<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 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: 000-23453
FLEXIINTERNATIONAL SOFTWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C>
Delaware 06-1309427
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
Two Enterprise Drive, Shelton, CT 06484
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(203) 925-3040
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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
----- -----
As of May 7, 1999, there were 17,339,255 shares of FlexiInternational
Software, Inc. Common Stock outstanding.
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FLEXIINTERNATIONAL SOFTWARE, INC.
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheet ....................... 3
Condensed Consolidated Statement of Operations ............. 4
Condensed Consolidated Statement of Cash Flows ............. 5
Condensed Consolidated Statement of Stockholders' Equity ... 6
Notes to Condensed Consolidated Financial Statements ....... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................... 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk...... 9
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds ..................... 13
Item 6. Exhibits and Reports on Form 8-K .............................. 13
Signature ..................................................... 13
2
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
FLEXIINTERNATIONAL SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
March 31, December 31,
--------- ------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,771 $ 7,876
Marketable securities 3,000 3,000
Accounts receivable, net of allowance for doubtful
accounts of $985 and $812, respectively 10,267 13,051
Prepaid expenses and other current assets 658 999
-------- --------
Total current assets 18,696 24,926
Property and equipment at cost, net of accumulated depreciation
and amortization of $3,444 and $3,121, respectively 2,455 2,732
Acquired software, net of accumulated amortization of $324 and $216, respectively 1,836 1,944
Goodwill, net of accumulated amortization of $849 and $566, respectively 4,818 5,101
Other assets, net of accumulated amortization of $217 and $217, respectively 208 218
-------- --------
Total assets $ 28,013 $ 34,921
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 2,001 $ 3,199
Accrued commissions 370 725
Accrued restructuring costs 1,211 --
Accrued expenses - other 2,605 3,483
Current portion of capital lease obligations 594 586
Short-term debt 2,000 --
Deferred revenues 4,469 4,341
-------- --------
Total current liabilities 13,250 12,334
Long-term portion of capital lease obligations 714 878
-------- --------
Total liabilities 13,964 13,212
-------- --------
Stockholders' equity:
Common stock; $.01 par value; 50,000,000 shares authorized; issued shares -
17,383,133 and 17,383,133, respectively and
outstanding shares - 17,339,255 and 17,293,622, respectively 174 174
Additional paid-in capital 56,128 56,308
Accumulated deficit (42,190) (34,561)
Currency translation adjustment 17 2
Common stock in treasury at cost - 43,878 and 89,511 shares, respectively (80) (214)
-------- --------
Total stockholders' equity 14,049 21,709
-------- --------
Total liabilities and stockholders' equity $ 28,013 $ 34,921
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 4
FLEXIINTERNATIONAL SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
---- ----
unaudited) (unaudited)
<S> <C> <C>
Revenues:
Software license $ 1,055 $ 4,687
Service and maintenance 3,281 2,821
-------- --------
Total revenues 4,336 7,508
Cost of revenues:
Software license 68 467
Service and maintenance 2,601 1,753
-------- --------
Total cost of revenues 2,669 2,220
Operating expenses:
Sales and marketing 2,461 2,143
Product development 2,686 2,022
General and administrative 2,249 612
Restructuring charge (See Note 5) 1,896 --
-------- --------
Total operating expenses 9,292 4,777
-------- --------
Operating (loss) income (7,625) 511
Interest income 104 286
Interest expense (30) (13)
-------- --------
(Loss) income before provision for income taxes (7,551) 784
Provision for income taxes -- --
-------- --------
Net (loss) income $ (7,551) $ 784
======== ========
Net (loss) income per share:
Basic $ (0.44) $ 0.05
Diluted $ (0.44) $ 0.05
Weighted average shares:
Basic 17,339 16,500
Diluted 17,339 17,287
</TABLE>
See accompanying notes to condensed financial statements.
4
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FLEXIINTERNATIONAL SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
---- ----
unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (7,551) $ 784
Non-cash items included in net (loss) income:
Depreciation and amortization 744 167
Provision for doubtful accounts 602 --
Change in operating accounts:
Accounts receivable 2,171 (2,119)
Prepaid expenses and other assets 170 367
Accounts payable and accrued expenses (2,444) (717)
Accrued restructuring 1,211 --
Deferred revenue 131 (596)
-------- --------
Net cash used in operating activities (4,966) (2,114)
Cash flows from investing activities:
Proceeds from sales of property and equipment 29 --
Purchase of property and equipment (105) (113)
-------- --------
Net cash used in investing activities (76) (113)
Cash flows from financing activities:
Purchase of short-term investments -- (4,412)
Proceeds from line of credit 2,000 --
Proceeds from employee stock purchase plan 56 --
Proceeds from exercise of stock options
and warrants -- 26
Payments of capital lease obligations (156) (31)
-------- --------
Net cash provided by (used in) financing
activities 1,900 (4,417)
-------- --------
Effect of exchange rate changes on cash 37 --
-------- --------
Decrease in cash and cash equivalents (3,105) (6,644)
-------- --------
Cash and cash equivalents at beginning of period 7,876 24,622
-------- --------
Cash and cash equivalents at end of period $ 4,771 $ 17,978
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
5
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FLEXIINTERNATIONAL SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Total
Common Stock Additional Currency stockholders'
---------------- paid-in Accumulated translation Treasury equity Comprehensive
Shares Amount capital deficit adjustment stock (deficit) income
---------- ------ ------- ------- ---------- ----- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 17,383,133 $ 174 $ 56,308 $ (34,561) $ 2 $ (214) $ 21,709
Shares issued for ESPP -- -- -- (78) -- 134 56
Cancellation of options
issued in conjunction
with the acquisition
of The Dodge Group -- -- (180) -- -- -- (180)
Net loss -- -- -- (7,551) -- -- (7,551) $(7,551)
Currency translation
adjustment -- -- -- -- 15 -- 15 15
-------
Comprehensive Income -- -- -- -- -- -- -- $(7,536)
---------- ----- -------- --------- ---- ------ -------- =======
Balance at March 31, 1999 17,383,133 $ 174 $ 56,128 $ (42,190) $ 17 $ (80) $ 14,049
========== ===== ======== ========= ==== ====== ========
</TABLE>
See accompanying notes to condensed financial statements.
6
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FLEXIINTERNATIONAL SOFTWARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction with
the financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
The unaudited condensed consolidated financial statements include the accounts
of FlexiInternational Software, Inc. and its subsidiaries and reflect all
adjustments (which include only normal, recurring adjustments) which are, in the
opinion of management, necessary to state fairly the results for the three month
period ended March 31, 1999. The results for the three month period ended March
31, 1999 are not necessarily indicative of the results expected for the full
year.
NOTE 2 - EARNINGS PER SHARE
Basic earnings per share includes no dilution and is computed by dividing net
income (loss) available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution of securities that could share in the earnings of an
entity, similar to fully diluted earnings per share. The Company has presented
basic and diluted income (loss) per share for all periods. The difference
between the number of shares used in the basic per share calculation compared to
the diluted per share calculation for the three months ended March 31, 1998 is
due to the dilutive effect of outstanding stock options and warrants. The number
of shares used in the March 31, 1999 diluted per share calculation does not
include the effect of outstanding stock options, as the effect would be
anti-dilutive.
NOTE 3 - REVENUE RECOGNITION
The Company licenses software under noncancellable license agreements through
direct and indirect channels, and provides services including maintenance,
training and consulting. Effective January 1, 1998, the Company has adopted SOP
97-2 "Software Revenue Recognition". The adoption of SOP 97-2 had no material
impact on the financial statements. Software license revenues through the
Company's direct sales channel and guaranteed minimum royalties through its
indirect sales channel are recognized when a noncancellable license agreement
has been signed, the product has been delivered and installed, collection is
considered probable by management and all significant contractual obligations
have been satisfied. Other software license royalties earned through the
Company's indirect sales channel are recognized as such fees are reported to the
Company. Revenues on all software license transactions in which there are
significant outstanding obligations are not recognized until such obligations
are fulfilled. Maintenance revenues for maintaining, supporting and providing
periodic upgrading are deferred and recognized ratably over the maintenance
period, generally one year. Revenues from training and consulting services are
recognized as such services are performed. The Company does not require
collateral for its receivables, and reserves are maintained for potential
losses.
NOTE 4 - ACQUISITION
On June 24, 1998, the Company completed the acquisition of The Dodge Group, Inc.
("Dodge"), a software developer that specializes in financial data warehouse
solutions. As a result of the acquisition, the company wrote off $1,890 for
acquired in-process research and development in the June 1998 quarter.
The following table reflects pro forma combined results of operations
(unaudited) of the Company and Dodge, giving effect to the acquisition of Dodge
at the beginning of the fiscal year 1998, for all periods presented, and
excludes the one-time in-process research and development charge of $1,890 for
the periods presented:
7
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<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Revenue $ 4,336 $ 9,650
Net loss $ (7,551) $ (400)
Net loss per diluted common share $ (0.44) $ (0.02)
Shares used in computation 17,339 17,363
</TABLE>
NOTE 5 - RESTRUCTURING CHARGE
On February 26, 1999, management, with the approval of the Board of Directors,
took certain actions to reduce employee headcount in order to align its sales,
development and administrative organization with the current overall
organization structure, and to position the Company for profitable growth in the
future consistent with management's long term objectives. In this regard, the
primary actions taken include involuntary terminations of selected personnel.
Severance packages were offered to 66 employees. This reduction in headcount
also led to the Company having excess leased facility space. As a result of
these actions, the Company recorded a charge to operations during the three
month period ended March 31, 1999 of $1,896. Of the total amount of this charge,
$1,730 was related to severance costs, of which $667 was paid during the three
month period ended March 31, 1999 and $166 related to costs of idle facility
space, of which $18 was paid during the three month period ended March 31, 1999.
The remaining balance of the severance costs, $1,063 will be payable in
installments for up to two years. The Company believes that these actions
resulted in sustainable cost savings, primarily through the elimination of
redundant functions in product development, due to completion of development
work on FlexiFinancials Release 4, and to a lesser extent in the support and
sales organizations.
Detail of the restructuring charge is as follows:
<TABLE>
<CAPTION>
Severance Excess
& benefits facilities Total
---------- ---------- -----
<S> <C> <C> <C>
Reserve balances,
February 26, 1999 $ 1,730 $ 166 $ 1,896
Cash charges (667) (18) (685)
------- ------- -------
Reserve balances,
March 31, 1999 $ 1,063 $ 148 $ 1,211
======= ======= =======
</TABLE>
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Quarterly Report contains
forward-looking statements. For this purpose, any statements contained herein
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," and similar expressions are intended to identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's opinions only as of
the date hereof. The Company undertakes no obligation to revise or publicly
release the results of any revision to these forward-looking statements. Readers
should carefully review the risk factors described in other documents the
Company files from time to time with the Securities and Exchange Commission,
including the Annual Report on Form 10-K for the year ended December 31, 1998.
RESULTS OF OPERATIONS
Revenues. Total revenues, consisting of software license revenues and
service and maintenance revenues, decreased 42.2%, from $7.5 million for the
three months ended March 31, 1998 to $4.3 million for the three months ended
March 31, 1999. Two customers provided approximately 25.5% and 46.5% of the
total revenues for the three months ended March 31, 1999 and 1998, respectively.
Software license revenues decreased 77.5%, from $4.7 million for the three
months ended March 31, 1998 to $1.1 million for the three months ended March 31,
1999. The Company believes that the decline in software license revenue was
primarily due to continued delays in companies' buying decisions as a result of
their focus on Year 2000 issues. Service and maintenance revenues increased
16.3%, from $2.8 million for the three months ended March 31, 1998 to $3.3
million for the three months ended March 31, 1999. The increase was primarily
attributable to the growth of the installed base of customers, which resulted in
an increased maintenance revenue stream.
Cost of Revenues. The Company's cost of revenues consists of cost of
software license revenues and cost of service and maintenance revenues. Cost of
software license revenues consists primarily of the cost of third-party software
products distributed by the Company and the cost of product media, manuals and
shipping. Cost of service and maintenance revenues consists of costs to provide
customers with consulting, implementation, training , software maintenance and
technical support services, and periodic upgrades of software.
Cost of software license revenues decreased 85.4%, from $467,000 for the
three months ended March 31, 1998 to $68,000 for the three months ended March
31, 1999. Cost of software license revenues as a percentage of software license
revenues decreased from 10.0% for the three months ended March 31, 1998 to 6.4%
for the three months ended March 31, 1999. The decrease in cost of software
license revenues in dollar amount was primarily attributable to lower
third-party license fee revenues which resulted in lower royalties.
Cost of service and maintenance revenues increased 48.4%, from $1.8
million for the three months ended March 31, 1998 to $2.6 million for the three
months ended March 31, 1999. Cost of service and maintenance revenues as a
percentage of service and maintenance revenues increased from 62.1% for the
three months ended March 31, 1998 to 79.3% for the three months ended March 31,
1999. The increase in dollar amount resulted primarily from the addition of
service consultants and customer support personnel to provide services to a
larger customer base. The increase as a percentage of service and maintenance
revenues was due to lower utilization of the Company's consulting staff. The
Company has taken actions to bring the cost of service and maintenance into line
with anticipated service and maintenance revenues. As a result, the Company
anticipates cost of service and maintenance revenues to decrease in subsequent
quarters (See Note 5).
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions, travel and promotional expenses, and facility and
communication costs for direct sales offices. Sales and marketing expenses
increased 14.8%, from $2.1 million for the three months ended March 31, 1998 to
$2.5 million for the three months ended March 31, 1999. The increase in dollar
amount was primarily attributable to higher average headcount levels in during
the three months ended March 31, 1999 versus the three months ended March 31,
1998. Sales and marketing expenses as a percentage of total revenues increased
from 28.5% for the three months ended March 31, 1998 to 56.8% for the three
months ended March 31, 1999 due to a lower revenue base. The Company has taken
action to align its sales and marketing costs with its anticipated revenues. As
a result, the Company anticipates sales and marketing expenses to decrease in
subsequent quarters (See Note 5).
9
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Product Development. Product development expenses include software
development costs and consist primarily of engineering personnel costs.
Product development expenses increased 32.8%, from $2.0 million for the
three months ended March 31, 1998 to $2.7 million for the three months ended
March 31, 1999. The increase in product development expenses was due primarily
to the increase in development staff needed to complete work on the Company's
latest version of its software. The Company has subsequently reduced its
development staff to the level needed to maintain and enhance the products
as necessary. As a result, the Company anticipates development expenses to
decrease in subsequent quarters (See Note 5). Product development expenses as a
percentage of total revenues increased from 26.9% for the three months ended
March 31, 1998 to 61.9% for the three months ended March 31, 1999 due to the
lower revenue base.
General and Administrative. General and administrative expenses consist
primarily of salaries of executive, administrative and financial personnel, as
well as provisions for doubtful accounts, amortization of acquired software and
goodwill and outside professional fees. General and administrative expenses
increased 267.5%, from $612,000 for the three months ended March 31, 1998 to
$2.2 million for the three months ended March 31, 1999. The increase was
primarily attributable to an increase in the reserve for bad debts, commencement
of amortization of acquired software and goodwill associated with the June 1998
acquisition of The Dodge Group and an increase in administrative personnel as a
result of The Dodge Group acquisition. General and administrative expenses as a
percentage of total revenues increased from 8.2% for the three months ended
March 31, 1998 to 51.9% for the three months ended March 31, 1999 due to the
increased expenses and lower revenue base. The Company has taken actions to
reduce the ongoing general and administrative expenses.
Provision for Income Taxes. No provision or benefit for federal, state or
foreign income taxes was made for the three month periods ended March 31, 1999
and 1998. The Company has reported only annual tax losses to date and
consequently has approximately $31.0 million and $7.3 million of U.S. and
foreign net operating loss carryforwards, respectively, which expire at various
times through the year 2018, available to offset future taxable income. The
utilization of such net operating losses is subject to limitations as a result
of ownership changes. The annual limitation and the timing of attaining
profitability will result in the expiration of net operating loss carryforwards
before utilization.
Net (Loss) Income and (Loss) Income per Share. The net loss for the three
month period ended March 31, 1999, was ($7.5) million or ($0.44) per basic and
diluted share. Excluding the one-time restructuring charge of $1.9 million the
net loss for the three month period ended March 31, 1999 was ($5.7) million or
($0.33) per basic and diluted share. This compares to net income of $784,000 or
$0.05 per basic and diluted share for the three month period ended March 31,
1998, as reflected in the following table:
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------
1999 1999* 1998
---- ----- ----
(unaudited) (unaudited) (unaudited)
(in thousands, except per share amounts)
<S> <C> <C> <C>
Net (loss) income $(7,551) $(5,655) $ 784
Net (loss) income per share:
Basic $ (0.44) $ (0.33) $ 0.05
Diluted $ (0.44) $ (0.33) $ 0.05
</TABLE>
* Excludes one-time restructuring charge of $1.9 million.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has primarily financed its operations
through private placements of its stock to private investors, issuances of
convertible promissory notes and loans, equipment financing and traditional
borrowing arrangements, and in December 1997, an initial public offering of its
Common Stock, resulting in net proceeds to the Company of approximately $22.2
million.
10
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As of March 31, 1999, the Company had cash and cash equivalents of $4.8
million, a decrease of $3.1 million from December 31, 1998. The Company also had
$3.0 million in short-term marketable securities at March 31, 1999 and December
31, 1998. The Company's working capital at March 31, 1999 was $5.4 million,
compared to $12.6 million at December 31, 1998.
The Company's operating activities resulted in net cash outflow of $5.0
million for the three months March 31, 1999, principally from the net operating
loss. Investing activities, consisting of capital expenditures, resulted in net
cash outflow of $76,000 for the three months ended March 31, 1999. The Company's
financing activities resulted in a net cash inflow for the three months ended
March 31, 1999 of $1.9 million, principally from the proceeds from borrowings
against the Company's line of credit.
The Company's Board of Directors has adopted a share repurchase program
authorizing the Company to purchase up to 1.0 million shares of its common stock
on the open market. As of March 31, 1999 the Company has purchased 135,000
common shares at a total cost of $463,000.
The Company has a working capital revolving line of credit with a bank,
which is secured by the Company's accounts receivable. The amount available
under this facility is limited to the lesser of 80% of the Company's eligible
accounts receivable, or $5.0 million. The facility will expire on May 17, 1999,
unless renewed. The Company is currently in negotiations with the bank, and the
Company expects that it will be successful in renewing the facility, although
there is no guarantee this will happen. At March 31, 1999 the company had $2.0
million outstanding under this line of credit, which was subsequently repaid
after quarter end.
The Company believes that cash and cash equivalents, cash generated
internally by operations, will be sufficient to meet the Company's working
capital requirements for at least the next twelve months.
YEAR 2000 COMPLIANCE
The year 2000 issue relates to computer programs and systems that
recognize dates using two-digit year data rather than four-digit year data.
These programs and systems may fail or provide incorrect information when using
dates after December 31, 1999. If the year 2000 issue disrupts our internal
information technology systems, or the information technology systems of
companies with whom we have significant commercial relationships, our business
and financial condition could be materially adversely affected.
The year 2000 issue may affect three areas of our business: (1) the design
of our products, (2) our internal computer systems, and (3) the computer systems
of our significant suppliers or customers. Each area is addressed below.
1. YEAR 2000 COMPLIANCE OF OUR PRODUCTS. In as much as no test of year
2000 compliance can simulate the actual change of the millennium, we cannot
assure you that our products will be unaffected by the year 2000. From the
beginning, our products have been designed and tested to be year 2000 compliant,
and we design new products, and any updates of existing products, to be year
2000 compliant. However, failures that cannot be detected using currently
available compliance testing could have a material adverse effect on our
business and financial condition.
2. YEAR 2000 COMPLIANCE OF OUR INTERNAL SYSTEMS. Our internal computer
programs and operating systems relate to virtually all segments of our business,
including:
* merchandising
* customer database management
* marketing
* order processing
* order fulfillment
* contract management
* customer service
* financial reporting
These applications are currently, or are expected to be, year 2000 compliant.
Nonetheless, we are requesting compliance statements from any parties that
service and supply these applications. We intend to evaluate any risks disclosed
in their responses and, if necessary, consider possible alternative sources.
11
<PAGE> 12
3. YEAR 2000 COMPLIANCE OF THIRD-PARTY SYSTEMS. The computer programs and
operating systems used by entities with whom we have commercial relationships
pose potential problems relating to the year 2000 issue, which may affect our
operations in a variety of ways. These risks are more difficult to assess than
those posed by internal programs and systems. We rely on third parties for some
of the software code or programs that are embedded in, or work with, our
products. We are assessing whether the functionality of our products would be
materially diminished by a failure of such third-party software to be year 2000
compliant. There can be no assurance that we may not experience unanticipated
expenses or be otherwise adversely impacted by a failure of third-party systems
or software to be year 2000 compliant. The most reasonably likely worst-case
scenarios may include: (i) corruption of data contained in our internal
information systems, (ii) hardware failure, and (iii) failure of infrastructure
services provided by utilities or government. We intend to include an evaluation
of these scenarios in our plan for assessing the programs and systems of the
entities with whom we have commercial relationships.
We have formed a management team assigned with the task of assessing the
programs and systems of the entities with whom we have commercial relationships;
questionnaires have been sent out and responses are being evaluated for possible
next steps. We expect to complete this phase of assessment and identify related
risks and uncertainties by the end of the second quarter of fiscal 1999. Once we
have identified the risks and uncertainties, we intend to resolve any material
risks and uncertainties by communicating further with the relevant vendors and
providers, by working internally to identify alternative sourcing and by
formulating contingency plans to deal with those risks and uncertainties. To
date, however, we have not formulated such a contingency plan. We expect the
resolution of material risks and uncertainties to be an ongoing process until
all year 2000 problems are satisfactorily resolved. We do not currently
anticipate that the total cost of any year 2000 remediation efforts that may be
needed will be material.
EUROPEAN MONETARY UNION ("EMU")
The Company's internal business information systems are comprised of the
same commercial application software products generally offered for license by
the Company to end user customers. The Company's latest software release
contains EMU functionality that allows for dual currency reporting and
information management. The Company is not aware of any material operational
issues or costs associated with preparing internal systems for the EMU. However,
the Company utilizes other third party software products that may or may not be
EMU compliant. Although the Company is currently taking steps to address the
impact, if any, of EMU compliance for such third party products, failure of any
critical technology components to operate properly post EMU may have an adverse
impact on business operations or require the Company to incur unanticipated
expenses to remedy any problems.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risk refers to the potential effects of unfavorable changes in
certain prices and rates on Company's financial results and conditions,
primarily foreign currency exchange rates and interest rates on marketable
securities. The Company does not utilize derivative instruments in managing its
exposure to such changes. The Company does not believe that near-term changes
in foreign currency exchange rates or interest rates will have a material
effect on its future earnings, fair values or cash flows.
12
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(d) Use of Proceeds.
(1) The Company's registration statement on Form S-1 under the
Securities Act of 1933, as amended, (File No. 333-38403) for the
Company's initial public offering, the use of proceeds of which
is herein reported, was declared effective as of December 11,
1997.
(4) (vii) The Company used approximately $15.6 million of the
proceeds from the initial public offering for ongoing
operations of the Company ($13.4 million), for the
purchase and installation of property and equipment ($1.0
million), the payments of convertible notes payable in
connection with the Dodge acquisition ($754,000), and the
purchase 135,000 shares ($463,000) of its common stock on
the open market under the Company's share repurchase
program. Payment of these expenses were to persons other
than (a) directors or officers of the Company or their
associates, (b) persons owning 10% or more of the equity
securities of the Company or (c) affiliates of the
Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated By-Laws
10.1 Severance and Settlement Agreement and Release dated
February 2, 1999 between the Registrant and Jennifer V.
Cheng.
10.2 Severance and Settlement Agreement and Release dated
February 2, 1999 between the Registrant and James W.
Schenck.
10.3 Amendment of Options dated May 12, 1999 between the
Registrant and Jennifer V. Cheng.
10.4 Amendment of Options dated May 12, 1999 between the
Registrant and James W. Schenck.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FLEXIINTERNATIONAL SOFTWARE, INC.
By: /s/ Stefan R. Bothe
-------------------------------
Stefan R. Bothe, Chairman & CEO
Date: May 14, 1999
13
<PAGE> 14
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
3.1 Amended and Restated Certificate of Incorporation of the
Registrant is incorporated herein by reference to Exhibit 3.2 to
the Registrant's Registration Statement on Form S-1, as amended
(File No 333-38403) (the "Form S-1").
3.2 Amended and Restated By-Laws of the Registrant is incorporated
herein by reference to Exhibit 3.4 to the Form S-1.
10.1 Severance and Settlement Agreement and Release dated February 2,
1999 between the Registrant and Jennifer V. Cheng.
10.2 Severance and Settlement Agreement and Release dated February 2,
1999 between the Registrant and James W. Schenck.
10.3 Amendment of Options dated May 12, 1999 between the Registrant and
Jennifer V. Cheng.
10.4 Amendment of Options dated May 12, 1999 between the Registrant and
James W. Schenck.
27.1 Financial Data Schedule (three month period ended March 31, 1999).
14
<PAGE> 1
Exhibit 10.1
SEVERANCE AND SETTLEMENT AGREEMENT AND RELEASE
AGREEMENT made as of the 2ND day of February, 1999 by and between
FlexiInternational Software, Inc. (the "Company") and Jennifer Cheng (the
"Employee").
WHEREAS, the parties wish to resolve amicably the Employee's
separation from the Company and establish the terms of the Employee's severance
arrangement;
NOW, THEREFORE, in consideration of the promises and conditions set
forth herein, the sufficiency of which is hereby acknowledged, the Company and
the Employee agree as follows:
1. RESIGNATION DATE. The Employee's effective date of resignation
from employment with the Company is FEBRUARY 15, 1999. Notwithstanding the
Employee's resignation from employment, nothing in this Agreement shall affect
the Employee's election to, current service upon, or potential re-election to
the Company's Board of Directors.
2. In return for the execution of the instant Severance and
Settlement Agreement and Release, the Company shall grant the Employee the
following severance benefits:
(a) As severance pay, the Company will continue to pay the
Employee's salary ("Salary Continuation") at the base salary rate at which she
was paid at the end of calendar year 1998 (the rate of $185,000 PER YEAR), less
all applicable state and federal taxes, for a period of one (1) year after the
Resignation Date (the "Severance Period"). The Salary Continuation shall be paid
to the Employee in accordance with the
<PAGE> 2
Company's regular payroll practices, the first payment to be made no earlier
than the eighth (8th) day after execution of the Agreement.
(b) In addition to the Salary Continuation referenced in
paragraph 2(a), once each month during the Severance Period the Employee shall
receive the sum of $11,221 (the "Monthly Payment"), less all applicable state
and federal taxes. The total of such payments during the Severance Period shall
be $134,648.
(c) If the Employee has not commenced new employment before
the conclusion of the Severance Period, the Employee shall receive additional
severance pay as follows: the Company agrees to pay the Employee additional
Salary Continuation, in the manner and subject to the deductions described in
paragraph 2(a), and to pay the Employee additional Monthly Payments, in the
manner and subject to the deductions described in paragraph 2(b), until the
Employee is employed; provided, however, that in no event shall the Company be
required to pay additional Salary Continuation or additional Monthly Payments
for a period longer than one (1) year after the conclusion of the Severance
Period. Amounts paid to the Employee under this paragraph 2(c) shall be reduced
by any amounts in excess of $20,000.00 that the Employee receives for consulting
services she provides to any person or entity other than the Company after the
Severance Period. The Employee shall notify the Company in writing of any
amounts received for such consulting services within 14 days of the date she
receives such payment.
-2-
<PAGE> 3
(d) In the event that the Employee elects to continue
receiving group medical insurance pursuant to the federal "COBRA" law, 29 U.S.C.
ss. 1161 ET SEQ., the Company shall continue to pay the share of the premium for
such coverage that iS paid by the Company for active and similarly-situated
employees who receive the same type of coverage, during the period of time (the
"Health Insurance Payment Period") running from the Resignation Date to the
first to occur of: (i) the expiration of 18 months from the Resignation Date; or
(ii) the time at which the Employee becomes eligible to participate in the group
medical insurance plan of another employer. The remaining balance of any premium
costs shall be paid by the Employee on a monthly basis for as long as, and to
the extent that, the Employee remains eligible for COBRA continuation. All other
benefits, including life insurance and long term disability, will cease upon the
Resignation Date.
3. CONSULTANT RELATIONSHIP. During any period of time the
Employee is receiving severance payments from the Company under paragraphs 2(a),
2(b) or 2(c) of this Agreement, the Employee shall be available at mutually
convenient times to consult with the Company from time to time on an as needed
basis. Other than the severance pay described in paragraph 2(a), 2(b), and 2(c),
the Employee shall not be entitled to receive any additional compensation for
providing such consulting services.
4. RELEASE. The Employee hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company, its officers,
directors, stockholders, corporate affiliates, agents and employees from any and
all claims,
-3-
<PAGE> 4
charges, complaints, demands, actions, causes of action, suits, rights, debts,
sums of money, costs, accounts, reckonings, covenants, contracts, agreements,
promises, doings, omissions, damages, executions, obligations, liabilities, and
expenses (including attorneys' fees and costs), of every kind and nature which
she ever had or now has against the Company, its officers, directors,
stockholders, corporate affiliates, agents and employees, including, but not
limited to, all claims arising out of her employment, all employment
discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
ss.2000E ET SEQ., the Age Discrimination in Employment Act, 29 U.S.C., ss.621 ET
SEQ., the Americans With Disabilities Act, 42 U.S.C. ss.12101 ET SEQ., the
Connecticut Human Rights and Opportunities Act, Conn. Gen. Stat. ss. 46A-51 ET
SEQ., damages arising out of all employment discrimination claims, all other
employment discrimination claims, wrongful discharge, common law tort,
defamation, breach of contract and all other common law claims and damages, and
all claims and damages under any federal, state or local statutes or ordinances
not expressly referenced above.
5. NATURE OF AGREEMENT. The Employee understands and agrees that
this Agreement is a severance and settlement agreement and does not constitute
an admission of liability or wrongdoing on the part of the Company.
6. AMENDMENT. This Agreement shall be binding upon the parties
and may not be abandoned, supplemented, changed or modified in any manner,
orally or otherwise, except by an instrument in writing of concurrent or
subsequent date signed by a duly authorized representative of the parties
hereto. This Agreement is binding
-4-
<PAGE> 5
upon and shall inure to the benefit of the parties and their respective agents,
assigns, heirs, executors, successors and administrators.
7. VALIDITY. Should any provision of this Agreement be declared
or be determined by any court of competent jurisdiction to be illegal or
invalid, the validity of the remaining parts, terms, or provisions shall not be
affected thereby and said illegal and invalid part, term or provision shall be
deemed not to be a part of this Agreement.
8. CONFIDENTIALITY. The Employee understands and agrees that the
terms and contents of this Agreement, and the contents of the negotiations and
discussions resulting in this Agreement, shall be maintained as confidential by
the Employee, her agents and representatives, and none of the above shall be
disclosed except to the extent required by federal or state law or as otherwise
agreed to in writing by the authorized agent of each party.
9. NON-DISCLOSURE AND NON-COMPETITION. The Employee acknowledges
her obligation to keep confidential all non-public information concerning the
Company which the Employee acquired during the course of employment with the
Company. As stated more fully in the non-disclosure agreement signed by the
Employee at the inception of employment (which remains in full force and
effect), the Employee will not disclose any such information to, or use such
information for the benefit of, any third party, including competitors of the
Company. The Employee further acknowledges and reaffirms her obligations under
any non-competition and/or non-solicitation agreement previously signed by her
for the benefit of the Company. The Employee
-5-
<PAGE> 6
further acknowledges that the obligations pursuant to any non-competition and/or
non-solicitation agreement will remain in full force and effect.
10. ENTIRE AGREEMENT. This Agreement contains and constitutes the
entire understanding and agreement between the parties hereto with respect to
the severance and settlement and cancels all previous oral and written
negotiations, agreements, commitments, and writings in connection therewith.
11. APPLICABLE LAW. This agreement shall be interpreted and construed
by the laws of the State of Connecticut, without regard to conflict of laws
provisions. The Employee hereby irrevocably submits to and acknowledges and
recognizes the jurisdiction of the courts of the State of Connecticut (which
courts, together with all applicable appellate courts, for purposes of this
agreement, are the only courts of competent jurisdiction) over any suit, action
or other proceeding arising out of, under or in connection with this agreement
or the subject matter hereof.
12. ACKNOWLEDGMENTS. The Employee acknowledges that she has been
given forty-five (45) days to consider this Agreement and that the Company
advised her to consult with an attorney of her own choosing prior to signing
this Agreement. The Employee may revoke this Agreement for a period of seven (7)
days after the execution of this Agreement, and the Agreement shall not be
effective or enforceable until the expiration of this seven (7) day revocation
period. Attached to this Agreement as Exhibit A is a description of (i) any
class, unit or group of individuals covered by the program of severance benefits
which the Company has offered to you, and any
-6-
<PAGE> 7
applicable time limits regarding such severance benefit program; and (ii) the
job title and ages of all individuals eligible or selected for such severance
benefit program, and the ages of all individuals in the same job classification
or organizational unit who are eligible or who were not selected for such
severance benefit program. By your signature below you acknowledge that you have
received Exhibit A and that you understand its contents.
13. VOLUNTARY ASSENT. The Employee affirms that no other promises or
agreements of any kind have been made to or with her by any person or entity
whatsoever to cause her to sign this Agreement, and that she fully understands
the meaning and intent of this Agreement. The Employee states and represents
that she has had an opportunity to fully discuss and review the terms of this
Agreement with an attorney. The Employee further states and represents that she
has carefully read this Agreement, understands the contents herein, freely and
voluntarily assents to all of the terms and conditions hereof, and signs her
name of her own free act.
14. COUNTERPARTS. This Agreement may be executed in two (2) signature
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute but one and the same instrument.
-7-
<PAGE> 8
IN WITNESS WHEREOF, all parties have set their hand and seal to this
Agreement as of the date written above.
___________________________________ Date: _____________
Name: Jennifer Cheng
FlexiInternational Software, Inc.
By: _______________________________ Date: _____________
Name:
Title:
-8-
<PAGE> 9
EXHIBIT A
OLDER WORKERS BENEFIT PROTECTION ACT
NOTICE TO EMPLOYEES
AGE AND TITLE INFORMATION
In connection with your severance agreement and the program of
severance benefits described therein, you are being provided with information as
to (i) any class, unit or group of individuals covered by such program, and any
time limits applicable to such program; and (ii) the job title and ages of all
individuals eligible or selected for the program, and the ages of all
individuals in the same job classification or organizational unit who are not
eligible or selected for the program. Eligible employees shall have 45 days to
consider the Company's severance offer and may revoke their agreement to
participate in the program within seven days of their execution of an agreement.
Departments Job Title and Ages Job Title and Ages of
Affected of Eligible Employees Ineligible Employees
- --------------------------------------------------------------------------------
Company Officers President and Chief Sr. Vice President and
Operating Officer (49) Chief Fin. Officer (51)
Executive Vice President (49) Chief Exec. Officer (49)
Vice President (38)
-9-
<PAGE> 1
Exhibit 10.2
SEVERANCE AND SETTLEMENT AGREEMENT AND RELEASE
AGREEMENT made as of the 2ND day of February, 1999 by and between
FlexiInternational Software, Inc. (the "Company") and James Schenk (the
"Employee").
WHEREAS, the parties wish to resolve amicably the Employee's
separation from the Company and establish the terms of the Employee's severance
arrangement;
NOW, THEREFORE, in consideration of the promises and conditions set
forth herein, the sufficiency of which is hereby acknowledged, the Company and
the Employee agree as follows:
1. RESIGNATION DATE. The Employee's effective date of resignation
from employment with the Company is FEBRUARY 15, 1999.
2. In return for the execution of the instant Severance and
Settlement Agreement and Release, the Company shall grant the Employee the
following severance benefits:
(a) As severance pay, the Company will continue to pay the
Employee's salary ("Salary Continuation") at the base salary rate at which he
was paid at the end of calendar year 1998 (the rate of $165,000 PER YEAR), less
all applicable state and federal taxes, for a period of one (1) year after the
Resignation Date (the "Severance Period"). The Salary Continuation shall be paid
to the Employee in accordance with the Company's regular payroll practices, the
first payment to be made no earlier than the eighth (8th) day after execution of
the Agreement.
(b) In addition to the Salary Continuation referenced in
paragraph 2(a), once each month during the Severance Period the Employee shall
receive the sum of
<PAGE> 2
$2,000 (the "Monthly Payment"), less all applicable state and federal taxes. The
total of such payments during the Severance Period shall be $24,000.
(c) If the Employee has not commenced new employment before
the conclusion of the Severance Period, the Employee shall receive additional
severance pay as follows: the Company agrees to pay the Employee additional
Salary Continuation, in the manner and subject to the deductions described in
paragraph 2(a), and to pay the Employee additional Monthly Payments, in the
manner and subject to the deductions described in paragraph 2(b), until the
Employee is employed; provided, however, that in no event shall the Company be
required to pay additional Salary Continuation or additional Monthly Payments
for a period longer than one (1) year after the conclusion of the Severance
Period. Amounts paid to the Employee under this paragraph 2(c) shall be reduced
by any amounts in excess of $20,000.00 that the Employee receives for consulting
services he provides to any person or entity other than the Company after the
Severance Period. The Employee shall notify the Company in writing of any
amounts received for such consulting services within 14 days of the date he
receives such payment.
(d) In the event that the Employee elects to continue
receiving group medical insurance pursuant to the federal "COBRA" law, 29 U.S.C.
ss. 1161 ET SEQ., the Company shall continue to pay the share of the premium for
such coverage that iS paid by the Company for active and similarly-situated
employees who receive the same type of coverage, during the period of time (the
"Health Insurance Payment Period") running
-2-
<PAGE> 3
from the Resignation Date to the first to occur of: (i) the expiration of 18
months from the Resignation Date; or (ii) the time at which the Employee becomes
eligible to participate in the group medical insurance plan of another employer.
The remaining balance of any premium costs shall be paid by the Employee on a
monthly basis for as long as, and to the extent that, the Employee remains
eligible for COBRA continuation. All other benefits, including life insurance
and long term disability, will cease upon the Resignation Date.
3. CONSULTANT RELATIONSHIP. During any period of time the Employee is
receiving severance payments from the Company under paragraphs 2(a), 2(b) or
2(c) of this Agreement, the Employee shall be available at mutually convenient
times to consult with the Company from time to time on an as needed basis. Other
than the severance pay described in paragraph 2(a), 2(b), and 2(c), the Employee
shall not be entitled to receive any additional compensation for providing such
consulting services.
4. RELEASE. The Employee hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company, its officers,
directors, stockholders, corporate affiliates, agents and employees from any and
all claims, charges, complaints, demands, actions, causes of action, suits,
rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts,
agreements, promises, doings, omissions, damages, executions, obligations,
liabilities, and expenses (including attorneys' fees and costs), of every kind
and nature which he ever had or now has against the Company, its officers,
directors, stockholders, corporate affiliates, agents
-3-
<PAGE> 4
and employees, including, but not limited to, all claims arising out of his
employment, all employment discrimination claims under Title VII of the Civil
Rights Act of 1964, 42 U.S.C. ss.2000E ET SEQ., the Age Discrimination in
Employment Act, 29 U.S.C., ss.621 ET SEQ., the Americans With Disabilities Act,
42 U.S.C. ss.12101 ET SEQ., the Connecticut Human Rights and Opportunities Act,
Conn. Gen. Stat. ss. 46A-51 ET SEQ., damages arising out of all employment
discrimination claims, all other employment discrimination claims, wrongful
discharge, common law tort, defamation, breach of contract and all other common
law claims and damages, and all claims and damages under any federal, state or
local statutes or ordinances not expressly referenced above.
5. RETURN OF COMPANY PROPERTY. The Employee agrees to return all
Company property and equipment in his possession or control, including, but not
limited to, all Company files and documents.
6. NATURE OF AGREEMENT. The Employee understands and agrees that this
Agreement is a severance and settlement agreement and does not constitute an
admission of liability or wrongdoing on the part of the Company.
7. AMENDMENT. This Agreement shall be binding upon the parties and
may not be abandoned, supplemented, changed or modified in any manner, orally or
otherwise, except by an instrument in writing of concurrent or subsequent date
signed by a duly authorized representative of the parties hereto. This Agreement
is binding upon and shall inure to the benefit of the parties and their
respective agents, assigns, heirs, executors, successors and administrators.
-4-
<PAGE> 5
8. VALIDITY. Should any provision of this Agreement be declared or be
determined by any court of competent jurisdiction to be illegal or invalid, the
validity of the remaining parts, terms, or provisions shall not be affected
thereby and said illegal and invalid part, term or provision shall be deemed not
to be a part of this Agreement.
9. CONFIDENTIALITY. The Employee understands and agrees that the
terms and contents of this Agreement, and the contents of the negotiations and
discussions resulting in this Agreement, shall be maintained as confidential by
the Employee, his agents and representatives, and none of the above shall be
disclosed except to the extent required by federal or state law or as otherwise
agreed to in writing by the authorized agent of each party.
10. NON-DISPARAGEMENT. The Employee understands and agrees that as a
condition for payment to him of the consideration herein described, the Employee
shall not make any false, disparaging or derogatory statements in public or
private regarding the Company or any of its directors, officers, employees,
agents or representatives or the Company's business affairs and financial
condition.
11. NON-DISCLOSURE AND NON-COMPETITION. The Employee acknowledges his
obligation to keep confidential all non-public information concerning the
Company which the Employee acquired during the course of employment with the
Company. As stated more fully in the non-disclosure agreement signed by the
Employee at the inception of employment (which remains in full force and
effect), the Employee will not disclose any such information to, or use such
information for the benefit of, any third
-5-
<PAGE> 6
party, including competitors of the Company. The Employee further acknowledges
and reaffirms his obligations under any non-competition and/or non-solicitation
agreement previously signed by him for the benefit of the Company. The Employee
further acknowledges that the obligations pursuant to any non-competition and/or
non-solicitation agreement will remain in full force and effect.
12. ENTIRE AGREEMENT. This Agreement contains and constitutes the
entire understanding and agreement between the parties hereto with respect to
the severance and settlement and cancels all previous oral and written
negotiations, agreements, commitments, and writings in connection therewith.
13. APPLICABLE LAW. This agreement shall be interpreted and construed
by the laws of the State of Connecticut, without regard to conflict of laws
provisions. The Employee hereby irrevocably submits to and acknowledges and
recognizes the jurisdiction of the courts of the State of Connecticut (which
courts, together with all applicable appellate courts, for purposes of this
agreement, are the only courts of competent jurisdiction) over any suit, action
or other proceeding arising out of, under or in connection with this agreement
or the subject matter hereof.
14. ACKNOWLEDGMENTS. The Employee acknowledges that he has been given
forty-five (45) days to consider this Agreement and that the Company advised him
to consult with an attorney of his own choosing prior to signing this Agreement.
The Employee may revoke this Agreement for a period of seven (7) days after the
execution of this Agreement, and the Agreement shall not be effective or
enforceable until the
-6-
<PAGE> 7
expiration of this seven (7) day revocation period. Attached to this Agreement
as Exhibit A is a description of (i) any class, unit or group of individuals
covered by the program of severance benefits which the Company has offered to
you, and any applicable time limits regarding such severance benefit program;
and (ii) the job title and ages of all individuals eligible or selected for such
severance benefit program, and the ages of all individuals in the same job
classification or organizational unit who are eligible or who were not selected
for such severance benefit program. By your signature below you acknowledge that
you have received Exhibit A and that you understand its contents.
15. VOLUNTARY ASSENT. The Employee affirms that no other promises or
agreements of any kind have been made to or with him by any person or entity
whatsoever to cause him to sign this Agreement, and that he fully understands
the meaning and intent of this Agreement. The Employee states and represents
that he has had an opportunity to fully discuss and review the terms of this
Agreement with an attorney. The Employee further states and represents that he
has carefully read this Agreement, understands the contents herein, freely and
voluntarily assents to all of the terms and conditions hereof, and signs his
name of his own free act.
16. COUNTERPARTS. This Agreement may be executed in two (2) signature
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute but one and the same instrument.
-7-
<PAGE> 8
IN WITNESS WHEREOF, all parties have set their hand and seal to this
Agreement as of the date written above.
___________________________________ Date: _____________
Name: James Schenk
FlexiInternational Software, Inc.
By: _______________________________ Date: _____________
Name:
Title:
-8-
<PAGE> 9
EXHIBIT A
OLDER WORKERS BENEFIT PROTECTION ACT
NOTICE TO EMPLOYEES
AGE AND TITLE INFORMATION
In connection with your severance agreement and the program of
severance benefits described therein, you are being provided with information as
to (i) any class, unit or group of individuals covered by such program, and any
time limits applicable to such program; and (ii) the job title and ages of all
individuals eligible or selected for the program, and the ages of all
individuals in the same job classification or organizational unit who are not
eligible or selected for the program. Eligible employees shall have 45 days to
consider the Company's severance offer and may revoke their agreement to
participate in the program within seven days of their execution of an agreement.
Departments Job Title and Ages Job Title and Ages of
Affected of Eligible Employees Ineligible Employees
- --------------------------------------------------------------------------------
Company Officers President and Chief Sr. Vice President and
Operating Officer (49) Chief Fin. Officer (51)
Executive Vice President (49) Chief Exec. Officer (49)
Vice President (38)
-9-
<PAGE> 1
Exhibit 10.3
AMENDMENT OF OPTIONS
This Amendment of Options is made this 12th day of May, 1999 between
FlexiInternational Software, Inc. (the "Company") and Jennifer V. Cheng (the
"Optionholder"). For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agree as follows:
1. Each of the agreements in effect on January 21, 1999 between the
Company and the Optionholder to purchase shares of common stock of the
Company (each, an "Option") is hereby amended to provide that the
shares issuable under such Option shall, notwithstanding any provision
to the contrary therein, become fully exercisable on the termination
of the Company's obligation to pay Salary Continuation as defined in
the Severance and Settlement Agreement dated February 2, 1999 between
the Company and the Optionholder, unless such Option has then or
previously expired.
2. All terms of each of the Options shall be deemed amended and
supplemented to the extent necessary to effect the intent of the
foregoing provision.
3. Except as expressly provided above, each of the Options shall remain
in effect in accordance with its terms.
In witness whereof, the undersigned have duly executed this Amendment
of Options as of the date first set forth above.
FLEXIINTERNATIONAL SOFTWARE, INC.
By: /s/ Jennifer V. Cheng
---------------------------- ---------------------------
Name: (Signature of Optionholder)
---------------------------
Title:
--------------------------
<PAGE> 1
Exhibit 10.4
AMENDMENT OF OPTIONS
This Amendment of Options is made this 12th day of May, 1999 between
FlexiInternational Software, Inc. (the "Company") and James W. Schenck (the
"Optionholder"). For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agree as follows:
1. Each of the agreements in effect on January 21, 1999 between the
Company and the Optionholder to purchase shares of common stock of the
Company (each, an "Option") is hereby amended to provide that the
shares issuable under such Option shall, notwithstanding any provision
to the contrary therein, become fully exercisable on the termination
of the Company's obligation to pay Salary Continuation as defined in
the Severance and Settlement Agreement dated February 2, 1999 between
the Company and the Optionholder, unless such Option has then or
previously expired.
2. All terms of each of the Options shall be deemed amended and
supplemented to the extent necessary to effect the intent of the
foregoing provision.
3. Except as expressly provided above, each of the Options shall remain
in effect in accordance with its terms.
In witness whereof, the undersigned have duly executed this Amendment
of Options as of the date first set forth above.
FLEXIINTERNATIONAL SOFTWARE, INC.
By: /s/ /s/ James W. Schenck
---------------------------- ---------------------------
Name: (Signature of Optionholder)
---------------------------
Title:
--------------------------
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 4,771
<SECURITIES> 3,000
<RECEIVABLES> 10,267
<ALLOWANCES> 985
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<CURRENT-ASSETS> 18,696
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<TOTAL-ASSETS> 28,013
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0
0
<COMMON> 174
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<TOTAL-LIABILITY-AND-EQUITY> 28,013
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<EPS-PRIMARY> (0.44)
<EPS-DILUTED> (0.44)
</TABLE>
