-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U+NtLkBv0aGvjX7ughUW36n3Vdso4V8LIEgH4T9dxF1hGmDTnhHwQ90EE0Idgp1E 5DuzoVprMF47sUpy/bVKEw== 0000891618-99-002158.txt : 19990513 0000891618-99-002158.hdr.sgml : 19990513 ACCESSION NUMBER: 0000891618-99-002158 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERSANT CORP CENTRAL INDEX KEY: 0000865917 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943079392 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-76045 FILM NUMBER: 99618682 BUSINESS ADDRESS: STREET 1: 6539 DUMBARTON CIRCLE CITY: FREMONT STATE: CA ZIP: 94555 BUSINESS PHONE: 5107891500 MAIL ADDRESS: STREET 1: 6539 DUMBARTON CIRCLE CITY: FREMONT STATE: CA ZIP: 94555 FORMER COMPANY: FORMER CONFORMED NAME: VERSANT OBJECT TECHNOLOGY CORP DATE OF NAME CHANGE: 19960428 S-3/A 1 AMENDMENT NO. 1 TO FORM S-3 1 As filed with the Securities and Exchange Commission on May 12, 1999 Registration No. 333-76045 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- PRE-EFFECTIVE AMENDMENT NO. 1 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- VERSANT CORPORATION (Exact name of Registrant as specified in its charter) CALIFORNIA 94-3079392 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 6539 DUMBARTON CIRCLE FREMONT, CALIFORNIA 94555 (510) 789-1500 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) -------------------- GARY RHEA CHIEF FINANCIAL OFFICER VERSANT CORPORATION 6539 DUMBARTON CIRCLE FREMONT, CALIFORNIA 94555 (510) 789-1500 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------------- Copies to: BARRY J. KRAMER, ESQ. JAMES GIVEN, ESQ. FENWICK & WEST LLP TWO PALO ALTO SQUARE, SUITE 800 PALO ALTO, CALIFORNIA 94306 (650) 494-0600 -------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] (1) Estimated solely for the purpose of calculating the amount of the registration fee, pursuant to Rule 457(c) under the Securities Act, based on the average of the high and low prices of the Common Stock on the Nasdaq National Market on April 6, 1999. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ 2 SUBJECT TO COMPLETION DATED MAY 12, 1999 - -------------------------------------------------------------------------------- PROSPECTUS - -------------------------------------------------------------------------------- 3,175,586 SHARES VERSANT CORPORATION COMMON STOCK ------------------- OUR COMMON STOCK CURRENTLY TRADES ON THE NASDAQ NATIONAL MARKET. LAST REPORTED SALE PRICE ON APRIL 8, 1999: $2.00 PER SHARE. TRADING SYMBOL: VSNT ------------------- THE OFFERING o The shares offered in this prospectus will be sold from time to time at then prevailing market prices, at prices relating to market prices or at negotiated prices. We are not aware of any underwriting discounts or commissions in connection with this offering. o All of the shares of common stock offered in this prospectus are being sold by the selling security holders named on page 12 of this prospectus. We will not receive any of the proceeds from the sale of these shares. These shares are being offered on a continuous basis under Rule 415 of the Securities Act until at least December 28, 2002 or the earlier sale of the shares offered hereby. ------------------- THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. PLEASE CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING SECURITY HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. - -------------------------------------------------------------------------------- THE DATE OF THIS PROSPECTUS IS , 1999. 3 PROSPECTUS SUMMARY We issued the shares that may be offered using this prospectus in three transactions in 1998. In July 1998, we acquired Soft Mountain S.A. and issued 245,586 shares of our common stock to the shareholders of Soft Mountain. These Soft Mountain selling security holders may offer some or all of these shares using this prospectus. In October 1998, we issued a $3.6 million convertible secured subordinated promissory note to Vertex Technology Fund Ltd. This note is convertible into 1,880,000 shares of our common stock, at a rate of $1.925 per share. If Vertex converts all or a portion of its note into common stock, Vertex may offer some or all of the conversion shares using this prospectus. In December 1998, we issued 700,000 shares of our common stock and warrants to purchase 350,000 shares of our common stock to three Special Situations Funds. The warrants may be exercised for common stock at an exercise price of $2.25 per share. The Special Situations Funds may offer some or all of their common stock, including shares that may be issued upon exercise of their warrants, using this prospectus. ---------------------- TABLE OF CONTENTS ---------------------- Prospectus Summary...................... 2 Selling Security Holders................ 12 Risk Factors............................ 3 Plan of Distribution.................... 13 Use of Proceeds......................... 10 Legal Matters........................... 14 Dividend Policy......................... 10 Experts................................. 14 Where You Can Find More Information..... 10
2 4 RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and the other information in this prospectus before investing in our common stock. Our business and results of operations could be seriously harmed by any of the following risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. RISKS RELATED TO OUR BUSINESS OUR LIMITED WORKING CAPITAL MAY PREVENT US FROM CONTINUING AS A GOING CONCERN. We incurred a significant reduction in working capital in 1998. To date, we have not achieved business volume sufficient to restore profitability and a positive cash flow. We operated at a net loss of $20 million in 1998 and since December 31, 1998 have continued to experience operating losses. Our available cash and credit facilities may not be sufficient to fund our operations and successfully implement our business plan, part of which consists of pursuing potential strategic relationships, acquisitions of companies, products and technologies. Also, the Soft Mountain Selling Security Holders have demanded that we repurchase for approximately $1.1 million the 245,586 shares of the Company's stock issued to them in connection with the Company's purchase all Soft Mountain shares as a result of the Company's inability to register the shares by December 31, 1998. Our ability to continue as a going concern is therefore dependent upon future events, including our ability to obtain additional debt or equity financing. We recently raised $3.6 million through the sale of a convertible secured subordinated promissory note to Vertex Technology Fund, and $1.4 million through the sale of equity securities to Special Situations Fund. We may raise additional funds through the sale of equity securities or other means in the near future. However, funds may not be available on favorable terms, if at all. If we are unable to raise additional funds, we will be dependent on cash flow from operations to fund operations and to repay outstanding bank debt. Unless we generate consistent positive cash flows from operations for the immediate and foreseeable future, we will be required to cease or substantially reduce operations. The sale of additional equity or convertible debt securities would result in dilution to our shareholders. OUR COMMON STOCK MAY BE DELISTED FROM NASDAQ. Our common stock is listed on the Nasdaq National Market. Nasdaq has continued listing requirements which we must meet to avoid delisting. Currently, we do not meet the $4 million minimum tangible net assets requirement and have been so notified by Nasdaq. We believe that we will be able to meet this requirement if Vertex converts its note into common shares and if additional equity can be raised in time to satisfy Nasdaq. We may be unable to timely secure or conclude these commitments, however. Companies traded on the Nasdaq Markets are also required to maintain a minimum bid price of $1.00 per share. Our stock price may decline below this requirement. There are other requirements as well. If our common stock is delisted, we may not be able to satisfy the higher requirements for a new listing on either the Nasdaq National or SmallCap Market. After delisting, trading in our common stock may be conducted in the over-the-counter market in what are commonly referred to as the "pink sheets." As a results, investors would find it more difficult to buy, sell or quote our common stock. OUR EXISTING DEBT BURDEN IS SUBSTANTIAL, AND WE MAY DEFAULT ON OUR LOANS. At December 31, 1998, we had the following outstanding borrowings: (1) $2.4 million under a bank revolving loan, which expires on May 31, 1999; (2) $2.3 million under a bank term loan, which expires on March 18, 2001; and (3) $3.6 million under our convertible subordinated secured promissory note, which is due in October 2001. Because we were not in compliance with the covenants that apply to the bank revolving loan and the bank term loan at December 31, 1998, the bank has the ability to declare a default on these loans and demand immediate payment of approximately $4.1 million in currently outstanding borrowings. Therefore, unless we are able to renegotiate our covenants and extend or refinance this debt, we will need to generate a significant amount of cash in the immediate future, and in any event by the May 31, 1999 expiration date of the bank revolving loan. As in previous quarters in which we were not in compliance with our financial covenants, we are currently pursuing discussions with the bank to amend the terms of our loans, including their repayment schedules and financial covenants. However, we may not be successful in this endeavor. Even if we are successful amending the terms of or refinancing our loans, the new terms could be significantly less attractive than our current financing arrangements and could significantly restrict our operating activities. OUR REVENUE LEVELS ARE UNPREDICTABLE. Our revenue has fluctuated dramatically on a quarterly and annual basis, and we expect this trend to continue. These dramatic fluctuations result from a number of factors, including: (1) the lengthy and highly consultative sales cycle associated with our products (2) uncertainty regarding the timing and scope of customer deployment schedules of applications based on the Versant ODBMS (3) fluctuations in domestic and foreign demand for our products and services, particularly in the telecommunications and financial services markets (4) the impact of new product introductions by us and our competitors (5) our unwillingness to significantly lower prices to meet prices set by our competitors (6) the effect of publications of opinions about us and our competitors and their respective products (7) customer order deferrals in anticipation of product enhancements or new product offerings by us or our competitors (8) potential customers unwillingness to invest in our products given our financial instability 3 5 A number of other factors make it impossible to predict our operating results for any period prior to the end of that period. We ship our software to a customer at receipt of the customer's order, and consequently, we have little order backlog. As a result, license revenue in any quarter is substantially dependent on orders booked and shipped in that quarter. Historically, we record most of our revenue and book most of our orders in the third month of each quarter, with a concentration of such revenue and orders in the last few days of the quarter. We expect this trend to continue. Many of these factors are beyond our control. WE MAY NOT BE ABLE TO MANAGE COSTS GIVEN THE UNPREDICTABILITY OF OUR REVENUE. We expended significant resources in 1997 and 1998 to build our infrastructure and hire personnel, before reductions, particularly in the services and sales and marketing sectors, in expectation of higher revenue growth than actually occurred. Although we have restructured our operations to reduce operating expenses, we continue to plan for revenue growth in 1999 compared to 1998. Consequently, we will continue to incur a relatively high level of fixed expenses. Although, in January 1999, we reduced significantly our worldwide headcount and implemented controls on spending in order to achieve expense reductions, if expense controls are not achieved or planned revenue growth does not materialize, our business, financial condition and results of operations will be materially harmed. WE RELY ON TELECOMMUNICATIONS AND FINANCIAL SERVICES MARKETS CHARACTERIZED BY COMPLEXITY AND INTENSE COMPETITION. Historically, we have been highly dependent upon the telecommunications industry and are becoming increasingly dependent upon the financial services market. Our success in the telecommunications and financial service markets is dependent, in part, on our ability to compete with alternative technology providers and on whether our customers and potential customers believe we have the expertise necessary to provide effective solutions in these markets. If these conditions, among others, are not satisfied, we may not be successful in generating additional opportunities in these markets. The need for and type of applications and commercial products for the telecommunications and financial services markets is continuing to develop, is rapidly changing, and is characterized by an increasing number of new entrants whose products may compete with those of ours. As a result, we cannot predict the future growth of these markets, and demand for object-oriented databases in these markets may not develop or be sustainable. We also may not be successful in attaining a significant share of these markets. In addition, organizations in these markets generally develop sophisticated and complex applications that require substantial customization of our products. Although we seek to generate consulting revenue in connection with these customization efforts, we have offered, and may, under certain circumstances continue to offer, free or reduced price consulting. This practice has impacted, and will continue to impact, our service margins and will require that we maintain a highly skilled service infrastructure with specific expertise in these markets. OUR PRODUCTS HAVE A LENGTHY SALES CYCLE. Our sales cycle, which varies substantially from customer to customer, often exceeds nine months and can sometimes extend to a year or more. Due in part to the strategic nature of our products and associated expenditures, potential customers are typically cautious in making product acquisition decisions. The decision to license our products generally requires us to provide a significant level of education to prospective customers regarding the uses and benefits of our products, and we must frequently commit no-fee pre-sales support resources, such as assistance in performing bench marking and application prototype development. Because of the lengthy sales cycle and the relatively large average dollar size of individual licenses, a lost or delayed sale could have a significant impact on our operating results for a particular period. Although we seek to develop relationships with best-of-class value-added resellers in the telecommunications and financial services markets in order to strengthen our indirect sales activity, we have not yet entered into such relationships and may not be successful in developing such relationships. In addition, our value-added resellers may be subject to a lengthy sales cycle for our products. OUR CUSTOMER CONCENTRATION INCREASES THE POTENTIAL VOLATILITY OF OUR OPERATING RESULTS. Notwithstanding our recent efforts to develop new customers, typically through the use of relatively small licenses, a significant portion of our total revenue has been, and we believe will continue to be, derived from a limited number of orders placed by large organizations. The timing of such orders and their fulfillment has caused, and is likely to cause in the future, material fluctuations in our operating results, particularly on a quarterly basis. In addition, our major customers tend to change from year to year. The loss of any one or more of our major customers or our inability to replace a customer that has become less significant in a given year with a different major customer could have a material adverse effect on our business. WE DEPEND ON OUR INTERNATIONAL OPERATIONS. A significant portion of our revenue is derived from customers located outside the United States. This requires that we operate internationally and maintain a significant presence in international markets. However, our international operations are subject to a number of risks. These risks include: 4 6 (1) longer receivable collection periods (2) changes in regulatory requirements (3) dependence on independent resellers (4) multiple and conflicting regulations and technology standards (5) import and export restrictions and tariffs (6) difficulties and costs of staffing and managing foreign operations (7) potentially adverse tax consequences (8) foreign exchange fluctuations (9) the burdens of complying with a variety of foreign laws (10) the impact of business cycles and economic instability outside the United States, including the current economic instability in Asia. WE MUST DEFEND AGAINST SECURITIES LITIGATION. We and certain of our present and former officers and directors were named as defendants in four class action lawsuits filed in the United States District Court for the Northern District of California, filed on January 26, 1998, February 5, 1998, March 11, 1998 and March 18, 1998, respectively. On June 19, 1998, a consolidated amended complaint was filed in this court by the lead plaintiff named by the court. The amended complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act, and Securities and Exchange Commission Rule 10b-5 promulgated under the Exchange Act, in connection with public statements about our expected financial performance. The complaint seeks an unspecified amount of damages. We vigorously deny the plaintiff's claims and have moved to dismiss the allegations. The plaintiff has filed a response to our motion to dismiss, and we have filed an opposition to plaintiff's response. The motion to dismiss was submitted to the court for consideration on November 13, 1998, and the court has not yet issued a decision. Securities litigation can be expensive to defend, consume significant amounts of management time and result in adverse judgments or settlements that could have a material adverse effect on our results of operations and financial condition. OUR STOCK PRICE IS VOLATILE. Our revenue, operating results and stock price have been and may continue to be subject to significant volatility, particularly on a quarterly basis. We have previously experienced significant shortfalls in revenue and earnings from levels expected by securities analysts and investors, which has had an immediate and significant adverse effect on the trading price of our common stock. This may occur again in the future. Additionally, as a significant portion of our revenue often occurs late in the quarter, we may not learn of revenue shortfalls until late in the quarter, which could result in an even more immediate and adverse effect on the trading price of our common stock. OUR BUSINESS MAY BE HARMED BY YEAR 2000 PROBLEMS. We and our customers and suppliers are aware and concerned about the risks associated with Year 2000 computer issues. If our systems do not recognize the correct date when the year changes to 2000, there could be a material adverse effect on our operations. We are at risk from both internal and external areas. We have categorized our risk into the following categories: (1) internal systems required to operate our business (e.g. operational, financial, product development, safety and environmental controls); (2) external supplier systems that are necessary to support our business requirements (e.g. raw materials, supplies, shipping and delivery systems, banking, payroll and government systems); and (3) product warranty exposure with our customer base. We are currently evaluating our exposure in all these areas. We have been reviewing our facility, financial and operating systems to identify and assess the requirements to bring hardware systems and software applications to Year 2000 compliance. We expect to conclude our estimate of exposure to Year 2000 problems, associated costs and required correction plans by the end of July 1999 and to correct any Year 2000 problems by October 31, 1999. We have not identified any alternative remediation plans in the event Year 2000 issues can not be adequately corrected. We will define any alternative plans if and when we discover systems that can not be made Year 2000 compliant. If implementation of upgrade or replacement systems is delayed or if significant new non-compliance issues are discovered, our operations could be materially adversely affected. We have and will continue to make certain investments in software applications and systems to ensure that we are Year 2000 compliant with respect to our internal systems. In particular, our purchase of $9 million of property and equipment during 1997 and 1998 included substantial investments in management and information systems designed to be Year 2000 compliant. 5 7 We have contracted with an outside independent consulting firm to provide internal Year 2000 equipment testing and consulting services to assist us in the process of defining and implementing a Year 2000 compliance project. This compliance project includes the following phases:
Expected completion Name of phase: Description: Status: date: - -------------- ------------ ------- ---------- Awareness and Educate the company on the Year 2000 In progress April 1999 Assessment Phase project, the potential problems associated with this date issue, inventory our systems and products that require compliance testing. Testing and Test our systems and products and identify Begins March July 1999 Validation Phase the non-compliant areas, develop remediation 1999 plans, map the conversion process to correct non-compliant areas and validate the changes that need to be made to correct non-compliant areas. Implementation and Convert non-compliant areas with compliant Begins August October Certification Phase products (hardware or software), verify that 1999 1999 all intended changes have been made successfully and that all planned Year 2000 compliance changes have been made. Maintenance Phase This phase puts processes and procedures in Begins December place to minimize the likelihood that Year 1999 2000 compliance problems will be November 1999 reintroduced into the compliant systems and products.
Status: Awareness and Assessment Phase: We are in the process of writing an awareness statement to educate our employees, vendors and customers about the Year 2000 issues and potential problems associated with the Year 2000 rollover problem and what effect this will have on our company and customers. We have identified all internal systems (products and software) that need to be tested for Year 2000 compliance. Testing and Validation Phase: We have tested the personal computers and servers used by our employees to complete their daily work assignments. The results are being analyzed and will be assessed by April 1999. We will be testing or seeking validation with respect to Year 2000 compliance regarding external providers for phone service, security service, utility service, internet service and air conditioning service. We will then develop remediation plans to correct non-compliant systems. In addition to the internal testing, evaluation and remediation project, we will implement a program that will query our suppliers and providers of third-party technology that may be integrated with our products to determine if the suppliers operations', products and services are Year 2000 compliant. We expect these questionnaires to be sent to our third party providers and key suppliers by the end of April 1999 and conclude our review by the end of June 1999. Where practical, we will take the necessary actions to reduce our exposure to suppliers that are not Year 2000 compliant by finding alternative suppliers. However, there may be critical suppliers that cannot be substituted and this could have a material adverse effect on our operations. We believe our products are Year 2000 compliant. However, not every customer situation can be anticipated, especially in areas that involve third party products. Extensive testing has been performed on our products and additional testing will continue as we become aware of our customer's Year 2000 needs and issues. We may see an increase in customer demands for warranty service. This may create additional service costs that can not be recovered. In addition, if our products are not Year 2000 compliant, we could face litigation regarding Year 2000 compliance issues. 6 8 The process to insure our systems and our supplier systems are Year 2000 compliant is expected to be significantly completed by October 31, 1999, with testing to be done through the remainder of 1999. In addition, we could face reduced demand for our products through 1999 if customers focus on purchasing solutions to their Year 2000 problems rather than purchasing our products, which are not designed to solve Year 2000 problems. Customer's purchasing plans could be affected by the Year 2000 problem if they need to expend significant resources to correct their existing systems. This situation may result in reduced funds available to implement solutions based upon our products. In addition, some customers may defer the license of our products until after the Year 2000 while they complete remediation and testing of their current systems to ensure Year 2000 compliance. A decrease in demand for our products due to customers' Year 2000 issues would seriously harm our business and results of operations. RISKS RELATED TO OUR INDUSTRY WE FACE INTENSE COMPETITION. The market for our products is intensely competitive. We believe that the primary competitive factors in our market include: (1) database performance, including the speed at which operations can be executed and the ability to support large amounts of different information (2) vendor reputation (3) the ability to handle abstract data types and complex data relationships (4) ease of use (5) database scalability (6) the reliability, availability and serviceability of the database (7) compatibility with customers' existing technology platforms (8) the ease and speed with which applications can be developed (9) price and (10) service and support. Our current and prospective competitors include companies that offer a variety of database solutions using various technologies including object database, object-relational database and relational database technologies. Competitors offering object and object-relational database management systems include Oracle Corporation, Computer Associates International, Inc., Object Design, Inc., Informix and its Illustra Information Technologies, Inc. subsidiary, Objectivity, Inc., Gemstone Systems, Inc., Poet Software Corporation, ONTOS, Inc. In addition, our products compete with traditional relational database management systems, many of which have been or are expected to be modified to incorporate object-oriented interface and other functionality, and to leverage Java. The principal competitors in the relational database market are Oracle, Sybase, Informix, IBM and Microsoft. We expect to face additional competition from other established and emerging companies as the object database market continues to develop and expand. In 1997, Oracle released its Oracle8 product, which, with its object option, provides object-relational database capabilities, and Computer Associates released their Jasmine ODBMS, which is a pure object-oriented database. Although we believe that the decision of relational database vendors to pursue object-relational or object-oriented approaches validates our belief that object-oriented database solutions will be increasingly demanded by today's business organizations, we are facing heightened competition. During the last year we have seen a major shift away from Smalltalk towards JAVA. In addition Versant is used more and more as a middle tier persistence layer in multi tier applications This brings us in direct competition with some of the more established companies in these markets. These are companies like IBM, SUN and BEA selling Java based tools and solutions. There is also some movement in the market to buy as much middleware components as possible from one or just a few suppliers. Because we are offering just a ODBMS for the time being we may not be able to compete in some of these situations. This could result and would continue to result in fewer customer orders, price reductions, reduced transaction size, reduced gross margins and loss of market share, any of which could have a material adverse effect on our business, operating results and financial condition and on the market price of our common stock. Due to the introduction by Oracle and Computer Associates of competing products with lower prices than the Versant ODBMS, we may not be able to maintain prices for our products at levels that will enable us to market our products profitably. Any decrease in per unit prices, as a result of competition or otherwise, could have a material adverse effect on our business, operating results and financial condition. In addition our poor financial performance during 1998 may influence customers to delay orders or cancel projects to wait and see how we are performing during the next foreseeable future. 7 9 We are also indirectly facing competition from developers of middleware products that allow users to connect object-oriented applications to existing legacy data and RDBMSs. To the extent that these products gain market acceptance, they may reduce the market for the Versant ODBMS for less complex object-oriented applications. Many of our competitors, and especially Oracle and Computer Associates, have longer operating histories, significantly greater financial, technical, marketing, service and other resources, significantly greater name recognition, broader product offerings and a larger installed base of customers than ours. In addition, many of our competitors have well-established relationships with current and potential customers of ours. As a result, our competitors may be able to devote greater resources to the development, promotion and sale of their products, may have more direct access to corporate decision-makers based on previous relationships and may be able to respond more quickly to new or emerging technologies and changes in customer requirements. We may not be able to compete successfully against current or future competitors, and competitive pressures could have a material adverse effect on our business, operating results and financial condition. WE DEPEND ON SUCCESSFUL TECHNOLOGY DEVELOPMENT. We believe that significant research and development expenditures will be necessary to remain competitive. While we believe our research and development expenditures will improve the Versant ODBMS and result in successful peripheral product introductions, due to the uncertainty of software development projects, these expenditures will not necessarily result in successful product introductions. Uncertainties impacting the success of software development project introductions include technical difficulties, market conditions, competitive products and consumer acceptance of new products and operating systems. In particular, we note that we have not yet achieved commercial acceptance for our Versant Multimedia Access product. We also face certain challenges in integrating third-party technology with our products. These challenges include the technological challenges of integration, which may result in development delays, and uncertainty regarding the economic terms of our relationship with the third-party technology provider, which may result in delays of the commercial release of new products. We face further technology development challenges associated with our acquisition of Soft Mountain. The Soft Mountain R'Net product offering is still under development, and there is uncertainty in both the timing of the release and the market acceptance of the product. Soft Mountain's geographic location in France generates additional management and integration challenges, because our product development to date has been performed in California and India. Developing and marketing our new Versant Enterprise Container for Java Beans creates new challenges for us. This product, which has not yet been commercially introduced, represents our first attempt to provide solutions to the application server market. Although we have worked with BEA to develop technology that will allow the Versant Enterprise Container to support the BEA WebLogic application server family, undiscovered bugs or errors may exist that prevent us from achieving the functionality we seek with the Versant Enterprise Container. In addition, because Java Bean containers are specific to each application server vendor and no standards have been adopted for such containers, we may not be able to take advantage of our development work with the BEA application server family when developing solutions for other application server vendors. We do not currently have any agreements or relationships regarding the Versant Enterprise Container with other application server vendors, and when our new product is introduced, customers will only be able to use it with BEA application servers. WE MUST PROTECT OUR INTELLECTUAL PROPERTY. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products, obtain or use information that we regard as proprietary or use or make copies of our products in violation of license agreements. Policing unauthorized use of our products is difficult. In addition, the laws of many jurisdictions do not protect our proprietary rights to as great an extent as do the laws of the United States. Shrink-wrap licenses may be wholly or partially unenforceable under the laws of certain jurisdictions, and copyright and trade secret protection for software may be unavailable in certain foreign countries. Our means of protecting our proprietary rights may not be adequate, and our competitors may independently develop similar technology. To date, we have not been notified that our products infringe the proprietary rights of third parties, but third parties could claim that our current or future products infringe such rights. We expect that developers of object-oriented technology will increasingly be subject to infringement claims as the number of products, competitors and patents in our industry segment grows. Any such claim, whether meritorious or not, could be time-consuming, result in costly litigation, cause product shipment delays or require us to enter into royalty or licensing agreements. 8 10 Such royalty or licensing agreements might not be available on terms acceptable to us or at all, which could have a material adverse effect upon our business, operating results and financial condition. Our future success will depend in part on our ability to integrate our products with those of vendors providing complementary products. The Versant ODBMS must be integrated with compilers, development tools, operating systems and other software and hardware components to produce a complete end-user solution. We may not receive the support of these third-party vendors, some of which may compete with us, to integrate our products with the vendors' products. WE DEPEND ON OUR PERSONNEL FOR WHOM COMPETITION IS INTENSE. Our future performance depends in significant part upon the continued service of our key technical, sales and senior management personnel. The loss of the services of one or more of our key employees could have a material adverse effect on our business. Our future success also depends on our continuing ability to attract, train and motivate highly qualified technical, sales and managerial personnel. Competition for such personnel is intense, especially in Silicon Valley where our headquarters are located, and we may not be able to attract, train and motivate such personnel. RISKS RELATED TO THIS OFFERING SALES OF THE SHARES INCLUDED IN THIS PROSPECTUS COULD AFFECT OUR STOCK PRICE. If the selling security holders sell substantial amounts of our common stock in the public market using this prospectus, the market price of our common stock could fall. EXISTING SHAREHOLDERS COULD INCUR DILUTION AS A RESULT OF FUTURE ISSUANCES OF OUR COMMON STOCK. To the extent the selling security holders exercise warrants or convert convertible securities into shares of our common stock, existing shareholders could experience dilution. THIS PROSPECTUS CONTAINS FORWARD LOOKING STATEMENTS. These statements defined by federal securities laws usually contain expressions like "believes", "expects", "intends" and "anticipates" and involve significant uncertainty. Actual results may differ significantly. 9 11 USE OF PROCEEDS We will not receive any proceeds from the sale of common stock by the selling security holders. DIVIDEND POLICY We have never paid any cash dividends on our stock and we anticipate that, for the foreseeable future, we will continue to retain any earnings for use in the operation of our business and do not intend to pay dividends. WHERE YOU CAN FIND MORE INFORMATION We have filed with the Securities and Exchange Commission a registration statement on Form S-3 under the Securities Act of 1933 with respect to the shares of common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the Securities and Exchange Commission. For further information with respect to us and the common stock offered by this prospectus, please refer to the registration statement. Statements in this prospectus as to the contents of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of the contract or document filed as an exhibit to the registration statement. Each such statement is qualified in all respects by such reference. Copies of the registration statement may be inspected, without charge, at the offices of the Securities and Exchange Commission, or obtained at prescribed rates from the Public Reference Section of the Securities and Exchange Commission at the address set forth below. We are subject to the informational requirements of the Securities Exchange Act of 1934, and, in accordance therewith, we file reports, proxy statements and other information with the Securities and Exchange Commission. Reports, proxy statements and other information that we have filed can be inspected and copied at the public reference facilities of the Securities and Exchange Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain copies of these materials from the Public Reference Section of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a World Wide Web site that contains reports, proxy and information statements and other information that is filed electronically with it. This Web site can be accessed at http://www.sec.gov. We will furnish without charge to each person to whom a copy of this prospectus is delivered, upon such person's written or oral request, a copy of any and all of the information that has been incorporated by reference into this prospectus, other than exhibits to such documents, unless such exhibits are specifically incorporated by reference as well. Requests for such copies should be directed to Versant Corporation, 6539 Dumbarton Circle, Fremont, CA 94555, Attention: Gary Rhea, Vice President and Chief Financial Officer, telephone: (510) 789-1500. IN CONNECTION WITH THIS OFFERING, NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF SUCH INFORMATION IS GIVEN OR REPRESENTATIONS MADE, YOU MAY NOT RELY ON SUCH INFORMATION OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE REGISTERED HEREBY, NOR IS IT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. YOU MAY NOT IMPLY FROM THE DELIVERY OF THIS PROSPECTUS, NOR FROM ANY SALE MADE UNDER THIS PROSPECTUS, THAT OUR AFFAIRS ARE UNCHANGED SINCE THE DATE OF THIS PROSPECTUS OR THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE DATE OF THIS PROSPECTUS. 10 12 The following documents that we have filed with the Securities and Exchange Commission are incorporated by reference into this prospectus: o The registration statement on Form S-3 of which this prospectus is a part, and the exhibits filed and incorporated by reference with the Form S-3. o Our Annual Report on Form 10-KSB filed with the Securities and Exchange Commission for the fiscal year ended December 31, 1998. o Our Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission for the fiscal quarter ended march 31, 1999. o The description of our common stock contained in our registration statement on Form 8-A filed with the Securities and Exchange Commission on May 31, 1996. o All other documents we file with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act on or after the date of this prospectus and prior to the termination of this offering. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this prospectus to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus or the registration statement. 11 13 SELLING SECURITY HOLDERS Special Situations Fund III LP, Special Situations Cayman LP and Special Situations Technology Fund LP acquired 700,000 shares of common stock, which they may offer pursuant to this prospectus on December 28, 1998, when they provided us with $1,443,750 in a private financing. At that time, these funds also acquired warrants to purchase 350,000 shares of our common stock, and their share numbers in the following table include the shares issuable upon exercise of these warrants. None of these funds has had any position, office or other material relationship with us within the past three years, except that these funds collectively own more than 10% of our common stock. Vertex Technology Fund Ltd. acquired its convertible secured subordinated promissory note, which is convertible into the 1,880,000 shares of our common stock that Vertex may offer pursuant to this prospectus, when it provided us with $3.6 million in an October 16, 1998 private financing. An affiliate of Vertex initially became a shareholder of ours in November 1989 and had a representative on our board of directors from August 1991 to February 1997. The former shareholders of Soft Mountain, listed in the table below as Soft Mountain Selling Security Holders, acquired the shares of our common stock that they may offer pursuant to this prospectus in connection with our acquisition of Soft Mountain, when they sold their Soft Mountain securities for our common stock. None of these security holders has had any position, office or other material relationship with us within the past three years. The following table sets forth certain information known to us with respect to the beneficial ownership of the our Common Stock as of March 31, 1999 by each of the selling security holders named below. The following table assumes each selling security holder sells all of the shares offered hereby. The selling security holders may from time to time offer and sell any or all of the shares pursuant to this prospectus. Because the selling security holders are not obligated to sell shares, and because selling security holders may also acquire publicly traded shares of our common stock, we cannot estimate how many shares each selling security holder will beneficially own after this offering. Therefore, the number of shares listed in the column entitled shares beneficially owned after offering reflects only the current share ownership of the selling security holders. We may update or supplement this prospectus from time to time to update the disclosure set forth herein.
Shares Beneficially Shares Beneficially Owned Prior to Offering Shares Owned After Offering ------------------------ Being -------------------- Name Number Percent(1) Offered Number Percent - ---- -------- ---------- ------- ------ ------- Special Situations Fund III LP(2) 896,753 8.6% 708,750 188,003 1.9% Special Situations Cayman LP(2) 295,050 2.9 236,250 58,000 .6 Special Situations Technology Fund LP(2) 166,000 1.6 105,000 51,000 .5 Vertex Technology Fund Ltd.(3) 1,880,000 15.6 1,880,000 0 SOFT MOUNTAIN SELLING SECURITY HOLDERS(4) SC Finoris 167,890 1.6 167,890 0 Trinova 45,631 * 45,631 0 Rhone-Alpes Creation 31,955 * 31,955 0 Guillaume Doumenc 110 * 110 0
-------------------- * Less than 1%. (1) Based on 10,135,517 shares of our common stock outstanding as of March 31, 1999. (2) Includes warrants to purchase 236,250 shares, 78,750 shares and 35,000 shares held by Special Situations Fund III LP, Special Situations Cayman LP and Special Situations Technology Fund. This information is derived from a Schedule 13G/A filed by the Special Situations Funds with the Securities and Exchange Commission on January 4, 1999. (3) Represents 1,880,000 shares issuable upon conversion of Vertex's convertible secured subordinated promissory note. Does not include 596,367 shares held by affiliates of Vertex. (4) These shareholders have demanded that we repurchase their shares for approximately $1.1 million as a result of the registration for sale of their shares later than the December 31, 1998 date prescribed by their registration rights provisions. Settlement discussions are ongoing. Arbitration or litigation may result if a settlement cannot be reached. 12 14 PLAN OF DISTRIBUTION In connection with our acquisition of Soft Mountain, we and the Soft Mountain selling shareholders entered into a share purchase agreement. In connection with the financings provided by Vertex and the Special Situation Funds, we entered into registration rights agreements. The registration statement of which this prospectus forms a part has been filed pursuant to the Soft Mountain share purchase agreement and the registration rights agreements. To our knowledge, none of the selling security holders have entered into any agreement, arrangement or understanding with any particular broker or market maker with respect to the shares offered hereby, nor do we know the identity of the brokers or market makers that will participate in the offering. The shares of common stock covered by this prospectus may be offered and sold from time to time by the selling security holders. The selling security holders will act independently from us in making decisions with respect to the timing, manner and size of each sale. The selling security holders may not sell any of the shares that are subject to this prospectus, and selling security holders could sell their shares in a private transaction or other transaction that is exempt from the registration requirements of the Securities Act. We have been advised by the selling security holders that they have not, as of the date hereof, entered into any arrangement with a broker-dealer for the sale of shares. In effecting sales, broker-dealers engaged by the selling security holders may arrange for other broker-dealers to participate. Broker-dealers will receive commissions or discounts from the selling security holders in amounts to be negotiated immediately prior to the sale. In offering the shares, the selling security holders and any broker-dealers who execute sales for the selling security holders may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. Any profits realized by the selling security holders and the compensation of a broker-dealer may be deemed to be underwriting discounts and commissions. In addition, any securities covered by this prospectus that qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus. The selling security holders have advised us that, during such time as they may be engaged in a distribution of the shares of common stock included herein, they will comply with Rules 10b-6 and 10b-7 under the Exchange Act. In connection with these rules, the selling security holders have agreed not to engage in any stabilization activity in connection with any of our securities, to furnish copies of this prospectus to each broker-dealer through which the shares of common stock included in this prospectus may be offered, and not to bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities except as permitted under the Exchange Act. The selling security holders have also agreed to inform us and broker-dealers through whom sales may be made under this prospectus when the distribution of the shares is completed. We will bear the costs, expenses and fees in connection with the registration of the shares of common stock offered by this prospectus. Commissions and discounts, if any, attributable to the sales of shares of common stock using this prospectus will be borne by the selling security holders. The selling security holders may agree to indemnify any broker-dealer or agent that participates in transactions involving sales of the shares against certain liabilities, including liabilities arising under the Securities Act. We have advised the selling security holders that the anti-manipulation rules under the Exchange Act may apply to sales of shares of common stock in the market and to the activities of selling security holders. Each selling security holder has advised us that during such time as it may be engaged in the attempt to sell shares of common stock included in this prospectus, it will: o not engage in any stabilization activity in connection with any of our securities; o not bid for or purchase any of our securities or any rights to acquire our securities, or attempt to induce any person to purchase any of our securities or rights to acquire our securities, other than as permitted under the Exchange Act; o not effect any sale or distribution of the shares of common stock until after this prospectus has been appropriately amended or supplemented, if required, to set forth the terms thereof; and o effect all sales of shares of common stock in broker's transactions through broker-dealers acting as agents, in transactions directly with market makers or in privately negotiated transactions where no broker or other third party, other than the purchaser, is involved. Pursuant to the Soft Mountain share purchase agreement and the registration rights agreements, no selling security holder may sell any of the shares of common stock offered using this prospectus in the event and during 13 15 such period as we determine, based upon the advice of outside counsel, that unforeseen circumstances, including pending negotiations relating to, or the consummation of, a transaction, would require additional disclosure of material information by us in the registration statement the confidentiality of which we have a bona fide business purpose to preserve or which unforeseen circumstances would render us unable to comply with Securities and Exchange Commission requirements. Such suspension shall exist for only so long as any such suspension exists for other similarly restricted Versant shareholders. Each selling security holder has agreed that it will not effect any sales of the shares offered hereby any time after he or it has received notice from us to suspend sales as a result of a stop order or the occurrence or existence of any suspension event or so that we may correct or update the registration statement. This offering will terminate as to the Special Situations Funds on December 28, 2002 or the date on which all shares offered have been sold by the Special Situations Funds or are eligible for sale under Rule 144(k) of the Securities Act. This offering will terminate as to Vertex on October 15, 2001 or the date on which all shares offered have been sold by Vertex or are eligible for sale under Rule 144(k) of the Securities Act. This offering will terminate as to each Soft Mountain selling security holder on the earlier of one year after the date of this prospectus or the date on which all shares offered have been sold by the Soft Mountain selling security holders. LEGAL MATTERS The validity of the issuance of the shares of Common Stock offered hereby will be passed upon for the Company by Fenwick & West LLP, Two Palo Alto Square, Suite 800, Palo Alto, California 94306. EXPERTS The financial statements and schedule incorporated by reference in this registration statement on Form S-3 have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated by reference in reliance upon the authority of said firm as experts in giving said reports. Reference is made to said report, which includes an explanatory paragraph with respect to the uncertainty regarding the Company's ability to continue as a going concern as discussed in Note 1 to the financial statements. 14 16 ================================================================================ VERSANT CORPORATION 3,175,586 Shares of Common Stock -------------------- PROSPECTUS -------------------- IN CONNECTION WITH THIS OFFERING, NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF SUCH INFORMATION IS GIVEN OR REPRESENTATIONS MADE, YOU MAY NOT RELY ON SUCH INFORMATION OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE REGISTERED HEREBY, NOR IS IT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. YOU MAY NOT IMPLY FROM THE DELIVERY OF THIS PROSPECTUS, NOR FROM ANY SALE MADE UNDER THIS PROSPECTUS, THAT OUR AFFAIRS ARE UNCHANGED SINCE THE DATE OF THIS PROSPECTUS OR THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE DATE OF THIS PROSPECTUS. ================================================================================ 17 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses to be paid by the Registrant in connection with this offering are as follows: Securities and Exchange Commission registration fee $ 1,104 Nasdaq National Market filing fee 39,912 Accounting fees and expenses 3,000 Legal fees and expenses 15,000 Miscellaneous ------------- Total $ 59,016 =============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Registrant's Articles of Incorporation (the "Articles") include a provision that eliminates the liability of the Registrant's directors for monetary damages to the fullest extent permissible under California law. This limitation has no effect on a director's liability: (i) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law; (ii) for acts or omissions that a director believes to be contrary to the best interests of the Registrant or its shareholders or that involve the absence of good faith on the part of the director; (iii) for any transaction from which a director derived an improper personal benefit; (iv) for acts or omissions that show a reckless disregard for the director's duty to the Registrant or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of a serious injury to the Registrant or its shareholders; (v) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the Registrant or its shareholders; (vi) under Section 310 of the California Corporations Code (the "California Code") concerning contracts or transactions between the Registrant and a director; or (vii) under Section 316 of the California Code concerning directors' liability for improper dividends, loans and guarantees. The provision in the Articles does not extend to acts or omissions of a director in his capacity as an officer. Further, the provision will not affect the availability of injunctions and other equitable remedies available to the Registrant's shareholders for any violation of a director's fiduciary duty to the Registrant or its shareholders. The Articles also authorize the Registrant to indemnify its agents (as defined in Section 317 of the California Code), through bylaw provisions, by agreement or otherwise, to the fullest extent permitted by law. Pursuant to this provision, the Registrant's Bylaws provide that the Registrant shall indemnify its directors and officers to the fullest extent permissible under California law, subject to certain exceptions. In addition, the Registrant, at its discretion, may provide indemnification to persons whom the Registrant is not obligated to indemnify. The Bylaws also allow the Registrant to enter into indemnity agreements with individual directors, officers, employees and other agents. The Registrant has entered into indemnity agreements with all of its directors and officers providing the maximum indemnification permitted by law, subject to certain exceptions. These agreements, together with the Registrant's Bylaws and Articles, may require the Registrant, among other things, to indemnify these directors or officers against certain liabilities that may arise by reason of their status or service as directors or officers and to advance expenses to them as such expenses are incurred (provided that they undertake to repay the amount advanced if it is ultimately determined by a court that they are not entitled to indemnification). As authorized by the registrant's Bylaws, the Registrant, with approval by the Registrant's Board of Directors, has applied for, and expects to obtain, directors' and officers' liability insurance with a per claim and annual aggregate coverage limit of up to $5,000,000. Section 317 of the California Code makes provisions for the indemnification of officers, directors and other corporate agents in terms sufficiently broad to indemnify such persons, under certain circumstances, for liabilities (including reimbursement of expenses incurred) arising under the Securities Act. II-1 18 The indemnification provision in the Bylaws, and the indemnity agreements entered into between the Registrant and its directors and executive officers, may be sufficiently broad to permit indemnification of the Registrant's directors and executive officers for liabilities arising under the Securities Act. Reference is made to the following documents filed as exhibits to the Registrant's initial Registration Statement on Form SB-2 (File No. 333-4910-LA) regarding relevant indemnification provisions described above:
DOCUMENT EXHIBIT NUMBER -------- -------------- Registrant's Amended and Restated Articles of Incorporation........ 3.01 Registrant's Bylaws....................................... 3.04 Form of Indemnity Agreement............................... 10.10
ITEM 16. EXHIBITS. The following exhibits are filed herewith or incorporated by reference herein:
EXHIBIT NUMBER EXHIBIT TITLE - ------- ------------- 2.01 -- Acquisition Agreement dated as of March 26, 1997 by and between registrant and ISAR-Vermogensverwaltung Gbr mbH ("ISAR")(1) 4.01 -- [intentionally omitted] 4.02 -- Preferred Stock Purchase Agreement, dated as of April 27, 1994, as amended(2) 4.03 -- Share Purchase Agreement, dated as of July 30, 1998 5.01 -- Opinion of Fenwick & West LLP regarding the legality of the securities being issued+ 23.01 -- Consent of Arthur Andersen LLP, Independent Auditors 23.02 -- Consent of Fenwick & West LLP+ 24.01 -- Power of Attorney+
- ---------- (1) Incorporated by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 10, 1997 (2) Incorporated by reference to the registrant's Registration Statement on Form SB-2 (file number 333-4910-LA) filed with and declared effective by the Securities and Exchange Commission on July 17, 1996. + Previously filed. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made pursuant to this Registration Statement, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the "Securities Act"); (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement (notwithstanding the foregoing, any increase or decrease in volume or securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate II-2 19 offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement); and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by paragraphs (1)(i) or (1)(ii) is contained in any periodic report filed with or furnished to the Securities and Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 20 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all for the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on the 12th day of May, 1999. VERSANT CORPORATION By: /s/ Gary Rhea ------------------------------------- Gary Rhea Vice President -- Finance and Administration Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - --------- ----- ---- PRINCIPAL EXECUTIVE OFFICER: /s/ * - ---------------------------- President, Chief Executive May 12, 1999 Nick Ordon Officer and Director PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER: /s/ Gary Rhea - ---------------------------- Vice President--Finance May 12, 1999 Gary Rhea and Administration ADDITIONAL DIRECTORS: - ---------------------------- Director Mark Leslie /s/ * - ---------------------------- Director May 12, 1999 Stephen J. Gaal /s/ * - ---------------------------- Director May 12, 1999 James Simpson /s/ * - ---------------------------- Director May 12, 1999 David Banks *By /s/ Gary Rhea ------------------------ Attorney-in-Fact
II-4 21 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT TITLE - ------- ------------- 2.01 -- Acquisition Agreement dated as of March 26, 1997 by and between registrant and ISAR-Vermogensverwaltung Gbr mbH ("ISAR")(1) 4.01 -- [intentionally omitted] 4.02 -- Preferred Stock Purchase Agreement, dated as of April 27, 1994, as amended(2) 4.03 -- Share Purchase Agreement, dated as of July 30, 1998 5.01 -- Opinion of Fenwick & West LLP regarding the legality of the securities being issued+ 23.01 -- Consent of Arthur Andersen LLP, Independent Auditors 23.02 -- Consent of Fenwick & West LLP+ 24.01 -- Power of Attorney+
- ---------- (1) Incorporated by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 10, 1997 (2) Incorporated by reference to the registrant's Registration Statement on Form SB-2 (file number 333-4910-LA) filed with and declared effective by the Securities and Exchange Commission on July 17, 1996. + Previously filed. II-5 EX-4.03 2 SHARE PURCHASE AGREEMENT, DATED 7/30/98 1 EXHIBIT 4.03 SOFT MOUNTAIN S.A. SHARE PURCHASE AGREEMENT by and between VERSANT CORPORATION and SC FINORIS RHONE - ALPES CREATION TRINOVA MR. GUILLAUME DOUMENC MRS. ANNE DOUMENC MR. ANDRE MAY MME CLAIRE DEMENGEOT MR. FRANCIS LORENTZ MR. ROGER POTTLITZER dated as of July 30, 1998 2 THIS AGREEMENT is made and entered into this 30th day of July 1998, by and between VERSANT CORPORATION, a California Corporation having its principal office at 6539 Dumbarton Circle, Fremont, California, 94555 United States, represented by Bernhard Woebker, in his capacity as Vice President (hereinafter referred to as "Buyer") ON THE ONE HAND, AND SC FINORIS, a societe civile with a capital of 20,000 FF with its registered office at 5, allee Moulin Berger, Ecully, registered with the Registry of commerce and Companies of Lyon, under the number D 409 421 484 duly represented by Messrs Andre May and Guillaume Doumenc, go-gerants RHONE-ALPES CREATION, with its registered office at Immeuble Midas, registered with the Registry of Commerce and Companies, under the number B 352 014 559, duly represented by Guy Rigaud, in his capacity as President du Directoire TRINOVA, with its registered office at 17, avenue Charles de Gaulle, 69370 Saint Didier au Mont D'Or, registered with the Registry of Commerce and Companies of Lyon, under the number 411 877 657 duly represented by Jean-Jacques Delorme, in his capacity as President du conseil d'administration MR. GUILLAUME DOUMENC, domiciled at 24, Chemin de la Guillere, 69570 Dardilly MRS. ANNE DOUMENC, domiciled at 24, Chemin de la Guillere, 69570 Dardilly MR. ANDRE MAY, domiciled at 23, route de Champagne 36, domaine de castellard, 69370 Saint-Didier au Mont d'Or MRS. CLAIRE DEMENGEOT, domiciled at 23, route de Champagne, 36 domaine de castellard, 69370 Saint-Didier au Mont d'Or MR. FRANCIS LORENTZ, domiciled at 45, rue St Roc, 75001 Paris MR. ROGER POTTLITZER, domiciled at 27, route de la Plaine, 78110 Le Vesinet (hereinafter referred to collectively as "Sellers" and individually as a "Seller") ON THE OTHER HAND 3 3 4 WHEREAS Soft Mountain S.A. was created for the purpose of developing software based on reactive technology, issued partly from research and developments conducted at INRIA by founders of Soft Mountain. Thereafter, Soft Mountain S.A. has developed new technology and software, which are different from the one previously developed. This new technology and software has had success on the market, with in particular great interest from France Telecom, IBM and Lotus. At the suggestion of France Telecom, Versant showed interest in the acquisition of Soft Mountain. In the course of the financial and legal audit conducted by Buyer for the period from April to June 15, 1998, Buyer has received and reviewed all documents listed in the Schedules of this agreement. The shareholders of Soft Mountain had decided that it was a good opportunity to sell the company to Versant, due to the fact that Soft Mountain under the ownership of Versant would be well equipped to continue the relationship with France Telecom, Lotus/IBM and develop the activity of the company, and also due to the fact that Soft Mountain was in a difficult cash situation, and needed a strong shareholder to support the company. The Sellers remitted to Buyer the financial statements of Soft Mountain as of December 31, 1997 (9 months), March 31, 1998 (12 months), and June 15, 1998 (2 months and 15 days) (together, the "Financial Statements"). Sellers own fourteen thousand two hundred and forty nine (14,249) shares representing all shares of Soft Mountain S.A. (the "Shares"), a French societe anonyme with a statutory capital (capital social) of 1,424,900 French francs with its registered office at Technoparc, 5 allee Moulin Berger, 69130 Ecully, and which is registered with the Registry of Commerce and Companies of Lyon under the number 403 906 092 ("Soft Mountain"); SC Finoris is the owner of nine thousand nine hundred and ninety four (9,994) Shares. Rhone-Alpes Creation is the owner of one thousand seven hundred and fifty (1,750) Shares. Trinova is the owner of two thousand four hundred and ninety nine Shares (2,499) Shares. Mr. Guillaume Doumenc, Mrs. Anne Doumenc, Mr. Andre May, Mrs. Claire Demengeot, Mr. Francis Lorentz and Mr. Roger Pottlitzer are each the owner of one (1) Share. 4 5 Sellers having informed Buyer of their wish to sell their Shares and Buyer having advised Sellers of its interest in such transaction, Buyer and Sellers entered into a letter agreement, dated June 16, 1998, describing the terms of the contemplated transaction. Buyer and Sellers agreed in particular that the transfer of Shares would be effective July 1, 1998. Since this date both Buyer and Seller have confirmed their wish to enter into a share purchase agreement, which supersedes and replaces the June 16, 1998 letter agreement. NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows: SECTION 1 - PURCHASE AND SALE OF SHARES 1.1 Shares transferred. Subject to complete fulfillment of the provisions of Section 1.9 hereof Sellers sell and transfer the Shares to Buyer, and Buyer purchases and accepts them from Sellers. 1.2 Purchase Price - Payment of Purchase Price. In a letter agreement dated June 16, 1998, which is attached hereto as Schedule 1.2, and the terms of which are superseded and replaced by the present Agreement, the Parties had decided on a Purchase Price of seven million French francs (FF. 7,000,000.00), subject to adjustment based on liabilities of Soft Mountain as of June 15, 1998 in excess to a certain level. As per the auditors report dated July 10, 1998, a copy of which is also attached on Schedule 1.2, the parties accept that there is no adjustment to be done with respect to the June 15, 1998 financials. The purchase price (the "Purchase Price") for all of the shares of Soft Mountain S.A. is therefore of seven million French francs (FF. 7,000,000.00). Further to additional negotiation, Buyer has accepted to waive the escrow clause and to calculate the price of the Versant shares on the basis of 4.2 US dollars per share. The Purchase to be paid on Closing (as defined in Section 5) is as follows: (a) partly in cash, in an amount of eight hundred ten thousand French francs (FF. 810,000.00), (b) partly in kind by delivering two hundred forty five thousand five hundred and eighty six 245,586 shares ("Versant Shares") of Buyer common stock ("Versant Common Stock"). This number of Versant Shares has been obtained by dividing six million one hundred ninety thousand French francs (FF. 6,190,000.00) 5 6 (Purchase Price minus amount paid in cash as provided under section 1.2.a) above by 4.2 converted into French francs, using an exchange rate of 6.0012 French francs for one US Dollar. The Purchase Price, in cash and in Versant Shares, shall be allocated among Sellers as set forth on Schedule 1.2. 1.3 Registration. (a) Buyer agrees to use reasonable efforts to file a registration statement on Form S3 (or another appropriate form) with respect to the resale by Sellers of the Versant Shares (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Securities Act"), before September 30, 1998 at the latest and to use reasonable efforts to cause the Registration Statement to become effective as soon as practicable thereafter, and at the latest at the first of the following two dates: (i) date on which the registration statement based on the equity investment contract presently being negotiated with Citadel shall become effective, and (ii) December 31, 1998; provided that Buyer shall not be responsible for any failure to cause such Registration Statement to become effective that results from the failure of any Seller to provide to Buyer such information or documents as Buyer requests in order to comply with the Securities Act or regulations of the SEC. (b) Buyer shall use reasonable efforts to keep the Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all of such Versant Shares registered thereunder until one (1) year from the date the Registration Statement has become effective. (c) Notwithstanding anything to the contrary set forth in this Agreement, Buyer's obligations under this Section 1.3 to file the Registration Statement and to use its reasonable efforts to cause the Registration Statement to become effective shall be suspended in the event and during such period as Versant determines, based upon the advice of outside counsel, that unforeseen circumstances (including without limitation pending negotiations relating to, or the consummation of, a transaction or the occurrence of any other event) would require additional disclosure of material information by Buyer in the Registration Statement the confidentiality of which Buyer has a bona fide business purpose to preserve or which unforeseen circumstances would render Buyer unable to comply with SEC requirements (in either case, a "Suspension Event"). The suspension of Buyer's obligations in accordance with the preceding 6 7 sentence shall exist for only so long as any such suspension exists for other similarly restricted stockholders of Buyer. Buyer shall notify Sellers, on a confidential basis, promptly in writing of the existence of any Suspension Event. In the case of any Suspension Event occurring prior to the filing of the Registration Statement, Buyer shall be required to file the Registration Statement as soon as practicable after the conclusion of the Suspension Event. In the case of any Suspension Event occurring after effectiveness of the Registration Statement, Buyer shall be required to keep the Registration Statement effective for one (1) year from the date it has become effective. (d) Following the effectiveness of the Registration Statement, each Seller agrees that it will not effect any sales of Versant Shares at any time after he has received notice from Buyer to suspend sales as a result of a stop order or the occurrence or existence of any Suspension Event or so that Buyer may correct or update the Registration Statement. Sellers may recommence effecting sales of Versant Shares following further notice to such effect from Buyer, which notice shall be given by Buyer promptly after the withdrawal of any stop order or the conclusion of any such Suspension Event. (e) Upon the effectiveness of the Registration Statement, Buyer shall, as promptly as practicable, furnish to each Seller such number of conformed copies of the Registration Statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in the Registration Statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as any Seller may reasonably request in order to facilitate the public sale or other disposition of the Registered Securities owned by Sellers. (f) Buyer shall bear all registration expenses in connection with each Registration Statement including legal expenses of Sellers not to exceed ten thousand dollars (10,000 USD) in the aggregate, other than (i) any underwriting discounts and commissions or stock transfer taxes applicable to the Registered Securities and (ii) any fees or expenses incurred by any Seller for brokerage, accounting, tax, legal services (except as stated above) or any other expenses incurred by any Seller in taking possession of or disposing of the Versant Shares. (g) In the event that Buyer is unable to register the Versant Shares by 7 8 December 31, 1998, and if this is due to a reason other than the failure of any Seller to provide to Buyer such information and documents as Buyer requests in order to comply with the Securities Act or regulations of the SEC, then in such event Buyer has the obligation to pay to Sellers an amount of six million one hundred ninety thousand French francs (FF. 6,190,000.00) in cash, at the latest on January 31, 1999, and in return for the shares provided to Sellers. Also, Versant agrees that until such date on which the Versant Shares shall be registered, or Versant has paid in cash the price to Sellers, Versant will pledge the Shares, and will not sell Soft Mountain's software business activity ("fonds de commerce"). For clarification purposes, it is expressed that this will not prevent Soft Mountain from concluding commercial contracts regarding its software and general activity. Versant will execute a consulting agreement with Soft Mountain to provide for payment for all consulting services provided by Soft Mountain as part of the Primevere contract currently negotiated with France Telecom and IBM/Lotus to be executed on July 31, 1998. 1.4. Number of Versant Shares. Versant agrees not to increase the number of Versant Shares by more than twenty per cent (20%) between the date hereof and September 30, 1998, except under a very remote possibility under the capital investment deal presently being entered into between Versant and Citadel, the terms of which have been presented to the Sellers. 1.5. Sellers' Investment Intent. Each Seller represents that the Versant Shares being purchased by Seller are being purchased for his or its own account, for investment for an indefinite period of time, not as nominee or agent for any other person, firm or corporation and not for distribution or resale to others in contravention of the Securities Act and the rules and regulations promulgated thereunder. Each Seller agrees that he or it will not sell or otherwise transfer the Versant Shares unless they are registered under the Securities Act or unless an exemption from such registration is available. 1.6. Securities Legend; Stop Transfer Instructions. Each Seller consents to the placement of a legend on any certificate or other document evidencing any of the Versant Shares, stating that such Versant Shares have not been registered under the Securities Act or any state securities or "blue sky" laws and setting forth or referring to the restrictions on transferability and sale thereof, including the restrictions set forth herein. Each Seller is aware that Buyer will make a notation in its appropriate records with respect to the restrictions on the transferability of such Versant Shares. Each Seller also consents and acknowledges that "stop transfer" instructions may be noted against the Versant Shares received by any Seller as consideration thereunder. Buyer hereby undertakes to remove any legend described in 8 9 this Section 1.6, or to rescind any "stop transfer" instructions described in this Section 1.6. as to Seller's Versant Shares (a) if such Seller furnishes Buyer with an opinion of counsel or other written information satisfactory in form and content to Buyer that such legend or any such instructions are no longer required (as applicable) to such Seller's Versant Shares or (b) with respect to and at the time of the disposition of any such Versant Shares pursuant to an effective registration statement under the Securities Act, including the Registration Statement. 1.7. Sellers' Letters. To ensure compliance with the Securities Act, each Seller commits to deliver to Buyer on Closing a letter, in the form attached hereto as Schedule 1.7. (the "Sellers' Letters"), agreeing, among other things, that Seller will not sell, pledge, transfer or otherwise dispose of any of the Versant Shares received as consideration pursuant to Section 1.2 hereof, except in compliance with Rule 144 under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act or an effective registration statement under the Securities Act. Sellers who shall be working with Versant or Soft Mountain shall also be requested to deliver to Buyer on Closing a letter, in the form attached also as Schedule 1.7 summarizing rules applicable to employees and consultants. 1.8. INTENTIONALLY LEFT EMPTY 1.9. Deliveries by Sellers. On or before Closing, Sellers deliver to Buyer the following: (a) duly executed and completed share transfer orders (ordres de mouvement) in favor of Buyer for the Shares; (b) the minutes of a duly held meeting of the Board of Directors of Soft Mountain, and notice to the statutory auditor (i) approving Buyer and designees of Buyer listed in Schedule 1.9 b) as new shareholder, and (ii) calling a shareholders' meeting for August 10, 1998 to elect the three new directors listed in Schedule 1.9. b); and the minutes of the shareholders meeting approving the accounts for fiscal year ending March 31, 1998: (c) the minutes of duly held meetings of the shareholders of Finoris, the board of Trinova and of Rhones-Alpes Creation authorizing the transaction contemplated herein; (d) duly signed original of the up to date "statuts" of the Company; 9 10 (e) duly completed and signed official Soft Mountain registries (minutes of shareholders meetings, minutes of Board of Directors meetings) with the attendance books and attendance sheets, shareholders account documents and registry of transfers; original of statutory auditor's reports; (f) a letter from the Company's statutory auditor confirming that the financial statements of Soft Mountain as of March 31, 1998 (12 months) are true and correct (sincere et veritable); (g) the written resignations of all directors of Soft Mountain from their positions as directors, effective as of August 10, 1998; and of Mr. Doumenc from his office of Chairman of the board; (h) an opinion of counsel to Sellers attached on Schedule 1.9.(h) hereto regarding Soft Mountain's intellectual and industrial property rights; (i) a letter from INRIA in the form attached hereto, in Schedule 1.9(i), acknowledging that they do not have any rights over the technology and the software used by Soft Mountain, listed on Schedule 1.9.(i) and confirming that they waive their right to obtain any royalty and to obtain Soft Mountain shares; (j) the Sellers' Letters described under section 1.7. of the Agreement; (k) a resignation letter signed by Mr. Guillaume Doumenc for his duties as employee of Soft Mountain, reflecting the terms of Section 4.2.b below; (l) a letter by GDO Sarl providing for termination of the agreement concluded with Soft Mountain, reflecting the terms of Section 4.2.b below; (m) such other instruments or documents as may be reasonably necessary to carry out the transactions contemplated by this Agreement and to comply with the terms hereof. 1.10. Deliveries by Buyer. On the date hereof, Buyer delivers: (a) to Sellers (i) stock certificates evidencing two hundred fourty five thousand five hundred and eighty six (245,586) of the Versant Shares, issued to the Sellers in accordance with the percentages on Schedule 1.2; and (ii) checks in the total amounts of eight hundred ten thousand French Francs (810,000.00 FF), issued in accordance with the percentages on Schedule 1.2; 10 11 (b) such other instruments or documents as may be reasonably necessary to carry out the transactions contemplated by this Agreement and to comply with the terms hereof. SECTION 2 -- REPRESENTATIONS AND WARRANTIES OF SELLERS Sellers hereby make the representations and warranties set forth in this Section 2. For the purposes hereof, "knowledge of Seller" shall include matters known to Sellers or Soft Mountain or which should reasonably be known to them. When reference is made to any event, change or effect having a Material Adverse Effect, this reference shall mean that this event, change or effect materially harms the business, operations, prospects, assets (including intangible assets), liability (including contingent liabilities), financial situation or operation profits of Soft Mountain. 2.1 Corporate Organization. Soft Mountain is a societe anonyme duly organized and validly existing under French law. All transactions leading to the creation of Soft Mountain and the constitution of assets and activity have been done in accordance with French law. Soft Mountain has the corporate power and authority to own or lease its properties and to carry on its business in the manner in which it is currently conducted. Soft Mountain does not, directly or indirectly, have any equity interest or other property interest in any company, joint venture, partnership, association or other entity. Complete and correct copies of the certificate of incorporation and by-laws (the "Constitutive Documents") are attached on Schedule 2.1. Soft Mountain has not stopped making payments, declared a moratorium on payments of its debts, is not in bankruptcy or reorganization or liquidation, has not entered into an assignment for the benefit of its creditors and has not become subject to any reorganization procedure. Buyer understands from Sellers that technically Soft Mountain could be qualified under French law to be in "cessation des paiements". Buyer waives his right to sue Sellers on that basis, as long as the Financial Statements are accurate and that the situation since June 15, 1998 did not deteriorate more than what could be expected on the basis of the existing trend. 2.2. Authorization. Sellers have the requisite capacity to enter into this Agreement and the other agreements to be executed and delivered by the Sellers pursuant hereto and to carry out the transactions contemplated hereby and thereby. When fully executed and delivered, this Agreement and all related agreements will constitute the valid and binding agreements of Sellers, enforceable against Sellers in accordance with their respective terms. 2.3. Capitalization and Shares. As of the date of this Agreement, the capital of Soft Mountain is as set forth in the preamble to this Agreement. All the 11 12 Shares have been validly issued and are fully paid, non assessable and are free of any lien, preemptive rights or other restrictions with respect thereto. The Shares are fully owned by Sellers as set out in the table in the preamble to this Agreement. There is no agreement or commitment which could result in Soft Mountain having to purchase, amortize, issue or transfer the Shares in any manner whatsoever. By signing this contract, Sellers confirm that any and all agreements existing between the Sellers or part of them, are terminated, and that none of the Sellers will involve any breach by another Seller of its obligations under any such agreement. 2.4. Consents and Approvals; Non-Contravention. Neither the execution, delivery or performance of this Agreement or of any related documents, nor the consummation by Sellers of the transactions contemplated hereby or thereby, nor compliance by Sellers with any of the provisions hereof or thereof: (a) violates any provision of the Constitutive Documents, (b) requires on the part of Sellers or Buyer any filing with, or permit, authorization, consent or approval of, any court, trustee in bankruptcy ("administrateur judiciaire"), administrative or other authority (a "Governmental Entity"), (c) require, in accordance with the terms of any contract, lease or other agreement to which a Seller or Soft Mountain is a party, any consent, filing approval or authorization, (d) violate any judicial or arbitral decision, or any legal regulatory or contractual provision applicable to Sellers or Soft Mountain, or (e) may result in a material violation or material breach of any agreement or result in the termination, modification, cancellation, non renewal loss of a material benefit, or result in the creation or imposition of any lien upon any of the respective properties or assets of a Seller or Soft Mountain. 2.5. Financial Statements. The Financial Statements, which are attached as Schedule 2.5 are complete, sincere and true, prepared in accordance with generally applicable accounting principles in France and under the same methods, and accurately reflect the asset and liability situation of Soft Mountain at each of the dates and for each period indicated. 2.6. Interim Change. Since March 31, 1998, Soft Mountain has not engaged in any business or transaction other than in the ordinary course of business. In particular (but without this list being exclusive): 12 13 (a) Soft Mountain has not suffered any change, nor has there arisen any event, having or which could reasonably be expected to have a Material Adverse Effect; (b) Soft Mountain has not forgiven or canceled any debts or claims or waived, released or relinquished any contract right or any other rights of its business; (c) Soft Mountain has not consented to, or has not had imposed on it, any liens; (d) Soft Mountain has not suffered any damage, destruction or loss of property, whether or not covered by insurance, which could reasonably be expected to have a Material Adverse Effect; (e) Soft Mountain has not accelerated the collection of, granted any discounts with respect to or sold or assigned to third parties any accounts receivable or delayed the payment of any payables or, other than in the ordinary course of business and consistent with past practice, had any reason to write off as uncollectable any accounts receivable or any portion thereof; (f) Soft Mountain has not assumed any loan, directly or indirectly, (with the exception of the loan taken from Versant France) or incurred or guaranteed any obligation with regards to a loan, or made any loans, advances or capital contributions to, or investment in, any other individual, corporation, partnership, joint venture, association, organization or other entity (a "Person"), (g) Soft Mountain has not pledged or subjected to any lien, sold, assigned or transferred any asset except for sales of inventory in the ordinary course of business and consistent with past practice; (h) Soft Mountain has not increased in any manner the wages, salaries, bonuses, pension plans, retirement allocations or other allocations of any director, employee or other person, (i) Soft Mountain has not amended any existing, or entered into, any additional pension, profit-sharing, bonus, severance pay, or other schemes relating to retirement of other benefits, (j) Soft Mountain has not entered into any employment or consulting agreement with any person, nor modified existing terms of such agreements, 13 14 (k) Soft Mountain has not made any investment in any business, company, partnership, association or other entity. (l) Soft Mountain has not declared, paid or set aside for payment any dividend or other distribution; (m) Soft Mountain has not made any change in its accounting principles or methods, except as may have been required by a change in generally accepted accounting principles in France; (n) no employee has notified Soft Mountain or Sellers of its intention to resign from its position, and no employee has been terminated with the exception of Mr. Beral. 2.7. No Undisclosed Liabilities. Except as and to the extent of the amounts specifically reflected or reserved against in the Financial Statements, Soft Mountain has not incurred any liabilities or obligations of any nature (whether or not accrued). As of the date hereof there exists no shareholder advances owed by Soft Mountain nor any contract entered into directly or indirectly with shareholders of Soft Mountain. 2.8. Litigation. There is no claim, action, suit, inquiry or investigation by or before any judicial entity pending or, to the knowledge of Sellers, threatened against or involving Soft Mountain or affecting any of its assets products or activity. There is no basis known to the Seller for any such claim, action, suit, inquiry, or investigation. The only two exceptions are the following: - (i) the employees of the Company pretend that they are eligible to obtain shares of Soft Mountain S.A. or proceeds from the sale of such shares; Sellers have found an agreement with the employees under which they accept as full and final settlement for such claim the payment of an amount equal to the value of 4% of the shares of Soft Mountain. Sellers commit that a cash amount of two hundred and eighty thousand (280,000) francs will be used to satisfy the Sellers' obligations to distribute 4% of the purchase price to the current Soft Mountain's employees and that such amount shall be paid under Seller's responsibility at the latest two weeks after Closing. - (ii) Mr. Beral has contested his termination. Upon termination, Mr. Beral received the amount to be paid under French law upon termination and now requests from the Company the payment of an additional three months of notice and one month of severance payment. A settlement agreement, a copy of which is in Schedule 2.8, has been signed between Soft Mountain S.A. and Mr. Beral. Buyer will make sure that Soft Mountain honors such agreement on due time. 14 15 2.9. No Violation. (a) Soft Mountain, its directors and employees have always acted within the corporate purpose of Soft Mountain and in accordance with French law, and with contractual obligations. Soft Mountain's directors have not exceeded their internal limitations of powers. (b) Sellers and Soft Mountain have complied with any and all obligations with regard to any contract or agreement entered into by Soft Mountain. (c) Soft Mountain has all authorizations (from Governmental Entity or other authority) necessary to: (i) enable it conduct its business as currently conducted and, if necessary (ii) to enter into all transactions contemplated by this Agreement. 2.10. Title to Assets. Soft Mountain does not own any real property assets. Soft Mountain has good and marketable title, free and clear of all liens, any pledge or other security, of all assets, rights, trademarks, trade names, licenses and properties, which are used in the conduct of the business conducted by Soft Mountain (the "Assets"). Soft Mountain has valid and enforceable leases or licenses, as the case may be, with respect to the Assets consisting of property that is leased or licensed to Soft Mountain, under which there does not exist any default, on the part of Soft Mountain. Since inception, Soft Mountain has validly entered into and, as the case may be, has validly and legally terminated any lease agreement used for carrying on its business activities. 2.11. Intellectual Property. (a) A true and complete list, of all the industrial and intellectual property rights owned by Soft Mountain (the "Owned Intellectual Property") and licensed to it (the "Licensed Intellectual Property") is contained in Schedule 2.11(a). The Intellectual Property described in Schedule 2.11(a) constitutes all Intellectual Property necessary to operate Soft Mountain's business activity, as currently planned or as planned to be conducted. The Owned Intellectual Property is duly and validly registered under Soft Mountain's name and all fees for recordation or renewal have been timely paid by Soft Mountain. (b) Except as described on Schedule 2.11.(b), Soft Mountain is the owner of, and has the sole and exclusive right to use, sell, license, dispose of the Owned Intellectual Property, and has not delegated nor assigned any of such rights with the exception of the licenses to use granted to customers in normal course of business. 15 16 (c) Except as described on Schedule 2.11.(c), Soft Mountain has the exclusive right to bring any actions for any infringement of the Licensed Intellectual Property. (d) Except for those listed on Schedule 2.11(d) there are no royalties, fees or other payments payable by Soft Mountain to any Person by reason of ownership, use, license, sale or disposition of any Owned or Licensed Intellectual Property. (e) The transfer of all Shares to Buyer, will not in any way impair the right of Soft Mountain to use, sell, license or dispose of, or any portion thereof, or to bring any action for the infringement of any of such rights to the Owned or Licensed Intellectual Property. (f) None of the former or present employees, consultants or directors of Soft Mountain or their predecessors hold any right, title or interest, directly or indirectly, in whole or in part, in or to any Owned Intellectual Property. (g) There is no pending or threatened claim or litigation challenging or questioning the validity, ownership or right to use, sell, license or dispose of any Owned or Licensed Intellectual Property nor, to the knowledge of Sellers a valid basis for such claim or litigation. (h) Software presently used and/or commercialized by Soft Mountain S.A. belongs to Soft Mountain S.A. Neither CMA, nor any other company (with the exception of France Telecom, as indicated below) has any right whatsoever with regard to the Software presently used and/or commercialized by Soft Mountain. CMA has some limited right to the reactive C software tool which was developed and is not any more used or commercialized. None of the software on which CMA, or any other company may have a claim has been or is being used in any of the software presently used and/or commercialized by Soft Mountain. AS far as France Telecom, Sellers confirm that the situation did not change since the date of issuance of the opinion listed in Schedule 1.9.(h). 2.12. Contract and Commitments. A detailed and exhaustive list of all contracts entered into by Soft Mountain is attached on Schedule 2.12. Other than those listed on such Schedule 2.12, Soft Mountain has not: (a) entered into any collective bargaining agreements or employment related collective contract or "accord", 16 17 (b) entered into any agreement that contain any specific benefits (i.e., providing benefits in excess to those applicable by law and by applicable regulations), severance liabilities or obligations, (c) entered into any bonus, deferred compensation, incentive compensation, pension, profit-sharing or retirement plans, or any other employee benefit plans or arrangements, (d) entered into any employment or consulting agreement, contract or commitment with an employee or individual consultant or sales person or consulting or sales agreement, contract or commitment with a firm or other organization, not terminable on the minimum notice periods permitted under French law, except to the extent general principles of French employment law may limit Soft Mountain's ability to terminate employees, (e) entered into fixed term commercial contract for a duration superior to one year. (f) entered into a credit agreement, loan agreement (except the one entered with Versant Object Technology SARL on July 15, 1998), financial facility agreement with any financial institution or third party. (g) received any financial benefit, investment or subsidy granted by any public agency or company. (h) except as required by law, have any pension, profit-sharing, bonus, severance pay, retirement, hospitalization, insurance, stock purchase, stock option or other benefit with or for the benefit of any Person (a "Benefit Plan"). Benefit Plans are for the minimum amount required by law. (i) entered into a fixed-term employment agreement nor any on interim contract. (j) entered into outstanding loans agreements to Sellers or employee. (k) guaranteed any obligations of Sellers or any other person. Sellers have not guaranteed any obligations of Soft Mountain which would still be in effect after the date hereof. (l) entered into any contract which is material to its business, operations or prospects or any other contract, instrument, 17 18 commitment, plan or arrangement which has not been made in the ordinary course of business. (m) entered into any contract, which will or can be terminated or significantly modified by reason of transfer of Shares to Buyer. 2.13. Customers and Suppliers. There has not been any adverse change in the business relationship of Soft Mountain with any customer or supplier since January 1, 1998. All contracts for more than fifty thousand French francs (50,000.00 FF) are listed on Schedule 2.13. 2.14. Insurance. Soft Mountain has valid insurance policies which adequately cover all the risks against which it is normal to insure considering the activities of Soft Mountain. There has not been any failure to give any notice or present any claim under any such policy in a timely fashion or in the manner or detail required by the policy. There are no outstanding past due premiums or claims, and there are no provisions for retroactive or retrospective premium adjustments. No notice of cancellation or non-renewal with respect to, or disallowance of any claim under, any such policy has been received by Soft Mountain. 2.15. Environmental Matters. Soft Mountain is not in breach of any environmental regulations. 2.16. Labor Law Matters. (a) Soft Mountain has been in full compliance with French labor law legislation and the applicable collective bargaining agreement. Soft Mountain has complied with the legal obligations relating to the setting-up and functioning of personnel representative bodies; (b) Attached in Schedule 2.16.b is a list of all Soft Mountain employee as of the date hereof, with an indication of the salary and all other benefits, the exact position and accrued rights and benefits (referred to collectively as the "Personnel Information"); (c) The Personnel Information contains accurate, complete and updated information as of the date hereof. (d) No current or past employee of Soft Mountain, with the exception of Mr. Vincent Beral (see Section 2.8), has any ground to claim any sum or damage from Soft Mountain. 2.17. Taxes - Social security contributions. 18 19 (a) All tax and social security returns, declarations, reports, estimates, information returns, and statements (collectively, "Tax and Social Security Returns") required to be filed by Soft Mountain on or before the date hereof for all periods ending on or before the date hereof have been timely filed, and all such Tax and Social Security Returns are true, correct and complete. (b) Soft Mountain has timely paid (or accrued in its accounts) all taxes and social security contributions due or claimed to be due by it by any taxing or social security authority in respect to periods (or any portion thereof) ending on or before the date hereof, and no failure in this regard may be attributed to it. (c) No audited or other proceeding by any national, local court, governmental, regulatory, para fiscal, administrative or similar authority are presently pending with respect to any taxes or social security contributions of Soft Mountain. 2.18 Accounts Receivable. All receivables of Soft Mountain arose in the ordinary course of business and the aggregate amounts thereof, are collectible (except to the extent reserved against as reflected in the Financial Statements) and are carried at values determined in accordance with French generally accepted accounting principles. None of the receivables are subject to any claim of setoff, setoff or counterclaim and there are no facts or circumstances that would give rise to any such claim. No person has any lien, charge, pledge, security interest or other encumbrance on any such receivables and no agreement for deduction or discount has been made with respect to any of such receivables. 2.19 Minute Books. The fully completed and signed official Soft Mountain registries (minutes of shareholders meetings, minutes of Board of Directors meetings) with signed attendance sheets for the shareholders meetings and attendance documents signed for the board of directors meetings, shareholders account documents and registry of transfers; original of statutory auditor's reports made available to Buyer contain all minutes since Soft Mountain's incorporation as normally kept in conformance with French law. 2.20 Representations Complete. None of the representations or warranties of Sellers, nor any statement made in any Schedule, Exhibit or Additional Sellers Document furnished pursuant to this Agreement, when read in their entirety, contains or will contain any untrue statement of a material fact at the date hereof, or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading, or not incomplete. 19 20 2.21 Soft Mountain Products and Technology. All products and technology sold or licensed by Soft Mountain are free of any defects and comply with the specifications made available to purchasers or licensees of such products and/or technology. Soft Mountain has not received any compliant regarding Soft Mountain's products or technology. SECTION III - REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Sellers as follows: 3.1. Corporate Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of California. 3.2. Authorization. Buyer has the requisite corporate power and authority to enter into this Agreement and the other agreements, documents and instruments to be executed and delivered by Buyer pursuant hereto (the "Additional Buyer's Documents") and to carry out the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Additional Buyer's Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of Buyer, and no other corporate proceedings on the part of Buyer or its stockholders are necessary to authorize this Agreement and the Additional Buyer's Documents and transactions contemplated hereby and thereby. When fully executed and delivered, this Agreement and each of the Additional Buyer's Documents will constitute the valid and binding agreements of Buyer, enforceable against Buyer in accordance with their respective terms. 3.3. Authorization and Issuance of Versant Shares. The issuance of the Versant Shares has been duly authorized by Buyer and, upon delivery to Seller of the certificate or certificates therefor against receipt of the Shares being purchased by Buyer and the other deliveries by Sellers pursuant to Section 1.9 hereof, the Versant Shares will be validly issued, fully paid and non assessable, free and clear of all Liens and restrictions other than the restrictions imposed herein, on the certificate or certificates therefor or by the Rules and Regulations. 3.4. Consents and Approvals; Non-Contravention. Neither the execution, delivery or performance of this Agreement or any of the Additional Buyer's Documents by Buyer nor the consummation by Buyer of the transactions contemplated hereby or thereby nor compliance by Buyer with any of the provisions hereof or thereof will (a) violate any provision of the Certificate of Incorporation, or Bylaws of Buyer, (b) require any filing with, or permit, 20 21 authorization, consent or approval of, any Governmental Entity or (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Buyer or any of its properties or assets. SECTION 4 - CONVENIENCE OF SELLERS AND/OR BUYERS 4.1. Consents and Approvals. Buyer and Sellers agree to take all reasonable actions (including delivering information, document and affix signatures) to comply with the legal requirements necessary to the consummation of the transactions contemplated herein, or the registration or renewal of Owned and Licensed Intellectual Property Rights. 4.2. Non-competition. For a period of eighteen (18) months as from the date hereof: (a) none of the Sellers shall directly or indirectly, solicit any of the current or future employees of Soft Mountain or entice such employees to leave their position with Soft Mountain. (b) Mr. Guillaume Doumenc shall not engage, or continue to engage, or hold any participation, directly or indirectly, in the capital, voting rights or rights to profits of any business, company or firm currently competitive or which may become competitive with Soft Mountain; as used above, the term "participation" shall not include an acquisition on an exchange market of securities representing five percent (5%) or less of the outstanding capital, voting rights or rights to profits of a business, company or firm. If and when Buyer and Mr. Guillaume Doumenc, or a company designated by him sign a consulting agreement, containing a non compete clause, that non compete clause will replace this clause, from the date on which the consulting agreement shall become effective. Mr. Guillaume Doumenc, hereby resign from his duties of employee of Soft Mountain and confirms that the existing contract between GDO Sarl will be terminated at no cost to Soft Mountain. Such resignation and termination shall be effective on the date on which the consulting agreement is effective, and Soft Mountain will owe no money to either of them, except the payment for services until the effective resignation or termination date. 4.3. Confidentially. Except as required by applicable law or regulation, the Sellers and Buyer undertake not to disclose, and to use their best efforts to procure that none of their respective Affiliates, directors, employees, officers or agents shall disclose, to any Person, at any time for a period of two (2) years from the date hereof, any confidential information, 21 22 observations, data, written materials, records or documents which may be disclosed or delivered in the course of the negotiations of this Agreement or the other agreements referred to herein or the actions taken pursuant hereto or thereto. In the event that the transactions contemplated by this Agreement or the other agreements referred to herein are not completed for any reason, all such information shall be returned to Sellers or Buyer, as relevant. This will however not prevent Buyer from using or disclosing any information obtained with regard to Soft Mountain and its operations. Sellers however must keep such information confidential and shall not use it. Notwithstanding the confidentiality obligation described in this paragraph, Sellers agree that Versant can disclose the terms of the Agreement to France Telecom and Lotus. 4.4. Specific assistance from Sellers. It is specifically agreed that, in order to allow the new management of Soft Mountain to exploit and use the technology and software of Soft Mountain, each of Mrs. Guillaume Doumenc, Andre May and Roger Pottlitzer shall be available for consultation by the management of Soft Mountain for a period of three months from Closing. This specific undertaking is given by those individuals in consideration of the Purchase Price. SECTION 5 - CLOSING The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Kahn & Associes, 9, rue Anatole de la Forge, 75017 Paris, at 10:00 o'clock a.m. on September 15, 1998, (or at such other place or time as the parties mutually agree) (the "Closing Date"). At the Closing, Sellers shall deliver to Buyer and Buyer shall deliver to Sellers (unless delivered previously), the various documents listed in this Agreement. SECTION 6 - INDEMNIFICATION 6.1. Duration of the indemnification. The obligation of Sellers to indemnify Buyer or Soft Mountain pursuant to this Section 6 shall expire on the third anniversary date of this Agreement, except for such Losses (as defined below) incurred in relation to taxes and social contribution matters, for which the obligation of the Sellers to indemnify Buyer or Soft Mountain thereunder shall only expire thirty (30) days after the applicable statute of limitation has elapsed. 6.2. Indemnification. Buyer accepts not to have a recourse for indemnification against any of Mr. Guillaume Doumenc, Mrs. Anne Doumenc, Mr. Andre May, Mme Claire Demengeot, Mr. Francis Lorentz, Mr. Roger Pottlitzer, taken in their individual capacity. SC Finoris, Rhone- 22 23 Alpes Creation and Trinova (the "Indemnifiers") agree to be bound for the total amount of such indemnification (in the percentage of the shares they own before the acquisition to the number of shares after deducting the shares of the six individuals listed above). Indemnifiers jointly and severally agree to indemnify and hold harmless Buyer or, at the option of the latter, Soft Mountain, for the period specified in Section 6.1 above against and in respect of any direct and consequential loss, liability, damage, deficiency, cost and expense (collectively, "Losses") incurred or sustained by any of them as a result of any breach by any Seller of this Agreement, including any breach or inaccuracy or omission in the representations, warranties and covenants contained herein or in any agreement, document or other instrument delivered pursuant hereto or in connection herewith. 6.3 Threshold and exceptions. Indemnifiers shall not be required to indemnify Buyer or Soft Mountain under this Section 6 unless and until the aggregate Losses exceed one hundred thousand French francs (FF. 100,000) in which case Indemnifiers shall be only responsible for such Losses in excess of such amount. No investigation made by Buyer or any of its advisers shall affect any representation or warranty of Sellers contained in this Agreement or the indemnification obligation of Indemnifiers set forth herein. Buyer agrees not to request indemnification from Sellers in case the anticipated research tax credit (credit d'impot recherche) shown in the Financial Statements, cannot be recovered from the French tax authorities. 6.4 Procedure for Indemnification. (a) For the purpose of this section, Indemnifiers hereby appoint Finoris Societe civile, c/o Me Yves-Marie Ravet, Avocat a la Cour, 3, rue du Bocador, 75008 Paris, as their sole agent and representative (the < Indemnification Representative >) (b) Buyer or, as the case may be, Soft Mountain, shall give written notice within 30 days to Indemnification Representative of any claim or event known to it which does give rise to a claim for indemnification thereunder, provided that the failure of any of Buyer or Soft Mountain to give notice as provided in this Section 6.4 shall not relieve any of the Indemnifiers of its obligations under this Section 6, except to the extent that such failure has materially and adversely affected the rights of Indemnifiers. (c) In the case of any claim for indemnification thereunder arising out of a claim, action, suit or proceeding brought by any person who is not a party to this Agreement (a "Third Party Claim"), Buyer or Soft Mountain shall also give the Indemnification Representative copies of any written claims, process or legal pleadings with respect to such Third Party Claim promptly after such documents are received 23 24 by Buyer or Soft Mountain. (d) If the amount of any Losses shall, at any time subsequent to payment pursuant to this Agreement, be reduced by recovery, settlement or otherwise, the amount of such reduction, less any expenses incurred in connection therewith, shall promptly be repaid by the Buyer or, as the case may be, Soft Mountain, to the Indemnifiers. 6.5 Remedies Cumulative. Buyer's remedies thereunder are cumulative with any other remedies available under applicable law. Indemnifiers hereby acknowledge and agrees that money damages would not be a sufficient remedy for, and Buyer would be irreparably harmed by, any breach by Indemnifiers of this Agreement and that Buyer shall be entitled to such interim or conservatory measures as may be available under applicable law. 6.6 Payments of amounts due All amounts claimed by Buyer or Soft Mountain in a claim for indemnification pursuant to Section 6.4 shall be paid by Indemnifiers within thirty (30) days from the receipt of such claim. Payments shall be made directly to Buyer or to Soft Mountain, at the sole discretion of Buyer. SECTION 7 - GENERAL PROVISIONS 7.1 Amendment. No amendment of any provision of this Agreement shall in any event be effective, unless the same shall be in writing and signed by the parties hereto. 7.2 Dispute Resolution. Any dispute, controversy or claim arising out of or in connection with this Agreement shall be finally settled by arbitration in Paris. In case of a dispute, the party deciding to resort to arbitration shall inform the other by registered letter return receipt requested, indicating the name of the arbitrator designated by it. The other party shall have a period of 15 days from receipt of the above-mentioned letter to proceed with the nomination of a second arbitrator. In the event of failure to do so within this time period, the President of the Commercial Court of Paris will do so at the request of the first party to so request, ruling as a judge in summary proceedings ("refere"). The two arbitrators thus designated shall name a third arbitrator within a period of 15 days from the date of appointment of the second arbitrator. In the event of failure of the arbitrators to agree upon a third arbitrator, this person will be named by the President of the Commercial Court of Paris, will do so at the request of the first party to so request, ruling as a judge in summary proceedings. The third arbitrator thus appointed will chair the arbitral panel. In case an arbitrator withdraws 24 25 or is otherwise prevented from acting, he will be replaced following the same method of nomination as that used for the arbitrator who withdraws or is prevented from acting, and this shall be done within a period of one month from his being prevented from acting or his withdrawal. The arbitration shall be conducted in the English language. Each arbitrator to be appointed must have a sufficient level of English to be able to conduct this arbitration in the English language. The arbitrators shall conduct the arbitration in accordance with such procedural and evidentiary rules as they may determine. The arbitrators shall give written reasons for their award. The last hearing shall be held no later than 120 days following the appointment of the third arbitrator and the award shall be rendered no later than 30 days following the close of such hearing. This arbitration provision does not prevent the parties hereto to go before a court of competent jurisdiction for seeking interim, interlocutory, injunctions or other provisional relief. The award shall be final and binding upon the parties hereto, and shall be the sole and exclusive remedy between the parties regarding any claims, counterclaims, issues, or accounting presented to the arbitrator. Judgment upon any award may be entered in any court having jurisdiction. However, the parties accept that an award can be appealed before the Court of Appeals of Paris, only if the arbitration award, gives any party damages above five hundred thousand francs (500,000 FF). For clarification purposes, the arbitration costs and legal fees are not to be included in this amount, which means that if the award is 450,000 francs for damages and 100,000 francs for arbitration costs, there will be no appeal. Buyer accepts to advance the amount of the advance requested by the arbitrators, upon the commencement of a arbitration, being however understood that the final allocation of the costs of arbitration shall be decided by the arbitrators in their award. 7.3 Expenses and advisers' fees. Each of Sellers and Buyer will bear its own expenses and advisers' fees. Buyer confirms that Soft Mountain will pay Me Ravet's fees for the services rendered to Soft Mountain from early April 1998 to end of July 1998 which are around FF 50,000 HT. Buyer acknowledges that those may not be reflected in the Financial Statements, and will not allege such violation. 7.4 Notices. All notices, requests and other communications thereunder shall be in writing and shall be deemed given if delivered personally, facsimiles 25 26 (which is confirmed) or mailed by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to Buyer: Versant Corporation 6539 Dumbarton Circle Fremont, California 94555 USA Attention General Counsel With a copy to: VERSANT GmbH Arabellastr-4 D-81925 Munich Germany Attention Managing Director (b) If to Sellers: Finoris Societe Civile c/o Me Yves-Marie Ravet Avocat a la Cour 3, rue du Bocador 75008 Paris 7.5 Entire Agreement; Binding Effect. This Agreement and the documents referred to herein constitute the entire agreement and supersede all other agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof, and in particular the letter of intent of June 16, 1998 attached hereto on Schedule 1.2. 7.6 Applicable Law. This Agreement shall be governed by and be construed in accordance with the laws of France. 7.7 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors, it being specified that the Buyer may also assign this Agreement to any party it may wish. 7.8 Announcements. Except as required by law or the rules of any national securities exchange, for so long as this Agreement is in effect, no announcement of this Agreement or the transactions contemplated hereby shall be made by any of the parties without the written consent of the other party or parties, which consent shall not be unreasonably withheld. 26 27 7.9 Severability. In case any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining terms, provisions, covenants or restrictions, or of such term, provision, covenant or restriction in any other jurisdiction, shall not in any way be affected or impaired thereby. 7.10 Translation. A translation of this agreement into French shall be prepared by a French independent translator to be provided on Closing. Buyer agrees to pay the fees of such translator. For clarification purposes the translation shall be for information only, and the English signed document shall be the only one with effect. IN WITNESS WHEREOF, the parties hereto have signed this Agreement under the seal as of the date first written above. /s/ C. DOUMENC /s/ GUY RIGAUD - -------------------------- ------------------------------ SC Finoris Rhone - Alpes Creation by C. Doumenc by Guy Rigaud its Co-Gerant its President du Directoire /s/ A. MAY /s/ GUILLAUME DOUMENC - -------------------------- ------------------------------ Trinova Mr. Guillaume Doumenc by A. May its D.C. of Pouvoir /s/ ANNE DOUMENC /s/ ANDRE MAY - -------------------------- ------------------------------ Mrs. Anne Doumenc Mr. Andre May /s/ CLAIRE DEMENGEOT - -------------------------- ------------------------------ Mme. Claire Demengeot Mr. Francis Lorentz of Pouvoir 27 28 - -------------------------- ------------------------------ Mr. Roger Pottlitzer /s/ BERNHARD WOEBKER - -------------------------- Versant Corporation By Bernhard Woebker its Vice President Europe 28 EX-23.01 3 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.01 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated January 25, 1999, included in Versant Corporation's Form 10-KSB for the year ended December 31, 1998 and to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP ----------------------- ARTHUR ANDERSEN LLP San Jose, California May 12, 1999 -----END PRIVACY-ENHANCED MESSAGE-----