders are not
obligated to sell shares, and because selling security holders may also acquire
publicly traded shares of our common stock, we cannot estimate how many shares
each selling security holder will beneficially own after this offering.
Therefore, the number of shares listed in the column entitled shares
beneficially owned after offering reflects only the current share ownership of
the selling security holders. We may update or supplement this prospectus from
time to time to update the disclosure set forth herein.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Shares Owned After Offering
------------------------ Being --------------------
Name Number Percent(1) Offered Number Percent
- ---- -------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Special Situations Fund III LP(2) 896,753 8.6% 708,750 188,003 1.9%
Special Situations Cayman LP(2) 295,050 2.9 236,250 58,000 .6
Special Situations Technology Fund LP(2) 166,000 1.6 105,000 51,000 .5
Vertex Technology Fund Ltd.(3) 1,880,000 15.6 1,880,000 0
SOFT MOUNTAIN SELLING SECURITY HOLDERS(4)
SC Finoris 167,890 1.6 167,890 0
Trinova 45,631 * 45,631 0
Rhone-Alpes Creation 31,955 * 31,955 0
Guillaume Doumenc 110 * 110 0
</TABLE>
--------------------
* Less than 1%.
(1) Based on 10,135,517 shares of our common stock outstanding as of March 31,
1999.
(2) Includes warrants to purchase 236,250 shares, 78,750 shares and 35,000
shares held by Special Situations Fund III LP, Special Situations Cayman LP
and Special Situations Technology Fund. This information is derived from a
Schedule 13G/A filed by the Special Situations Funds with the Securities
and Exchange Commission on January 4, 1999.
(3) Represents 1,880,000 shares issuable upon conversion of Vertex's
convertible secured subordinated promissory note. Does not include 596,367
shares held by affiliates of Vertex.
(4) These shareholders have demanded that we repurchase their shares for
approximately $1.1 million as a result of the registration for sale of
their shares later than the December 31, 1998 date prescribed by their
registration rights provisions. Settlement discussions are ongoing.
Arbitration or litigation may result if a settlement cannot be reached.
12
<PAGE> 14
PLAN OF DISTRIBUTION
In connection with our acquisition of Soft Mountain, we and the Soft
Mountain selling shareholders entered into a share purchase agreement. In
connection with the financings provided by Vertex and the Special Situation
Funds, we entered into registration rights agreements. The registration
statement of which this prospectus forms a part has been filed pursuant to the
Soft Mountain share purchase agreement and the registration rights agreements.
To our knowledge, none of the selling security holders have entered into any
agreement, arrangement or understanding with any particular broker or market
maker with respect to the shares offered hereby, nor do we know the identity of
the brokers or market makers that will participate in the offering.
The shares of common stock covered by this prospectus may be offered and
sold from time to time by the selling security holders. The selling security
holders will act independently from us in making decisions with respect to the
timing, manner and size of each sale. The selling security holders may not sell
any of the shares that are subject to this prospectus, and selling security
holders could sell their shares in a private transaction or other transaction
that is exempt from the registration requirements of the Securities Act. We have
been advised by the selling security holders that they have not, as of the date
hereof, entered into any arrangement with a broker-dealer for the sale of
shares. In effecting sales, broker-dealers engaged by the selling security
holders may arrange for other broker-dealers to participate. Broker-dealers will
receive commissions or discounts from the selling security holders in amounts to
be negotiated immediately prior to the sale.
In offering the shares, the selling security holders and any broker-dealers
who execute sales for the selling security holders may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. Any profits realized by the selling security holders and the compensation
of a broker-dealer may be deemed to be underwriting discounts and commissions.
In addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than pursuant to this prospectus.
The selling security holders have advised us that, during such time as they
may be engaged in a distribution of the shares of common stock included herein,
they will comply with Rules 10b-6 and 10b-7 under the Exchange Act. In
connection with these rules, the selling security holders have agreed not to
engage in any stabilization activity in connection with any of our securities,
to furnish copies of this prospectus to each broker-dealer through which the
shares of common stock included in this prospectus may be offered, and not to
bid for or purchase any of our securities or attempt to induce any person to
purchase any of our securities except as permitted under the Exchange Act. The
selling security holders have also agreed to inform us and broker-dealers
through whom sales may be made under this prospectus when the distribution of
the shares is completed.
We will bear the costs, expenses and fees in connection with the
registration of the shares of common stock offered by this prospectus.
Commissions and discounts, if any, attributable to the sales of shares of common
stock using this prospectus will be borne by the selling security holders. The
selling security holders may agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
We have advised the selling security holders that the anti-manipulation
rules under the Exchange Act may apply to sales of shares of common stock in the
market and to the activities of selling security holders. Each selling security
holder has advised us that during such time as it may be engaged in the attempt
to sell shares of common stock included in this prospectus, it will:
o not engage in any stabilization activity in connection with any of our
securities;
o not bid for or purchase any of our securities or any rights to acquire
our securities, or attempt to induce any person to purchase any of our
securities or rights to acquire our securities, other than as
permitted under the Exchange Act;
o not effect any sale or distribution of the shares of common stock
until after this prospectus has been appropriately amended or
supplemented, if required, to set forth the terms thereof; and
o effect all sales of shares of common stock in broker's transactions
through broker-dealers acting as agents, in transactions directly with
market makers or in privately negotiated transactions where no broker
or other third party, other than the purchaser, is involved.
Pursuant to the Soft Mountain share purchase agreement and the registration
rights agreements, no selling security holder may sell any of the shares of
common stock offered using this prospectus in the event and during
13
<PAGE> 15
such period as we determine, based upon the advice of outside counsel, that
unforeseen circumstances, including pending negotiations relating to, or the
consummation of, a transaction, would require additional disclosure of material
information by us in the registration statement the confidentiality of which we
have a bona fide business purpose to preserve or which unforeseen circumstances
would render us unable to comply with Securities and Exchange Commission
requirements. Such suspension shall exist for only so long as any such
suspension exists for other similarly restricted Versant shareholders.
Each selling security holder has agreed that it will not effect any sales
of the shares offered hereby any time after he or it has received notice from us
to suspend sales as a result of a stop order or the occurrence or existence of
any suspension event or so that we may correct or update the registration
statement.
This offering will terminate as to the Special Situations Funds on December
28, 2002 or the date on which all shares offered have been sold by the Special
Situations Funds or are eligible for sale under Rule 144(k) of the Securities
Act. This offering will terminate as to Vertex on October 15, 2001 or the date
on which all shares offered have been sold by Vertex or are eligible for sale
under Rule 144(k) of the Securities Act. This offering will terminate as to each
Soft Mountain selling security holder on the earlier of one year after the date
of this prospectus or the date on which all shares offered have been sold by the
Soft Mountain selling security holders.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Fenwick & West LLP, Two Palo Alto Square,
Suite 800, Palo Alto, California 94306.
EXPERTS
The financial statements and schedule incorporated by reference in this
registration statement on Form S-3 have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference in reliance upon the authority of
said firm as experts in giving said reports. Reference is made to said report,
which includes an explanatory paragraph with respect to the uncertainty
regarding the Company's ability to continue as a going concern as discussed in
Note 1 to the financial statements.
14
<PAGE> 16
================================================================================
VERSANT CORPORATION
3,175,586 Shares of
Common Stock
--------------------
PROSPECTUS
--------------------
IN CONNECTION WITH THIS OFFERING, NO PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF
SUCH INFORMATION IS GIVEN OR REPRESENTATIONS MADE, YOU MAY NOT RELY ON SUCH
INFORMATION OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS
IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THOSE REGISTERED HEREBY, NOR IS IT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SECURITIES WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. YOU MAY NOT IMPLY FROM THE DELIVERY OF THIS PROSPECTUS, NOR FROM ANY
SALE MADE UNDER THIS PROSPECTUS, THAT OUR AFFAIRS ARE UNCHANGED SINCE THE DATE
OF THIS PROSPECTUS OR THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
CORRECT AS OF ANY TIME AFTER THE DATE OF THIS PROSPECTUS.
================================================================================
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid by the Registrant in connection with this
offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 1,104
Nasdaq National Market filing fee 39,912
Accounting fees and expenses 3,000
Legal fees and expenses 15,000
Miscellaneous
-------------
Total $ 59,016
=============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation (the "Articles") include a
provision that eliminates the liability of the Registrant's directors for
monetary damages to the fullest extent permissible under California law. This
limitation has no effect on a director's liability: (i) for acts or omissions
that involve intentional misconduct or a knowing and culpable violation of law;
(ii) for acts or omissions that a director believes to be contrary to the best
interests of the Registrant or its shareholders or that involve the absence of
good faith on the part of the director; (iii) for any transaction from which a
director derived an improper personal benefit; (iv) for acts or omissions that
show a reckless disregard for the director's duty to the Registrant or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of a serious injury to the Registrant or its shareholders; (v) for acts or
omissions that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the Registrant or its shareholders; (vi)
under Section 310 of the California Corporations Code (the "California Code")
concerning contracts or transactions between the Registrant and a director; or
(vii) under Section 316 of the California Code concerning directors' liability
for improper dividends, loans and guarantees. The provision in the Articles does
not extend to acts or omissions of a director in his capacity as an officer.
Further, the provision will not affect the availability of injunctions and other
equitable remedies available to the Registrant's shareholders for any violation
of a director's fiduciary duty to the Registrant or its shareholders.
The Articles also authorize the Registrant to indemnify its agents (as
defined in Section 317 of the California Code), through bylaw provisions, by
agreement or otherwise, to the fullest extent permitted by law. Pursuant to this
provision, the Registrant's Bylaws provide that the Registrant shall indemnify
its directors and officers to the fullest extent permissible under California
law, subject to certain exceptions. In addition, the Registrant, at its
discretion, may provide indemnification to persons whom the Registrant is not
obligated to indemnify. The Bylaws also allow the Registrant to enter into
indemnity agreements with individual directors, officers, employees and other
agents. The Registrant has entered into indemnity agreements with all of its
directors and officers providing the maximum indemnification permitted by law,
subject to certain exceptions. These agreements, together with the Registrant's
Bylaws and Articles, may require the Registrant, among other things, to
indemnify these directors or officers against certain liabilities that may arise
by reason of their status or service as directors or officers and to advance
expenses to them as such expenses are incurred (provided that they undertake to
repay the amount advanced if it is ultimately determined by a court that they
are not entitled to indemnification). As authorized by the registrant's Bylaws,
the Registrant, with approval by the Registrant's Board of Directors, has
applied for, and expects to obtain, directors' and officers' liability insurance
with a per claim and annual aggregate coverage limit of up to $5,000,000.
Section 317 of the California Code makes provisions for the indemnification
of officers, directors and other corporate agents in terms sufficiently broad to
indemnify such persons, under certain circumstances, for liabilities (including
reimbursement of expenses incurred) arising under the Securities Act.
II-1
<PAGE> 18
The indemnification provision in the Bylaws, and the indemnity agreements
entered into between the Registrant and its directors and executive officers,
may be sufficiently broad to permit indemnification of the Registrant's
directors and executive officers for liabilities arising under the Securities
Act.
Reference is made to the following documents filed as exhibits to the
Registrant's initial Registration Statement on Form SB-2 (File No. 333-4910-LA)
regarding relevant indemnification provisions described above:
<TABLE>
<CAPTION>
DOCUMENT EXHIBIT NUMBER
-------- --------------
<S> <C>
Registrant's Amended and Restated Articles of Incorporation........ 3.01
Registrant's Bylaws....................................... 3.04
Form of Indemnity Agreement............................... 10.10
</TABLE>
ITEM 16. EXHIBITS.
The following exhibits are filed herewith or incorporated by reference
herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<S> <C> <C>
2.01 -- Acquisition Agreement dated as of March 26, 1997 by and between
registrant and ISAR-Vermogensverwaltung Gbr mbH ("ISAR")(1)
4.01 -- [intentionally omitted]
4.02 -- Preferred Stock Purchase Agreement, dated as of April 27, 1994,
as amended(2)
4.03 -- Share Purchase Agreement, dated as of July 30, 1998
5.01 -- Opinion of Fenwick & West LLP regarding the legality of the
securities being issued+
23.01 -- Consent of Arthur Andersen LLP, Independent Auditors
23.02 -- Consent of Fenwick & West LLP+
24.01 -- Power of Attorney+
</TABLE>
- ----------
(1) Incorporated by reference to the registrant's Current Report on Form 8-K
filed with the Securities and Exchange Commission on April 10, 1997
(2) Incorporated by reference to the registrant's Registration Statement on
Form SB-2 (file number 333-4910-LA) filed with and declared effective by
the Securities and Exchange Commission on July 17, 1996.
+ Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
pursuant to this Registration Statement, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement (notwithstanding the foregoing, any increase or
decrease in volume or securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
II-2
<PAGE> 19
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement); and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by
paragraphs (1)(i) or (1)(ii) is contained in any periodic report filed with
or furnished to the Securities and Exchange Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all for the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California, on the 12th day
of May, 1999.
VERSANT CORPORATION
By: /s/ Gary Rhea
-------------------------------------
Gary Rhea
Vice President -- Finance and
Administration
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
PRINCIPAL EXECUTIVE OFFICER:
<S> <C> <C>
/s/ *
- ---------------------------- President, Chief Executive May 12, 1999
Nick Ordon Officer and Director
PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER:
/s/ Gary Rhea
- ---------------------------- Vice President--Finance May 12, 1999
Gary Rhea and Administration
ADDITIONAL DIRECTORS:
- ---------------------------- Director
Mark Leslie
/s/ *
- ---------------------------- Director May 12, 1999
Stephen J. Gaal
/s/ *
- ---------------------------- Director May 12, 1999
James Simpson
/s/ *
- ---------------------------- Director May 12, 1999
David Banks
*By /s/ Gary Rhea
------------------------
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<S> <C> <C>
2.01 -- Acquisition Agreement dated as of March 26, 1997 by and between
registrant and ISAR-Vermogensverwaltung Gbr mbH ("ISAR")(1)
4.01 -- [intentionally omitted]
4.02 -- Preferred Stock Purchase Agreement, dated as of April 27, 1994,
as amended(2)
4.03 -- Share Purchase Agreement, dated as of July 30, 1998
5.01 -- Opinion of Fenwick & West LLP regarding the legality of the
securities being issued+
23.01 -- Consent of Arthur Andersen LLP, Independent Auditors
23.02 -- Consent of Fenwick & West LLP+
24.01 -- Power of Attorney+
</TABLE>
- ----------
(1) Incorporated by reference to the registrant's Current Report on Form 8-K
filed with the Securities and Exchange Commission on April 10, 1997
(2) Incorporated by reference to the registrant's Registration Statement on
Form SB-2 (file number 333-4910-LA) filed with and declared effective by
the Securities and Exchange Commission on July 17, 1996.
+ Previously filed.
II-5
<PAGE> 1
EXHIBIT 4.03
SOFT MOUNTAIN S.A.
SHARE PURCHASE AGREEMENT
by and between
VERSANT CORPORATION
and
SC FINORIS
RHONE - ALPES CREATION
TRINOVA
MR. GUILLAUME DOUMENC
MRS. ANNE DOUMENC
MR. ANDRE MAY
MME CLAIRE DEMENGEOT
MR. FRANCIS LORENTZ
MR. ROGER POTTLITZER
dated as of July 30, 1998
<PAGE> 2
THIS AGREEMENT is made and entered into this 30th day of July 1998, by and
between
VERSANT CORPORATION, a California Corporation having its principal office at
6539 Dumbarton Circle, Fremont, California, 94555 United States, represented by
Bernhard Woebker, in his capacity as Vice President
(hereinafter referred to as "Buyer")
ON THE ONE HAND,
AND
SC FINORIS, a societe civile with a capital of 20,000 FF with its registered
office at 5, allee Moulin Berger, Ecully, registered with the Registry of
commerce and Companies of Lyon, under the number D 409 421 484 duly represented
by Messrs Andre May and Guillaume Doumenc, go-gerants
RHONE-ALPES CREATION, with its registered office at Immeuble Midas, registered
with the Registry of Commerce and Companies, under the number B 352 014 559,
duly represented by Guy Rigaud, in his capacity as President du Directoire
TRINOVA, with its registered office at 17, avenue Charles de Gaulle, 69370
Saint Didier au Mont D'Or, registered with the Registry of Commerce and
Companies of Lyon, under the number 411 877 657 duly represented by
Jean-Jacques Delorme, in his capacity as President du conseil d'administration
MR. GUILLAUME DOUMENC, domiciled at 24, Chemin de la Guillere, 69570 Dardilly
MRS. ANNE DOUMENC, domiciled at 24, Chemin de la Guillere, 69570 Dardilly
MR. ANDRE MAY, domiciled at 23, route de Champagne 36, domaine de castellard,
69370 Saint-Didier au Mont d'Or
MRS. CLAIRE DEMENGEOT, domiciled at 23, route de Champagne, 36 domaine de
castellard, 69370 Saint-Didier au Mont d'Or
MR. FRANCIS LORENTZ, domiciled at 45, rue St Roc, 75001 Paris
MR. ROGER POTTLITZER, domiciled at 27, route de la Plaine, 78110 Le Vesinet
(hereinafter referred to collectively as "Sellers" and individually as a
"Seller")
ON THE OTHER HAND
<PAGE> 3
3
<PAGE> 4
WHEREAS
Soft Mountain S.A. was created for the purpose of developing software based on
reactive technology, issued partly from research and developments conducted at
INRIA by founders of Soft Mountain.
Thereafter, Soft Mountain S.A. has developed new technology and software,
which are different from the one previously developed.
This new technology and software has had success on the market, with in
particular great interest from France Telecom, IBM and Lotus.
At the suggestion of France Telecom, Versant showed interest in the acquisition
of Soft Mountain.
In the course of the financial and legal audit conducted by Buyer for the period
from April to June 15, 1998, Buyer has received and reviewed all documents
listed in the Schedules of this agreement.
The shareholders of Soft Mountain had decided that it was a good opportunity to
sell the company to Versant, due to the fact that Soft Mountain under the
ownership of Versant would be well equipped to continue the relationship with
France Telecom, Lotus/IBM and develop the activity of the company, and also due
to the fact that Soft Mountain was in a difficult cash situation, and needed a
strong shareholder to support the company. The Sellers remitted to Buyer the
financial statements of Soft Mountain as of December 31, 1997 (9 months), March
31, 1998 (12 months), and June 15, 1998 (2 months and 15 days) (together, the
"Financial Statements").
Sellers own fourteen thousand two hundred and forty nine (14,249) shares
representing all shares of Soft Mountain S.A. (the "Shares"), a French societe
anonyme with a statutory capital (capital social) of 1,424,900 French francs
with its registered office at Technoparc, 5 allee Moulin Berger, 69130 Ecully,
and which is registered with the Registry of Commerce and Companies of Lyon
under the number 403 906 092 ("Soft Mountain");
SC Finoris is the owner of nine thousand nine hundred and ninety four (9,994)
Shares.
Rhone-Alpes Creation is the owner of one thousand seven hundred and fifty
(1,750) Shares.
Trinova is the owner of two thousand four hundred and ninety nine Shares
(2,499) Shares.
Mr. Guillaume Doumenc, Mrs. Anne Doumenc, Mr. Andre May, Mrs. Claire Demengeot,
Mr. Francis Lorentz and Mr. Roger Pottlitzer are each the owner of one (1)
Share.
4
<PAGE> 5
Sellers having informed Buyer of their wish to sell their Shares and Buyer
having advised Sellers of its interest in such transaction, Buyer and Sellers
entered into a letter agreement, dated June 16, 1998, describing the terms of
the contemplated transaction. Buyer and Sellers agreed in particular that the
transfer of Shares would be effective July 1, 1998.
Since this date both Buyer and Seller have confirmed their wish to enter into a
share purchase agreement, which supersedes and replaces the June 16, 1998
letter agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree
as follows:
SECTION 1 - PURCHASE AND SALE OF SHARES
1.1 Shares transferred. Subject to complete fulfillment of the provisions
of Section 1.9 hereof Sellers sell and transfer the Shares to Buyer,
and Buyer purchases and accepts them from Sellers.
1.2 Purchase Price - Payment of Purchase Price. In a letter agreement
dated June 16, 1998, which is attached hereto as Schedule 1.2, and the
terms of which are superseded and replaced by the present Agreement,
the Parties had decided on a Purchase Price of seven million French
francs (FF. 7,000,000.00), subject to adjustment based on liabilities
of Soft Mountain as of June 15, 1998 in excess to a certain level. As
per the auditors report dated July 10, 1998, a copy of which is also
attached on Schedule 1.2, the parties accept that there is no
adjustment to be done with respect to the June 15, 1998 financials.
The purchase price (the "Purchase Price") for all of the shares of
Soft Mountain S.A. is therefore of seven million French francs (FF.
7,000,000.00). Further to additional negotiation, Buyer has accepted
to waive the escrow clause and to calculate the price of the Versant
shares on the basis of 4.2 US dollars per share.
The Purchase to be paid on Closing (as defined in Section 5) is as follows:
(a) partly in cash, in an amount of eight hundred ten thousand French
francs (FF. 810,000.00),
(b) partly in kind by delivering two hundred forty five thousand
five hundred and eighty six 245,586 shares ("Versant Shares") of
Buyer common stock ("Versant Common Stock"). This number of
Versant Shares has been obtained by dividing six million one
hundred ninety thousand French francs (FF. 6,190,000.00)
5
<PAGE> 6
(Purchase Price minus amount paid in cash as provided under section
1.2.a) above by 4.2 converted into French francs, using an exchange
rate of 6.0012 French francs for one US Dollar.
The Purchase Price, in cash and in Versant Shares, shall be allocated among
Sellers as set forth on Schedule 1.2.
1.3 Registration.
(a) Buyer agrees to use reasonable efforts to file a registration
statement on Form S3 (or another appropriate form) with respect to the
resale by Sellers of the Versant Shares (the "Registration Statement")
with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"), before
September 30, 1998 at the latest and to use reasonable efforts to
cause the Registration Statement to become effective as soon as
practicable thereafter, and at the latest at the first of the
following two dates: (i) date on which the registration statement
based on the equity investment contract presently being negotiated
with Citadel shall become effective, and (ii) December 31, 1998;
provided that Buyer shall not be responsible for any failure to cause
such Registration Statement to become effective that results from the
failure of any Seller to provide to Buyer such information or
documents as Buyer requests in order to comply with the Securities Act
or regulations of the SEC.
(b) Buyer shall use reasonable efforts to keep the Registration Statement
effective and to comply with the provisions of the Securities Act with
respect to the disposition of all of such Versant Shares registered
thereunder until one (1) year from the date the Registration Statement
has become effective.
(c) Notwithstanding anything to the contrary set forth in this Agreement,
Buyer's obligations under this Section 1.3 to file the Registration
Statement and to use its reasonable efforts to cause the Registration
Statement to become effective shall be suspended in the event and
during such period as Versant determines, based upon the advice of
outside counsel, that unforeseen circumstances (including without
limitation pending negotiations relating to, or the consummation of, a
transaction or the occurrence of any other event) would require
additional disclosure of material information by Buyer in the
Registration Statement the confidentiality of which Buyer has a bona
fide business purpose to preserve or which unforeseen circumstances
would render Buyer unable to comply with SEC requirements (in either
case, a "Suspension Event"). The suspension of Buyer's obligations in
accordance with the preceding
6
<PAGE> 7
sentence shall exist for only so long as any such suspension
exists for other similarly restricted stockholders of Buyer.
Buyer shall notify Sellers, on a confidential basis, promptly in
writing of the existence of any Suspension Event. In the case of
any Suspension Event occurring prior to the filing of the
Registration Statement, Buyer shall be required to file the
Registration Statement as soon as practicable after the
conclusion of the Suspension Event. In the case of any
Suspension Event occurring after effectiveness of the
Registration Statement, Buyer shall be required to keep the
Registration Statement effective for one (1) year from the date
it has become effective.
(d) Following the effectiveness of the Registration Statement, each
Seller agrees that it will not effect any sales of Versant
Shares at any time after he has received notice from Buyer to
suspend sales as a result of a stop order or the occurrence or
existence of any Suspension Event or so that Buyer may correct
or update the Registration Statement. Sellers may recommence
effecting sales of Versant Shares following further notice to
such effect from Buyer, which notice shall be given by Buyer
promptly after the withdrawal of any stop order or the
conclusion of any such Suspension Event.
(e) Upon the effectiveness of the Registration Statement, Buyer
shall, as promptly as practicable, furnish to each Seller such
number of conformed copies of the Registration Statement and of
each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus
contained in the Registration Statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such
other documents, as any Seller may reasonably request in order
to facilitate the public sale or other disposition of the
Registered Securities owned by Sellers.
(f) Buyer shall bear all registration expenses in connection with
each Registration Statement including legal expenses of Sellers
not to exceed ten thousand dollars (10,000 USD) in the
aggregate, other than (i) any underwriting discounts and
commissions or stock transfer taxes applicable to the Registered
Securities and (ii) any fees or expenses incurred by any Seller
for brokerage, accounting, tax, legal services (except as stated
above) or any other expenses incurred by any Seller in taking
possession of or disposing of the Versant Shares.
(g) In the event that Buyer is unable to register the Versant Shares
by
7
<PAGE> 8
December 31, 1998, and if this is due to a reason other than the
failure of any Seller to provide to Buyer such information and
documents as Buyer requests in order to comply with the
Securities Act or regulations of the SEC, then in such event
Buyer has the obligation to pay to Sellers an amount of six
million one hundred ninety thousand French francs (FF.
6,190,000.00) in cash, at the latest on January 31, 1999, and in
return for the shares provided to Sellers. Also, Versant agrees
that until such date on which the Versant Shares shall be
registered, or Versant has paid in cash the price to Sellers,
Versant will pledge the Shares, and will not sell Soft
Mountain's software business activity ("fonds de commerce"). For
clarification purposes, it is expressed that this will not
prevent Soft Mountain from concluding commercial contracts
regarding its software and general activity. Versant will
execute a consulting agreement with Soft Mountain to provide for
payment for all consulting services provided by Soft Mountain as
part of the Primevere contract currently negotiated with France
Telecom and IBM/Lotus to be executed on July 31, 1998.
1.4. Number of Versant Shares. Versant agrees not to increase the number
of Versant Shares by more than twenty per cent (20%) between the
date hereof and September 30, 1998, except under a very remote
possibility under the capital investment deal presently being
entered into between Versant and Citadel, the terms of which have
been presented to the Sellers.
1.5. Sellers' Investment Intent. Each Seller represents that the Versant
Shares being purchased by Seller are being purchased for his or its
own account, for investment for an indefinite period of time, not as
nominee or agent for any other person, firm or corporation and not
for distribution or resale to others in contravention of the
Securities Act and the rules and regulations promulgated thereunder.
Each Seller agrees that he or it will not sell or otherwise transfer
the Versant Shares unless they are registered under the Securities
Act or unless an exemption from such registration is available.
1.6. Securities Legend; Stop Transfer Instructions. Each Seller consents
to the placement of a legend on any certificate or other document
evidencing any of the Versant Shares, stating that such Versant
Shares have not been registered under the Securities Act or any
state securities or "blue sky" laws and setting forth or referring
to the restrictions on transferability and sale thereof, including
the restrictions set forth herein. Each Seller is aware that Buyer
will make a notation in its appropriate records with respect to the
restrictions on the transferability of such Versant Shares. Each
Seller also consents and acknowledges that "stop transfer"
instructions may be noted against the Versant Shares received by any
Seller as consideration thereunder. Buyer hereby undertakes to
remove any legend described in
8
<PAGE> 9
this Section 1.6, or to rescind any "stop transfer" instructions described
in this Section 1.6. as to Seller's Versant Shares (a) if such Seller
furnishes Buyer with an opinion of counsel or other written information
satisfactory in form and content to Buyer that such legend or any such
instructions are no longer required (as applicable) to such Seller's
Versant Shares or (b) with respect to and at the time of the disposition
of any such Versant Shares pursuant to an effective registration statement
under the Securities Act, including the Registration Statement.
1.7. Sellers' Letters. To ensure compliance with the Securities Act, each
Seller commits to deliver to Buyer on Closing a letter, in the form
attached hereto as Schedule 1.7. (the "Sellers' Letters"), agreeing, among
other things, that Seller will not sell, pledge, transfer or otherwise
dispose of any of the Versant Shares received as consideration pursuant to
Section 1.2 hereof, except in compliance with Rule 144 under the
Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act or an effective registration statement
under the Securities Act. Sellers who shall be working with Versant or
Soft Mountain shall also be requested to deliver to Buyer on Closing a
letter, in the form attached also as Schedule 1.7 summarizing rules
applicable to employees and consultants.
1.8. INTENTIONALLY LEFT EMPTY
1.9. Deliveries by Sellers.
On or before Closing, Sellers deliver to Buyer the following:
(a) duly executed and completed share transfer orders (ordres de
mouvement) in favor of Buyer for the Shares;
(b) the minutes of a duly held meeting of the Board of Directors of Soft
Mountain, and notice to the statutory auditor (i) approving Buyer and
designees of Buyer listed in Schedule 1.9 b) as new shareholder, and
(ii) calling a shareholders' meeting for August 10, 1998 to elect the
three new directors listed in Schedule 1.9. b); and the minutes of
the shareholders meeting approving the accounts for fiscal year
ending March 31, 1998:
(c) the minutes of duly held meetings of the shareholders of Finoris, the
board of Trinova and of Rhones-Alpes Creation authorizing the
transaction contemplated herein;
(d) duly signed original of the up to date "statuts" of the Company;
9
<PAGE> 10
(e) duly completed and signed official Soft Mountain registries
(minutes of shareholders meetings, minutes of Board of Directors
meetings) with the attendance books and attendance sheets,
shareholders account documents and registry of transfers;
original of statutory auditor's reports;
(f) a letter from the Company's statutory auditor confirming that the
financial statements of Soft Mountain as of March 31, 1998 (12
months) are true and correct (sincere et veritable);
(g) the written resignations of all directors of Soft Mountain from
their positions as directors, effective as of August 10, 1998;
and of Mr. Doumenc from his office of Chairman of the board;
(h) an opinion of counsel to Sellers attached on Schedule 1.9.(h)
hereto regarding Soft Mountain's intellectual and industrial
property rights;
(i) a letter from INRIA in the form attached hereto, in Schedule
1.9(i), acknowledging that they do not have any rights over the
technology and the software used by Soft Mountain, listed on
Schedule 1.9.(i) and confirming that they waive their right to
obtain any royalty and to obtain Soft Mountain shares;
(j) the Sellers' Letters described under section 1.7. of the
Agreement;
(k) a resignation letter signed by Mr. Guillaume Doumenc for his
duties as employee of Soft Mountain, reflecting the terms of
Section 4.2.b below;
(l) a letter by GDO Sarl providing for termination of the agreement
concluded with Soft Mountain, reflecting the terms of Section
4.2.b below;
(m) such other instruments or documents as may be reasonably
necessary to carry out the transactions contemplated by this
Agreement and to comply with the terms hereof.
1.10. Deliveries by Buyer. On the date hereof, Buyer delivers:
(a) to Sellers (i) stock certificates evidencing two hundred fourty
five thousand five hundred and eighty six (245,586) of the
Versant Shares, issued to the Sellers in accordance with the
percentages on Schedule 1.2; and (ii) checks in the total amounts
of eight hundred ten thousand French Francs (810,000.00 FF),
issued in accordance with the percentages on Schedule 1.2;
10
<PAGE> 11
(b) such other instruments or documents as may be reasonably
necessary to carry out the transactions contemplated by this
Agreement and to comply with the terms hereof.
SECTION 2 -- REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby make the representations and warranties set forth in this
Section 2. For the purposes hereof, "knowledge of Seller" shall include matters
known to Sellers or Soft Mountain or which should reasonably be known to them.
When reference is made to any event, change or effect having a Material Adverse
Effect, this reference shall mean that this event, change or effect materially
harms the business, operations, prospects, assets (including intangible
assets), liability (including contingent liabilities), financial situation or
operation profits of Soft Mountain.
2.1 Corporate Organization. Soft Mountain is a societe anonyme duly
organized and validly existing under French law. All transactions
leading to the creation of Soft Mountain and the constitution of
assets and activity have been done in accordance with French law.
Soft Mountain has the corporate power and authority to own or lease
its properties and to carry on its business in the manner in which
it is currently conducted. Soft Mountain does not, directly or
indirectly, have any equity interest or other property interest in
any company, joint venture, partnership, association or other
entity. Complete and correct copies of the certificate of
incorporation and by-laws (the "Constitutive Documents") are
attached on Schedule 2.1. Soft Mountain has not stopped making
payments, declared a moratorium on payments of its debts, is not in
bankruptcy or reorganization or liquidation, has not entered into an
assignment for the benefit of its creditors and has not become
subject to any reorganization procedure. Buyer understands from
Sellers that technically Soft Mountain could be qualified under
French law to be in "cessation des paiements". Buyer waives his
right to sue Sellers on that basis, as long as the Financial
Statements are accurate and that the situation since June 15, 1998
did not deteriorate more than what could be expected on the basis of
the existing trend.
2.2. Authorization. Sellers have the requisite capacity to enter into
this Agreement and the other agreements to be executed and delivered
by the Sellers pursuant hereto and to carry out the transactions
contemplated hereby and thereby. When fully executed and delivered,
this Agreement and all related agreements will constitute the valid
and binding agreements of Sellers, enforceable against Sellers in
accordance with their respective terms.
2.3. Capitalization and Shares. As of the date of this Agreement, the
capital of Soft Mountain is as set forth in the preamble to this
Agreement. All the
11
<PAGE> 12
Shares have been validly issued and are fully paid, non assessable and
are free of any lien, preemptive rights or other restrictions with
respect thereto. The Shares are fully owned by Sellers as set out in
the table in the preamble to this Agreement. There is no agreement or
commitment which could result in Soft Mountain having to purchase,
amortize, issue or transfer the Shares in any manner whatsoever. By
signing this contract, Sellers confirm that any and all agreements
existing between the Sellers or part of them, are terminated, and that
none of the Sellers will involve any breach by another Seller of its
obligations under any such agreement.
2.4. Consents and Approvals; Non-Contravention. Neither the execution,
delivery or performance of this Agreement or of any related
documents, nor the consummation by Sellers of the transactions
contemplated hereby or thereby, nor compliance by Sellers with any of
the provisions hereof or thereof:
(a) violates any provision of the Constitutive Documents,
(b) requires on the part of Sellers or Buyer any filing with, or
permit, authorization, consent or approval of, any court,
trustee in bankruptcy ("administrateur judiciaire"),
administrative or other authority (a "Governmental Entity"),
(c) require, in accordance with the terms of any contract, lease or
other agreement to which a Seller or Soft Mountain is a party,
any consent, filing approval or authorization,
(d) violate any judicial or arbitral decision, or any legal
regulatory or contractual provision applicable to Sellers or
Soft Mountain, or
(e) may result in a material violation or material breach of any
agreement or result in the termination, modification,
cancellation, non renewal loss of a material benefit, or result
in the creation or imposition of any lien upon any of the
respective properties or assets of a Seller or Soft Mountain.
2.5. Financial Statements. The Financial Statements, which are attached as
Schedule 2.5 are complete, sincere and true, prepared in accordance
with generally applicable accounting principles in France and under
the same methods, and accurately reflect the asset and liability
situation of Soft Mountain at each of the dates and for each period
indicated.
2.6. Interim Change. Since March 31, 1998, Soft Mountain has not engaged
in any business or transaction other than in the ordinary course of
business. In particular (but without this list being exclusive):
12
<PAGE> 13
(a) Soft Mountain has not suffered any change, nor has there arisen
any event, having or which could reasonably be expected to have
a Material Adverse Effect;
(b) Soft Mountain has not forgiven or canceled any debts or claims
or waived, released or relinquished any contract right or any
other rights of its business;
(c) Soft Mountain has not consented to, or has not had imposed on it,
any liens;
(d) Soft Mountain has not suffered any damage, destruction or loss
of property, whether or not covered by insurance, which could
reasonably be expected to have a Material Adverse Effect;
(e) Soft Mountain has not accelerated the collection of, granted any
discounts with respect to or sold or assigned to third parties
any accounts receivable or delayed the payment of any payables
or, other than in the ordinary course of business and consistent
with past practice, had any reason to write off as uncollectable
any accounts receivable or any portion thereof;
(f) Soft Mountain has not assumed any loan, directly or indirectly,
(with the exception of the loan taken from Versant France) or
incurred or guaranteed any obligation with regards to a loan, or
made any loans, advances or capital contributions to, or
investment in, any other individual, corporation, partnership,
joint venture, association, organization or other entity (a
"Person"),
(g) Soft Mountain has not pledged or subjected to any lien, sold,
assigned or transferred any asset except for sales of inventory
in the ordinary course of business and consistent with past
practice;
(h) Soft Mountain has not increased in any manner the wages,
salaries, bonuses, pension plans, retirement allocations or
other allocations of any director, employee or other person,
(i) Soft Mountain has not amended any existing, or entered into, any
additional pension, profit-sharing, bonus, severance pay, or
other schemes relating to retirement of other benefits,
(j) Soft Mountain has not entered into any employment or consulting
agreement with any person, nor modified existing terms of such
agreements,
13
<PAGE> 14
(k) Soft Mountain has not made any investment in any business,
company, partnership, association or other entity.
(l) Soft Mountain has not declared, paid or set aside for payment any
dividend or other distribution;
(m) Soft Mountain has not made any change in its accounting
principles or methods, except as may have been required by a
change in generally accepted accounting principles in France;
(n) no employee has notified Soft Mountain or Sellers of its
intention to resign from its position, and no employee has been
terminated with the exception of Mr. Beral.
2.7. No Undisclosed Liabilities. Except as and to the extent of the
amounts specifically reflected or reserved against in the
Financial Statements, Soft Mountain has not incurred any
liabilities or obligations of any nature (whether or not
accrued). As of the date hereof there exists no shareholder
advances owed by Soft Mountain nor any contract entered into
directly or indirectly with shareholders of Soft Mountain.
2.8. Litigation. There is no claim, action, suit, inquiry or
investigation by or before any judicial entity pending or, to the
knowledge of Sellers, threatened against or involving Soft
Mountain or affecting any of its assets products or activity.
There is no basis known to the Seller for any such claim, action,
suit, inquiry, or investigation. The only two exceptions are the
following:
- (i) the employees of the Company pretend that they are eligible
to obtain shares of Soft Mountain S.A. or proceeds from the sale
of such shares; Sellers have found an agreement with the
employees under which they accept as full and final settlement
for such claim the payment of an amount equal to the value of 4%
of the shares of Soft Mountain. Sellers commit that a cash amount
of two hundred and eighty thousand (280,000) francs will be used
to satisfy the Sellers' obligations to distribute 4% of the
purchase price to the current Soft Mountain's employees and that
such amount shall be paid under Seller's responsibility at the
latest two weeks after Closing.
- (ii) Mr. Beral has contested his termination. Upon termination,
Mr. Beral received the amount to be paid under French law upon
termination and now requests from the Company the payment of an
additional three months of notice and one month of severance
payment. A settlement agreement, a copy of which is in Schedule
2.8, has been signed between Soft Mountain S.A. and Mr. Beral.
Buyer will make sure that Soft Mountain honors such agreement on
due time.
14
<PAGE> 15
2.9. No Violation.
(a) Soft Mountain, its directors and employees have always acted
within the corporate purpose of Soft Mountain and in
accordance with French law, and with contractual obligations.
Soft Mountain's directors have not exceeded their internal
limitations of powers.
(b) Sellers and Soft Mountain have complied with any and all
obligations with regard to any contract or agreement entered
into by Soft Mountain.
(c) Soft Mountain has all authorizations (from Governmental Entity
or other authority) necessary to: (i) enable it conduct its
business as currently conducted and, if necessary (ii) to
enter into all transactions contemplated by this Agreement.
2.10. Title to Assets. Soft Mountain does not own any real property
assets. Soft Mountain has good and marketable title, free and clear
of all liens, any pledge or other security, of all assets, rights,
trademarks, trade names, licenses and properties, which are used in
the conduct of the business conducted by Soft Mountain (the
"Assets"). Soft Mountain has valid and enforceable leases or
licenses, as the case may be, with respect to the Assets consisting
of property that is leased or licensed to Soft Mountain, under which
there does not exist any default, on the part of Soft Mountain.
Since inception, Soft Mountain has validly entered into and, as the
case may be, has validly and legally terminated any lease agreement
used for carrying on its business activities.
2.11. Intellectual Property.
(a) A true and complete list, of all the industrial and
intellectual property rights owned by Soft Mountain (the
"Owned Intellectual Property") and licensed to it (the
"Licensed Intellectual Property") is contained in Schedule
2.11(a). The Intellectual Property described in Schedule
2.11(a) constitutes all Intellectual Property necessary to
operate Soft Mountain's business activity, as currently
planned or as planned to be conducted. The Owned Intellectual
Property is duly and validly registered under Soft Mountain's
name and all fees for recordation or renewal have been timely
paid by Soft Mountain.
(b) Except as described on Schedule 2.11.(b), Soft Mountain is the
owner of, and has the sole and exclusive right to use, sell,
license, dispose of the Owned Intellectual Property, and has
not delegated nor assigned any of such rights with the
exception of the licenses to use granted to customers in
normal course of business.
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(c) Except as described on Schedule 2.11.(c), Soft Mountain has the
exclusive right to bring any actions for any infringement of the
Licensed Intellectual Property.
(d) Except for those listed on Schedule 2.11(d) there are no royalties,
fees or other payments payable by Soft Mountain to any Person by
reason of ownership, use, license, sale or disposition of any Owned
or Licensed Intellectual Property.
(e) The transfer of all Shares to Buyer, will not in any way impair the
right of Soft Mountain to use, sell, license or dispose of, or any
portion thereof, or to bring any action for the infringement of any of
such rights to the Owned or Licensed Intellectual Property.
(f) None of the former or present employees, consultants or directors of
Soft Mountain or their predecessors hold any right, title or
interest, directly or indirectly, in whole or in part, in or to any
Owned Intellectual Property.
(g) There is no pending or threatened claim or litigation challenging or
questioning the validity, ownership or right to use, sell, license or
dispose of any Owned or Licensed Intellectual Property nor, to the
knowledge of Sellers a valid basis for such claim or litigation.
(h) Software presently used and/or commercialized by Soft Mountain S.A.
belongs to Soft Mountain S.A. Neither CMA, nor any other company
(with the exception of France Telecom, as indicated below) has any
right whatsoever with regard to the Software presently used and/or
commercialized by Soft Mountain. CMA has some limited right to the
reactive C software tool which was developed and is not any more used
or commercialized. None of the software on which CMA, or any other
company may have a claim has been or is being used in any of the
software presently used and/or commercialized by Soft Mountain. AS
far as France Telecom, Sellers confirm that the situation did not
change since the date of issuance of the opinion listed in Schedule
1.9.(h).
2.12. Contract and Commitments.
A detailed and exhaustive list of all contracts entered into by Soft Mountain is
attached on Schedule 2.12. Other than those listed on such Schedule 2.12, Soft
Mountain has not:
(a) entered into any collective bargaining agreements or employment
related collective contract or "accord",
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(b) entered into any agreement that contain any specific benefits (i.e.,
providing benefits in excess to those applicable by law and by
applicable regulations), severance liabilities or obligations,
(c) entered into any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other employee
benefit plans or arrangements,
(d) entered into any employment or consulting agreement, contract or
commitment with an employee or individual consultant or sales person
or consulting or sales agreement, contract or commitment with a firm
or other organization, not terminable on the minimum notice periods
permitted under French law, except to the extent general principles of
French employment law may limit Soft Mountain's ability to terminate
employees,
(e) entered into fixed term commercial contract for a duration superior to
one year.
(f) entered into a credit agreement, loan agreement (except the one
entered with Versant Object Technology SARL on July 15, 1998),
financial facility agreement with any financial institution or third
party.
(g) received any financial benefit, investment or subsidy granted by any
public agency or company.
(h) except as required by law, have any pension, profit-sharing, bonus,
severance pay, retirement, hospitalization, insurance, stock purchase,
stock option or other benefit with or for the benefit of any Person (a
"Benefit Plan"). Benefit Plans are for the minimum amount required by
law.
(i) entered into a fixed-term employment agreement nor any on interim
contract.
(j) entered into outstanding loans agreements to Sellers or employee.
(k) guaranteed any obligations of Sellers or any other person. Sellers
have not guaranteed any obligations of Soft Mountain which would still
be in effect after the date hereof.
(l) entered into any contract which is material to its business,
operations or prospects or any other contract, instrument,
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commitment, plan or arrangement which has not been made in
the ordinary course of business.
(m) entered into any contract, which will or can be terminated
or significantly modified by reason of transfer of Shares to
Buyer.
2.13. Customers and Suppliers. There has not been any adverse change in
the business relationship of Soft Mountain with any customer or
supplier since January 1, 1998. All contracts for more than fifty
thousand French francs (50,000.00 FF) are listed on Schedule
2.13.
2.14. Insurance. Soft Mountain has valid insurance policies which
adequately cover all the risks against which it is normal to
insure considering the activities of Soft Mountain. There has
not been any failure to give any notice or present any claim
under any such policy in a timely fashion or in the manner or
detail required by the policy. There are no outstanding past due
premiums or claims, and there are no provisions for retroactive
or retrospective premium adjustments. No notice of cancellation
or non-renewal with respect to, or disallowance of any claim
under, any such policy has been received by Soft Mountain.
2.15. Environmental Matters. Soft Mountain is not in breach of any
environmental regulations.
2.16. Labor Law Matters.
(a) Soft Mountain has been in full compliance with French labor law
legislation and the applicable collective bargaining agreement.
Soft Mountain has complied with the legal obligations relating
to the setting-up and functioning of personnel representative
bodies;
(b) Attached in Schedule 2.16.b is a list of all Soft Mountain
employee as of the date hereof, with an indication of the salary
and all other benefits, the exact position and accrued rights
and benefits (referred to collectively as the "Personnel
Information");
(c) The Personnel Information contains accurate, complete and
updated information as of the date hereof.
(d) No current or past employee of Soft Mountain, with the exception
of Mr. Vincent Beral (see Section 2.8), has any ground to claim
any sum or damage from Soft Mountain.
2.17. Taxes - Social security contributions.
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(a) All tax and social security returns, declarations, reports,
estimates, information returns, and statements (collectively, "Tax
and Social Security Returns") required to be filed by Soft Mountain
on or before the date hereof for all periods ending on or before the
date hereof have been timely filed, and all such Tax and Social
Security Returns are true, correct and complete.
(b) Soft Mountain has timely paid (or accrued in its accounts) all taxes
and social security contributions due or claimed to be due by it by
any taxing or social security authority in respect to periods (or any
portion thereof) ending on or before the date hereof, and no failure
in this regard may be attributed to it.
(c) No audited or other proceeding by any national, local court,
governmental, regulatory, para fiscal, administrative or similar
authority are presently pending with respect to any taxes or social
security contributions of Soft Mountain.
2.18 Accounts Receivable. All receivables of Soft Mountain arose in the
ordinary course of business and the aggregate amounts thereof, are
collectible (except to the extent reserved against as reflected in the
Financial Statements) and are carried at values determined in accordance
with French generally accepted accounting principles. None of the
receivables are subject to any claim of setoff, setoff or counterclaim and
there are no facts or circumstances that would give rise to any such
claim. No person has any lien, charge, pledge, security interest or other
encumbrance on any such receivables and no agreement for deduction or
discount has been made with respect to any of such receivables.
2.19 Minute Books. The fully completed and signed official Soft Mountain
registries (minutes of shareholders meetings, minutes of Board of
Directors meetings) with signed attendance sheets for the shareholders
meetings and attendance documents signed for the board of directors
meetings, shareholders account documents and registry of transfers;
original of statutory auditor's reports made available to Buyer contain
all minutes since Soft Mountain's incorporation as normally kept in
conformance with French law.
2.20 Representations Complete. None of the representations or warranties of
Sellers, nor any statement made in any Schedule, Exhibit or Additional
Sellers Document furnished pursuant to this Agreement, when read in their
entirety, contains or will contain any untrue statement of a material fact
at the date hereof, or omits or will omit to state any material fact
necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which made, not misleading, or not
incomplete.
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2.21 Soft Mountain Products and Technology. All products and technology
sold or licensed by Soft Mountain are free of any defects and comply
with the specifications made available to purchasers or licensees of
such products and/or technology. Soft Mountain has not received any
compliant regarding Soft Mountain's products or technology.
SECTION III - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
3.1. Corporate Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California.
3.2. Authorization. Buyer has the requisite corporate power and
authority to enter into this Agreement and the other agreements,
documents and instruments to be executed and delivered by Buyer
pursuant hereto (the "Additional Buyer's Documents") and to carry
out the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the
Additional Buyer's Documents and the consummation of the
transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Buyer, and no other
corporate proceedings on the part of Buyer or its stockholders are
necessary to authorize this Agreement and the Additional Buyer's
Documents and transactions contemplated hereby and thereby. When
fully executed and delivered, this Agreement and each of the
Additional Buyer's Documents will constitute the valid and binding
agreements of Buyer, enforceable against Buyer in accordance with
their respective terms.
3.3. Authorization and Issuance of Versant Shares. The issuance of the
Versant Shares has been duly authorized by Buyer and, upon delivery
to Seller of the certificate or certificates therefor against
receipt of the Shares being purchased by Buyer and the other
deliveries by Sellers pursuant to Section 1.9 hereof, the Versant
Shares will be validly issued, fully paid and non assessable, free
and clear of all Liens and restrictions other than the restrictions
imposed herein, on the certificate or certificates therefor or by
the Rules and Regulations.
3.4. Consents and Approvals; Non-Contravention. Neither the execution,
delivery or performance of this Agreement or any of the Additional
Buyer's Documents by Buyer nor the consummation by Buyer of the
transactions contemplated hereby or thereby nor compliance by Buyer
with any of the provisions hereof or thereof will (a) violate any
provision of the Certificate of Incorporation, or Bylaws of Buyer,
(b) require any filing with, or permit,
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authorization, consent or approval of, any Governmental Entity or
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer or any of its properties or assets.
SECTION 4 - CONVENIENCE OF SELLERS AND/OR BUYERS
4.1. Consents and Approvals. Buyer and Sellers agree to take all
reasonable actions (including delivering information, document and
affix signatures) to comply with the legal requirements necessary
to the consummation of the transactions contemplated herein, or the
registration or renewal of Owned and Licensed Intellectual Property
Rights.
4.2. Non-competition.
For a period of eighteen (18) months as from the date hereof:
(a) none of the Sellers shall directly or indirectly, solicit any
of the current or future employees of Soft Mountain or entice
such employees to leave their position with Soft Mountain.
(b) Mr. Guillaume Doumenc shall not engage, or continue to
engage, or hold any participation, directly or indirectly, in
the capital, voting rights or rights to profits of any
business, company or firm currently competitive or which may
become competitive with Soft Mountain; as used above, the
term "participation" shall not include an acquisition on an
exchange market of securities representing five percent (5%)
or less of the outstanding capital, voting rights or rights
to profits of a business, company or firm. If and when Buyer
and Mr. Guillaume Doumenc, or a company designated by him
sign a consulting agreement, containing a non compete clause,
that non compete clause will replace this clause, from the
date on which the consulting agreement shall become
effective. Mr. Guillaume Doumenc, hereby resign from his
duties of employee of Soft Mountain and confirms that the
existing contract between GDO Sarl will be terminated at no
cost to Soft Mountain. Such resignation and termination shall
be effective on the date on which the consulting agreement is
effective, and Soft Mountain will owe no money to either of
them, except the payment for services until the effective
resignation or termination date.
4.3. Confidentially. Except as required by applicable law or regulation,
the Sellers and Buyer undertake not to disclose, and to use their
best efforts to procure that none of their respective Affiliates,
directors, employees, officers or agents shall disclose, to any
Person, at any time for a period of two (2) years from the date
hereof, any confidential information,
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observations, data, written materials, records or documents which
may be disclosed or delivered in the course of the negotiations
of this Agreement or the other agreements referred to herein or
the actions taken pursuant hereto or thereto. In the event that
the transactions contemplated by this Agreement or the other
agreements referred to herein are not completed for any reason,
all such information shall be returned to Sellers or Buyer, as
relevant. This will however not prevent Buyer from using or
disclosing any information obtained with regard to Soft Mountain
and its operations. Sellers however must keep such information
confidential and shall not use it. Notwithstanding the
confidentiality obligation described in this paragraph, Sellers
agree that Versant can disclose the terms of the Agreement to
France Telecom and Lotus.
4.4. Specific assistance from Sellers. It is specifically agreed
that, in order to allow the new management of Soft Mountain to
exploit and use the technology and software of Soft Mountain,
each of Mrs. Guillaume Doumenc, Andre May and Roger Pottlitzer
shall be available for consultation by the management of Soft
Mountain for a period of three months from Closing. This
specific undertaking is given by those individuals in
consideration of the Purchase Price.
SECTION 5 - CLOSING
The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Kahn &
Associes, 9, rue Anatole de la Forge, 75017 Paris, at 10:00
o'clock a.m. on September 15, 1998, (or at such other place or
time as the parties mutually agree) (the "Closing Date"). At the
Closing, Sellers shall deliver to Buyer and Buyer shall deliver
to Sellers (unless delivered previously), the various documents
listed in this Agreement.
SECTION 6 - INDEMNIFICATION
6.1. Duration of the indemnification. The obligation of Sellers to
indemnify Buyer or Soft Mountain pursuant to this Section 6
shall expire on the third anniversary date of this Agreement,
except for such Losses (as defined below) incurred in relation
to taxes and social contribution matters, for which the
obligation of the Sellers to indemnify Buyer or Soft Mountain
thereunder shall only expire thirty (30) days after the
applicable statute of limitation has elapsed.
6.2. Indemnification. Buyer accepts not to have a recourse for
indemnification against any of Mr. Guillaume Doumenc, Mrs. Anne
Doumenc, Mr. Andre May, Mme Claire Demengeot, Mr. Francis
Lorentz, Mr. Roger Pottlitzer, taken in their individual
capacity. SC Finoris, Rhone-
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Alpes Creation and Trinova (the "Indemnifiers") agree to be bound for
the total amount of such indemnification (in the percentage of the
shares they own before the acquisition to the number of shares after
deducting the shares of the six individuals listed above).
Indemnifiers jointly and severally agree to indemnify and hold
harmless Buyer or, at the option of the latter, Soft Mountain, for
the period specified in Section 6.1 above against and in respect of
any direct and consequential loss, liability, damage, deficiency,
cost and expense (collectively, "Losses") incurred or sustained by
any of them as a result of any breach by any Seller of this
Agreement, including any breach or inaccuracy or omission in the
representations, warranties and covenants contained herein or in any
agreement, document or other instrument delivered pursuant hereto or
in connection herewith.
6.3 Threshold and exceptions. Indemnifiers shall not be required to
indemnify Buyer or Soft Mountain under this Section 6 unless and
until the aggregate Losses exceed one hundred thousand French francs
(FF. 100,000) in which case Indemnifiers shall be only responsible for
such Losses in excess of such amount. No investigation made by Buyer
or any of its advisers shall affect any representation or warranty of
Sellers contained in this Agreement or the indemnification obligation
of Indemnifiers set forth herein. Buyer agrees not to request
indemnification from Sellers in case the anticipated research tax
credit (credit d'impot recherche) shown in the Financial Statements,
cannot be recovered from the French tax authorities.
6.4 Procedure for Indemnification.
(a) For the purpose of this section, Indemnifiers hereby appoint
Finoris Societe civile, c/o Me Yves-Marie Ravet, Avocat a la
Cour, 3, rue du Bocador, 75008 Paris, as their sole agent and
representative (the < Indemnification Representative >)
(b) Buyer or, as the case may be, Soft Mountain, shall give written
notice within 30 days to Indemnification Representative of any
claim or event known to it which does give rise to a claim for
indemnification thereunder, provided that the failure of any of
Buyer or Soft Mountain to give notice as provided in this
Section 6.4 shall not relieve any of the Indemnifiers of its
obligations under this Section 6, except to the extent that such
failure has materially and adversely affected the rights of
Indemnifiers.
(c) In the case of any claim for indemnification thereunder arising
out of a claim, action, suit or proceeding brought by any person
who is not a party to this Agreement (a "Third Party Claim"),
Buyer or Soft Mountain shall also give the Indemnification
Representative copies of any written claims, process or legal
pleadings with respect to such Third Party Claim promptly after
such documents are received
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by Buyer or Soft Mountain.
(d) If the amount of any Losses shall, at any time subsequent to
payment pursuant to this Agreement, be reduced by recovery,
settlement or otherwise, the amount of such reduction, less
any expenses incurred in connection therewith, shall
promptly be repaid by the Buyer or, as the case may be, Soft
Mountain, to the Indemnifiers.
6.5 Remedies Cumulative. Buyer's remedies thereunder are cumulative
with any other remedies available under applicable law.
Indemnifiers hereby acknowledge and agrees that money damages
would not be a sufficient remedy for, and Buyer would be
irreparably harmed by, any breach by Indemnifiers of this
Agreement and that Buyer shall be entitled to such interim or
conservatory measures as may be available under applicable law.
6.6 Payments of amounts due
All amounts claimed by Buyer or Soft Mountain in a claim for
indemnification pursuant to Section 6.4 shall be paid by
Indemnifiers within thirty (30) days from the receipt of such
claim. Payments shall be made directly to Buyer or to Soft
Mountain, at the sole discretion of Buyer.
SECTION 7 - GENERAL PROVISIONS
7.1 Amendment. No amendment of any provision of this Agreement shall
in any event be effective, unless the same shall be in writing
and signed by the parties hereto.
7.2 Dispute Resolution. Any dispute, controversy or claim arising
out of or in connection with this Agreement shall be finally settled by
arbitration in Paris. In case of a dispute, the party deciding to resort to
arbitration shall inform the other by registered letter return receipt
requested, indicating the name of the arbitrator designated by it. The other
party shall have a period of 15 days from receipt of the above-mentioned letter
to proceed with the nomination of a second arbitrator. In the event of failure
to do so within this time period, the President of the Commercial Court of
Paris will do so at the request of the first party to so request, ruling as a
judge in summary proceedings ("refere"). The two arbitrators thus designated
shall name a third arbitrator within a period of 15 days from the date of
appointment of the second arbitrator. In the event of failure of the
arbitrators to agree upon a third arbitrator, this person will be named by the
President of the Commercial Court of Paris, will do so at the request of the
first party to so request, ruling as a judge in summary proceedings. The third
arbitrator thus appointed will chair the arbitral panel. In case an arbitrator
withdraws
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or is otherwise prevented from acting, he will be replaced following the
same method of nomination as that used for the arbitrator who withdraws or
is prevented from acting, and this shall be done within a period of one
month from his being prevented from acting or his withdrawal.
The arbitration shall be conducted in the English language. Each arbitrator
to be appointed must have a sufficient level of English to be able to
conduct this arbitration in the English language.
The arbitrators shall conduct the arbitration in accordance with such
procedural and evidentiary rules as they may determine. The arbitrators
shall give written reasons for their award.
The last hearing shall be held no later than 120 days following the
appointment of the third arbitrator and the award shall be rendered no
later than 30 days following the close of such hearing.
This arbitration provision does not prevent the parties hereto to go before
a court of competent jurisdiction for seeking interim, interlocutory,
injunctions or other provisional relief.
The award shall be final and binding upon the parties hereto, and shall be
the sole and exclusive remedy between the parties regarding any claims,
counterclaims, issues, or accounting presented to the arbitrator. Judgment
upon any award may be entered in any court having jurisdiction. However,
the parties accept that an award can be appealed before the Court of
Appeals of Paris, only if the arbitration award, gives any party damages
above five hundred thousand francs (500,000 FF). For clarification
purposes, the arbitration costs and legal fees are not to be included in
this amount, which means that if the award is 450,000 francs for damages
and 100,000 francs for arbitration costs, there will be no appeal.
Buyer accepts to advance the amount of the advance requested by the
arbitrators, upon the commencement of a arbitration, being however
understood that the final allocation of the costs of arbitration shall be
decided by the arbitrators in their award.
7.3 Expenses and advisers' fees. Each of Sellers and Buyer will bear its own
expenses and advisers' fees. Buyer confirms that Soft Mountain will pay Me
Ravet's fees for the services rendered to Soft Mountain from early April
1998 to end of July 1998 which are around FF 50,000 HT. Buyer acknowledges
that those may not be reflected in the Financial Statements, and will not
allege such violation.
7.4 Notices. All notices, requests and other communications thereunder shall be
in writing and shall be deemed given if delivered personally, facsimiles
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(which is confirmed) or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(a) If to Buyer:
Versant Corporation
6539 Dumbarton Circle
Fremont, California 94555 USA
Attention General Counsel
With a copy to:
VERSANT GmbH
Arabellastr-4
D-81925 Munich
Germany
Attention Managing Director
(b) If to Sellers:
Finoris Societe Civile
c/o Me Yves-Marie Ravet
Avocat a la Cour
3, rue du Bocador
75008 Paris
7.5 Entire Agreement; Binding Effect. This Agreement and the documents
referred to herein constitute the entire agreement and supersede all
other agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof, and in particular the
letter of intent of June 16, 1998 attached hereto on Schedule 1.2.
7.6 Applicable Law. This Agreement shall be governed by and be construed in
accordance with the laws of France.
7.7 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective
successors, it being specified that the Buyer may also assign this
Agreement to any party it may wish.
7.8 Announcements. Except as required by law or the rules of any national
securities exchange, for so long as this Agreement is in effect, no
announcement of this Agreement or the transactions contemplated hereby
shall be made by any of the parties without the written consent of the
other party or parties, which consent shall not be unreasonably
withheld.
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7.9 Severability. In case any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
terms, provisions, covenants or restrictions, or of such term, provision,
covenant or restriction in any other jurisdiction, shall not in any way be
affected or impaired thereby.
7.10 Translation. A translation of this agreement into French shall be prepared
by a French independent translator to be provided on Closing. Buyer agrees
to pay the fees of such translator. For clarification purposes the
translation shall be for information only, and the English signed document
shall be the only one with effect.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement under
the seal as of the date first written above.
/s/ C. DOUMENC /s/ GUY RIGAUD
- -------------------------- ------------------------------
SC Finoris Rhone - Alpes Creation
by C. Doumenc by Guy Rigaud
its Co-Gerant its President du Directoire
/s/ A. MAY /s/ GUILLAUME DOUMENC
- -------------------------- ------------------------------
Trinova Mr. Guillaume Doumenc
by A. May
its D.C. of Pouvoir
/s/ ANNE DOUMENC /s/ ANDRE MAY
- -------------------------- ------------------------------
Mrs. Anne Doumenc Mr. Andre May
/s/ CLAIRE DEMENGEOT
- -------------------------- ------------------------------
Mme. Claire Demengeot Mr. Francis Lorentz
of Pouvoir
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- -------------------------- ------------------------------
Mr. Roger Pottlitzer
/s/ BERNHARD WOEBKER
- --------------------------
Versant Corporation
By Bernhard Woebker
its Vice President Europe
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EXHIBIT 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated January 25,
1999, included in Versant Corporation's Form 10-KSB for the year ended December
31, 1998 and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
San Jose, California
May 12, 1999
