Document:

Exhibit 4.4

 

DESIGNATION OF THE SERIES B PARTNERSHIP PREFERRED UNITS OF

AFFORDABLE RESIDENTIAL COMMUNITIES LP

 

1.     Number of
Units and Designation. A series of Partnership Preferred Units of
Affordable Residential Communities LP (the “Partnership”) is hereby
designated as Series B Partnership Preferred Units (“Series B PPUs”)
and the number of Series B PPUs constituting such series shall be three
hundred thousand (300,000).

 

2.     Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned thereto in the First Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of February 11, 2004, as amended,
supplemented or restated from time to time (the “Agreement”), as
modified by this Designation of the Series B Partnership Preferred Units
of the Partnership (this “Designation”) and the defined terms used
herein. The following term shall have the meaning ascribed below:

 

“Assignee”
shall mean a Person to whom one or more Partnership Units have been Transferred
in a manner permitted under the Agreement, but who has not become a Substituted
Limited Partner, and who has the rights set forth in Section 11.5 of the
Agreement.

 

3.     Ranking.
Any class or series of Partnership Units of the Partnership shall be deemed to
rank:

 

a.             prior
or senior to the Series B PPUs as to the payment of distributions and as
to distributions of assets upon liquidation, dissolution or winding up, if the
holders of such class or series shall be entitled to the receipt of distributions
and of amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of Series B PPUs
(the Partnership Units referred to in this paragraph, including without
limitation the Series A Cumulative Redeemable Preferred Units of Limited
Partnership, being hereinafter referred to, collectively, as “Senior
Partnership Units”);

 

b.             on
parity with the Series B PPUs as to the payment of distributions and as to
distribution of assets upon liquidation, dissolution or winding up, whether or
not the distribution rates, distribution payment dates or redemption or
liquidation prices per unit or other denomination thereof be different from
those of the Series B PPUs, if the holders of such class or series of
Partnership Units and the Series B PPUs shall be entitled to the receipt
of distributions and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
distributions per unit or other denomination or liquidation preferences,
without preference or priority one over the other (the Partnership Units
referred to in this paragraph, including without limitation the Series C
Partnership Preferred Units and the Series D Partnership Preferred Units
of the Partnership, being hereinafter referred to, collectively, as “Parity
Partnership Units”); and

 

c.             junior
to the Series B PPUs as to the payment of distributions and as to the
distribution of assets upon liquidation, dissolution or winding up, if (i) such
class or series of Partnership Units shall be Partnership Common Units, or (ii) the
holders of Series B PPUs otherwise shall be entitled to receipt of
distributions or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the holders of
such class or series of Partnership Units (the Partnership Units referred to in
clauses (i) and (ii) of this paragraph being hereinafter referred to,
collectively, as “Junior Partnership Units”).

 

4.     Quarterly
Cash Distributions.

 

a.             Holders
of Series B PPUs will be entitled to receive, when and as declared by the
General Partner, quarterly cash distributions at the rate of 6.25% per annum of
the Series B Liquidation Preference (as defined in Section 5.a.
hereof). Any such distributions will be cumulative from the date of original
issue, whether or not in any distribution period or periods such distributions
have been declared, and shall be payable quarterly on July 30, October 30,

 

 

January 30 and April 30 of each
year (or, if not a Business Day, the next succeeding Business Day) (each a “Distribution
Payment Date”), commencing on the first such date occurring after the date
of original issue. If the Series B PPUs are issued on any day other than a
Distribution Payment Date, the first distribution payable on such Series B
PPUs will be prorated for the portion of the quarterly period that such Series B
PPUs are outstanding on the basis of twelve 30-day months and a 360-day
year. Distributions will be payable in arrears to Holders as they appear on the
records of the Partnership at the close of business on the July 15, October 15,
January 15 or April 15, as the case may be, immediately preceding
each Distribution Payment Date. Holders of Series B PPUs will not be
entitled to receive any distributions in excess of the cumulative quarterly
cash distributions on the Series B PPUs specified herein. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
distribution payment or payments on the Series B PPUs that may be in
arrears. Holders of any Series B PPUs that are issued after the date of
original issuance will be entitled to receive distributions calculated in the
manner set forth in this Section 4.a. from the date of issue of such Series B
PPUs.

 

b.             When
distributions are not paid in full upon the Series B PPUs or any Parity
Partnership Units, or a sum sufficient for such payment is not set apart, all
distributions declared upon the Series B PPUs and any Parity Partnership Units
shall be declared ratably in proportion to the respective amounts of
distributions accumulated and unpaid on the Series B PPUs and accumulated
and unpaid on such Parity Partnership Units (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such Parity Partnership Units do not have a cumulative distribution). Except
as set forth in the preceding sentence, unless distributions on the Series B
PPUs equal to the full amount of accumulated and unpaid distributions have been
or contemporaneously are declared and paid, or declared and a sum sufficient
for the payment thereof has been or contemporaneously is set apart for such
payment, for all past distribution periods and the then current distribution period,
no distributions shall be declared or paid or set apart for payment by the
Partnership with respect to any Parity Partnership Units.

 

c.             Unless
full cumulative distributions (including all accumulated, accrued and unpaid
distributions) on the Series B PPUs have been declared and paid, or
declared and set apart for payment, for all past distribution periods and the
then current distribution period, no distributions (other than distributions
paid in Junior Partnership Units or options, warrants or rights to subscribe
for or purchase Junior Partnership Units or by the General Partner in REIT
Shares) may be declared or paid or set apart for payment by the Partnership and
no other distribution of cash or other property may be declared or made,
directly or indirectly, by the Partnership with respect to any Junior
Partnership Units, nor shall any Junior Partnership Units be redeemed,
purchased or otherwise acquired for any consideration (or any monies be paid to
or made available for a sinking fund for the redemption of any such Junior
Partnership Units), directly or indirectly, by the Partnership (except by
conversion into or exchange for Junior Partnership Units or REIT Shares, or
options, warrants or rights to subscribe for or purchase Junior Partnership Units),
nor shall any other cash or other property be paid or distributed to or for the
benefit of holders of Junior Partnership Units.

 

d.             Notwithstanding
the foregoing provisions of this Section 4, the Partnership shall not be
prohibited from (i) declaring or paying or setting apart for payment any
distribution on any Parity Partnership Units or (ii) redeeming, purchasing
or otherwise acquiring any Parity Partnership Units, in each case, if such
declaration, payment, redemption, purchase or other acquisition is necessary to
maintain the General Partner’s qualification as a REIT.

 

5.     Liquidation
Preference.

 

a.             Upon
any voluntary or involuntary liquidation, dissolution or winding up of the
Partnership, before any distribution by the Partnership shall be made to or set
apart for the holders of any Junior Partnership Units, to the extent possible
and in accordance with Section 13.2 of the Agreement, the holders of Series B
PPUs shall be entitled to receive a liquidation preference per

 

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Series B PPU equal to the sum of (i) $25.00
per unit (the “Series B Liquidation Preference”), plus (ii) all
accumulated, accrued and unpaid distributions (whether or not earned or
declared) to and including the date of final distribution to such holders ((i) and
(ii), together, the “Series B Liquidating Proceeds”); but such
holders will not be entitled to any further payment. Until all holders of the Series B
PPUs have been paid the Series B Liquidating Proceeds in full, no distribution
of the Partnership will be made to any holder of Junior Partnership Units upon
the liquidation, dissolution or winding up of the Partnership.

 

b.             If,
upon any liquidation, dissolution or winding up of the Partnership, the assets
of the Partnership, or proceeds thereof, distributable among the holders of Series B
PPUs and any Parity Partnership Units shall be insufficient to pay in full the Series B
Liquidating Proceeds and liquidating payments on any Parity Partnership Units,
such assets, or the proceeds thereof, shall be distributed among the holders of
Series B PPUs and any such Parity Partnership Units ratably in the same
proportion as the respective amounts that would be payable on such Series B
PPUs and any such Parity Partnership Units if all amounts payable thereon were
paid in full.

 

c.             Upon
any liquidation, dissolution or winding up of the Partnership, after all
distributions shall have been made in full to the holders of Series B PPUs
and any Parity Partnership Units to enable them to receive their respective
liquidation preferences, any Junior Partnership Units shall be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series B PPUs and any Parity Partnership Units shall not be
entitled to share therein.

 

6.     Redemption
at the Option of the Partnership.

 

a.             Right
of Optional Redemption. The Series B PPUs may not be redeemed prior to
the fifth (5th) anniversary of the issuance date of such Series B PPUs. On
or after such date, the Partnership shall have the right to redeem the Series B
PPUs, in whole or in part, at any time or from time to time, upon not less than
thirty (30) nor more than sixty (60) days written notice, at a redemption price
per Series B PPU, payable in cash, equal to (i) the Series B
Liquidation Preference, plus (ii) all accumulated, accrued and unpaid
distributions (whether or not earned or declared) to and including the date of
redemption ((i) and (ii), together, the “Series B Redemption Price”).
If fewer than all of the outstanding Series B PPUs are to be redeemed, the
Series B PPUs to be redeemed shall be selected pro rata (as nearly as
practicable without creating fractional units).

 

b.             Procedures
for Redemption.

 

(i) Notice of redemption will be (A) faxed,
and (B) mailed by the Partnership, by certified mail, postage prepaid, not
less than thirty (30) nor more than sixty (60) days prior to the redemption
date, addressed to the respective Holders of the Series B PPUs at their
respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series B PPUs except as to any
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (1) the
redemption date, (2) the Series B Redemption Price, (3) the
aggregate number of Series B PPUs to be redeemed and if fewer than all of
the outstanding Series B PPUs are to be redeemed, the number of Series B
PPUs to be redeemed held by such holder, which number shall equal such holder’s
pro rata share (based on the percentage of the aggregate number of outstanding Series B
PPUs the total number of Series B PPUs held by such holder represents) of
the aggregate number of Series B PPUs to be redeemed, (4) the place
or places where the Series B PPUs are to be surrendered for payment of the
Series B Redemption Price, (5) that distributions on the Series B
PPUs to be redeemed will cease to accumulate on such redemption date and (6) that
payment of the Series B Redemption Price will be made upon presentation
and surrender of such Series B PPUs.

 

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(ii) If the Partnership gives a notice
of redemption in respect of Series B PPUs then, by 12:00 noon, New York
City time, on the redemption date, the Partnership will pay such Series B
Redemption Price to the holders of the Series B PPUs upon surrender of the
Series B PPUs by such holders at the place designated in the notice of
redemption. If fewer than all Series B PPUs evidenced by any certificate
are being redeemed, a new certificate shall be issued upon surrender of the
certificate evidencing all Series B PPUs, evidencing the unredeemed Series B
PPUs without cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series B PPUs or portions
thereof called for redemption, unless the Partnership defaults in the payment
thereof. If any date fixed for redemption of Series B PPUs is not a
Business Day, then payment of the Series B Redemption Price payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date fixed for redemption. If payment of
the Series B Redemption Price is improperly withheld or refused and not
paid by the Partnership, distributions on such Series B PPUs will continue
to accumulate from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the applicable Series B Redemption Price.

 

7.     Redemption
at the Option of the Holder.

 

a.             Right
to Redemption.

 

(i) At any time after the later of (A) the
first anniversary of the date of issuance of such Series B PPUs and (B) July 1,
2005, any Holder (any such Holder, a “Series B Redeeming Party”) of
Series B PPUs shall have the right (subject to the terms and
conditions set forth herein) to require the Partnership to redeem (a “Series B
Redemption”) all or a portion of the Series B PPUs held by such Holder
(such Series B PPUs being hereafter “Series B Redeemed Units”)
in exchange for (1) one-third of such Series B Redeeming Party’s Series B
Redeemed Units (as nearly as practicable without creating fractional units) for
cash in an amount per Series B PPU equal to the Series B Liquidating
Proceeds, payable on the Series B Redemption Date (as defined below), and (2) such
Series B Redeeming Party’s remaining Series B Redeemed Units by
delivery to the Series B Redeeming Party on the Series B Redemption
Date of a negotiable note (subject to standard transfer restrictions applicable
to securities not registered under the Securities Act), bearing interest at a
rate of 7% per annum (the “Note”), with a principal amount equal to the
aggregate Series B Liquidating Proceeds for the Series B Redeemed
Units to which this clause (2) applies, payable (x) on the 180th
day following such Series B Redemption Date in an aggregate amount equal
to one-half of the principal amount of the Note plus all of the then-accrued
and unpaid interest on the Note, and (y) on the one-year anniversary of such Series B
Redemption Date in an aggregate amount equal to the remaining one-half of the
principal amount of the Note plus any then-accrued and unpaid interest on the
Note. Any Series B Redemption shall be exercised pursuant to a Series B
Redemption Notice (as defined below) delivered to the General Partner by such Series B
Redeeming Party when exercising the Series B Redemption right. The
Partnership’s obligation to effect a Series B Redemption, however, shall
not arise or be binding against the Partnership (1) until and unless there
has been a Series B Declination (as defined below) and (2) before the
Business Day following the Series B Cut-Off Date (as defined below).
Regardless of the binding or non-binding nature of a pending Series B
Redemption, a Series B Redeeming Party shall have no right to receive
distributions with respect to any Series B Redeemed Units (other than the
cash amounts payable pursuant to this paragraph) paid after delivery of the Series B
Redemption Notice, whether or not the record date for such distribution
precedes or coincides with such delivery of the Series B Redemption
Notice. A “Series B Redemption Notice” shall mean a notice in the
form of Annex I to this Designation.

 

Notwithstanding the foregoing, upon notice to a Series B Redeeming
Party delivered by the Partnership on or before the close of business on the Series B
Cut-Off Date, the Partnership may redeem all or any portion of such Series B
Redeeming Party’s Series B Redeemed Units on the

 

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Series B Redemption Date for cash in an amount per Series B
PPU equal to the Series B Liquidating Proceeds.

 

Any cash amount payable pursuant to this Section 7.a.(i) shall
be delivered as a certified check payable to the Series B Redeeming Party
or, in the General Partner’s sole and absolute discretion, in immediately
available funds.

 

(ii) Notwithstanding
the provisions of Section 7.a.(i) hereof, on or before the close of
business on the Series B Cut-Off Date, the General Partner may, in its
sole and absolute discretion but subject to the Ownership Limit and the
transfer restrictions and other limitations of the Charter, elect to acquire some
or all of the Series B Redeemed Units from the Series B Redeeming
Party (such percentage being referred to as the “Series B Applicable
Percentage”) in exchange for a number of authorized but previously unissued
REIT Shares equal to (A) the Series B Liquidating Proceeds multiplied
by the aggregate number of such Series B Redeemed Units to be acquired by
the General Partner, (B) divided by the Value of a REIT Share determined
as of the Business Day preceding the Series B Redemption Date (rounded
down to the nearest whole number of REIT Shares). If the General Partner so
elects, on any Series B Redemption Date the Series B Redeeming Party
shall sell the Series B Applicable Percentage of the Series B
Redeemed Units to the General Partner in exchange for (A) the aggregate
number of REIT Shares exchangeable therefor and (B) cash in an amount
(rounded to the nearest whole cent) equal to the Value of a REIT Share
determined as of the Business Day preceding the Series B Redemption Date
multiplied by the fraction of a REIT Share such Series B Redeeming Party would otherwise
be entitled to receive
pursuant to the first sentence of this subparagraph (ii) but for the
terminal parenthetical of such sentence. The Series B Redeeming Party
shall submit (A) such information, certification or affidavit as the
General Partner may reasonably require in connection with the application of
the Ownership Limit and other restrictions and limitations of the Charter to
any such acquisition and (B) such written representations, investment
letters, legal opinions or other instruments necessary, in the General Partner’s
view, to effect compliance with the Securities Act. In the event of an election
to purchase any Series B Redeemed Units by the General Partner pursuant to
this Section 7.a.(ii), the Series B Redeeming Party shall no longer
have the right to cause the Partnership to effect a Series B Redemption of
those Series B Redeemed Units to be so purchased, and, upon notice to the Series B
Redeeming Party by the General Partner, given on or before the close of
business on the Series B Cut-Off Date, that the General Partner has
elected to acquire some or all of the Series B Redeemed Units pursuant to
this Section 7.a.(ii), the obligation of the Partnership to effect a Series B
Redemption of the Series B Redeemed Units as to which the General Partner’s
notice relates shall not accrue or arise. The REIT Shares issuable by the
General Partner pursuant to this Section 7.a.(ii) shall be delivered
by the General Partner as duly authorized, validly issued, fully paid and
non-assessable REIT Shares free of any pledge, lien, encumbrance or
restriction, other than the Ownership Limit and other restrictions provided in
the Charter and the Bylaws of the General Partner.

 

Notwithstanding anything in
this Section 7 to the contrary, the General Partner may not exchange REIT
Shares for Series B Redeemed Units pursuant to Section 7.a.(ii) unless
the REIT Shares to be so issued will be issued pursuant to a registration
statement (the “Series B Issuance Registration Statement”) on an
appropriate form filed with and declared effective by the SEC.

 

(iii)  In connection with a Series B
Issuance Registration Statement pursuant to Section 7.a.(ii) hereof
the General Partner will use commercially reasonable efforts to:

 

(A)          prepare and file with the SEC such
amendments and supplements to the Series B Issuance Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the issuance by the General Partner of REIT Shares pursuant to Section 7.a.(ii) hereof;

 

(B)           at any time, and from time to time,
in its sole discretion prepare and file with the SEC such amendments and
supplements to the Series B Issuance

 

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Registration Statement,
or an additional Series B Issuance Registration Statement, as may be
necessary to register such additional REIT Shares that may become issuable
pursuant to Section 7.a.(ii) hereof;

 

(C)           cause all REIT Shares registered as
described herein to be listed, at or promptly following the time of issuance,
on each securities exchange or quoted on each quotation service, if any, on
which REIT Shares of the same class as the REIT Shares are then listed or
quoted;

 

(D)          provide a transfer agent and registrar
for all REIT Shares registered pursuant to the Series B Issuance
Registration Statement; and

 

(E)           promptly comply with all applicable rules and
regulations of the SEC or state “blue sky” or other securities laws with
respect to any Series B Issuance Registration Statement.

 

b.             Procedure
for Redemption.

 

(i) In the event that the General
Partner declines or fails to exercise its purchase rights for any Series B
Redeemed Units pursuant to Section 7.a.(ii) hereof following receipt
of a Series B Redemption Notice (a “Series B Declination”),
the General Partner shall give notice of such Series B Declination to the Series B
Redeeming Party on or before the close of business on the fifth (5th)
Business Day after the General Partner’s receipt of the applicable Series B
Redemption Notice (each such Business Day, a “Series B Cut-Off Date”).
The failure of the General Partner to give notice of such Series B
Declination by the close of business on the applicable Series B Cut-Off
Date shall itself constitute a Series B Declination.

 

(ii) Notwithstanding the
provisions of Section 7.a. hereof, no Series B Redeeming Party shall
have any rights under this Designation that would otherwise be prohibited under
the Charter with respect to the Ownership Limit. To the extent that any
attempted acquisition of Series B Redeemed Units by the General Partner
pursuant to Section 7.a.(ii) hereof would be in violation of this Section 7.b.(ii),
it shall be null and void ab initio, and the Series B Redeeming Party
shall not acquire any rights or economic interests in REIT Shares otherwise
issuable by the General Partner under Section 7.a.(ii) hereof.

 

(iii) The “Series B Redemption
Date” applicable to the redemption of any Series B PPUs subject to a Series B
Redemption Notice shall be the tenth (10th) Business Day after the
receipt by the General Partner of such Series B Redemption Notice; provided,
however, that if the General Partner has elected under Section 7.a.(ii) to
exchange REIT Shares for some or all of the Series B Redeemed Units, then
the Series B Redemption Date, as well as the closing of a Series B
Redemption pursuant to this Section 7, with respect to such Series B
Redeemed Units, may be deferred, in the General Partner’s sole and absolute
discretion, for such time (but in any event not more than ninety (90) days in
the aggregate) as may reasonably be required to effect, if applicable, (A) compliance
with the Securities Act or other law (including, but not limited to, (1) state
“blue sky” or other securities laws and (2) the expiration or termination
of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended) and (B) satisfaction or waiver of
other commercially reasonable and customary closing conditions and requirements
for a transaction of such nature. With respect to the Series B Redeemed
Units for which the General Partner has not elected under Section 7.a.(ii) to
exchange REIT Shares for such Series B Redeemed Units, the Series B
Redemption Date shall not be deferred and the redemption by the Partnership of
such Series B Redeemed Units shall occur on the tenth (10th)
Business Day after the receipt by the General Partner of such Series B
Redemption Notice.

 

(iv) Notwithstanding the
provisions of Section 7.a. hereof, the General Partner shall not, under
any circumstances, acquire Series B Redeemed Units in exchange for REIT
Shares if such exchange would be prohibited under the Charter.

 

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(v) Notwithstanding anything
herein to the contrary (but subject to Section 7.b.(ii) hereof), with
respect to any acquisition of Series B Redeemed Units pursuant to this Section 7:

 

(A)          All
Series B PPUs acquired by the General Partner pursuant to Section 7.a.(ii) hereof
shall automatically, and without further action required, be converted into and
deemed to be a General Partner Interest comprised of a number of Partnership
Common Units equal to the number of REIT Shares issued in exchange for the Series B
PPUs so acquired.

 

(B)           Subject
to the Ownership Limit, no Series B Redeeming Party may effect a Series B
Redemption for less than four thousand (4,000) Series B PPUs or, if such Series B
Redeeming Party holds (as a Limited Partner or, economically, as an Assignee)
less than four thousand (4,000) Series B PPUs, all of the Series B
PPUs held by such Series B Redeeming Party.

 

(C)           Each
Series B Redeeming Party (1) may effect a Series B Redemption
only once in each fiscal quarter of a Twelve-Month Period, unless otherwise
permitted by the General Partner, in its sole and absolute discretion, and (2) may
not effect a Series B Redemption during the period after the record date
immediately preceding any Distribution Payment Date for distributions upon Series B
PPUs and before the record date established by the General Partner for a
distribution to its stockholders of some or all of its portion of any
Partnership distribution.

 

(D)          The
consummation of a Series B Redemption pursuant to Section 7.a. hereof
shall be subject, if applicable, to the expiration or termination of the
applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

 

(E)           A
Series B Redeeming Party shall continue to own (subject, in the case of an
Assignee, to the provision of Section 11.5 of the Agreement) all Series B
Redeemed Units, and be treated as a Limited Partner or an Assignee, as
applicable, with respect to such Series B Redeemed Units for all purposes
of this Designation and the Agreement, until such Series B Redeemed Units
are either paid for by the Partnership pursuant to Section 7.a.(i) hereof
(whether in cash or cash and securities) or transferred to the General Partner
and paid for, by the issuance of REIT Shares, pursuant to Section 7.a.(ii) hereof
on the applicable Series B Redemption Date. Until the Series B
Redemption Date with respect to such Series B Redeemed Units and an
acquisition of the Series B Redeemed Units by the General Partner pursuant
to Section 7.a.(ii) hereof, the Series B Redeeming Party shall
have no rights as a stockholder of the General Partner with respect to the REIT
Shares issuable in connection with such acquisition.

 

(vi) In connection with an
exercise of Series B Redemption rights pursuant to this Section 7, a Series B
Redeeming Party shall submit the following to the General Partner, in addition
to the Series B Redemption Notice:

 

(A)          A
written affidavit, dated the same date as the Series B Redemption Notice, (1) disclosing
the actual and constructive ownership, as determined for purposes of Code Sections
856(a)(6) and 856(h), of REIT Shares by (x) such Series B Redeeming
Party and (y) any Related Party and (2) representing that, giving effect
to the acquisition of all such Series B Redeemed Units by the General
Partner pursuant to Section 7.a.(ii) hereof, neither the Series B
Redeeming Party nor any Related Party will own REIT Shares in excess of the
Ownership Limit;

 

7

 

(B)           A
written representation that neither the Series B Redeeming Party nor any
Related Party has any intention to acquire any additional REIT Shares prior to
the Series B Redemption Date for such Series B PPUs; and

 

(C)           An
undertaking to certify, at and as a condition to the closing of the Series B
Redemption on the applicable Series B Redemption Date in the event of a Series B
Redemption by the General Partner pursuant to Section 7.a.(ii) hereof,
that either (1) the actual and constructive ownership of REIT Shares by
the Series B Redeeming Party and any Related Party remain unchanged from
that disclosed in the affidavit required by Section 7.b.(vi)(A) hereof
or (2) after giving effect to such Series B Redemption, neither the Series B
Redeeming Party nor any Related Party shall own REIT Shares in violation of the
Ownership Limit.

 

8.     Status of
Reacquired Units. All Series B PPUs which shall have been
issued and reacquired in any manner by the Partnership (but not the General
Partner) shall be deemed cancelled and no longer outstanding.

 

9.     General.
The ownership of the Series B PPUs shall be evidenced by one or more
certificates in the form of Annex II hereto. The General Partner shall amend Exhibit A
to the Agreement from time to time to the extent necessary to reflect
accurately the issuance of, and subsequent redemption, or any other event
having an effect on the ownership of, the Series B PPUs.

 

10.   Allocations
of Income and Loss. This Section 10 of this Designation shall
apply to Series B PPUs notwithstanding anything to the contrary in Section 6.2
of the Agreement (but with regard to the remainder of Article VI of the
Agreement). For each taxable year, each holder of Series B PPUs shall be
allocated Net Income and Net Loss of the Partnership as follows.

 

Net Income shall be allocated as follows:

 

(a) first, to the extent of the aggregate
amount of Net Losses in excess of the aggregate amount of Net Income, each as
previously allocated pursuant to this Section 10; and

 

(b) second, among each series of
Partnership Units to the extent of and in proportion to the aggregate amount of
cash distributed with respect to the quarter pursuant to Article V of the
Agreement and Section 4 of this Designation. All such cash distributions
are to be treated as advances against the distributive share of income to be
allocated under this subparagraph pursuant to Section 1.731-1(a)(1)(ii) of
the Regulations.

 

Net Loss shall be allocated as follows:

 

(a) first, to the extent of and in
proportion to the positive Capital Account balance of each holder of
Partnership Common Units; and

 

(b) second, among each series of
Partnership Preferred Units to the extent of and in proportion to the aggregate
positive Capital Account balance of such series over the aggregate positive
Capital Account balance of all series of Partnership Preferred Units.

 

Nonrecourse Deductions shall be allocated in the same manner as Net
Income for the taxable year.

 

Any such amounts of Net Income, Net Loss and Nonrecourse Deductions of
the Partnership allocated to Series B PPUs shall be further allocated to
each Holder of Series B PPUs in proportion to its respective Percentage
Interest in such series.

 

To the extent that the number of Partnership Units in a series changes
during each taxable year, such allocations shall be made based upon the
weighted average of the number of Partnership Units outstanding

 

8

 

in each series during such taxable year unless in the opinion of
counsel to the Partnership, another method of allocation is required by the
Code and Regulations.

 

Notwithstanding the foregoing, Section 6.3.C of the Agreement
shall apply upon any liquidation, dissolution or winding up of the Partnership,
if after tentatively making allocations pursuant to the foregoing provisions of
this Section 10 and the payment of the Series B Liquidating Proceeds
to the holders of Series B PPUs pursuant to Section 5 of this
Designation, the Capital Account balance of each such holder of such Series B
PPUs is not zero, items of gross income or gross loss shall first be made to
the holders of such Series B PPUs in an amount sufficient such that after
all allocations pursuant to this Section 10 and payment of Series B
Liquidating Proceeds, the Capital Account balance of each such holder of such Series B
PPUs is zero.

 

11.   Tax Matters.

 

a.             Maintenance
of Non-Recourse Indebtedness. Until the later of (i) January 1,
2007 and (ii) the date that all Series B PPUs issued on the date of
original issue of the Series B PPUs have been redeemed or otherwise
acquired by the Partnership pursuant to Section 6 or Section 7 hereof,
the Partnership shall maintain non-recourse indebtedness (as defined in
Treasury Regulation § 1.752-1(a)(2)) on the Real Estate (as defined
in the Contribution Agreement, executed on May 3, 2004 and with an
effective date of May 5, 2004, by and between D.A.M. Master Entity, L.P.,
a Pennsylvania limited partnership, and the Partnership (the “D.A.M.
Contribution Agreement”)) in an amount equal to or greater than the amount of
the outstanding principal balance of the Assumed Debt (as defined in the D.A.M.
Contribution Agreement) as of the Closing Date (as defined in the D.A.M.
Contribution Agreement), whether or not the Partnership assumes or prepays the
Assumed Debt. Excess Nonrecourse Liabilities with respect to the Real Estate
shall be allocated under Section 6.3.D of the Agreement so that, to the
extent possible, the amount of Nonrecourse Liabilities allocated to any Holder
of Series B PPUs remains constant.

 

b.             Restrictions
on Sale of the Property. Until the earlier of (i) January 1, 2007
and (ii) the date that all Series B PPUs issued on the date of
original issue of the Series B PPUs have been redeemed or otherwise
acquired by the Partnership pursuant to Section 6 or Section 7
hereof, the Partnership shall not sell or otherwise voluntarily dispose of for
consideration (other than to the General Partner or a Subsidiary of the
Partnership) all or any portion of the Property, except for any transaction not
subject to taxation under the Code (including, but not limited to, an exchange
under Section 1031 of the Code).

 

c.             Traditional
Allocation Method. The Partnership will utilize the “traditional method”
with respect to all allocations pursuant to Section 704(c) of the
Code relating to the Real Estate (as defined above), unless another allocation
method is requested by holders of a majority of the Series B PPUs then
outstanding.

 

12.   No Sinking
Fund. No sinking fund shall be established for the retirement or
redemption of Series B PPUs.

 

13.   Voting
Rights.

 

a.             Holders
of the Series B PPUs will not have any voting rights or right to consent
to any matter requiring the consent or approval of the Limited Partners, except
as provided by applicable law and Article XIV of the Agreement and as set
forth in Section 13.b. of this Designation below and except that the Partnership
shall not consummate a Common Unit Recapitalization without the prior written
approval (such approval not to be unreasonably withheld) of holders of at least
50% in aggregate Liquidation Preference of the outstanding Series B PPUs.
For purposes of this Section 13.a., the term “Common Unit
Recapitalization” means a transaction, or series of related transactions,
pursuant to which any of the Partnership Interests represented by Junior
Partnership Units outstanding immediately prior to such transaction(s) is

 

9

 

converted, automatically, by operation of law or at the election of
holders thereof, into Partnership Interests represented by Parity Partnership
Units or Senior Partnership Units outstanding immediately following the
consummation of such transaction(s), or pursuant to which there is issued to
any holder of Junior Partnership Units by way of exchange, distribution or
similar transaction in respect of such Junior Partnership Units, any Parity Partnership
Units or Senior Partnership Units.

 

b.             So
long as any Series B PPUs are outstanding, in addition to any other vote
or consent of partners required by law or by the Agreement, the affirmative
vote or consent of holders of at least 50% in aggregate Liquidation Preference
of the outstanding Series B PPUs will be necessary for effecting any
amendment of any of the provisions of this Designation that materially and
adversely affects the rights or preferences of the holders of the Series B
PPUs. Except as provided in Section 13.a., the creation or issuance of any
class or series of Partnership Units, including, without limitation, any
Partnership Units that may have rights junior to, on a parity with, or senior
or superior to the Series B PPUs, will not be deemed to have a material
adverse effect on the rights or preferences of the holders of Series B
PPUs. With respect to the exercise of the above described voting rights, each Series B
PPU will have one (1) vote per Partnership Preferred Unit.

 

14.   Restrictions
on Transfer. Series B PPUs are subject to the same restrictions
on transfer applicable to Partnership Interests, as set forth in Article XI
of the Agreement; provided, however, that the General Partner of the
Partnership will consent to a transfer permitted under Section 5.4 of that
certain Contribution Agreement executed on May 3, 2004 and with an
effective date of May 5, 2004, by and between D.A.M. Master Entity, L.P.,
and the Partnership and will not require an opinion of counsel, as set forth in
Section 11.3.D of the Agreement so long as the other terms and conditions
set forth in Section 11.3 thereof are satisfied.

 

10EXHIBIT 10.01

 

June 14, 2005

 

 

Mr. Nick Ordon

c/o Versant Corporation

6539 Dumbarton Circle

Fremont, CA 
94555

 

Re:      Agreement Regarding Terms of Your
Separation and General Release

 

Dear Nick:

 

This
letter agreement confirms the agreement (this “Agreement”) between you and Versant
Corporation (“Versant”)
concerning the terms of your agreement to resign as an officer and director of
Versant and the termination of your employment with Versant and offers you the
separation compensation and other agreements set forth herein in exchange for a
general release of claims from you and your compliance with the other
provisions of this Agreement, including the terms on which you will provide
consulting services to Versant after termination of your employment.  This Agreement is intended to permanently
resolve any and all potential disputes which may arise concerning your
employment and relationship with Versant, and the termination of your
employment with Versant.

 

1.                                      Separation Date.  Versant and you have mutually agreed that (i) you
will cease to be the Chairman of the Board, President and Chief Executive
Officer of Versant or to hold any other office of Versant or any of its
subsidiaries (and you hereby resign from each of those offices) effective as of
June 15, 2005 and (ii) your employment with Versant in all
capacities, positions and offices will be terminated effective as of Friday, June 24,
2005 (the “Separation Date”).  Therefore you will cease to be an employee of
Versant or any subsidiary of Versant on the Separation Date.  You also agree to submit your written
resignation from Versant’s Board of Directors (and from the board of directors
of any subsidiary of Versant), effective as of June 15, 2005, by signing
and delivering the resignation letter attached hereto as Appendix 1
concurrently with your signature and delivery of this Agreement.  You confirm that you are not resigning as a
director due to any disagreement with Versant on any matter relating to Versant’s
operations, policies or practices.

 

2.                                      Payment of Wages;
Continuation of Health Benefits.  On
or before the Separation Date, Versant will deliver to you your final paycheck,
which will be for an amount not to exceed a maximum of $9,136.25 (the “Final Paycheck Amount”).  You agree that the Final Paycheck Amount
shall be equal to all your accrued salary, any reimbursable expenses, all 

 

 

your accrued but unused vacation
pay and any similar payments due and owing to you from Versant as of the
Separation Date, net of all tax withholdings and other required payroll
deductions from these payments. By signing below, you acknowledge and agree
that, except for the Final Paycheck Amount payable on the Separation Date,
Versant does not owe you any bonus or any other amounts except as expressly
provided for in Section 4 of this Agreement. You will be eligible to
continue coverage under Versant’s group health plan under COBRA, with Versant
to pay for such continued coverage solely to the extent provided in Section 4
below, provided you timely request such continued coverage under COBRA
after receiving formal notice of your right to do so.

 

3.                                      Your Versant
Stock Options.  You acknowledge and
agree that, assuming no exercise by you of any Versant stock options now held
by you prior to the Separation Date, and assuming your continuous employment
with Versant through the Separation Date, on the Separation Date you will hold
the vested and unexercised options to purchase shares of Versant Common Stock
listed on Exhibit A attached hereto (“Exhibit A”)
and initialed by you (“your Versant options”),
which on the Separation Date will be vested and exercisable only to the extent
shown on such Exhibit A.  You
acknowledge and agree with Versant, and represent to Versant, that: (i) the
information in Exhibit A regarding your Versant options is correct and
complete; (ii) the stock options listed in Exhibit A are the only
options to purchase Versant stock that you hold; (iii) you hold no other
options, warrants or any other rights to purchase or otherwise acquire any
shares of the capital stock or any other securities of Versant, including any
such rights under Versant’s 1996 Employee Stock Purchase Plan, as amended (the “ESPP Plan”); and (iv) you are
not currently a participant, nor will you become a participant, in the ESPP
Plan.  You agree that, in accordance with
the terms of your Versant options, the vesting of the right to exercise your
Versant options will continue only through the Separation Date, at which time
and date vesting of the right to exercise your Versant options will immediately
cease and terminate.

 

In
consideration of your agreements and the releases granted by you under this
Agreement, and provided that (and for so long as) you comply with and do not
breach your consulting obligations under Section 5 hereof and the release
granted by you under Section 8 hereof, and subject to the provisions of Section 7
hereof, you will be given the right to exercise your Versant options that are
fully vested as of the Separation Date until March 12, 2006, the date on
which your consulting obligations under Section 5 of this Agreement will
terminate, at which time your Versant options will expire and terminate and cease to
be exercisable.  Except as expressly
provided in this Section 3, nothing in this Agreement will change
any of the terms or conditions of your Versant options or of any plan under
which any of your Versant options were granted.

 

4.                                      Severance
Compensation:  In exchange for your
agreement to the release and waiver of claims set forth in Section 8 below
and your other agreements herein, in addition to the payments referred to in Section 2
above, and subject to the provisions of Section 7 and Section 14
below and for so long as you continue to comply with all the provisions of this
Agreement, Versant agrees:  (a)  to
continue to pay you as severance payment, until March 12, 2006 (the “Severance Expiration Date”) an
amount in cash each month (pro-rated for any partial month) at a rate equal to
your current monthly base salary of $22,500.00 (less applicable state and federal
tax and other payroll withholding deductions), payable in installments on each
of Versant’s

 

 

regular payroll payment dates; (b) to pay for the
continuance of your existing coverage under Versant’s health and medical
insurance plans as permitted by COBRA until the Severance Expiration Date; (c) to
buy out the lease on the laptop personal computer currently used by you (which
is an IBM Thinkpad personal computer, Serial No. FX05563) and transfer
ownership thereof to you as promptly as reasonably practicable after the
Separation Date, but only if such a buy out of the lease is permitted under the
terms of such lease and all confidential and proprietary information regarding
Versant is first removed from the hard drive of such computer; and (d) to
continue to provide you with the email and Blackberry messaging service you
currently receive from Versant until the Severance Expiration Date (the
compensation described in clause (a), (b) (c) and (d) of this Section 4
being collectively referred to in this Agreement as the “Severance”).

 

5.                                      Consulting
Obligation.  Subject to the terms and
conditions of this Section 5 and Section 14 below, in consideration
of the agreements of Versant under this Agreement, you hereby agree with
Versant that, from the Separation Date through the Severance Expiration Date,
you will make yourself available to, and will provide, consulting services and
advice to Versant as an independent consultant with respect to transition
matters concerning Versant’s business and operations (a) for up to forty
(40) hours per week as requested by Versant’s Chief Executive Officer until June 30,
2005 and (b) after June 30, 2005 until the Severance Expiration Date,
for up to ten (10) hours
per month as requested by Versant’s Chief Executive Officer (the “Consulting Services”).  You agree that the Severance and the
agreements of Versant under Section 3 will constitute the only
compensation that you will be entitled to receive for the Consulting Services.
You will not incur, nor be reimbursed for, any out-of-pocket or other expenses
in performing the Consulting Engagement unless Versant approves such expenses
in advance in a writing signed by Versant’s Chief Executive Officer.  You agree that your duties of confidentiality
under your Employee Invention Agreement (as defined below) and under Section 6
below will continue to apply to any Proprietary Information (as defined in that
agreement) or other confidential information of Versant which you learn or have
access to in the course of your providing the Consulting Services.

 

6.                                      Confidential
Information.  You hereby acknowledge
that you now are bound by, and after the Separation Date you will continue to
be bound by, your Employee Invention Assignment and Confidentiality Agreement
with Versant dated as of January 7, 1998 (the “Employee
Invention Agreement”), and that as a result of your employment
with Versant you have had access to Versant’s Proprietary Information (as
defined in the Employee Invention Agreement). You hereby confirm and agree that
you will hold in strictest confidence and not disclose all Proprietary
Information (including but not limited to any Proprietary Information which you
learn or to which you are provided access in the course of your providing the
Consulting Services pursuant to Section 5 above), and that you will not
make use of any such Proprietary Information on behalf of anyone.  You further confirm that you have delivered
to Versant all documents and data of any nature containing or pertaining to
such Proprietary Information and that you have not taken with you any such
documents or data or any reproduction thereof. 
Nothing herein will prevent Versant from disclosing this Agreement.

 

7.                                      Non-Competition
and Non-Solicitation.  As a material
consideration for the Severance, and in addition to any similar obligations you
have under the Employee Invention Agreement, you hereby specifically agree with
Versant that, during any period of time in which 

 

 

you are receiving Severance from Versant under Section 4
hereof, you shall not, directly or indirectly:  
(a) engage in any Competing Business (as defined below); or (b) solicit
or induce any of the employees, independent contractors or agents of Versant or
any of its subsidiaries to end or diminish their relationships with or services
to Versant or any of its subsidiaries, nor shall you solicit, recruit or
otherwise induce any such person to perform services for you or for any other
person or entity. The foregoing non-solicitation obligation extends to all
employees, independent contractors and agents of Versant and all Versant’s
subsidiaries, business units and/or divisions. 
A “Competing Business” means the
business of developing, supporting, marketing, distributing, licensing, or
otherwise providing database management software or related maintenance,
support or consulting services. You agree with Versant that, before you
commence any employment or other services for any company or business (other
than Versant) during any period of time in which you are receiving Severance
from Versant under Section 4 hereof, you will first notify Versant in
writing of the specific nature of such employment or other services and the
identity of the company or business for whom you will provide such services or
be employed by (the “Employment Notice”)
so that Versant may decide whether it believes that such services or employment
will constitute a Competing Business.  In
the event that you engage in a Competing Business, you will immediately cease
to be entitled to receive any further Severance and your right to exercise your
Versant options will immediately terminate. 
Provided you have complied with your obligation to give Versant the
Employment Notice, if you thereafter engage in a Competing Business described
in an Employment Notice you will not be deemed to be in breach of this Section 7
so long as you promptly reimburse Versant for any Severance you received to
which you are not entitled under this Section 7.  Nothing in this Section 7 is intended to
modify your consulting obligations under Section 5 hereof.  In addition, nothing in this Agreement is
intended to release you from any of your obligations under the Employee
Invention Agreement or from any other fiduciary or other duty (at law or
otherwise) to refrain from disclosing or using (or permitting others to use)
any confidential or proprietary information or technology of Versant or any
trade secrets of Versant.

 

8.                                      General
Release and Waiver of Claims.

 

(a)                                  Waiver
and General Release.  The payments
and promises of Versant set forth in this Agreement are being paid and made by
Versant in full satisfaction of all accrued salary, vacation pay, bonus pay,
profit-sharing, stock options, termination benefits or other compensation to
which you may be entitled by virtue of your employment with Versant or your
separation from and termination of employment with Versant.  In consideration of Versant’s agreements
under this Agreement, you hereby irrevocably release and discharge Versant, its
successors and assigns, subsidiaries, affiliates, and the past and present
employees, officers, directors, shareholders, agents, attorneys and
representatives of Versant and its subsidiaries and affiliates (Versant,
together with its successors, assigns, subsidiaries, affiliates, and such past
and present employees, officers, directors, shareholders, agents, attorneys and
representatives being collectively referred to as the “Releasees”) from all
claims, liabilities, demands and causes of action known or unknown, fixed or
contingent, which you have or may hereafter have arising out of or in any way
connected with your employment or other relationship with Versant, or the
termination of your employment with Versant; provided, however,
that notwithstanding the foregoing, the foregoing release and discharge will not
release or discharge Versant from: (i) any of its unperformed express
obligations to you under this Agreement; (ii) Versant’s obligations with
respect to your Versant options as provided in Section 3 of this
Agreement; or (iii) any 

 

 

rights you may have to
indemnification or advancement of expenses from Versant under Versant’s bylaws
or under any written indemnity agreement entered into by you and Versant that
is in effect on the Separation Date.  The
claims you are releasing under the foregoing release include, but are not
limited to, claims of unlawful discharge, breach of contract, breach of the
covenant of good faith and fair dealing, violation of public policy,
defamation, physical injury, emotional distress, claims for additional
compensation or benefits arising out of your employment or your separation of
employment, claims under Title VII of the 1964 Civil Rights Act, as amended,
the California Fair Employment and Housing Act, the California Family Rights
Act, the Americans With Disabilities Act, the Equal Pay Act of 1963, and any
other laws and/or regulations relating to employment or employment
discrimination, including, without limitation, claims based on age or under the
Age Discrimination in Employment Act or Older Workers Benefit Protection Act.

 

(b)                                 Civil Code 1542
Waiver.  By signing this Agreement
below, you expressly waive any benefits of Section 1542 of the Civil Code
of the State of California, which provides as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR.”

 

(c)                                  Acknowledgements
by You. You represent and agree that: 
(i) Versant has advised you to consult with an attorney regarding
this Agreement and that to the extent, if any, that you desired, you have has
availed himself of this right; (ii) you have carefully read and fully
understand all of the provisions of this Agreement (including but not limited
to the general release of claims set forth above, and that you are voluntarily
entering into this Agreement and making the general release of claims set forth
above; and (iii) you have not relied upon any representations or
statements, written or oral, not set forth in this Agreement.

 

(d)                                 Confirmation.  As a condition of receiving the Severance
after your employment terminates on June 24, 2005 you will deliver to
Versant a written confirmation (reasonably satisfactory to Versant in form and
substance) that the above release shall additionally extend to and cover any
and all events occurring after the date of this letter and through June 24,
2005.

 

9.                                      Arbitration;
Attorneys’ Fees.  Except for claims
for injunctive relief or the remedy of specific performance or other equitable
remedies arising out of the Employee Invention Agreement or this Agreement (for
which you or Versant may seek relief from a court of competent jurisdiction),
the parties agree to arbitrate any and all claims arising out of this Agreement
or your employment relationship with Versant, including the termination of your
employment with Versant.  Any such
arbitration shall be mandatory and shall be conducted in Santa Clara County,
California before a single arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The arbitrator’s
decision shall be final and binding and may be enforced by any court of
competent jurisdiction.  If any action at
law or in equity is brought to enforce the terms of this Agreement, the
prevailing party will be 

 

 

entitled to recover its
reasonable attorneys’ fees, costs and expenses from the other party, in
addition to any other relief to which such prevailing party may be entitled.

 

10.                               No Admission of Liability.  This Agreement is not, and you may not
construe or contend it to be, an admission or evidence of wrongdoing or
liability on the part of Versant, its representatives, attorneys, agents,
officers, shareholders, directors, employees, subsidiaries, successors or
assigns. This Agreement will be given the maximum protection allowable under
California Evidence Code Section 1152 and/or any other state or Federal
provisions of similar effect.

 

11.                               Entire Agreement:
This Agreement, the Employee Invention Agreement and the terms of your Versant
options and the option plan or plans they were granted under together
constitute the entire agreement and understanding between you and Versant with
respect to the subject matter of this document and together supersede all prior
negotiations and agreements, written or oral, relating to this subject matter.
You acknowledge that neither Versant nor its agents or attorneys have promised
or represented, either expressly or impliedly, in writing or orally, anything
not contained in this Agreement for the purpose of inducing you to execute this
Agreement. You acknowledge that you have signed this Agreement relying only on
the promises, representations and warranties contained in this Agreement.

 

12.                               Modification.  This Agreement may not be amended or modified
in any respect except by another written agreement that specifically refers to
this Agreement, executed by an authorized representative of each of the
parties.

 

13.                               Period to Review
Agreement.  You acknowledge that this
Agreement was presented to you on June 14, 2005, and that you are entitled
to have up to twenty-one (21) days within which to consider this Agreement. You
acknowledge that you have been advised to consult with an attorney prior to
executing this Agreement. You further represent that if you sign this Agreement
before the expiration of the twenty-one (21) day period, you voluntarily waive
any remaining time period to review and consider this Agreement.

 

14.                               Revocation of Agreement;
Effective Date of Agreement. You understand that you may revoke this
Agreement within seven (7) days of your execution of this document. Any
such revocation must be in writing, and must be received by Versant within such
seven (7) day period.  You understand that the benefits to be provided to you under this
Agreement (including but not limited to the Severance payments described in Section 4
and any extension of time to exercise any of your Versant stock options under Section 3)
will be provided only after the revocation period has expired and you have not
revoked this Agreement. The Effective Date of this Agreement is therefore the
eighth (8th) day after you sign this Agreement, but no earlier than
your Separation Date, which is June 24, 2005.

 

15.                               Directors’
and Officers’ Liability Insurance. To the extent, and only for so long as,
Versant maintains directors’ and officers’ liability insurance (“D&O Insurance”) during the
Follow-on Period (as defined below), Versant will not affirmatively and
specifically exclude you from the definition of covered “directors and officers”
and/or “insured person” under such D&O Insurance, if any, that otherwise
covers Versant’s prior officers and/or directors generally except to the extent
that Versant determines that it is reasonably appropriate to do so in order to (i) 

 

 

obtain
such D&O Insurance and/or (ii) to obtain such D&O Insurance at
rates or premiums that are determined to be reasonable by Versant’s Board of
Directors.  The “Follow-on
Period” means that period of time beginning upon the date of
this Agreement and ending on the earlier of 
(i) two (2) years from the date of this Agreement or (ii) the
date on which (A) Versant is acquired in a merger or consolidation
transaction after which the shareholders of Versant immediately prior to such
transaction cease to own a majority of the voting power of the surviving entity
of such transaction, (B) Versant sells or otherwise disposes of all or
substantially all of its assets or (C) Versant liquidates or dissolves.

 

16.                               Section 16 Compliance. You acknowledge that you alone are
responsible for your compliance with Section 16 under the Securities
Exchange Act of 1934, as amended, and all regulations thereunder.  If you agree to the terms of this Agreement,
please sign the attached copy and return it to me on or before June 14, 2005.

 

PLEASE
REVIEW THIS AGREEMENT CAREFULLY. THIS AGREEMENT CONTAINS A WAIVER OF KNOWN AND
UNKNOWN CLAIMS.

 

	
  Very truly yours,

  
	
   

  
	
  VERSANT CORPORATION

  
	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  READ, UNDERSTOOD AND AGREED TO:

  
	
   

  
	
   

  	
   

  
	
  Nick Ordon

  
						

 

 

Attachment:

 

Exhibit A:                                            Table
of Your Versant Options

 

 

Appendix 1

 

 

June 14, 2005

 

 

The Board of Directors

Versant Corporation

6539 Dumbarton Circle

Fremont, CA 
94555

 

Re:                               My
Resignation from the Board of Directors of Versant Corporation

 

Gentlemen:

 

I am signing and delivering to you this letter in
order to submit my irrevocable resignation from the Board of Directors of
Versant Corporation (and from the board of directors of any subsidiary of
Versant Corporation of which I am a member), effective as of June 15, 2005.  I
am are not resigning due to any disagreement with Versant Corporation on any
matter relating to Versant’s operations, policies or practices.

 

I
understand that Versant Corporation and its Board of Directors will be entitled
to rely upon this resignation letter.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Nick Ordon

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