SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant |X|
Filed by the Party other than the Registrant
|_| Check the appropriate box:
[ ] Preliminary Proxy Statement |_| Confidential, for Use of
[X] Definitive Proxy Statement the Commission Only (as
[ ] Definitive Additional Materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Under Rule 14a-12
VERSANT CORPORATION
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
May 11, 2000
To Our Shareholders:
You are cordially invited to attend the 2000 Annual Meeting of
Shareholders of Versant Corporation to be held at the Company, 6539 Dumbarton
Circle, Fremont, California 94555, on Thursday, June 22, 2000, at 10:30 a.m.,
Pacific Time.
The matters expected to be acted upon at the meeting are described in
detail in the following Notice of Annual Meeting of Shareholders and Proxy
Statement.
It is important that you use this opportunity to take part in the
affairs of your Company by voting on the business to come before this meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. Returning the Proxy does not
deprive you of your right to attend the meeting and to vote your shares in
person.
We look forward to seeing you at the meeting.
Sincerely,
Nick Ordon
President and Chief Executive Officer
<PAGE>
VERSANT CORPORATION
6539 DUMBARTON CIRCLE
FREMONT, CALIFORNIA 94555
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 22, 2000
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Versant
Corporation (the "Company") will be held at the Company, 6539 Dumbarton Circle,
Fremont, California 94555, on Thursday, June 22, 2000, at 10:30 a.m., Pacific
Time for the following purposes:
1. To elect five (5) directors of the Company, each to serve until the
next Annual Meeting of Shareholders and until his successor has been
elected and qualified or until his earlier resignation or removal.
The Company's Board of Directors intends to present the following
nominees for election as directors:
David Banks William R. Shellooe
Nick Ordon William Henry Delevati
Bernhard Woebker
2. To ratify and approve the amendments of the Company's 1996 Equity
Incentive Plan made by the Board of Directors to increase the number
of shares of Common Stock reserved for issuance by an aggregate of
1,000,000 shares.
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ended December 31, 2000.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 28, 2000 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Nick Ordon
President and Chief Executive Officer
Fremont, California
May 11, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE>
VERSANT CORPORATION
6539 DUMBARTON CIRCLE
FREMONT, CALIFORNIA 94555
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PROXY STATEMENT
May 11, 2000
The accompanying Proxy is solicited on behalf of the Board of Directors
(the "Board") of Versant Corporation, a California corporation (the "Company"),
for use at the Annual Meeting of Shareholders of the Company to be held at the
Company's principal offices, located at 6539 Dumbarton Circle, Fremont,
California 94555, on Thursday, June 22, 2000, at 10:30 a.m., Pacific Time (the
"Meeting"). This Proxy Statement and the accompanying form of Proxy were first
mailed or delivered to shareholders on or about May 11, 2000. An annual report
for the year ended December 31, 1999 is enclosed with this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Holders of record of the Company's common stock and Series A Preferred
Stock at the close of business on April 28, 2000 (the "Record Date") will be
entitled to vote at the Meeting. At the close of business on the Record Date,
the Company had 11,222,172 shares of common stock outstanding and entitled to
vote and 1,313,743 shares of Series A Preferred Stock outstanding and entitled
to vote. A majority of the shares outstanding on the Record Date will constitute
a quorum for the transaction of business.
Holders of common stock are entitled to one vote for each share held as of
the Record Date. Holders of Series A Preferred Stock are entitled to one vote
for every share held as of the Record Date. In the event that a broker, bank,
custodian, nominee or other record holder of the Company's common stock or
Series A Preferred Stock indicates on a proxy that it does not have
discretionary authority to vote certain shares on a particular matter (a "broker
non-vote"), those shares will not be considered present and entitled to vote
with respect to that matter, although they will be counted in determining the
presence of a quorum.
Directors will be elected by a plurality of the votes of the shares of
common stock and Series A Preferred Stock present in person or represented by
proxy at the Meeting that are voted on the election of directors. Approval of
the other Proposals require the affirmative vote of a majority of the shares of
common stock and Series A Preferred Stock present in person or represented by
proxy at the Meeting that are voted "for" or "against" the proposal AND the
affirmative votes must constitute at least a majority of the required quorum.
Neither an abstention nor a broker non-vote will be counted as a vote "for" or
"against" Proposal Nos. 2 and 3. All votes will be tabulated by the inspector
of elections appointed for the Meeting. Each of the Company's Proposals requires
that a quorum be present at the Meeting.
Unless otherwise instructed, each valid returned Proxy in the form
accompanying this Proxy Statement that is not revoked will be voted in the
election of directors "FOR" the nominees of the Board of Directors and "FOR"
Proposal Nos. 2, 3 and 4 described in this Proxy Statement, and at the Proxy
holder's discretion, on such other matters, if any, that may come before the
Meeting (including any proposal to adjourn the Meeting).
In the event that sufficient votes in favor of the proposals are not
received by the date of the Meeting, the persons named as Proxies may propose
one or more adjournments of the Meeting to permit further solicitations of
Proxies. Any such adjournment would require the affirmative vote of the majority
of the shares present in person or represented by Proxy at the Meeting and
entitled to vote.
The expenses of soliciting Proxies will be paid by the Company. Following
the original mailing of the Proxy Statement, the Proxy and other soliciting
materials, the Company will request brokers, custodians, nominees and other
record holders to forward copies of those materials to persons for whom they
hold shares of common stock or Series A Preferred Stock and to request authority
for the exercise of Proxies. In such cases, the Company, upon the
<PAGE>
request of the record holders, will reimburse such holders for their reasonable
expenses. Proxies may also be solicited by certain of the Company's directors,
officers and regular employees, without additional compensation, in person or by
telephone or telegram.
REVOCABILITY OF PROXIES
Any person signing a Proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Meeting or at the Meeting prior to the
vote pursuant to the Proxy. A Proxy may be revoked by a writing delivered to the
Company stating that the Proxy is revoked, by a subsequent Proxy that is signed
by the person who signed the earlier Proxy and is presented at the Meeting, or
by attendance at the Meeting and voting in person. PLEASE NOTE, HOWEVER, THAT IF
A SHAREHOLDER'S SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND
THAT SHAREHOLDER WISHES TO VOTE AT THE MEETING, THE SHAREHOLDER MUST BRING TO
THE MEETING A LETTER FROM THE BROKER, BANK OR OTHER NOMINEE CONFIRMING THAT
SHAREHOLDER'S BENEFICIAL OWNERSHIP OF THE SHARES.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
DIRECTORS/NOMINEES
At the Meeting, shareholders will elect five directors, which will be the
number of directors authorized by the Board of Directors pursuant to the
Company's Bylaws as of the date of the Meeting, to hold office until the next
Annual Meeting of Shareholders and until their respective successors have been
elected and qualified, or until such directors' earlier resignation or removal.
Shares represented by the accompanying Proxy will be voted for the election of
five nominees (recommended by the Board) who are named in the following table,
unless the Proxy is marked in such a manner as to withhold authority so to vote.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the Meeting that are voted on the election of
directors. The Company has no reason to believe that the nominees for election
will not be available to serve their prescribed terms. However, if any nominee
for any reason is unable to serve or will not serve, the Proxy may be voted for
such substitute nominee as the persons appointed in the Proxy may in their
discretion determine.
The following table sets forth certain information concerning the nominees
(each of whom is currently a director of the Company), which is based on data
furnished by them:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C>
Nick Ordon 52 President and Chief Executive Officer of the Company 1998
David Banks 54 Consultant 1993
Bernhard Woebker 50 Senior Vice President of Field Operations of the Company 1999
and Consultant
William Henry Delevati 51 Consultant 1999
William R. Shellooe 62 Vice President of Sales, HAL Computer (subsidiary of 2000
Fujitsu Corporation)
</TABLE>
Mr. Ordon has served as President, Chief Executive Officer and a director
of the Company since he joined the Company in January 1998. From July 1996 to
December 1997, Mr. Ordon was Vice President and General Manager of Lotus
Messaging at Lotus Development Corporation, a software development company and
wholly-owned subsidiary of International Business Machines Corporation. From
August 1994 to July 1996, he was Vice President and General Manager of the
Commercial Business Unit of Lockheed Martin Corporation, an aerospace products
company. From January 1993 to August 1994, Mr. Ordon served as General Manager,
NetWare Operations with Hewlett-Packard Company. Mr. Ordon received both a
Bachelor and Masters of Science degree in Aerospace Engineering from University
of Colorado in 1970 and 1971 respectively, and a Master of Business
Administration degree in Finance and Operations from Syracuse University in
1980.
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Mr. Banks has served as a director of the Company since April 1993. Mr.
Banks is currently a consultant to various companies located in the Silicon
Valley area. From January 1998 to January 1999, Mr. Banks served as a consultant
to the Company. From April 1993 to January 1998, Mr. Banks was the Company's
President and Chief Executive Officer. From January 1985 to January 1989, Mr.
Banks served as Chief Executive Officer and President of Cadre Technologies
Incorporated ("Cadre"), a software development company. In January 1989,
following a merger of MicroCase Inc. and Cadre, Mr. Banks was named President of
Cadre, a position he held until mid-1992, when he became Executive Vice
President of Cadre. Mr. Banks served in this position until December 1992. Mr.
Banks received a Bachelor of Science degree in Chemistry from Indiana University
in 1967, a Master of Science degree in Chemistry from University of California,
San Diego in 1968 and a Masters of Business Administration degree from Purdue
University in 1969.
Mr. Woebker has served as a director of the Company since June 1999. He
has served as Senior Vice President of Field Operations of the Company and as
the senior executive officer of the Company's European subsidiaries since
January 1999. Beginning January 1, 2000, Mr. Woebker significantly reduced his
daily involvement with the Company while retaining his operational and
managerial roles in these positions. Beginning January 1, 2000, Mr. Woebker also
began serving on a part-time basis as a consultant with the investment banking
firm E.M. Warburg, Pincus & Co. LLC. Mr. Woebker joined Versant in March 1997
and served as Vice President and General Manager Europe, from that date to
January 1999. From 1994 to March 1997, he was President of Versant Object
Technology GmbH, an independently-owned distributorship for Versant products in
Europe which was acquired by the Company in March 1997. From 1976 until 1994,
Mr. Woebker held a variety of positions in Germany and the United States with
Nixdorf Computer AG, Nixdorf Computer Engineering Corp. and Siemens Nixdorf
Informationssysteme AG, information technology companies, including President
and CEO of Nixdorf Computer Engineering Corp. in Boston, Massachusetts from 1986
to 1989. Mr. Woebker has also served as Senior Vice President, Pyramid
Technology Corp./Europe and as Vice President, NeXT Computer, Inc./Europe. Mr.
Woebker received a Masters degree in Mathematics and Computer Science from the
University of Hannover in 1973.
Mr. Delevati has served as a director of the Company since October 1999.
From October 1999 to April 2000, Mr. Delevati served as the Senior Vice
President, Information Technology and CIO of Aspect Technology, an automated
call device company. From November 1995 to April 1999, Mr. Delevati served as
Vice President of Worldwide Information Services for Quantum Corporation, a
storage device company. From April 1995 to November 1995, he held the position
of Chief Information Officer, Senior Vice President of MIS for Conner
Peripherals, a storage device company. From September 1994 to April 1995, he was
Chief Information Officer, Vice President of Worldwide MIS for Borland
Corporation, a software tools company. From September 1993 to September 1994, he
was Chief Information Officer, Vice President of Worldwide MIS for Logitech, a
computer peripheral device company. From December 1987 to September 1993, he was
Director of Application Development and Global Information Resources for Sun
Microsystems, Inc. Mr. Delevati received a Bachelor of Science degree in
Operations Research in 1974 from Arizona State University.
Mr. Shellooe has served as a director of the Company since April 2000.
Since April 1997, Mr. Shellooe has served as Vice President of Sales for HAL
Computer, a company that develops SPARC processors and a subsidiary of Fujitsu
Corporation. Between 1994 and 1997, Mr. Shellooe served in a variety of
executive officer positions with AXIL Computer, Inc., a SPARC systems company
and a subsidiary of Hyundia Electronics. From January 1994 to December 1994, he
served as Vice President of Sales of AXIL, from December 1994 to July 1996, as
its Senior Vice President of Sales and Marketing and from July 1996 to February
1997 as its Chief Executive Officer. Prior to working with AXIL Computer, Inc.,
Mr. Shellooe served in a variety of executive management positions with MASPAR
Computer Corporation, Pyramid Technology and Hewlett Packard. Mr. Shellooe
received his Bachelor of Science degree in Electrical Engineering in 1960 and a
Masters of Business Administration degree in 1966 from the University of Santa
Clara.
There is no family relationship between any of the foregoing nominees or
between any of such nominees and any of the Company's executive officers. The
Company's executive officers serve at the discretion of the Board.
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<PAGE>
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board met five times, including telephone conference meetings, and
acted by written consent twice during 1999. Standing committees of the Board
include an Audit Committee and a Compensation Committee. The Board does not have
a nominating committee or a committee performing similar functions.
The Audit Committee is currently comprised of Stephen J. Gaal and David
Banks. Following the Meeting, the Company expects that Mr. Shellooe will be
appointed by the Board to fill the vacancy on the Audit Committee created by Mr.
Gaal's departure from the Board. The Audit Committee met four times during 1999.
The Audit Committee has the following primary powers: (i) to recommend the
appointment of the Company's independent auditors to the Board; (ii) to review
the independent auditors' proposed audit scope and audit approach; (iii) to
review the independent auditors' letters of recommendations provided to
management; (iv) to review the activities, organizational reporting and
effectiveness of the Company's internal audit function; (v) to review the
independent auditors' fee arrangements for professional services; (vi) to review
management's monitoring of compliance with the Company's code of conduct; (vii)
to review, with the Company's counsel, any legal matters that could have a
significant impact on the Company's financial statements; (viii) to review with
financial management and the independent auditors the Company's quarterly
financial results and significant proposed adjustments, reserves, accounting
estimates and financial reporting issues related thereto; (ix) to determine that
there are appropriate policies and procedures for the review of officers'
expenses and perquisites; (x) to approve the Company's revenue recognition
policy and any amendments thereto; (xi) to approve the Company's investment
policy and any amendments thereto; (xii) to review the status of Internal
Revenue Service examinations and related tax reserves; and (xiii) to perform
other oversight functions as determined by the Audit Committee or the full
Board.
The Compensation Committee is currently comprised of Stephen J. Gaal and
Mark Leslie, who are non-employee directors. Following the Meeting, the Company
expects that David Banks and William Henry Delevati, who are non-employee
directors, will be appointed by the Board to fill the vacancies created by the
departure from the Board of Messrs. Gaal and Leslie. The Compensation Committee
met one time and acted by written consent four times during 1999. The
Compensation Committee is responsible for: (i) reviewing and submitting to the
Board for approval major compensation and benefits programs and plans, such as
stock option, stock purchase, 401(k) and bonus plans, and amendments thereto;
(ii) administering the Company's 1996 Equity Incentive Plan and approving all
option grants pursuant thereto; (iii) administering the Company's 1996 Employee
Stock Purchase Plan; (iv) reviewing and approving for submission to the Board
the election of corporate officers and the designation of officers subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); (v) reviewing and approving compensation for corporate officers,
including salary, bonus awards and major perquisites; (vi) reviewing and
approving compensation ranges for non-officer employees; (vii) reviewing the
performance of corporate officers; (viii) reviewing significant changes to the
structure of the Company's organization; and (ix) preparing a report to
shareholders on compensation policy for inclusion in the Company's proxy
statement, if applicable.
No director attended fewer than 75% of the aggregate of the total number
of meetings of the Board (held during the period for which he was a director)
and the total number of meetings held by all committees of the Board on which he
served (during the period that he served).
DIRECTORS COMPENSATION
Directors of the Company do not receive cash compensation for their
services as directors but are reimbursed for their reasonable expenses in
attending meetings of the Board.
Directors who are not officers of the Company are entitled to participate
in the 1996 Directors Stock Option Plan (the "Directors Plan"). The purpose of
the Directors Plan is to provide incentive for members of the Board who are not
also employees of the Company or any parent, subsidiary or affiliate of the
Company by providing such persons with an opportunity to purchase shares of
common stock of the Company. The Directors Plan provides that each non-employee
director automatically receives an option to purchase 10,000 shares of the
Company's common stock upon initially joining the Board of Directors and
automatically receives an option to purchase 5,000 shares of
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<PAGE>
the Company's common stock each year on the anniversary of the initial grant to
such non-employee director, as long as the director continues to serve on the
Board. On July 16, 1999, the Company granted to each of Messrs. Leslie, Gaal and
Banks an option to purchase 5,000 shares of the Company's common stock at an
exercise price of $3.15625 per share pursuant to the automatic annual grant
provisions of this plan. On October 21, 1999, the Company granted to Mr.
Delevati an option to purchase 10,000 shares of the Company's common stock at an
exercise price of $2.4375 per share pursuant to the automatic initial grant
provisions of this plan. On April 17, 2000, the Company granted to Mr. Shellooe
an option to purchase 10,000 shares of the Company's common stock at an exercise
price of $5.25 per share pursuant to the automatic initial grant provisions of
this plan. Grants under this plan vest 50% on each of the two anniversaries
following the date of grant so long as the recipients of such grants continue to
serve as directors or consultants to the Company.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINATED DIRECTORS.
PROPOSAL NO. 2--RATIFY AND APPROVE THE AMENDMENTS
MADE BY THE BOARD TO THE 1996 EQUITY INCENTIVE PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE BY AN AGGREGATE OF 1,000,000 SHARES
Shareholders are being asked to (i) ratify an amendment to the Company's
1996 Equity Incentive Plan (the "Incentive Plan") made by the Board of Directors
on January 19, 2000 increasing the number of shares of common stock reserved for
issuance under the Incentive Plan by 500,000 and (ii) approve a further
amendment of the Incentive Plan to provide for an additional increase in the
number of shares of common stock reserved for issuance thereunder by 500,000
shares, so that the total number of shares authorized for issuance under the
Incentive Plan will be 2,900,000, plus any shares remaining under the Company's
1989 Stock Option Plan (the "Prior Plan"), as discussed below. As of April 28,
2000, there were 571,245 shares remaining and available for grant under the
Prior Plan and the Incentive Plan (including the 500,000 share increase approved
by the Board on January 19, 2000 and the 500,000 share increase approved by the
Board on April 18, 2000). The Board believes that adding shares to the Incentive
Plan is in the best interests of the Company because it will permit the Company
to attract and retain employees by providing them with appropriate equity
incentives. The Incentive Plan plays an important role in the Company's efforts
to attract and retain employees of outstanding ability.
The Incentive Plan was adopted by the Board in May 1996 and approved by
the shareholders of the Company in June 1996. The Incentive Plan was amended in
1997 to increase the number of shares of common stock reserved for issuance by
800,000, which amendment was approved by the shareholders of the Company in June
1997. The Board approved an amendment to the Incentive Plan in April 1999, which
was approved by the shareholders in June 1999, to increase the number of shares
of common stock reserved for issuance by 250,000. As mentioned above, the Board
approved an amendment to the Incentive Plan on January 19, 2000 to increase the
number of shares reserved for issuance by 500,000, and the Company is now
seeking ratification by the shareholders of that amendment. The Board's January
19, 2000 approval of such 500,000 share increase limited option grants made
pursuant to such increase to persons who were not officers of the Company. On
April 18, 2000, the Board approved a further amendment to the Incentive Plan, to
be effective upon shareholder approval, to increase the number of shares
reserved for issuance by an additional 500,000. Set forth below is a summary of
the principal features of the Incentive Plan, which summary is qualified in its
entirety by reference to the terms and conditions of the Incentive Plan. The
Company will provide, without charge and upon request, to each person to whom a
Proxy Statement is delivered, a copy of the Incentive Plan. Any such request
should be directed as follows: Secretary, Versant Corporation, 6539 Dumbarton
Circle, Fremont, California 94555; telephone number (510) 789-1500; facsimile
(510) 789-1515.
SHARES SUBJECT TO THE INCENTIVE PLAN. The stock subject to issuance under
the Incentive Plan consists of shares of the Company's authorized but unissued
common stock. As of April 28, 2000, the Board had reserved an aggregate of
2,900,000 shares of common stock for issuance under the Incentive Plan including
the 500,000 shares approved by the Board on January 19, 2000 as well as the
500,000 shares approved by the Board on April 18, 2000
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and subject to shareholder approval. In addition, any shares remaining unissued
under the Prior Plan on the effective date of the Incentive Plan, any shares
repurchased at the original issuance price under the Prior Plan, and any shares
issuable upon exercise of options granted pursuant to the Prior Plan that expire
or become unexercisable for any reason without having been exercised in full,
will no longer be available for distribution under the Prior Plan but will be
available for distribution under the Incentive Plan. Shares subject to an option
granted pursuant to the Incentive Plan that expires or terminates for any reason
without being exercised or shares subject to an award granted pursuant to the
Incentive Plan that are forfeited or are repurchased by the Company at the
original issue price or are subject to an award granted pursuant to the
Incentive Plan that otherwise terminates without shares being issued, will again
become available for grant and issuance pursuant to awards under the Incentive
Plan. This number of shares is subject to proportional adjustment to reflect
stock splits, stock dividends and other similar events. If the Company's
shareholders adopt this Proposal, the maximum number of shares that may be
issued under the Incentive Plan will be 2,900,000 shares, plus shares remaining
under the Prior Plan.
ELIGIBILITY. Employees, officers, directors, consultants, independent
contractors and advisors of the Company (and of any subsidiaries and affiliates)
are eligible to receive awards under the Incentive Plan (the "Participants"). No
Participant is eligible to receive more than 400,000 shares of common stock in
any calendar year under the Incentive Plan, other than new employees of the
Company (including directors and officers who are also new employees) who are
eligible to receive up to a maximum of 600,000 shares of common stock in the
calendar year in which they commence their employment with the Company. As of
April 28, 2000, approximately 115 persons were in the class of persons eligible
to participate in the Incentive Plan, 255,415 shares had been issued upon
exercise of options, 2,328,755 shares were subject to outstanding options and no
shares had been issued pursuant to stock bonus awards. As of that date, 571,245
shares were available for future grant, after taking into account any shares
issuable upon exercise of options granted pursuant to the Prior Plan that have
expired or become unexercisable without having been exercised in full and that
have become available for distribution under the Incentive Plan and including
the 500,000 shares approved by the Board on January 19, 2000 as well as the
500,000 shares approved by the Board on April 18, 2000 and subject to
shareholder approval. The closing price of the Company's common stock on Nasdaq
was $6.625 per share as April 27, 2000, the last trading day before the Record
Date.
Over the term of the Incentive Plan from May 1996 through April 28, 2000,
the following executive officers have been granted the following options to
purchase shares under the Incentive Plan: Nick Ordon (President and Chief
Executive Officer), 550,000 shares; George C. Franzen (former Chief Technical
Officer), 221,128 shares; Bernhard Woebker (Senior Vice President Field
Operations), 318,000 shares; and Gary Rhea (Chief Financial Officer) 248,000
shares. As of April 28, 2000, the Company's current executive officers as a
group have been granted options to purchase an aggregate of 1,116,128 shares
under the Incentive Plan, and all current employees as a group (excluding
executive officers) have been granted options to purchase an aggregate of
1,039,450 shares under the Incentive Plan. Over the term of the Incentive Plan,
current directors who are not currently executive officers have been granted
options to purchase an aggregate of 148,887 shares of common stock under the
Incentive Plan. Such grants were made while the directors were not executive
officers of the Company. No grants have been made under the Incentive Plan to
directors who were also executive officers at the time the grants were made. The
only nominee for director, who is not also a current executive officer, who has
received grants under the Incentive Plan is David Banks, who was awarded options
to purchase 352,092 shares while an executive officer, under the Incentive Plan.
Except for those persons named above, as of April 28, 2000, no one has received
in excess of 5% of the number of options granted under the Incentive Plan. As
the Company's officers and directors are eligible to participate in the
Incentive Plan, they may have an interest in the proposed amendment approved by
the Board on April 18, 2000 to increase the number of shares authorized for
issuance thereunder by 500,000.
ADMINISTRATION. The Incentive Plan is administered by the Compensation
Committee (the "Committee"), the members of which are appointed by the Board.
The Committee currently consists of Mark Leslie and Steve Gaal, both of whom are
"non-employee directors," as defined in Rule 16b-3 promulgated under the
Exchange Act, and "outside directors," as defined pursuant to Section 162(m) of
the Code. Following the Meeting, the Company expects that Messrs. Banks and
Delevati, both of whom are "non-employee" directors, will be nominated to fill
the vacancies on the Committee created by the departures from the Board of
Messrs. Gaal and Leslie. Subject to the terms of the Incentive Plan, the
Committee determines the persons who are to receive awards, the number of shares
subject to each such award, and the terms and conditions of such awards. The
Committee also has the authority to
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construe and interpret any of the provisions of the Incentive Plan or any awards
granted thereunder. The Committee has delegated to the President of the Company
the authority to make awards under the Incentive Plan without further Committee
review to non-officer and non-director employees of the Company up to a maximum
of 20,000 shares per award, provided that no such award may be made if, as a
result, the employee in question would have awards for an aggregate number of
shares that exceeds the Company's guidelines for that employee's position by
more than 15%.
STOCK OPTIONS. The Incentive Plan permits the granting of options that are
intended to qualify either as incentive stock options ("ISOs") or nonqualified
stock options ("NQSOs"). ISOs may be granted only to employees (including
officers and directors who are also employees) of the Company or any parent or
subsidiary of the Company. The option exercise price for each ISO share must be
no less than 100% of the "fair market value" (as defined in the Incentive Plan)
of a share of common stock at the time the ISO is granted. The per share
exercise price of an ISO granted to a 10% shareholder must be no less than 110%
of the fair market value of a share of common stock at the time the ISO is
granted. The option exercise price for each NQSO share must be no less than 85%
of the fair market value of a share of common stock at the time of grant. The
Company has not granted options under the Incentive Plan at less than fair
market value and does not intend to do so in the foreseeable future.
The exercise price of options granted under the Incentive Plan may be paid
as approved by the Committee at the time of grant: (1) in cash (by check); (2)
by cancellation of indebtedness of the Company to the Participant; (3) by
surrender of shares of the Company's common stock owned by the Participant for
at least six months and having a fair market value on the date of surrender
equal to the aggregate exercise price of the option; (4) by tender of a full
recourse promissory note; (5) by waiver of compensation due to or accrued by the
Participant for services rendered; (6) by a "same-day sale" commitment from the
Participant and a National Association of Securities Dealers, Inc. ("NASD")
broker; (7) by a "margin" commitment from the Participant and a NASD broker; or
(8) by any combination of the foregoing.
TERMINATION OF OPTIONS. Except as provided below, each option expires ten
years after the date of grant. Options granted to a 10% shareholder expire five
years after the date of grant. In the event an optionee's relationship with the
Company is terminated for any reason other than death or disability, the
optionee will have the right to exercise the option at any time within three
months (or such shorter or longer time period not exceeding five years as may be
determined by the Committee, with any exercise beyond three months after
termination deemed to be an NQSO) after such termination to the extent the right
to exercise such option has accrued and had not previously been exercised at the
date of termination, but in any event no later than the option expiration date.
In the event an optionee's relationship terminates due to death or disability,
as defined in Section 22(e)(3) of the Code (or if the optionee dies within three
months after termination), the three-month period mentioned above will be twelve
months (or such shorter or longer time period not exceeding five years as may be
determined by the Committee, with any such exercise beyond twelve months after
termination due to death or disability deemed to be an NQSO) after death or
disability to the extent the right to exercise such option has accrued and had
not previously been exercised at the date of death or disability under the
Incentive Plan, but in any event no later than the option expiration date.
RESTRICTED STOCK AWARDS. The Committee may grant Participants restricted
stock awards to purchase stock either separately from, or in tandem with, other
awards under the Incentive Plan, under such terms, conditions and restrictions
as the Committee may determine. The purchase price for such awards must be no
less than 85% of the fair market value of the Company's common stock on the date
of the award (and in the case of an award granted to a 10% shareholder, the
purchase price shall be 100% of fair market value) and can be paid for in any of
the forms of consideration listed in items (1) through (5) in "Stock Options"
above, or any combination thereof, as are approved by the Committee at the time
of grant. The Company has not granted any restricted stock awards under the
Incentive Plan.
STOCK BONUS AWARDS. The Committee may grant Participants stock bonus
awards either separately from, or in tandem with, other awards under the
Incentive Plan, under such terms, conditions and restrictions as the Committee
may determine. As of April 28, 2000, no shares had been issued pursuant to stock
bonus awards.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger,
consolidation, dissolution or liquidation of the Company, the sale of
substantially all of the assets of the Company or any other similar corporate
7
<PAGE>
transaction, the successor corporation may assume, replace or substitute
equivalent awards in exchange for those granted under the Incentive Plan or
provide substantially similar consideration, shares or other property as was
provided to shareholders of the Company (after taking into account provisions of
the awards). In the event that the successor corporation does not assume or
substitute awards, such awards will expire upon the closing of such transaction
at the time and upon the conditions as the Board determines.
AMENDMENT OF THE INCENTIVE PLAN. The Board may at any time terminate or
amend the Incentive Plan, including amending any form of award agreement or
instrument to be executed pursuant to the Incentive Plan. However, the Board may
not amend the Incentive Plan in any manner that requires shareholder approval
pursuant to the Code or the regulations promulgated thereunder, or pursuant to
the Exchange Act or Rule 16b-3 (or its successor) promulgated thereunder.
TERM OF THE INCENTIVE PLAN. Unless terminated earlier as provided in the
Incentive Plan, the Incentive Plan will expire in May 2006, ten years from the
date the Incentive Plan was adopted by the Board.
FEDERAL INCOME TAX INFORMATION. THE FOLLOWING IS A GENERAL SUMMARY AS OF
THE DATE OF THIS PROXY STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE
COMPANY AND PARTICIPANTS UNDER THE INCENTIVE PLAN. FEDERAL TAX LAWS MAY CHANGE
AND THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPANT WILL
DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN AND
IS ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX
CONSEQUENCES OF PARTICIPATION IN THE INCENTIVE PLAN.
INCENTIVE STOCK OPTIONS. A Participant will recognize no income upon grant
of an ISO and incur no tax on its exercise (unless the Participant is subject to
the alternative minimum tax ("AMT")). If the Participant holds shares acquired
upon exercise of an ISO (the "ISO Shares") for more than one year after the date
the option was exercised and for more than two years after the date the option
was granted, the Participant generally will realize long-term capital gain or
loss (rather than ordinary income or loss) upon disposition of the ISO Shares.
This gain or loss will be equal to the difference between the amount realized
upon such disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration of
either required holding period (a "disqualifying disposition"), the gain
realized upon such disposition, up to the difference between the fair market
value of the ISO Shares on the date of exercise and the option exercise price
(or, if less, the amount realized on a sale of such shares), will be treated as
ordinary income. Any additional gain will be long-term or short-term capital
gain, depending upon the amount of time the ISO Shares were held by the
Participant.
ALTERNATIVE MINIMUM TAX. The difference between the fair market value of
the ISO Shares on the date of exercise and the exercise price is an adjustment
to income for purposes of AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular tax) is 26% of an individual taxpayer's alternative minimum
taxable income (28% in the case of alternative minimum taxable income in excess
of $175,000). Alternative minimum taxable income is determined by adjusting
regular taxable income for certain items, increasing that income by certain tax
preference items (including the difference between the fair market value of the
ISO Shares on the date of exercise and the exercise price), and reducing this
amount by the applicable exemption amount ($45,000 in case of a joint return,
subject to reduction under certain circumstances). If a disqualifying
disposition of the ISO Shares occurs in the same calendar year as exercise of
the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon
a sale of ISO Shares that is not a disqualifying disposition, alternative
minimum taxable income is reduced in the year of sale by the excess of the fair
market value of the ISO Shares at exercise over the amount paid for the ISO
Shares.
NONQUALIFIED STOCK OPTIONS. A Participant will not recognize any taxable
income at the time an NQSO is granted. However, upon exercise of an NQSO, the
Participant must include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the Participant's exercise price. The included amount must be treated as
ordinary income by the Participant and may be subject to withholding by the
Company (either by payment in cash or withholding out of the Participant's
salary). Upon resale
8
<PAGE>
of the shares by the Participant, any subsequent appreciation or depreciation in
the value of the shares will be treated as capital gain or loss.
RESTRICTED STOCK AND STOCK BONUS AWARDS. Restricted stock and stock bonus
awards will generally be subject to tax at the time of receipt, unless there are
restrictions that enable the Participant to defer tax. At the time the tax is
incurred, the tax treatment will be similar to that discussed above for NQSOs.
MAXIMUM TAX RATES. The maximum tax rate applicable to ordinary income is
39.6%. Long-term capital gain will be taxed at a maximum of 20%. For this
purpose, in order to receive long-term capital gain treatment, the shares must
be held for more than one year. Capital gains may be offset by capital losses
and up to $3,000 of capital losses may be offset annually against ordinary
income.
TAX TREATMENT OF THE COMPANY. The Company generally will be entitled to a
deduction in connection with the exercise of an NQSO by a Participant or the
receipt of restricted stock or stock bonus awards by a Participant to the extent
that the Participant recognizes ordinary income and the Company withholds tax.
The Company will be entitled to a deduction in connection with the disposition
of ISO Shares only to the extent that the Participant recognizes ordinary income
on a disqualifying disposition of the ISO Shares.
ERISA. The Incentive Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974 and is not qualified under
Section 401(a) of the Code.
NEW PLAN BENEFITS. The following table shows the grants of options to
purchase common stock that have been made as of April 28, 2000 from the 500,000
shares of common stock of the Company approved for issuance by the Board of
Directors on January 19, 2000 under the Company's Incentive Plan. No grants from
this 500,000 share increase have been or will be made to any individuals other
than employees who are not executive officers or directors of the Company.
Future awards and purchases under the Incentive Plan are not included in the
table because the Company cannot determine them currently. Awards under the
Incentive Plan are made at the discretion of the Compensation Committee, as
described above.
NAME EXERCISE PRICE PER SHARE NUMBER OF SHARES
- ---- ------------------------ ----------------
All employees
as a group, excluding
executive officers Between $4.00 and $15.875(1) 428,755
- ---------------
(1) All grants were made at the fair market value of the common stock of the
Company on the date of grant, as determined under the Incentive Plan. The
information in the table represents the range of prices at which the grants have
been made.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1996 EQUITY INCENTIVE PLAN.
PROPOSAL NO. 3--RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company has appointed Arthur Andersen LLP as its independent auditors
to perform the audit of the Company's financial statements for the 2000 fiscal
year, and the shareholders are being asked to ratify such appointment. Arthur
Andersen LLP has served as the Company's independent auditors since 1990.
Representatives of Arthur Andersen LLP will be present at the Meeting, will be
given an opportunity to make a statement at the Meeting if they desire to do so
and will be available to respond to questions.
9
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 28, 2000
unless otherwise noted, with respect to the beneficial ownership of the
Company's common stock by (i) each person known by the Company to be the
beneficial owner of more than 5% of the Company's common stock or more than 5%
of the Company's Series A Preferred Stock, (ii) each of the Company's directors,
(iii) each of the Company's executive officers included in the "Executive
Compensation table, below, and (iv) all current directors and executive officers
as a group.
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Preferred Stock
Beneficially Owned (1) Beneficially Owned (1)
---------------------- ----------------------
5% SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS NUMBER PERCENT NUMBER PERCENT
- ------------------------------------------------- ------ ------- ------ -------
5% SHAREHOLDERS:
<S> <C> <C> <C> <C>
Vertex .................................................... 4,009,428(2) 27.40% 1,137,687(3) 86.60%
Joseph M. Cohen Family Limited Partnership................. -- -- 176,056 13.40%
NON-EMPLOYEE DIRECTORS:
David Banks (4)............................................ 280,686 2.50% 0 --
Stephen J. Gaal (5)........................................ 28,365 * 0 --
Mark Leslie (6)............................................ 79,958 * 0 --
William R. Shellooe........................................ 0 * 0 --
William Delevati........................................... 0 * 0 --
EXECUTIVE OFFICERS:
Nick Ordon (7)............................................. 284,581 2.48% 0 --
George C. Franzen (8)...................................... 29,044 * 0 --
Gary Rhea (9)............................................. 67,227 * 0 --
Bernhard Woebker (10)..................................... 177,140 1.55% 0 --
ALL CURRENT DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (8 PERSONS) (11)................................ 917,957 7.77% 0 --
</TABLE>
* Represents less than 1%
(1) Percent ownership is based on 11,222,172 shares of common stock
outstanding as of April 28, 2000 and 1,313,743 shares of Series A
Preferred Stock outstanding as of April 28, 2000, respectively. Each
share of Series A Preferred Stock is convertible, at the election of
the holder, into two shares of common stock. See "Certain Transactions"
for additional information about the Series A Preferred Stock. Unless
otherwise indicated below, the persons and entities named in the table
have sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where
applicable. Shares of common stock subject to options or warrants or
issuable upon conversion of outstanding Series A Preferred Stock that
are currently exercisable or convertible within 60 days of April 28,
2000 are deemed to be outstanding and to be beneficially owned by the
person holding such options, warrants or convertible securities for the
purpose of computing the number and percentage ownership of common
stock of such person but are not deemed to be outstanding and to be
beneficially owned for the purpose of computing the percentage
ownership of common stock of any other person.
10
<PAGE>
(2) Includes 489,767 shares of common stock owned directly by Vertex
Investments International (III) Inc. ("VII"), 100,000 shares of common
stock owned directly by Vertex Investments International (I) Inc.
("VI"), 6,600 shares of common stock owned directly by Vertex
Management Pte. Ltd. ("VM"), 2,708,838 shares of common stock issuable
upon conversion of Series A Preferred Stock and exercise of common
stock warrants issued in the Company's July 12, 1999 Series A Preferred
Stock financing (the "Financing") owned by Vertex Technology Fund Ltd.
(formerly Vertex Technology Fund Pte. Ltd. ("VTF")) and 704,223 shares
of common stock issuable upon conversion of Series A Preferred Stock
and exercise of common stock warrants issued in the Financing owned by
Vertex Technology Fund (II) Ltd. ("VTF II"). VM, VI, VII, VTF and VTF
II are indirectly controlled by Singapore Technologies Pte. Ltd. The
address of VM, VI and VII is 83 Science Park Drive, #01-01/02 The
Curie, Singapore 118256. The address of VTF is 89 Science Park Drive,
#02-09/12 The Rutherford, Singapore 118261. The foregoing information
is based on the Schedule 13D dated July 23, 1999 filed by VTF, VTF II,
VM, VI and VII with the SEC.
(3) Includes 902,946 shares of Series A Preferred Stock issued in the
Financing owned by VTF, and 234,741 shares of Series A Preferred Stock
issued in the Financing owned by VTF II. The address of VTF and VTF II
is 89 Science Park Drive, #02-09/12 The Rutherford, Singapore 118261.
The foregoing information is based on the Schedule 13D dated July 23,
1999 filed by VTF and VTF II.
(4) Includes 10,000 shares of common stock subject to options exercisable
within 60 days of April 28, 2000.
(5) Includes 17,500 shares of common stock subject to options exercisable
within 60 days of April 28, 2000. Mr. Gaal is a director of the Company
but is not standing for reelection at the Meeting.
(6) Includes 41,500 shares of common stock subject to options exercisable
within 60 days of April 28, 2000. Mr. Leslie is Chairman of the Board
of Directors of the Company but is not standing for reelection at the
Meeting.
(7) Includes 274,581 shares of common stock subject to options exercisable
within 60 days of April 28, 2000. Mr. Ordon is President and Chief
Executive Officer of the Company.
(8) Represents 29,044 shares of common stock subject to options exercisable
within 60 days of April 28, 2000. Mr. Franzen is the former Vice
President and Chief Technical Officer of the Company. Effective
February 2000, Mr. Franzen ceased serving in such position and reduced
his status to a part time employee with the Company assisting the
Company with technical support and product development services.
(9) Represents 67,227 shares of common stock subject to options exercisable
within 60 days of April 28, 2000. Mr. Rhea is Vice President, Finance
and Administration and Chief Financial Officer of the Company.
(10) Includes 175,291 shares of common stock subject to options exercisable
within 60 days of April 28, 2000. Mr. Woebker is a director and Senior
Vice President Field Operations of the Company.
(11) Represents the shares beneficially owned by the individuals identified
in footnotes (4) through (7), (9) and (10).
MANAGEMENT
The names of the current executive officers of the Company and certain
information about them are set forth below:
<TABLE>
<CAPTION>
NAME OF EXECUTIVE OFFICER AGE POSITION WITH THE COMPANY
------------------------- --- -------------------------
<S> <C> <C>
Nick Ordon 52 President and Chief Executive Officer
Gary Rhea 56 Vice President of Finance and Administration, Chief
Financial Officer and Secretary
Bernhard Woebker 50 Senior Vice President of Field Operations
</TABLE>
For information regarding Mr. Ordon and Mr. Woebker, see "Proposal No. 1 -
Election of Directors - Directors/Nominees."
11
<PAGE>
Mr. Rhea has served as Vice President of Finance and Administration, Chief
Financial Officer and Secretary of the Company since he joined the Company in
May 1997. From May 1995 to May 1997, Mr. Rhea served as Chief Financial Officer
of Vadem Inc., a semiconductor company. From July 1992 until May 1995, he served
as Chief Financial Officer of Pacific Monolithics, a wireless communications
company. Mr. Rhea received a Bachelor of Science degree in Accounting from San
Jose State University in 1969.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to or earned or
paid for services rendered in all capacities to the Company during each of 1997,
1998 and 1999 by Nick Ordon, the Company's President and Chief Executive
Officer, and the Company's three other most highly compensated executive
officers during 1999 (collectively, the "Named Executive Officers"). This
information includes the dollar values of base salaries and bonus awards, the
number of shares subject to stock options granted and certain other
compensation, whether paid or deferred.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-term
----------------------------------------------------- Compensation
Awards
-----------
Securities
Name and Fiscal Other Annual Underlying
Principal Position Year Salary ($) Bonus ($)(1) Compensation ($)(2) Options (#)
------------------- ------ ---------- ------------ ------------------- -----------
<S> <C> <C> <C> <C> <C>
Nick Ordon 1999 200,000 245,000 1,814 150,000
President and Chief 1998 198,590 -- 1,814 325,000
Executive Officer 1997 -- -- -- --
Bernhard Woebker 1999 186,644(3) 258,750(4) -- 200,000
Senior Vice President 1998 190,611(3) 93,231(4) -- 3,000
of Field Operations 1997 142,436(3) 79,850(4) -- 50,000
Gary Rhea 1999 169,078 73,500 2,835 70,000
Vice President of Finance 1998 149,500 30,000 2,835 38,000
and Administration and 1997 95,644 10,000 756 75,000
Chief Financial Officer
George Franzen 1999 174,667 58,500 2,835 70,000
Former Vice President and 1998 159,200 20,000 2,835 33,000
Chief Technical Officer 1997 150,000 -- 1,814 10,000
</TABLE>
- ---------------------
(1) Bonus amounts for the fiscal years indicated are generally paid at the
beginning of the following fiscal year. Some bonus amounts for fiscal
year 1999 were, however, paid during that year. For 1997, bonuses were
paid at the discretion of the Board. For 1998 and 1999, bonuses were
paid pursuant to a plan approved by the Compensation Committee.
(2) Represents payment of life insurance premiums.
(3) Includes car allowance of $18,101, $13,176 and $7,769 in 1999, 1998 and
1997, respectively. Effective January 1, 2000, Mr. Woebker
significantly decreased his daily involvement with the Commpany while
retaining his operational and managerial roles in his position as
Senior Vice President of Field Operations. In connection with these
changes, Mr. Woebker's compensation was adjusted.
(4) Represents sales commissions in 1999, 1998 and 1997.
12
<PAGE>
OPTION GRANTS IN 1999
The following table contains information concerning stock option grants
pursuant to the Company's 1996 Equity Incentive Plan during 1999 to each of the
Named Executive Officers, all of which were made pursuant to the Company's 1996
Equity Incentive Plan. In accordance with the rules of the Securities and
Exchange Commission, the table sets forth the hypothetical gains or "option
spreads" that would exist for the options at the end of their respective
ten-year terms, except as otherwise noted. These gains are based on assumed
annual rates of stock price appreciation of 5% and 10% from the date the option
was granted to the end of the option term.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------
Number of Annual Rates
Securities % of Total of Stock Price
Underlying Options Appreciation for
Options Granted to Exercise Option Term (2)
Granted Employees Price Per Expiration ------------------
Name (#) in 1999 (1) Share ($) Date 5% 10%
- ---- ------------- ----------- ---------- ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
Nick Ordon................. 150,000 (3) 14.43% 2.656 7/19/09 250,552 634,946
Bernhard Woebker........... 75,000 (4) 7.22% 1.0625 3/23/09 50,115 127,001
125,000 (3) 12.03% 2.656 7/19/09 208,793 529,122
Gary Rhea.................. 70,000 (3) 6.73% 2.656 7/19/09 116,924 296,308
George C. Franzen.......... 70,000 (3) 6.73% 2.656 7/19/09 116,924 296,308
</TABLE>
- -------------------------
(1) The Company granted options to purchase an aggregate of 1,039,450
shares to employees in 1999. The sum of the specific grants described
in the table is 490,000 and are not included in the 1,039,450.
(2) The 5% and 10% assumed annual rates of stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of future common
stock prices.
(3) These options fully vest on July 16, 2003, assuming that the optionee
has continuously rendered services to the Company from the date of
grant. Under the terms initially approved by the Compensation
Committee, vesting of these options accelerate under the following
conditions, assuming that the optionee continues to render services to
the Company: (i) one-quarter of the shares vest on the first date that
the Company reports quarterly positive net income for a single quarter
following the date of grant; (ii) one-quarter of the shares vest on the
first date that the Company reports quarterly positive net income for
two consecutive quarters following the date of grant; (iii) one-quarter
of the shares vest on the first date that the Company reports quarterly
positive net income for three consecutive quarters following the date
of grant; (iv) one-quarter of the shares vest on the date that the
Company reports quarterly positive net income for four consecutive
quarters following the date of grant. To date, 25% of these options
have vested in accordance with the foregoing initial terms and an
additional 25% were vested pursuant to an action of the Compensation
Committee on April 18, 2000. These options expire ten (10) years from
the date of grants.
(4) These options fully vest on March 23, 2003, assuming that the optionee
has continuously rendered services to the Company from the date of
grant. Under the terms initially approved by the Compensation
Committee, vesting of these options accelerate under the following
conditions, assuming that the optionee
13
<PAGE>
continues to render services to the Company: (i) one-quarter of the
shares vest on the first date that the Company reports quarterly
positive net income for a single quarter following the date of grant;
(ii) one-quarter of the shares vest on the first date that the Company
reports quarterly positive net income for two consecutive quarters
following the date of grant; (iii) one-quarter of the shares vest on
the first date that the Company reports quarterly positive net income
for three consecutive quarters following the date of grant; (iv)
one-quarter of the shares vest on the first date that the Company
reports quarterly positive net income for four consecutive quarters
following the date of grant. To date, 50% of these options have vested
in accordance with the foregoing initial terms and an additional 25%
were vested pursuant to an action of the Compensation Committee on
April 18, 2000. These options expire ten (10) years from the date of
grant.
(4) On February 1, 2000 the Compensation Committee approved additional
option grants to purchase 65,000 shares, 65,000 shares and 75,000
shares, respectively, of the Company's common stock to each of Messrs.
Woebker, Rhea and Ordon. These options vest fully on February 1, 2004,
assuming that the optionee has continuously rendered services to the
Company from the date of grant. Under the terms approved by the
Compensation Committee, vesting of these options accelerate under the
following conditions, assuming that the optionee continues to render
services to the Company: (i) one-quarter of the shares vest on the
first date that the Company reports quarterly positive net income for a
single quarter following the date of grant; (ii) one-quarter of the
shares vest on the first date that the Company reports quarterly
positive net income for two consecutive quarters following the date of
grant; (iii) one-quarter of the shares vest on the first date that the
Company reports quarterly positive net income for three consecutive
quarters following the date of grant; and (iv) one-quarter of the
shares vest on the date that the Company reports quarterly positive net
income for four consecutive quarters following the date of grant. To
date, 25% of these options have vested. These options expire ten (10)
years from date of grant.
YEAR-END OPTION VALUES
The following table sets forth information concerning the number of shares
of common stock underlying exercisable and unexercisable options held by each of
the Named Executive Officers at December 31, 1999 and the values of unexercised
"in-the-money" options as of that date. None of the Named Executive Officers
exercised options during 1999.
<TABLE>
<CAPTION>
Value Of
Number of Unexercised
Securities Underlying In-the-money
Unexercised Options Options At
At December 31, 1999 (#) December 31, 1999 ($)(1)
------------------------------------------ ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Nick Ordon.................. 183,330 291,670 775,640 1,330,610
Bernhard Woebker............ 103,519 149,481 598,514 921,330
Gary Rhea................... 86,331 96,669 385,017 514,670
George C. Franzen........... 64,664 78,336 362,767 470,358
</TABLE>
(1) These values represent the positive spread between the respective
exercise prices of outstanding stock options and the fair market value
of the Company's common stock based on the closing trade on Nasdaq on
December 31, 1999 ($8.75). Certain executive officers exercised options
following the end of fiscal 1999, and the fair market value at that
time exceeded these levels.
14
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into agreements with its executive officers
(excluding Nick Ordon and Bernhard Woebker) that provide for acceleration of two
additional years of vesting of shares subject to options or restricted stock
upon certain acquisitions or changes in control of the Company.
The Company entered into agreements with each of its executive officers
(excluding Nick Ordon and Bernhard Woebker) that provided the executive officer
with up to 12 months of salary and non-equity benefits continuation and up to 12
months of additional stock option and unvested stock vesting following a
termination of that executive officer's employment without cause prior to
January 7, 1999. No such termination occurred and these agreements are no longer
in effect.
The Company entered into an agreement on December 3, 1997 with Nick Ordon,
its President and Chief Executive Officer, providing that: (i) Mr. Ordon will
receive an annual salary of $200,000; (ii) Mr. Ordon will be eligible for a
bonus of $125,000 at the end of his first year of employment with the Company
based upon the achievement of certain goals and objectives and for an additional
bonus of $25,000 if he exceeds those goals and objectives; (iii) Mr. Ordon will
be granted an option to purchase 200,000 shares of the Company's common stock at
a price of $6.5625 per share, which vests with respect to 25% of the shares on
the first anniversary of the date of grant and thereafter for three years at the
rate of 1/48th of the shares for each full month that Mr. Ordon renders services
to the Company, such option to expire 10 years from the date of grant; (iv) Mr.
Ordon will be granted an option to purchase 25,000 shares of the Company's
common stock at a price of $6.5625 per share, which will vest based upon the
achievement of certain goals and objectives in two equal annual increments; (v)
in the event the Company is acquired during the term of Mr. Ordon's employment,
50% of Mr. Ordon's unvested options outstanding on the date of acquisition will
immediately vest; and (vi) Mr. Ordon will receive certain other employee
benefits.
The Company entered into an agreement on January 7, 1998 with David Banks,
the Company's former President and Chief Executive Officer, in connection with
his departure from that position providing that: (i) Mr. Banks would continue to
receive a $210,000 annual salary, a $62,250 bonus and certain other benefits
through January 7, 1999; (ii) Mr. Banks' options and unvested stock would
continue to vest through January 7, 1999; (iii) Mr. Banks would be able to
exercise any vested options through April 7, 1999; and (iv) Mr. Banks would
retain the IBM ThinkPad Notebook computer supplied to him by the Company. Mr.
Banks is currently a non-employee director of the Company.
CERTAIN TRANSACTIONS
Except as described below and except for compensation arrangements
described where required above, since January 1, 1998, there has not been, nor
is there currently proposed, any transaction or series of similar transactions
to which the Company was or is to be a party in which the amount involved
exceeded or will exceed $60,000 and in which any director, executive officer or
holder of more than 5% of the common stock of the Company had or will have a
direct or indirect material interest.
On July 12, 1999, the Company issued shares of a newly designated
Series A Preferred Stock ("Series A Stock"). The Series A Stock has a
liquidation preference amount equal to 150% of the full amount paid for the
Series A Stock, with the preference amount increasing by an additional 50% of
such full amount paid on the second anniversary of the issuance of the Series A
Stock and increasing by another 50% of such full amount paid on the third
anniversary. The Series A Stock automatically converts into common stock if the
Company's common stock price exceeds $12.00 per share for 45 consecutive trading
days. The holders of Series A Stock will generally vote with the holders of
common stock provided that the Series A Stock is only entitled to a number of
votes equal to 50% of the number of shares of common stock into which the Series
A Stock is convertible. As of April 28, 2000
15
<PAGE>
each share of Series A Stock was convertible into two shares of common stock.
The holders of Series A Stock were also provided with certain voting protective
provisions.
A total of 1,489,799 shares of Series A Stock were issued, with each
share of Series A Stock initially convertible into two shares of the Company's
common stock. Of these shares, 902,946 shares of Series A Stock were issued in
exchange for an outstanding convertible secured promissory note with outstanding
principal and interest of $3,846,550.82 held by VTF, and 586,853 shares of
Series A Stock were issued in consideration of an additional $2,499,994 in new
financing. Of the total amount provided in the new financing, $1 million was
provided by VTF II, with the remainder provided by other investors. Each share
of Series A Stock was sold at a price of $4.26 per share. The Company also
issued warrants to purchase a total of 1,489,799 shares of common stock at an
exercise price of $2.13 per share as part of the transaction. VTF acquired
902,946 of these warrants in connection with the new financing and VTF II
acquired 234,741 of these warrants. As of April 28, 2000, VTF and its affiliates
beneficially owned an aggregate of 596,367 shares of common stock, representing
5.31% of the Company's outstanding common stock.See "Security Ownership of
Certain Beneficial Owners and Management."
In connection with the Financing, the Joseph M. Cohen Family Limited
Partnership purchased 176, 056 shares of Series A Stock and a warrant
exercisable for 176,056 shares of Common Stock on July 12, 1999.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 2001
Annual Meeting of Shareholders must be received by the Company at its principal
executive offices no later than January 11, 2001 in order to be included in the
Company's Proxy Statement and form of proxy relating to the meeting. Under Rule
14a-4(c)(1), shareholders wishing to bring a proposal before the 2001 annual
meeting of shareholders (but not include it in the Company's proxy materials)
should provide written notice of the proposal to the Company no later than March
27, 2001, as proxies solicited for the 2001 annual meeting will confer
discretionary authority to vote on any such matter of which the Company did not
have notice as of such date.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the SEC. Such persons are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors of
the Company, the Company believes that all Section 16(a) filing requirements
were met during 1999.
ADDITIONAL INFORMATION
The Company's 1999 annual report on Form 10-KSB as filed with the SEC is
available without charge by writing to or calling the Company headquarters.
Request should be directed to Investor Relations, 6539 Dumbarton Circle,
Fremont, CA 94555, telephone number (510) 789-1800. The Company's 1999 annual
report on Form 10-KSB may be obtained through the website maintained by the SEC
at http://www.sec.gov.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the Notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended that
Proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such Proxies.
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POST-AGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
17
VERSANT CORPORATION
1996 EQUITY INCENTIVE PLAN
As Adopted May 21, 1996
As Amended June 5, 1997,
June 10, 1999, January 19, 2000 and April 18, 2000*
(*April 18, 2000 increase is subject to June 22, 2000 shareholder approval)
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
--------------------------
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2
and 18, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 2,900,000 Shares. Subject to Sections 2.2 and 18,
Shares that: (a) are subject to issuance upon exercise of an Option but cease to
be subject to such Option for any reason other than exercise of such Option; (b)
are subject to an Award granted hereunder but are forfeited or are repurchased
by the Company at the original issue price; or (c) are subject to an Award that
otherwise terminates without Shares being issued will again be available for
grant and issuance in connection with future Awards under this Plan. Any
authorized shares not issued or subject to outstanding grants under the Versant
Corporation 1989 Stock Option Plan (the "PRIOR PLAN") on the Effective Date (as
defined below) and any shares that: (a) are issuable upon exercise of options
granted pursuant to the Prior Plan that expire or become unexercisable for any
reason without having been exercised in full; (b) are subject to an award
granted pursuant to the Prior Plan but are forfeited or are repurchased by the
Company at the original issue price; or (c) are subject to an award granted
pursuant to the Prior Plan that otherwise terminates without shares being issued
will no longer be available for grant and issuance under the Prior Plan, but
will be available for grant and issuance under this Plan. At all times the
Company shall reserve and keep available a sufficient number of Shares as shall
be required to satisfy the requirements of all outstanding Options granted under
this Plan and all other outstanding but unvested Awards granted under this Plan.
2.2 ADJUSTMENT OF SHARES. In the event that the number
of outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the shareholders of the
Company and compliance with applicable securities laws; PROVIDED, HOWEVER, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISO (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. All other
Awards may be granted to employees, officers, directors, consultants,
independent contractors and advisors of the Company or any Parent or Subsidiary
of the Company; PROVIDED such consultants, contractors and advisors render bona
fide services not in connection with the offer and sale of securities in a
capital-raising transaction. No person will be eligible to receive more than
400,000 Shares in any calendar year under this Plan pursuant to the grant of
Awards hereunder, other than new employees of the Company or of a Parent or
Subsidiary of the Company (including new employees who are also officers and
directors of the Company or any Parent or Subsidiary of the Company) who are
eligible to receive up to a maximum of 600,000 Shares in the calendar year in
which they commence their employment. A person may be granted more than one
Award under this Plan.
<PAGE>
4. ADMINISTRATION.
--------------
4.1 COMMITTEE AUTHORITY. This Plan will be administered
by the Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and
any other agreement or document executed pursuant to this
Plan;
(b) prescribe, amend and rescind rules and regulations relating
to this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent
or Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of
Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award
Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for
the administration of this Plan.
4.2 COMMITTEE DISCRETION. Any determination made by
the Committee with respect to any Award will be made in its sole discretion at
the time of grant of the Award or, unless in contravention of any express term
of this Plan or Award, at any later time, and such determination will be final
and binding on the Company and on all persons having an interest in any Award
under this Plan. The Committee may delegate to one or more officers of the
Company the authority to grant an Award under this Plan to Participants who are
not Insiders of the Company.
4.3 EXCHANGE ACT REQUIREMENTS. If two or more members
of the Board are Outside Directors, the Committee will be comprised of at least
two (2) members of the Board, all of whom are Outside Directors and
Disinterested Persons. During all times that the Company is subject to Section
16 of the Exchange Act, the Company will take appropriate steps to comply with
the disinterested administration requirements of Section 16(b) of the Exchange
Act, which will consist of the appointment by the Board of a Committee
consisting of not less than two (2) members of the Board, each of whom is a
Disinterested Person.
5. OPTIONS. The Committee may grant Options to eligible persons
and will determine whether such Options will be Incentive Stock Options within
the meaning of the Code ("ISOS") or Nonqualified Stock Options ("NQSOS"), the
number of Shares subject to the Option, the Exercise Price of the Option, the
period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
5.1 FORM OF OPTION GRANT. Each Option granted under
this Plan will be evidenced by an Award Agreement which will expressly identify
the Option as an ISO or an NQSO ("STOCK OPTION AGREEMENT"),
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and will be in such form and contain such provisions (which need not be the same
for each Participant) as the Committee may from time to time approve, and which
will comply with and be subject to the terms and conditions of this Plan.
5.2 DATE OF GRANT. The date of grant of an Option will
be the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of this Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.3 EXERCISE PERIOD. Options may be exercisable
immediately (subject to repurchase pursuant to Section 12 of this Plan) or may
be exercisable within the times or upon the events determined by the Committee
as set forth in the Stock Option Agreement governing such Option; PROVIDED,
HOWEVER, that no Option will be exercisable after the expiration of ten (10)
years from the date the Option is granted; and PROVIDED FURTHER that no ISO
granted to a person who directly or by attribution owns more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any Parent or Subsidiary of the Company ("TEN PERCENT SHAREHOLDER") will
be exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for the exercise of Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the Committee determines.
5.4 EXERCISE PRICE. The Exercise Price of an Option
will be determined by the Committee when the Option is granted and may be not
less than 85% of the Fair Market Value of the Shares on the date of grant;
provided that: (i) the Exercise Price of an ISO will be not less than 100% of
the Fair Market Value of the Shares on the date of grant; and (ii) the Exercise
Price of any ISO granted to a Ten Percent Shareholder will not be less than 110%
of the Fair Market Value of the Shares on the date of grant. Payment for the
Shares purchased may be made in accordance with Section 8 of this Plan.
5.5 METHOD OF EXERCISE. Options may be exercised only
by delivery to the Company of a stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 TERMINATION. Notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:
(a) If the Participant is Terminated for any reason except
death or Disability, then the Participant may exercise
such Participant's Options only to the extent that such
Options would have been exercisable upon the
Termination Date no later than three (3) months after
the Termination Date (or such shorter or longer time
period not exceeding five (5) years as may be
determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to
be an NQSO), but in any event, no later than the
expiration date of the Options.
(b) If the Participant is Terminated because of
Participant's death or Disability (or the Participant
dies within three (3) months after a Termination other
than because of Participant's death or disability),
then Participant's Options may be exercised only to the
extent that such Options would have been exercisable by
Participant on the Termination Date and must be
exercised by Participant (or Participant's legal
representative or authorized assignee) no later than
twelve (12) months after the Termination Date (or such
shorter or longer time period not exceeding five (5)
years as may be determined by the Committee, with any
such exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason
other than the Participant's death or Disability, or
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<PAGE>
(b) twelve (12) months after the Termination Date when
the Termination is for Participant's death or
Disability, deemed to be an NQSO), but in any event no
later than the expiration date of the Options.
(c) If a Participant is determined by the Board to have
committed an act of theft, embezzlement, fraud,
dishonesty or a breach of fiduciary duty to the Company
or Subsidiary, neither the Participant, the
Participant's estate nor such other person who may then
hold the Option shall be entitled to exercise any
Option with respect to any Shares whatsoever, after
termination of service, whether or not after
termination of service the Participant may receive
payment from the Company or Subsidiary for vacation
pay, for services rendered prior to termination, for
services rendered for the day on which termination
occurs, for salary in lieu of notice, or for any other
benefits. In making such determination, the Board shall
give the Participant an opportunity to present to the
Board evidence on his behalf. For the purpose of this
paragraph, termination of service shall be deemed to
occur on the date when the Company dispatches notice or
advice to the Participant that his service is
terminated.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify
a reasonable minimum number of Shares that may be purchased on any exercise of
an Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 LIMITATIONS ON ISO. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISOs are exercisable for
the first time by a Participant during any calendar year exceeds $100,000, then
the Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISOs and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSOs. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date of this Plan to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISO, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee
may modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; PROVIDED, HOWEVER, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.
5.10 NO DISQUALIFICATION. Notwithstanding any other
provision in this Plan, no term of this Plan relating to ISOs will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under
a Restricted Stock Award made pursuant to this Plan will be evidenced by an
Award Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time
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<PAGE>
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.
6.2 PURCHASE PRICE. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award will be determined by the Committee and
will be at least 85% of the Fair Market Value of the Shares on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Shareholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.
6.3 RESTRICTIONS. Restricted Stock Awards will be
subject to such restrictions (if any) as the Committee may impose. The Committee
may provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions, in whole or part, based on length of
service, performance or such other factors or criteria as the Committee may
determine.
7. STOCK BONUSES.
-------------
7.1 AWARDS OF STOCK BONUSES. A Stock Bonus is an award
of Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent or Subsidiary of the Company. A Stock Bonus may be awarded
for past services already rendered to the Company, or any Parent or Subsidiary
of the Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that
will be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.
7.2 TERMS OF STOCK BONUSES. The Committee will
determine the number of Shares to be awarded to the Participant and whether such
Shares will be Restricted Stock. If the Stock Bonus is being earned upon the
satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will determine: (a) the nature, length and
starting date of any period during which performance is to be measured (the
"PERFORMANCE PERIOD") for each Stock Bonus; (b) the performance goals and
criteria to be used to measure the performance, if any; (c) the number of Shares
that may be awarded to the Participant; and (d) the extent to which such Stock
Bonuses have been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Stock Bonuses that are subject to
different Performance Periods and different performance goals and other
criteria. The number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 FORM OF PAYMENT. The earned portion of a Stock
Bonus may be paid currently or on a deferred basis with such interest or
dividend equivalent, if any, as the Committee may determine. Payment may be made
in the form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the Committee
will determine.
7.4 TERMINATION DURING PERFORMANCE PERIOD. If a
Participant is Terminated during a Performance Period for any reason, then such
Participant will be entitled to payment (whether in Shares, cash or
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otherwise) with respect to the Stock Bonus only to the extent earned as of the
date of Termination in accordance with the Performance Stock Bonus Agreement,
unless the Committee will determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
---------------------------
8.1 PAYMENT. Payment for Shares purchased pursuant to
this Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned
by Participant for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and,
if such shares were purchased from the Company by use
of a promissory note, such note has been fully paid
with respect to such shares); or (2) were obtained by
Participant in the public market;
(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of the
Code; PROVIDED, HOWEVER, that Participants who are not
employees or directors of the Company will not be
entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral
other than the Shares;
(d) by waiver of compensation due or accrued to the
Participant for services rendered;
(e) with respect only to purchases upon exercise of an
Option, and provided that a public market for the
Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a
member of the National Association of
Securities Dealers (an "NASD DEALER") whereby
the Participant irrevocably elects to exercise
the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price,
and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward
the Exercise Price directly to the Company; or
(2) through a "margin" commitment from the
Participant and a NASD Dealer whereby the
Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in
the amount of the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise
Price directly to the Company; or
(f) by any combination of the foregoing.
8.2 LOAN GUARANTEES. The Committee may help the
Participant pay for Shares purchased under this Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
-----------------
9.1 WITHHOLDING GENERALLY. Whenever Shares are to be
issued in satisfaction of Awards granted under this Plan, the Company may
require the Participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such Shares. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 STOCK WITHHOLDING. When, under applicable tax laws,
a Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant
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is obligated to pay the Company the amount required to be withheld, the
Committee may in its sole discretion allow the Participant to satisfy the
minimum withholding tax obligation by electing to have the Company withhold from
the Shares to be issued that number of Shares having a Fair Market Value equal
to the minimum amount required to be withheld, determined on the date that the
amount of tax to be withheld is to be determined (the "TAX DATE"). All elections
by a Participant to have Shares withheld for this purpose will be made in
writing in a form acceptable to the Committee and will be subject to the
following restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
(b) once made, then except as provided below, the election
will be irrevocable as to the particular Shares as to
which the election is made;
(c) all elections will be subject to the consent or
disapproval of the Committee;
(d) if the Participant is an Insider and if the Company is
subject to Section 16(b) of the Exchange Act: (1) the
election may not be made within six (6) months of the
date of grant of the Award, except as otherwise
permitted by SEC Rule 16b-3(e) under the Exchange Act,
and (2) either (A) the election to use stock
withholding must be irrevocably made at least six (6)
months prior to the Tax Date (although such election
may be revoked at any time at least six (6) months
prior to the Tax Date) or (B) the exercise of the
Option or election to use stock withholding must be
made in the ten (10) day period beginning on the third
day following the release of the Company's quarterly or
annual summary statement of sales or earnings; and
(e) in the event that the Tax Date is deferred until six
(6) months after the delivery of Shares under Section
83(b) of the Code, the Participant will receive the
full number of Shares with respect to which the
exercise occurs, but such Participant will be
unconditionally obligated to tender back to the Company
the proper number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
-----------------------------
10.1 VOTING AND DIVIDENDS. No Participant will have any
of the rights of a shareholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant will be a shareholder and have all the rights of a shareholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; PROVIDED, that if
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; PROVIDED, FURTHER, that the Participant
will have no right to retain such stock dividends or stock distributions with
respect to Shares that are repurchased at the Participant's original Purchase
Price pursuant to Section 12.
10.2 FINANCIAL STATEMENTS. The Company will provide
financial statements to each Participant prior to such Participant's purchase of
Shares under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; PROVIDED, HOWEVER, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any
interest therein, will not be transferable or assignable by Participant, and may
not be made subject to execution, attachment or similar process, otherwise than
by will or by the laws of descent and distribution or as consistent with the
specific Plan and Award Agreement provisions relating thereto. During the
lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award, may be made only by the
Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee,
the Company may reserve to itself and/or its assignee(s) in the Award Agreement
a right to repurchase a portion of or all Shares held by
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a Participant following such Participant's Termination at any time within ninety
(90) days after the later of Participant's Termination Date and the date
Participant purchases Shares under this Plan, for cash and/or cancellation of
purchase money indebtedness, at: (A) with respect to Shares that are "Vested"
(as defined in the Award Agreement), the higher of: (l) Participant's original
Purchase Price, or (2) the Fair Market Value of such Shares on Participant's
Termination Date, PROVIDED, that such right of repurchase (i) must be exercised
as to all such "Vested" Shares unless a Participant consents to the Company's
repurchase of only a portion of such "Vested" Shares and (ii) terminates when
the Company's securities become publicly traded; or (B) with respect to Shares
that are not "Vested" (as defined in the Award Agreement), at the Participant's
original Purchase Price, provided, that the right to repurchase at the original
Purchase Price lapses at the rate of at least 20% per year over five (5) years
from the date the Shares were purchased (or from the date of grant of options in
the case of Shares obtained pursuant to a Stock Option Agreement and Stock
Option Exercise Agreement), and if the right to repurchase is assignable, the
assignee must pay the Company, upon assignment of the right to repurchase, cash
equal to the excess of the Fair Market Value of the Shares over the original
Purchase Price.
13. CERTIFICATES. All certificates for Shares or other
securities delivered under this Plan will be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed or quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; PROVIDED, HOWEVER, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any
time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time buy
from a Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
will not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation system
upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.
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17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent or Subsidiary of the Company or limit in any way
the right of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
----------------------
18.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR.
In the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the shareholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but the Company's shareholders prior to the merger (other than any shareholder
that merges, or controls another corporation that merges, with the Company) own
less than 51% of the surviving corporation, or (d) the sale of substantially all
of the assets of the Company, any or all outstanding Awards may be assumed,
converted or replaced by the successor corporation (if any), which assumption,
conversion or replacement will be binding on all Participants. In the
alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
shareholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a transaction described in this
Subsection 18.1, such Awards will expire on such transaction at such time and on
such conditions as the Board will determine.
18.2 OTHER TREATMENT OF AWARDS. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
18, in the event of the occurrence of any transaction described in Section 18.1,
any outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation, sale of assets or
other "corporate transaction."
18.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company,
from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (EXCEPT that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
19. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become
effective on the date on which the registration statement filed by the Company
with the SEC under the Securities Act registering the initial public offering of
the Company's Common Stock is declared effective by the SEC (the "EFFECTIVE
DATE"); PROVIDED, HOWEVER, that if the Effective Date does not occur on or
before December 31, 1996, this Plan will terminate having never become
effective. This Plan shall be approved by the shareholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable
laws, within twelve (12) months before or after the date this Plan is adopted by
the Board. Upon the Effective Date, the Board may grant Awards pursuant to this
Plan; PROVIDED, HOWEVER, that: (a) no Option may be exercised prior to initial
shareholder approval of this Plan; (b) no Option granted pursuant to an increase
in the number of Shares subject to this Plan approved by the Board will be
exercised prior to the time such increase has been approved by the shareholders
of the Company; and (c) in the event that shareholder approval of such increase
is not obtained within the time period provided herein, all Awards granted
hereunder will be canceled, any Shares issued pursuant to any Award will be
canceled, and any
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purchase of Shares hereunder will be rescinded. So long as the Company is
subject to Section 16(b) of the Exchange Act, the Company will comply with the
requirements of Rule 16b-3 (or its successor), as amended, with respect to
shareholder approval.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as
provided herein, this Plan will terminate ten (10) years from the date this Plan
is adopted by the Board or, if earlier, the date of shareholder approval. This
Plan and all agreements thereunder shall be governed by and construed in
accordance with the laws of the State of California.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; PROVIDED, HOWEVER, that the Board will not, without the approval
of the shareholders of the Company, amend this Plan in any manner that requires
such shareholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or (if the Company is subject
to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to the
Exchange Act or Rule 16b-3 (or its successor), as amended, thereunder,
respectively.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this
Plan by the Board, the submission of this Plan to the shareholders of the
Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options and bonuses otherwise than under this
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.
23. DEFINITIONS. As used in this Plan, the following terms
will have the following meanings:
"AWARD" means any award under this Plan, including any
Option, Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as
amended.
"COMMITTEE" means the committee appointed by the Board
to administer this Plan, or if no such committee is appointed, the Board.
"COMPANY" means Versant Corporation or any successor
corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"DISINTERESTED PERSON" means a director who has not,
during the period that person is a member of the Committee and for one year
prior to commencing service as a member of the Committee, been granted or
awarded equity securities pursuant to this Plan or any other plan of the Company
or any Parent or Subsidiary of the Company, except in accordance with the
requirements set forth in Rule 16b-3(c)(2)(i) (and any successor regulation
thereto) as promulgated by the SEC under Section 16(b) of the Exchange Act, as
such rule is amended from time to time and as interpreted by the SEC.
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
"EXERCISE PRICE" means the price at which a holder of
an Option may purchase the Shares issuable upon exercise of the Option.
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"FAIR MARKET VALUE" means, as of any date, the value of
a share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq
National Market on the date of determination as
reported in THE WALL STREET JOURNAL;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, its closing
price on the date of determination on the principal
national securities exchange on which the Common Stock
is listed or admitted to trading as reported in THE
WALL STREET JOURNAL;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange,
the average of the closing bid and asked prices on the
date of determination as reported in THE WALL STREET
JOURNAL;
(d) in the case of an Award made on the Effective Date, the
price per share at which shares of the Company's Common
Stock are initially offered for sale to the public by
the Company's underwriters in the initial public
offering of the Company's Common Stock pursuant to a
registration statement filed with the SEC under the
Securities Act; or
(d) if none of the foregoing is applicable, by the
Committee in good faith.
"INSIDER" means an officer or director of the Company
or any other person whose transactions in the Company's Common Stock are subject
to Section 16 of the Exchange Act.
"OUTSIDE DIRECTOR" means any director who is not; (a) a
current employee of the Company or any Parent or Subsidiary of the Company; (b)
a former employee of the Company or any Parent or Subsidiary of the Company who
is receiving compensation for prior services (other than benefits under a
tax-qualified pension plan); (c) a current or former officer of the Company or
any Parent or Subsidiary of the Company; or (d) currently receiving compensation
for personal services in any capacity, other than as a director, from the
Company or any Parent or Subsidiary of the Company; PROVIDED, HOWEVER, that at
such time as the term "Outside Director", as used in Section 162(m) of the Code
is defined in regulations promulgated under Section 162(m) of the Code, "Outside
Director" will have the meaning set forth in such regulations, as amended from
time to time and as interpreted by the Internal Revenue Service.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5.
"PARENT" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if at the time of
the granting of an Award under this Plan, each of such corporations other than
the Company owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award
under this Plan.
"PLAN" means this Versant Corporation1996 Equity
Incentive Plan, as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares
pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
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"SHARES" means shares of the Company's Common Stock
reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and
18, and any successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu
of Shares, pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of
this Plan with respect to a Participant, that the Participant has for any reason
ceased to provide services as an employee, director, consultant, or advisor to
the Company or a Parent or Subsidiary of the Company. An employee will not be
deemed to have ceased to provide services in the case of (i) sick leave, (ii)
military leave, or (iii) any other leave of absence approved by the Committee,
provided, that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute or unless provided otherwise pursuant to formal policy adopted from time
to time by the Company and issued and promulgated to employees in writing. In
the case of any employee on an approved leave of absence, the Committee may make
such provisions respecting suspension of vesting of the Option while on leave
from the employ of the Company or a Subsidiary as it may deem appropriate,
except that in no event may an Option be exercised after the expiration of the
term set forth in the Option agreement. The Committee will have sole discretion
to determine whether a Participant has ceased to provide services and the
effective date on which the Participant ceased to provide services (the
"TERMINATION DATE").
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