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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q/A-1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-27886
WORLDTALK COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 77-0303581
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
5155 Old Ironsides Drive
Santa Clara, California 95054
(Address of principal executive offices)
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(408) 567-1500
(Registrant's telephone number, including area code)
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of outstanding shares of the Registrant's Common Stock, par value
$0.01 per share, on August 10, 1999 was 14,286,772 shares.
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Registrant hearby amends part II, Item 6 of its report on form 10-Q for the
quarterly period ended June 30, 1999.
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PART II: OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are being filed as part of this report on Form 10-Q:
10.01 Employment Agreement, dated June 4, 1999, between Registrant
and James Heisch. (A)
27.1 Financial Data Schedule (B)
(b) Report on Form 8-K.
No reports on Form 8-K were filed in the quarter ended June 30, 1999.
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(A) Management contract or compensatory plan.
(B) Previously filed.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: August 16, 1999
WORLDTALK COMMUNICATIONS
CORPORATION
By: /s/ BERNARD HARGUINDEGUY
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Bernard Harguindeguy
President and Chief Executive Officer
(Duly authorized officer)
By: /s/ JAMES A. HEISCH
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James A. Heisch
Vice President of Finance and Chief
Financial Officer
(Duly authorized officer)
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Exhibit 10.01
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of June
4, 1999 (the "Effective Date") between Worldtalk Communications Corporation, a
Delaware corporation doing business as Worldtalk Corporation with its principal
offices located at 5155 Old Ironsides Drive, San Jose, California 95054 (the
"Company"), and James Heisch, residing at 7197 Wooded Lake Drive, San Jose,
California 95120 ("Executive").
In consideration of the promises and the terms and conditions set forth
in this Agreement, the parties agree as follows:
1. Position. As of the Effective Date, the Company will employ
Executive, and Executive will serve as an employee of the Company. Initially
Executive will be the Vice President, Chief Financial Officer and Secretary of
the Company. As such, Executive will initially report directly to the Chief
Executive Officer of the Company. As Vice President and Chief Financial Officer,
Executive will have overall responsibility for managing and directing financial
matters for the Company.
2. Term of Agreement. This Agreement will commence on the Effective
Date, and will continue indefinitely until Executive's employment is terminated
by either party hereto, orally or in writing. Executive's employment with the
Company, its Successors or Affiliates is on an "at will" basis, meaning that
either Executive or such entity may terminate Executive's employment at any time
for any reason or for no reason, without further obligation or liability.
3. Compensation and Benefits.
3.1 Base Salary. Commencing on the Effective Date, Executive's
salary of $15,000 per month will be payable in two equal payments per month, as
earned, pursuant to the Company's regular payroll policy as in effect from time
to time. Executive's base salary will be reviewed as part of the Company's
normal salary review. However, neither Executive's base salary nor his bonus
described below is guaranteed to remain at any particular level.
3.2 Bonus In the event that certain objectives agreed to by
Executive and the Company's Chief Executive Officer are met by Executive with
respect to any calendar year, Executive will be entitled to receive an annual
bonus of at least 25% of Executive's arithmetic-average salary in effect during
such year, payable in accordance with the policies of the Company applicable to
officer bonuses in general. The first calendar year of Executive's employment
will begin June 4 and end December 31, 1999 and, Executive's bonus payable for
that year shall be 7/12ths of the bonus payable had Executive been employed by
the Company for the full calendar year. All subsequent calendar years shall
commence on January 1.
3.3 Stock Options. Subject to the discretion of the Board of
Directors of the
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Company (the "Board") or the Compensation Committee of the Board, Executive will
be granted an option for the purchase of 275,000 shares of the Company's Common
Stock pursuant to the terms of the Company's 1996 Equity Incentive Plan (the
"Plan") at an exercise price equal to fair market value of the Company's Common
Stock on the date of grant, as determined in accordance with the Plan. Subject
to Sections 5 and 6 below, such option will vest as to 2.083% of such shares on
the third day of each month following the date of grant. Executive may be
eligible to receive additional grants of stock options or purchase rights from
time to time in the future, on such terms and subject to such conditions as the
Board or Compensation Committee of the Board shall determine.
3.4 Indemnification of Officers and Directors. The Company
currently indemnifies all officers and directors to the maximum extent permitted
by law, and, in order to obtain such rights, Executive will be entitled to enter
into the Company's standard form of Indemnification Agreement giving Executive
such protection.
3.5 Expenses. The Company will reimburse Executive for all
reasonable and necessary expenses incurred by Executive in connection with the
Company's business, provided that such expenses are deductible to the Company,
are in accordance with the Company's applicable policy and are properly
documented and accounted for in accordance with the requirements of the Internal
Revenue Service.
3.6 Additional Benefits. Executive will be eligible to receive
such other benefits, including insurance, vacation, holidays and sick leave, as
the Company provides to its employees generally.
4. Proprietary Rights and Confidentiality. Executive has signed and
delivered to the Company a Confidential Information and Invention Assignment
Agreement in substantially the form attached hereto as Exhibit A, (the
"Confidentiality Agreement").
5. Termination.
5.1 Acceleration of Vesting. Notwithstanding the vesting terms
of any option held by Executive or the terms of any agreement pursuant to which
Executive hereafter may acquire shares of the Company's capital stock, but
subject to Section 6, in the event of a "Change in Control" (defined in Section
5.2 below) occurring within two years after the Effective Date, then, on the
first closing of such Change in Control (the "Acceleration Date"):
(a) all options of the Company, its Successor or
Affiliate held by Executive that are not completely vested shall
accelerate vesting, such that Executive may exercise all options as to
the number of shares that are vested on the date of termination in
accordance with the terms and conditions thereof, plus a number of
shares equal to one-half of all shares that remain unvested on the
Acceleration Date; and
(b) all shares of the capital stock that are subject
to a right of repurchase in favor of the Company, its Successor or
Affiliate or any of its assignees ("Rights"), shall be released from
such right of repurchase, as to all shares that are vested on the date
of termination in accordance with the terms and conditions of the
purchase
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agreement pursuant to which they were originally acquired by Executive,
plus a number of shares equal to one-half of all shares that remain
unvested on the Acceleration Date.
If a Change in Control occurs after the second anniversary of the Effective
Date, the number of shares and options that accelerate vesting will be
determined by the terms and conditions of the Company's plan pursuant to which
such shares and options were granted.
5.2 Definition of "Change in Control." A "Change in Control"
shall occur upon the first closing of (a) a merger, reorganization,
consolidation or other transaction in which the stockholders of the Company
before such merger, reorganization, consolidation or other transaction own less
than 50% of the outstanding voting equity securities of the surviving
corporation, (b) a sale or other transfer of all or substantially all of the
assets of the Company as a going concern, or (c) a transfer of more than 50% of
the outstanding voting equity securities of the Corporation by the stockholders
of the Company in one transaction or a series of related transactions.
5.3 Definition of "Successor" and "Affiliate." "Successor"
means any corporation or other entity that succeeds to the business, or to all
or substantially all of the assets, of the Company. An "Affiliate" means a
corporation or other entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
another corporation or entity, where "control" (including the terms "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to cause the direction of the management and policies of the
corporation or entity, whether through the ownership of voting securities, by
contract or otherwise.
6. Savings Provisions. In the event that the benefit obtainable by
Executive in accordance with Section 5.1 above, when added to any other
severance and other benefits provided to Executive in connection with the Change
in Control (collectively, "Severance Benefits") (a) constitute "parachute
payments" within the meaning of Section 280G of the Code and (b) but for this
Section 6, such Severance Benefits would be subject to the excise tax imposed by
Section 4999 of the Code, then at the election of Executive delivered to the
Company in writing at least 30 days prior to the consummation of the event
causing such payment to be considered "parachute payments":
(a) (This alternative may be chosen only if the
accounting treatment of the Change-in-Control transaction is not a
pooling of interests) the Company will make adequate disclosure to its
shareholders of all material facts concerning all payments or amounts
that may be considered "parachute payments," will solicit the vote of
its shareholders to approve such payments and amounts (which approval
shall be obtained in accordance with the Code and as permitted therein
to make the excise tax under Section 4999 inapplicable of the Code to
such payments) and, if approval is obtained, Executive's severance
benefits shall be payable in full, all options will accelerate vesting
in full and all shares held by Executive will be released from the
applicable Rights; or
(b ) Executive's severance benefits shall be payable
in full, his options will accelerate vesting in as set forth in Section
5.1 above and his shares will be released
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from all applicable Rights as set forth in Section 5.1 hereof,
regardless of the fact that such Severance Benefits would result in
payment of an excise tax under Section 4999 of the Code; or
(c) Executive's severance benefits shall be payable
either as to such lesser amount, his options will accelerate vesting in
such lesser numbers and his shares will be released from all applicable
Rights in such lesser numbers, that would result in no portion of such
Severance Benefits being subject to excise tax under Section 4999 of
the Code.
Unless the Company and Executive otherwise agree in writing, the independent
public accountants agreed to by the Company and Executive (the "Accountants"),
shall calculate whichever of the foregoing amounts described in clauses (a), (b)
or (c) above, taking into account the applicable federal, state and local income
taxes and the excise tax imposed by Section 4999, results in the receipt by
Executive on an after-tax basis, of the greatest amount of Severance Benefits.
Such results will be delivered to Executive in writing at least ten days prior
to the date Executive's election described above in this Section 6, must be
made. For purposes of making the calculations required by this Section 6, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and Executive shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this Section 8.1 and the Company shall bear all costs the Accountants may
reasonably incur in connection therewith. If no election is made within the
30-day period Executive has to make such election, Executive will be deemed to
have chosen payment pursuant to clause (b) or (c) of this Section 6 that results
in the greatest amount of after-tax Severance Benefits, as calculated by the
Accountants.
7. General Provisions.
7.1 Arbitration. Executive and the Company shall submit to
mandatory binding arbitration in any controversy or claim arising out of, or
relating to, this Agreement or any breach hereof. However both the Company and
Executive retain its or his right to, and shall not be prohibited, limited, or
in any other way restricted from, seeking or obtaining equitable relief from a
court having jurisdiction over the parties. Such arbitration shall be conducted
in accordance with the commercial arbitration rules of the American Arbitration
Association in effect at that time, and judgment upon the determination or award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
7.2 Severability. If any provision of this Agreement shall be
found by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect.
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7.3 Remedies. The Company and Executive acknowledge that the
service to be provided by Executive is of a special, unique, unusual,
extraordinary and intellectual character, which gives it peculiar value the loss
of which cannot be reasonably or adequately compensated in damages in an action
at law. Accordingly, Executive hereby consents and agrees that for any breach or
violation by Executive of any of the provisions of this Agreement a restraining
order and/or injunction may be issued against Executive, in addition to any
other rights and remedies the Company may have, at law or equity, including
without limitation the recovery of money damages.
7.4 No Waiver. The failure by either party at any time to
require performance or compliance by the other of any of its obligations or
agreements shall in no way affect the right to require such performance or
compliance at any time thereafter. The waiver by either party of a breach of any
provision hereof shall not be taken or held to be a waiver of any preceding or
succeeding breach of such provision or as a waiver of the provision itself. No
waiver of any kind shall be effective or binding, unless it is in writing and is
signed by the party against whom such waiver is sought to be enforced.
7.5 Assignment. This Agreement and all rights hereunder are
personal to Executive and may not be transferred or assigned by Executive at any
time. The Company may assign its rights, together with its obligations
hereunder, to any parent, subsidiary, affiliate or successor, or in connection
with any sale, transfer or other disposition of all or substantially all of its
business and assets, provided, however, that any such assignee assumes the
Company's obligations hereunder.
7.6 Withholding. All sums payable to Executive hereunder shall
be reduced by all federal, state, local and other withholding and similar taxes
and payments required by applicable law.
7.7 Entire Agreement. This Agreement constitutes the entire
and only agreement between the parties relating to employment of Executive with
the Company, and this Agreement supersedes and cancels any and all previous
contracts, arrangements or understandings with respect thereto. This Agreement
expressly cancels and replaces the provisions of any offer letter signed by
Executive and the Company in connection with the commencement of Executive's
employment as though it had never been in effect.
7.8 Amendment. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended only by an agreement in writing
executed by both parties hereto.
7.9 Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered, sent by
certified first class mail, postage pre-paid, return receipt requested, or sent
by nationally recognized express courier service receipt confirmed. Such notices
and other communications shall be effective upon receipt if hand delivered, five
(5) days after mailing if sent by mail, and one (l) day after dispatch if sent
by express courier, to the address of the intended recipient that is set forth
on the first page hereof, or to such other addresses as any party shall notify
the other parties. Notices sent to the Company
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shall be sent to the attention of the President.
7.10 Counterparts. This Agreement may be executed in more than
one counterpart, each of which shall be deemed to be an original but all of
which, taken together, constitute one and the same agreement.
7.11 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be construed in accordance with the laws
of the State of California, without giving effect to the principles of conflict
of laws.
In Witness Whereof, the Company and Executive have executed this
Agreement as of the date first written above.
"COMPANY" "EXECUTIVE"
WORLDTALK CORPORATION
By: /s/ Bernard Harguindeguy /s/ James Heisch
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Bernard Harguindeguy, President JAMES HEISCH
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