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As filed with the Securities and Exchange Commission on August 13, 1999
Registration No. 333-76045
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-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)
--------------------
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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Registration No. 333-76045
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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 SMALLCAP MARKET. LAST REPORTED
SALE PRICE ON AUGUST 12, 1999: $2.15 PER SHARE. TRADING SYMBOL: VSNT or VSNTC
-------------------
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.
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS AUGUST 13, 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
was convertible into 1,880,000 shares of our common stock, at a rate of $1.925
per share. 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. In July 1999, we agreed to modify the terms of
the Vertex convertible note. The note, including accrued interest, has been
converted into 902,946 shares of Series A Preferred Stock. This preferred stock
is convertible into 1,805,892 shares of our common stock, subject to customary
adjustments for stock splits and dividends and other corporate restructurings.
Vertex may offer some or all of these 1,805,892 conversion shares 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
WE HAVE LIMITED WORKING CAPITAL. 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 on a year to date basis. 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 COMMON STOCK MAY BE DELISTED FROM NASDAQ. Our common stock was listed
on the Nasdaq National Market until July 19, 1999. On this date, our common
stock was listed on the Nasdaq SmallCap Market on a conditional basis. To remain
listed on Nasdaq SmallCap Market, Nasdaq must be satisfied that we were
profitable for the quarter ending June 30, 1999 and that we have net tangible
assets of at least $5.4 million after conversion of the Vertex note and raising
an additional $2.5 million through the issuance of preferred stock. We believe
that we will comply with the Nasdaq SmallCap listing requirements, but we cannot
be certain until confirmation is received from Nasdaq after the filing of our
quarterly report on Form 10-Q for the quarter ending June 30, 1999. To maintain
our listing on the Nasdaq SmallCap Market, there are several requirements
applicable to all issuers listed there, including a minimum bid price of one
dollar per share and net tangible assets of $2 million. We might not meet these
or other continued listing requirements in the future. If our common stock were
delisted, we may not be able to satisfy the higher requirements for relisting on
either the Nasdaq National or Nasdaq SmallCap Market. If we were delisted,
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 result, investors would
find it more difficult to buy, sell or quote our common stock.
OUR EXISTING DEBT BURDEN IS SUBSTANTIAL. At June 30, 1999, we had the
following outstanding borrowings:
(1) $1.6 million under a bank revolving loan, which expires on June 30,
2000;
(2) $1.5 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.
The bank revolving line of credit and term loan have been amended effective for
the quarter ending June 30, 1999. The line of credit will expire June 30, 2000
and has substantially modified financial covenants. Its interest rate has been
increased to 2 percent over the lender's base rate (currently 7.75%). The term
loan interest rate has been increased to 2.5% over the lender's base rate. Its
financial covenants were also modified.
The $3.6 million convertible secured promissory note and accrued interest was
converted into preferred stock in July 1999. The preferred stock is convertible
into 1,805,892 shares of our common stock. In connection with this conversion,
approximately $2.5 million was raised through the issuance of additional shares
of preferred stock that is convertible into 1,173,706 additional shares of our
common stock. The preferred shares have a participating liquidation preference
equal to 150% of the amount paid increasing by 50% per year for the next two
years. Each preferred share votes like one common share until conversion. The
preferred stock holders also received five year warrants to purchase 1,489,799
shares of our common stock for an initial exercise price of $2.13/share.
OWNERSHIP OF OUR EQUITY HAS BECOME CONCENTRATED as a result of the Vertex
note conversion and raising of additional equity. According to Vertex filings
with the SEC, if Vertex converted its preferred shares and exercised all of its
warrants it would own approximately 21% of our common stock (assuming 10,151,277
outstanding shares prior to such conversion and exercise and no other
conversions or exercises). Affiliates of Vertex own 5.8% of our common stock
(assuming 10,151,277 shares outstanding). Another affiliate of Vertex invested
approximately $1,000,000 in preferred shares and warrants in July 1999. If all
of these preferred shares were converted and all warrants exercised, this Vertex
affiliate would own 6.5% of our common shares (assuming 10,151,277 shares
outstanding and no other conversions or exercises) based on recent filings by
Vertex and its affiliates with the SEC. Additionally, another investor in the
preferred stock was introduced to us by Vertex. Its 176,056 shares of preferred
stock and equal number of warrants would convert into 528,168 shares of our
common stock (or 4.9% of our common shares assuming 10,151,277 shares
outstanding prior to exercise or conversion and no other exercises or
conversions). Prior to conversion and exercise, each preferred share votes like
one common share and warrants do not vote. Therefore, prior to conversion Vertex
and the security holders referred to above hold securities representing 16.4% of
the total votes (assuming 10,151,277 outstanding shares). Vertex has not
expressed interest in controlling the Company but is in a position to influence
its management. Vertex and the other preferred stock holders have agreed not to
acquire more than an additional 100,000 shares without our approval while such
investor owns more than 5% of the Company. Such concentration of ownership may
adversely effect the liquidity of the common stock.
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 August
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 August 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 have written and published 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 published a statement about our products, testing procedures used and
their Y2k compliance. We have published these statements internally to our
employees and management and will be distributing them via our web site
"versant.com" and by mail to certain vendors and customers by the end of
July 1999. 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 our personal computers and
servers used by our information management systems, engineering development
teams and employees to complete their daily work assignments. The results
were 3 personal computers and two servers failed our Year 2000 test. We
intend to replace both servers and the 486 system with existing Y2k
compliant inventory, and upgrade the remaining two with bios upgrades if
possible, or replace same. In the process of testing our internal business
software programs we have determined that certain operating systems and
financial programs need to be upgraded with Y2k patches to be Y2k
compliant. We have budgeted $50,000 for the upgrade process (software and
labor) and plan to complete the upgrades by October 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
sent these questionnaires to our third party providers and key suppliers at the
end of June 1999 and will conclude our review by the end of August 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.
RISKS RELATED TO OTHER OFFERINGS. We are obligated to register 2,663,505
common shares issuable in connection with the preferred stock offering in July
1999 that raised approximately $2.5 million in additional equity funds for the
Company. A separate registration statement will be filed by us prior to October
10, 1999. To the extent such selling security holders acquire and or sell our
common stock, other shareholders could experience dilution or adverse effects.
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 June 30, 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 when it provided us with $3.6 million in an October 16, 1998
private financing. This note was converted into 902,946 shares of our preferred
stock in July 1999. This preferred stock is convertible into 1,805,892 shares of
our common stock that Vertex may offer pursuant to this prospectus. 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. See
also, the Ownership Consolidated Risk Factor. Other affiliates of Vertex
acquired preferred stock and warrants in the $2.5 million offering in July 1999.
the common stock issuable upon conversion of these preferred shares or exercise
of the warrants are to be offered in a separate registration statement.
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 June 30, 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 7.3% 708,750 188,003 1.9%
Special Situations Cayman LP(2) 295,050 2.4 236,250 58,000 *
Special Situations Technology Fund LP(2) 166,000 1.3 105,000 51,000 *
Vertex Technology Fund Ltd.(3) 1,805,892 14.6 1,805,892 0
SOFT MOUNTAIN SELLING SECURITY HOLDERS(4)
SC Finoris 167,890 1.4 167,890 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 10,151,277 shares of our common stock outstanding as of July 12,
1999, plus 1,805,892 additional shares after the conversion of Vertex's
preferred shares; 300,000 additional shares after exercise of Special
Situation's warrants; and 74,108 additional shares if other adjustments are
necessary (a total of 12,331,277).
(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 1,805,892 shares issuable upon conversion of Vertex's preferred
stock. Does not include 596,367 shares currently held by affiliates of
Vertex, common shares issuable upon exercise of Vertex' warrant for 902,946
shares or common shares issuable to Vertex affiliates in connection with
the preferred stock offering in July 1999.
(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.
(5) As of the date of this prospectus, the Special Situations Funds have
already sold approximately 230,000 shares pursuant to this offering.
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+
10.01 -- Preferred Stock and Warrant Purchase Agreement entered into as of
June 28, 1999.(3)
23.01 -- Consent of Arthur Andersen LLP, Independent Public Accountants
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.
(3) Incorporated by reference to the registrant's current report on Form 8-K
dated July 13, 1999.
+ 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 13th day
of August, 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 August 13, 1999
Nick Ordon Officer and Director
PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER:
/s/ Gary Rhea
- ---------------------------- Vice President--Finance August 13, 1999
Gary Rhea and Administration
ADDITIONAL DIRECTORS:
- ---------------------------- Director August 13, 1999
Mark Leslie
/s/ *
- ---------------------------- Director August 13, 1999
Stephen J. Gaal
- ---------------------------- Director August 13, 1999
Bernhard Woebker
/s/ *
- ---------------------------- Director August 13, 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+
10.01 -- Preferred Stock and Warrant Purchase Agreement entered into as of
June 28, 1999.(3)
23.01 -- Consent of Arthur Andersen LLP, Independent Public Accountants
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.
(3) Incorporated by reference to the registrant's current report on Form 8-K
dated July 13, 1999.
+ Previously filed.
II-5
<PAGE> 1
EXHIBIT 5.01
[FENWICK & WEST, LLP LETTERHEAD]
April 9, 1999
Versant Corporation
6539 Dumbarton Circle
Fremont, California 94555
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form S-3 to
be filed by you with the Securities and Exchange Commission (the "SEC") on or
about April 9, 1999 (the "Registration Statement") in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate of
3,175,586 shares of your Common Stock (the "Stock"), 945,586 of which have
already been issued, 1,880,000 shares of which are subject to issuance by you
upon the conversion of $3,619,000 aggregate principal amount of your convertible
secured subordinated promissory note (the "Note"), and 350,000 of which are
subject to issuance by you upon the exercise of outstanding warrants (the
"Warrants"). Each of these 3,175,586 shares of Stock may be sold only by certain
selling security holders named in the Registration Statement and in subsequent
amendments thereto (the "Selling Security holders"). The Stock is to be
registered for an offering on a delayed or continuous basis as set forth in the
Registration Statement, the prospectus contained therein and the supplements to
the prospectus.
In rendering this opinion, we have examined the following:
(1) your Amended and Restated Articles of Incorporation, as amended, and
Bylaws, each as filed with your registration on Form SB-2 (File Number
333-4910-LA) declared effective by the SEC on July 17, 1996;
(2) your registration statement on Form 8-A (File Number 000-22697) filed
with the SEC on May 31, 1996, together with the order of effectiveness
issued by the SEC therefor on July 17, 1996;
(3) the Registration Statement, together with the exhibits filed as a part
thereof, and the prospectuses prepared in connection with the
Registration Statement;
(4) the minutes of meetings and actions by written consent of the
shareholders and Board of Directors that are contained in your minute
books that are in our possession;
<PAGE> 2
(5) your statement as to the number, as of April 9, 1999, of (a)
outstanding shares of your common stock, (b) outstanding options,
warrants and rights to purchase common stock and (c) any additional
shares of common stock reserved for future issuance in connection with
your stock option and purchase plans and all other plans, agreements
or rights;
(6) oral verification from your transfer agent of the number of
outstanding shares of the your common stock as of the date hereof;
(7) your fiscal 1998 Annual Report on Form 10-KSB;
(8) a Management Certificate addressed to us and dated of even date
herewith executed by you containing certain factual and other
representations;
(9) The Stock Purchase Agreement dated as of July 30, 1998 under which
certain of the Selling Security Holders acquired the Stock to be sold
by them as described in the Registration Statement;
(10) The Note Purchase Agreement dated as of October 16, 1998 under which
one of the Selling Security Holders acquired the Stock to be sold by
it as described in the Registration Statement, together with the Note;
and
(11) The Stock and Warrant Purchase Agreement dated as of December 28, 1998
under which certain of the Selling Security Holders acquired the Stock
to be sold by them as described in the Registration Statement,
together with the Warrants (together with the documents listed in
items (9) and (10) above, the "Purchase Agreements").
By telephone call to the offices of the SEC, we have confirmed the
continued effectiveness of your registration under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the timely filing by you of all
reports required to be filed by you pursuant to Rules 13, 14 and 15 promulgated
under the Exchange Act.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity and completeness of all documents submitted
to us as originals, the conformity to originals and completeness of all
documents submitted to us as copies, the legal capacity of all natural persons
executing the same, the lack of any undisclosed termination, modification,
waiver or amendment to any document reviewed by us and the due authorization,
execution and delivery of all documents where due authorization, execution and
delivery are prerequisites to the effectiveness thereof.
In rendering this opinion, we have also assumed that, at the time of any
issuance of any shares of Stock pursuant to the Registration Statement, the
number of shares of Stock so issued will not exceed that number of shares of
Stock obtained by subtracting from the number of shares of Stock then authorized
under the Articles of Incorporation: (a) the number of shares of Stock that are
then issued, and (b) the number of shares of Stock that are then reserved for
issuance pursuant to then outstanding commitments or obligations of Versant
Corporation.
2
<PAGE> 3
As to matters of fact relevant to this opinion, we have relied solely upon
our examination of the documents referred to above and have assumed the current
accuracy and completeness of the information obtained from public officials and
records referred to above. We have made no independent investigation or other
attempt to verify the accuracy of any of such information or to determine the
existence or non-existence of any other factual matters; however, we are not
aware of any facts that would cause us to believe that the opinion expressed
herein is not accurate.
We are admitted to practice law in the State of California, and we express
no opinion herein with respect to the application or effect of the laws of any
jurisdiction other than the existing laws of the United States of America and
the State of California.
In connection with our opinion expressed below, we have assumed that, at or
prior to the time of the delivery of any shares of Stock, the Registration
Statement will have been declared effective under the Securities Act of 1933, as
amended, that the registration will apply to such shares of Stock and will not
have been modified or rescinded and that there will not have occurred any change
in law affecting the validity or enforceability of such shares of Stock.
You have informed us that you intend to issue the unissued Stock from time
to time on a delayed or continuous basis. This opinion is limited to the laws,
including the rules and regulations, as in effect on the date hereof. We are
basing this opinion on our understanding that, prior to issuing any Stock, you
will advise us in writing of the terms thereof and other information material
thereto, will afford us an opportunity to review the operative documents
pursuant to which such Stock is to be issued (including the Registration
Statement, the prospectus and the applicable prospectus supplement, as then in
effect) and will file such supplement or amendment to this opinion (if any) as
we may reasonably consider necessary or appropriate with respect to such Stock.
However, we undertake no responsibility to monitor your future compliance with
applicable laws, rules or regulations of the SEC or other governmental body. We
also assume you will timely file any and all supplements to the Registration
Statement and prospectus as are necessary to comply with applicable laws in
effect from time to time.
Based upon the foregoing assumptions, understandings and qualifications, we
are of the opinion that the up to 3,175,586 shares of Stock that may be sold by
the Selling Security Holders pursuant to the Registration Statement, when issued
pursuant to the applicable Purchase Agreement and evidenced by appropriate
certificates that have been properly executed and delivered, and when issued and
sold in accordance with and in the manner referred to in the relevant prospectus
associated with the Registration Statement, will be validly issued, fully paid
and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
3
<PAGE> 4
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for your use as an exhibit to the Registration
Statement for the purpose of the above sale of the Stock and is not to be relied
upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
By: /s/ Barry J. Kramer
-------------------------------------
Barry J. Kramer, a Partner
4
<PAGE> 1
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 (except for certain matters as to which the date was March 19, 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
August 12, 1999
