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FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 333-61971
180,822 SHARES
THE VANTIVE CORPORATION
COMMON STOCK
The 180,822 shares (the "Shares") of Common Stock of The Vantive
Corporation, a Delaware corporation ("Vantive" or the "Company"), offered by
this Prospectus were issued in connection with the merger of Wayfarer
Communications, Inc., a California corporation ("Wayfarer"), with and into Revo
Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of
Vantive, which was consummated on June 30, 1998 (the "Wayfarer Merger"). The
Shares consist of (i) 178,571 shares of Common Stock which may be sold from time
to time by or on behalf of certain former shareholders of Wayfarer (the "Selling
Shareholders") and (ii) 2,251 shares of Common Stock issuable upon exercise of
certain warrants (the "Warrants") to purchase Common Stock of the Company issued
to certain Selling Shareholders by Wayfarer and assumed by the Company pursuant
to the terms of the Wayfarer Merger. See "Selling Shareholders." In connection
with the Wayfarer Merger, the Company has agreed to register the Shares under
the Securities Act of 1933, as amended (the "Securities Act"). The Company has
also agreed to use all reasonable efforts to cause the registration statement
covering the Shares to become effective as promptly as practicable after filing
and to keep this Registration Statement effective until the earlier of (i) June
30, 1999 or (ii) such time as the Shares can be sold without compliance with the
registration requirements of the Securities Act, provided however that the
Company shall have the right with certain limitations to require that the
Selling Shareholders suspend open market offers and sales of the Shares
whenever, and for so long as, in the reasonable judgment of the Company in good
faith there may be or is in existence material undisclosed information with
respect to the Company. The Company will not receive any of the proceeds from
the sale of the Shares by the Selling Shareholders. The Company will receive
proceeds from the exercise of the Warrants, if any, and will use any such
proceeds for general corporate purposes. See "Use of Proceeds."
The Company has been advised by the Selling Shareholders that they intend
to sell all or a portion of the Shares from time to time in The Nasdaq National
Market, in negotiated transactions or otherwise, and on terms and at prices then
obtainable. The Selling Shareholders and any broker-dealers, agents or
underwriters that participate with the Selling Shareholders in the distribution
of any of the Shares may be deemed to be "underwriters" within the meaning of
the Securities Act, and any commission received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Company has agreed to
indemnify in certain circumstances the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act. The Selling
Shareholders have agreed to indemnify in certain circumstances the Company
against certain liabilities, including liabilities under the Securities Act. See
"Plan of Distribution."
The Company will bear all out-of-pocket expenses incurred in connection
with the registration of the Shares, including, without limitation, all
registration and filing fees imposed by the Securities and Exchange Commission
(the "Commission"), the National Association of Securities Dealers (the "NASD")
and blue sky laws, printing expenses, transfer agents' and registrars' fees, and
the reasonable fees and disbursements of the Company's outside counsel and
independent accountants and a single counsel for all of the Selling
Shareholders, but excluding
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underwriting discounts and commissions and transfer or other taxes and other
costs and expenses incident to the offering and sale of the shares to the public
which shall be borne by the Selling Shareholders.
THE SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES LAWS OF
ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS. BROKERS OR DEALERS
EFFECTING TRANSACTIONS IN THE SHARES SHOULD CONFIRM THE REGISTRATION OF THE
SHARES UNDER THE SECURITIES LAWS OF THE STATES IN WHICH SUCH TRANSACTIONS OCCUR,
OR THE EXISTENCE OF ANY EXEMPTIONS FROM SUCH REGISTRATION.
The Company's Common Stock is currently traded on The Nasdaq National
Market under the symbol "VNTV". On September 1, 1998, the last sale price of the
Company's Common Stock as reported on The Nasdaq National Market was $8.25.
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF
THE SHARES OFFERED HEREBY.
------------------------------
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 September 2, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the Regional Offices of the Commission
located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60611 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the fees prescribed by the Commission. The Company's
Common Stock is traded on The Nasdaq National Market. Reports and other
information concerning the Company can also be inspected at the offices of the
National Association of Securities Dealers, Inc., Market Listing Section, 1735 K
Street, N.W., Washington, D.C. 20006. Such reports and other information may
also be inspected without charge at a Web site maintained by the Commission. The
address of the site is http:\\www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") 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, reference is made to the Registration Statement, copies of
which may be obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed
by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated herein by reference:
1. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed on August 9,
1995;
2. Annual Report on Form 10-K for the year ended December 31, 1997;
3. Quarterly Reports on Form 10-Q for the three-month periods ended
March 31, 1998 and June 30, 1998; and
4. Current Reports on Form 8-K filed on June 23, 1998 and July 15,
1998.
All documents and reports subsequently 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 this offering shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents or reports. Any statement contained in a document incorporated
by reference 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 written or oral request, a copy of any or all of
the foregoing documents incorporated by reference in this Prospectus (other than
any exhibits thereto). Requests for such documents should be submitted in
writing to The Vantive Corporation, 2455 Augustine Drive, Santa Clara,
California 95054, Attention: Chief Financial Officer, or by telephone at (408)
982-5700.
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THE COMPANY
The Vantive Corporation is a leading provider of front-office automation
software that automates sales and marketing, call centers, field service, help
desk and quality assurance operations. These integrated front-office software
applications, called the Vantive Enterprise, are designed to enable businesses
to attract, acquire and retain customers. The front-office applications
comprising Vantive Enterprise are built using a component-based, multi-tier
architecture and a common data model. Vantive Enterprise applications may also
be used through a Web-based browser, providing the end-user access to the
software outside the traditional office environment. Vantive Enterprise software
may be used independently or as part of an integrated, enterprise-wide,
front-office automation system. The Company believes that businesses
implementing an integrated front-office automation system can better manage
customer relationships by sharing valuable customer information throughout the
organization. The Company's front-office software applications have been
deployed by businesses in a broad range of industries, including software,
communications, consumer products, finance, outsourcing/services, personal
computer hardware, healthcare, manufacturing, medical products, public
sector/regulated industry, online services, consumer goods and retail.
On June 30, 1998, the Company completed the Wayfarer Merger, pursuant to
which Wayfarer, a leader in Web-based information delivery, became a
wholly-owned subsidiary of the Company. Under the terms of the agreement,
Vantive issued 178,571 shares of the Company's Common Stock in exchange for all
outstanding shares of Wayfarer and has reserved 2,251 shares of the Company's
Common Stock issuable upon exercise of the Warrants. The Wayfarer Merger has
been accounted for as a purchase, and Vantive has recorded charges related to
the acquisition of approximately $9.5 million, including a one-time in-process
research and development charge and a compensatory bonus expense in the second
quarter of 1998.
The Company was incorporated in California on October 25, 1990 and
reincorporated in Delaware on August 10, 1995. The Company's principal executive
offices are located at 2455 Augustine Drive, Santa Clara, California 95054, and
its telephone number is (408) 982-5700.
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RISK FACTORS
The following risk factors should be considered in conjunction with the
other information included and incorporated by reference in its Prospectus
before purchasing the Common Stock offered hereby. This Prospectus contains
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Actual results could differ materially
from those projected in these forward-looking statements as a result of a
variety of factors, including those set forth below and elsewhere in this
Prospectus.
FUTURE OPERATING RESULTS UNCERTAIN.
The Company has experienced significant growth and significant fluctuations
in growth in revenues in recent periods. The Company does not believe that the
historical growth rates of revenues will be sustainable or are indicative of
future results. In addition, the Company's limited operating history makes the
prediction of future operating results difficult or impossible. The Company's
future operating results will depend on many things, including demand for the
Company's products, the level of product and price competition, the ability of
the Company to develop and market new products and to control costs, the ability
of the Company to expand its direct sales force and indirect distribution
channels and the ability to attract and retain key personnel. The Company is
currently investing, and intends to continue to invest, significant resources to
develop its sales strategy, which could adversely affect the Company's operating
margins. Competition for good salespeople and sales managers is intense and
there can be no assurance that the Company can retain its existing sales
personnel or that it can attract, assimilate and retain additional highly
qualified sales personnel in the future. The Company's strategy also depends, in
part, on relationships with third parties. There also can be no assurance that
the Company will attract and retain appropriate high-end integrators, resellers
and other third party distributors to market the Company's products effectively.
Further, the Company believes, based on interactions with its customers and
potential customers, that the purchase of its products is relatively
discretionary and generally involves a significant commitment of capital. As a
result, in the event of any downturn in any potential customer's business or the
economy in general, purchases of the Company's products may be deferred or
canceled, which could have a material adverse effect on the Company's business,
results of operations and financial condition. The Company was not profitable
prior to 1995 and there can be no assurance that the Company will remain
profitable on a quarterly or annual basis.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS.
The Company's quarterly operating results have in the past varied
substantially and will probably in the future vary significantly depending on
factors such as the size, timing and recognition of revenue from significant
orders, increased competition, sales execution, the timing of new product
releases by the Company and its competitors, market acceptance of the Company's
products, changes in the Company's and its competitors' pricing policies, the
mix of license and service revenue, budgeting cycles of its customers,
seasonality, the mix of direct and indirect sales, changes in operating
expenses, changes in Company strategy, personnel changes, foreign currency
exchange rates and general economic factors.
A significant portion of the Company's revenues in any quarter is typically
derived from non-recurring sales to a limited number of customers. Accordingly,
revenues in any one quarter are not indicative of revenues in any future period.
In addition, like many software applications businesses, the Company has
generally recognized a substantial portion of its revenues in the last month of
each quarter, with these revenues concentrated in the last weeks of the quarter.
Any significant deferral of purchases of the Company's products, or failure by
the Company to close anticipated transactions could have a material adverse
effect on the Company's business, results of operations and financial condition
in any particular quarter and to the extent that significant sales occur earlier
than expected, operating results for subsequent quarters may be adversely
affected. Product revenues are also difficult to forecast because the market for
front-office automation software products is rapidly evolving. The Company's
sales cycle is typically six to nine months but varies substantially from
customer to customer. The Company expects that sales made through indirect
channels, which are harder to predict and usually have lower margins than direct
sales, will increase as a percentage of total revenues.
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The Company operates with little order backlog because its products are
typically shipped shortly after orders are received. As a result of these
factors, quarterly revenues for any future quarter are not predictable with any
significant degree of certainty. The Company's expense levels are based, in
part, on its expectations as to future revenues. Net income may be
disproportionately affected by a reduction in revenues, because most of the
Company's expenses do not vary with revenues. The Company may also choose to
reduce prices or increase spending in response to competition or to pursue new
market opportunities. In particular, if new competitors, technological advances
by existing competitors, or other competitive factors require the Company to
invest significantly greater resources in research and development efforts, the
Company's operating margins in the future may be adversely affected.
Because of these factors, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and that
such comparisons should not be relied upon as indications of future performance.
Due to all of the foregoing factors, and as occurred in the quarter ended June
30, 1998, it is likely that in some future quarter the Company's operating
results will be below the expectations of public market analysts and investors.
If this happens, the price of the Company's Common Stock will likely be
materially adversely affected.
RAPID TECHNOLOGICAL CHANGE AND PRODUCT DEVELOPMENT RISKS.
The front-office automation software market is subject to rapid
technological change, changing customer needs, frequent new product
introductions and evolving industry standards that may render existing products
and services less marketable or obsolete. As a result, the Company's position in
its existing markets or other markets that it may enter could be eroded rapidly
by product advances. The life cycles of the Company's products are difficult to
estimate. The Company's growth and future financial performance will depend in
part on its ability to enhance existing applications, develop and introduce new
applications that keep pace with technological advances, meet changing customer
requirements, respond to competitive products and achieve market acceptance.
These are increasingly complex and costly undertakings. For example, the
Company's customers have adopted a wide variety of hardware, software, database,
Internet-based and networking platforms and as a result, to gain broad market
acceptance, the Company must continue to support and maintain its products on a
variety of such platforms. The Company's future success will depend on its
ability to address the increasingly sophisticated needs of its customers by
supporting existing and emerging hardware, software, database, Internet-based
and networking platforms and by developing and introducing enhancements to its
products and new products on a timely basis that keep pace with technological
developments, evolving industry standards and changing customer requirements.
The Company may not be able to successfully change other aspects of its
business, such as its distribution channels or cost structure, if technological
changes in its market require such change.
The Company's product development efforts require substantial investments
by the Company. There can be no assurance that the Company will have sufficient
resources to make the necessary investments. The Company has in the past
experienced development delays and there can be no assurance that the Company
will not experience such delays in the future. There can be no assurance that
the Company will not experience difficulties that could delay or prevent the
successful development, introduction or marketing of new or enhanced products in
the future. In addition, there can be no assurance that such products will meet
the requirements of the marketplace and achieve market acceptance. If the
Company is unable, for technological or any other reasons, to develop and
introduce new and enhanced products in a timely manner, the Company's business,
results of operations and financial condition could be materially adversely
affected.
Software products as complex as those offered by the Company may contain
errors that may be detected at any point in the products' life cycles. The
Company has in the past discovered software errors in certain of its products
and has delayed shipment of products during the period required to correct these
errors. There can be no assurance that, despite testing by the Company and by
current and potential customers, errors will not be found, resulting in loss of,
or delay in, market acceptance and sales, diversion of development resources,
injury to the Company's reputation, or
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increased service and warranty costs, any of which could have a material adverse
effect on the Company's business, results of operations and financial condition.
RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS.
As part of its business strategy, the Company expects to review acquisition
prospects that would complement its existing product offerings, augment its
market coverage or enhance its technological capabilities or that may otherwise
offer growth opportunities. Future acquisitions by the Company could result in
potentially dilutive issuances of equity securities, the incurrence of debt and
contingent liabilities or amortization expenses related to goodwill and other
intangible assets, any of which could materially adversely affect the Company's
operating results and/or the price of the Company's Common Stock. Acquisitions
entail numerous risks, including difficulties in the assimilation of acquired
operations, technologies and products, diversion of management's attention to
other business concerns, risks of entering markets which the Company has no or
limited prior experience and potential loss of key employees of acquired
organizations. No assurance can be given as to the ability of the Company to
successfully integrate any businesses, products, technologies or personnel that
might be acquired in the future, and the failure of the Company to do so could
have a material adverse effect on the business, operating results and financial
condition of the Company.
COMPETITION.
The front-office automation software market is intensely competitive,
highly fragmented and subject to rapid change. Because the Company offers
multiple applications that can be purchased separately or integrated as part of
Vantive Enterprise, the Company competes with a variety of other businesses
depending on the target market for their applications software products. These
competitors include a select number of businesses targeting the enterprise-level
and department-level front-office markets, such as Astea International, Inc.,
Aurum Software, Inc. (a subsidiary of The Baan Company), Clarify, Inc., Onyx
Software, and Siebel Systems, Inc.
The Company also competes with a substantial number of businesses that
offer products targeted at one or more specific markets, including the customer
support market, the help desk market, the quality assurance market and the sales
and marketing automation market, such as Remedy Corporation and Software
Artistry, Inc. (which was acquired by the IBM subsidiary, Tivoli Systems, Inc.).
The Company believes that such point solution providers may expand their product
offerings, which could provide increased competition for the company across its
market segments. The Company also competes with third party professional service
organizations that develop custom software and with internal information
technology departments of customers that develop customer interaction
applications. Among the Company's current and potential competitors are also a
number of large hardware and software businesses that may develop or acquire
products that compete with the Company's products. In this regard, SAP AG,
Oracle Corporation and The Baan Company have each introduced sales automation
and/or customer support modules as part of their application suites. Oracle has
announced the creation of a network of third party dealers that will sell
Oracle's application suites exclusively to medium-sized businesses.
The Company expects that large software vendors in the enterprise resource
planning market will continue to enter and pursue the front-office automation
market. These competitors have significantly greater financial, marketing,
service, support, technical and other resources than the Company.
The Company also expects that competition will increase as a result of
software industry consolidations. Current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties to increase the ability of their products to address the needs of
the Company's prospective customers. Accordingly, it is possible that new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share. The Company also expects that competition may increase
as a result of both new software start ups entering the market as well as
existing software industry vendors which may be planning to enter the market for
front-office applications. Increased competition is likely to result in price
reductions, reduced operating margins and loss of market share, any of which
could materially adversely affect the Company's business, results of operations
and financial condition. Many of the Company's current and potential competitors
have significantly greater financial, marketing, service, support, technical and
other resources than the Company. As a result, they may be able to respond more
quickly to new or emerging technologies and changes in customer
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requirements, or to devote greater resources to the development, promotion,
service and sale of their products than can the Company. There can be no
assurance that the Company will be able to compete successfully against current
and future competitors or that competitive pressures faced by the Company will
not materially adversely affect its business, results of operations and
financial condition.
The Company believes that the principal competitive factors affecting its
market include product features such as adaptability, scalability, ability to
integrate with products produced by other vendors, functionality, ease of use
and such other factors as product reputation, quality, performance, price,
customer service and support, the effectiveness of sales and marketing efforts
and company reputation. Although the Company believes that its products
currently compete favorably with respect to such factors, there can be no
assurance that the Company can maintain its competitive position against current
and potential competitors, especially those with significantly greater
financial, marketing, service, support, technical and other resources.
DEPENDENCE ON EMERGING MARKETS FOR FRONT-OFFICE AUTOMATION SOFTWARE; PRODUCT
CONCENTRATION.
The Company's future financial performance will depend in large part on the
growth in demand for individual front-office automation applications as well as
the number of organizations adopting comprehensive front-office automation
software information systems. To date, much of the Company's license revenues
have resulted from sales of individual applications, particularly Vantive
Support, Vantive HelpDesk, and Vantive Sales. The markets for these applications
are relatively new and undeveloped and failure of these markets to expand would
have a material adverse effect on the Company's business, results of operations
and financial condition. Additionally, the Company is investing in the field
service and quality automation markets. Should these markets fail to develop,
not accept the Company's products or cause the company to lose new business
and/or customers in its traditional markets, there would be an adverse effect on
the Company's business, results of operations and financial condition.
The Company believes that an important competitive advantage for its
software applications is their ability to be integrated with one another and
with other back-office software applications to create an enterprise-wide
information system. If the demand for integrated suites of front-office
automation applications fails to develop, or develops more slowly than the
Company currently anticipates, it could have a material adverse effect on the
demand for the Company's applications and on its business, results of operations
and financial condition. In addition, any other factor adversely affecting the
demand for the Company's existing applications could have a material adverse
effect on the Company's business, results of operations and financial condition.
MANAGEMENT OF EXPANDING OPERATIONS; DEPENDENCE UPON KEY PERSONNEL.
The Company's ability to compete effectively and to manage future growth,
if any, will require the Company to continue to improve its financial and
management controls, reporting systems and procedures on a timely basis and
expand, train and manage its workforce. There can be no assurance that the
Company will be able to do so. The Company's failure to do so could have a
material adverse effect on the Company's business, results of operations and
financial condition. The Company has recently hired a significant number of
employees, including senior sales and marketing personnel and in order to
maintain its ability to grow in the future, the Company will be required to
significantly increase its total headcount. In addition, the Company's future
performance depends in significant part upon attracting and retaining key
technical, sales, senior management and financial personnel. In particular,
delays in hiring sales or research and development personnel may have a material
adverse effect on the Company's business, results of operations and financial
condition. The loss of the services of one or more of the Company's officers or
the inability to recruit other additional senior management could have a
material adverse effect on the Company's business, results of operations and
financial condition. Competition for such personnel is intense and the inability
to retain its key technical, sales, senior management and financial personnel or
to attract, assimilate or retain other highly qualified technical, sales, senior
management and financial personnel in the future on a timely basis could have a
material adverse effect on the Company's business, results of operations and
financial condition.
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INTERNATIONAL OPERATIONS, FOREIGN CURRENCY FLUCTUATIONS.
International revenue, or revenue derived from sales to customers in
foreign countries, accounted for approximately 28% and 15% of the Company's
revenue in the quarter ended June 30, 1998 and 1997, and 28% and 13% of the
Company's revenue in the six months ended June 30, 1998 and 1997, respectively.
International revenues increased by 177% for the quarter ended June 30, 1998
compared to quarter ended June 30, 1997 and by 214% for the six months ended
June 30, 1998 compared to six months ended June 30, 1997 demonstrating the wide
acceptance of Vantive's front office automation products through the IT
Community. The majority of this international revenue has come from Europe. The
Company believes that its continued growth and profitability will require
further expansion of its international operations. To successfully expand
international sales, the Company must establish additional foreign operations,
hire additional personnel and recruit additional international resellers. To the
extent that the Company is unable to do so in a timely manner, the Company's
growth in international sales, if any, will be limited and the Company's
business, results of operations and financial condition could be materially
adversely affected.
As the Company continues to expand its international operations,
significant costs may be incurred before achieving any additional international
revenues, which could have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, future increases in
the value of the U.S. dollar could make the Company's products less competitive
in foreign markets. There are certain risks inherent in doing business on an
international level, such as unexpected changes in regulatory requirements,
export restrictions, tariffs and other trade barriers, difficulties in staffing
and managing foreign operations, longer payment cycles, problems in collecting
accounts receivable, political instability, changes in foreign economic
conditions, fluctuations in currency exchange rates, seasonal reductions in
business activity during the summer months in Europe and certain other parts of
the world and potentially adverse tax consequences, any of which could adversely
impact the success of the combined company's international operations. The
Company's foreign subsidiaries operate primarily in local currencies, and their
results are translated into US dollars. If the value of the US dollar increases
relative to foreign currencies, the Company's operating results could be
materially adversely affected. In particular, revenue from sales in the Pacific
Rim could be adversely affected by declines in the value of such currencies
against the dollar.
The Company has not been significantly affected by the recent unfavorable
economic conditions in certain Asian and Pacific Rim countries. If the economic
conditions in these markets do not improve, this may have an adverse impact on
the Company's business, results of operations, and financial condition.
INCREASED USE OF THIRD PARTY SOFTWARE.
The Company currently markets a proprietary application development
environment for its customers to tailor its products. This application
development environment is also used by the Company to build and modify its
products. The Company believes, based on interactions with its customers and
potential customers, that it currently derives a competitive advantage from this
proprietary application development environment. However, the Company believes
that competitive pressures, technological changes demanded by customers and
significant advances in the sophistication of third party application
development tools such as Visual Basic will require the Company to make greater
use of third party software in the future. The greater use of third party
software could require the Company to invest significant resources in rewriting
some or all of its software applications products utilizing third party software
and/or to enter into license arrangements with third parties which could result
in higher royalty payments and a loss of product differentiation and any
competitive advantage associated with the proprietary development environment.
There can be no assurance that the Company would be able to successfully rewrite
its applications or enter into commercially reasonable licenses and the costs
of, or inability or delays in doing so could have a material adverse effect on
the Company's business, results of operations and financial condition.
LEVERAGE; SUBORDINATION.
In connection with the August 1997 sale of its 4.75% Convertible
Subordinated Notes (the "Notes"), the Company has incurred $69 million of
indebtedness. As a result of this additional indebtedness, the Company's
principal and interest obligations have increased substantially. The degree to
which the
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Company is leveraged could materially and adversely affect the Company's ability
to obtain 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 is 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.
NEED TO EXPAND DISTRIBUTION CHANNELS AND SUCCESSFULLY LEVERAGE THIRD PARTY
RELATIONSHIPS.
An important element of the Company's distribution strategy is to expand
its direct sales force, to create additional relationships with third parties
and to dedicate certain direct sales resources and leverage third party
relationships to cover key vertical markets. An important element of the
Company's strategy is to integrate its products with products from enterprise
resource planning ("ERP") vendors. The Company is currently investing and
intends to continue to invest, significant resources toward these strategies,
which could adversely affect the Company's operating margins. In this regard,
the Company has recently hired significant numbers of direct salespeople.
Competition for salespeople is intense and there can be no assurance that the
Company can retain its existing salespeople or that it can attract, assimilate
and retain additional highly qualified salespeople in the future. The Company's
distribution strategy also depends, in large part, on attracting and retaining
beneficial third party relationships. There also can be no assurance that the
Company will be able to attract and retain appropriate high-end integrators,
resellers, other third party distributors or ERP vendors. The Company's
agreements with these third parties are not exclusive and, in many cases, may be
terminated by either party without cause. In addition, many of these third
parties sell or co-market competing product lines. Therefore, there can be no
assurance that any of these parties will continue to represent or recommend the
Company's products. There also can be no assurance that the Company will
effectively identify key vertical markets. The inability to recruit, or the loss
of, important direct sales personnel, high-end integrators, resellers, other
third party distributors or ERP vendors, or the failure to effectively identify
key vertical markets, could have a material adverse effect on the Company's
business, results of operations and financial condition.
POSSIBLE VOLATILITY OF STOCK PRICE.
Future announcements concerning the Company or its competitors, quarterly
variations in operating results, announcements of technological innovations, the
introduction of new products or changes in product pricing policies by the
Company or its competitors, proprietary rights or other litigation, changes in
earnings estimates by analysts or other factors could cause the market price of
the Common Stock to fluctuate substantially. In addition, stock prices for many
technology companies fluctuate widely for reasons which may be unrelated to
operating results of such companies. These fluctuations, as well as general
economic, market and political conditions such as changes in interest rates,
recessions or military conflicts, may materially and adversely affect the market
price of the Company's Common Stock. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such companies. Such
litigation could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
ANTI-TAKEOVER EFFECTS OF RESTATED CERTIFICATE OF INCORPORATION, BYLAWS AND
DELAWARE LAW.
Certain provisions of the Company's Restated Certificate of Incorporation
and Bylaws and of Delaware Law could discourage potential acquisition proposals
and could delay or prevent a change in control of the Company. Such provisions
could diminish the opportunities for a stockholder to participate in tender
offers, including tender offers at a price above the then current market value
of the common stock. Such provisions may also inhibit increase in the market
price of the common stock that could result from takeover attempts. In addition,
the Restated Certificate of Incorporation authorizes 2,000,000 shares of
undesignated preferred stock. The board of directors of the Company, without
further stockholder approval, may issue this preferred stock with such terms as
the board of directors may determine, which could have the effect of delaying or
preventing a change in control
8
<PAGE> 11
of the Company. The issuance of preferred stock could also adversely affect the
voting power of the holders of common stock, including the loss of voting
control. Such preferred stock could be utilized to implement, without
stockholder approval, a stockholders' right plan that could be triggered by
certain change in control transactions, which could delay or prevent a change in
control of the Company or could impede a merger, consolidation, takeover or
other business combination involving the Company, or discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of
the Company. The Company's bylaws and indemnity agreements provide that the
Company will indemnify officers and directors against losses that they may incur
in legal proceedings resulting from their service to the Company. In addition,
the Restated Certificate of Incorporation and Bylaws eliminate the right of
stockholders to take action by written consent. Moreover, section 203 of the
Delaware General Corporation Law restricts certain business combinations with
"interested stockholders" as defined by that statute. The provisions of the
Restated Certificate of Incorporation and Bylaws and of Delaware Law are
intended to encourage potential acquirers to negotiate with the Company and
allow the board of directors the opportunity to consider alternative proposals
in the interest of maximizing stockholder value. However, such provisions may
also have the effect of discouraging acquisition proposals or delaying or
preventing a change in control of the Company, which in turn may have an adverse
effect on the market price of the Company's common stock.
DEPENDENCE ON LICENSED TECHNOLOGY.
Vantive licenses technology on a non-exclusive basis from several
businesses for use with its products and anticipates that it will continue to do
so in the future. The inability of the Company to continue to license these
products or to license other products for use with its products or substantial
increases in royalty payments under these third party licenses could have a
material adverse effect on its business, results of operations and financial
condition. In addition, the effective implementation of the Company's products
depends upon the successful operation of these licensed products in conjunction
with the Company's products and therefore any undetected errors in such licensed
products may prevent the implementation or impair the functionality of the
Company's products, delay new product introductions and/or injure the Company's
reputation. Such problems could have a material adverse effect on the Company's
business, results of operations and financial condition.
DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT.
The Company's success is heavily dependent upon proprietary technology. The
Company relies primarily on a combination of copyright, trademark and trade
secrets laws, as well as confidentiality procedures and contractual provisions
to protect its proprietary rights. There can be no assurance that such measures
will be adequate to protect the Company from infringement of its technology. The
Company presently has no patents or patent applications pending. Despite the
Company's efforts to protect its proprietary rights, attempts may be made to
copy aspects of the Company's products or to obtain and use information that the
Company regards as proprietary. In particular, as the Company provides its
licensees with access to the proprietary information underlying the Company's
licensed applications, there can be no assurance that licensees or others will
not develop products which infringe the Company's proprietary rights.
Policing unauthorized use of the Company's products is difficult and while
the Company is unable to determine the extent to which piracy of its software
products exists, software piracy can be expected to be a persistent problem. In
addition, the laws of some foreign countries do not protect the Company's
proprietary rights to as great an extent as do the laws of the United States.
There can be no assurance that the Company's means of protecting its proprietary
rights will be adequate or that the Company's competitors will not independently
develop similar technology. The Company is not aware that any of its products
infringe the proprietary rights of third parties, although the Company has in
the past and may in the future, receive communications alleging possible
infringement of third party intellectual property rights. The Company expects
that software product developers will increasingly be subject to infringement
claims as the number of products and competitors in the Company's target markets
grows and the functionality of products in such markets overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require the Company to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company or at all,
which could have a material adverse effect upon the Company's business, results
of operations and financial condition.
9
<PAGE> 12
PRODUCT LIABILITY.
The Company's license agreements with its customers typically contain
provisions intended to limit the Company's exposure to potential product
liability claims. It is possible that the limitation of liability provisions
contained in the Company's agreements may not be effective. Although the Company
has not experienced any product liability claims to date, the sale and support
of products by the Company and the incorporation of products from other
businesses may entail the risk of such claims. A successful product liability
action brought against the Company could have a material adverse effect upon the
Company's business, results of operations and financial condition.
YEAR 2000 COMPLIANCE.
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
the 20th century dates. As a result many companies' software and computer
systems may need to be upgraded or replaced in order to comply with such "Year
2000" requirements. Although the Company believes that its systems are Year 2000
compliant, the Company utilizes third-party equipment and software that may not
be Year 2000 compliant. Failure of such third-party equipment or software to
operate properly with regard to Year 2000 and thereafter could require the
Company to incur unanticipated expenses to address any problems, which could
have a material adverse effect on the Company's business, operating results and
financial condition. The business, operating results and financial condition of
the Company's customers could be adversely affected to the extent that they
utilize third-party software products which are not Year 2000 compliant.
Furthermore, the purchasing patterns of customers or potential customers may be
affected by Year 2000 issues as companies expend significant resources to
correct their current systems for Year 2000 compliance. These expenditures may
result in reduced funds available to purchase products and services such as
those offered by the Company, which could have a material adverse effect on the
Company's business, operating results and financial condition. The Vantive
Enterprise has been designed to support dates well into the next century and to
be Year 2000 compliant. Failure of the software to operate properly with regard
to Year 2000 and thereafter could require the Company to incur unanticipated
expenses to address any problems, which could have a material adverse effect on
the Company's business, operating results and financial condition.
10
<PAGE> 13
SELLING SHAREHOLDERS
Certain Selling Shareholders hold Shares which were issued by the Company
in the Wayfarer Merger and certain Selling Shareholders will hold shares of
Common Stock of the Company which are issuable upon exercise of the Warrants.
The table below lists the Selling Shareholders and the number of shares of
Vantive Common Stock which each owned as of August 12, 1998, all of which are
subject to sale pursuant to this Registration Statement, and the number of the
shares of Vantive Common Stock which each would own assuming that such number of
Shares were offered and assuming the sale of all such Shares permitted to be
sold.
<TABLE>
<CAPTION>
SHARES OWNED
SELLING SHAREHOLDER(1) BEFORE OFFERING
---------------------- ---------------
<S> <C>
Joyce and William Armstrong 20
Bay Partners SBIC 15,523
Bayview Investors, Ltd. 4,657
Philipp J. Beisel 1,061
Philipp W. Beisel 824
Edward E. Colby 2,363
Dennis S. Crow 20
Michael Curry 10
David and Susan Davis 46
Freda Mae Davis 172
Jane Dietze 51
Landon M. Dyer 186
David and Michaelyn Eppley 73
F&W Investments 1996 398
Donald G. and Jean M. Foster 265
Jamie Hamilton 51
Robert Scott Healy 3
Roland Heiniel 18
Thomas A. and Susan C. Herring 26
Jeff Hosley 51
Hummer Winblad Tech. Fund II, L.P. 983
Hummer Winblad Tech Fund II(A), L.P. 80
Hummer Winblad Venture Partners II, L.P. 25,504
Brian Jacoby 2
J.F. Shea Co., Inc. as Nominee 7,761
Berta Kerr 2
Korea Technology Banking Corp. 13,265
Carl and Sandi Lefebvre 2
William P. and Jane S. Marino 3
Joseph E. McKairnes 2
Darlene Mooreland 51
Christopher and Sandra Goozee Nichols 5
William J. Patterson, Sr. 32
Stephen Piziali 18
Stephen Quinn 1
RC Search, Inc. 2
RS & Co. IV, L.P. 26,389
Patricia and Cory Ricard 13
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
SHARES OWNED
SELLING SHAREHOLDER(1) BEFORE OFFERING
---------------------- ---------------
<S> <C>
DonnaJay and Jeffry Robelen 2
Alain Rossman 830
Mark Rozanski 2
Carol M. Sams 3
Dr. Robert Scoren 265
Robert Donald Scoren Trust 53
Anna Seitz 219
Gregory Seitz 612
Sequoia Capital VI 44,074
Sequoia Technology Partners VI 2,422
Sequoia XXIV 929
Sequoia 1995 531
SQP 1997 306
Sequoia 1997 173
Stanford University 464
Sumitomo Corporation 26,530
David Walls-Kaufman 2
Wavelength Technologies 133
Robert R. Welland 265
Robert V. Welland 425
Hiranori and Toyoko Yogi 265
Sharon Yogi 133
Comdisco, Inc. 328(2)
Silicon Valley Bank 1,923(3)
=================== =======
TOTALS 180,822
</TABLE>
- ----------
(1) The persons/entities named in the table have sole voting and investment
power with respect to all shares of Vantive Common Stock shown as
beneficially owned by them, subject to community property laws, where
applicable.
(2) The number of shares set forth assumes the exercise of the Warrant held by
Comdisco, Inc. (the "Comdisco Warrant"). Pursuant to the terms of the
Wayfarer Merger, the Company assumed the Comdisco Warrant on the same terms
and conditions as were applicable prior to the Wayfarer Merger. Prior to
the Wayfarer Merger, the Comdisco Warrant entitled Comdisco, Inc. to
purchase 19,000 shares of Wayfarer Series D Preferred Stock. Pursuant to
the terms of the Wayfarer Merger, each share of Wayfarer Series D Preferred
Stock was converted into 0.0172439 of a share of Common Stock of the
Company. Thus, upon the effectiveness of the Wayfarer Merger, Comdisco,
Inc. is entitled to receive 328 shares of Common Stock of the Company upon
exercise of the Comdisco Warrant.
(3) The number of shares set forth assumes the exercise of two Warrants held by
Silicon Valley Bank (collectively, the "Silicon Warrants"). Pursuant to the
terms of the Wayfarer Merger, the Company assumed the Silicon Warrants on
the same terms and conditions as were applicable prior to the Wayfarer
Merger. Prior to the Wayfarer Merger, the Silicon Warrants entitled Silicon
Valley Bank to purchase an aggregate of 60,923 shares of Wayfarer Series F
Preferred Stock. Pursuant to the terms of the Wayfarer Merger, each share
of Wayfarer Series F Preferred Stock was converted into 0.0315696 of a
share of Common Stock of the Company. Thus, upon the effectiveness of the
Wayfarer Merger, Silicon Valley Bank is entitled to receive an aggregate of
1,923 shares of Common Stock of the Company upon exercise of the Silicon
Warrants.
12
<PAGE> 15
PLAN OF DISTRIBUTION
Pursuant to the Agreement and Plan of Reorganization dated June 18, 1998 by
and among the Company, Revo Acquisition Corporation and Wayfarer, the Company
has filed with the Commission under the Securities Act the Registration
Statement, of which this Prospectus forms a part, with respect to the resale of
the Shares from time to time and has agreed to use all reasonable efforts to
cause such Registration Statement to remain effective until the earlier of (i)
June 30, 1999 or (ii) such time as the Shares can be sold without compliance
with the registration requirements of the Securities Act; provided, however,
that the Company has the right, subject to certain limitations, to require that
the Selling Shareholders suspend open market offers and sales of the Shares
whenever, and for so long as, in the reasonable judgment of the Company in good
faith, there is or may be in existence material undisclosed information or
events with respect to the Company.
Each of the Selling Shareholders will act independently of the Company in
making decisions with respect to the timing, manner and size of each sale. The
Selling Shareholder may choose to sell the Shares from time to time at market
prices prevailing at the time of the sale, at prices related to the then
prevailing market prices or in negotiated transactions, including pursuant to an
underwritten offering or pursuant to one or more of the following methods: (a)
block trades in which the broker or dealer so engaged will attempt to sell the
Shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction, (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus
and (c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
In connection with the sale of the Shares, Selling Shareholders may engage
broker-dealers who in turn may arrange for other broker-dealers to participate.
Broker-dealers may receive commissions or discounts from the Selling
Shareholders in amounts to be negotiated immediately prior to the sale. In
addition, underwriters or agents may receive compensation from the Selling
Shareholders or from purchasers of the Shares for whom they may act as agents,
in the form of discounts, concessions or commissions. Underwriters may sell
Shares to or through dealers, such dealers may receive compensation in the form
of discounts, concessions or commissions from the underwriters or commissions
from the purchasers for whom they act as agents. Underwriters, dealers and
agents that participate in the distribution of the Shares may be deemed to be
underwriters and any discounts or commissions received by them from the Selling
Shareholders and any profit on the resale of the Shares by them may be deemed to
be underwriting discounts and commissions under the Securities Act.
At the time a particular offer of Shares is made, to the extent required,
a supplement to this Prospectus will be distributed which will identify and set
forth the aggregate amount of Shares being offered and the terms of the
offering, including the name or names of any underwriters, dealers or agents,
the purchase price paid by any underwriter for Shares purchased from the Selling
Shareholders and/or the Company, and any discounts, commissions or concessions
allowed or reallowed or paid to dealers, including the proposed selling price
to the public.
The Company has agreed to indemnify in certain circumstances the Selling
Shareholders against certain liabilities, including liabilities under the
Securities Act. The Selling Shareholders have agreed to indemnify in certain
circumstances the Company against certain liabilities, including liabilities
under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the shares may not simultaneously engage in market
making activities with respect to the shares for a period of nine business days
prior to the commencement of such distribution. In addition, and without
limiting the foregoing, the selling shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder
including, without limitation, rules 10B-2, 10B-6 and 10B-7, which provisions
may limit the timing of purchases and sales of the shares by the selling
shareholders.
In order to comply with certain states' securities laws, if applicable,
the shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the shares may not be sold unless
the shares have been registered or qualified for sale in such state, or unless
an exemption from registration or qualification is available and is obtained.
The Company will bear all out-of-pocket expenses incurred in connection
with the registration of the Shares, including, without limitation, all
registration and filing fees imposed by the Commission, the NASD and
13
<PAGE> 16
blue sky laws, printing expenses, transfer agents' and registrars' fees, and
the fees and disbursements of the Company's outside counsel and independent
accountants, but excluding underwriting discounts and commissions and transfer
or other taxes which shall be borne by the Selling Shareholders.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders. The Company will receive proceeds from the
exercise of the Warrants, if any, and will use any such proceeds for general
corporate purposes.
LEGAL MATTERS
The validity of the Shares is being passed upon for the Company by Gray
Cary Ware & Freidenrich LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 have
been audited by Arthur Andersen LLP, independent accountants, as set forth in
their report thereon, included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
14
<PAGE> 17
================================================================================
No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained or incorporated by
reference in this prospectus in connection with the offering described herein,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the company, any selling shareholder or by any
underwriter. This prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities other than the registered
securities to which it relates, or an offer to sell, or a solicitation of an
offer to buy, in any jurisdiction in which it is unlawful to make such offer or
solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the company since the date hereof or that the
information contained herein is correct as of any time subsequent to the date
hereof.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 1
Incorporation of Certain Documents by
Reference.......................... 1
The Company............................ 2
Risk Factors........................... 3
Selling Shareholders................... 11
Plan of Distribution.................. 13
Use of Proceeds........................ 14
Legal Matters.......................... 14
Experts................................ 14
</TABLE>
PROSPECTUS
180,822 SHARES
THE VANTIVE CORPORATION
COMMON STOCK
September 2, 1998
================================================================================
