<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
- ----- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
X TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from January 1, 1996 to July 31, 1996
Commission File Number 0-20008
VTEL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 74-2415696
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
108 WILD BASIN ROAD
AUSTIN, TEXAS 78746
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code:
(512) 314-2700
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
______________________________
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.[_]
The aggregate market value of Common Stock held by nonaffiliates of the
registrant as of October 1, 1996 was $101,513,506. For purposes of this
computation, all officers, directors and 5% beneficial owners of the registrant
are deemed to be affiliates. Such determination should not be deemed an
admission that such officers, directors and beneficial owners are, in fact,
affiliates of the registrant.
As of October 25, 1996, there was 13,901,073 shares of the registrant's
Common Stock, $0.1 par value, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
VTEL Corporation, a Delaware corporation (the "Company"), hereby amends, as
set forth herein, the Company's Transition Report on Form 10-K filed with the
Securities and Exchange Commission on November 13, 1996.
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The item numbers and responses thereto are in accordance with the
requirements of Form 10-K. All capitalized terms used and not otherwise defined
herein shall have the meaning specified in the Company's Transition Report on
Form 10-K.
The Company hereby amends and restates in its entirety each of the
following items of the Company's Transition Report on Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------------------------
The Company's Board of Directors consists currently of five directors.
Directors are elected for one-year terms and serve until their successors are
elected and qualified. All of the executive officers of the Company are full-
time employees of the Company. Executive officers of the Company are appointed
for a one-year term and serve until their respective successors have been
selected and qualified; provided, however, such officers are subject to removal
-------- -------
at any time by the affirmative vote of a majority of the Board of Directors.
Reference is made to Part I hereof for a description of the executive
officers of the Company.
The following is a description of the principal occupations and other
employment during the past five years and their directorships in certain
companies of the directors of the Company.
F.H. (DICK) MOELLER, age 51, joined the Company as Chief Executive
Officer, President and Director in October 1989 and became the Chairman of the
Board in March 1992. From May 1982 to October 1989, Mr. Moeller served as the
founder and President of ProfitMaster Computer Systems, Inc., a computer
software firm specializing in real-time financial management systems for retail
point-of-sale applications. Prior to founding such firm, Mr. Moeller spent 12
years with Texas Instruments Incorporated during which he held a variety of
management positions, most recently serving as Advanced Systems Manager of its
Computer Systems Division. Mr. Moeller is also a director of AMX Corp. and
Accord Telecommunications, LTD. (Israel).
ERIC L. JONES, age 61, has served as a Director to the Company since
June 1989. He also served as the Company's President and Chief Executive
Officer from June 1989 until October 1989 and as the Company's Chairman of the
Board from October 1989 until March 1992. He also serves as chairman and/or
director of several privately-held companies. Since January 1994, he has been a
general partner of SSM Venture Partners, L.P., a venture capital firm.
Previously, Mr. Jones has served as Vice President of Texas Instruments
Incorporated, as President of its Data Systems Group and Vice President of its
Geophysical Services Inc. subsidiary. He holds a Ph.D. in Mechanical Engineering
from The University of Texas at Austin.
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JOHN V. JAGGERS, age 45, has been a Director of the Company since May
1991. Since November 1988, Mr. Jaggers has been associated with Sevin Rosen
Funds, a family of venture capital funds. Prior to October 1989, Mr. Jaggers
served as a consultant to Sevin Rosen Funds, and he is currently a general
partner of SRB Associates III L.P., SRB Associates IV L.P. and SRB Associates V
L.P., the general partners respectively of Sevin Rosen Fund III L.P., Sevin
Rosen Fund IV, L.P. and Sevin Rosen Fund V L.P. From January 1984 until November
1988, Mr. Jaggers was President of Rotan Mosle Technology, Inc., the general
partner of Rotan Mosle Technology Partners, Ltd., a venture capital partnership.
GORDON H. MATTHEWS, age 59, has served as a Director of the Company
since his election to the Board by the other directors in October 1994. Since
May of 1992, Mr. Matthews has been the Chief Executive Officer and Chairman of
Matthews Communications Management, Inc., a provider of voice mail services, and
Chairman and President of Matthews Communication Systems, Inc., a consulting
firm providing assistance to corporations on intellectual property processes.
Mr. Matthews' pre-1992 experience includes founding and managing a number of
companies in the electronics industry. Mr. Matthews has also invented and holds
patents for a number of technology products, including inventing voice mail.
MAX D. HOPPER, age 61, has served as a Director of the Company since
May 1995. In January 1995, Mr. Hopper founded Max D. Hopper Associates, Inc., a
consulting firm specializing in creating benefits from the strategic use of
advanced information technologies. He currently serves as its Chief Executive
Officer. Mr. Hopper served as Senior Vice President--Information Systems for
American Airlines from November 1985 to January 1995 and served as chairman of
The SABRE Group, a unit of AMR Corporation, from April 1993 through January
1995. Mr. Hopper is also a director of the Gartner Group, Computer Language
Research, Inc., Gupta Corporation, Scopus Technology and USDATA Corporation.
None of the directors or executive officers of the Company is related
to any other nominee or to any executive officer or Director of the Company by
blood, marriage or adoption (except relationships, if any, more remote than
first cousin).
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and Directors, and persons who
beneficially own more than 10% of the Company's Common Stock ("10%
Stockholders"), to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based solely upon information provided to
the Company by individual officers, Directors and 10% stockholders, the Company
believes that all of these filing requirements were satisfied by the Company's
officers, Directors and 10% Stockholders, except for one Notice on Form 4 which
was not timely filed by Mr. Eric L. Jones with respect to the acquisition of 686
shares of Common Stock.
ITEM 11. EXECUTIVE COMPENSATION.
----------------------
The following table summarizes certain information regarding compensation
paid or accrued to (i) the Company's Chief Executive Officer, (ii) each of the
Company's four other most highly compensated executive officers, and (iii) two
additional former executive officers for whom disclosure would have been
required by the rules of the Securities and Exchange Commission but for the fact
that
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these two individuals were not serving as executive officers as of July 31,
1996, during the seven month transition period ended July 31, 1996 reflecting
the change of fiscal year and during the years ended December 31, 1993, 1994 and
1995 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards/(1)/
---------------------------------------- ------------
Year
Ending
July 31 Other Annual Securities
or Compensation Underlying All Other
Name and Principal Position Dec. 31* Salary($) Bonus ($) ($)/(2)/ Options/SARs (#) Compensation($)/(3)/
- --------------------------- -------- --------- --------- ------------ ---------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
F.H. (Dick) Moeller 7 mos. $115,417 $ 3,623 $ 0 100,000 3,622
Chairman, President and 1995 $195,000 $ 52,750 $ 0 25,000 $ 3,831
Chief Executive Officer 1994 $195,000 $173,187 $ 0 25,000 $ 1,802
1993 $195,000 $ 41,110 $ 0 0 $ 1,802
Glenn A. Pierce 7 mos. $110,833 0 $ 0 0 $ 50,147/(4)/
Former Chief Operating 1995 $190,000 $ 48,873 $ 0 25,000 $ 381
Officer and President 1994 $190,000 $167,536 $ 0 25,000 $ 86
1993 $190,000 $ 40,350 $ 0 236,250/(1)(7)/ $ 86
Clayton A. Reed 7 mos. $ 75,208 $ 16,181 $ 0 0 $ 10,056/(5)/
Former Senior Vice 1995 $155,000 $ 48,223 $ 0 10,000 $ 381
President-Sales 1994 $155,000 $ 98,840 $ 0 10,000 $ 86
1993 $135,000 $ 37,530 $ 37,500/(5)/ 75,000/(1)/ $ 52
Michael O'Dell 7 mos. $ 90,000 $ 3,856 $ 0 15,000 $ 172
Vice President- 1995 $150,000 $ 40,225 $ 0 10,000 $ 347
General Manager 1994 $150,000 $116,312 $ 0 10,000 $ 52
1993 $ 71,058 $ 22,031 $ 37,000/(6)/ 75,000 $ 22
Rodney S. Bond 7 mos. $ 77,083 $ 4,250 $ 0 15,000 $ 172
Chief Financial Officer 1995 $125,000 $ 44,068 $ 0 10,000 $ 381
Vice President-Finance, 1994 $112,950 $ 91,296 $ 0 12,000 $ 86
Treasurer and Secretary 1993 $100,900 $ 25,586 $ 0 0 $ 52
Thomas C. Stevenson 7 mos. $ 76,250 $ 4,363 $ 0 15,000 $ 172
Vice President- 1995 $125,000 $ 34,269 $ 0 0 $ 295
Marketing 1994 $ 42,824 $ 18,875 $ 35,000/(8)/ 50,000 $ 98
1993 N/A N/A N/A N/A N/A
Michael P. Cronin 7 mos. $ 81,667 $ 17,896 $ 0 3,750 $ 172
Vice President-North 1995 $120,750 $ 56,531 $ 69,266/(8)/ 15,000 $ 283
American Sales 1994 $ 16,209 0 $ 0 35,000 0
1993 N/A N/A N/A N/A N/A
- -----------------------
</TABLE>
* The Company changed its fiscal year from December 31 to July 31.
1. Effective as of May 5, 1993, the Compensation Committee approved an
exchange program pursuant to which all holders of options under the 1989 Plan
were permitted an opportunity to exchange their options outstanding under the
1989 Plan for new options having an exercise price of $4.00, the fair market
value of the Common Stock on May 5, 1993. The new options issued pursuant to
this program vest ratably over a 48-month period commencing on May 5, 1993.
Subsequently, 42.4% of the eligible options, representing options covering
336,250 shares of Common Stock were repriced pursuant to this exchange program.
Grants in 1993 to Mr. Pierce and Mr. Reed were repricing of options originally
granted in 1992. Effective April 15, 1996, Mr. Pierce was no longer an executive
officer of the Company and effective June 21, 1996, Mr. Reed was no longer an
executive officer of the Company.
2. Includes perquisites and other personal benefits if value is greater
than the lesser of $50,000 or 10% of reported salary and bonus.
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3. Represents the dollar value of any insurance premiums paid by the
Company during the covered fiscal year with respect to term life insurance and
long term disability insurance for the benefit of the Chief Executive Officer or
Named Executive Officer.
4. Represents $147 related to the dollar value of any insurance premiums
paid by the Company during the covered fiscal year with respect to term life
insurance and long term disability insurance for the benefit of Mr. Pierce and
$50,000 for the settlement of severance benefits. Mr. Pierce resigned all
offices and directorships of the Company effective April 15, 1996.
5. Consists of relocation expenses paid by the Company in 1993 and the
payment of accrued vacation in 1996. Mr. Reed left the employ of the Company
effective June 21, 1996.
6. Consists of a $37,000 bonus paid to Mr. O'Dell upon his initially
accepting employment with the Company.
7. Includes 33,750 options that were canceled on December 31, 1993 due to
certain 1993 revenue and earnings per share goals not being met.
8. Consists of relocation expenses paid by the Company.
STOCK OPTION GRANTS DURING TRANSITION PERIOD ENDED JULY 31, 1996
The following table sets forth information with respect to grants of
stock options to purchase Common Stock pursuant to the Company's 1989 and 1996
Stock Option Plans (the "1989 and 1996 Plans") to the Chief Executive Officer
and the Named Executive Officers reflected in the Summary Compensation Table
above. No stock appreciation rights (SARs) were granted during the seven months
ended July 31, 1996 and none were outstanding as of July 31, 1996.
OPTION/SAR GRANTS IN TRANSITION PERIOD
<TABLE>
<CAPTION>
Potential Realizable
Value of Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term/(1)/
------------------------------------------------------- ---------------------------------
% of Total
Number Options/SARs
Securities Granted to Exercise
Underlying Employees or Base
Options/SARs in Price Expiration 0%
Name Granted (#) Fiscal Year ($/Sh) Date ($)/(2)/ 5% ($) 10% ($)
- ---- ------------ ----------- -------- -------------- -------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
F.H. (Dick) Moeller 100,000 22.29% $9.00 July 10, 2006 $ 0 $ 566,005 $ 1,434,368
Glenn A. Pierce 0 N/A N/A N/A N/A N/A N/A
Clayton A. Reed 0 N/A N/A N/A N/A N/A N/A
Michael O'Dell 15,000 3.34% 12.25 May 23, 2006 0 115,559 292,850
Rodney S. Bond 15,000 3.34% 12.25 May 23, 2006 0 115,559 292,850
Thomas C. Stevenson 15,000 3.34% 12.25 May 23, 2006 0 115,559 292,850
Michael P. Cronin 3,750 0.84% 12.25 May 23, 2006 0 28,890 73,213
All employee options 448,527 100% 9.286/(3) N/A 0 2,619,360 6,637,972
All stockholders N/A N/A N/A N/A 0 83,555,952/(4)/ 211,747,187/(4)/
Optionee gains as % of all
stockholder gains N/A N/A N/A N/A 0 3.13% 3.13%
- --------------------------
</TABLE>
4
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1. The dollar amounts under these columns represent the potential
realizable value of each grant of options assuming that the market price of the
Company's Common Stock appreciates in value from the date of grant at the 5% and
10% annual rates prescribed by the Securities and Exchange Commission and
therefore are not intended to forecast possible future appreciation, if any, of
the price of the Company's Common Stock.
2. An appreciation in stock price, which will benefit all stockholders, is
required for optionees to receive any gain. A stock price appreciation rate of
0% would, therefore, render the options without value to the optionees.
3. Weighted average grant price of all stock options granted to employees
in the seven months ended July 31, 1996.
4. Appreciation for all stockholders is calculated using the average
exercise price for all employee optionees ($9.286) and using the number of
shares of the Company's Common Stock outstanding on July 31, 1996 (14,307,733).
AGGREGATED STOCK OPTION/SAR EXERCISES DURING THAT TRANSITION PERIOD ENDED JULY
31, 1996 AND STOCK OPTION/SAR VALUES AS OF JULY 31, 1996
The following table sets forth information with respect to the Chief
Executive Officer and the Named Executive Officers concerning the exercise of
options during the transition period ended July 31, 1996 and unexercised options
held as of July 31, 1996:
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES /(1)/
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SAR
Year End(#) at Fiscal Year End ($)
-------------------------- --------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
F.H. (Dick) Moeller 0 0 209,541 128,126 $1,022,794 $ 31,447
Glenn A. Pierce 5,000 28,750 64,138 45,491 186,853 135,498
Clayton A. Reed 20,312 97,146 0 0 0 0
Michael O'Dell 0 0 48,183 44,376 76,736 43,048
Rodney S. Bond 8,500 61,232 35,030 26,584 73,818 15,094
Thomas C. Stevenson 0 0 13,541 41,459 17,759 37,240
Michael P. Cronin 0 0 13,385 35,261 0 0
- --------------------
</TABLE>
1. All options held by the Chief Executive Officer and the Named Executive
Officers were granted under the Company's 1989 and 1996 Plans. Pursuant to the
1989 and 1996 Plans, all options granted thereunder are immediately exercisable,
however shares issued upon exercise are subject to repurchase by the Company, at
the exercise price, to the extent of the number of shares that have not vested
in the event that the optionee's employment terminates prior to all such
optionee's option shares becoming vested. The amounts under the headings
entitled "Exercisable" reflect vested options as of July 31, 1996 and the
amounts under the headings entitled "Unexercisable" reflect option shares that
have not vested as of July 31, 1996.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the seven month period ended July 31, 1996, no executive officer of
the Company served as a Director, or member of the compensation committee, of
another entity whose executive officers served as a Director, or on the
Compensation Committee, of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The Company has only one outstanding class of equity securities, its Common
Stock, par value $.01 per share.
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of October 1, 1996 by (i)
each person who is known by the Company to beneficially own more than 5% of the
Company's Common Stock, (ii) each of the Company's Directors and Named Executive
Officers (as defined above) and (iii) all Directors and officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED/(1)(2)/
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ ------------ --------
<S> <C> <C>
Intel Corporation 1,449,759/3/ 10.4%
5200 N.E. Elam Young Parkway
Hillsboro, OR 97124
F.H. (Dick) Moeller 352,065/4/ 2.5%
Eric L. Jones 63,853/5/ *
John V. Jaggers 9,690/6/ *
Gordon H. Matthews 5,000/7/ *
Max Hopper 6,000/8/ *
Michael P. Cronin 52,646/9/ *
Michael O'Dell 100,000/10/ *
Rodney S. Bond 84,524/11/ *
Thomas C. Stevenson 55,000/12/ *
All Directors and officers as a group 836,350/13/ 5.7%
(12 persons)/4, 5, 6, 7, 8, 9, 10, 11, 12, 13/
Clayton A. Reed 3,412/14/ *
Glenn A. Pierce 109,729/15/ *
</TABLE>
* Indicates ownership of less than 1% of the Company's Common Stock
1. Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The persons and entities named in the
table
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have sole voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below. Amounts shown include shares
of Common Stock issuable upon exercise of certain outstanding options within 60
days after October 1, 1996.
2. Except for the percentages of certain parties that are based on
presently exercisable options which are indicated in the following footnotes to
the table, the percentages indicated are based on 13,899,096 shares of Common
Stock issued and outstanding on October 1, 1996. In the case of parties holding
presently exercisable options, the percentage ownership is calculated on the
assumption that the shares presently held or purchasable within the next 60 days
underlying such options are outstanding.
3. On October 25, 1993, the Company entered into a Common Stock and
Warrant Purchase Agreement ("Stock Agreement") whereby the Company sold to Intel
970,201 shares of unregistered Common Stock (which then represented 10% of the
Company's outstanding Common Stock after the sale) and a warrant for the
purchase of an additional 10% of the Company's Common Stock or 1,199,124 shares.
The Company received proceeds of approximately $7,034,000 from the sale of the
Common Stock and stock warrant. An Investor Rights Agreement (the "Investor
Rights Agreement") entered into in connection with the sale of these securities
to Intel afforded Intel certain special rights in respect of its investment in
the Company. In June 1995, 51,898 shares of unregistered Common Stock were sold
and issued to Intel pursuant to the terms of the Investor Rights Agreement. In
September 1995, the Company and Intel entered into a new agreement defining
certain matters (the "Amendment"). Specifically, in the Amendment, the Company
and Intel agreed to modify the Investor Rights Agreement to terminate the rights
granted to Intel pursuant to the Investor Rights Agreement (other than
registration rights). Intel agreed to sell to the Company, and the Company
agreed to purchase from Intel, a number of shares of Common Stock determined by
dividing the aggregate cash exercise price paid by Intel to the Company pursuant
to the exercise of its warrant by the closing sale price of the Common Stock on
The Nasdaq Stock Market on the business day immediately preceding the date that
the notice of exercise was delivered. In October 1995, the Company received
notice of Intel's intent to exercise the warrant. In January 1996, Intel
consummated the exercise of the warrant and the Company issued Intel 427,660
shares of Common Stock in the net issuance transaction.
4. Consists of 14,398 shares held by Mr. Moeller directly and 337,667
shares (115,626 of which are subject to repurchase at November 29, 1996 by the
Company at the optionee's exercise price pursuant to the option agreement) which
Mr. Moeller may acquire upon the exercise of options within 60 days after
October 1, 1996.
5. Consists of 5,686 shares held by Mr. Jones directly and 58,167 shares
which Mr. Jones may acquire upon the exercise of options within 60 days after
October 1, 1996.
6. Consists of 1,524 shares held by Mr. Jaggers directly and 8,166 shares
which Mr. Jaggers may acquire upon the exercise of options within 60 days after
October 1, 1996.
7. Consists of 5,000 shares which Mr. Matthews may acquire upon the
exercise of options within 60 days after October 1, 1996.
8. Consists of 6,000 shares which Mr. Hopper may acquire upon the
exercise of options within 60 days after October 1, 1996.
9. Consists of 4,000 shares held by Mr. Cronin directly and 48,646 shares
(30,782 of which are subject to repurchase at November 29, 1996 by the Company
at the optionee's exercise price pursuant to the option agreement) which Mr.
Cronin may acquire upon the exercise of options within 60 days after October 1,
1996.
10. Consists of 7,441 shares held directly by Mr. O'Dell and 92,559 shares
(35,211 of which are subject to repurchase at November 29, 1996 by the Company
at the optionee's exercise price pursuant to the option agreement) which Mr.
O'Dell may acquire upon the exercise of options within 60 days after October 1,
1996.
11. Consists of 22,910 shares held directly by Mr. Bond and 61,614 shares
(23,500 of which are subject to repurchase at November 29, 1996 by the Company
at the optionee's exercise price pursuant to the option agreement) which Mr.
Bond may acquire upon the exercise of options within 60 days after October 1,
1996.
12. Consists of 55,000 shares (36,042 of which are subject to repurchase
at November 29, 1996 by the Company at the optionee's exercise price pursuant to
the option agreement) which Mr. Stevenson may acquire upon the exercise of
options within 60 days after October 1, 1996.
7
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13. Includes an aggregate of 72 shares held directly or indirectly by
Dennis Egan, Charlie Sauer, and Bob Swem, collectively, and 107,500 shares
(61,824 of which are subject to repurchase at November 29, 1996 by the Company
at the optionees' exercise price pursuant to the option agreements) which such
persons, collectively, may acquire upon the exercise of options within 60 days
after October 1, 1996. All options held by the Chief Executive Officer and the
Named Executive Officers were granted under the 1989 and 1996 Plans. Pursuant
to the 1989 and 1996 Plans, all options granted thereunder are immediately
exercisable, however, shares issued upon exercise are subject to repurchase by
the Company, at the exercise price, to the extent of the number of shares that
have not vested in the event that the optionees' employment terminates prior to
all such optionees' options becoming vested. Does not include shares held
directly or indirectly by Messrs. Reed and Pierce.
14. Consists of 3,412 shares held directly by Mr. Reed.
15. Consists of 109,729 shares (26,342 of which are subject to repurchase
at November 29, 1996 by the Company at the Optionee's exercise price pursuant to
the option agreement) which Mr. Pierce may acquire upon the exercise of options
within 60 days after October 1, 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 25, 1993, the Company entered into the Stock Agreement with
Intel Corporation ("Intel") whereby the Company sold to Intel 970,201 shares of
unregistered Common Stock (which then represented 10% of the Company's
outstanding Common Stock after the sale) and a warrant for the purchase of an
additional 10% of the Company's Common Stock or 1,199,124 shares. The Company
received proceeds of approximately $7,034,000 from the sale of the Common Stock
and stock warrant. The Investor Rights Agreement entered into in connection
with the sale of these securities to Intel afforded Intel certain special rights
in respect of its investment in the Company. In June 1995, 51,898 shares of
unregistered Common Stock were issued to Intel pursuant to the terms of the
Investor Rights Agreement. In September 1995, the Company and Intel entered
into the Amendment defining certain matters. Specifically, in the Amendment,
the Company and Intel agreed to modify the Investor Rights Agreement to
terminate the rights granted to Intel pursuant to the Investor Rights Agreement
(other than registration rights). Intel agreed to sell to the Company, and the
Company agreed to purchase from Intel, a number of shares of Common Stock
determined by dividing the aggregate cash exercise price paid by Intel to the
Company pursuant to the exercise of its warrant by the closing sale price of the
Common Stock on The Nasdaq Stock Market on the business day immediately
preceding the date that the notice of exercise was delivered. In October 1995,
the Company received notice of Intel's intent to exercise the warrant. In
January 1996, Intel consummated the exercise of the warrant and the Company
issued Intel 427,660 shares of Common Stock in the net issuance transaction.
Subsequent to the transition period ended July 31, 1996, the Company entered
into an agreement relating to the separation of Glenn A. Pierce, Jr. from the
Company. Until April 15, 1996, Mr. Pierce was the president and chief operating
officer and a director of the Company. Effective April 15, 1996, Mr. Pierce
resigned from all offices and directorships he held with the Company. Pursuant
to this separation agreement, Mr. Pierce agreed to release the Company from any
employment related claims he may have and made a variety of covenants, including
noncompete and nondisclosure covenants, designed to protect the goodwill and
business of the Company. In consideration for the agreements of Mr. Pierce, the
Company agreed to monthly salary continuation payments of $15,833.33 per month
for a period of thirteen months, subject to earlier termination under certain
specified circumstances, including acceptance of employment with another
company. Mr. Pierce was also paid a termination payment of $50,000 and the
Company agreed to continue Mr. Pierce's
8
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participation in the Company's group health and accident insurance plans for a
period of thirteen months, with the Company continuing to bear the portion of
the costs thereof that it bore prior to such termination. The Company also made
certain agreements designed to permit Mr. Pierce to continue to hold and
exercise certain options theretofore granted to him up to 30 days after May 15,
1997.
9
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized.
VTEL CORPORATION
By: /s/ Rodney S. Bond
----------------------------------------
Rodney S. Bond
Chief Financial Officer, Vice President-
Finance, Treasurer and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
Date: November 27, 1996
10
