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As filed with the Securities and Exchange Commission on January 10, 1997
Registration No. 33-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BAAN COMPANY N.V.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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THE NETHERLANDS 7372 NOT APPLICABLE
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(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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BAAN COMPANY N.V.
POST OFFICE BOX 250
6710 BG Ede
The Netherlands
011-31-318-696666
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WIM H. HEIJTING
BAAN COMPANY N.V.
C/O BAAN USA, INC.
4600 BOHANNON DRIVE
MENLO PARK, CALIFORNIA 94025
(415) 462-4949
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
Copies Of All Communications Should Be
Sent To:
HOWARD ZEPRUN, ESQ.
JAN-MARC VAN DER SCHEE, ESQ.
WILSON, SONSINI, GOODRICH & ROSATI
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(415) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the Registration Statement becomes effective.
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.[ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE* OFFERING PRICE* REGISTRATION FEE
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Common Stock..................... 914,992 $35.94 $32,884,812.48 $9,965.09
===================================================================================================================================
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* Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, based on the
average of the high and low prices per share of Common Stock reported on
the Nasdaq National Market System on January 6, 1997.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 10, 1997
914,992 SHARES
BAAN COMPANY N.V.
COMMON STOCK
----------------------
All of the 914,992 shares of Common Stock of Baan Company N.V. ("Baan"
or the "Company") offered hereby are being offered for sale from time to time by
certain shareholders of the Company (the "Selling Shareholders"). See "Principal
and Selling Shareholders." The Company has been advised that the Selling
Shareholders expect to offer the shares on the Nasdaq National Market System
through certain broker-dealers at the then current market price or in negotiated
transactions. See "Plan of Distribution." The Company will not receive any of
the proceeds from the sale of shares by the Selling Shareholders.
See "Risk Factors" for information that should be considered by
prospective investors.
The Selling Shareholders will bear all discounts and commissions paid
to broker-dealers in connection with the sale of the shares. The Company will
bear the reasonable fees and expenses of a single counsel that the Selling
Shareholders may employ to represent them in this offering.
The Common Stock is quoted on the NASDAQ National Market System under
the trading symbol "BAANF" On January 6, 1997, the last sale price of the Common
Stock as reported by the NASDAQ National Market System was $35 3/4 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January 10, 1997
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No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering described herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or the Selling Shareholders. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, nor shall there be any sale of these
securities by any person in any jurisdiction in which it is unlawful for such
person to make such offer, solicitation or sale. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create an
implication that the information contained herein is correct as of any time
subsequent to the date hereof.
ENFORCEABILITY OF CIVIL LIABILITIES
The Company is a Netherlands corporation and a substantial portion of
the Company's assets are located outside the United States. In addition, members
of the Management and Supervisory Boards of the Company and certain experts
named herein are residents of countries other than the United States. As a
result, it may not be possible for investors to effect service of process within
the United States upon such persons or to enforce against such persons or the
Company judgments of courts of the United States predicated upon civil
liabilities under the United States federal securities laws. Since there is no
treaty between the United States and The Netherlands providing for the
reciprocal recognition and enforcement of judgments, U.S. judgments are not
automatically enforceable in The Netherlands. However, a final judgment for the
payment of money obtained in a U.S. court and not rendered by default, which is
not subject to appeal or any other means of contestation and is enforceable in
the United States, would in principle be upheld and be regarded by a Netherlands
court of competent jurisdiction as conclusive evidence when asked to render a
judgment in accordance with such final judgment by a U.S. court, without
substantive re-examination or relitigation on the merits of the subject matter
thereof, provided that the competent Netherlands court finds that the
jurisdiction of the U.S. court has been based on grounds which are
internationally acceptable, that such judgment has been rendered in accordance
with rules of proper procedure, that it has not been rendered in proceedings of
a penal or revenue nature and that its content and possible enforcement are not
contrary to public policy or public order of The Netherlands. Notwithstanding
the foregoing, there can be no assurance that United States investors will be
able to enforce against the Company, or members of the Management or Supervisory
Boards or certain experts named herein who are residents of The Netherlands or
countries other than the United States, any judgments in civil and commercial
matters, including judgments under the federal securities laws. In addition,
there is doubt as to whether a Netherlands court would impose civil liability on
the Company or on the members of the Management or Supervisory Boards of the
Company and certain experts named herein in an original action predicated solely
upon the federal securities laws of the United States brought in a court of
competent jurisdiction in The Netherlands against the Company or such members.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as applicable to foreign
private issuers, and in accordance therewith files reports and other information
with the Securities and Exchange Commission (the "Commission"). Such reports and
other information can be inspected and copied at the offices of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
as well as the following regional offices of the Commission: Northwestern
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
reports, proxy statements and other information concerning the Company may be
inspected at the office of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006. In addition, certain of the
Company's securities are listed on the Nasdaq National Market and the Amsterdam
Stock Exchange, and the aforementioned material may also be inspected at the
offices of such exchanges. At the Amsterdam Stock Exchange, all notices in
respect of the Notes will be published in the Official Price List (De Officiele
Prijs-Courant van AEX Data Services).
In addition, the most recently filed annual report and audited
statutory annual accounts and a copy of the current Articles of Association of
the Company are available upon request, free of charge, during normal business
hours at the offices of ABN AMRO Bank N.V., Herengracht 595, 1017 CE Amsterdam,
The Netherlands. In addition, other documents mentioned in this Prospectus are
available for inspection at the Company's offices in The Netherlands at
Zonneoordlaan 17, 6710 BG Ede, The Netherlands. The Company is registered with
the Trade Register of the Chamber of Commerce and Industry at Arnhem, The
Netherlands, under number 09048765.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
1. The Company's Annual Report on Form 20-F for the year ended
December 31, 1995;
2. The Company's Report on Form 6-K for the three months ended
March 31, 1996;
3. The Company's Report on Form 6-K for the three months and six
months ended June 30, 1996;
4. The Company's Report on Form 6-K for the three months and nine
months ended September 30, 1996;
5. The Company's Report on Form 6-K dated March 25, 1996 relating
to the Company's Annual General Meeting of Shareholders held
on April 11, 1996;
6. The Company's Report on Form 6-K dated April 25, 1996 relating
to the Company's Extraordinary General Meeting of Shareholders
held on May 13, 1996;
7. The Company's Report on Form 6-K dated May 23, 1996 relating
to the Company's Extraordinary General Meeting of Shareholders
held on May 29, 1996; and
8. The Company's Articles of Association and Notarial Deed of
Amendment thereto as filed with the Company's Annual Report on
Form 20-F for the year ended December 31, 1995 and Report on
Form 6-K dated May 23, 1996, respectively.
All documents filed by the Company pursuant to Section 13 (a), 13 (c)
or 15 (d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Shares shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the foregoing documents incorporated herein by reference, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such documents should be directed
to the Company's headquarters in The Netherlands at Zonneoordlaan 17, 6710 BG
Ede, The Netherlands, Attention: Chief Financial Officer, or to the Company's
headquarters in the United States at 4600 Bohannon Drive, Menlo Park, CA 94025,
U.S.A., Attention: Vice President of Finance -- U.S.
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THE COMPANY
Baan Company N.V. is a leading provider of open systems,
client/server-based enterprise business software used by organizations worldwide
to manage company resources and coordinate enterprise-wide functions such as
sales forecasting, inventory control, procurement, distribution, finance and
project management. The Company's BAAN IV software is designed to allow
businesses of all sizes to adapt quickly to changes in the market, thereby
enabling them to maintain a competitive advantage in the management of their
critical business processes. It is also designed for rapid implementation and
easy adaptation, and reconfiguration in response to changing organizational
needs and technological advances.
The Company believes that its software can facilitate increased
competitiveness and a higher level of customer service by enabling customers to
continually restructure business processes in response to dynamic market and
customer demands. The software is readily adapted to small, medium and large
organizations, and supports hybrid manufacturing, process manufacturing and
project manufacturing, within a single site or multiple sites and within a
single organization or across the extended enterprise of the supply/demand
chain.
The Company has undertaken several strategic initiatives to address
targeted vertical markets in which Baan believes its software provides
particular advantages, and is continuing to develop specific configurations,
templates and software functionality. These vertical markets include automotive,
electronics, aerospace and defense, heavy equipment and other project industries
as well as the process sectors in which supply chains are complex and evolving
and improved supply chain integration requires flexible, scaleable solutions.
The Company has worked closely with key customers and partners in these segments
to define business requirements and provide comprehensive software solutions
specifically tailored to these industries. The Company's customers include
Advanced Micro Devices, Inc., Asea Brown Boveri Group, The Boeing Company,
Fujitsu-ICL Systems, Inc., Gennum Corporation, Hitachi Ltd., Honda of America
Manufacturing, Inc., Mercedes Benz US International, Inc., Northern Telecom
Limited, Oki Electric Industry Co. Ltd., Philips Medical Systems Nederland B.V.,
Sensormatic and Snap-on Incorporated. The Company has more than 2,000 customers
worldwide.
An essential element of the Company's strategy is to continue to extend
the functionality of its software to enable Dynamic Enterprise Modeling ("DEM"),
a framework that allows an organization to adapt its information systems to
rapidly changing organizational structure, business practices and operational
procedures. To enhance the DEM concept, the Company has extended the
functionality of its current software release, BAAN IV, to include enhanced
implementation capabilities and development tools to streamline the software
adoption curve; new application functionality; industry specific models; greater
desktop connectivity across the enterprise; and new tools for Internet access.
Additionally, the Company was among the first enterprise business application
providers to be Microsoft BackOffice Certified with the Company's BAAN IV
application set. BAAN IV also supports expanded electronic commerce capability,
allowing enhanced interactive business-to-business communications via the
Internet or Electronic Data Interchange ("EDI").
The BAAN IV software consists of BAAN Applications, BAAN OrgWare and
BAAN Tools. BAAN Applications consist of six principal components that support
the entire business process: Manufacturing, Finance, Project, Distribution,
Transportation and Service. BAAN OrgWare is a collection of software, tools and
methodologies that facilitate rapid implementation of BAAN Applications and
support ready reconfiguration in response to changing business needs. BAAN Tools
is a fourth generation language ("4GL") software development toolset used by the
Company, its implementation providers and its end user customers to develop,
enhance and modify BAAN Applications.
The Company sells and supports its products through corporate
headquarters in Ede, The Netherlands and Menlo Park, California, Global Support
Centers in The Netherlands, the United States and India, and direct and indirect
distribution channels in 59 countries. Over the past several years, the Company
has significantly expanded its sales and service presence in North American,
Latin American, Eastern European and Asia Pacific markets. The Company also has
developed relationships with leading global providers of implementation and
customization services, including the systems consulting groups of major public
accounting firms such as KPMG Peat Marwick and systems integrators such as Cap
Gemini and Origin International.
Baan Company N.V. is a Netherlands holding company with its statutory
seat at Barneveld, The Netherlands, and conducts business through its domestic
and international subsidiaries. The Company's business was founded in 1978 and
Baan Holding B.V., the predecessor of Baan Company N.V., was incorporated in
1983. References in this Prospectus to "Baan" or the "Company," unless the
context otherwise requires, relate to Baan Company N.V., its predecessor, Baan
Holding B.V., and its subsidiaries. The Company's headquarters are located in
Zonneoordlaan 17, 6710 BG Ede, The Netherlands, telephone number (31)
318-696666, and at 4600 Bohannon Drive, Menlo Park, California 94025 U.S.A.,
telephone number (1) 415-462-4949.
4
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RECENT EVENTS
THIRD QUARTER RESULTS. The Company's net revenues for the third quarter
ended September 30, 1996 increased by 79% to $97.7 million from $54.4 million in
the corresponding period in 1995. License revenues increased 82% percent to
$55.7 million in the third quarter of 1996 from $30.5 million in the
corresponding period of 1995. Gross and operating margins increased sequentially
to 62% and 16%, respectively, in the third quarter of 1996 from 59% and 13%,
respectively, in the second quarter of 1996. Net income increased to $9.3
million or $0.10 per share in the third quarter of 1996 from $3.1 million or
$0.03 per share in the third quarter of 1995.
ACQUISITIONS. In 1996 the Company completed acquisitions of Berclain
Group, Inc. ("Berclain") and Antalys, Inc. ("Antalys"), adding functionality to
the Company's product line and providing its customers with more broadly
integrated solutions for targeted market segments. Berclain, acquired in May
1996, provides manufacturing scheduling and shop floor synchronization software.
The Company believes the integration of Berclain's software with BAAN IV will
allow manufacturers to further coordinate the production environment and
synchronize production to customer demand. Antalys provides configuration
management software that automates the configuration and pricing for products
and services. The Company believes this acquisition will better enable the
Company's customers to pursue the benefits of engineer-to-order manufacturing by
enabling them to provide to their customers the ability to specify product
requirements and receive real-time pricing and delivery information.
STRATEGIC RELATIONSHIPS. The Company has recently developed new
relationships intended to extend the core functionality of BAAN IV across
additional platforms and the Internet and access a broader class of customers.
In October 1996, Baan announced certification of BAAN IV for Microsoft
BackOffice. The Company believes its relationship with Microsoft will allow the
Company to offer a scaleable solution to enterprises operating on Windows NT and
Microsoft SQL Server database. In September 1996, Baan announced a relationship
with Sun Microsystems, Inc. to jointly develop extensions to the Java Enterprise
API. The Company believes this relationship will facilitate the delivery of
large-scale Internet application functionality written in Java to Baan's
customer base, to enable the Company's customers to link applications across the
supply chain and through the Internet.
5
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RISK FACTORS
This Prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Actual results could differ
materially from those projected in the forward-looking statements as a result of
the risk factors set forth below and elsewhere in this Prospectus. In addition
to the other information contained and incorporated by reference in this
Prospectus, the following factors should be carefully considered in evaluating
the Company and its business before purchasing the Common Shares.
LIMITED PERIOD OF PROFITABILITY
The Company has experienced substantial revenue growth in recent years,
but its profitability, as a percentage of net revenues, has varied widely on a
quarterly and annual basis. The Company was not profitable in 1993, and was only
slightly profitable in 1994 due largely to recognition of $14.8 million in
software license revenues from one large customer contract. Absent such
contract, the Company would not have been profitable in 1994. Due to the
Company's limited operating history on a significant international scale, the
rate of growth of the Company's business and the variability of operating
results in past periods, there can be no assurance that the Company's revenues
will continue at the current level or will grow, or that the Company will be
able to sustain profitability on a quarterly or annual basis. During 1996, the
Company has experienced increases in accounts receivable as revenues have
increased. Accounts receivable days sales outstanding (the ratio of the
quarter-end accounts receivable balance to quarterly revenues, multiplied by 90)
increased to 119 days at the end of the third quarter of 1996 as compared to 104
days as of December 31, 1995. These increases in accounts receivable, together
with increased investments by the Company in infrastructure and expansion of
operations, have impacted cash flow from operations. Although the Company has in
recent periods generated cash from operations, there can be no assurance that
cash flow from operations in future periods will not be further impacted.
VARIABILITY OF QUARTERLY OPERATING RESULTS
The Company's net revenues and operating results can vary, sometimes
substantially, from quarter to quarter. The Company's license revenues have in
recent periods increased as a percentage of total net revenues as a result of
the Company's focus on increasing the use of third party implementation
providers for implementation services and on reducing hardware sales. License
revenues increased from 37% of total net revenues in 1993 to 49%, 52% and 55% of
total net revenues in 1994, 1995 and in the nine month period ended September
30, 1996, respectively. The Company's revenues in general, and in particular its
license revenues, are relatively difficult to forecast due to a number of
reasons, including (i) the relatively long sales cycles for the Company's
products, (ii) the size and timing of individual license transactions, (iii) the
timing of the introduction of new products or product enhancements by the
Company or its competitors, (iv) the potential for delay or deferral of customer
implementations of the Company's software, (v) changes in customer budgets, and
(vi) seasonality of technology purchases and other general economic conditions.
In the last two years, and particularly in its U.S. operations, the Company has
made significant changes in its business focus, including greater emphasis on
sales to larger customers. As a result, the Company has realized an increasingly
high portion of total net revenues from individually large licenses, which could
contribute to greater quarterly variability. In addition, while the Company
believes that its allowance for doubtful accounts as of September 30, 1996 is
adequate, a significant portion of the Company's accounts receivable at such
date are derived from sales of large licenses, often to new customers with which
the Company does not have a payment history. Accordingly, there can be no
assurances that the allowance will be adequate to cover any receivables which
are later determined to be uncollectible, particularly if one or more large
receivables becomes uncollectible.
The Company's software products generally are shipped as orders are
received. As a result, license revenues in any quarter are substantially
dependent on orders booked and shipped in that quarter. Because the Company's
operating expenses are based on anticipated revenue levels and because a high
percentage of the Company's expenses are relatively fixed, a delay in the
recognition of revenue from a limited number of license transactions could cause
significant variations in operating results from quarter to quarter and could
result in losses. The Company plans to increase expenditures in order to fund
continued build-up of international operations, greater levels of research and
development, a larger direct sales and marketing staff, development of new
distribution and resale channels, and broader customer support capability,
although annual expenditures will depend upon ongoing results and evolving
business needs. To the extent such expenses precede or are not subsequently
followed by increased revenues, the Company's operating results would be
materially adversely affected.
The Company believes that fourth quarter revenues have historically
been positively impacted by year-end capital purchases by some large corporate
customers. This seasonality, which the Company believes is common in the
computer software industry, is likely to increase as the Company focuses on
larger corporate accounts, and typically result in first quarter revenues in any
year being lower than revenues in the immediately preceding fourth quarter.
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NORTH AMERICAN OPERATIONS
The Company commenced its investment program in North America in 1993
and has a limited number of operational installations of its products at
customer sites in North America. Accordingly, the Company has only a limited
number of reference customers in North America. Many of these customers continue
to implement the Company's products, and some of these customers are in the
early stage of implementation. If the Company were to experience significant
implementation problems at these or other reference sites in North America (or
elsewhere), it could significantly impact future sales and operating results in
North America (and elsewhere). In addition, in order to support the anticipated
growth of the Company's business in the North American market, the Company
continues to incur significant costs to build corporate infrastructure ahead of
anticipated revenues. This includes developing experienced resources, through
both internal hiring and establishing relationships with third party
implementation providers, that are necessary to support customer installations
of Baan's software and provide other customer services. The number of employees
in North America has grown from 168 at December 31, 1993 to 180 at December 31,
1994, 309 at December 31, 1995 and 473 at September 30, 1996. In addition, the
Company's operating expenses (exclusive of general corporate expenses) in North
America have increased from $13.1 million for the year ended December 31, 1993
to $29.2 million for the year ended December 31, 1994, $44.7 million for the
year ended December 31, 1995 and $65.3 million for the nine months ended
September 30, 1996. As a result of this expansion, the Company must continue to
implement and improve its operational and financial control systems and to
expand, train and manage its employee base and relationships with third party
implementation providers, in order to provide high-quality training, product
implementation and other customer services. These factors have placed, and are
expected to continue to place, a significant strain on the Company's management
and operations. There can be no assurance that the Company's North American
operations will continue to be successful or that the Company will be able to
manage effectively an increased level of operations in North America. Any lack
of success in North American markets or inability to manage these activities
effectively would have a material adverse effect on the Company's results of
operations.
MANAGEMENT OF GROWTH
The Company's business has grown rapidly in the last five years, with
total net revenues increasing from $35.2 million in 1991 to $216.2 million in
1995 and $264.1 million in the nine months ended September 30, 1996. The growth
of the Company's business and expansion of the Company's customer base has
placed a significant strain on the Company's management and operations. In
addition, Tom Tinsley and Jan Westerhoud joined the Company within the past 18
months as President and Chief Operating Officer and as Chief Financial Officer,
respectively (Mr. Westerhoud previously served as a partner with Moret Ernst &
Young, the Company's independent auditors). Moreover, certain of the Company's
senior executive officers had limited or no prior management experience as
senior executives in large, public software companies prior to joining the
Company. The Company's recent expansion has resulted in substantial growth in
the number of its employees, the scope of its operating and financial systems
and the geographic area of its operations, resulting in increased responsibility
for both existing and new management personnel. The Company's ability to support
the growth of its business will be substantially dependent upon having in place
highly trained internal and third party resources to conduct presales activity,
product implementation, training and other customer support services.
Accordingly, the Company's future operating results will depend on the ability
of its officers and other key employees to continue to implement and improve its
operational, customer support and financial control systems, to expand, train
and manage its employee base and to work effectively with third party
implementation providers. There can be no assurance that the Company will be
able to manage its recent or any future expansion successfully, and any
inability to do so would have a material adverse effect on the Company's results
of operations.
LEVERAGE
The Company sold an aggregate of $175,000,000 of subordinated notes
(the "Notes") in December 1996, ($200 million if the purchasers' over-allotment
option is exercised in full) which will result in an increase in the Company's
ratio of long-term debt to total capitalization at September 30, 1996 from
approximately 1% to approximately 57% on an as adjusted basis (60% if the
over-allotment option is exercised in full). As a result of this additional
indebtedness, the Company's principal and interest obligations will increase
substantially. The degree to which the Company will be leveraged could
materially adversely affect the Company's ability to obtain additional financing
for working capital, acquisitions or other purposes and could make it more
vulnerable to industry downturns and competitive pressures. The Company's
ability to meet its debt service obligations will be dependent upon the
Company's future performance, which will be subject to financial, business and
other factors affecting the operations of the Company, many of which are beyond
its control.
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COMPETITION
The information management application software market is highly
competitive, is changing rapidly, and is significantly affected by new product
introductions and other market activities of industry participants. The
Company's products are targeted at the emerging market for open systems,
client/server, Enterprise Resource Planning ("ERP") software solutions, and the
Company's current and prospective competitors offer a variety of products and
solutions to address this market. The Company's primary competition comes from a
large number of independent software vendors and other sources including SAP AG
("SAP"), Oracle Corporation ("Oracle"), System Software Associates, Inc. and
Peoplesoft Corporation ("Peoplesoft"). In addition, the Company faces indirect
competition from suppliers of custom-developed business application software
that have focused mainly on proprietary mainframe and minicomputer-based systems
with highly customized software, such as the systems consulting groups of major
accounting firms and systems integrators. The Company also faces indirect
competition from systems developed by the internal MIS departments of large
organizations.
Many of the Company's competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources than
the Company, greater name recognition, and a larger installed base of customers.
In addition, certain competitors, including SAP, Oracle and Peoplesoft, have
well-established relationships with customers of the Company. Further, because
the Company's products run on relational database management systems ("RDBMS")
and Oracle has the largest market share for RDBMS software, Oracle may have a
competitive advantage in selling its application products to its RDBMS customer
base. The Company may also face market resistance from the large installed base
of legacy systems because of the reluctance of these customers to commit the
time and effort necessary to convert to an open systems-based client/server
software solution. Furthermore, as the client/server computing market develops,
companies with significantly greater resources than the Company could attempt to
increase their presence in this market by acquiring or forming strategic
alliances with competitors of the Company.
The Company relies on a number of systems consulting and systems
integration firms for implementation and other customer support services, as
well as recommendations of its products during the evaluation stage of the
purchase process. Although the Company seeks to maintain close relationships
with these third party implementation providers, many of these third parties
have similar, and often more established, relationships with the Company's
principal competitors. If the Company is unable to develop and retain effective,
long-term relationships with these third parties, it would adversely affect the
Company's competitive position. Further, there can be no assurance that these
third parties, many of which have significantly greater financial, technical and
marketing resources than the Company, will not market software products in
competition with the Company in the future or will not otherwise reduce or
discontinue their relationships with or support of the Company and its products.
The Company believes that its success has been due in part to its focus
on the client/server architecture of its software products. Certain of the
Company's competitors currently offer products using client/server architecture,
and the Company believes that many of its other competitors are actively
developing client/server-based products, including certain large,
well-established software companies that have announced their intent to
introduce client/server ERP products. As a result, competition (including price
competition) is likely to increase substantially, which could result in price
reductions and loss of market share. There can be no assurance that the Company
will be able to compete successfully with existing or new competitors or that
competition will not have a material adverse effect on the Company's business.
RAPID TECHNOLOGICAL CHANGE AND NEW PRODUCTS
The market for the Company's software products is characterized by
rapid technological advances, evolving industry standards in computer hardware
and software technology, changes in customer requirements, and frequent new
product introductions and enhancements. The Company's future success will depend
upon its ability to continue to enhance its current product line and to develop
and introduce new products that keep pace with technological developments,
satisfy increasingly sophisticated customer requirements and achieve market
acceptance. In particular, the Company must continue to anticipate and respond
adequately to advances in RDBMS software and desktop computer operating systems
such as Microsoft Windows and its successors. There can be no assurance that the
Company will be successful in developing and marketing, on a timely and
cost-effective basis, fully functional product enhancements or new products that
respond to technological advances by others, or that its new products will
achieve market acceptance.
Historically, the Company has issued significant new releases of its
software products approximately every two years with interim releases on a more
frequent basis. As a result of the complexities inherent in both the RDBMS and
client/server environments and the broad functionality and performance demanded
by customers for ERP products, major new product enhancements and new products
can require long development and testing periods to achieve market acceptance.
The Company has on occasion experienced
8
<PAGE> 10
delays in the scheduled introduction of new and enhanced products. In addition,
software programs as complex as those offered by the Company may contain
undetected errors or "bugs" when first introduced or as new versions are
released that, despite testing by the Company, are discovered only after a
product has been installed and used by customers. For example, Version 3.0
contained certain identified software errors which required correction in
Version 3.1. There can be no assurance that the Company's most recent software
release, BAAN IV, or future releases of the Company's products, will not contain
further software errors. Any such errors could impair the market acceptance of
these products and adversely affect operating results. Problems encountered by
customers installing and implementing new releases or with the performance of
the Company's products could also have a material adverse effect on the
Company's business and operating results. Customers have only recently commenced
implementation of the BAAN IV version of the Company's software. If the Company
were to experience delays in the introduction of new and enhanced products, or
if customers were to experience significant problems with the implementation and
installation of new releases or were to be dissatisfied with product
functionality or performance, it could materially adversely affect the Company's
business and operating results.
INTERNATIONAL OPERATIONS AND CURRENCY FLUCTUATIONS
The Company's products are currently marketed in the United States, The
Netherlands, Germany and 56 other countries. Sales in the United States, The
Netherlands and Germany accounted for 33%, 21% and 15%, respectively, of the
Company's net revenues in the nine months ended September 30, 1996. The
Company's operations are subject to risks inherent in international business
activities, including, in particular, general economic conditions in each
country, overlap of different tax structures, management of an organization
spread over various countries, unexpected changes in regulatory requirements,
compliance with a variety of foreign laws and regulations, and longer accounts
receivables payment cycles in certain countries. Other risks associated with
international operations include import and export licensing requirements, trade
restrictions and changes in tariff and freight rates.
A significant portion of the Company's business is conducted in
currencies other than the U.S. dollar (the currency in which its financial
statements are stated), primarily the Dutch guilder and, the German mark. The
Company has historically recorded a majority of its expenses in guilders,
especially research and development expenses, and a substantial majority of its
revenues has been denominated in guilders, marks and, more recently, U.S.
dollars. As a result, appreciation in the value of the guilder relative to the
value of the U.S. dollar could adversely affect operating results. Foreign
currency transaction gains and losses arising from normal business operations
are credited to or charged against earnings in the period incurred. As a result,
fluctuations in the value of the currencies in which the Company conducts its
business relative to the U.S. dollar have caused and will continue to cause
foreign currency transaction gains and losses. In 1994, the Company incurred
$1.9 million in foreign currency transaction losses compared to a $398,000 gain
in 1993. At the end of 1994, the Company reevaluated its currency management
process, and established programs to reduce its foreign currency exposure. In
1995, the Company incurred a foreign currency transaction net loss of $253,000.
Starting in the fourth quarter of 1995, the Company established. controls
regarding the use of derivative financial instruments, which it uses primarily
to offset the effects of exchange rate changes on intracompany cash flow
exposures denominated in foreign currencies. These exposures include firm trade
accounts, royalties, service fees and loans. In the first nine months of 1996,
the Company incurred a foreign currency transaction gain of $60,000. The Company
continues to evaluate its currency management policies. Notwithstanding the
measures the Company has adopted, due to the number of currencies involved, the
constantly changing currency exposures and the substantial volatility of
currency exchange rates, there can be no assurance that the Company will not
experience currency losses in the future, nor can the Company predict the effect
of exchange rate fluctuations upon future operating results.
RELIANCE ON CERTAIN RELATIONSHIPS
The Company relies on a number of consulting and systems integration
firms to enhance its marketing, sales and customer support efforts, particularly
with respect to implementation and support of its products as well as lead
generation and assistance in the sales process. As the Company continues to
implement its strategy of focusing on the licensing of its core software
products, the Company will remain dependent upon third party implementation
providers for product implementation, customization, customer support services
and end user training. Many such firms have similar, and often more established,
relationships with the Company's principal competitors. There can be no
assurance that these third party implementation providers will provide the level
and quality of service required to meet the needs of the Company's customers,
that the Company will be able to maintain an effective, long term relationship
with these third parties, or that these parties will continue to meet the needs
of the Company's customers. If the Company is unable to develop and maintain
effective, long-term relationships with these third parties, or if these parties
fall to meet the needs of the Company's customers, the Company's business would
be adversely affected. Although the Company has agreements with certain of these
providers, these agreements are generally terminable by the third party
providers at any time and do not impose specific obligations on the part of
these third party providers. Further, there can be no assurance that these third
party implementation providers, many of which have significantly greater
financial, technical, personnel and marketing resources than the Company, will
not market software products in competition with the Company in the future or
will not otherwise reduce or discontinue their relationships with or support of
the Company and its products.
DEPENDENCE ON KEY PERSONNEL
9
<PAGE> 11
The Company's success depends to a significant extent upon a limited
number of members of senior management of the Company and other key employees.
The Company does not maintain key man life insurance on any personnel. The loss
of the service of one or more key employees could have a material adverse effect
on the Company. In addition, the Company believes that its future success will
also depend in large part upon its ability to attract and retain highly skilled
technical, management, sales and marketing personnel. Competition for such
personnel in the computer software industry is intense. There can be no
assurance that the Company will be successful in attracting and retaining such
personnel, and the failure to attract and retain such personnel could have a
material adverse effect on the Company's business.
ABILITY TO ENFORCE THE COMPANY'S INTELLECTUAL PROPERTY RIGHTS
The Company relies on a combination of the protections provided under
applicable copyright, trademark and trade secret laws, as well as on
confidentiality procedures and licensing arrangements, to establish and protect
its rights in its software. Despite the Company's efforts, it may be possible
for unauthorized third parties to copy certain portions of the Company's
products or to reverse engineer or obtain and use information that the Company
regards as proprietary. In addition, the laws of certain countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States or The Netherlands. Accordingly, there can be no assurance
that the Company will be able to protect its proprietary software against
unauthorized third party copying or use, which could adversely affect the
Company's competitive position.
The Company, from time to time, receives notices from third parties
claiming infringement by the Company's products of third party proprietary
rights. The Company expects that software products will increasingly be subject
to such claims as the number of products and competitors in the Company's
industry segment grows and the functionality of products overlap. Any such
claim, with or without merit, could be time-consuming, result in costly
litigation and require the Company to enter into royalty and licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable by the Company, or at all. In the event of a
successful claim against the Company and the failure of the Company to develop
or license a substitute technology, the Company's business and operating results
would be materially adversely effected.
In February 1996 the Company received correspondence from counsel for
The COBRE Group, Inc. (which does not compete in the ERP market) stating their
belief that the Company's OrgWare software infringed their U.S. Patent (No.
5,321,610) issued in June 1994. The letter also impliedly threatened legal
action in the event the Company did not either provide an appropriate
explanation why there is no infringement, or obtain a license under the patent,
or discontinue offering the OrgWare software. The Company has reviewed the
claims of the patent in relation to the OrgWare software, and based upon such
review the Company does not believe that the OrgWare software infringes the
claims of the patent. Between February arid August 1996, counsel for the Company
corresponded with counsel for The COBRE Group specifying the Company's bases for
denying infringement. The Company has received no further communications from
The COBRE Group since August 1996.
The Company intends to contest any claim of infringement and does not
believe that resolution of this matter, whether or not litigation is commenced,
would have a material adverse effect on its business, operating results and
financial condition. There can be no assurance, however, that legal action
claiming patent infringement will not be commenced against the Company, or that
the Company would necessarily prevail in such litigation given the complex
technical issues and inherent uncertainties in patent litigation; and in the
event a claim against the Company was successful and the Company could not
obtain a license on acceptable terms or develop or license a substitute
technology, the Company's business and operating results would be materially
adversely affected.
LEGAL PROCEEDINGS
The Company is party to legal proceedings from time to time. There is
no such proceeding currently pending which the Company believes is likely to
have a material adverse effect upon the Company's business as a whole. Any
litigation, however, involves potential risk and potentially significant
litigation costs, and therefore there can be no assurances that any litigation
which is now pending or which may arise in the future will not have such a
material adverse effect.
CONTROL BY EXISTING SHAREHOLDERS
Baan Investment B.V. owns approximately 48% of the Company's
outstanding Common Shares. Jan Baan and J.G. Paul Baan, by virtue of their
positions as managing directors of Baan Investment B.V. and the control they
exercise over the entities that own and control the shares of Baan Investment
B.V., effectively have the power to vote the Common Shares of the Company owned
by Baan Investment B.V. Messrs. Baan and Baan will therefore also have the
effective power to influence significantly the outcome of matters submitted for
shareholder action, including the appointment of members of the Company's
Management and Supervisory
10
<PAGE> 12
Boards and the approval of significant change in control transactions, and may
be deemed to have control over the management and affairs of the Company. This
significant equity interest in the Company may have the effect of making certain
transactions more difficult absent the support of Jan Baan and J.G. Paul Baan,
and may have the effect of delaying or preventing a change in control of the
Company.
POSSIBLE VOLATILITY OF SHARE PRICE
The market price of the Company's Common Shares has experienced
significant fluctuations and may continue to fluctuate significantly. The market
price of the Common Shares may be significantly affected by factors such as the
announcement of new products or product enhancements by the Company or its
competitors, technological innovation by the Company or its competitors,
quarterly variations in the Company's results of operations, changes in earnings
estimates by market analysts, and general market conditions or market conditions
specific to particular industries. In particular, the stock prices for many
companies in the technology and emerging growth sector have experienced wide
fluctuations which have often been unrelated to the operating performance of
such companies. Such fluctuations may adversely affect the market price of the
Common Shares.
FOREIGN PERSONAL HOLDING COMPANY TAX RISK
The Company or certain of its subsidiaries may in the future be
characterized as a foreign personal holding company ("FPHC") if: (i) Jan Baan or
J.G. Paul Baan or a member of either of their families were to become a U.S.
resident or citizen, or to marry a U.S. resident or citizen and (ii) more than
60% of the gross income of the Company or a subsidiary were considered foreign
personal holding company income. If such treatment were to occur, U.S.
residents, citizens, corporations and other persons subject to U.S. taxation on
the basis of net income who hold Common Shares would be required to include in
their gross income as a dividend their pro rata portion of any undistributed
income of the Company or a subsidiary so classified as a FPHC, even if no cash
dividend were actually paid. Although neither the Company nor any subsidiary is
currently a FPHC, the Company can give no assurances that changes in ownership
of the shares currently held by Baan Investment B.V., or changes in ownership or
residency of Jan Baan or J.G. Paul Baan or members of either of their families,
will not cause the Company to be treated as a FPHC, nor is the Company
undertaking any obligation to determine or disclose at any time in the future
its status as a FPHC.
ENFORCEABILITY OF UNITED STATES JUDGMENTS AGAINST NETHERLANDS CORPORATIONS,
DIRECTORS AND OFFICERS
Judgments of United States courts, including judgments against the
Company, its directors or its officers predicated on the civil liability
provisions of the federal securities laws of the United States, are not directly
enforceable in The Netherlands. See "Enforceability of Civil Liabilities."
OTHER MATTERS RELATED TO DUTCH COMPANIES
As a Netherlands naamloze vennootschap (N.V.), the Company is subject
to certain requirements not generally applicable to corporations organized in
United States jurisdictions. Among other things, the issuance of shares by the
Company must be submitted for resolution of the general meeting of shareholders,
except to the extent such authority to issue shares has been delegated by the
general meeting of shareholders to another corporate body. The issuance of
shares by the Company is generally subject to shareholder preemptive rights,
except to the extent that such preemptive rights have been excluded or limited
by the general meeting of shareholders (subject to a qualified majority of
two-thirds of the votes if less than 50% of the outstanding share capital is
present or represented) or, in case the authority to issue shares has been
delegated to another corporate body that has also been empowered by the general
meeting of shareholders to exclude or limit such preemptive rights, by such
corporate body. In this regard, the general meeting of shareholders has
authorized the Management Board of the Company, upon approval by the Supervisory
Board, to issue any authorized and unissued shares of the Company at any time up
to and including March 31, 2001, and has authorized the Management Board, upon
approval by the Supervisory Board, to exclude or limit shareholder preemptive
rights with respect to any issuance of such shares up to and including such
date. Such authorizations may be renewed by the general meeting of shareholders
from time to time, or by the Company's Articles of Association pursuant to an
amendment to that effect, for up to five years at a time. This authorization
would also permit the issuance of shares in an acquisition, provided that
shareholder approval is required in connection with a statutory merger (except
that, in certain limited circumstances, the management board of a surviving
company may resolve to legally merge the company). Shareholders do not have
preemptive rights with respect to shares which are issued against payment other
than in cash, shares which are issued to employees of the Company or of a group
company or shares which are issued to someone exercising a previously acquired
right to subscribe for shares. In addition, certain major corporate decisions
are subject to prior approval or advice by the Works Council established at Baan
Development B.V. and Baan Nederland B.V., two Dutch subsidiaries of the Company.
11
<PAGE> 13
EXCHANGE CONTROLS AND OTHER LIMITATIONS
AFFECTING SECURITY HOLDERS
Except as set forth below, there are currently no limitations under the
laws of The Netherlands to the rights of holders from outside The Netherlands to
hold or vote Common Shares. Cash distributions, if any, payable on the Common
Shares in Dutch guilders may be officially transferred from The Netherlands and
converted into any other currency without Netherlands legal restrictions, except
that for recording purposes such payments and transactions must be reported by
the Company to The Netherlands Central Bank. Exceptions may apply to the above
under applicable Netherlands sanctions regulations regarding Iraq and Libya.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
offered hereby.
12
<PAGE> 14
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock of the Selling Shareholders
as of December 1996.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF SHAREHOLDER NUMBER OF SHARES OFFERED BENEFICIALLY OWNED
- ---------------------------------------- ---------------------------- ------------------
<S> <C> <C>
Davis B. Weidner 302,252 302,252
Susan B. Thompson 302,252 302,252
Shunsaku Sugiura 88,187 88,187
Kent W. Wilhelm 88,187 88,187
David W. Gustafson 33,888 33,888
Raymond T. Anderson 17,637 17,637
Robert M. Lanier 15,403 15,403
Stephen P. Newman 19,254 19,254
Albert J. Bates 8,857 8,857
Charles M. Powell 19,255 19,255
Paul Heller 3,850 3,850
Kenneth Parent 3,850 3,850
Nathan Gans 3,850 3,850
Leonard Coyne 3,850 3,850
Paul B. Fine 2,118 2,118
Mark J. Fine 2,118 2,118
Patricia Mitchell 184 184
</TABLE>
13
<PAGE> 15
PLAN OF DISTRIBUTION
The Common Shares offered hereby are being offered directly by the
Selling Shareholders. The Company has been advised by the Selling Shareholders
that they intend to sell all of the shares offered hereby from time to time
during the 2 year period following the date of this Prospectus in the
over-the-counter market and that sales will be made at prices prevailing at the
times of such sales. The Selling Shareholders may also make private sales at
negotiated prices directly or through a broker or brokers, who may act as agent
or as principal or by a combination of such methods of sale. The Selling
Shareholders and any underwriter, dealer or agent who participate in the
distribution of such shares may be deemed to be "underwriters" under the
Securities Act, and any discount, commission or concession received by such
persons might be deemed to be an underwriting discount or commission under the
Securities Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Shareholders (and, if acting as agent for
the purchaser of such shares, from such purchaser). Usual and customary
brokerage fees will be paid by the Selling Shareholders. Broker-dealers may
agree with the Selling Shareholders to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the any of the Selling Shareholders, to purchase as
principal any unsold shares at the price required to fulfill the broker-dealer
commitment to any of the Selling Shareholders. Broker-dealers who acquire shares
as principal may thereafter resell such shares from time to time in transactions
(which may involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or by a
combination of such methods of sale or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above.
The Company has advised the Selling Shareholders that the
anti-manipulative Rules 10b-6 and 10b-7 under the Exchange Act may apply to
sales in the market, has furnished the Selling Shareholders with a copy of these
Rules and has informed the Selling Shareholders of the need for delivery of
copies of this Prospectus. The Selling Shareholders may indemnify any
broker-dealer that participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under the Securities
Act. Any commissions paid or any discounts or concessions allowed to any such
broker-dealers, and any profits received on the resale of such shares, may be
deemed to be underwriting discounts and commissions under the Securities Act if
any such broker-dealers purchase shares as principal.
In order to comply with the securities laws of certain states, if
applicable, the Common Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
Common Shares may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
At the time a particular offer of the shares of Common Shares
registered hereunder is made, if required, a Prospectus Supplement will be
distributed that will set forth the number of shares being offered and the terms
of the offering including the name of any underwriter, dealer or agent, the
purchase price paid by any underwriter for securities purchased from, any
discount, commission and other item constituting compensation and any discount,
commission or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
There can be no assurance that the Selling Shareholders will sell all
or any of the shares of Common Shares offered hereunder.
LEGAL MATTERS
The validity of the Common Shares issued hereby will be passed upon for
the Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California, solely as to matters of U.S. law, and by DeBrauw Blackstone
Westbroek, Amsterdam, The Netherlands, solely as to matters of Netherlands law.
EXPERTS
The consolidated financial statements of Baan Company N.V. incorporated
by reference in the Company's Annual Report (Form 20-F) for the year ended
December 31, 1995, have been audited by Moret Ernst & Young Accountants,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
14
<PAGE> 16
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
-15-
<PAGE> 17
BAAN COMPANY N.V.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee--Securities and
Exchange Commission.................................... $ 9,965.09
Accountant's fees....................................... $ 6,000.00
Legal fees.............................................. $ 10,000.00
Miscellaneous........................................... $ 0
-----------
Total ................................................. $ 25,965.09
</TABLE>
All of the above expenses will be paid (or reimbursed) by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has entered into indemnification agreements with its
directors and executive officers, providing for indemnification by the Company
against any liability to which a director or executive officer may be subject
for judgments, settlements, penalties, fines and expenses of defense (including
attorneys' fees, bonds and costs of investigation), arising out of or in any way
related to acts or omissions as a member of the Management or Supervisory Board,
or an executive officer, or in any other capacity in which services are rendered
to the Company or its subsidiaries. The Company believes that the
indemnification agreements will assist the Company in attracting and retaining
qualified individuals to serve as directors and executive officers. The
agreements provide that a director or officer is not entitled to indemnification
under such agreements (i) if indemnification if expressly prohibited under
applicable law, (ii) for certain violations of securities laws or (iii) for
certain claims initiated by the officer or director. Generally, under
Netherlands law a director will not be held personally liable for decisions made
with reasonable business judgment, absent self dealing. In addition,
indemnification may not be available to directors or officers under Netherlands
law if any act or omission by a director or officer would qualify as willful
misconduct or gross negligence. Due to the lack of applicable case law, it is
not clear whether indemnification if available in case of a breach of securities
laws of the United States. See "Enforceability of Civil Liabilities."
ITEM 16. EXHIBITS.
Exhibit No. Exhibit
5.1 Opinion of DeBrauw Blackstone Westbroek
23.1 Consent of Moret Ernst & Young Accountants, Independent
Auditors
23.2 Consent of DeBrauw Blackstone Westbroek
(contained in Exhibit 5.1)
II-1
<PAGE> 18
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions 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
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, amended;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by reference
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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable,
each filing of any employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934, as amended) 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.
II-2
<PAGE> 19
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------- ------------------------------------------------- ---------------------------
<S> <C> <C>
/S/ Jan Baan B.V. Managing Director, Chairman of the Board and January 9, 1997
- ------------------------------------------- Chief Executive Officer
(Jan Baan B.V.) (Principal Executive Officer)
/S/ J.G. Paul Baan B.V. Supervisory Director and Vice Chairman January 9, 1997
- ------------------------------------------- of the Board
(J.G. Paul Baan B.V.)
/S/ Thomas C. Tinsley Managing Director, President and Chief January 9, 1997
- ------------------------------------------ Operating Officer
(Thomas C. Tinsley)
/S/ Jan Westerhoud Vice President, Finance January 9, 1997
- ------------------------------------------ (Principal Financial and Accounting Officer)
(Jan Westerhoud)
/S/ William O. Grabe
- ------------------------------------------ Supervisory Director January 9, 1997
(William O. Grabe)
/S/ David C. Hodgson
- ------------------------------------------ Supervisory Director January 9, 1997
(David C. Hodgson)
/S/ Graham J. Sharman
- ------------------------------------------ Supervisory Director January 9, 1997
(Graham J. Sharman)
/S/ J.C. (Hans) Wortmann
- ------------------------------------------ Supervisory Director January 9, 1997
(J.C. (Hans) Wortmann)
</TABLE>
II-3
<PAGE> 20
EXHIBIT INDEX
Exhibit
No. Document
5.1 Opinion of DeBrauw Blackstone Westbroek
23.1 Consent of Moret Ernst & Young Accountants, Independent
Auditors
23.2 Consent of DeBrauw Blackstone Westbroek
(contained in Exhibit 5.1)
<PAGE> 1
Exhibit 5.1
DE BRAUW BLACKSTONE WESTBROEK
To: Baan Company N. V.
Zonneoordlaan 17
6710 BG EDE
the Netherlands
January 10, 1997
Ladies and Gentlemen,
BAAN COMPANY N. V.
Issue of 914,992 common shares
in the share capital of
BAAN COMPANY N. V.
I have acted as legal counsel in respect of certain matters of the law
of the Netherlands to Baan Company N.V., a company incorporated under
the law of the Netherlands with its corporate seat in Barneveld, the
Netherlands, (the "Company") in connection with the issue (the "Issue")
by the Company of 914,992 common shares (the "Issued Shares") with a
nominal value of NLG 0.01 each in the share capital of the Company,
In connection herewith I have examined the following documents:
(a) a photocopy of a copy of the deed of incorporation of the
Company, as filed with the trade register of the Chamber of
Commerce and industry in Arnhem, the Netherlands, (the "Trade
Register") and the text of the articles of association of the
Company as most recently amended according to the Extract (as
defined below) by deed of amendment executed on May 29, 1996
(the "Articles Of Association");
(b) a telecopy of an extract (the "Extract"), dated January 10,
1997, from the Trade Register with information regarding
the Company, (provided that it should be noted that certain
information included in the Extract regarding the Company's
enterprise not material for rendering this opinion is
incorrect);
(c) a telecopy of the minutes of the general meeting of
shareholders of the Company, held on April 11, 1996;
(d) a telecopy of the text of the resolutions adopted by the board
of supervisory directors of the Company (lastly) on November
29, 1996;
<PAGE> 2
(e) a telecopy of the text of the resolutions adopted by the board
of managing directors of the Company on November 29, 1996;
(f) a telecopy of an executed description prepared by the Company
and signed by one member of the board of managing directors of
the Company (the other member of the board of managing
directors of the Company, as set forth in the description,
being unable to sign the description) in connection with
article 94b, paragraph 1, of Book 2 of the Netherlands Civil
Code, dated November 29, 1996 (the "Description");
(g) a telecopy of an executed statement from the auditors Moret
Ernst &Young in connection with article 94b, paragraph 2, of
Book 2 of the Netherlands Civil Code, dated November 29, 1996
(the "Auditor's Statement");
(h) a telecopy, dated November 28, 1996, of an executed copy of an
agreement and plan of reorganization, dated November 15, 1996
among the Company, Platypus Solutions, Inc. and Antalys, Inc.
(the "Agreement");
(j) a telecopy received by me on January 6, 1997 of an undated
draft of a registration statement on Form F-3 (the
"Registration Statement") relating to the offering of
914,992 common shares with a nominal value of NLG 0.01
each in the share capital of the Company (the "Shares")
by the Selling Shareholders as defined in the Registration
Statement.
My examination referred to above has been limited to the face of the
documents.
For the purpose of rendering this opinion I have assumed that:
(i) the signatures on original documents are the genuine
signatures of the persons purported to have executed the same
and the conformity of photo- and telecopies to originals;
(ii) the Registration Statement has been or will be executed and
filed substantially in the form of the draft referred to in
(j) above;
(iii) the resolutions referred to in (d) above have been adopted
prior to the resolutions mentioned under (e) above;
(iv) the resolutions referred to in (c), (d) and (e) above
are not contrary to standards of reasonableness and
fairness ("redelijkheid en billijkheid") to be
observed by a legal entity and those persons who are,
pursuant to the law or the articles of association of
such legal entity, involved in its Organisation;
(v) the Agreement constitutes valid, binding and enforceable
obligations of all Parties thereto;
(vi) the Shares only comprise Issued Shares;
(vii) the Issued Shares have been issued, offered, sold, delivered,
duly accepted by the subscribers therefor and paid for in
kind as contemplated in and in
<PAGE> 3
accordance with the Agreement, the Description and
the Auditor's Statement;
(viii) the statements in the Description and the Auditor's
Statement are correct and, to the extent that the
value of the consideration for the Issued Shares
exceeds the nominal value of the Issued Shares and
will be deemed to form part of the payment obligation
("stortingsplicht") on the Issued Shares, the
Auditor's Statement takes such excess into account;
(ix) the outstanding common shares in the capital of
Antalys, Inc., being the consideration for the Issued
Shares, have been validly transferred
("overgedragen") under applicable law to the Company
simultaneously with the Issue.
I have not investigated the law of any jurisdiction other than the Netherlands
as it stands and has been interpreted in published case law of the courts in the
Netherlands as at the date of this opinion and I do not express an opinion on
the law of any jurisdiction other than the Netherlands.
Terms and expressions of law and of legal concepts as used in this opinion have
the meaning in this opinion attributed to them under the law of the Netherlands
and this opinion should be read and understood accordingly.
Based upon the foregoing (including the assumptions set out above), and subject
to any factual matters, documents and events not disclosed to me in the course
of my examination referred to above, I am, at the date hereof, of the following
opinion:
1. The Shares have been duly authorized and validly issued in accordance
with the law of the Netherlands and the provisions of the Articles of
Association applicable thereto and are fully paid-up and
non-assessable.
This opinion is addressed to you and is for the sole benefit of yourselves and
may not be relied upon by any person other than yourselves and your legal
advisers. This opinion may not without my prior written consent be transmitted
to or filed with any person, firm, company or institution.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to De Brauw Blackstone Westbroek in the
Prospectus included in the Registration Statement under the heading "Legal
Matters". In giving such consent, I do not thereby admit that I am in the
category of persons whose consent is required under Section 7 of the United
States Securities Act of 1933, as amended.
Very truly yours,
/s/ Paul Cronheim
Paul Cronheim
<PAGE> 1
Exhibit 23.1
CONSENT OF MORET ERNST & YOUNG ACCOUNTANTS, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form F-3) and related Prospectus of Baan Company N.V.
for the registration of 914,992 shares of its common stock and to the
incorporation by reference therein of our report dated January 30, 1996, with
respect to the consolidated financial statements of Baan Company N.V. included
in its Annual Report (Form 20-F) for the year ended December 31, 1995, filed
with the Securities and Exchange Commission.
/s/ Moret Ernst & Young
MORET ERNST & YOUNG ACCOUNTANTS
Utrecht, The Netherlands
January 6, 1997
