-----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, ErPUt0leXq9ShTwu1BnZruLD+viAhmrqpxPVNhzHcNvubaTnc14ugES5SnQCjGbo DCYrdHnImNk0okbZQ9nTvg== 0001104659-00-000199.txt : 20000511 0001104659-00-000199.hdr.sgml : 20000511 ACCESSION NUMBER: 0001104659-00-000199 CONFORMED SUBMISSION TYPE: DEFR14A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000510 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: DEFR14A SEC ACT: SEC FILE NUMBER: 000-28540 FILM NUMBER: 624026 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 DEFR14A 1 PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. __) Filed by the Registrant |X| Filed by the Party other than the Registrant |_| Check the appropriate box: [ ] Preliminary Proxy Statement |_| Confidential, for Use of [X] Definitive Proxy Statement the Commission Only (as [ ] Definitive Additional Materials permitted by Rule 14a-6(e)(2)) [ ] Soliciting Material Under Rule 14a-12 VERSANT CORPORATION (Name of Registrant as Specified in Its Charter) ----------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1) Title of each class of securities to which transaction applies: -------------------------------------------------------------- 2) Aggregate number of securities to which transaction applies: -------------------------------------------------------------- 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): -------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: -------------------------------------------------------------- 5) Total fee paid: -------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. 1) Amount Previously Paid: -------------------------------------------------------------- 2) Form, Schedule or Registration Statement No.: -------------------------------------------------------------- 3) Filing Party: -------------------------------------------------------------- 4) Date Filed: -------------------------------------------------------------- May 11, 2000 To Our Shareholders: You are cordially invited to attend the 2000 Annual Meeting of Shareholders of Versant Corporation to be held at the Company, 6539 Dumbarton Circle, Fremont, California 94555, on Thursday, June 22, 2000, at 10:30 a.m., Pacific Time. The matters expected to be acted upon at the meeting are described in detail in the following Notice of Annual Meeting of Shareholders and Proxy Statement. It is important that you use this opportunity to take part in the affairs of your Company by voting on the business to come before this meeting. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. Returning the Proxy does not deprive you of your right to attend the meeting and to vote your shares in person. We look forward to seeing you at the meeting. Sincerely, Nick Ordon President and Chief Executive Officer VERSANT CORPORATION 6539 DUMBARTON CIRCLE FREMONT, CALIFORNIA 94555 ----------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 22, 2000 To Our Shareholders: NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Versant Corporation (the "Company") will be held at the Company, 6539 Dumbarton Circle, Fremont, California 94555, on Thursday, June 22, 2000, at 10:30 a.m., Pacific Time for the following purposes: 1. To elect five (5) directors of the Company, each to serve until the next Annual Meeting of Shareholders and until his successor has been elected and qualified or until his earlier resignation or removal. The Company's Board of Directors intends to present the following nominees for election as directors: David Banks William R. Shellooe Nick Ordon William Henry Delevati Bernhard Woebker 2. To ratify and approve the amendments of the Company's 1996 Equity Incentive Plan made by the Board of Directors to increase the number of shares of Common Stock reserved for issuance by an aggregate of 1,000,000 shares. 3. To ratify the appointment of Arthur Andersen LLP as the Company's independent auditors for the year ended December 31, 2000. 4. To transact such other business as may properly come before the meeting or any adjournment thereof. The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Only shareholders of record at the close of business on April 28, 2000 are entitled to notice of and to vote at the meeting or any adjournment thereof. By Order of the Board of Directors Nick Ordon President and Chief Executive Officer Fremont, California May 11, 2000 WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. VERSANT CORPORATION 6539 DUMBARTON CIRCLE FREMONT, CALIFORNIA 94555 ----------- PROXY STATEMENT May 11, 2000 The accompanying Proxy is solicited on behalf of the Board of Directors (the "Board") of Versant Corporation, a California corporation (the "Company"), for use at the Annual Meeting of Shareholders of the Company to be held at the Company's principal offices, located at 6539 Dumbarton Circle, Fremont, California 94555, on Thursday, June 22, 2000, at 10:30 a.m., Pacific Time (the "Meeting"). This Proxy Statement and the accompanying form of Proxy were first mailed or delivered to shareholders on or about May 11, 2000. An annual report for the year ended December 31, 1999 is enclosed with this Proxy Statement. VOTING RIGHTS AND SOLICITATION OF PROXIES Holders of record of the Company's common stock and Series A Preferred Stock at the close of business on April 28, 2000 (the "Record Date") will be entitled to vote at the Meeting. At the close of business on the Record Date, the Company had 11,222,172 shares of common stock outstanding and entitled to vote and 1,313,743 shares of Series A Preferred Stock outstanding and entitled to vote. A majority of the shares outstanding on the Record Date will constitute a quorum for the transaction of business. Holders of common stock are entitled to one vote for each share held as of the Record Date. Holders of Series A Preferred Stock are entitled to one vote for every share held as of the Record Date. In the event that a broker, bank, custodian, nominee or other record holder of the Company's common stock or Series A Preferred Stock indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular matter (a "broker non-vote"), those shares will not be considered present and entitled to vote with respect to that matter, although they will be counted in determining the presence of a quorum. Directors will be elected by a plurality of the votes of the shares of common stock and Series A Preferred Stock present in person or represented by proxy at the Meeting that are voted on the election of directors. Approval of the other Proposals require the affirmative vote of a majority of the shares of common stock and Series A Preferred Stock present in person or represented by proxy at the Meeting that are voted "for" or "against" the proposal AND the affirmative votes must constitute at least a majority of the required quorum. Neither an abstention nor a broker non-vote will be counted as a vote "for" or "against" Proposal Nos. 2 and 3. All votes will be tabulated by the inspector of elections appointed for the Meeting. Each of the Company's Proposals requires that a quorum be present at the Meeting. Unless otherwise instructed, each valid returned Proxy in the form accompanying this Proxy Statement that is not revoked will be voted in the election of directors "FOR" the nominees of the Board of Directors and "FOR" Proposal Nos. 2, 3 and 4 described in this Proxy Statement, and at the Proxy holder's discretion, on such other matters, if any, that may come before the Meeting (including any proposal to adjourn the Meeting). In the event that sufficient votes in favor of the proposals are not received by the date of the Meeting, the persons named as Proxies may propose one or more adjournments of the Meeting to permit further solicitations of Proxies. Any such adjournment would require the affirmative vote of the majority of the shares present in person or represented by Proxy at the Meeting and entitled to vote. The expenses of soliciting Proxies will be paid by the Company. Following the original mailing of the Proxy Statement, the Proxy and other soliciting materials, the Company will request brokers, custodians, nominees and other record holders to forward copies of those materials to persons for whom they hold shares of common stock or Series A Preferred Stock and to request authority for the exercise of Proxies. In such cases, the Company, upon the request of the record holders, will reimburse such holders for their reasonable expenses. Proxies may also be solicited by certain of the Company's directors, officers and regular employees, without additional compensation, in person or by telephone or telegram. REVOCABILITY OF PROXIES Any person signing a Proxy in the form accompanying this Proxy Statement has the power to revoke it prior to the Meeting or at the Meeting prior to the vote pursuant to the Proxy. A Proxy may be revoked by a writing delivered to the Company stating that the Proxy is revoked, by a subsequent Proxy that is signed by the person who signed the earlier Proxy and is presented at the Meeting, or by attendance at the Meeting and voting in person. PLEASE NOTE, HOWEVER, THAT IF A SHAREHOLDER'S SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND THAT SHAREHOLDER WISHES TO VOTE AT THE MEETING, THE SHAREHOLDER MUST BRING TO THE MEETING A LETTER FROM THE BROKER, BANK OR OTHER NOMINEE CONFIRMING THAT SHAREHOLDER'S BENEFICIAL OWNERSHIP OF THE SHARES. PROPOSAL NO. 1--ELECTION OF DIRECTORS DIRECTORS/NOMINEES At the Meeting, shareholders will elect five directors, which will be the number of directors authorized by the Board of Directors pursuant to the Company's Bylaws as of the date of the Meeting, to hold office until the next Annual Meeting of Shareholders and until their respective successors have been elected and qualified, or until such directors' earlier resignation or removal. Shares represented by the accompanying Proxy will be voted for the election of five nominees (recommended by the Board) who are named in the following table, unless the Proxy is marked in such a manner as to withhold authority so to vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the Meeting that are voted on the election of directors. The Company has no reason to believe that the nominees for election will not be available to serve their prescribed terms. However, if any nominee for any reason is unable to serve or will not serve, the Proxy may be voted for such substitute nominee as the persons appointed in the Proxy may in their discretion determine. The following table sets forth certain information concerning the nominees (each of whom is currently a director of the Company), which is based on data furnished by them:
DIRECTOR NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE --------------- --- -------------------- -------- Nick Ordon 52 President and Chief Executive Officer of the Company 1998 David Banks 54 Consultant 1993 Bernhard Woebker 50 Senior Vice President of Field Operations of the Company 1999 and Consultant William Henry Delevati 51 Consultant 1999 William R. Shellooe 62 Vice President of Sales, HAL Computer (subsidiary of 2000 Fujitsu Corporation)
Mr. Ordon has served as President, Chief Executive Officer and a director of the Company since he joined the Company in January 1998. From July 1996 to December 1997, Mr. Ordon was Vice President and General Manager of Lotus Messaging at Lotus Development Corporation, a software development company and wholly-owned subsidiary of International Business Machines Corporation. From August 1994 to July 1996, he was Vice President and General Manager of the Commercial Business Unit of Lockheed Martin Corporation, an aerospace products company. From January 1993 to August 1994, Mr. Ordon served as General Manager, NetWare Operations with Hewlett-Packard Company. Mr. Ordon received both a Bachelor and Masters of Science degree in Aerospace Engineering from University of Colorado in 1970 and 1971 respectively, and a Master of Business Administration degree in Finance and Operations from Syracuse University in 1980. 2 Mr. Banks has served as a director of the Company since April 1993. Mr. Banks is currently a consultant to various companies located in the Silicon Valley area. From January 1998 to January 1999, Mr. Banks served as a consultant to the Company. From April 1993 to January 1998, Mr. Banks was the Company's President and Chief Executive Officer. From January 1985 to January 1989, Mr. Banks served as Chief Executive Officer and President of Cadre Technologies Incorporated ("Cadre"), a software development company. In January 1989, following a merger of MicroCase Inc. and Cadre, Mr. Banks was named President of Cadre, a position he held until mid-1992, when he became Executive Vice President of Cadre. Mr. Banks served in this position until December 1992. Mr. Banks received a Bachelor of Science degree in Chemistry from Indiana University in 1967, a Master of Science degree in Chemistry from University of California, San Diego in 1968 and a Masters of Business Administration degree from Purdue University in 1969. Mr. Woebker has served as a director of the Company since June 1999. He has served as Senior Vice President of Field Operations of the Company and as the senior executive officer of the Company's European subsidiaries since January 1999. Beginning January 1, 2000, Mr. Woebker significantly reduced his daily involvement with the Company while retaining his operational and managerial roles in these positions. Beginning January 1, 2000, Mr. Woebker also began serving on a part-time basis as a consultant with the investment banking firm E.M. Warburg, Pincus & Co. LLC. Mr. Woebker joined Versant in March 1997 and served as Vice President and General Manager Europe, from that date to January 1999. From 1994 to March 1997, he was President of Versant Object Technology GmbH, an independently-owned distributorship for Versant products in Europe which was acquired by the Company in March 1997. From 1976 until 1994, Mr. Woebker held a variety of positions in Germany and the United States with Nixdorf Computer AG, Nixdorf Computer Engineering Corp. and Siemens Nixdorf Informationssysteme AG, information technology companies, including President and CEO of Nixdorf Computer Engineering Corp. in Boston, Massachusetts from 1986 to 1989. Mr. Woebker has also served as Senior Vice President, Pyramid Technology Corp./Europe and as Vice President, NeXT Computer, Inc./Europe. Mr. Woebker received a Masters degree in Mathematics and Computer Science from the University of Hannover in 1973. Mr. Delevati has served as a director of the Company since October 1999. From October 1999 to April 2000, Mr. Delevati served as the Senior Vice President, Information Technology and CIO of Aspect Technology, an automated call device company. From November 1995 to April 1999, Mr. Delevati served as Vice President of Worldwide Information Services for Quantum Corporation, a storage device company. From April 1995 to November 1995, he held the position of Chief Information Officer, Senior Vice President of MIS for Conner Peripherals, a storage device company. From September 1994 to April 1995, he was Chief Information Officer, Vice President of Worldwide MIS for Borland Corporation, a software tools company. From September 1993 to September 1994, he was Chief Information Officer, Vice President of Worldwide MIS for Logitech, a computer peripheral device company. From December 1987 to September 1993, he was Director of Application Development and Global Information Resources for Sun Microsystems, Inc. Mr. Delevati received a Bachelor of Science degree in Operations Research in 1974 from Arizona State University. Mr. Shellooe has served as a director of the Company since April 2000. Since April 1997, Mr. Shellooe has served as Vice President of Sales for HAL Computer, a company that develops SPARC processors and a subsidiary of Fujitsu Corporation. Between 1994 and 1997, Mr. Shellooe served in a variety of executive officer positions with AXIL Computer, Inc., a SPARC systems company and a subsidiary of Hyundia Electronics. From January 1994 to December 1994, he served as Vice President of Sales of AXIL, from December 1994 to July 1996, as its Senior Vice President of Sales and Marketing and from July 1996 to February 1997 as its Chief Executive Officer. Prior to working with AXIL Computer, Inc., Mr. Shellooe served in a variety of executive management positions with MASPAR Computer Corporation, Pyramid Technology and Hewlett Packard. Mr. Shellooe received his Bachelor of Science degree in Electrical Engineering in 1960 and a Masters of Business Administration degree in 1966 from the University of Santa Clara. There is no family relationship between any of the foregoing nominees or between any of such nominees and any of the Company's executive officers. The Company's executive officers serve at the discretion of the Board. 3 BOARD OF DIRECTORS' MEETINGS AND COMMITTEES The Board met five times, including telephone conference meetings, and acted by written consent twice during 1999. Standing committees of the Board include an Audit Committee and a Compensation Committee. The Board does not have a nominating committee or a committee performing similar functions. The Audit Committee is currently comprised of Stephen J. Gaal and David Banks. Following the Meeting, the Company expects that Mr. Shellooe will be appointed by the Board to fill the vacancy on the Audit Committee created by Mr. Gaal's departure from the Board. The Audit Committee met four times during 1999. The Audit Committee has the following primary powers: (i) to recommend the appointment of the Company's independent auditors to the Board; (ii) to review the independent auditors' proposed audit scope and audit approach; (iii) to review the independent auditors' letters of recommendations provided to management; (iv) to review the activities, organizational reporting and effectiveness of the Company's internal audit function; (v) to review the independent auditors' fee arrangements for professional services; (vi) to review management's monitoring of compliance with the Company's code of conduct; (vii) to review, with the Company's counsel, any legal matters that could have a significant impact on the Company's financial statements; (viii) to review with financial management and the independent auditors the Company's quarterly financial results and significant proposed adjustments, reserves, accounting estimates and financial reporting issues related thereto; (ix) to determine that there are appropriate policies and procedures for the review of officers' expenses and perquisites; (x) to approve the Company's revenue recognition policy and any amendments thereto; (xi) to approve the Company's investment policy and any amendments thereto; (xii) to review the status of Internal Revenue Service examinations and related tax reserves; and (xiii) to perform other oversight functions as determined by the Audit Committee or the full Board. The Compensation Committee is currently comprised of Stephen J. Gaal and Mark Leslie, who are non-employee directors. Following the Meeting, the Company expects that David Banks and William Henry Delevati, who are non-employee directors, will be appointed by the Board to fill the vacancies created by the departure from the Board of Messrs. Gaal and Leslie. The Compensation Committee met one time and acted by written consent four times during 1999. The Compensation Committee is responsible for: (i) reviewing and submitting to the Board for approval major compensation and benefits programs and plans, such as stock option, stock purchase, 401(k) and bonus plans, and amendments thereto; (ii) administering the Company's 1996 Equity Incentive Plan and approving all option grants pursuant thereto; (iii) administering the Company's 1996 Employee Stock Purchase Plan; (iv) reviewing and approving for submission to the Board the election of corporate officers and the designation of officers subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (v) reviewing and approving compensation for corporate officers, including salary, bonus awards and major perquisites; (vi) reviewing and approving compensation ranges for non-officer employees; (vii) reviewing the performance of corporate officers; (viii) reviewing significant changes to the structure of the Company's organization; and (ix) preparing a report to shareholders on compensation policy for inclusion in the Company's proxy statement, if applicable. No director attended fewer than 75% of the aggregate of the total number of meetings of the Board (held during the period for which he was a director) and the total number of meetings held by all committees of the Board on which he served (during the period that he served). DIRECTORS COMPENSATION Directors of the Company do not receive cash compensation for their services as directors but are reimbursed for their reasonable expenses in attending meetings of the Board. Directors who are not officers of the Company are entitled to participate in the 1996 Directors Stock Option Plan (the "Directors Plan"). The purpose of the Directors Plan is to provide incentive for members of the Board who are not also employees of the Company or any parent, subsidiary or affiliate of the Company by providing such persons with an opportunity to purchase shares of common stock of the Company. The Directors Plan provides that each non-employee director automatically receives an option to purchase 10,000 shares of the Company's common stock upon initially joining the Board of Directors and automatically receives an option to purchase 5,000 shares of 4 the Company's common stock each year on the anniversary of the initial grant to such non-employee director, as long as the director continues to serve on the Board. On July 16, 1999, the Company granted to each of Messrs. Leslie, Gaal and Banks an option to purchase 5,000 shares of the Company's common stock at an exercise price of $3.15625 per share pursuant to the automatic annual grant provisions of this plan. On October 21, 1999, the Company granted to Mr. Delevati an option to purchase 10,000 shares of the Company's common stock at an exercise price of $2.4375 per share pursuant to the automatic initial grant provisions of this plan. On April 17, 2000, the Company granted to Mr. Shellooe an option to purchase 10,000 shares of the Company's common stock at an exercise price of $5.25 per share pursuant to the automatic initial grant provisions of this plan. Grants under this plan vest 50% on each of the two anniversaries following the date of grant so long as the recipients of such grants continue to serve as directors or consultants to the Company. THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINATED DIRECTORS. PROPOSAL NO. 2--RATIFY AND APPROVE THE AMENDMENTS MADE BY THE BOARD TO THE 1996 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE BY AN AGGREGATE OF 1,000,000 SHARES Shareholders are being asked to (i) ratify an amendment to the Company's 1996 Equity Incentive Plan (the "Incentive Plan") made by the Board of Directors on January 19, 2000 increasing the number of shares of common stock reserved for issuance under the Incentive Plan by 500,000 and (ii) approve a further amendment of the Incentive Plan to provide for an additional increase in the number of shares of common stock reserved for issuance thereunder by 500,000 shares, so that the total number of shares authorized for issuance under the Incentive Plan will be 2,900,000, plus any shares remaining under the Company's 1989 Stock Option Plan (the "Prior Plan"), as discussed below. As of April 28, 2000, there were 531,241 shares remaining and available for grant under the Prior Plan and the Incentive Plan (including the 500,000 share increase approved by the Board on January 19, 2000 and the 500,000 share increase approved by the Board on April 18, 2000). The Board believes that adding shares to the Incentive Plan is in the best interests of the Company because it will permit the Company to attract and retain employees by providing them with appropriate equity incentives. The Incentive Plan plays an important role in the Company's efforts to attract and retain employees of outstanding ability. The Incentive Plan was adopted by the Board in May 1996 and approved by the shareholders of the Company in June 1996. The Incentive Plan was amended in 1997 to increase the number of shares of common stock reserved for issuance by 800,000, which amendment was approved by the shareholders of the Company in June 1997. The Board approved an amendment to the Incentive Plan in April 1999, which was approved by the shareholders in June 1999, to increase the number of shares of common stock reserved for issuance by 250,000. As mentioned above, the Board approved an amendment to the Incentive Plan on January 19, 2000 to increase the number of shares reserved for issuance by 500,000, and the Company is now seeking ratification by the shareholders of that amendment. The Board's January 19, 2000 approval of such 500,000 share increase limited option grants made pursuant to such increase to persons who were not officers of the Company. On April 18, 2000, the Board approved a further amendment to the Incentive Plan, to be effective upon shareholder approval, to increase the number of shares reserved for issuance by an additional 500,000. Set forth below is a summary of the principal features of the Incentive Plan, which summary is qualified in its entirety by reference to the terms and conditions of the Incentive Plan. The Company will provide, without charge and upon request, to each person to whom a Proxy Statement is delivered, a copy of the Incentive Plan. Any such request should be directed as follows: Secretary, Versant Corporation, 6539 Dumbarton Circle, Fremont, California 94555; telephone number (510) 789-1500; facsimile (510) 789-1515. SHARES SUBJECT TO THE INCENTIVE PLAN. The stock subject to issuance under the Incentive Plan consists of shares of the Company's authorized but unissued common stock. As of April 28, 2000, the Board had reserved an aggregate of 2,900,000 shares of common stock for issuance under the Incentive Plan including the 500,000 shares approved by the Board on January 19, 2000 as well as the 500,000 shares approved by the Board on April 18, 2000 5 and subject to shareholder approval. In addition, any shares remaining unissued under the Prior Plan on the effective date of the Incentive Plan, any shares repurchased at the original issuance price under the Prior Plan, and any shares issuable upon exercise of options granted pursuant to the Prior Plan that expire or become unexercisable for any reason without having been exercised in full, will no longer be available for distribution under the Prior Plan but will be available for distribution under the Incentive Plan. Shares subject to an option granted pursuant to the Incentive Plan that expires or terminates for any reason without being exercised or shares subject to an award granted pursuant to the Incentive Plan that are forfeited or are repurchased by the Company at the original issue price or are subject to an award granted pursuant to the Incentive Plan that otherwise terminates without shares being issued, will again become available for grant and issuance pursuant to awards under the Incentive Plan. This number of shares is subject to proportional adjustment to reflect stock splits, stock dividends and other similar events. If the Company's shareholders adopt this Proposal, the maximum number of shares that may be issued under the Incentive Plan will be 2,900,000 shares, plus shares remaining under the Prior Plan. ELIGIBILITY. Employees, officers, directors, consultants, independent contractors and advisors of the Company (and of any subsidiaries and affiliates) are eligible to receive awards under the Incentive Plan (the "Participants"). No Participant is eligible to receive more than 400,000 shares of common stock in any calendar year under the Incentive Plan, other than new employees of the Company (including directors and officers who are also new employees) who are eligible to receive up to a maximum of 600,000 shares of common stock in the calendar year in which they commence their employment with the Company. As of April 28, 2000, approximately 115 persons were in the class of persons eligible to participate in the Incentive Plan, 255,415 shares had been issued upon exercise of options, 2,680,608 shares were subject to outstanding options and no shares had been issued pursuant to stock bonus awards. As of that date, 531,241 shares were available for future grant, after taking into account any shares issuable upon exercise of options granted pursuant to the Prior Plan that have expired or become unexercisable without having been exercised in full and that have become available for distribution under the Incentive Plan and including the 500,000 shares approved by the Board on January 19, 2000 as well as the 500,000 shares approved by the Board on April 18, 2000 and subject to shareholder approval. The closing price of the Company's common stock on Nasdaq was $6.625 per share as April 27, 2000, the last trading day before the Record Date. Over the term of the Incentive Plan from May 1996 through April 28, 2000, the following executive officers have been granted the following options to purchase shares under the Incentive Plan: Nick Ordon (President and Chief Executive Officer), 550,000 shares; George C. Franzen (former Chief Technical Officer), 221,128 shares; Bernhard Woebker (Senior Vice President Field Operations), 318,000 shares; and Gary Rhea (Chief Financial Officer) 248,000 shares. As of April 28, 2000, the Company's current executive officers as a group have been granted options to purchase an aggregate of 1,116,128 shares under the Incentive Plan, and all current employees as a group (excluding executive officers) have been granted options to purchase an aggregate of 1,039,450 shares under the Incentive Plan. Over the term of the Incentive Plan, current directors who are not currently executive officers have been granted options to purchase an aggregate of 148,887 shares of common stock under the Incentive Plan. Such grants were made while the directors were not executive officers of the Company. No grants have been made under the Incentive Plan to directors who were also executive officers at the time the grants were made. The only nominee for director, who is not also a current executive officer, who has received grants under the Incentive Plan is David Banks, who was awarded options to purchase 352,092 shares while an executive officer, under the Incentive Plan. Except for those persons named above, as of April 28, 2000, no one has received in excess of 5% of the number of options granted under the Incentive Plan. As the Company's officers and directors are eligible to participate in the Incentive Plan, they may have an interest in the proposed amendment approved by the Board on April 18, 2000 to increase the number of shares authorized for issuance thereunder by 500,000. ADMINISTRATION. The Incentive Plan is administered by the Compensation Committee (the "Committee"), the members of which are appointed by the Board. The Committee currently consists of Mark Leslie and Steve Gaal, both of whom are "non-employee directors," as defined in Rule 16b-3 promulgated under the Exchange Act, and "outside directors," as defined pursuant to Section 162(m) of the Code. Following the Meeting, the Company expects that Messrs. Banks and Delevati, both of whom are "non-employee" directors, will be nominated to fill the vacancies on the Committee created by the departures from the Board of Messrs. Gaal and Leslie. Subject to the terms of the Incentive Plan, the Committee determines the persons who are to receive awards, the number of shares subject to each such award, and the terms and conditions of such awards. The Committee also has the authority to 6 construe and interpret any of the provisions of the Incentive Plan or any awards granted thereunder. The Committee has delegated to the President of the Company the authority to make awards under the Incentive Plan without further Committee review to non-officer and non-director employees of the Company up to a maximum of 20,000 shares per award, provided that no such award may be made if, as a result, the employee in question would have awards for an aggregate number of shares that exceeds the Company's guidelines for that employee's position by more than 15%. STOCK OPTIONS. The Incentive Plan permits the granting of options that are intended to qualify either as incentive stock options ("ISOs") or nonqualified stock options ("NQSOs"). ISOs may be granted only to employees (including officers and directors who are also employees) of the Company or any parent or subsidiary of the Company. The option exercise price for each ISO share must be no less than 100% of the "fair market value" (as defined in the Incentive Plan) of a share of common stock at the time the ISO is granted. The per share exercise price of an ISO granted to a 10% shareholder must be no less than 110% of the fair market value of a share of common stock at the time the ISO is granted. The option exercise price for each NQSO share must be no less than 85% of the fair market value of a share of common stock at the time of grant. The Company has not granted options under the Incentive Plan at less than fair market value and does not intend to do so in the foreseeable future. The exercise price of options granted under the Incentive Plan may be paid as approved by the Committee at the time of grant: (1) in cash (by check); (2) by cancellation of indebtedness of the Company to the Participant; (3) by surrender of shares of the Company's common stock owned by the Participant for at least six months and having a fair market value on the date of surrender equal to the aggregate exercise price of the option; (4) by tender of a full recourse promissory note; (5) by waiver of compensation due to or accrued by the Participant for services rendered; (6) by a "same-day sale" commitment from the Participant and a National Association of Securities Dealers, Inc. ("NASD") broker; (7) by a "margin" commitment from the Participant and a NASD broker; or (8) by any combination of the foregoing. TERMINATION OF OPTIONS. Except as provided below, each option expires ten years after the date of grant. Options granted to a 10% shareholder expire five years after the date of grant. In the event an optionee's relationship with the Company is terminated for any reason other than death or disability, the optionee will have the right to exercise the option at any time within three months (or such shorter or longer time period not exceeding five years as may be determined by the Committee, with any exercise beyond three months after termination deemed to be an NQSO) after such termination to the extent the right to exercise such option has accrued and had not previously been exercised at the date of termination, but in any event no later than the option expiration date. In the event an optionee's relationship terminates due to death or disability, as defined in Section 22(e)(3) of the Code (or if the optionee dies within three months after termination), the three-month period mentioned above will be twelve months (or such shorter or longer time period not exceeding five years as may be determined by the Committee, with any such exercise beyond twelve months after termination due to death or disability deemed to be an NQSO) after death or disability to the extent the right to exercise such option has accrued and had not previously been exercised at the date of death or disability under the Incentive Plan, but in any event no later than the option expiration date. RESTRICTED STOCK AWARDS. The Committee may grant Participants restricted stock awards to purchase stock either separately from, or in tandem with, other awards under the Incentive Plan, under such terms, conditions and restrictions as the Committee may determine. The purchase price for such awards must be no less than 85% of the fair market value of the Company's common stock on the date of the award (and in the case of an award granted to a 10% shareholder, the purchase price shall be 100% of fair market value) and can be paid for in any of the forms of consideration listed in items (1) through (5) in "Stock Options" above, or any combination thereof, as are approved by the Committee at the time of grant. The Company has not granted any restricted stock awards under the Incentive Plan. STOCK BONUS AWARDS. The Committee may grant Participants stock bonus awards either separately from, or in tandem with, other awards under the Incentive Plan, under such terms, conditions and restrictions as the Committee may determine. As of April 28, 2000, no shares had been issued pursuant to stock bonus awards. MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger, consolidation, dissolution or liquidation of the Company, the sale of substantially all of the assets of the Company or any other similar corporate 7 transaction, the successor corporation may assume, replace or substitute equivalent awards in exchange for those granted under the Incentive Plan or provide substantially similar consideration, shares or other property as was provided to shareholders of the Company (after taking into account provisions of the awards). In the event that the successor corporation does not assume or substitute awards, such awards will expire upon the closing of such transaction at the time and upon the conditions as the Board determines. AMENDMENT OF THE INCENTIVE PLAN. The Board may at any time terminate or amend the Incentive Plan, including amending any form of award agreement or instrument to be executed pursuant to the Incentive Plan. However, the Board may not amend the Incentive Plan in any manner that requires shareholder approval pursuant to the Code or the regulations promulgated thereunder, or pursuant to the Exchange Act or Rule 16b-3 (or its successor) promulgated thereunder. TERM OF THE INCENTIVE PLAN. Unless terminated earlier as provided in the Incentive Plan, the Incentive Plan will expire in May 2006, ten years from the date the Incentive Plan was adopted by the Board. FEDERAL INCOME TAX INFORMATION. THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPANTS UNDER THE INCENTIVE PLAN. FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPANT WILL DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN AND IS ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN THE INCENTIVE PLAN. INCENTIVE STOCK OPTIONS. A Participant will recognize no income upon grant of an ISO and incur no tax on its exercise (unless the Participant is subject to the alternative minimum tax ("AMT")). If the Participant holds shares acquired upon exercise of an ISO (the "ISO Shares") for more than one year after the date the option was exercised and for more than two years after the date the option was granted, the Participant generally will realize long-term capital gain or loss (rather than ordinary income or loss) upon disposition of the ISO Shares. This gain or loss will be equal to the difference between the amount realized upon such disposition and the amount paid for the ISO Shares. If the Participant disposes of ISO Shares prior to the expiration of either required holding period (a "disqualifying disposition"), the gain realized upon such disposition, up to the difference between the fair market value of the ISO Shares on the date of exercise and the option exercise price (or, if less, the amount realized on a sale of such shares), will be treated as ordinary income. Any additional gain will be long-term or short-term capital gain, depending upon the amount of time the ISO Shares were held by the Participant. ALTERNATIVE MINIMUM TAX. The difference between the fair market value of the ISO Shares on the date of exercise and the exercise price is an adjustment to income for purposes of AMT. The AMT (imposed to the extent it exceeds the taxpayer's regular tax) is 26% of an individual taxpayer's alternative minimum taxable income (28% in the case of alternative minimum taxable income in excess of $175,000). Alternative minimum taxable income is determined by adjusting regular taxable income for certain items, increasing that income by certain tax preference items (including the difference between the fair market value of the ISO Shares on the date of exercise and the exercise price), and reducing this amount by the applicable exemption amount ($45,000 in case of a joint return, subject to reduction under certain circumstances). If a disqualifying disposition of the ISO Shares occurs in the same calendar year as exercise of the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon a sale of ISO Shares that is not a disqualifying disposition, alternative minimum taxable income is reduced in the year of sale by the excess of the fair market value of the ISO Shares at exercise over the amount paid for the ISO Shares. NONQUALIFIED STOCK OPTIONS. A Participant will not recognize any taxable income at the time an NQSO is granted. However, upon exercise of an NQSO, the Participant must include in income as compensation an amount equal to the difference between the fair market value of the shares on the date of exercise and the Participant's exercise price. The included amount must be treated as ordinary income by the Participant and may be subject to withholding by the Company (either by payment in cash or withholding out of the Participant's salary). Upon resale 8 of the shares by the Participant, any subsequent appreciation or depreciation in the value of the shares will be treated as capital gain or loss. RESTRICTED STOCK AND STOCK BONUS AWARDS. Restricted stock and stock bonus awards will generally be subject to tax at the time of receipt, unless there are restrictions that enable the Participant to defer tax. At the time the tax is incurred, the tax treatment will be similar to that discussed above for NQSOs. MAXIMUM TAX RATES. The maximum tax rate applicable to ordinary income is 39.6%. Long-term capital gain will be taxed at a maximum of 20%. For this purpose, in order to receive long-term capital gain treatment, the shares must be held for more than one year. Capital gains may be offset by capital losses and up to $3,000 of capital losses may be offset annually against ordinary income. TAX TREATMENT OF THE COMPANY. The Company generally will be entitled to a deduction in connection with the exercise of an NQSO by a Participant or the receipt of restricted stock or stock bonus awards by a Participant to the extent that the Participant recognizes ordinary income and the Company withholds tax. The Company will be entitled to a deduction in connection with the disposition of ISO Shares only to the extent that the Participant recognizes ordinary income on a disqualifying disposition of the ISO Shares. ERISA. The Incentive Plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974 and is not qualified under Section 401(a) of the Code. NEW PLAN BENEFITS. The following table shows the grants of options to purchase common stock that have been made as of April 28, 2000 from the 500,000 shares of common stock of the Company approved for issuance by the Board of Directors on January 19, 2000 under the Company's Incentive Plan. No grants from this 500,000 share increase have been or will be made to any individuals other than employees who are not executive officers or directors of the Company. Future awards and purchases under the Incentive Plan are not included in the table because the Company cannot determine them currently. Awards under the Incentive Plan are made at the discretion of the Compensation Committee, as described above. NAME EXERCISE PRICE PER SHARE NUMBER OF SHARES - ---- ------------------------ ---------------- All employees as a group, excluding executive officers Between $4.00 and $15.875(1) 468,759 - --------------- (1) All grants were made at the fair market value of the common stock of the Company on the date of grant, as determined under the Incentive Plan. The information in the table represents the range of prices at which the grants have been made. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE 1996 EQUITY INCENTIVE PLAN. PROPOSAL NO. 3--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Company has appointed Arthur Andersen LLP as its independent auditors to perform the audit of the Company's financial statements for the 2000 fiscal year, and the shareholders are being asked to ratify such appointment. Arthur Andersen LLP has served as the Company's independent auditors since 1990. Representatives of Arthur Andersen LLP will be present at the Meeting, will be given an opportunity to make a statement at the Meeting if they desire to do so and will be available to respond to questions. 9 THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information, as of April 28, 2000 unless otherwise noted, with respect to the beneficial ownership of the Company's common stock by (i) each person known by the Company to be the beneficial owner of more than 5% of the Company's common stock or more than 5% of the Company's Series A Preferred Stock, (ii) each of the Company's directors, (iii) each of the Company's executive officers included in the "Executive Compensation table, below, and (iv) all current directors and executive officers as a group.
Shares of Common Stock Shares of Preferred Stock Beneficially Owned (1) Beneficially Owned (1) ---------------------- ---------------------- 5% SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS NUMBER PERCENT NUMBER PERCENT - ------------------------------------------------- ------ ------- ------ ------- 5% SHAREHOLDERS: Vertex .................................................... 4,009,428(2) 27.40% 1,137,687(3) 86.60% Joseph M. Cohen Family Limited Partnership................. -- -- 176,056 13.40% NON-EMPLOYEE DIRECTORS: David Banks (4)............................................ 280,686 2.50% 0 -- Stephen J. Gaal (5)........................................ 28,365 * 0 -- Mark Leslie (6)............................................ 79,958 * 0 -- William R. Shellooe........................................ 0 * 0 -- William Delevati........................................... 0 * 0 -- EXECUTIVE OFFICERS: Nick Ordon (7)............................................. 284,581 2.48% 0 -- George C. Franzen (8)...................................... 53,211 * 0 -- Gary Rhea (9)............................................. 67,227 * 0 -- Bernhard Woebker (10)..................................... 177,140 1.55% 0 -- ALL CURRENT DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (8 PERSONS) (11)................................ 917,957 7.77% 0 --
* Represents less than 1% (1) Percent ownership is based on 11,222,172 shares of common stock outstanding as of April 28, 2000 and 1,313,743 shares of Series A Preferred Stock outstanding as of April 28, 2000, respectively. Each share of Series A Preferred Stock is convertible, at the election of the holder, into two shares of common stock. See "Certain Transactions" for additional information about the Series A Preferred Stock. Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of common stock subject to options or warrants or issuable upon conversion of outstanding Series A Preferred Stock that are currently exercisable or convertible within 60 days of April 28, 2000 are deemed to be outstanding and to be beneficially owned by the person holding such options, warrants or convertible securities for the purpose of computing the number and percentage ownership of common stock of such person but are not deemed to be outstanding and to be beneficially owned for the purpose of computing the percentage ownership of common stock of any other person. 10 (2) Includes 489,767 shares of common stock owned directly by Vertex Investments International (III) Inc. ("VII"), 100,000 shares of common stock owned directly by Vertex Investments International (I) Inc. ("VI"), 6,600 shares of common stock owned directly by Vertex Management Pte. Ltd. ("VM"), 2,708,838 shares of common stock issuable upon conversion of Series A Preferred Stock and exercise of common stock warrants issued in the Company's July 12, 1999 Series A Preferred Stock financing (the "Financing") owned by Vertex Technology Fund Ltd. (formerly Vertex Technology Fund Pte. Ltd. ("VTF")) and 704,223 shares of common stock issuable upon conversion of Series A Preferred Stock and exercise of common stock warrants issued in the Financing owned by Vertex Technology Fund (II) Ltd. ("VTF II"). VM, VI, VII, VTF and VTF II are indirectly controlled by Singapore Technologies Pte. Ltd. The address of VM, VI and VII is 83 Science Park Drive, #01-01/02 The Curie, Singapore 118256. The address of VTF is 89 Science Park Drive, #02-09/12 The Rutherford, Singapore 118261. The foregoing information is based on the Schedule 13D dated July 23, 1999 filed by VTF, VTF II, VM, VI and VII with the SEC. (3) Includes 902,946 shares of Series A Preferred Stock issued in the Financing owned by VTF, and 234,741 shares of Series A Preferred Stock issued in the Financing owned by VTF II. The address of VTF and VTF II is 89 Science Park Drive, #02-09/12 The Rutherford, Singapore 118261. The foregoing information is based on the Schedule 13D dated July 23, 1999 filed by VTF and VTF II. (4) Includes 10,000 shares of common stock subject to options exercisable within 60 days of April 28, 2000. (5) Includes 17,500 shares of common stock subject to options exercisable within 60 days of April 28, 2000. Mr. Gaal is a director of the Company but is not standing for reelection at the Meeting. (6) Includes 41,500 shares of common stock subject to options exercisable within 60 days of April 28, 2000. Mr. Leslie is Chairman of the Board of Directors of the Company but is not standing for reelection at the Meeting. (7) Includes 274,581 shares of common stock subject to options exercisable within 60 days of April 28, 2000. Mr. Ordon is President and Chief Executive Officer of the Company. (8) Represents 53,211 shares of common stock subject to options exercisable within 60 days of April 28, 2000. Mr. Franzen is the former Vice President and Chief Technical Officer of the Company. Effective February 2000, Mr. Franzen ceased serving in such position and reduced his status to a part time employee with the Company assisting the Company with technical support and product development services. (9) Represents 67,227 shares of common stock subject to options exercisable within 60 days of April 28, 2000. Mr. Rhea is Vice President, Finance and Administration and Chief Financial Officer of the Company. (10) Includes 175,291 shares of common stock subject to options exercisable within 60 days of April 28, 2000. Mr. Woebker is a director and Senior Vice President Field Operations of the Company. (11) Represents the shares beneficially owned by the individuals identified in footnotes (4) through (7), (9) and (10). MANAGEMENT The names of the current executive officers of the Company and certain information about them are set forth below:
NAME OF EXECUTIVE OFFICER AGE POSITION WITH THE COMPANY ------------------------- --- ------------------------- Nick Ordon 52 President and Chief Executive Officer Gary Rhea 56 Vice President of Finance and Administration, Chief Financial Officer and Secretary Bernhard Woebker 50 Senior Vice President of Field Operations
For information regarding Mr. Ordon and Mr. Woebker, see "Proposal No. 1 - Election of Directors - Directors/Nominees." 11 Mr. Rhea has served as Vice President of Finance and Administration, Chief Financial Officer and Secretary of the Company since he joined the Company in May 1997. From May 1995 to May 1997, Mr. Rhea served as Chief Financial Officer of Vadem Inc., a semiconductor company. From July 1992 until May 1995, he served as Chief Financial Officer of Pacific Monolithics, a wireless communications company. Mr. Rhea received a Bachelor of Science degree in Accounting from San Jose State University in 1969. EXECUTIVE COMPENSATION The following table sets forth all compensation awarded to or earned or paid for services rendered in all capacities to the Company during each of 1997, 1998 and 1999 by Nick Ordon, the Company's President and Chief Executive Officer, and the Company's three other most highly compensated executive officers during 1999 (collectively, the "Named Executive Officers"). This information includes the dollar values of base salaries and bonus awards, the number of shares subject to stock options granted and certain other compensation, whether paid or deferred. SUMMARY COMPENSATION TABLE
Annual Compensation Long-term ----------------------------------------------------- Compensation Awards ----------- Securities Name and Fiscal Other Annual Underlying Principal Position Year Salary ($) Bonus ($)(1) Compensation ($)(2) Options (#) ------------------- ------ ---------- ------------ ------------------- ----------- Nick Ordon 1999 200,000 245,000 1,814 150,000 President and Chief 1998 198,590 -- 1,814 325,000 Executive Officer 1997 -- -- -- -- Bernhard Woebker 1999 186,644(3) 258,750(4) -- 200,000 Senior Vice President 1998 190,611(3) 93,231(4) -- 3,000 of Field Operations 1997 142,436(3) 79,850(4) -- 50,000 Gary Rhea 1999 169,078 73,500 2,835 70,000 Vice President of Finance 1998 149,500 30,000 2,835 38,000 and Administration and 1997 95,644 10,000 756 75,000 Chief Financial Officer George Franzen 1999 174,667 58,500 2,835 70,000 Former Vice President and 1998 159,200 20,000 2,835 33,000 Chief Technical Officer 1997 150,000 -- 1,814 10,000
- --------------------- (1) Bonus amounts for the fiscal years indicated are generally paid at the beginning of the following fiscal year. Some bonus amounts for fiscal year 1999 were, however, paid during that year. For 1997, bonuses were paid at the discretion of the Board. For 1998 and 1999, bonuses were paid pursuant to a plan approved by the Compensation Committee. (2) Represents payment of life insurance premiums. (3) Includes car allowance of $18,101, $13,176 and $7,769 in 1999, 1998 and 1997, respectively. Effective January 1, 2000, Mr. Woebker significantly decreased his daily involvement with the Commpany while retaining his operational and managerial roles in his position as Senior Vice President of Field Operations. In connection with these changes, Mr. Woebker's compensation was adjusted. (4) Represents sales commissions in 1999, 1998 and 1997. 12 OPTION GRANTS IN 1999 The following table contains information concerning stock option grants pursuant to the Company's 1996 Equity Incentive Plan during 1999 to each of the Named Executive Officers, all of which were made pursuant to the Company's 1996 Equity Incentive Plan. In accordance with the rules of the Securities and Exchange Commission, the table sets forth the hypothetical gains or "option spreads" that would exist for the options at the end of their respective ten-year terms, except as otherwise noted. These gains are based on assumed annual rates of stock price appreciation of 5% and 10% from the date the option was granted to the end of the option term.
Individual Grants ------------------------------------------------------------- Number of Annual Rates Securities % of Total of Stock Price Underlying Options Appreciation for Options Granted to Exercise Option Term (2) Granted Employees Price Per Expiration ------------------ Name (#) in 1999 (1) Share ($) Date 5% 10% - ---- ------------- ----------- ---------- ------------ -------- ----- Nick Ordon................. 150,000 (3) 14.43% 2.656 7/19/09 250,552 634,946 Bernhard Woebker........... 75,000 (4) 7.22% 1.0625 3/23/09 50,115 127,001 125,000 (3) 12.03% 2.656 7/19/09 208,793 529,122 Gary Rhea.................. 70,000 (3) 6.73% 2.656 7/19/09 116,924 296,308 George C. Franzen.......... 70,000 (3) 6.73% 2.656 7/19/09 116,924 296,308
- ------------------------- (1) The Company granted options to purchase an aggregate of 1,039,450 shares to employees in 1999. The sum of the specific grants described in the table is 490,000 and are not included in the 1,039,450. (2) The 5% and 10% assumed annual rates of stock price appreciation are mandated by the rules of the Securities and Exchange Commission and do not represent the Company's estimate or projection of future common stock prices. (3) These options fully vest on July 16, 2003, assuming that the optionee has continuously rendered services to the Company from the date of grant. Under the terms initially approved by the Compensation Committee, vesting of these options accelerate under the following conditions, assuming that the optionee continues to render services to the Company: (i) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for a single quarter following the date of grant; (ii) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for two consecutive quarters following the date of grant; (iii) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for three consecutive quarters following the date of grant; (iv) one-quarter of the shares vest on the date that the Company reports quarterly positive net income for four consecutive quarters following the date of grant. To date, 25% of these options have vested in accordance with the foregoing initial terms and an additional 25% were vested pursuant to an action of the Compensation Committee on April 18, 2000. These options expire ten (10) years from the date of grants. (4) These options fully vest on March 23, 2003, assuming that the optionee has continuously rendered services to the Company from the date of grant. Under the terms initially approved by the Compensation Committee, vesting of these options accelerate under the following conditions, assuming that the optionee 13 continues to render services to the Company: (i) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for a single quarter following the date of grant; (ii) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for two consecutive quarters following the date of grant; (iii) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for three consecutive quarters following the date of grant; (iv) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for four consecutive quarters following the date of grant. To date, 50% of these options have vested in accordance with the foregoing initial terms and an additional 25% were vested pursuant to an action of the Compensation Committee on April 18, 2000. These options expire ten (10) years from the date of grant. On February 1, 2000 the Compensation Committee approved additional option grants to purchase 65,000 shares, 65,000 shares and 75,000 shares, respectively, of the Company's common stock to each of Messrs. Woebker, Rhea and Ordon. These options vest fully on February 1, 2004, assuming that the optionee has continuously rendered services to the Company from the date of grant. Under the terms approved by the Compensation Committee, vesting of these options accelerate under the following conditions, assuming that the optionee continues to render services to the Company: (i) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for a single quarter following the date of grant; (ii) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for two consecutive quarters following the date of grant; (iii) one-quarter of the shares vest on the first date that the Company reports quarterly positive net income for three consecutive quarters following the date of grant; and (iv) one-quarter of the shares vest on the date that the Company reports quarterly positive net income for four consecutive quarters following the date of grant. To date, 25% of these options have vested. These options expire ten (10) years from date of grant. YEAR-END OPTION VALUES The following table sets forth information concerning the number of shares of common stock underlying exercisable and unexercisable options held by each of the Named Executive Officers at December 31, 1999 and the values of unexercised "in-the-money" options as of that date. None of the Named Executive Officers exercised options during 1999.
Value Of Number of Unexercised Securities Underlying In-the-money Unexercised Options Options At At December 31, 1999 (#) December 31, 1999 ($)(1) ------------------------------------------ --------------------------------- Name Exercisable Unexercisable Exercisable Unexercisable - ---- ----------- ------------- ----------- ------------- Nick Ordon.................. 183,330 291,670 775,640 1,330,610 Bernhard Woebker............ 103,519 149,481 598,514 921,330 Gary Rhea................... 86,331 96,669 385,017 514,670 George C. Franzen........... 64,664 78,336 362,767 470,358
(1) These values represent the positive spread between the respective exercise prices of outstanding stock options and the fair market value of the Company's common stock based on the closing trade on Nasdaq on December 31, 1999 ($8.75). Certain executive officers exercised options following the end of fiscal 1999, and the fair market value at that time exceeded these levels. 14 EMPLOYMENT CONTRACTS AND TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS The Company has entered into agreements with its executive officers (excluding Nick Ordon and Bernhard Woebker) that provide for acceleration of two additional years of vesting of shares subject to options or restricted stock upon certain acquisitions or changes in control of the Company. The Company entered into agreements with each of its executive officers (excluding Nick Ordon and Bernhard Woebker) that provided the executive officer with up to 12 months of salary and non-equity benefits continuation and up to 12 months of additional stock option and unvested stock vesting following a termination of that executive officer's employment without cause prior to January 7, 1999. No such termination occurred and these agreements are no longer in effect. The Company entered into an agreement on December 3, 1997 with Nick Ordon, its President and Chief Executive Officer, providing that: (i) Mr. Ordon will receive an annual salary of $200,000; (ii) Mr. Ordon will be eligible for a bonus of $125,000 at the end of his first year of employment with the Company based upon the achievement of certain goals and objectives and for an additional bonus of $25,000 if he exceeds those goals and objectives; (iii) Mr. Ordon will be granted an option to purchase 200,000 shares of the Company's common stock at a price of $6.5625 per share, which vests with respect to 25% of the shares on the first anniversary of the date of grant and thereafter for three years at the rate of 1/48th of the shares for each full month that Mr. Ordon renders services to the Company, such option to expire 10 years from the date of grant; (iv) Mr. Ordon will be granted an option to purchase 25,000 shares of the Company's common stock at a price of $6.5625 per share, which will vest based upon the achievement of certain goals and objectives in two equal annual increments; (v) in the event the Company is acquired during the term of Mr. Ordon's employment, 50% of Mr. Ordon's unvested options outstanding on the date of acquisition will immediately vest; and (vi) Mr. Ordon will receive certain other employee benefits. The Company entered into an agreement on January 7, 1998 with David Banks, the Company's former President and Chief Executive Officer, in connection with his departure from that position providing that: (i) Mr. Banks would continue to receive a $210,000 annual salary, a $62,250 bonus and certain other benefits through January 7, 1999; (ii) Mr. Banks' options and unvested stock would continue to vest through January 7, 1999; (iii) Mr. Banks would be able to exercise any vested options through April 7, 1999; and (iv) Mr. Banks would retain the IBM ThinkPad Notebook computer supplied to him by the Company. Mr. Banks is currently a non-employee director of the Company. CERTAIN TRANSACTIONS Except as described below and except for compensation arrangements described where required above, since January 1, 1998, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which the Company was or is to be a party in which the amount involved exceeded or will exceed $60,000 and in which any director, executive officer or holder of more than 5% of the common stock of the Company had or will have a direct or indirect material interest. On July 12, 1999, the Company issued shares of a newly designated Series A Preferred Stock ("Series A Stock"). The Series A Stock has a liquidation preference amount equal to 150% of the full amount paid for the Series A Stock, with the preference amount increasing by an additional 50% of such full amount paid on the second anniversary of the issuance of the Series A Stock and increasing by another 50% of such full amount paid on the third anniversary. The Series A Stock automatically converts into common stock if the Company's common stock price exceeds $12.00 per share for 45 consecutive trading days. The holders of Series A Stock will generally vote with the holders of common stock provided that the Series A Stock is only entitled to a number of votes equal to 50% of the number of shares of common stock into which the Series A Stock is convertible. As of April 28, 2000 15 each share of Series A Stock was convertible into two shares of common stock. The holders of Series A Stock were also provided with certain voting protective provisions. A total of 1,489,799 shares of Series A Stock were issued, with each share of Series A Stock initially convertible into two shares of the Company's common stock. Of these shares, 902,946 shares of Series A Stock were issued in exchange for an outstanding convertible secured promissory note with outstanding principal and interest of $3,846,550.82 held by VTF, and 586,853 shares of Series A Stock were issued in consideration of an additional $2,499,994 in new financing. Of the total amount provided in the new financing, $1 million was provided by VTF II, with the remainder provided by other investors. Each share of Series A Stock was sold at a price of $4.26 per share. The Company also issued warrants to purchase a total of 1,489,799 shares of common stock at an exercise price of $2.13 per share as part of the transaction. VTF acquired 902,946 of these warrants in connection with the new financing and VTF II acquired 234,741 of these warrants. As of April 28, 2000, VTF and its affiliates beneficially owned an aggregate of 596,367 shares of common stock, representing 5.31% of the Company's outstanding common stock.See "Security Ownership of Certain Beneficial Owners and Management." In connection with the Financing, the Joseph M. Cohen Family Limited Partnership purchased 176, 056 shares of Series A Stock and a warrant exercisable for 176,056 shares of Common Stock on July 12, 1999. SHAREHOLDER PROPOSALS Proposals of shareholders intended to be presented at the Company's 2001 Annual Meeting of Shareholders must be received by the Company at its principal executive offices no later than January 11, 2001 in order to be included in the Company's Proxy Statement and form of proxy relating to the meeting. Under Rule 14a-4(c)(1), shareholders wishing to bring a proposal before the 2001 annual meeting of shareholders (but not include it in the Company's proxy materials) should provide written notice of the proposal to the Company no later than March 27, 2001, as proxies solicited for the 2001 annual meeting will confer discretionary authority to vote on any such matter of which the Company did not have notice as of such date. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16 of the Exchange Act requires the Company's directors and officers, and persons who own more than 10% of a registered class of the Company's equity securities, to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms furnished to the Company and written representations from the executive officers and directors of the Company, the Company believes that all Section 16(a) filing requirements were met during 1999. ADDITIONAL INFORMATION The Company's 1999 annual report on Form 10-KSB as filed with the SEC is available without charge by writing to or calling the Company headquarters. Request should be directed to Investor Relations, 6539 Dumbarton Circle, Fremont, CA 94555, telephone number (510) 789-1800. The Company's 1999 annual report on Form 10-KSB may be obtained through the website maintained by the SEC at http://www.sec.gov. OTHER BUSINESS The Board does not presently intend to bring any other business before the Meeting, and, so far as is known to the Board, no matters are to be brought before the Meeting except as specified in the Notice of the Meeting. As to any business that may properly come before the Meeting, however, it is intended that Proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such Proxies. 16 WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POST-AGE-PAID ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. 17 EX-1 2 PROXY CARD PROXY VERSANT CORPORATION 6539 DUMBARTON CIRCLE FREMONT, CALIFORNIA 94555 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Nick Ordon and Gary Rhea, and each of them, as the Proxyholders, each with full powers of substitution, and hereby authorizes them to represent and to vote, as designated below, all shares of Common Stock of Versant Corporation ( the "CORPORATION") held of record by the undersigned on April 28, 2000, at the Annual Meeting of Shareholders of the Corporation to be held on Thursday, June 22, 2000, and at any adjournment or postponement thereof. This Proxy, when properly executed and returned in a timely manner, will be voted at the Meeting and any adjournment or postponement thereof in the manner described herein. If no contrary indication is made, the proxy will be voted FOR the Board of Directors nominees, FOR Proposals 2 and 3 and in accordance with the judgement and in the discretion of the persons named as Proxyholders herein on any other business that may properly come before the Meeting or any adjournment or postponement thereof, to the extent authorized by Rule 14A-4(C) promulgated under the Securities Exchange Act of 1934, as amended. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -------------- ------------- SEE CONTINUED AND TO BE SIGNED AND DATED SEE REVERSE ON REVERSE SIDE REVERSE SIDE SIDE -------------- ------------- FOLD AND DETACH HERE PLEASE MARK VOTES AS [X] IN THIS EXAMPLE. The Board of Directors recommends that you vote FOR the election of the five nominees and FOR proposals 2 and 3.
FOR WITHHOLD ALL NOMINES FROM ALL NOMINES FOR AGAINST ABSTAIN 1. ELECTION OF DIRECTORS. [ ] [ ] 2. Ratify and approve amendments to the [ ] [ ] [ ] Company's 1996 Equity Incentive Plan Nominees: David Banks, Nick Ordon, made by the Board of Directors to increase Bernhard Woebker, William H. Delevati the number of shares of common stock and William R. Shellooe reserved for issuance thereunder by an aggregate of 1,000,000 shares. To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below: 3. Ratification of the appointment of FOR AGAINST ABSTAIN Arthur Andersen LLP as the Company's [ ] [ ] [ ] independent auditors for 2000. Mark here for address change and note below. [ ]
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THIS PROXY CARD AND RETURN IT PRIOR TO THE MEETING IN THE ENCLOSED ENVELOPE. Printed Name: ------------------------------------ Signature(s) Date ---------------------------------------------- ----------------- This Proxy must be signed exactly as your name appears hereon. If more than one name appears, all persons so designated should sign. Attorneys, executors, administrators, trustees and guardians should indicate their capacities. If the signer is a corporation, please print full corporate name and indicate capacity of duly authorized officer executing on behalf of the corporation. If the signer is a partnership, please print full partnership name and indicate capacity of duty authorized person executing on behalf of the partnership. FOLD AND DETACH HERE EX-2 3 1996 EQUITY INCENTIVE PLAN VERSANT CORPORATION 1996 EQUITY INCENTIVE PLAN As Adopted May 21, 1996 As Amended June 5, 1997, June 10, 1999, January 19, 2000 and April 18, 2000* (*April 18, 2000 increase is subject to June 22, 2000 shareholder approval) 1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, its Parent and Subsidiaries, by offering them an opportunity to participate in the Company's future performance through awards of Options, Restricted Stock and Stock Bonuses. Capitalized terms not defined in the text are defined in Section 23. 2. SHARES SUBJECT TO THE PLAN. -------------------------- 2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 18, the total number of Shares reserved and available for grant and issuance pursuant to this Plan will be 2,900,000 Shares. Subject to Sections 2.2 and 18, Shares that: (a) are subject to issuance upon exercise of an Option but cease to be subject to such Option for any reason other than exercise of such Option; (b) are subject to an Award granted hereunder but are forfeited or are repurchased by the Company at the original issue price; or (c) are subject to an Award that otherwise terminates without Shares being issued will again be available for grant and issuance in connection with future Awards under this Plan. Any authorized shares not issued or subject to outstanding grants under the Versant Corporation 1989 Stock Option Plan (the "PRIOR PLAN") on the Effective Date (as defined below) and any shares that: (a) are issuable upon exercise of options granted pursuant to the Prior Plan that expire or become unexercisable for any reason without having been exercised in full; (b) are subject to an award granted pursuant to the Prior Plan but are forfeited or are repurchased by the Company at the original issue price; or (c) are subject to an award granted pursuant to the Prior Plan that otherwise terminates without shares being issued will no longer be available for grant and issuance under the Prior Plan, but will be available for grant and issuance under this Plan. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Options granted under this Plan and all other outstanding but unvested Awards granted under this Plan. 2.2 ADJUSTMENT OF SHARES. In the event that the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise Prices of and number of Shares subject to outstanding Options, and (c) the number of Shares subject to other outstanding Awards will be proportionately adjusted, subject to any required action by the Board or the shareholders of the Company and compliance with applicable securities laws; PROVIDED, HOWEVER, that fractions of a Share will not be issued but will either be replaced by a cash payment equal to the Fair Market Value of such fraction of a Share or will be rounded up to the nearest whole Share, as determined by the Committee. 3. ELIGIBILITY. ISO (as defined in Section 5 below) may be granted only to employees (including officers and directors who are also employees) of the Company or of a Parent or Subsidiary of the Company. All other Awards may be granted to employees, officers, directors, consultants, independent contractors and advisors of the Company or any Parent or Subsidiary of the Company; PROVIDED such consultants, contractors and advisors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No person will be eligible to receive more than 400,000 Shares in any calendar year under this Plan pursuant to the grant of Awards hereunder, other than new employees of the Company or of a Parent or Subsidiary of the Company (including new employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) who are eligible to receive up to a maximum of 600,000 Shares in the calendar year in which they commence their employment. A person may be granted more than one Award under this Plan. 4. ADMINISTRATION. -------------- 4.1 COMMITTEE AUTHORITY. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan. Without limitation, the Committee will have the authority to: (a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan; (b) prescribe, amend and rescind rules and regulations relating to this Plan; (c) select persons to receive Awards; (d) determine the form and terms of Awards; (e) determine the number of Shares or other consideration subject to Awards; (f) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company; (g) grant waivers of Plan or Award conditions; (h) determine the vesting, exercisability and payment of Awards; (i) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement; (j) determine whether an Award has been earned; and (k) make all other determinations necessary or advisable for the administration of this Plan. 4.2 COMMITTEE DISCRETION. Any determination made by the Committee with respect to any Award will be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of this Plan or Award, at any later time, and such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan. The Committee may delegate to one or more officers of the Company the authority to grant an Award under this Plan to Participants who are not Insiders of the Company. 4.3 EXCHANGE ACT REQUIREMENTS. If two or more members of the Board are Outside Directors, the Committee will be comprised of at least two (2) members of the Board, all of whom are Outside Directors and Disinterested Persons. During all times that the Company is subject to Section 16 of the Exchange Act, the Company will take appropriate steps to comply with the disinterested administration requirements of Section 16(b) of the Exchange Act, which will consist of the appointment by the Board of a Committee consisting of not less than two (2) members of the Board, each of whom is a Disinterested Person. 5. OPTIONS. The Committee may grant Options to eligible persons and will determine whether such Options will be Incentive Stock Options within the meaning of the Code ("ISOS") or Nonqualified Stock Options ("NQSOS"), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following: 5.1 FORM OF OPTION GRANT. Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), -2- and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan. 5.2 DATE OF GRANT. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless otherwise specified by the Committee. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option. 5.3 EXERCISE PERIOD. Options may be exercisable immediately (subject to repurchase pursuant to Section 12 of this Plan) or may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock Option Agreement governing such Option; PROVIDED, HOWEVER, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and PROVIDED FURTHER that no ISO granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company ("TEN PERCENT SHAREHOLDER") will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for the exercise of Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines. 5.4 EXERCISE PRICE. The Exercise Price of an Option will be determined by the Committee when the Option is granted and may be not less than 85% of the Fair Market Value of the Shares on the date of grant; provided that: (i) the Exercise Price of an ISO will be not less than 100% of the Fair Market Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO granted to a Ten Percent Shareholder will not be less than 110% of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 8 of this Plan. 5.5 METHOD OF EXERCISE. Options may be exercised only by delivery to the Company of a stock option exercise agreement (the "EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the same for each Participant), stating the number of Shares being purchased, the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and such representations and agreements regarding Participant's investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws, together with payment in full of the Exercise Price for the number of Shares being purchased. 5.6 TERMINATION. Notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following: (a) If the Participant is Terminated for any reason except death or Disability, then the Participant may exercise such Participant's Options only to the extent that such Options would have been exercisable upon the Termination Date no later than three (3) months after the Termination Date (or such shorter or longer time period not exceeding five (5) years as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be an NQSO), but in any event, no later than the expiration date of the Options. (b) If the Participant is Terminated because of Participant's death or Disability (or the Participant dies within three (3) months after a Termination other than because of Participant's death or disability), then Participant's Options may be exercised only to the extent that such Options would have been exercisable by Participant on the Termination Date and must be exercised by Participant (or Participant's legal representative or authorized assignee) no later than twelve (12) months after the Termination Date (or such shorter or longer time period not exceeding five (5) years as may be determined by the Committee, with any such exercise beyond (a) three (3) months after the Termination Date when the Termination is for any reason other than the Participant's death or Disability, or -3- (b) twelve (12) months after the Termination Date when the Termination is for Participant's death or Disability, deemed to be an NQSO), but in any event no later than the expiration date of the Options. (c) If a Participant is determined by the Board to have committed an act of theft, embezzlement, fraud, dishonesty or a breach of fiduciary duty to the Company or Subsidiary, neither the Participant, the Participant's estate nor such other person who may then hold the Option shall be entitled to exercise any Option with respect to any Shares whatsoever, after termination of service, whether or not after termination of service the Participant may receive payment from the Company or Subsidiary for vacation pay, for services rendered prior to termination, for services rendered for the day on which termination occurs, for salary in lieu of notice, or for any other benefits. In making such determination, the Board shall give the Participant an opportunity to present to the Board evidence on his behalf. For the purpose of this paragraph, termination of service shall be deemed to occur on the date when the Company dispatches notice or advice to the Participant that his service is terminated. 5.7 LIMITATIONS ON EXERCISE. The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent Participant from exercising the Option for the full number of Shares for which it is then exercisable. 5.8 LIMITATIONS ON ISO. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company, Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value of Shares on the date of grant with respect to which ISOs are exercisable for the first time by a Participant during any calendar year exceeds $100,000, then the Options for the first $100,000 worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the amount in excess of $100,000 that become exercisable in that calendar year will be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date of this Plan to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISO, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment. 5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant's rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. The Committee may reduce the Exercise Price of outstanding Options without the consent of Participants affected by a written notice to them; PROVIDED, HOWEVER, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 5.4 of this Plan for Options granted on the date the action is taken to reduce the Exercise Price. 5.10 NO DISQUALIFICATION. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code. 6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to sell to an eligible person Shares that are subject to restrictions. The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the price to be paid (the "PURCHASE PRICE"), the restrictions to which the Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the following: 6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under a Restricted Stock Award made pursuant to this Plan will be evidenced by an Award Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form (which need not be the same for each Participant) as the Committee will from time to time -4- approve, and will comply with and be subject to the terms and conditions of this Plan. The offer of Restricted Stock will be accepted by the Participant's execution and delivery of the Restricted Stock Purchase Agreement and full payment for the Shares to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is delivered to the person. If such person does not execute and deliver the Restricted Stock Purchase Agreement along with full payment for the Shares to the Company within thirty (30) days, then the offer will terminate, unless otherwise determined by the Committee. 6.2 PURCHASE PRICE. The Purchase Price of Shares sold pursuant to a Restricted Stock Award will be determined by the Committee and will be at least 85% of the Fair Market Value of the Shares on the date the Restricted Stock Award is granted, except in the case of a sale to a Ten Percent Shareholder, in which case the Purchase Price will be 100% of the Fair Market Value. Payment of the Purchase Price may be made in accordance with Section 8 of this Plan. 6.3 RESTRICTIONS. Restricted Stock Awards will be subject to such restrictions (if any) as the Committee may impose. The Committee may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions, in whole or part, based on length of service, performance or such other factors or criteria as the Committee may determine. 7. STOCK BONUSES. ------------- 7.1 AWARDS OF STOCK BONUSES. A Stock Bonus is an award of Shares (which may consist of Restricted Stock) for services rendered to the Company or any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past services already rendered to the Company, or any Parent or Subsidiary of the Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. A Stock Bonus may be awarded upon satisfaction of such performance goals as are set out in advance in the Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS AGREEMENT") that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. Stock Bonuses may vary from Participant to Participant and between groups of Participants, and may be based upon the achievement of the Company, Parent or Subsidiary and/or individual performance factors or upon such other criteria as the Committee may determine. 7.2 TERMS OF STOCK BONUSES. The Committee will determine the number of Shares to be awarded to the Participant and whether such Shares will be Restricted Stock. If the Stock Bonus is being earned upon the satisfaction of performance goals pursuant to a Performance Stock Bonus Agreement, then the Committee will determine: (a) the nature, length and starting date of any period during which performance is to be measured (the "PERFORMANCE PERIOD") for each Stock Bonus; (b) the performance goals and criteria to be used to measure the performance, if any; (c) the number of Shares that may be awarded to the Participant; and (d) the extent to which such Stock Bonuses have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Stock Bonuses that are subject to different Performance Periods and different performance goals and other criteria. The number of Shares may be fixed or may vary in accordance with such performance goals and criteria as may be determined by the Committee. The Committee may adjust the performance goals applicable to the Stock Bonuses to take into account changes in law and accounting or tax rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships. 7.3 FORM OF PAYMENT. The earned portion of a Stock Bonus may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee may determine. Payment may be made in the form of cash, whole Shares, including Restricted Stock, or a combination thereof, either in a lump sum payment or in installments, all as the Committee will determine. 7.4 TERMINATION DURING PERFORMANCE PERIOD. If a Participant is Terminated during a Performance Period for any reason, then such Participant will be entitled to payment (whether in Shares, cash or -5- otherwise) with respect to the Stock Bonus only to the extent earned as of the date of Termination in accordance with the Performance Stock Bonus Agreement, unless the Committee will determine otherwise. 8. PAYMENT FOR SHARE PURCHASES. --------------------------- 8.1 PAYMENT. Payment for Shares purchased pursuant to this Plan may be made in cash (by check) or, where expressly approved for the Participant by the Committee and where permitted by law: (a) by cancellation of indebtedness of the Company to the Participant; (b) by surrender of shares that either: (1) have been owned by Participant for more than six (6) months and have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (2) were obtained by Participant in the public market; (c) by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient to avoid imputation of income under Sections 483 and 1274 of the Code; PROVIDED, HOWEVER, that Participants who are not employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares; (d) by waiver of compensation due or accrued to the Participant for services rendered; (e) with respect only to purchases upon exercise of an Option, and provided that a public market for the Company's stock exists: (1) through a "same day sale" commitment from the Participant and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD DEALER") whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or (2) through a "margin" commitment from the Participant and a NASD Dealer whereby the Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or (f) by any combination of the foregoing. 8.2 LOAN GUARANTEES. The Committee may help the Participant pay for Shares purchased under this Plan by authorizing a guarantee by the Company of a third-party loan to the Participant. 9. WITHHOLDING TAXES. ----------------- 9.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments in satisfaction of Awards are to be made in cash, such payment will be net of an amount sufficient to satisfy federal, state, and local withholding tax requirements. 9.2 STOCK WITHHOLDING. When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant -6- is obligated to pay the Company the amount required to be withheld, the Committee may in its sole discretion allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from the Shares to be issued that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined (the "TAX DATE"). All elections by a Participant to have Shares withheld for this purpose will be made in writing in a form acceptable to the Committee and will be subject to the following restrictions: (a) the election must be made on or prior to the applicable Tax Date; (b) once made, then except as provided below, the election will be irrevocable as to the particular Shares as to which the election is made; (c) all elections will be subject to the consent or disapproval of the Committee; (d) if the Participant is an Insider and if the Company is subject to Section 16(b) of the Exchange Act: (1) the election may not be made within six (6) months of the date of grant of the Award, except as otherwise permitted by SEC Rule 16b-3(e) under the Exchange Act, and (2) either (A) the election to use stock withholding must be irrevocably made at least six (6) months prior to the Tax Date (although such election may be revoked at any time at least six (6) months prior to the Tax Date) or (B) the exercise of the Option or election to use stock withholding must be made in the ten (10) day period beginning on the third day following the release of the Company's quarterly or annual summary statement of sales or earnings; and (e) in the event that the Tax Date is deferred until six (6) months after the delivery of Shares under Section 83(b) of the Code, the Participant will receive the full number of Shares with respect to which the exercise occurs, but such Participant will be unconditionally obligated to tender back to the Company the proper number of Shares on the Tax Date. 10. PRIVILEGES OF STOCK OWNERSHIP. ----------------------------- 10.1 VOTING AND DIVIDENDS. No Participant will have any of the rights of a shareholder with respect to any Shares until the Shares are issued to the Participant. After Shares are issued to the Participant, the Participant will be a shareholder and have all the rights of a shareholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; PROVIDED, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; PROVIDED, FURTHER, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant's original Purchase Price pursuant to Section 12. 10.2 FINANCIAL STATEMENTS. The Company will provide financial statements to each Participant prior to such Participant's purchase of Shares under this Plan, and to each Participant annually during the period such Participant has Awards outstanding; PROVIDED, HOWEVER, the Company will not be required to provide such financial statements to Participants whose services in connection with the Company assure them access to equivalent information. 11. TRANSFERABILITY. Awards granted under this Plan, and any interest therein, will not be transferable or assignable by Participant, and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution or as consistent with the specific Plan and Award Agreement provisions relating thereto. During the lifetime of the Participant an Award will be exercisable only by the Participant, and any elections with respect to an Award, may be made only by the Participant. 12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement a right to repurchase a portion of or all Shares held by -7- a Participant following such Participant's Termination at any time within ninety (90) days after the later of Participant's Termination Date and the date Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at: (A) with respect to Shares that are "Vested" (as defined in the Award Agreement), the higher of: (l) Participant's original Purchase Price, or (2) the Fair Market Value of such Shares on Participant's Termination Date, PROVIDED, that such right of repurchase (i) must be exercised as to all such "Vested" Shares unless a Participant consents to the Company's repurchase of only a portion of such "Vested" Shares and (ii) terminates when the Company's securities become publicly traded; or (B) with respect to Shares that are not "Vested" (as defined in the Award Agreement), at the Participant's original Purchase Price, provided, that the right to repurchase at the original Purchase Price lapses at the rate of at least 20% per year over five (5) years from the date the Shares were purchased (or from the date of grant of options in the case of Shares obtained pursuant to a Stock Option Agreement and Stock Option Exercise Agreement), and if the right to repurchase is assignable, the assignee must pay the Company, upon assignment of the right to repurchase, cash equal to the excess of the Fair Market Value of the Shares over the original Purchase Price. 13. CERTIFICATES. All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted. 14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant's Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of Participant's obligation to the Company under the promissory note; PROVIDED, HOWEVER, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant's Shares or other collateral. In connection with any pledge of the Shares, Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid. 15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards. The Committee may at any time buy from a Participant an Award previously granted with payment in cash, Shares (including Restricted Stock) or other consideration, based on such terms and conditions as the Committee and the Participant may agree. 16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so. -8- 17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant's employment or other relationship at any time, with or without cause. 18. CORPORATE TRANSACTIONS. ---------------------- 18.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the event of (a) a dissolution or liquidation of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the shareholders of the Company or their relative stock holdings and the Awards granted under this Plan are assumed, converted or replaced by the successor corporation, which assumption will be binding on all Participants), (c) a merger in which the Company is the surviving corporation but the Company's shareholders prior to the merger (other than any shareholder that merges, or controls another corporation that merges, with the Company) own less than 51% of the surviving corporation, or (d) the sale of substantially all of the assets of the Company, any or all outstanding Awards may be assumed, converted or replaced by the successor corporation (if any), which assumption, conversion or replacement will be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to shareholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor corporation (if any) refuses to assume or substitute Awards, as provided above, pursuant to a transaction described in this Subsection 18.1, such Awards will expire on such transaction at such time and on such conditions as the Board will determine. 18.2 OTHER TREATMENT OF AWARDS. Subject to any greater rights granted to Participants under the foregoing provisions of this Section 18, in the event of the occurrence of any transaction described in Section 18.1, any outstanding Awards will be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution, liquidation, sale of assets or other "corporate transaction." 18.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company's award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (EXCEPT that the exercise price and the number and nature of Shares issuable upon exercise of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. 19. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become effective on the date on which the registration statement filed by the Company with the SEC under the Securities Act registering the initial public offering of the Company's Common Stock is declared effective by the SEC (the "EFFECTIVE DATE"); PROVIDED, HOWEVER, that if the Effective Date does not occur on or before December 31, 1996, this Plan will terminate having never become effective. This Plan shall be approved by the shareholders of the Company (excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board. Upon the Effective Date, the Board may grant Awards pursuant to this Plan; PROVIDED, HOWEVER, that: (a) no Option may be exercised prior to initial shareholder approval of this Plan; (b) no Option granted pursuant to an increase in the number of Shares subject to this Plan approved by the Board will be exercised prior to the time such increase has been approved by the shareholders of the Company; and (c) in the event that shareholder approval of such increase is not obtained within the time period provided herein, all Awards granted hereunder will be canceled, any Shares issued pursuant to any Award will be canceled, and any -9- purchase of Shares hereunder will be rescinded. So long as the Company is subject to Section 16(b) of the Exchange Act, the Company will comply with the requirements of Rule 16b-3 (or its successor), as amended, with respect to shareholder approval. 20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will terminate ten (10) years from the date this Plan is adopted by the Board or, if earlier, the date of shareholder approval. This Plan and all agreements thereunder shall be governed by and construed in accordance with the laws of the State of California. 21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; PROVIDED, HOWEVER, that the Board will not, without the approval of the shareholders of the Company, amend this Plan in any manner that requires such shareholder approval pursuant to the Code or the regulations promulgated thereunder as such provisions apply to ISO plans or (if the Company is subject to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to the Exchange Act or Rule 16b-3 (or its successor), as amended, thereunder, respectively. 22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the shareholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 23. DEFINITIONS. As used in this Plan, the following terms will have the following meanings: "AWARD" means any award under this Plan, including any Option, Restricted Stock or Stock Bonus. "AWARD AGREEMENT" means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award. "BOARD" means the Board of Directors of the Company. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMITTEE" means the committee appointed by the Board to administer this Plan, or if no such committee is appointed, the Board. "COMPANY" means Versant Corporation or any successor corporation. "DISABILITY" means a disability, whether temporary or permanent, partial or total, within the meaning of Section 22(e)(3) of the Code, as determined by the Committee. "DISINTERESTED PERSON" means a director who has not, during the period that person is a member of the Committee and for one year prior to commencing service as a member of the Committee, been granted or awarded equity securities pursuant to this Plan or any other plan of the Company or any Parent or Subsidiary of the Company, except in accordance with the requirements set forth in Rule 16b-3(c)(2)(i) (and any successor regulation thereto) as promulgated by the SEC under Section 16(b) of the Exchange Act, as such rule is amended from time to time and as interpreted by the SEC. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXERCISE PRICE" means the price at which a holder of an Option may purchase the Shares issuable upon exercise of the Option. -10- "FAIR MARKET VALUE" means, as of any date, the value of a share of the Company's Common Stock determined as follows: (a) if such Common Stock is then quoted on the Nasdaq National Market, its closing price on the Nasdaq National Market on the date of determination as reported in THE WALL STREET JOURNAL; (b) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in THE WALL STREET JOURNAL; (c) if such Common Stock is publicly traded but is not quoted on the Nasdaq National Market nor listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in THE WALL STREET JOURNAL; (d) in the case of an Award made on the Effective Date, the price per share at which shares of the Company's Common Stock are initially offered for sale to the public by the Company's underwriters in the initial public offering of the Company's Common Stock pursuant to a registration statement filed with the SEC under the Securities Act; or (d) if none of the foregoing is applicable, by the Committee in good faith. "INSIDER" means an officer or director of the Company or any other person whose transactions in the Company's Common Stock are subject to Section 16 of the Exchange Act. "OUTSIDE DIRECTOR" means any director who is not; (a) a current employee of the Company or any Parent or Subsidiary of the Company; (b) a former employee of the Company or any Parent or Subsidiary of the Company who is receiving compensation for prior services (other than benefits under a tax-qualified pension plan); (c) a current or former officer of the Company or any Parent or Subsidiary of the Company; or (d) currently receiving compensation for personal services in any capacity, other than as a director, from the Company or any Parent or Subsidiary of the Company; PROVIDED, HOWEVER, that at such time as the term "Outside Director", as used in Section 162(m) of the Code is defined in regulations promulgated under Section 162(m) of the Code, "Outside Director" will have the meaning set forth in such regulations, as amended from time to time and as interpreted by the Internal Revenue Service. "OPTION" means an award of an option to purchase Shares pursuant to Section 5. "PARENT" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if at the time of the granting of an Award under this Plan, each of such corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. "PARTICIPANT" means a person who receives an Award under this Plan. "PLAN" means this Versant Corporation1996 Equity Incentive Plan, as amended from time to time. "RESTRICTED STOCK AWARD" means an award of Shares pursuant to Section 6. "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended. -11- "SHARES" means shares of the Company's Common Stock reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any successor security. "STOCK BONUS" means an award of Shares, or cash in lieu of Shares, pursuant to Section 7. "SUBSIDIARY" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. "TERMINATION" or "TERMINATED" means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, director, consultant, or advisor to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee, provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Option while on leave from the employ of the Company or a Subsidiary as it may deem appropriate, except that in no event may an Option be exercised after the expiration of the term set forth in the Option agreement. The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the "TERMINATION DATE"). -12- -----END PRIVACY-ENHANCED MESSAGE-----