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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 24, 1998
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________
VERTEL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
__________________
CALIFORNIA 95-3948704
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
21300 VICTORY BOULEVARD, SUITE 1200
WOODLAND HILLS, CA 91367
(818) 227-1400
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
__________________
GORDON L. ALMQUIST
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
VERTEL CORPORATION
21300 VICTORY BOULEVARD, SUITE 1200
WOODLAND HILLS, CA 91367
(818) 227-1400
(Name, Address Including Zip Code, and Telephone Number Including Area Code, of
Agent for Service)
__________________
COPIES TO:
Elias J. Blawie
Sanjay K. Khare
Venture Law Group, A Professional Corporation
2800 Sand Hill Road
Menlo Park, California 94025
(650) 854-4488
__________________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
__________________
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
Box. [_]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] _______________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED PRICE PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
COMMON STOCK 2,000,000 $1.875 $3,750,000.00 $1,042.50
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee based on the average of the high and low closing price of
the Common Stock as reported on the Nasdaq National Market on December 22,
1998 pursuant to Rule 457(c).
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION INCLUDING THIS PROSPECTUS IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE SUCH AN OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 24, 1998
PROSPECTUS
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VERTEL CORPORATION
2,000,000 SHARES OF COMMON STOCK
The 2,000,000 shares of Vertel Common Stock covered by this Prospectus (the
"Shares") are all being offered for the account of certain shareholders of the
Company, or their transferres, donees or distributees (the "Selling
Shareholders"). We sold the Shares to the Selling Shareholders on September 29,
1998, in a private placement described in the Prospectus under the title "Sale
of Common Stock to Selling Shareholders."
The Selling Shareholders may sell the Shares from time to time on the
over-the-counter market in regular brokerage transactions, in transactions
directly with market makers or in certain privately-negotiated transactions.
Each Selling Shareholder has advised us that they will not sell any of the
Shares until this Prospectus has been appropriately amended or supplemented, if
required and has been declared effective. Each of the Selling Shareholders and
any broker executing orders on their behalf may be deemed to be an Underwriter
under the Securities Act of 1933.
The price to public, underwriting discounts and commissions and net
proceeds to the Selling Shareholders from the sale of the Shares will depend on
the nature and timing of the sales and therefore will not be known until the
sale are actually made. We will not receive proceeds from the sale of the
Shares by the Selling Shareholders. We have agreed to bear certain registration
costs associated with selling the Shares of approximately $40,000.00.
Vertel Common Stock trades on the Nasdaq Stock Market under the symbol
"VRTL." On December 22, 1998, the last closing price of Vertel Common Stock on
the Nasdaq Stock Market was $1.875 per share.
_______________________________________
SEE "RISK FACTORS," BEGINNING ON PAGE 2,
FOR INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
_______________________________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______________________, 1998
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING OF THE SHARES TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND YOU SHOULD NOT RELY ON ANY SUCH INFORMATION OR REPRESENTATION AS HAVING BEEN
AUTHORIZED BY US OR ANY SELLING SHAREHOLDER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
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TABLE OF CONTENTS
Vertel Overview...............................................................1
Risk Factors..................................................................2
Sale of Common Stock to Selling Shareholders..................................6
Use of Proceeds...............................................................6
Determination of Offering Price...............................................6
Plan of Distribution..........................................................6
Selling Shareholders..........................................................8
Interests of Named Experts and Counsel........................................9
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by Vertel Corporation (the "Company") with
the Commission are incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December
27, 1997.
2. The Company's definitive Proxy Statement dated March 6, 1998, filed in
connection with the Company's March 31, 1998 Annual Meeting of
Shareholders.
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 28, 1998.
4. The Company's Current Report on Form 8-K dated April 13, 1998.
5. The Company's Quarterly Report on Form 10-Q for the quarter ended June
27, 1998.
6. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 26, 1998.
7. The Company's Current Report on Form 8-K dated December 3, 1998.
8. The description of the Company's Common Stock which is contained in
Items 1 and 2 of the Company's Registration Statement on Form 8-A
filed pursuant to Section 12 of the Exchange Act on November 11, 1991.
9. The description of the Company's Preferred Share Purchase Rights
which is contained in Items 1 and 2 of the Company's Registration
Statement on Form 8-A field pursuant to Section 12 of the Exchange Act
on April 30, 1997.
10. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the Common Stock offered
hereby.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any other subsequently filed document
which also is incorporated by reference herein) modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part hereof, except as so modified or superseded.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference, other than exhibits to such documents. Requests should be directed
to Vertel Corporation, 21300 Victory Blvd., Suite 1200, Woodland Hills,
California 91367, telephone: (818) 227-1400, Attn: Investor Relations.
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VERTEL OVERVIEW
We develop and market software for the management and operation of
telecommunications networks. Our software and solutions include communications
infrastructure products, network management platforms and applications software
for telecommunication carrier networks worldwide. Our solutions are based upon
the International Telecommunications Union's telecommunications management
network or "TMN" standard, and support seamless network operation and
management over diverse transmission media and protocols. For example, we offer
embedded software for network equipment and software solutions to allow
telecommunications service providers to integrate proprietary or SNMP based
network management systems with a TMN standards based solution. In addition our
object oriented software platforms facilitate the rapid development of network
and service management applications and provide features such as fault detection
and automatic response, remote improvement of network configuration, automation
of accounting and billing functions and optimization of network traffic and
security. We also provide professional services that enable service providers
to deploy and maintain a complete TMN solution that complements our software
products and development platforms. Our professional services include system
analysis and design, source code portation and interface, custom application
development, conformance and certification testing and technical support
services.
We were incorporated in California in 1985 and our principal offices are
located at 21300 Victory Boulevard, Suite 1200, Woodland Hills, California
91367. Our telephone number at that location is (818) 227-1400. References in
this prospectus to Vertel, the Company, we, or us are references to Vertel
Corporation.
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RISK FACTORS
THIS PROSPECTUS CONTAINS STATEMENTS REGARDING THE FUTURE INCLUDING, AMONG
OTHER THINGS, OUR EXPECTATIONS, BELIEFS, INTENTIONS AND STRATEGIES. ALL OF THESE
STATEMENTS ARE BASED ON INFORMATION AVAILABLE TO US AS OF THE DATE OF THIS
PROSPECTUS, AND WE ARE NOT OBLIGATING OURSELVES TO UPDATE THE PUBLIC WITH
RESPECT TO THESE STATEMENTS IN THE EVENT OF FUTURE DEVELOPMENTS. OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM OUR EXPECTATIONS AS A RESULT OF, AMONG
OTHER THINGS, THE RISK FACTORS DESCRIBED BELOW AND IN THE DOCUMENTS INCORPORATED
BY REFERENCE FROM OUR FILINGS WITH THE SEC. YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS IN ADDITION TO THE RISK FACTORS SET FORTH IN OUR FILINGS
WITH THE SEC BEFORE MAKING A DECISION TO PURCHASE ANY SHARES.
Adoption of Standards. Our success will be based in large part on the
adoption of the TMN standard by major telecommunications service providers in
the United States and abroad. Competing standards such as SNMP2 and CMIP have
emerged. In addition, telecommunications service providers have historically
depended on proprietary systems, which do not rely on any standards. While we
invest substantial efforts in encouraging the adoption of the TMN standard, we
do not have direct control over such adoption and we cannot provide any
assurance that the TMN standard will be widely adopted in a timely matter, or at
all. Telecommunications service providers could adopt a competing standard or no
standard at all. Similarly, they could adopt the TMN standard, but not do so
within the timeframe that we expect them to. If telecommunications service
providers adopt a standard other than TMN, adopt the TMN standard but not in a
timely way or fail to adopt any standard at all, our business, operating
results, financial condition and strategic position would be materially
adversely affected.
Dependence upon New Products. We expect that new products and related
services will account for a substantial portion of our revenues in the
foreseeable future. As a result, factors adversely affecting the pricing of or
demand for our newer TMN-related software and services, such as competition for
new products or lack of customer acceptance, could have a disproportionately
adverse effect on our business, operating results and financial condition.
The markets for our products are characterized by rapidly changing
technology and frequent new product introductions. Accordingly, we believe that
our future success will depend on our ability to enhance our existing products
and to develop and introduce in a timely fashion new products that achieve
market acceptance. If the products we develop are not widely accepted by
customers, we are not able to identify, develop, manufacture, market or support
such products successfully or we are unable to respond effectively to
technological changes, revisions in industry standards or product announcements
by competitors, our business, operating results and financial condition would be
adversely affected. We have, from time to time, experienced delays in developing
new products and enhancements. If we are unable in the future, due to resource
constraints or technological or other reasons, to develop and introduce new
products or product enhancements in a timely manner, this would have a material
adverse effect on our business, financial condition and results of operations.
From time to time, we announce new products, capabilities or technologies
that have the potential to replace our existing product offerings. Such
announcements can cause customers to defer purchasing or licensing existing
Company products, which would adversely affect our business, operating results
and financial condition.
Regulation. The telecommunications industry is subject to regulation in the
United States and other countries, and therefore our products and the businesses
of our current and potential customers are required to receive regulatory
approvals from multiple organizations using different standards. The enactment
or amendment by federal, state or foreign governments of new laws or regulations
or changes in the interpretation of existing regulations could adversely affect
our products and the businesses of our current and potential customers, and
thereby affect our business, operating results and financial conditions.
Emerging Product Markets. As part of our corporate strategy, we have
targeted product markets which are in the early stage of their development,
including the TMN market. There can be no assurance that these markets will
attain broad acceptance or generate long-term growth opportunities in line with
our objectives. We believe that the TMN applications markets will take years to
develop and that development of this market will require (a) a
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sufficient number of high quality, commercially successful communications
applications, and (b) the availability of communications stacks, information
models and applications suites that allow telecommunications equipment
manufacturers and service providers to implement TMN in their products and there
can be no assurance that these conditions will be met in a timely way, if at
all. We cannot predict the size of the market or the rate at which the market
will grow and if the markets fail to grow, grow more slowly than anticipated, or
become saturated with competitors, our business, financial condition and results
of operations would be materially adversely affected.
Substantial Fluctuations in Quarterly Operating Results; Future Operating
Results Uncertain. A substantial portion of our software revenues have been, and
will continue to be, derived from a small number of large orders placed by large
organizations after extended evaluation. In addition, our customers have in the
past, and we expect they will continue in the future, to exhibit seasonality in
their purchasing patterns. The timing of orders and their fulfillment has
caused and will continue to cause material fluctuations in our operating
results, particularly on a quarterly basis. In addition, our quarterly operating
results have in the past and will in the future vary significantly depending
upon factors such as the timing of significant orders and shipments, the lengthy
sales cycle of the our products, capital spending patterns of our customers,
changes in pricing policies by ourselves and our competitors, increased
competition, the cancellation of service or maintenance agreements, changes in
operating expenses, personnel changes, demand for our products, the number,
timing and significance of new product and product enhancement announcements by
either ourselves or our competitors, our ability to develop, introduce and
market new and enhanced versions of our products on a timely basis, the mix
between U.S. and international sales, the mix of direct and indirect sales and
general economic factors, among others. Due to the foregoing factors, quarterly
revenues and operating results have been and will continue to be difficult to
forecast. Based upon all of the foregoing, we believe that quarterly revenues
and operating results are likely to vary significantly in the future and that
period-to-period comparisons of results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
There can be no assurance that our revenue will increase or be sustained in
future periods or that we will be profitable in any future period. Further, it
is likely that in some future quarter our revenue or operating results will be
below the expectations of public market analysts and investors. In such event,
the price of the our Common Stock is likely to be materially adversely affected.
Timing of Orders. We typically realize a significant portion of our TMN-
based software license revenues in the last month of a quarter, and frequently
in the last weeks or even days of a quarter. Since our revenues are based in
large part on a limited number of large orders, small delays in a limited number
of orders can have a dramatic effect on quarterly results. In addition, we
currently intend to increase funding of research and product development,
increase sales and market development activities and expand our distribution
channels which will increase our expense rates. Because only a small portion of
our expenses varies with revenue in the short term, net income maybe
disproportionately affected by a reduction in revenue, particularly since
reductions in revenue may not be apparent until the last days of a quarter.
Similarly, to the extent additional expenses are not subsequently followed by
increased revenues, the Company's business, operating results and financial
condition could be materially and adversely affected. If revenue levels are
below expectations, operating results are likely to be materially adversely
affected.
Lengthy Sales Cycles. Our products are complex and generally involve
significant investment decisions after extended evaluations by prospective
customers. Accordingly, we must engage in a lengthy sales cycle to provide a
significant level of education regarding the use and benefits of our products to
potential customers. Our customers often must secure executive level approval to
license our products and the agreements pursuant to which we license our
products often involve lengthy negotiation. In addition, the implementation of
our software products involves a significant commitment by customers over an
extended period of time. As a result, our sales cycle is subject to a number of
significant delays over which we have little control. Therefore, significant
delays in implementation, or delays in purchases by customers, whether or not
such delays are within our control, could materially adversely affect our
business, operating results and financial condition.
Fixed Price Arrangements. From time to time we enter into fixed price
arrangements for professional services. Fixed price arrangements could in the
future result in losses primarily due to delays in the implementation
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process or other complexities associated with completion of the project
underlying such arrangements. Such losses could have a material adverse effect
on our business, operating results and financial condition.
Sales and Marketing Risks. During 1999, we plan to increase the number of
direct sales and marketing personnel to support the further development of TMN
market opportunities. As we hire new sales and marketing personnel we anticipate
that there will be a delay before they become effective. There can be no
assurance that we will be successful in attracting or retaining qualified sales
and marketing personnel, that this expansion will result in sales of our
products, that the costs of such expansion will not exceed the revenues
generated, or that our sales and marketing organization will successfully
compete against the larger and better funded sales and marketing organizations
of the Company's competitors.
Competition. Competition in the markets in which we compete is
characterized by rapidly changing technologies, evolving industry standards, in-
house or proprietary solutions, frequent new product introductions, and rapid
changes in customer requirements. To maintain and improve our competitive
position, we must continue to develop and introduce, in a timely and cost-
effective manner, new services, products and product features that keep pace
with competitors' offerings, technological developments and changing industry
standards. The principal competitive factors in our market are quality,
performance, product features such as scalability, interoperability,
functionality, customizability and ease of use, customer support, services,
price and maintenance. We experience significant competition in
telecommunications network management from TCSI, OSI, IBM, Sun Microsystems,
DSET and major telecommunication vendors such as AT&T, all of whom have longer
operating histories and have greater financial, technical, sales, marketing and
other resources than we do. There can be no assurance that we will be able to
identify, develop, manufacture, market or support products successfully or that
we will be able to respond effectively to technological changes or product
announcements by our competitors. Moreover, the Company's current and potential
competitors may respond more quickly than we do to new or emerging technologies
or changes in customer requirements. In addition, as the market develops, a
number of companies with significantly greater resources than us could attempt
to increase their presence in the market by acquiring or forming strategic
alliances with our competitors resulting in increased competition. There can be
no assurance that we will be able to compete successfully with such competitors.
Risks Associated with Complex Software-Based Products. The development,
enhancement and implementation of our products entail risks of product defects
or failures. In the past we have discovered software bugs in certain of our
products and software solutions. Although to date we have not experienced
material adverse effects resulting from any such bugs, there can be no assurance
that errors will not be found in existing or new products or releases after
commencement of commercial licensing, which may result in delay or loss of
revenue, loss of market share, failure to achieve market acceptance, or may
otherwise adversely impact our business, operating results and financial
condition. Moreover, the complexities involved in implementing and customizing
our software solutions entail additional risks of performance failures. We
cannot provide any assurance that we will not encounter substantial delays or
other difficulties due to such complexities. Any such occurrence could have a
material adverse effect on our business, operating results and financial
condition.
Risks Associated With Year 2000. New releases of our software have been
designed to address processing for the Year 2000 to the extent it has been
required. We have completed a review of all of our developed products for Year
2000 compliance purposes. We believe that most (approximately 75%) of our
products are Year 2000 compliant and that those that are not Year 2000 compliant
will be upgraded to be Year 2000 compliant by March 1999. However, to the
extent that others, such as system integrators, make use of our software in
developing solutions for third parties, we may have no knowledge as to the Year
2000 readiness of those third party products. In addition it is possible that
third parties could assert claims against us or our customers concerning Year
2000 issues and regardless of their merits or lack thereof, such claims could be
material.
As with other organizations, our internal computer systems and programs
were originally designed to recognize calendar years by their last two digits.
Calculations performed using these truncated fields would not work properly with
dates from the Year 2000 and beyond. We have completed an evaluation of Year
2000 issues associated with our internal computer systems. Most of our computer
systems are already Year 2000 compliant. Other internal computer and other
systems that have been identified as non-compliant and will be upgraded to be
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Year 2000 compliant by June 1999, however if we are unsuccessful in completing
these upgrades in a timely way, our business could be materially adversely
affected.
We have also completed an evaluation of the possible effects on our
operations of the Year 2000 readiness of our key suppliers. We rely on third
party manufacturers for the proper functioning of our information systems,
software and products. The failure of those manufacturers to address Year 2000
issues could have a material impact on our operations and financial results;
however, the potential impact and related costs are not known at this time
Fluctuations in Market Price of Common Stock. Announcement of new products
by us or our competitors and quarterly variations in financial results could
cause the market price of our Common Stock to fluctuate substantially. In
addition, the stock market has experienced price and volume fluctuations from
time to time that have affected the market prices of many technology-based
companies and that are not necessarily related to the operating performance of
such companies.
Risk of Delisting. The Nasdaq Stock Market has announced a policy of
delisting securities that trade below the price of $1.00 per share for more than
10 business days. While our stock price has not been below $1.00 at any time in
the past, it has approached $1.00 in recent periods. If the price of our Common
Stock falls below $1.00 and our Common Stock is subsequently delisted our shares
would become highly illiquid. In addition, we could spend material financial and
management resources in an attempt to avoid delisting.
International Sales and Operations. Sales to third party customers outside
of the United States accounted for a substantial fraction of our net revenues
for 1996, 1997 and the first three quarters of 1998. We expect that
international sales will continue to be a significant portion of our business.
International sales and operations may also be subject to risks such as the
imposition of governmental controls, export license requirements, restrictions
on the export of critical technology, currency exchange fluctuations, political
instability, trade restrictions, changes in tariffs and difficulties in staffing
and managing international operations. In addition, sales in Europe are
adversely affected in the third quarter of each year as many customers and end-
users reduce their business activities during the summer months. These seasonal
factors and currency fluctuation risks may have an effect on our quarterly
results of operations. Further, because we have sales offices in different
countries, our management must address differences in regulatory environments
and cultures. If we are unable to address these differences successfully our
business, financial condition and results of operations would be adversely
affected.
In addition, international sales denominated in U.S. Dollars may be
adversely affected by exchange rate fluctuations if the relative cost of the our
products becomes higher. Fluctuations in exchange rates could also result in
exchange losses. The impact of future exchange rate fluctuations cannot be
predicted adequately. To date, we have not sought to hedge the risks associated
with fluctuations in exchange rates, but may undertake such transactions in the
future. We do not currently have a policy relating to hedging. There can be no
assurance that our results of operations will not be materially adversely
affected by exchange rate fluctuations.
Dependence on Suppliers and Licenses. We license certain technology
included in our products; if we become unable to utilize such technology,
because of the termination of these licenses for any reason, our operations
could be adversely affected.
Dependence on Key Personnel. Our success depends to a significant degree
upon the continued contributions of key management, sales, marketing,
engineering and research and development personnel, many of whom would be
difficult to replace. If certain of these employees were to leave, we would be
adversely affected. We believe our future success will also depend in large part
upon our ability to attract and retain highly skilled software engineers, and
managerial, sales and marketing personnel. Competition for such personnel is
intense and there can be no assurance that we will be successful in attracting
and retaining the necessary personnel. To the extent we are not successful in
attracting or retaining key personnel, we could also be adversely affected.
Potential Misappropriation of Our Intellectual Property. We regard our
products as proprietary and rely primarily on a combination of statutory and
common law copyright, trademark and trade secret laws, customer licensing
agreements, employee and third-party nondisclosure agreements and other methods
to protect our proprietary rights. We also generally enter into confidentiality
and invention assignment agreements with our employees and consultants.
Additionally, we enter into confidentiality agreements with certain of our
customers and potential customers and limit access to, and distribution of, our
source code and other proprietary information. Despite these precautions, it may
be possible for a third party to copy or otherwise obtain and use our
technologies without authorization, or to develop similar technologies
independently. Furthermore, the laws of certain countries in which we do
business do not protect our software and intellectual property rights to the
same extent as do the
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laws of the United States. We do not include in our software any mechanisms to
prevent or inhibit unauthorized use, but generally either require the execution
of an agreement that restricts copying and use of our products or provides for
the same in a break-the-seal license agreement. If unauthorized copying or
misuse of our products were to occur to any substantial degree, our business,
financial condition and results of operations could be materially adversely
affected. We cannot provide any assurance that our means of protecting our
proprietary rights will be adequate or that our competitors will not
independently develop similar technology.
Infringement of Intellectual Property of Third Parties. While we have not
received claims alleging infringement of the proprietary rights of third parties
which we believe would have a material adverse effect on our business, financial
condition or results of operations, nor are we aware of any similar threatened
claims, we cannot provide any assurance that third parties will not claim that
our current or future products infringe the proprietary rights of others. Any
such claim, with or without merit, could result in costly litigation or might
require us to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on reasonable terms, or
at all.
SALE OF COMMON STOCK TO SELLING SHAREHOLDERS
Pursuant to the terms of a Common Stock Purchase Agreement, on September
29, 1998 we sold 2,000,000 shares of our Common Stock to the Selling
Shareholders at a price per share of $1.50, which was a premium to the average
closing price of the Company's Common Stock on the Nasdaq National Market for
the five (5) trading days immediately preceding the closing of such transaction.
Pursuant to the terms of such agreement we agreed to file a registration
statement on Form S-3 with respect to the Shares on or before December 28, 1999
and to maintain the effectiveness of such registration statement until all of
the Shares registered thereunder were sold. We also agreed to bear the
registration expenses (filing fees, printing expenses, fees and disbursements of
our legal counsel and blue sky fees and expenses) incurred in connection with
the registration and sale of the Shares. The Selling Shareholders agreed to bear
the selling expenses (underwriting discounts, selling commissions, stock
transfer taxes and fees and costs of counsel to the Selling Shareholders)
incurred in connection with the registration and sale of the Shares. Under the
Common Stock Purchase Agreement described above, Vertel and the Selling
Shareholders agreed to customary reciprocal indemnification provisions in
connection with the registration and sale of the Shares. This registration
statement is being filed pursuant to such agreement.
USE OF PROCEEDS
All shares of Common Stock offered hereby are being sold by the Selling
Shareholders named under the caption "Selling Shareholders." We will not receive
any proceeds from the offering.
DETERMINATION OF OFFERING PRICE
The Shares are being registered for sale on a continuous basis pursuant to
Rule 415 of the Securities Act of 1933 and the Selling Shareholders may sell the
Shares from time to time on the over-the-counter market in regular brokerage
transactions, in transactions directly with market makers or in certain
privately-negotiated transactions at prices and on terms prevailing at the time
of any such sale. The price to public, underwriting discounts and commissions
and net proceeds to the Selling Shareholders from the sale of the Shares will
depend on the nature and timing of the sales and therefore will not be known
until the sales are actually made, if at all.
PLAN OF DISTRIBUTION
The Selling Shareholders may sell the Shares in whole or in part, from time
to time on the over-the-counter market at prices and on terms prevailing at the
time of any such sale. Any such sale may be made in broker's transactions
through broker-dealers acting as agents, in transactions directly with market
makers or in privately-negotiated transactions where no broker or other third
party (other than the purchaser) is involved. The Selling Shareholders will pay
selling commissions or brokerage fees, if any, with respect to the sale of the
Shares in amounts customary for the type of transaction effected. The Selling
Shareholders will also pay all applicable
-6-
<PAGE>
transfer taxes and all fees and disbursements of counsel for such Selling
Shareholders incurred in connection with the sale of the Shares.
The Selling Shareholders have advised the Company that during such time as
such Selling Shareholders may be engaged in the attempt to sell Shares
registered hereunder, such persons will:
(i) not engage in any stabilization activity in connection with any of the
Company's securities;
(ii) cause to be furnished to each person to whom Shares included herein
may be offered, and to each broker-dealer, if any, through whom Shares are
offered, such copies of this Prospectus, as supplemented or amended, as may be
required by such person;
(iii) not bid for or purchase any of the Company's securities or any
rights to acquire the Company's securities, or attempt to induce any person to
purchase any of the Company's securities or rights to acquire the Company's
securities other than as permitted under the Exchange Act;
(iv) not effect any sale or distribution of the Shares until after the
Prospectus shall have been appropriately amended or supplemented, if required,
to set forth the terms thereof; and
(v) effect all sales of Shares in broker's transactions through broker-
dealers acting as agents, in transactions directly with market makers or in
privately negotiated transactions where no broker or other third party (other
than the purchaser) is involved.
The Selling Shareholders, and any other persons who participate in the sale
of the Shares, may be deemed to be "Underwriters" as defined in the Securities
Act. Any commissions paid or any discounts or concessions allowed to any such
persons, and any profits received on resale of the Shares, may be deemed to be
underwriting discounts and commissions under the Securities Act.
We have agreed to maintain the effectiveness of this Registration Statement
until the earlier of (a) the sale of all the Shares registered pursuant to this
Prospectus or (b) such date as we are satisfied that each holder of Shares can
sell all of the Shares it holds in any three-month period in compliance with
Rule 144 promulgated under the Securities Act. No sales may be made pursuant to
this Prospectus after such date unless we amend or supplement this Prospectus to
indicate that we have agreed to extend such period of effectiveness. There can
be no assurance that the Selling Shareholders will sell all or any of the Shares
of Common Stock offered hereunder.
We have agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act.
The Selling Shareholders may distribute, donate or transfer the Shares held
by them to third-parties, including family members and limited partners, which
parties may sell the Shares received by them pursuant to this Prospectus. Prior
to any such sale, we will amend this Prospectus, as required by the SEC, to
reflect such a sale.
-7-
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information as of December 1, 1998
with respect to the Selling Shareholders. Except as indicated, none of the
Selling Shareholders has held any position or office or had a material
relationship with Vertel or any of its affiliates within the past three years
other than as a result of the ownership of our Common Stock. We may amend or
supplement this Prospectus from time to time to update the disclosure set forth
herein, including as a result of any transfers or distributions of the Shares by
the Selling Shareholders.
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Prior to the Offering Shares Offered After the Offering
Name of Selling Shareholder Number Percent (1) Hereby Number Percent (1)
- ----------------------------------------- ------------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sierra Ventures V, L.P. ...................... 4,457,627 16.80% 1,000,000 3,457,627 13.03%
3000 Sand Hill Road
Building 4, Suite 210
Menlo Park, CA 94025
Attention: Jeffrey M. Drazan
Jeffrey M. Drazan (2)......................... 4,499,025 16.93 1,000,000 3,499,025 13.17
Sierra Ventures
3000 Sand Hill Road
Building 4, Suite 210
Menlo Park, CA 94025
Pequot Private Equity Fund, L.P. ............. 887,618 3.35 887,618 -- *
c/o Dawson-Samberg Capital
Management, Inc.
354 Pequot Avenue.
Southport, CT 06490
Attention: Amiel Peretz
Pequot Offshore Private Equity Fund, Inc. .... 112,382 0.42 112,382 -- *
c/o Dawson-Samberg Capital
Management, Inc.
354 Pequot Avenue.
Southport, CT 06490
Attention: Amiel Peretz
</TABLE>
* Less than one percent (1%)
(1) Based on 26,526,810 shares outstanding as of December 1, 1998.
(2) Includes 4,457,627 shares held by Sierra Ventures V, L.P. Mr. Drazan, a
director of the Company is a general partner of Sierra Ventures V, L.P. but
specifically disclaims beneficial ownership of such shares except to the
extent of his pecuniary interest therein. Also includes options to purchase
78,223 shares of the Company's Common Stock, 41,398 of which are exercisable
within sixty (60) days of the date of this table.
______________________________
-8-
<PAGE>
INTEREST OF NAMED EXPERTS AND COUNSEL
Certain legal matters with respect to the legality of the issuance of the
Common Stock offered hereby will be passed upon by Venture Law Group, A
Professional Corporation, 2800 Sand Hill Road, Menlo Park, California 94025.
Craig W. Johnson a director of Venture Law Group is also a director of Vertel
and as such is entitled to receive periodic grants under our Directors' Stock
Option Plan. As of the date of this prospectus, Mr. Johnson holds options to
purchase 68,733 shares of our Common Stock.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and the
Shares offered hereby, reference is hereby made to the Registration Statement.
Statements contained herein concerning the provisions of any document are not
necessarily complete, and each such statement is qualified in its entirety by
reference to the copy of such document filed with the Commission. The
Registration Statement, including exhibits thereto, may be inspected without
charge and can be inspected and copied at the public reference facilities
maintained by the Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549, and at its regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, Suite
1300, New York, New York 10048. In addition, the Company is an electronic filer
and copies of such material may be retrieved from the Web site
(http://www.sec/gov) maintained by the Commission.. We are also subject to the
informational requirements of the Securities Exchange Act of 1934 and in
accordance therewith file proxy statements, reports and other information with
the Securities and Exchange Commission. Reports, proxy and information
statements, and other information filed by us with the SEC may be inspected as
described above or at the Nasdaq Stock Market, 1735 K Street, N.W., Washington,
DC 20006-1506.
-9-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale and distribution of the Common Stock
being registered. Selling commissions and brokerage fees and any applicable
transfer taxes and fees and disbursements of counsel for the Selling
Shareholders are payable individually by the Selling Shareholders. All amounts
are estimates except the registration fee.
<TABLE>
<CAPTION>
Amount
To be Paid
----------
<S> <C>
Registration Fee..................................... $ 1,042.50
Nasdaq Fee for Listing of Additional Shares.......... 17,500.00
Legal Fees and Expenses.............................. 20,000.00
Accounting Fees and Expenses......................... 10,000.00
Miscellaneous........................................ 11,457.50
----------
Total............................................. $60,000.00
==========
</TABLE>
Item 15. Indemnification of Directors and Officers
"Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). The Company's Bylaws provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by California law,
including circumstances in which indemnification is otherwise discretionary
under California law. The Company has entered into indemnification agreements
with its officers and directors containing provisions that are in some respects
broader than the specific indemnification provisions contained in the California
Corporations Code."
Item 16. Exhibits
Exhibit
Number Description of Exhibit
- ------- ----------------------
3.3 Amended and Restated Articles of Incorporation of the Registrant.(4)
3.4 Bylaws of the Registrant, as amended to date.(12)
3.5 Certificate of Amendment to Registrant's Articles of
Incorporation.(13)
5.1 Legal Opinion of Venture Law Group, A Professional Corporation.
10.2 1988 Stock Option Plan and forms of option agreements thereunder.(5)
10.4 1991 Directors' Stock Option Plan and forms of option agreements
thereunder, as amended to date.(7)
10.5 1991 Employee Stock Purchase Plan and form of subscription agreement
thereunder.(2)
10.6 Form of Indemnification Agreement.(1)
10.22 Lease Agreement between the Registrant and Moorpark Associates, a
California Limited Partnership, dated February 5, 1993.(3)
II-1
<PAGE>
10.27 Lease Agreement between the Registrant and OMA El Segundo Properties,
a California general partnership, dated May 23, 1995.(6)
10.28 Employment Agreement between M.Y. Stephan and Retix, dated September
27, 1995.(6)
10.29 Employment Agreement between Philip Mantle and Retix, dated November
1, 1995.(6)
10.30 Common Stock and Warrant Purchase Agreement by and between Retix and
Sierra Ventures V.LP., dated January 30, 1996.(6)
10.31 Master Agreement dated February 28, 1996 for Spin-Off of Open Systems
Interconnection Technology between Telaware Corporation and Retix.(6)
10.32 1996 Directors' Stock Option Plan and forms of option agreement
thereunder.(12)
10.33 Form of Exercise Notice and Stock Purchase Agreement between the
Company and M.Y. Stephan, dated January 30, 1996.(7)
10.34 Form of Exercise Notice and Stock Purchase Agreement between the
Company and M.Y. Stephan, dated March 18, 1996.(7)
10.35 Form of Exercise Notice and Stock Purchase Agreement between the
Company and M.Y. Stephan, dated March 18, 1996.(7)
10.36 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Philip Mantle, dated January 30, 1996.(7)
10.37 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Philip Mantle, dated March 18, 1996.(7)
10.38 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 18, 1996.(7)
10.39 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated January 30, 1996.(7)
10.40 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated February 21, 1996.(7)
10.41 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 26, 1996.(7)
10.42 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 26, 1996.(7)
10.43 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 26, 1996.(7)
10.44 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 26, 1996.(7)
10.45 Sublease Agreement dated May, 1996 between Value Behavioral Health and
Retix.(8)
10.46 Master Agreement between Retix and Internetworking Solutions dated May
31, 1996.(8)
10.47 Master Agreement between Retix and Wireless Solutions dated May 31,
1996.(8)
10.48 Lease Agreement between the Registrant and Nomura-Warner Center
Associates, L.P., dated November 26, 1996.(9)
10.49 Stock Transfer Agreement between Retix, Vertel Corporation and
Wireless Solutions dated June 10, 1997.(10)
10.50 Surrender of Lease between Cofton Irish Investments and Retix B.V.,
dated August 21, 1997.(11)
10.51 Sub-Sublease Agreement between TSN, L.L.C., and Retix, dated August
22, 1997.(11)
10.52 Executive Separation Agreement between Retix and M.Y. Stephan dated
December 27, 1997. (12)
10.53 Executive Separation Agreement between Retix and Philip Mantle dated
December 27, 1997. (12)
10.54 Executive Separation Agreement between Retix and Steve Waszak dated
December 27, 1997. (12)
10.55 Amended and Restated Articles of Incorporation of Sonoma Systems,
Inc., and related documents dated January 7, 1998.(12)
10.56 Sub-sublease between Retix and Sonoma Systems, Inc., dated December
28, 1997.(12)
10.57+ Sale and License Agreement between the Company and AMP Incorporated,
dated July 27, 1998, and an Amendment dated October 9, 1998 (14)
10.58 Common Stock Purchase Agreement between the Company and Pequot Private
Equity Fund, L.P. and Pequot Offshore Private Equity Fund, Inc. and
Sierra Ventures V, L.P., dated September 29, 1998 (14)
21.1 Subsidiaries of the Registrant.
23.1 Independent Auditors' Consent
23.2 Consent of Counsel (included in Exhibit 5.1)
II-2
<PAGE>
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.(13)
- -------------------------------------------------
+ Confidential Treatment Requested
(1) Incorporated by reference to identically numbered exhibits filed in
response to Item 16(a), "Exhibits," of the Registrants Registration
Statement on Form S-1 and Amendment No. 1 thereto (File No. 33-43544)
which became effective on December 9, 1991.
(2) Incorporated by reference to identically numbered exhibits filed in
response to Item 6(a), "Exhibits," of the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 26, 1992.
(3) Incorporated by reference to identically numbered exhibits filed in
response to Item 14(a)(3), "Exhibits," of the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 2, 1993.
(4) Incorporated by reference to identically numbered exhibit filed in
response to Item 6(a), "Exhibits," of the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended October 1, 1994.
(5) Incorporated by reference from Registrant's Registration Statement on
Form S-8 (No. 33-82154) filed on July 28, 1994.
(6) Incorporated by reference to identically numbered exhibits filed in
response to Item 14(a)(3), "Exhibits," of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
(7) Incorporated by reference to identically numbered exhibit filed in
response to Item 6(a), "Exhibits," of the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 30, 1996.
(8) Incorporated by reference to identically numbered exhibit filed in
response to Item 6(a), "Exhibits," of the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1996.
(9) Incorporated by reference to identically numbered exhibits filed in
response to Item 14(a)(3), "Exhibits," of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 28, 1996.
(10) Incorporated by reference to identically numbered exhibit filed in
response to Item 6(a), "Exhibits," of the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 28, 1997.
(11) Incorporated by reference to identically numbered exhibit filed in
response to Item 6(a), "Exhibits," of the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 27, 1997.
(12) Incorporated by reference to identically numbered exhibits filed in
response to Item 14(a)(3), "Exhibits," of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 27, 1997.
(13) Incorporated by reference to identically numbered exhibit filed in
response to Item 7, "Financial Statements and Exhibits," by
Registrant's Current Report on Form 8-K filed on April 13, 1998.
(14) Incorporated by reference to identically numbered exhibit filed in
response to Item 6(a), "Exhibits," of the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 27, 1998.
II-3
<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 above or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such director, officer
or controlling person in connection with the securities being registered
hereunder, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Woodland Hills, State of California, on the 23rd day
of December, 1998.
VERTEL CORPORATION
By: /s/ Bruce W. Brown
---------------------------------
Bruce W. Brown
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, Bruce W. Brown and Gordon
Almquist, and each of them acting individually, as his attorney-in-fact, each
with full power of substitution, for him in any and all capacities, to sign any
and all amendments to this Registration Statement (including post-effective
amendments), and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorney to any and all amendments to said Registration Statement. Pursuant to
the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE Date
- ------------------------------------------ ------------------------------------------------- -----------------------
<S> <C> <C>
/s/ Bruce W. Brown President, Chief Executive Officer and December 23, 1998
- ------------------------------------------ Director (Principal Executive Officer)
(Bruce W. Brown)
/s/ Gordon L. Almquist Vice President Finance and Chief Financial December 23, 1998
- ------------------------------------------ Officer (Principal Financial and
(Gordon L. Almquist) Accounting Officer)
/s/ M.Y. Stephan Director December 23, 1998
- ------------------------------------------
(M.Y. Stephan)
Director December 23, 1998
/s/ Craig W. Johnson
- ------------------------------------------
(Craig W. Johnson)
Director December 23, 1998
/s/ Jeffrey Drazan
- ------------------------------------------
(Jeffrey Drazan)
Director December 23, 1998
/s/ Gilbert Williamson
- ------------------------------------------
(Gilbert Williamson)
Director December 23, 1998
/s/ Ralph Ungermann
- ------------------------------------------
(Ralph Ungermann)
</TABLE>
II-5
<PAGE>
VERTEL CORPORATION
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
3.3 Amended and Restated Articles of Incorporation of the Registrant.(4)
3.4 Bylaws of the Registrant, as amended to date.(12)
3.5 Certificate of Amendment to Registrant's Articles of
Incorporation.(13)
5.1 Legal Opinion of Venture Law Group, A Professional Corporation.
10.2 1988 Stock Option Plan and forms of option agreements thereunder.(5)
10.4 1991 Directors' Stock Option Plan and forms of option agreements
thereunder, as amended to date.(7)
10.5 1991 Employee Stock Purchase Plan and form of subscription agreement
thereunder.(2)
10.6 Form of Indemnification Agreement.(1)
10.22 Lease Agreement between the Registrant and Moorpark Associates, a
California Limited Partnership, dated February 5, 1993.(3)
10.27 Lease Agreement between the Registrant and OMA El Segundo Properties,
a California general partnership, dated May 23, 1995.(6)
10.28 Employment Agreement between M.Y. Stephan and Retix, dated September
27, 1995.(6)
10.29 Employment Agreement between Philip Mantle and Retix, dated November
1, 1995.(6)
10.30 Common Stock and Warrant Purchase Agreement by and between Retix and
Sierra Ventures V.LP., dated January 30, 1996.(6)
10.31 Master Agreement dated February 28, 1996 for Spin-Off of Open Systems
Interconnection Technology between Telaware Corporation and Retix.(6)
10.32 1996 Directors' Stock Option Plan and forms of option agreement
thereunder.(12)
10.33 Form of Exercise Notice and Stock Purchase Agreement between the
Company and M.Y. Stephan, dated January 30, 1996.(7)
10.34 Form of Exercise Notice and Stock Purchase Agreement between the
Company and M.Y. Stephan, dated March 18, 1996.(7)
10.35 Form of Exercise Notice and Stock Purchase Agreement between the
Company and M.Y. Stephan, dated March 18, 1996.(7)
10.36 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Philip Mantle, dated January 30, 1996.(7)
10.37 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Philip Mantle, dated March 18, 1996.(7)
10.38 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 18, 1996.(7)
10.39 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated January 30, 1996.(7)
10.40 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated February 21, 1996.(7)
<PAGE>
10.41 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 26, 1996.(7)
10.42 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 26, 1996.(7)
10.43 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 26, 1996.(7)
10.44 Form of Exercise Notice and Stock Purchase Agreement between the
Company and Steven M. Waszak, dated March 26, 1996.(7)
10.45 Sublease Agreement dated May, 1996 between Value Behavioral Health and
Retix.(8)
10.46 Master Agreement between Retix and Internetworking Solutions dated May
31, 1996.(8)
10.47 Master Agreement between Retix and Wireless Solutions dated May 31,
1996.(8)
10.48 Lease Agreement between the Registrant and Nomura-Warner Center
Associates, L.P., dated November 26, 1996.(9)
10.49 Stock Transfer Agreement between Retix, Vertel Corporation and
Wireless Solutions dated June 10, 1997.(10)
10.50 Surrender of Lease between Cofton Irish Investments and Retix B.V.,
dated August 21, 1997.(11)
10.51 Sub-Sublease Agreement between TSN, L.L.C., and Retix, dated August
22, 1997.(11)
10.52 Executive Separation Agreement between Retix and M.Y. Stephan dated
December 27, 1997. (12)
10.53 Executive Separation Agreement between Retix and Philip Mantle dated
December 27, 1997. (12)
10.54 Executive Separation Agreement between Retix and Steve Waszak dated
December 27, 1997. (12)
10.55 Amended and Restated Articles of Incorporation of Sonoma Systems,
Inc., and related documents dated January 7, 1998.(12)
10.56 Sub-sublease between Retix and Sonoma Systems, Inc., dated December
28, 1997.(12)
10.57+ Sale and License Agreement between the Company and AMP Incorporated,
dated July 27, 1998, and an Amendment dated October 9, 1998 (13)
10.58 Common Stock Purchase Agreement between the Company and Pequot Private
Equity Fund, L.P. and Pequot Offshore Private Equity Fund, Inc. and
Sierra Ventures V, L.P., dated September 29, 1998 (13)
21.1 Subsidiaries of the Registrant.(12)
23.1 Independent Auditors' Consent
23.2 Consent of Counsel (included in Exhibt 5.1)
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.
--------------------
+ Confidential Treatment Requested
(1) Incorporated by reference to identically numbered exhibits filed in
response to Item 16(a), "Exhibits," of the Registrants Registration
Statement on Form S-1 and Amendment No. 1 thereto (File No. 33-43544)
which became effective on December 9, 1991.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(2) Incorporated by reference to identically numbered exhibits filed in response to Item 6(a),
"Exhibits," of the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 26, 1992.
(3) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a)(3),
"Exhibits," of the Registrant's Annual Report on Form 10-K for the fiscal year ended January 2,
1993.
(4) Incorporated by reference to identically numbered exhibit filed in response to Item 6(a),
"Exhibits," of the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended October
1, 1994.
(5) Incorporated by reference from Registrant's Registration Statement on Form S-8 (No. 33-82154)
filed on July 28, 1994.
(6) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a)(3),
"Exhibits," of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31,
1995.
(7) Incorporated by reference to identically numbered exhibit filed in response to Item 6(a),
"Exhibits," of the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March
30, 1996.
(8) Incorporated by reference to identically numbered exhibit filed in response to Item 6(a),
"Exhibits," of the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1996.
(9) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a)(3),
"Exhibits," of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 28,
1996.
(10) Incorporated by reference to identically numbered exhibit filed in response to Item 6(a),
"Exhibits," of the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June
28, 1997.
(11) Incorporated by reference to identically numbered exhibit filed in response to Item 6(a),
"Exhibits," of the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 27, 1997.
(12) Incorporated by reference to identically numbered exhibits filed in response to Item 14(a)(3),
"Exhibits," of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 27,
1997.
(13) Incorporated by reference to identically numbered exhibit filed in response to Item 7, "Financial
Statements and Exhibits," by Registrant's Current Report on Form 8-K filed on April 13, 1998.
(14) Incorporated by reference to identically numbered exhibit filed in response to Item 6(a),
"Exhibits," of the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 27, 1998.
</TABLE>
<PAGE>
EXHIBIT 5.1
[VENTURE LAW GROUP LETTERHEAD]
December 23, 1998
Vertel Corporation
21300 Victory Blvd., Suite 1200
Woodland Hills, CA 91367
REGISTRATION STATEMENT ON FORM S-3
----------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about December ___, 1998 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 2,000,000 additional shares of
your Common Stock (the "Shares") to be sold by certain Selling Shareholders of
Vertel Corporation. As your legal counsel, we have examined the proceedings
taken and are familiar with the proceedings proposed to be taken by you in
connection with the sale and issuance of the Shares.
It is our opinion that, upon conclusion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, and upon completion of the proceedings being taken in order to permit
such transactions to be carried out in accordance with the securities laws of
the various states where required, the Shares, when issued and sold in the
manner described in the Registration Statement, will be legally and validly
issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and any amendments to it.
Sincerely,
/s/ Venture Law Group
VENTURE LAW GROUP
A Professional Corporation
EJB
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES
------------
Vertel Corporation I
Vertel GmbH
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
of Vertel Corporation on Form S-3 of our report dated January 23, 1998, except
for the last paragraph of Note 2, as to which the date is February 11, 1998,
appearing in the Annual Report on Form 10-K of Vertel Corporation for the year
ended December 27, 1997.
Deloitte & Touche LLP
/s/ Deloitte & Touche LLP
Los Angeles, California
December 23, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
2ND QUARTER OF 1998 FOR THE QUARTERLY PERIOD ENDED JUNE 27, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> DEC-28-1997
<PERIOD-END> JUN-27-1998
<CASH> 1,740
<SECURITIES> 4,691
<RECEIVABLES> 4,942<F1>
<ALLOWANCES> 540
<INVENTORY> 0
<CURRENT-ASSETS> 12,226
<PP&E> 849<F2>
<DEPRECIATION> 362
<TOTAL-ASSETS> 16,884<F3>
<CURRENT-LIABILITIES> 5,354
<BONDS> 0
0
0
<COMMON> 229
<OTHER-SE> 11,300
<TOTAL-LIABILITY-AND-EQUITY> 16,884
<SALES> 5,003
<TOTAL-REVENUES> 5,003
<CGS> 1,334
<TOTAL-COSTS> 5,313<F4>
<OTHER-EXPENSES> (202)
<LOSS-PROVISION> 55
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (108)
<INCOME-TAX> 64
<INCOME-CONTINUING> (172)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (172)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
<FN>
<F1>INCLUDES RELATED PARTY RECEIVABLE OF 33K
<F2>PP&E IS NET OF ACCUMULATED DEPRECIATION OF 3,523
<F3>TOTAL ASSETS INCLUDE $3,382 OF INVESTMENT AND $387 OF OTHER ASSETS
<F4>TOTAL COSTS INCLUDE $1,334 OF COST OF GOODS SOLD AND $3,979 OF OPERATING
EXPENSES
</FN>
</TABLE>
