-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lz4hbA3ZsGrfAyHKOvqPzl9S5J/CffPNmi6k8b0Mf+dbUoMb8ehpy7HwET5g+qHN dKuSOk3odzDVD/kucEDpdg== 0000950127-99-000232.txt : 19990802 0000950127-99-000232.hdr.sgml : 19990802 ACCESSION NUMBER: 0000950127-99-000232 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19990430 FILED AS OF DATE: 19990730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JETFORM CORP CENTRAL INDEX KEY: 0000887614 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-11898 FILM NUMBER: 99674423 BUSINESS ADDRESS: STREET 1: 560 ROCHESTER ST STE 400 CITY: OTTAWA ONTARIA CANAD STATE: A6 BUSINESS PHONE: 6132303676 MAIL ADDRESS: STREET 1: JETFORM CORP STREET 2: 560 ROCHESTER ST OTTAWA CANADA 10-K 1 ANNUAL REPORT FOR FISCAL YEAR ENDING 4/30/99 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K X ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 30, 1999. _ TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to_______ Commission file number 1-111898 JETFORM CORPORATION (Exact name of Registrant as specified in its Charter) Canada N/A (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 560 Rochester Street Ottawa, ON K1S 5K2, Canada (Address of principal executive offices) Issuer's telephone number including area code: 613-230-3676 Securities registered under Section 12(b) of the Exchange Act: Name of each exchange Title of each class on which registered Common shares, without par value Pacific Stock Exchange Securities registered under Section 12(g) of the Exchange Act: NONE 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 or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting and non voting stock held by non-affiliates of the registrant computed by reference to the last price at which the stock was sold as reported on the NASDAQ Stock Market on July 20, 1999 was US$46,631,439. For the purpose of determining this amount, voting stock held by officers, directors and stockholders whose ownership exceeds five percent are excluded. This determination of affiliate status is provided for purposes of this report and does not represent an admission by either the registrant or any such person as to the status of such person. State the number of the issuer's Common Shares outstanding on July 20, 1999; 19,442,201 DOCUMENTS INCORPORATED BY REFERENCE NONE JETFORM CORPORATION TABLE OF CONTENTS PAGE PART I ITEM 1 BUSINESS...............................................................4 ITEM 2 PROPERTIES............................................................15 ITEM 3 LEGAL PROCEEDINGS.....................................................15 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................15 PART II ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...............................................................16 ITEM 6 SELECTED FINANCIAL DATA...............................................18 ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................................19 ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS............30 ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................31 ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE..............................................55 PART III ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....................56 ITEM 11 EXECUTIVE COMPENSATION................................................59 ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......65 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................67 PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K......69 SIGNATURES....................................................................74 This Annual Report on Form 10-K ("Report"), contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933. Discussions containing such forward-looking statements may be found in Items 1, and 7 hereof, as well as within this Report generally. In addition, when used in this Report, the words "believes", "intends", "anticipates", "expects", and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially from those described in the forward-looking statements as a result of changes in technology, changes in industry standards, new product introduction by competitors, increased participation in the enterprise software market by major corporations and other matters set forth in this Report. The Company does not undertake any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. PART I Item 1. BUSINESS THE COMPANY JetForm Corporation (which, together with its subsidiaries is referred to herein as "JetForm" or the "Company") was incorporated as Jorag Computer Systems Ltd. pursuant to the Canada Business Corporations Act on June 10, 1982. By Articles of Amendment dated September 28, 1982, the Company changed its name to Indigo Software Ltd. By Articles of Amendment dated September 30, 1991, the Company changed its name to JetForm Corporation. The Company's registered head and principal office is located at 560 Rochester Street, Ottawa, Ontario, K1S 5K2. The following chart sets forth certain information concerning the principal subsidiaries of the Company as at April 30, 1999: Why Interactive Inc. (Ontario, Canada) JetForm Corporation (Delaware, U.S.A.) JetForm U.K. Limited (England & Wales) JetForm France SA JetForm Corporation 100% (France) (Canada) JetForm Pacific Pty Ltd. (Australia) JetForm Scandinavia AB (Sweden) JetForm Deutschland GmbH (Germany) JetForm Technologies Limited (Ireland) JetForm Japan K.K. (Japan) JetForm PTE LTD (Singapore) Overview JetForm Corporation develops software solutions that automate business processes, transforming them into e-processes. JetForm solutions enable companies and government to lower operating costs, increase revenues and reduce cycle times. The Company's core strengths are in intelligent XML forms, process automation and customer-focused document output. Management believes the Company is well-positioned for the broad acceptance of its e-process solutions worldwide. JetForm's sales force and service professionals, who operate in 11 countries, focus on sales and services to end users and support the Company's numerous third-party marketing and sales relationships. JetForm's third-party resellers, value-added resellers ("VARs"), system integrators and distributors further leverage the Company's global reach. JetForm has also established key strategic alliances and original equipment manufacturer ("OEM") relationships with, among others, Microsoft, Hewlett-Packard, IBM, PeopleSoft, SAP, and Xerox, to broaden market acceptance for its solutions. JetForm customers include Auction Universe, the Australian Department of Defence, Bank of America, BankBoston, Chase Manhattan, Cigna, DaimlerChrysler, Hydro Quebec, Kodak, Microsoft, Minnesota Mining and Manufacturing Co., New Brunswick Department of Supply and Services, PaineWebber, Prudential Real Estate and Relocation Services, Siemens Nixdorf Informationssysteme, U.S. Department of Defense, Volvo and Wells Fargo. Industry Background The Internet is transforming business operations. For years, the Internet and the world wide web ("the Web") were fundamentally uni-directional vehicles for delivering information to customers and partners. Now, organizations are embracing the Web in order to conduct business with their customers and partners. Web-based business processes - or "e-processes" - now extend beyond the enterprise to include customers, partners and employees. Compared to the world of paper processes, e-process is raising these customers' expectations for faster completion of service requests and up-to-the-minute status checking. Customers now expect access to services seven days a week, 24 hours a day and a sense of personal involvement in business processes. For organizations, e-process means not only a chance to dramatically lower costs, but to differentiate themselves through superior customer service. Organizations can reduce costs by replacing paper-driven labor-intensive process flows with highly automated ones and improve customer service by dramatically speeding up the time to complete a service request, integrating a variety of information sources and automating work tracking and notification functions. The JetForm Solution JetForm is a leader in helping companies transform inefficient paper-based business processes into automated e-processes and JetForm leads the global electronic forms market, with an estimated 80% market share. JetForm is also a global leader in enterprise workflow - the engine for automating e-processes. The Company's print and output solutions provide companies a flexible, fast, easy and cost-effective way to generate professional-quality document output from core business applications. These products are complemented by JetForm's comprehensive services team which facilitates product implementation and provides ongoing training and support. The cornerstones of the JetForm solution are as follows: o E-process Framework. JetForm's e-process framework allows organizations and integrators to create applications that automate their customer-facing, partner-facing and employee-facing processes. The reusable framework incorporates JetForm's e-form, workflow and output engines, along with a complete methodology into a comprehensive environment for rapid application development and deployment. It gives customers, partners, and OEMs JetForm tools to build e-process applications to address many different types of processes and problems. At the core of JetForm's e-process framework is a comprehensive open standard for e-processes, XFA or XML Forms Architecture. Developed by JetForm, XFA embraces all aspects of e-process -- the capture, presentation, routing, processing and outputting of e-forms-based information. By providing a consistent, platform-independent method of defining forms-based information, XFA insulates customers from changes to technology, applications and technology standards. It also enables critical flexibility. XFA-defined applications allow customers to generate multiple versions of a form from a single design on paper and electronically. o E-process Applications. JetForm is developing a series of e-process applications -- configurable and customizable business solutions that leverage the Internet and automate customer-facing, partner-facing and employee-facing business processes. E-process applications will most often be compared with two other types: applications built with tools and custom development, and packaged single-purpose applications. Time pressures are encouraging organizations to give up the approach of custom building applications in favor of ready-built applications. Single-purpose packaged applications, while popular, are limiting in many respects and may have little interoperability with other applications. The Company believes that increasing numbers of customers will choose to leverage the full capabilities of integrated e-process applications, either by purchasing packaged end-to-end solutions from JetForm or a JetForm solutions partner, or by licensing JetForm's technology and applications framework and building multiple custom solutions in-house. Examples of customers who are using JetForm's e-process solution to transform paper-based processes to digital processes include: o Auction Universe. Auction Universe, an online marketplace where classified advertising and sales merge with the auction process to create a dynamic e-commerce community, has implemented JetForm's e-process solution to automate their customer service operations. Over 200 customer requests regarding commission adjustments, bid cancellations, Web site issues and general questions were logged daily by Auction Universe's customer service department. Requests came in via the Web, e-mail and telephone. Using JetForm e-process technology, Auction Universe now captures and resolves all customer requests in a single electronic form - whether received via the Web, e-mail or phone. JetForm's use of well-known products allowed for seamless integration with Auction Universe's information technology infrastructure, including Microsoft Exchange, SQL Server and Windows NT. As a result, the Company believes Auction Universe has increased customer loyalty and customer satisfaction on the Web and produced a 50-70% reduction in response time. o The Chinese Service Center for Scholarly Exchange (CSCSE). CSCSE is affiliated with the Ministry of Education, People's Republic of China, and provides services to assist scholarly exchanges between China and other parts of the world. Using JetForm's e-process solution, Dawning Information Corporation, a major systems integrator in China, in partnership with JetForm's Beijing office, developed the Online Visa Application System (OVSAS). OVSAS automated the CSCSE's Internet-based forms filling, processing and verification procedures and enabled them to generate a high-quality visa application form for each embassy. The Chinese government expects to save the equivalent of US$2 million annually by deploying the JetForm e-process solution at CSCSE. The student visa application system increases the efficiency of the application and approval process, leading to faster turnarounds and easily accessible, more accurate data. Students can now apply for their visas using the Web at universities or local CSCSE offices, rather than travel across country to Beijing. o Prudential Real Estate and Relocation Services. Prudential Real Estate and Relocation Services ("PRERS")is a leading provider of domestic and international relocation services and a subsidiary of the Prudential Insurance Company of America. Following an e-business strategy, PRERS identified two urgent systems requirements. The first was to develop an integrated, Internet-driven platform for processing relocation services. The second was to replace a slow, paper-based, non Y2K compliant document production system. PRERS used the JetForm e-process workflow engine, InTempo, as well as FormFlow 99, to develop the EquiClose application - an extranet that lets relocation specialists, suppliers and title companies complete e-forms, monitor workflow progress and download related information. DocProd is the PRERS Web-enabled document production system. Information captured in EquiClose feeds DocProd and both are linked by a common service delivery database. Using JetForm e-process forms and output engines, DocProd improves document communications with customers, clients and suppliers by providing accurate content through integration with core operational systems. Each transferring employee receives a personalized package of documents and forms with clear directions on content and actions required. Using JetForm Web-based e-process technology for data capture, workflow and output management is expected to enabled PRERS to grow revenue and extend their systems to improve service delivery and responsiveness to their corporate clients, their clients' customers, suppliers and their own employees. Corporate Strategy JetForm's strategic vision is to be the global industry standard in e-process solutions. The Company plans to achieve this vision through the following strategies: o Maximize Customer Flexibility. JetForm has adopted a solution-selling model which is intended to allow JetForm and its solutions partners to sell more deeply into organizations by offering e-process solutions for most functional department. Solution selling also gives JetForm customers great flexibility. They can begin by purchasing one or more limited-license packaged or custom solutions from JetForm or a JetForm partner. Once they have invested in several e-process solutions, they can choose to leverage this investment by purchasing a full license for JetForm technology and the JetForm e-process application framework. The framework's focus on component re-usability will allow customers to quickly and cost-effectively build and deploy their own custom applications on a consistent, integrated e-process platform. o Leverage Distribution Channels and Third-Party Alliances. JetForm's objective is to achieve broader market penetration by employing a multi-channel strategy with a particular emphasis on third parties. Through its sales team, the Company focuses on Fortune 500 accounts and particular vertical segments, including the financial services, manufacturing and healthcare industries as well as the government sector and government agencies. The Company also provides support and sales assistance to resellers, VARs, system integrators and international distributors to leverage its distribution capabilities. The Company is developing and maintaining key strategic alliances and OEM relationships in order to broaden market acceptance. Alliances currently established include those with Hewlett-Packard, IBM, Microsoft, PeopleSoft, SAP, and Xerox. o Expand Customer Base. The Company intends to aggressively expand its customer base worldwide and in particular vertical markets. The Company is pursuing this opportunity through its sales force and service professionals which are located in 8 countries and the availability of its products in nine languages. While the Company has had a particular focus on financial services, the Company is broadening its focus on particular vertical markets including manufacturing, government, law enforcement, healthcare and technology. o Maintain Technological Leadership. The Company strives to maintain technological leadership by continually improving the functionality, performance, reliability and compatibility of its products. The Company believes that its success to date has resulted largely from technological innovation and leadership in the e-forms and workflow market. The Company's technological capabilities are a key factor in the Company's ability to work with strategic alliance partners to efficiently and effectively integrate their technologies in order to provide an integrated solution for its customers and its alliance partners' customers. Products The Company offers scaleable, e-forms, workflow and output solutions for enterprises to automate business proceses. The JetForm solution is comprised of a combination of software products and associated implementation and support services. The Company's product line has been designed and developed with a modular, open-systems architecture and supports most industry standard interfaces to e-mail, groupware, internet/intranet and business application software. The Company's products are sold individually or in combination. The actual price to an end user or reseller can vary substantially from customer to customer depending on location, the number of licensed users and combination of products and services to be provided. Design FormFlow 99 Form Designer, JetForm Design, and FormFlow Designer, allow users to design e-forms. FormFlow 99 Form Designer is the tool used to design the electronic forms for use with all other JetForm products, and runs on Microsoft Windows 95, Windows 98 and Windows NT and provides a "what you see is what you get" (WYSIWYG) interactive graphical user interface to allow e-forms designers to create or modify JetForm e-forms. JetForm Design allows developers to design the two major components found in every form: the template-- lines, boxes, shaded areas, logos, text blocks, headings, labels, etc. -- and the fields or locations where the variable information is filled in on the form. JetForm Design also allows the user to develop dynamic subforms which generate intelligent form presentation based on the data provided to populate the form. When the design of the form is completed, the form is compiled to create a specially encrypted run-time version of the form for use with JetForm Filler Pro, JetForm Central and JetForm Central Pro which run on most commonly used platforms and operating systems. Foreign language versions of JetForm Design are currently available in French, Swedish, German, Traditional Chinese and Japanese. The "suggested corporate price" (the "SCP") for a single user copy of JetForm Design is US$1,495. Through its acquisition of the Delrina Assets, JetForm also offers FormFlow Designer, which contains similar capability to JetForm Design. FormFlow Designer allows developers to create custom forms, menus, macros and applications quickly and easily, while also offering a Visual Basic-like scripting language for embedded logic. FormFlow Designer offers enhanced client-based workflow routing and tracking capabilities so organizations can automate enterprise-wide business processes. FormFlow Designer runs on Microsoft Windows 3.1 and Windows 95. The latest version of FormFlow -- FormFlow 99 -- allows for the creation of forms specifically for deployment to the Web. It permits designers to create rich forms that can be easily deployed into an Intranet or Internet environment. The SCP for a single user copy of FormFlow Designer is US$1,495. Filler JetForm Filler Pro and FormFlow Filler allow the user to view and input data into e-forms created by JetForm Design and FormFlow Designer, respectively. The e-form is displayed on screen, ready for the user to enter data into the data entry fields. As data is entered, it is validated to ensure that any rules included in the form design are satisfied. Some fields are automatically filled based on the calculation rules defined by the form designer, including relevant database lookups. Once completed, an e-form can be printed, saved to disk or sent via e-mail to the next designated recipient. JetForm Filler Pro and FormFlow Filler can send and receive e-mail messages to and from the majority of commonly used e-mail packages, including Microsoft Mail, Microsoft Exchange, Lotus cc:Mail, Lotus Notes Mail, Banyan Vines, CES Quick Mail, Novell Groupwise and ICL Teamware. Versions of JetForm Filler Pro are available for common client computer platforms and operating systems, including Microsoft Windows 3.1, Windows 95 and Windows NT. Versions of FormFlow Filler are available for Windows 3.1 and Windows 95. Foreign language versions of JetForm Filler are available in Danish, French, Finnish, German, Portuguese, Swedish and Norwegian. FormFlow Filler is available in English, French and German. The SCP for a single user license of JetForm Filler Pro is US$79 and the SCP for a single user copy of JetForm FormFlow Filler is US$79. InTempo InTempo was first shipped as JetForm Workflow in July 1996 and as InTempo in January 1998. InTempo is a server-based workflow engine suited to rapidly and securely automating a wide range of business e-processes across the Internet, extranets and intranets. InTempo allows organizations to leverage business investments in legacy systems, ERP, RDBMS and third party applications, by connecting their processes with their Web infrastructure and back office. With InTempo, simple and complex processes can be created. InTempo's graphical design tool enables business process owners to build workflows as a series of tasks drawn together like a flow chart. InTempo is integrated with HTML forms, as well as JetForm's e-forms products, which provide intelligent, feature-rich, secure applications. Scripts, workflow definitions, role definitions can all be re-used, making it fast to automate additional processes. Processes can be changed in response to dynamic business conditions. InTempo can produce high fidelity, customer-focused output such as invoices, records and statements, at any step in a process. Integration with Microsoft Management Console facilitates administration of InTempo. InTempo has a comprehensive security model - including user authentication, process permissions, electronic signatures, S/HTTP, role security and policy enforcement - making it a secure choice for automating processes that include customers, partners, suppliers and employees. InTempo provides the application richness needed by sophisticated users and the intuitiveness required by casual users. It has a browser-based work list, shared work queues, e-mail notifications and reminders, basic and advanced tracking capabilities, a drag-and-drop document envelope, and on-line help. The InTempo product includes advanced computer-based training to ensure end users work more effectively, sooner, and with less support. The SCP for InTempo is US$200 per copy with a minimum purchase of US$10,000 for 50 users. JetForm Central JetForm Central (previously called JetForm Server) is a client/server software solution that provides connectivity to line of business software applications for producing e-forms output to laser printers or fax servers. JetForm provides comprehensive support for "dynamic" forms and data transformation. Dynamic forms provide the capability to change the format of the printed output based on the data to be printed which is not possible with pre-printed forms. The data transformation capability provides enhanced flexibility for integration with business applications while minimizing the need for programming changes. JetForm Central can output documents in 18 different languages and is currently available for Microsoft Windows 3.1, Windows 95, Windows NT, OS/2, AS/400, DEC VMS, DEC Unix and Alpha NT, HP3000, HPUX, Sun Solaris, SCO Unix, IBM AIX, and several other Unix systems. The SCP for JetForm Central ranges from US$3,895 to US$19,995, depending on the computer platform and operating system. JetForm Central Pro While JetForm Central Pro offers the same capability as JetForm Central, it also provides Open Database Connectivity to existing databases and supports alternate output methods in addition to laser printed forms and faxing. Currently, JetForm Central Pro can support output to e-mail, PDF, automatic SQL database updates (and other field data calculations), initiation of JetForm workflow processes and automatic receipt of Web page forms. The SCP for JetForm Central Pro is US$11,995. JetForm Output Pak for SAP R/3 JetForm Output Pak for SAP R/3 expands the scope of R/3 applications by allowing customers to create and integrate electronic forms with their R/3 business processes. With an SAP-certified interface, it provides a flexible and cost-effective way to create and maintain forms specifically for the SAP R/3 environment. The SCP for JetForm Output Pak for SAP R/3 starts at US$40,000, depending on number of R/3 users licensed. JetForm Output Pak for Oracle Applications JetForm Output Pak for Oracle Applications expands the scope of Oracle Applications by allowing customers to create and integrate electronic forms with their Oracle business processes. With an Oracle-certified interface, it provides a flexible and cost-effective way to create and maintain forms specifically for the Oracle environment. It provides professional-looking output, readability for users, and a better corporate image for the organization. The SCP for JetForm Output Pak for Oracle Applications is US$35,000. JetForm Forms Pak for PeopleSoft Student Administration JetForm Forms Pak for PeopleSoft Student Administration allows the higher education community using PeopleSoft Student Administration applications to output line-of-business documents such as US Federal Government-compliant loan forms, student invoices and financial award notices. The SCP for JetForm Forms Pak for PeopleSoft Student Administration is US$15,000. Services As at April 30, 1999, the Company had a team of 168 professionals who are responsible for consulting, custom software development, forms design and technical support. Consulting services include assisting customers to configure, implement and integrate the Company's products and, when required, customize products and design automated processes to meet customers' specific business needs. In addition, the Company offers e-forms design services. This broad range of services provides customers with the ability to streamline business processes. The Company also provides customers with ongoing technical support by way of telephone, fax and Web access. The technical support team works closely with customers to diagnose problems and address system integration issues to ensure the customer receives the full benefit of the JetForm solution. The Company maintains support facilities which permit real-time testing and replication of customer problems. In February 1998, the Company incorporated JetForm Technologies Limited, a center for professional services and technical support in Dublin, Ireland to support its European customer base. The Company's software products are typically sold with annual maintenance and support contracts. The annual service fee is generally 15-18% of the corporate price of the software purchased and entitles the customer to remote support, product upgrades and maintenance releases. Sales, Marketing and Distribution The Company's sales strategy is to achieve broad market penetration worldwide by employing a sales force focused on sales to end users, resellers, VARs, systems integrators and international distributors. The sales force also supports the Company's strategic alliances and OEMs. The Company's marketing programs support the various focuses of the sales force and include market research and industry analyst relations; targeted print, web and direct mail advertising; public relations activities, lead-generating events, seminars and conferences; web, multi-media and printed marketing collateral; and field-focused education and communication. The Company utilizes the following distribution channels: o Sales Force. The Company's sales force operates from a total of 14 offices, with six in the United States near the following centers: Atlanta; Chicago; Dallas; New York; San Francisco; and Washington, two in Canada and Sweden one in each of the United Kingdom, China, France, Germany, and Japan. The Company's sales personnel primarily target Fortune 500 companies, with a particular focus on the financial services industry (banking, insurance and brokerage), manufacturing and the government sector. o Resellers, VARs, System Integrators and International Distributors. The Company considers four sales channels -- resellers, VARs, system integrators and international distributors -- integral to its sales and marketing effort. The Company's sales, marketing and technical support staff support these channels through education, training, customer assistance and marketing. In addition, the Company has agreements in place with local distributors in the following countries: the Czech Republic, Denmark, Finland, Greece, Hong Kong, India, Italy, Norway, Spain and South Africa. The JetForm Partner Program The JetForm Partner Program is designed to support JetForm in its mission to deliver the most comprehensive products and solutions that meet the needs of its customers. By developing partnerships with organizations that provide complementary products and services JetForm is able to offer its customers comprehensive solutions. The Partner Program allows JetForm to enter markets it would otherwise be unable to enter in the short term by partnering with the key players in a targeted market to deliver JetForm products or solutions built with JetForm Products. The JetForm Partner Program consists of the following types of partners: Strategic Alliances and Independent Software Vendors ("ISV"); VARs; System Integrators; Distributors; and OEMs. Strategic Alliances and ISV Partners JetForm has a number of strategic partners: o Strategic Alliances and OEMs. The Company's strategic alliances and OEM relationships provide JetForm a platform to access the customer bases of its partners. The Company's alliance strategy focuses specifically on building partnerships with companies whose own products and technologies are enhanced or complemented by e-forms, output, and workflow capabilities. The Company's alliance partners include printer, system integrator, groupware and applications software, document management, Internet and electronic commerce companies. These alliances facilitate access to additional markets and further the Company's third party distribution strategy. Nine of the Company's alliances are described below: Hewlett-Packard: JetForm is a Premier Partner of Hewlett-Packard ("HP"). The relationship with HP is executed at a number of different levels within the HP organization: the corporate relationship is intended to support inter-company activities such as mutual support of events including Users Group conferences, and seminars. IBM: In December 1996, JetForm and Footprint Software Inc.("IBM Footprint"), a wholly owned subsidiary of IBM Canada Ltd., entered into an OEM license agreement whereby IBM Footprint embeds JetForm Central within its Visual Banker application to offer output management of forms-based information. Visual Banker is a retail branch automation software application which supports the sales and services functions of a financial institution. Through the integration of JetForm Central and Visual Banker, users now have greater flexibility for output management. The integrated product is marketed and supported by IBM on a worldwide basis. Microsoft: JetForm is a strategic partner with Microsoft Corporation, participating in development activities, marketing programs, customer events and cooperative sales activities sponsored by Microsoft. JetForm is a member of the Microsoft Integrated Software Vendor (ISV) program for Document Management and Workflow. JetForm participates in the ISV programs for Windows NT, Exchange, and Windows CE, allowing early access and input to the various Microsoft product development groups. JetForm is also an Alliance Sponsor of Microsoft's Certified Solution Provider Program, sharing the Company's complementary development tools with the Microsoft Solution Providers and hosting joint marketing campaigns and educational events. PeopleSoft: JetForm is a Software Alliance Partner of the PeopleSoft Global Alliance Program. JetForm and PeopleSoft have teamed to create an integrated solution -- JetForm Forms Pak for PeopleSoft Student Administration and Grants - -- providing PeopleSoft Student Administration and Grants customers with a flexible, fast, easy way to generate forms and other documents. In addition, JetForm e-process applications offer casual users a simple, flexible, intuitive way to access PeopleSoft applications, such as the Human Resources module, using the familiar interface of an electronic form. As a PeopleSoft Global Alliance Partner, JetForm has the opportunity to participate in PeopleSoft marketing activities and has access to the PeopleSoft field sales organization. Oracle: JetForm is a member of the Oracle Partner Program and is a Cooperative Applications Initiative ("CAI") approved partner. CAI is a certification program for products developed to integrate with the Oracle Applications product suite. The JetForm Output Pak for Oracle Applications offers an easy and inexpensive way for Oracle Applications customers to create and output high-quality customer-focused documents (invoices, purchase orders, order confirmations, etc.) with virtually any laser printer. SAP: JetForm is a Complementary Solution Provider (CSP) as well as being BAPI certified for SAP solutions. Many SAP customers insist on this level of certification prior to buying a solution for a supplier. In the SAP environment, JetForm sells a vertical packaging of products and services called the Output Pak for SAP R/3. This product consists of JetForm output technology and is used on the back end of an SAP system to print documents. J.D. Edwards World Solutions Company: JetForm is a J.D. Edwards Product Alliances Partner. This program is open to organizations that are developing complementary applications that add value and integrate with J.D. Edwards World and OneWorld applications. The JetForm Print Solution for J.D. Edwards offers J.D. Edwards customers an easy and inexpensive way to create and output high-quality customer-focused documents. As a Product Alliances Partner, JetForm participates in a number of J.D. Edwards marketing initiatives. Xerox: JetForm has a number of agreements with Xerox Corporation. Currently in place are: a Cooperative Development Agreement; a Cooperative Marketing Agreement in the USA; a Cooperative Marketing Agreement in Canada; and a Reseller Agreement in Europe. Under the Cooperative Development Agreement, JetForm and Xerox work together to ensure that their technologies are compatible. JetForm is permitted to use Xerox's "Open Document Services" certification logo on products certified under this agreement. Under the Cooperative Marketing Agreements, JetForm and Xerox have agreed to work together to market and sell the Company's products and solutions. Under the Reseller Agreement in Europe, Xerox has agreed to resell JetForm products. The corporate relationship is intended to foster and support inter-company initiatives, while the field relationship is focused on developing and supporting revenue generating activities. In North America, most of the marketing activities are focused on selling into the ERP marketplace, although there have been non-ERP sales particularly in state and local government. Entrust Technologies Inc.: JetForm is a strategic partner with Entrust Technologies and is a member of the Entrust Partner Program. This alliance incorporates a wide range of marketing, development and cooperative selling activities. FormFlow 99 carries the Entrust-Ready Gold designation indicating it has achieved the highest level of integration testing with other Entrust applications, ensuring interoperability and a feature rich product. FormFlow 2.2 and JetForm Filler Pro 5.2 carry the Entrust Ready designation meaning that they integrate with an Entrust public key infrastructure. Customers The Company's customers include a wide variety of organizations with an emphasis on the financial services industry and the government sectors, both of which use forms intensively in their day-to-day operations. No customer accounted for more than 10% of the Company's total revenues for the year ended April 30, 1999. The Company has an international customer base with customers outside of North America representing 31% of revenues for the year ended April 30, 1999, and 27% and 29% of revenues for the years ended April 30, 1998, and April 30, 1997, respectively. A selected list of users of JetForm's e-forms, workflow and output products is set forth below in the following table: North America International Financial Services: Bank of America Australia and New Zealand BankBoston Banking Group Limited Bank of Montreal Commonwealth Bank of Chase Manhattan Australia CIGNA Corp. Dresdner Bank PaineWebber Incorporated Lloyds Bank Wells Fargo National Australia Bank CUNA Mutual Limited USERS Incorporated Union Bank of Switzerland Prudential Real Estate and Relocation Services Government: Hydro-Quebec Australian Department of Industry Canada Defence New Brunswick Dept. of Frankfurt Airport Supply & Services Authority U.S. Department of the Swedish Car Test Air Force Swedish Health Organization U.S. Department of Defense Chinese Service Center for U.S. Postal Service Scholarly Exchange U.S. Department of the Treasury Law Enforcement: Justice Canada Berlin City Police Metro Toronto Police Defence Centre Canberra Ontario Provincial Police (Australian Department of Royal Canadian Mounted Defence) Police Finnish Police Swedish Police Technology: Hewlett-Packard Company Siemens Nixdorf Microsoft Corporation Informationssysteme AG Symantec Corporation Other: Bombardier Inc. Asea Brown Boveri Chrysler Corporation DaimlerChrysler Minnesota Mining and Ford Motor Company Manufacturing Co Schindler Corp. Owens Corning Volvo AB Procter & Gamble Company Auction Universe Product Development The Company devotes significant resources to research and development activities focused primarily on e-forms, workflow, output and related technologies. As of April 30, 1999, the Company employed 173 full time employees in its research and development group. The Company's research and development professionals are engaged in development, testing, product management, quality assurance and documentation. The research and development team, located in Ottawa, consists of people with broad experience in e-forms and workflow and related technologies. The Company's research and development projects include development of JetForm's e-process web-centric product which builds on the key strengths of the Company's current product lines, maintenance and enhancements for all current product lines, integration with third-party hardware and software products and support for double-byte characters for Asian languages. Competition JetForm's products are used to build applications -- often for the Web -- that automate simple to complex processes in a wide range of industries, across all lines of business -- including operations, product development, finance, purchasing, HR, sales and marketing areas. There is a range of tool vendors for e-forms (Shana, UWI), workflow (Action Technologies, KeyFile, Staffware) and print & output (Optio, Streamserve). Many customers purchase these tools on a standalone basis and build applications with them. JetForm competes with these vendors by providing a feature-rich, integrated, end-to-end solution with rich functionality and high ease of use, that supports multiple client and server environments, including the Web. Other organizations build applications themselves using development tools (Visual Interdev, Java, C++, etc.) and existing infrastructure (e-mail, groupware, web servers,etc.). In February 1999, JetForm announced that it would begin to develop packaged applications for workplace automation that address specific, line-of-business needs and leverage the e-process framework. These e-process applications will compete with companies such as Concur, Interlynx and Talx in the Employee Self Service market. Here, the basis of competition includes product features, ease of integration (with other applications and databases), reusability, flexibility, pricing, maturity of the underlying framework of technologies and completeness of whole product offering. Finally, the Company continues to compete against paper-processes, or "p-processes". Organizations' unwillingness to transition from p-processes to e-processes poses a significant challenge to the Company. Intellectual Property The Company distributes its products under software license agreements which generally grant customers perpetual licenses to use, rather than own, the Company's products and which contain various provisions protecting the Company's ownership and confidentiality of the underlying technology. The source code of the Company's products is protected as a trade secret and as unpublished copyrighted work. The Company also periodically obtains licenses to use or copy software written or supplied by third parties for inclusion into or as part of the functionality of the Company's products. Such licenses usually are perpetual in nature, subject to the regular payment of royalties by the Company as specified in the licenses and generally on terms and conditions comparable to those terms on which the Company licenses its own products. The Company has registered JetForm as a trademark in the United States and Canada and has applications issued or pending in all foreign countries in which it has distributor representation. The Company acquired, as part of the Delrina Assets, all of Delrina's relevant trademarks including FormFlow. Employees As of April 30, 1999, the Company had 664 employees of which 620 were full-time employees. Full-time employees include 173 in research and development, 101 in North American sales, 85 in international sales, 24 in marketing, 168 in systems and consulting services and 69 in management and internal corporate services. Of the total full-time employees, 436 are located in Canada, 73 are located in the United States, 12 are located in the United Kingdom, 18 are located in France, 13 are located in Australia, 24 are located in Ireland, 13 are located in Germany, 13 are located in Sweden, 4 are located in Singapore, 5 are located in China and 9 are located in Japan. None of the Company's employees is represented by a labor union or subject to a collective bargaining agreement, and the Company believes that its relations with its employees are good. Item 2. PROPERTIES Facilities The following table sets forth the location of the principal offices of the Company, their uses, and the lease expiry date. The Company considers its facilities to be in good condition and adequate for its needs and that additional suitable space is available to accommodate further expansion as needed. The specific location of these facilities is not material to the Company's business. Location Use Lease Expiry Ottawa, Ontario, Canada Executive offices, customer September 2006 support, consulting services, multimedia products, training services, sales, marketing and administration North Sydney, Australia Pacific Rim sales, marketing March 2000 and services Toronto, Ontario, Canada Vacant July 2007 Falls Church, Virginia, USA U.S. Government sales and April 2000 marketing headquarters, regional sales Dallas, Texas, USA Regional sales office December 1999 Pleasanton, California, USA Regional sales office October 2001 Boulogne, France Regional sales office July 2002 Falkenberg, Sweden Regional sales office June 2000 Stockholm, Sweden Regional sales office December 2000 Orpington, Kent, UK Vacant March 2010 Droitwich, Worcester, UK Vacant December 2008 Beijing, China Regional sales office March 2000 Ratingen, Germany Regional sales office April 2002 Singapore Regional sales office August 1999 Oak Brook, Illinois USA Regional sales office June 2000 New York, New York USA Regional sales office April 2005 Burlingame, California USA Services office December 1999 Atlanta, Georgia USA Regional sales office October 1999 Boston, Massachusetts USA Regional Sales Office December 1999 Tokyo, Japan Asia Pacific Office January 2002 Thames Valley, UK Regional Sales Office October 1999 Dublin, Ireland European Services Centre January 2024 Item 3. LEGAL PROCEEDINGS The Company is not a party to any material litigation. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of the year ended April 30, 1999. PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Price Range of Common Shares The Company's Common Shares are quoted on the NASDAQ National Market under the symbol "FORM", the Pacific Stock Exchange under the symbol "JTF", and on The Toronto Stock Exchange under the symbol "JFM". The following table sets forth, for the periods indicated, the high and low closing sales prices of the Common Shares as reported on the NASDAQ National Market. High Low Year Ended April 30, 1998 First Quarter....................... US$16.62 US$11.00 Second Quarter...................... 17.43 12.75 Third Quarter....................... 17.37 11.62 Fourth Quarter...................... 23.75 12.25 Year Ended April 30, 1999 First Quarter....................... US$22.88 US$15.63 Second Quarter...................... 20.38 12.25 Third Quarter....................... 15.25 9.63 Fourth Quarter...................... 11.63 3.13 Holders As of July 26, 1999, there were 296 holders of record of Common Shares. A substantial number of Common Shares of the Company are held by depositories, brokerage firms and financial institutions in "street name". Based upon the number of annual reports and proxy statements requested by such nominees, management of the Company estimates that there are more than 13,000 beneficial holders of Common Shares. Dividends During the fiscal years ended April 30, 1999, 1998 and 1997, the Company did not declare or pay cash dividends on its Common Shares, and does not anticipate paying any dividends in the foreseeable future, but intends to retain future earnings for reinvestment to finance the growth of its business. Limitations Affecting Security Holders There is no law or government decree or regulation in Canada that restricts the export or import of capital, or affects the remittances of dividends, insurance or other payments to a non-resident holder of Common Shares, other than the withholding tax requirements described below. Taxation The following discussion summarizes certain tax considerations relevant to an investment by individuals and corporations who, for income tax purposes, are resident in the United States and not in Canada, hold Common Shares as capital property, and do not use or hold the Common Shares in carrying on business through a permanent establishment or in connection with a fixed base in Canada (collectively, "Unconnected US Shareholders"). The Canadian tax consequences of an investment in the Common Shares by investors who are not Unconnected US Shareholders may be expected to differ substantially from the tax consequences discussed herein. The discussion is based upon the provisions of the Income Tax Act (Canada) (the "Tax Act"), the Convention between Canada and the United States of America with respect to taxes on Income and on Capital (the "Convention") and the published administrative practices of Revenue Canada, Taxation and judicial decisions, all of which are subject to change. This discussion does not take into account the tax laws of the various provinces or territories of Canada. This discussion is intended to be a general description of the Canadian tax considerations and does not take into account the individual circumstances of any particular shareholder. Any cash dividends and stock dividends on the Common Shares payable to Unconnected US Shareholders generally will be subject to Canadian withholding tax. Under the Convention, the rate of withholding tax generally applicable to Unconnected US Shareholders is 15%. In the case of a United States corporate shareholder owning 10% or more of the voting shares of the Company, the applicable withholding tax under the Convention is 5% for 1998 and following years. Capital gains realized on the disposition of Common Shares by Unconnected US Shareholders will not be subject to tax under the Tax Act unless such Common Shares are taxable Canadian property within the meaning of the Tax Act. Common Shares will generally not be taxable Canadian property to a holder unless, at any time during the five-year period immediately preceding a disposition, the holder, or persons with whom the holder did not deal at arm's length, or any combination thereof, owned 25% or more of the issued shares of any class or series of the Company. If the Common Shares are considered taxable Canadian property to a holder, the Convention will generally exempt Unconnected US Shareholders from tax under the Tax Act in respect of a disposition of Common Shares provided the value of the shares of the Company is not derived principally from real property situated in Canada. Neither Canada nor any province thereof currently imposes any estate taxes or succession duties. Item 6. SELECTED FINANCIAL DATA The selected consolidated financial data as at and for each of the years in the five year period ended April 30, 1999, have been derived from the Company's audited Consolidated Financial Statements and Notes thereto, included in Item 8. "Financial Statements and Supplementary Data", and should be read in conjunction therewith. The Consolidated Financial Statements are prepared on the basis of U.S. GAAP and are expressed in Canadian dollars. See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Year ended April 30, ------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ------------ ----------- (in thousands of Canadian dollars, except share and per share amounts) Statement of Operations Data: Revenues Product........................ $ 66,662 $ 74,781 $ 54,935 $ 31,600 $ 17,184 Service........................ 47,550 36,446 21,679 11,855 8,825 ----------- ----------- ----------- ------------ ----------- 114,212 111,227 76,614 43,455 26,009 ----------- ----------- ----------- ------------ ----------- Costs and expenses Cost of product................ 9,164 7,539 4,677 2,491 1,246 Cost of service................ 19,058 15,259 10,805 6,125 6,168 Sales and marketing............ 53,315 40,214 29,140 16,697 8,592 General and administrative................. 10,722 9,846 8,618 5,513 5,039 Research and development.................... 15,384 10,620 7,422 3,905 1,889 Depreciation and amortization................... 11,568 11,631 8,190 3,593 1,196 Provision for Restructuring Costs (1)...................... 30,503 -- -- -- -- Repurchase of Moore Options(2)..................... -- -- 47,084 -- -- In process research and development(3)................. -- -- 106,962 -- -- ----------- ----------- ----------- ------------ ----------- 149,714 95,109 222,898 38,324 24,130 ----------- ----------- ----------- ------------ ----------- Operating income (loss)........ (35,502) 16,118 (146,284) 5,131 1,879 Interest and other income (expense)...................... 3,815 (3,564) (2,003) 1,466 1,574 ----------- ----------- ----------- ------------ ----------- Income (loss) before taxes.......................... (31,687) 12,554 (148,287) 6,597 3,453 Provision for (recovery of) income taxes................... (2,552) 1,690 193 2,449 698 ----------- ----------- ----------- ------------ ----------- Net income (loss).............. $ (29,135) $ 10,864 $ (148,480) $ 4,148 $ 2,755 =========== =========== =========== ============ =========== Basic income (loss) per share.......................... Net income (loss) per share.......................... $ (1.47) $ 0.65 $ (10.03) $ 0.39 $ 0.29 Weighted average number of shares......................... 19,826,057 16,622,835 14,796,852 10,650,807 9,559,411 Fully diluted income (loss) per share...................... Net income (loss) per share.......................... $ (1.47) $ 0.62 $ (10.03) $ 0.34 $ 0.24 Weighted average number of shares......................... 19,826,057 17,615,595 14,796,852 12,137,946 11,527,240
As at April 30, --------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---------- ----------- ----------- ----------- ----------- (in thousands of Canadian dollars) Balance Sheet Data: Cash and cash equivalents.......... $ 47,262 $ 91,604 $ 34,450 $ 20,198 $ 28,746 Accounts receivable................ 29,274 31,347 24,276 8,482 7,104 Term accounts receivable........... 19,576 13,187 11,676 11,260 375 Working capital.................... 45,054 70,370 30,409 29,716 37,979 Total assets....................... 156,869 216,567 142,988 88,879 51,651 Long term debt including current maturities......................... 32,557 73,404 101,518 -- -- Shareholders' equity............. 84,930 112,149 16,089 67,033 46,689
- --------------- (1) On March 17, 1999 the Company announced a restructuring plan which included the write-down of certain capital assets, reduction in the number of employees, closure of certain facilities and other costs totaling $30.5 million. See Note 15 to the Consolidated Financial Statements included elsewhere in this Form 10-K. (2) Effective June 27, 1996, the Company repurchased the Moore Options for consideration of US$34.0 million, paid for by the issuance of 1,813,334 Common Shares. See Note 10 to the Consolidated Financial Statements included elsewhere in this Form 10-K. (3) On September 10, 1996, the Company acquired certain assets including title to intellectual property, that were formerly part of the E-Forms software group of Delrina Corporation. During the year ended April 30, 1997, the Company recorded a non-recurring charge of $107.0 million for purchased in process research and development relating to this acquisition. See Note 14 to the Consolidated Financial Statements included elsewhere in this Form 10-K. The Company publishes its consolidated financial statements in Canadian dollars. The following table sets forth, for the periods indicated, certain exchange rates based on the exchange rates reported by the Federal Reserve Bank of New York as the noon buying rates in New York City for cable transfers in foreign currencies, as certified for customs purposes (the "Noon Buying Rate"). Such rates quoted are the number of U.S. dollars per Canadian dollar and are the inverse of the Noon Buying Rate.
Year ended April 30, ----------- ----------- ----------- ----------- ----------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ----------- ----------- High....................... US$0.6882 US$0.7317 US$0.7513 US$0.7527 US$0.7457 Low........................ 0.6341 0.6832 0.7145 0.7224 0.7023 Average(1)................. 0.6601 0.7093 0.7329 0.7344 0.7252 Period End................. 0.6863 0.6992 0.7157 0.7342 0.7374
- --------------- (1) The average of the month-end exchange rates during such periods. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The following discussion of the Company's results of operations and of its liquidity and capital resources should be read in conjunction with the information contained in the Consolidated Financial Statements and related Notes thereto. The following discussion provides a comparative analysis of material changes for the years ended April 30, 1999, 1998 and 1997, in the financial condition and results of operations of the parent company ("JetForm") and its wholly-owned subsidiaries: JetForm Corporation (a Delaware corporation), JetForm Pacific Pty Limited ("JetForm Pacific"), JetForm Scandinavia AB ("JetForm Nordic"), JetForm France SA ("JetForm France"), JetForm UK Limited ("JetForm UK"), JetForm Deutschland GmbH ("JetForm Germany"), JetForm Technologies Limited ("JetForm Ireland"), JetForm Japan K.K. ("JetForm Japan"), JetForm PTE Ltd ("JetForm Singapore"), and Why Interactive Inc. ("Why Interactive"). JetForm and its wholly-owned subsidiaries are collectively referred to herein as the "Company". Results of Operations The Company's revenues and operating results have varied substantially from period to period. With the exception of its consulting services operation, the Company has historically operated with little backlog of orders because its software products are generally shipped as orders are received. The Company records product revenue from packaged software and irrevocable commitments to purchase products when persuasive evidence of an arrangement exists, the software product has been shipped, there are no significant uncertainties surrounding product acceptance, the fees are fixed and determinable, and collection is considered probable. As a result, product revenue in any period is substantially dependent on orders booked and shipped in that period and on the receipt of irrevocable commitment license agreements. Product revenue is difficult to forecast due to the fact that the Company's sales cycle, from initial trial to multiple copy licenses, varies substantially from customer to customer. As a result, variations in the timing of product sales can cause significant variations in operating results from period to period. Product revenue represented 58% of total revenue for the year ended April 30, 1999. Service revenue, which primarily consists of custom software development, forms development, training, maintenance and support, E-Forms consulting services and multimedia consulting services, represented 42% of total revenue for the year ended April 30, 1999. Service revenue increased at a compound annual rate of 48% to $47.6 million for the year ended April 30, 1999 from $21.7 million for the year ended April 30, 1997. The increase in service revenue has been a result of growth in maintenance and support revenue and increased focus on bundling the Company's services with product sales. Subsequent to April 30, 1999 the Company sold its multimedia subsidiary, Why Interactive to a third party for $6.4 million. The annual consolidated revenues of Why Interactive were $4.0 million, $3.7 million and $1.6 million in fiscal years 1999, 1998 and 1997, respectively. Costs and expenses are comprised of cost of product, cost of service, sales and marketing, general and administrative, research and development, depreciation and amortization and other expenses. Cost of product consists of third party commissions, the cost of disks, manuals, packaging, freight, royalty payments to vendors whose software is bundled with certain products and amortization of deferred product development costs. Cost of service includes all costs of providing technical support, training, consulting, custom forms development and application development services. Sales and marketing expenses are principally related to salaries and commissions paid to sales and marketing personnel and the cost of marketing programs. Research and development expenses include personnel and occupancy costs as well as the costs of software development, testing, product management, quality assurance and documentation. Depreciation and amortization includes depreciation and amortization of fixed assets and amortization of intangible assets related to the acquisition from Delrina Corporation ("Delrina") of its E-Forms Technology (the "Delrina Assets"), goodwill and distribution rights relating to the acquisitions of JetForm UK, Proactive Systems S.A. ("Proactive France"), JetForm Germany, Eclipse Corporation ("Eclipse"), Why Interactive, JetForm Pacific, JetForm Nordic and JetForm France, and other intangible assets. The Company amortizes goodwill and distribution rights over their expected useful lives. The Company periodically reviews the carrying value of its capital assets. Any impairments in the carrying value are recognized at that time. The following table sets forth, on a comparative basis for the periods indicated, the components of the Company's product margin, service margin and product and service margin:
Year ended April 30, ---------------------------------------------------------------------------- 1999 1998 1997 ---------------------- ----------------------- ---------------------- (in thousands of Canadian dollars) Product revenue.... $ 66,662 100% $ 74,781 100% $54,935 100% Cost of product.... 9,164 14% 7,539 10% 4,677 9% ========== ======== ========== ========= ========== ========= Product margin..... $ 57,498 86% $ 67,242 90% $50,258 91% ========== ======== ========== ========= ========== ========= Service revenue........... $ 47,550 100% $ 36,446 100% $21,679 100% Cost of service........... 19,058 40% 15,259 42% 10,805 50% ========== ======== ========== ========= ========== ========= Service margin............ $ 28,492 60% $ 21,187 58% $10,874 50% ========== ======== ========== ========= ========== ========= Total revenue............. $114,212 100% $111,227 100% $76,614 100% Costs of product and service................. 28,222 25% 22,798 20% 15,482 20% ========== ======== ========== ========= ========== ========= Product and service margin.................. $ 85,990 75% $ 88,429 80% $61,132 80% ========== ======== ========== ========= ========== =========
The following table presents, for the periods indicated, consolidated statement of operations data expressed as a percentage of total revenues:
Year ended April 30, --------------------------------------------- 1999 1998 1997 ------------- ------------ ------------ REVENUES Product................................ 58% 67% 72% Service................................ 42% 33% 28% ------------- ------------ ------------ 100% 100% 100% ------------- ------------ ------------ COSTS AND EXPENSES Cost of product........................ 8% 7% 6% Cost of service........................ 17% 14% 14% Sales and marketing.................... 47% 36% 38% General and administrative............. 9% 9% 11% Research and development............... 13% 10% 10% Depreciation and amortization.......... 10% 10% 11% Provision for Restructuring Costs...... NM -- -- Repurchase of Moore Options............ -- -- NM In process research and development.... -- -- NM ------------- ------------ ------------ NM 86% NM ------------- ------------ ------------ OPERATING INCOME (LOSS).................. NM 14% NM Interest and other income (expense)...... 3% -3% -3% INCOME (LOSS) BEFORE TAXES............... NM 11% NM Provision for income taxes............... NM -2% NM ============= ============ ============ NET INCOME (LOSS)........................ NM 10% NM ============= ============ ============ - ---------------- NM -- not meaningful
The following table provides details of product revenue by geographic segment and, within Canada and the United States of America, by distribution channel:
Year ended April 30, Period to Period Increase ---------------------------------------- --------------------------------- 1999 1998 1997 1998 to 1999 1997 to 1998 ----------- ---------- ----------- -------------- --------------- (in thousands of Canadian dollars) Product revenue by region United States and Canada $ 42,286 $54,226 $ 38,818 -22% 40% Europe 20,051 16,832 13,745 19% 22% Rest of World 4,325 3,723 2,372 16% 57% =========== ========== =========== $ 66,662 $74,781 $ 54,935 -11% 36% =========== ========== =========== Product revenue by channel in the United States and Canada Reseller and OEM $ 24,779 $36,614 $ 19,358 -32% 89% Direct Sales 17,507 17,612 19,460 -1% -9% =========== ========== =========== $ 42,286 $54,226 $ 38,818 -22% 40% =========== ========== ===========
Year Ended April 30, 1999, Compared to the Year Ended April 30, 1998 Revenues Total Revenues. Total revenues increased 3% to $114.2 million for the year ended April 30, 1999 from $111.2 million for the year ended April 30, 1998. Total revenues consisted of 58% product revenue and 42% service revenue for the year ended April 30, 1999. Product Revenue. Product revenue decreased 11% to $66.7 million for the year ended April 30, 1999 from $74.8 million for the year ended April 30, 1998. Product revenue derived from North America, Europe and Rest of World represented 63%, 30%, and 7%, respectively, of product revenue for the year ended April 30, 1999, as compared to 72%, 23% and 5%, respectively, of product revenue for the year ended April 30, 1998. The Company attributes the decrease in product revenue primarily to external market factors including the Year 2000 issue, a shift towards Internet based solutions from traditional client/server solutions, and the emergence of new competitors selling pre-packaged solutions. The Year 2000 issue arises because many computerized systems use two digits rather than four to identify a year. Date sensitive systems may recognize the Year 2000 as 1900 or some other date, resulting in errors when information using Year 2000 dates is processed. As a result, the Company's primary customer base, large financial services organizations and government agencies, who are deeply affected by the Year 2000 problem due to their reliance on computer systems, have focused their information technology resources on ensuring Year 2000 readiness. This has dramatically impacted the Company's ability to sell enterprise wide licenses to these customers. The Company expects that the Year 2000 issue will have a continuing impact on product sales for its fiscal year 2000. During the latter part of the fiscal 1999 year the Company also experienced a shift of focus by its customers to Internet-based solutions from more traditional client/server solutions and the emergence of new competitors selling pre-packaged solutions. The Company has developed a comprehensive strategy to address both the market for Internet-based solutions and prepackaged applications which will be implemented in fiscal year 2000. However, there can be no assurance that revenue derived from this strategy will be sufficient to offset the potential decrease in revenue from the Company's client/server products. Product revenue derived from North America decreased 22% to $42.3 million for the year ended April 30, 1999 from $54.2 million for the year ended April 30, 1998. Reseller and OEM sales, which represented 59% of North American product revenue, decreased 32% to $24.8 million for the year ended April 30, 1999 from $36.6 million for the year ended April 30, 1998, primarily due to significant sales from U.S. government resellers and minimum commitments for resale by Moore Corporation Limited in fiscal year 1998. Product revenue from direct sales, which represented 41% of North American product revenue, decreased 1% to $17.5 million for the year ended April 30, 1999 from $17.6 million for the year ended April 30, 1998. Product revenue derived from Europe increased 19% to $20.1 million for the year ended April 30, 1999 from $16.8 million for the year ended April 30, 1998, primarily due to increased license revenue from Germany. Product revenue derived from Rest of World increased 16% to $4.3 million for the year ended April 30, 1999 from $3.7 million for the year ended April 30, 1998, primarily due to increased license revenue from Japan. Service Revenue. Service revenue increased 30% to $47.6 million for the year ended April 30, 1999 from $36.4 million for the year ended April 30, 1998. For the year ended April 30, 1999, maintenance and support revenue increased 25% to $21.9 million from $17.5 million for the year ended April 30, 1998. The Company's other service revenue increased 35% to $25.6 million for the year ended April 30, 1999 from $19.0 million for the year ended April 30, 1998. Costs and Expenses Total Costs and Expenses. Total costs and expenses were $149.7 million for the year ended April 30, 1999, an increase of 57% from $95.1 million for the year ended April 30, 1998. Excluding the provision for restructuring costs of $30.5 million, costs and expenses for the year ended April 30, 1999, increased by 25%. Cost of Product. Cost of product increased 22% to $9.2 million for the year ended April 30, 1999 from $7.5 million for the year ended April 30, 1998, primarily as a result of an increase in third party royalties and amortization of deferred development costs. For the year ended April 30, 1999, total deferred costs charged to cost of product increased to $3.3 million from $2.2 million for the year ended April 30, 1998. The product margin decreased to 86% for the year ended April 30, 1999 from 90% for the year ended April 30, 1998, primarily due to lost economies of scale resulting from the decrease in product revenue. Cost of Service. Cost of service increased 25% to $19.1 million for the year ended April 30, 1999 from $15.3 million for the year ended April 30, 1998, primarily as a result of an increase in the number of employees, particularly in Ireland, due to the expansion in the Company's service revenues. The service margin increased to 60% for the year ended April 30, 1999 from 58% for the year ended April 30, 1998, primarily as a result of gained economies of scale resulting from increased maintenance and support revenue. Costs of Product and Service. Costs of product and service increased 24% to $28.2 million for the year ended April 30, 1999 from $22.8 million for the year ended April 30, 1998. Product and service margin decreased to 75% for the year ended April 30, 1999 from 80% for the year ended April 30, 1998. Sales and Marketing. Sales and marketing expenses increased 33% to $53.3 million for the year ended April 30, 1999 from $40.2 million for the year ended April 30, 1998, primarily as a result of increased sales and marketing staff. As a percentage of total revenues, sales and marketing increased to 47% for the year ended April 30, 1999 from 36% for the year ended April 30, 1998 General and Administrative. General and administrative expenses increased 9% to $10.7 million for the year ended April 30, 1999 from $9.8 million for the year ended April 30, 1998, primarily due to increased spending on management information systems and facilities. As a percentage of total revenues, general and administrative remained constant at 9% for the years ended April 30, 1999 and 1998. Research and Development. Research and development expenses increased 45% to $15.4 million for the year ended April 30, 1999 from $10.6 million for the year ended April 30, 1998, primarily due to an increase in the number of employees and related costs. During the years ended April 30, 1999 and 1998, the Company capitalized approximately $3.6 million and $2.8 million respectively, of software development costs. Research and development expense were 23% and 14% of product revenue for the years ended April 30, 1999 and 1998, respectively. Depreciation and Amortization. Depreciation and amortization remained constant at $11.6 million for both the year ended April 30, 1999 and 1998, primarily as a result of increased purchases of computer equipment and leasehold improvements offset by the write-down of certain assets relating to the restructuring of the Company. (see "Liquidity and Capital Resources - Provision for Restructuring Costs"). Provision for Restructuring Costs. During the year ended April 30, 1999, the Company recorded a provision for restructuring costs of $30.5 million. The restructuring plan announced by the Company included: i) consolidation of management responsibilities and reduction in headcount; ii) closure of redundant facilities; iii) reduction in the carrying value of certain capital assets primarily related to past acquisitions and; iv) cancellation of trade shows and other commitments. (see "Liquidity and Capital Resources - Provision for Restructuring Costs"). Operating Income (Loss). Operating loss was $35.5 million for the year ended April 30, 1999, compared to operating income of $16.1 million for the year ended April 30, 1998 primarily due to the provision for restructuring costs. Excluding this charge, operating loss was $5.0 million for the year ended April 30, 1999. Interest and Other Income. Net interest and other income was $3.8 million for the year ended April 30, 1999, compared to a net interest expense of $3.6 million for the year ended April 30, 1998 primarily due to a reduction in interest charges on the Delrina obligation and an increase in investment income on cash and cash equivalents. On February 12, 1998, the Company and Delrina re-negotiated certain terms of the asset purchase agreement whereby the Company agreed to accelerate payment of its obligation in consideration for a reduction in the effective interest rate which resulted in a reduction of imputed interest charges (see "Liquidity and Capital Resources - Delrina Obligation"). In April, 1998, the Company received net proceeds of $63.7 million from the issuance of 2.2 million special warrants to Canadian investors. Income Taxes. The Company recorded a provision for current income taxes of $2.1 million and a recovery of deferred income tax of $4.6 million, for the year ended April 30, 1999, compared to a provision for current income taxes of $2.0 million and a recovery of deferred income tax of $355,000 for the year ended April 30, 1998. As at April 30, 1999, the Company had a deferred tax asset of $56.8 million comprised primarily of deductible temporary differences related to the Delrina Assets and the provision for restructuring costs. The Company believes sufficient uncertainty exists regarding the realizability of this net deferred tax asset such that a valuation allowance of $49.2 million has been applied. Year Ended April 30, 1998, Compared to the Year Ended April 30, 1997 Revenues Total Revenues. Total revenues increased 45% to $111.2 million for the year ended April 30, 1998 from $76.6 million for the year ended April 30, 1997. Total revenues consisted of 67% product revenue and 33% service revenue for the year ended April 30, 1998. Product Revenue. Product revenue increased 36% to $74.8 million for the year ended April 30, 1998 from $54.9 million for the year ended April 30, 1997. Product revenue derived from North America, Europe and Rest of World represented 72%, 23%, and 5%, respectively, of product revenue for the year ended April 30, 1998, as compared to 71%, 25% and 4%, respectively, of product revenue for the year ended April 30, 1997. Product revenue derived from North America increased 40% to $54.2 million for the year ended April 30, 1998 from $38.8 million for the year ended April 30, 1997. Reseller and OEM sales, which represented 68% of North American product revenue, increased 89% to $36.6 million for the year ended April 30, 1998 from $19.4 million for the year ended April 30, 1997, primarily as a result of a general increase in large orders from OEMs and VARs including a significant increase in U.S. government sales by resellers and minimum commitments for resale by Moore Corporation Limited ("Moore") Product revenue from end users, which represented 32% of North American product revenue, decreased 9% to $17.6 million for the year ended April 30, 1998 from $19.5 million for the year ended April 30, 1997, primarily as a result of the Company's decision to redirect certain U.S. government sales to resellers which would have been made by direct sales in previous years. Product revenue derived from Europe increased 22% to $16.8 million for the year ended April 30, 1998 from $13.7 million for the year ended April 30, 1997, primarily due to increased license revenue from Germany and Scandinavia. Product revenue derived from Rest of World increased 57% to $3.7 million for the year ended April 30, 1998 from $2.4 million for the year ended April 30, 1997, primarily due to increased license revenue from China and Japan. Service Revenue. Service revenue increased 68% to $36.4 million for the year ended April 30, 1998 from $21.7 million for the year ended April 30, 1997, primarily as a result of increased maintenance and support revenue in North America and Europe. Costs and Expenses Total Costs and Expenses. Total costs and expenses were $95.1 million for the year ended April 30, 1998, a decrease of 57% from $222.9 million for the year ended April 30, 1997. Excluding charges for in process research and development and the repurchase of Moore Options which aggregated $154.0 million for the year ended April 30, 1997, costs and expenses for the year ended April 30, 1998, increased by 38%. Cost of Product. Cost of product increased 61% to $7.5 million for the year ended April 30, 1998 from $4.7 million for the year ended April 30, 1997, primarily as a result of increased product revenue and amortization of deferred development costs. The product margin decreased to 90% for the year ended April 30, 1998 from 91% for the year ended April 30, 1997, primarily due to increased amortization of deferred product development costs. For the year ended April 30, 1998, total deferred costs charged to cost of product increased to $2.2 million from $544,000 for the year ended April 30, 1997. Cost of Service. Cost of service increased 41% to $15.3 million for the year ended April 30, 1998 from $10.8 million for the year ended April 30, 1997, primarily as a result of an increase in the number of employees due to the expansion in the Company's service revenues. The service margin increased to 58% for the year ended April 30, 1998 from 50% for the year ended April 30, 1997, primarily as a result of increased maintenance and support revenue. Costs of Product and Service. Costs of product and service increased 47% to $22.8 million for the year ended April 30, 1998 from $15.5 million for the year ended April 30, 1997. Product and service margin remained constant at 80% for both the year ended April 30, 1998 and 1997. Sales and Marketing. Sales and marketing expenses increased 38% to $40.2 million for the year ended April 30, 1998 from $29.1 million for the year ended April 30, 1997, primarily as a result of the expansion of the Company's world wide sales and marketing staff. General and Administrative. General and administrative expenses increased 14% to $9.8 million for the year ended April 30, 1998 from $8.6 million for the year ended April 30, 1997, primarily due to the expansion of the Company's European operations and increased spending on management information systems. As a percentage of total revenues, general and administrative expenses decreased to 9% from 11% for the years ended April 30, 1998 and 1997, respectively. Research and Development. Research and development expenses increased 43% to $10.6 million for the year ended April 30, 1998 from $7.4 million for the year ended April 30, 1997, primarily due to an increase in the number of employees and related costs. During the years ended April 30, 1998 and 1997, the Company capitalized approximately $2.8 million and $2.6 million respectively, of software development costs. Research and development expenses were 14% of product revenue for both the years ended April 30, 1998 and 1997. Depreciation and Amortization. Depreciation and amortization increased 42% to $11.6 million for the year ended April 30, 1998 from $8.2 million for the year ended April 30, 1997, primarily as a result of increased purchases of computer equipment and leasehold improvements and the acquisition of the Delrina Assets in September 1996 (See "Liquidity and Capital Resources - Delrina Obligation"). Operating Income (Loss). Operating income was $16.1 million for the year ended April 30, 1998, compared to a loss of $146.3 million for the year ended April 30, 1997, primarily due to charges, in fiscal 1997, for the repurchase of Moore Options and in process research and development. Excluding these charges, operating income was $7.8 million for the year ended April 30, 1997. Interest and Other Income. Net interest expense decreased to $3.6 million for the year ended April 30, 1998, compared to net interest expense of $3.7 million for the year ended April 30, 1997. Income Taxes. The Company recorded a provision for income taxes of $2.0 million and a recovery of deferred taxes of $355,000 for the year ended April 30, 1998, compared to a provision for income taxes of $1.1 million and a recovery of deferred taxes of $904,000 for the year ended April 30, 1997. As at April 30, 1998, the Company had a net deferred tax asset of $50.5 million comprised primarily of deductible temporary differences related to the Delrina Assets. The Company believes sufficient uncertainty exists regarding the realizability of this net deferred tax asset such that a valuation allowance of $43.9 million has been applied. Liquidity and Capital Resources As at April 30, 1999 and April 30, 1998, the Company had $47.3 million and $91.6 million of cash and cash equivalents respectively. During the year ended April 30, 1999, the Company's cash and cash equivalents decreased by $44.3 million, primarily due to four payments to Delrina totaling $50.8 million. (See "Liquidity and Capital Resources - Delrina Obligation.") Operations The Company decreased its investment in the non-cash operating components of working capital during the year ended April 30, 1999, by approximately $9.1 million, primarily due to increases in accounts payable, accrued liabilities, and deferred revenue offset by an increase in accounts receivable. The Company purchased approximately $8.3 million of fixed assets in the year ended April 30, 1999. The purchases of fixed assets included computer hardware and software, office equipment, furniture, and leasehold improvements. During the year ended April 30, 1999, the Company increased its investment in other assets by $5.8 million related primarily to capitalized development costs, prepaid royalties, and purchases of other assets. During the year ended April 30, 1999, the Company generated cash of approximately $3.0 million relating to the exercise of stock options and warrants by employees and others. Accounts Receivable and Term Accounts Receivable Total accounts receivable and term accounts receivable increased $4.4 million to $48.9 million at April 30, 1999 from $44.5 million at April 30, 1998, primarily due an increase in the proportion of product orders processed in the last month of the year and an increase in orders with payment dates exceeding the Company's customary trade terms. Accounts receivable decreased to $29.3 million at April 30, 1999 from $31.3 million at April 30, 1998. Term accounts receivable, which are accounts receivable with contracted payment dates exceeding the Company's customary trade terms, increased by $6.4 million to $19.6 million for the year ended April 30, 1999 from $13.2 million on April 30, 1998. Term accounts receivable primarily arise from the recording of revenue from Irrevocable Commitment Licenses. Under an Irrevocable Commitment License, a customer commits to pay a minimum amount over a specified period of time in return for the right to use or resell up to a specific number of copies of a delivered product for a fixed amount. The amount of revenue recorded is the amount of the minimum commitment over the term of the license, less deemed interest for that part of the license term that is beyond the Company's customary trade terms. Payments under Irrevocable Commitment Licenses are generally received from the customer on the earlier of (i) installation of the Company's products by the customer or delivery to its customers or end users and (ii) specified minimum payment dates in the license agreement. Amounts by which revenues recorded exceed payments received are recorded as accounts receivable. Payments that are expected beyond the Company's customary trade terms are recorded as term accounts receivable. Payments that are expected to be received more than one year from the balance sheet date, are recorded as non-current term accounts receivable. Total license fees over the term of the Irrevocable Commitment License may be greater than the minimum commitment initially recorded as revenue. Revenues from installations or sales of the Company's products in excess of the minimum commitment are recorded by the Company as and when they are reported by the customer. Provision for Restructuring Costs On March 17, 1999, the Corporation announced a restructuring plan directed at reducing costs. The key restructuring actions included: o Consolidation of management responsibilities and reduction in headcount. o Closure of redundant facilities. o Reduction in the carrying value of certain capital assets primarily related to past acquisitions. o Cancellation of certain commitments and other costs. The following table summarizes the activity in the provision for restructuring costs during the year:
Employee Other Total Non Cash Total Termination Facilities Cash Costs Cash Costs Costs Provision -------------- ------------- ------------- ------------ ----------- ------------ Restructuring provision............... $ 5,252 $ 2,914 $ 726 $ 8,892 $ 21,611 $ 30,503 Cash payments........... (1,175) (36) (207) (1,418) -- (1,418) Non-cash items.......... -- -- -- -- (21,611) (21,611) -------------------------------------------------------------------------------------- Balance, April 30, 1999......... $ 4,077 $ 2,878 $ 519 $ 7,474 $ -- $ 7,474 ====================================================================================== Long term balance....... $ 500 $ 2,307 $ 418 $ 3,225 $ $ 3,225 ======================================================================================
Employee terminations totalled 105 and included 46 in sales and marketing, 40 in research in development, 12 in internal corporate services, and 7 in systems and consulting services. All employees were terminated on or before April 30, 1999. Facilities costs consisted primarily of $2.1 million and $780,000 related to the closure of the Company's UK and Toronto facilities respectively. The provision for redundant facilities includes management's best estimates of the total future operating costs of these vacant facilities for the remainder of their respective lease terms. Actual costs could differ from these estimates. Other cash costs related primarily to the cancellation of trade shows and other commitments. Non-cash costs include impairment losses of $21.6 million related to assets held for use. The losses are comprised of $16.7 million related to marketing and distribution rights, $3.1 million related to goodwill, and $1.9 million related to other capital assets. In accordance with FAS 121 management reviews the carrying value of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. As part of the restructuring of the Company's operations, management will focus on its core products and traditional markets. As a result, the carrying value of certain of the Company's long-lived assets related to, among others, the Eclipse and Proactive acquisitions was higher than their fair value. Management used the discounted cash flows method to arrive at the estimated fair value of the assets. The cash cost of restructuring relating to facilities are payable over a period of 10 years. All other cash costs of restructuring are payable over the next two years. Delrina Obligation On September 10, 1996, the Company acquired the Delrina Assets from Delrina, a subsidiary of Symantec Corporation of Cupertino, California. Under the asset purchase agreement (the "Delrina Asset Purchase Agreement"), the Company will make quarterly payments to Delrina, from September 27, 1996 to June 27, 2000. During the year ended April 30, 1999, the Company made cash payments totaling US$34.4 million ($50.8 million) in satisfaction of its obligation to Delrina. On February 12, 1998, the Company and Delrina re-negotiated certain terms of the Delrina asset purchase agreement whereby the Company agreed to accelerate payment of its obligation in consideration for a reduction in the effective interest rate, resulting in a reduction in imputed interest charges. In addition, the amended agreement provided that the Company may issue its Common Shares to Delrina in satisfaction of a portion of its payment obligations provided that the total market value of the Company's Common Shares held by Delrina immediately following such issuance does not exceed US$14 million and the Company continues to meet certain registration requirements in respect of such issued Common Shares. The Company believes that Delrina held no Common Shares of the Company as at April 30, 1999. As at April 30, 1999, the next four scheduled, quarterly payments totaled US$14.8 million . Financial Instruments and Credit Facility The Company has entered into a receivables purchase agreement with the Royal Bank of Canada ("the Bank"). Under the agreement, the Company has the option to sell certain accounts receivable on a recourse basis. The Bank has recourse in the event of a trade dispute as defined in the receivables purchase agreement and upon the occurrence of other specified events. The maximum amount of accounts receivable the Company can sell under this agreement is US$20 million or the Canadian dollar equivalent thereof. The Bank is in the process of reviewing its policies regarding the purchase of accounts receivable with payment terms exceeding one year. As a result, there can be no assurance that the Bank will continue to purchase additional term accounts receivable under the current agreement. As at April 30, 1999, the outstanding balance of accounts receivable sold under this agreement was approximately US$6.9 million. The Company believes that none of the receivables sold are at risk of recourse. The Company has a committed $20 million credit facility with the Royal Bank of Canada. The credit facility is made up of (i) a $10 million term facility which bears interest at a rate of 1.5% over the Bankers Acceptance rate of the Bank from time to time and is payable on June 30, 2000; and (ii) a $10 million revolving line of credit which bears interest at the prime rate of the Canadian Bank from time to time. As at April 30, 1999, the Company had drawn down $10 million of the term loan facility and locked in the interest rate until October 18, 1999 at 6.24%. The Company had no borrowings against its revolving line of credit as at April 30, 1999. The Company has granted as collateral for the $20 million credit facility a general security agreement over JetForm's assets, including a pledge of the shares of certain subsidiaries. The Company believes that its existing cash and cash equivalents and its ability to pay the obligation to Delrina through the issuance of common shares, will provide sufficient liquidity to meet the Company's business requirements in the near term. However, should the Company continue to incur operating losses, its ability to meet its liquidity requirements and to raise additional capital through debt or equity financing may be compromised. Recent Accounting Pronouncements The Company recognizes revenue in accordance with Statement of Position ("SOP") 97-2, "Software Revenue Recognition" issued by the American Institute of Certified Public Accountants ("AICPA") in October 1997 and amended by SOP 98-4 issued in March 1998. Additionally, SOP 98-9 issued in December 1998 extends certain provisions of SOP98-4 and amends certain provisions of SOP97-2. SOP 98-9 will be effective for the Company's fiscal year ending April 2000. The Company is currently studying the impact, if any, of the adoption of SOP 98-9 on its future results of operations and financial position. In June 1998, the Financial Accounting Standards Board ("FASB") issued the Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). This statement establishes accounting and reporting standards for derivative instruments and hedging activities and is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. In June, 1999 the FASB issued SFAS No.137 which delays the effective date of SFAS 133 until fiscal years beginning after June 15, 2000. Although the impact of SFAS 133 on the Company's financial disclosures is not known at this time, the Company will adopt SFAS 133 during the year ending April 30, 2002. In April, 1998, the AICPA issued SOP 98-5, "Reporting Costs of Start-Up Activities". This statement establishes accounting and reporting standards for start-up costs and organization costs. This SOP is effective for fiscal years beginning after December 15, 1998. The Company will adopt SOP 98-5 in its fiscal year ending April 30, 2000. The Year 2000 What is commonly known as the Year 2000 issue arises because many computerized systems use two digits rather than four to identify a year. Date sensitive systems may recognize the Year 2000 as 1900 or some other date, resulting in errors when information using Year 2000 dates is processed. The effect of the Year 2000 issue may be experienced before, on, or after January 1, 2000, and, if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. The Company recognizes the need to ensure its operations will not be adversely impacted by software failures caused by the advent of the Year 2000. To address the Year 2000 issues, the Company commenced a program which entailed a comprehensive review of its software products, internal financial and operational systems, and the Company's suppliers. The Company has reviewed all its major products and believes that the majority of the current versions are Year 2000 compliant. Certain products which are not currently Year 2000 compliant are in the process of being upgraded to include Year 2000 compliance. The Company has made available information on its Year 2000 product compliance on its Web site http://www.jetform.com. With respect to the Company's internal systems, the Company has identified internal hardware and software systems that could be affected by the Year 2000 date change. The Company is taking preventive measures in those cases where systems have been found not to be Year 2000 compliant either by replacing those systems or upgrading to compliant versions offered by suppliers. All costs associated with modifying the existing internal use computer software will be expensed as incurred. The Company is contacting its major suppliers and is not aware of any Year 2000 compliance issues that would impact its normal business operations. However, there can be no assurance that the systems of its major suppliers and other service providers on which the Company relies will not be adversely impacted by software failures caused by the advent of the Year 2000. The Company expects to implement successfully the systems and programming changes necessary to address the Year 2000 issues with respect to its products and internal systems and does not believe that the cost of such actions will have a material adverse effect on its financial condition or results of operations. However, the risks from the inability of the Company's software products or internal systems to properly function in the Year 2000 could result in increased warranty costs, customer satisfaction issues, inability to ship products, potential lawsuits, and other costs and liabilities resulting from business interruptions. To the extent possible, the Company will be developing contingency plans designed to allow continued operation in the event of failure of the Company's or third parties' systems. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS The Company is primarily exposed to market risks associated with fluctuations in interest rates and foreign currency exchange rates. Interest rate risks The Company's exposure to interest rate fluctuations relates primarily to its investment portfolio and its credit facility with its bank. The Company primarily invests its cash in short-term high-quality securities with reputable financial institutions. The interest income from these investments is subject to interest rate fluctuations which management believes would not have a material impact on the financial position of the Company. The Company has a committed $20 million credit facility with the Royal Bank of Canada. The credit facility is made up of (i) a $10 million term facility which bears interest at a rate of 1.5% over the Bankers Acceptance rate of the Bank from time to time and is payable on June 30, 2000; and (ii) a $10 million revolving line of credit which bears interest at the prime rate of the Canadian Bank from time to time. As at April 30, 1999, the Company had drawn down $10 million of the term loan facility and locked in the interest rate until October 18, 1999 at 6.24%. The Company had no borrowings against its revolving line of credit as at April 30, 1999. The impact on net interest income of a 100 basis point adverse change in interest rates for the fiscal year ended April 30, 1999 would have been approximately $570,000. Foreign Currency Risk The Company has net monetary asset and liability balances in foreign currencies other than the Canadian Dollar, including the U.S. Dollar ("US$"), the Pound Sterling ("GBP"), the Australian dollar ("AUD"), the Swedish Krona ("SEK"), the German Mark ("DM"), the French Franc ("FF"), the Irish Punt ("IEP"), the Euro ("EUR"), and the Japanese Yen ("JPY"). JetForm hedges its U.S. dollar net asset position to reduce its exposure to currency fluctuations. Gains and losses resulting from these hedges are recognized in income in the same period as gains and losses on the underlying position JetForm does not enter into these financial instruments for speculative or trading purposes. As at April 30, 1999, JetForm had a forward contract outstanding to sell $5 million U.S. dollars at $1.4549 per Canadian dollar. As at April 30, 1999, the approximate fair value of this forward contract is nil. The Company's cash and cash equivalents are primarily held in Canadian and U.S. dollars. As a result, fluctuations in the exchange rate of the U.S. dollar will have an impact on the Company's reported cash position. As at April 30, 1999, a 10% adverse change in foreign exchange rates versus the U.S. dollar would have reduced the Company's reported cash and cash equivalents balance by approximately $2.0 million. As at April 30, 1999, a 10% adverse change in foreign exchange rates versus currencies other than the U.S. dollar, held by the Company, would not have had a material impact on the Company's reported cash and cash equivalents balance. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Management's Statement of Responsibility 32 Auditors' Report 33 Consolidated Balance Sheets 34 Consolidated Statements of Operations 35 Consolidated Statements of Comprehensive Income 36 Consolidated Statements of Shareholders' Equity 37 Consolidated Statements of Cash Flows 38 Notes to Consolidated Financial Statements 39 MANAGEMENT'S STATEMENT OF RESPONSIBILITY Management is responsible for the preparation of the financial statements and all other information in the Form 10-K filing with the U.S. Securities and Exchange Commission. The financial statements have been prepared in accordance with generally accepted accounting principles and reflect management's best estimates and judgments. The financial information presented elsewhere in the annual report is consistent with the consolidated financial statements. Management has developed and maintains a system of internal controls to provide reasonable assurance that all assets are safeguarded and to facilitate the preparation of relevant, reliable and timely financial information. Consistent with the concept of reasonable assurance, the Company recognizes that the relative cost of maintaining these controls should not exceed their expected benefits. The Audit Committee, which is comprised of independent directors, reviews the consolidated financial statements, considers the report of the external auditor, assesses the adequacy of the Company's internal controls, and recommends to the Board of Directors the independent auditors for appointment by the shareholders. The financial statements were reviewed by the Audit Committee and approved by the Board of Directors. The financial statements were audited by PricewaterhouseCoopers LLP, the external auditors, in accordance with generally accepted auditing standards on behalf of the shareholders. /s/ John B. Kelly /s/ Jeffrey McMullen - ------------------------------------- -------------------------------------- John B. Kelly Jeffrey McMullen President and Chief Executive Officer Vice President Finance and Chief Financial Officer AUDITORS' REPORT TO THE SHAREHOLDERS OF JETFORM CORPORATION We have audited the consolidated balance sheets of JetForm Corporation as of April 30, 1999 and 1998, and the consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for the years ended April 30, 1999, 1998 and 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Canada. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 1999 and 1998, and the results of its operations and its cash flows for the years ended April 30, 1999, 1998 and 1997, in accordance with accounting principles generally accepted in the United States. On June 22, 1999, we reported separately to the shareholders of JetForm Corporation on financial statements for the same period, prepared in accordance with accounting principles generally accepted in Canada. PRICEWATERHOUSECOOPERS LLP Chartered Accountants Ottawa, Canada June 22, 1999 JETFORM CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands of Canadian dollars, except share amounts) April 30, April 30, 1999 1998 --------- --------- ASSETS Current assets Cash and cash equivalents...................... $ 47,262 $ 91,604 Accounts receivable (Note 2)................... 29,274 31,347 Term accounts receivable (Note 2).............. 13,486 9,993 Unbilled receivables........................... 3,455 6,254 Inventory...................................... 1,139 1,127 Taxes and investment tax credits recoverable... 1,310 443 Prepaid expenses and deferred charges.......... 3,727 3,259 Asset held for sale (Note 18).................. 3,417 -- --------- --------- 103,070 144,027 Term accounts receivable (Note 2).............. 6,090 3,194 Taxes and investment tax credits recoverable... 3,218 2,510 Fixed assets (Note 3).......................... 18,620 17,522 Other assets (Note 4).......................... 25,871 49,314 ========= ========= $156,869 $216,567 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable............................... $ 7,874 $ 4,499 Accrued liabilities............................ 15,656 12,868 Unearned revenue............................... 12,463 9,197 Current portion of Delrina obligation (Note 14).................................... 22,023 47,093 ---------- --------- 58,016 73,657 Deferred income taxes (Note 9)................. 164 4,450 Accrued liabilities (Note 15).................. 3,225 -- Term loan (Note 6)............................. 9,998 -- Delrina obligation (Note 14)................... 536 26,311 ---------- --------- 71,939 104,418 ---------- --------- Commitments (Note 11) Shareholders' equity Capital stock (Issued and outstanding -- 19,421,428 Common Shares and 450,448 Preference Shares at April 30, 1999; 17,028,141 Common Shares, 450,448 Preference Shares and 2,200,000 Special Warrants at April 30, 1998) (Note 7) ........ 247,119 244,151 Cumulative translation adjustment..... (1,052) -- Deficit............................... (161,137) (132,002) --------- --------- 84,930 112,149 --------- ---------- $156,869 $216,567 ========= ========== (the accompanying notes are an integral part of these consolidated financial statements) Signed on behalf of the Board: /s/ John B. Kelly /s/ Abraham Ostrovsky - ----------------- --------------------- JETFORM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of Canadian dollars except share and per share amounts) Year ended April 30, ------------------------------------------- 1999 1998 1997 ------- -------- -------- Revenues Product..................... $ 66,662 $ 74,781 $ 54,935 Service..................... 47,550 36,446 21,679 --------- --------- --------- 114,212 111,227 76,614 --------- --------- --------- Costs and expenses Cost of product............. 9,164 7,539 4,677 Cost of service............. 19,058 15,259 10,805 Sales and marketing......... 53,315 40,214 29,140 General and administrative............ 10,722 9,846 8,618 Research and development (Note 5).................. 15,384 10,620 7,422 Depreciation and amortization.............. 11,568 11,631 8,190 Provision for restruc- turing costs (Note 15).... 30,503 -- -- Repurchase of Moore Options (Note 10)......... -- -- 47,084 In process research and development (Note 14)..... -- -- 106,962 --------- --------- --------- 149,714 95,109 222,898 --------- --------- --------- Operating income (loss)..... (35,502) 16,118 (146,284) Net interest income (expense)................. 3,826 (3,564) (3,662) Other income (expense)...... (11) -- 1,659 --------- --------- --------- Income (loss) before taxes..................... (31,687) 12,554 (148,287) Provision for current taxes (Note 9)............ (2,073) (2,045) (1,097) Recovery of deferred taxes (Note 9)............ 4,625 355 904 --------- --------- --------- Net income (loss)........... $ (29,135) $ 10,864 $ (148,480) ========= ========= ========= Basic income per share (Note 8) Net income (loss) per share..................... $ (1.47) $ 0.65 $ (10.03) Weighted average number of shares................. 19,826,057 16,622,835 14,796,852 Fully diluted income per share (Note 8) Net income (loss) per share................. $ (1.47) $ 0.62 $ (10.03) Weighted average number of shares................. 19,826,057 17,615,595 14,796,852 (the accompanying notes are an integral part of these consolidated financial statements) JETFORM CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands of Canadian dollars) Year ended April 30, ----------------------------------------------- 1999 1998 1997 ----------- ---------- ------------ Net income................... $ (29,135) $ 10,864 $ (148,480) Other comprehensive income (loss): Cumulative translation adjustment................ (1,052) -- -- =========== ========== ============ Comprehensive income (loss).................... $ (30,187) $ 10,864 $ (148,480) =========== ========== ============ (the accompanying notes are an integral part of these consolidated financial statements)
JETFORM CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands of Canadian dollars except share amounts) Number issued and outstanding Stated Value --------------------------------------------------------------------------------------------------------------- Total Cumulative Retained Total Common Special Preference Common Special Preference Capital Translation Earnings Shareholders' Stock Warrants Stock Stock Warrants Stock Stock Adjustment (Deficit) Equity --------------------------------------------------------------------------------------------------------------- Balance as at April 30, 1996 9,237,013 -- 2,263,782 $ 36,596 $ -- $ 24,823 $ 61,419 -- $ 5,614 $ 67,033 Issuance of Common Shares: Pursuant to acquisitions...... 15,665 -- -- 390 -- -- 390 -- -- 390 Pursuant to repurchase of Moore Options (Note 10)......... 1,813,334 -- -- 46,335 -- -- 46,335 -- -- 46,335 Repayment of Delrina obliga- tion.............. 662,731 -- -- 17,142 -- -- 17,142 -- -- 17,142 Public offering... 1,500,000 -- -- 30,094 -- -- 30,094 -- -- 30,094 Conversions....... 1,813,334 -- (1,813,334) 19,884 -- (19,884) -- -- -- -- Exercise of stock options............. 651,546 -- -- 3,575 -- -- 3,575 -- -- 3,575 Net loss for the year.............. -- -- -- -- -- -- -- -- (148,480) (148,480) --------------------------------------------------------------------------------------------------------------- Balance as at April 30, 1997 15,693,623 -- 450,448 154,016 -- 4,939 158,955 -- (142,866) 16,089 Issuance of Common Shares: Pursuant to acquisitions..... 6,918 -- -- 144 -- -- 144 -- -- 144 Repayment of Delrina obligation....... 715,654 -- -- 15,485 -- -- 15,485 -- -- 15,485 Exercise of stock options.......... 611,946 -- -- 5,917 -- -- 5,917 -- -- 5,917 Issuance of Spe- cial Warrants.... -- 2,200,000 -- -- 63,650 -- 63,650 -- -- 63,650 Net income for the year......... -- -- -- -- -- -- -- -- 10,864 10,864 --------------------------------------------------------------------------------------------------------------- Balance as at April 30, 1998 17,028,141 2,200,000 450,448 175,562 63,650 4,939 244,151 -- (132,002) 112,149 Issuance of Common Shares: Pursuant to acquisitions..... 6,918 -- -- 242 -- -- 242 -- -- 242 Share purchase plan............. 20,768 -- -- 375 -- -- 375 -- -- 375 Exercise of stock options.... 165,601 -- -- 2,259 -- -- 2,259 -- -- 2,259 Conversions of Special Warrants......... 2,200,000 (2,200,000) -- 63,742 (63,650) -- 92 -- -- 92 Cumulative translation adjustment....... -- -- -- -- -- -- -- (1,052) -- (1,052) Net Loss for the year............. -- -- -- -- -- -- -- -- (29,135) (29,135) --------------------------------------------------------------------------------------------------------------- Balance as at April 30, 1999 19,421,428 -- 450,448 $ 242,180 -- $ 4,939 $ 247,119 $(1,052) $(161,137) $ 84,930 =============================================================================================================== (the accompanying notes are an integral part of these consolidated financial statements)
JETFORM CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian dollars) Year ended April 30, -------------------------------------- 1999 1998 1997 ---------- -------- ---------- Cash provided from (used in): Operating activities Net income (loss)................. $(29,135) $ 10,864 $(148,480) Items not involving cash: Depreciation and amortization.................. 14,838 13,629 8,605 Deferred income taxes........... (4,625) (355) (904) Other non-cash items............ (4,130) 4,034 3,812 Provision for restructuring costs (Note 15)................. 21,611 -- -- Repurchase of Moore Options....... -- -- 46,335 In process research and development..................... -- -- 106,962 Net change in operating components of working capital (Note 12)............... 9,082 (6,869) (14,287) ---------- --------- ---------- 7,641 21,303 2,043 ---------- --------- ---------- Investing activities Non-cash assets acquired on purchase of subsidiaries........ -- -- (725) Purchase of fixed assets.......... (8,316) (8,401) (7,299) Increase in other assets.......... (5,788) (8,652) (7,463) ---------- --------- ---------- (14,104) (17,053) (15,487) ---------- --------- ---------- Financing activities Proceeds from issuance of shares... 2,968 69,567 33,669 Issuance of debt................... 9,998 -- -- Repayment of Delrina obligation.... (50,845) (16,663) (5,973) ---------- --------- ---------- (37,879) 52,904 27,696 ---------- --------- ---------- Increase (decrease) in cash and cash equivalents................. (44,342) 57,154 14,252 Cash and cash equivalents, beginning of year................ 91,604 34,450 20,198 ---------- --------- ---------- Cash and cash equivalents, end of year.......................... $ 47,262 $ 91,604 $ 34,450 ========== ========= ========== (the accompanying notes are an integral part of these consolidated financial statements) JETFORM CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation These consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"), and include all assets, liabilities, revenues and expenses of JetForm Corporation ("JetForm") and its wholly-owned subsidiaries: JetForm Corporation (a Delaware corporation), JetForm Pacific Pty Limited ("JetForm Pacific"), JetForm Scandinavia AB ("JetForm Nordic"), JetForm France SA ("JetForm France"), JetForm UK Limited ("JetForm UK"), JetForm Deutschland GmbH ("JetForm Germany"), JetForm Technologies Limited ("JetForm Ireland"), JetForm Japan K.K. ("JetForm Japan"), and Why Interactive Inc. ("Why Interactive"). JetForm and its wholly-owned subsidiaries are collectively referred to herein as the "Company". (b) Nature of operations The Company develops Web-based software solutions that automate business processes, transforming them into e-processes. Organizations use the Company's technology to replace existing pre-printed form processes with electronic forms-based solutions. The Company sells its products and services internationally through multiple channels which include direct sales to end users, joint marketing alliances with resellers including value-added resellers ("VARs"), system integrators, hardware and software vendors ("OEMs") and arrangements with distributors which resell products primarily to dealers and other retailers. (c) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. (d) Revenue recognition The Company records revenue in accordance with the Statement of Position ("SOP") 97-2 "Software Revenue Recognition" and SOP 98-4 "Deferral of the Effective Date of a Provision of SOP 97-2" which provide guidance on applying generally accepted accounting principles in recognizing revenue from software transactions. The Company records product revenue from packaged software and irrevocable commitments to purchase products when persuasive evidence of an arrangement exists, the software product has been shipped, there are no significant uncertainties surrounding product acceptance, the fees are fixed and determinable, and collection is considered probable. Revenues from irrevocable commitments to purchase products with payment terms exceeding the Company's customary trade terms are recorded at the amount receivable less deemed interest. The Company amortizes the difference between the face value of the receivable and the discounted amount over the term of the receivable and records the discount as interest income. Revenue from software product licenses which include significant customization and revenue from services are recognized on a percentage of completion basis, whereby revenue is recorded at the estimated realizable value of work completed to date. Estimated losses on contracts are recognized when they become probable. Unbilled receivables represent consulting work performed under contract and not yet billed. Revenue from maintenance agreements is recognized ratably over the term of the agreement. Unearned revenue represents payments received from customers for services not yet performed. (e) Investment tax credits Investment tax credits ("ITCs"), which are earned as a result of qualifying research and development expenditures, are recognized when the expenditures are made and their realization is reasonably assured, and are applied to reduce research and development expense in the year. (f) Capital assets Capital assets are recorded at cost. Depreciation and amortization are calculated using the following rates and bases. Computer equipment.............. 30% declining balance and straight line over 2 to 4 years Software........................ 30% declining balance Furniture and fixtures.......... 20% declining balance Software licenses and pur- chased rights to improve, market and/or distribute products...................... Straight-line over the lesser of the life of the license or right and 15 years Leasehold improvements......... Straight-line over the term of the lease Delrina technology............. Straight-line over 3 to 5 years Trademarks, trade names and workforce and other assets.... Straight-line or declining balance over the useful life of the assets which range from 3 to 15 years The carrying value of capital assets is periodically reviewed by management, and impairment losses, if any, are recognized when the expected non-discounted future operating cash flows derived from the capital asset is less than the carrying value of such asset. In the event of an impairment in capital assets, the discounted cash flows method is used to arrive at the estimated fair value of such asset. (g) Goodwill Goodwill, which represents the purchase price paid for an acquired business in excess of the values assigned to identifiable assets, is amortized on a straight-line basis over its expected useful life. In general, goodwill is expected to have a useful life of seven years. The carrying value of goodwill is periodically reviewed by management, and impairment losses, if any, are recognized when the expected non-discounted future operating cash flows derived from the related business acquired are less than the carrying value of such goodwill. In the event of an impairment in goodwill, the discounted cash flows method is used to arrive at the estimated fair value of such goodwill. (h) Software and software development costs Computer software purchased by the Company is recorded as fixed assets when acquired. Costs related to the development of proprietary software are expensed as incurred unless the costs relate to technically feasible and complete products and can reasonably be regarded as assured of recovery through future revenues in which case the costs are deferred and amortized on a straight-line basis over the useful life of the product, which generally does not exceed three years. (i) Foreign currency translation During the year ended April 30, 1999 the Company adopted the local currency of its subsidiaries as the functional currency of those subsidiaries. The change in functional currency resulted from a change in circumstance and has been applied prospectively. The financial statements of the parent company and its subsidiaries have been translated into Canadian dollars in accordance with Statement of Financial Accounting Standards("SFAS") No. 52 "Foreign Currency Translation". All balance sheet amounts with the exception of Shareholders' Equity have been translated using the exchange rates in effect at year end. Income statement amounts have been translated using the average exchange rate for the year. The gains and losses resulting from the translation of foreign currency statements into the Canadian dollar are reported in comprehensive income and as a separate component of Shareholders' Equity. (j) Cash equivalents and marketable securities Cash equivalents are defined as liquid investments which have a term to maturity at the time of purchase of less than ninety days. (k) Stock based compensation The Company has elected to continue to follow Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25"), and to present the pro forma information that is required by SFAS No. 123 -- "Accounting for Stock Based Compensation" ("SFAS 123"). (l) Derivative financial instruments Gains and losses on forward exchange contracts that hedge exposure to foreign currency fluctuations are recognized and included in income as realized. Realized gains and losses on foreign exchange contracts are recognized and offset against foreign exchange gains and losses on the underlying net asset or net liability position. 2. ACCOUNTS RECEIVABLE Accounts receivable and term accounts receivable are net of an allowance for doubtful accounts of $1.9 million at April 30, 1999 and $1.4 million at April 30, 1998. The Company records revenues from irrevocable commitments to purchase products which do not conform to the Company's customary trade terms at the minimum amount receivable less deemed interest ("Term Accounts Receivable"). The Company uses a discount rate equal to its current net cost of borrowing at the time the revenue is recorded. For the year ended April 30, 1999, the average discount rate used was 4.5%. Under an irrevocable commitment to purchase product the customer commits to pay a minimum amount over a specified period of time in return for the right to use or resell up to a specific number of copies of a delivered product. The Company records Term Accounts Receivable as non current to the extent that management estimates payment will be received more than one year from the balance sheet date. Payment of Term Accounts Receivable is generally due the earlier of: (i) delivery of the Company's products by the customer to its customers or end users; and (ii) specific dates in the license agreement ("Minimum Payment Dates"). As at April 30, 1999, total Term Accounts Receivable with Minimum Payment Dates exceeding one year were approximately $6.1 million. As at April 30, 1998, total Term Accounts Receivable with Minimum Payment Dates exceeding one year were approximately $5.4 million of which management estimated approximately $2.2 million would be received within one year. The Company's customer base consists of large numbers of geographically diverse customers dispersed across many industries. As a result, concentration of credit risk with respect to trade receivables is not significant. 3. FIXED ASSETS April 30, 1999 April 30, 1998 -------------------------------------- -------------- Accumulated depreciation and Net book Net book Cost amortization value value ------- ------------ -------- -------------- (in thousands of Canadian dollars) Computer equipment.... $15,051 $ 8,030 $ 7,021 $ 6,878 Furniture and fixtures............ 8,410 2,961 5,449 4,508 Software.............. 7,916 4,065 3,851 4,340 Leasehold improvements........ 3,270 971 2,299 1,796 ------- ------------ -------- -------------- $34,647 $16,027 $18,620 $17,522 ======= ============ ======== ============== The cost of fixed assets at April 30, 1998, was $28.8 million, and accumulated depreciation and amortization was $11.3 million. 4. OTHER ASSETS April 30, 1999 April 30, 1998 -------------------------------------- -------------- Accumulated Net book Net book Cost amortization value value ------- ------------ -------- -------------- (in thousands of Canadian dollars) Delrina technology, trademarks, trade names and work- $16,081 $ 7,510 $ 8,571 $10,682 force............... Goodwill.............. 1,159 226 933 4,794 Licenses, marketing and distribution rights.............. 8,482 3,244 5,238 21,746 Deferred and acquired devel- opment costs........ 11,125 4,784 6,341 5,376 Other assets.......... 6,624 1,836 4,788 6,716 ------- ------------ -------- -------------- $43,471 $17,600 $25,871 $49,314 ======= ============ ======== ============== The cost of other assets at April 30, 1998, was $66.4 million and accumulated amortization was $17.1 million. 5. RESEARCH AND DEVELOPMENT EXPENSE The following table provides a summary of development costs deferred and the related amortization charged to cost of product in the years ended April 30, 1999, 1998 and 1997. Year ended April 30, ----------------------------------- 1999 1998 1997 ------- ------- ------- (in thousands of Canadian dollars) Research and development costs net of investment tax credits.................... $18,984 $13,395 $ 9,972 Deferred development costs.................. (3,600) (2,775) (2,550) -------- -------- -------- Net research and development expense........ $15,384 $10,620 $ 7,422 ======== ======== ======== Amortization of development costs charged to cost of product................ $ 2,636 $ 1,726 $ 342 ======== ======== ======== 6. FINANCIAL INSTRUMENTS AND CREDIT FACILITIES The Company has entered into a receivables purchase agreement with the Royal Bank of Canada ("the Bank"). Under the agreement, the Company has the option to sell certain accounts receivable on a recourse basis. The Bank has recourse in the event of a trade dispute as defined in the receivables purchase agreement and upon the occurrence of other specified events. The maximum amount of accounts receivable the Company can sell under this agreement is US$20 million or the Canadian dollar equivalent thereof. The Bank is in the process of reviewing its policies regarding the purchase of accounts receivable with payment terms exceeding one year. As a result, there can be no assurance that the Bank will continue to purchase additional term accounts receivable under the current agreement. As at April 30, 1999, the outstanding balance of accounts receivable sold under this agreement was approximately US$6.9 million. The Company believes that none of the receivables sold are at risk of recourse. The Company has a committed $20 million credit facility with the Royal Bank of Canada. The credit facility is made up of (i) a $10 million term facility which bears interest at a rate of 1.5% over the bankers acceptance rate of the Bank from time to time and is payable on June 30, 2000; and (ii) a $10 million revolving line of credit which bears interest at the prime rate of the Canadian Bank from time to time. As at April 30, 1999, the Company had drawn down the $10 million term loan facility and fixed the interest rate until October 18, 1999 at 6.24%. The Company had no borrowings against its revolving line of credit as at April 30, 1999. The Company has granted as collateral for the $20 million credit facility a general security agreement over JetForm's assets, including a pledge of the shares of certain subsidiaries. JetForm hedges its U.S. dollar net asset position to reduce its exposure to currency fluctuations. To achieve this objective, JetForm primarily enters into foreign exchange forward contracts with major Canadian chartered banks, and therefore, does not anticipate non-performance by these counterparties. JetForm does not enter into foreign exchange forward contracts for speculative or trading purposes. As at April 30, 1999, JetForm had a foreign exchange forward contract outstanding to sell $5 million U.S. dollars at $1.4549 per Canadian dollar. As at April 30, 1999, the approximate fair value of this forward contract is nil. 7. CAPITAL STOCK The authorized capital stock of the Company consists of an unlimited number of Common Shares ("Common Shares") and 2,263,782 Convertible Preference Shares ("Preference Shares"). On June 27, 1996, the Company completed an agreement with Moore Corporation Limited ("Moore") under which a subsidiary of the Company repurchased certain options previously issued to Moore for consideration of US$34.0 million ($46.3 million), paid through the issuance by the Company to Moore of 1,813,334 Common Shares. Moore subsequently sold to various third parties 1,813,334 previously issued Preference Shares which were converted into an equal number of Common Shares, and Moore exercised certain other options to acquire 178,750 Common Shares at US$8.25 per share. As a result of the foregoing, as at April 30, 1999, Moore held 1,992,084 Common Shares, 450,448 Preference Shares and 116,216 options. During the year ended April 30, 1997, the Company issued 1,500,000 Common Shares, at a price of US$16.25 per share, to third parties pursuant to an underwritten public offering. The net proceeds from the offering after deducting underwriting discounts, fees and expenses were $30.1 million. During the year ended April 30, 1998, the Company issued 2,200,000 special warrants ("Special Warrants") to Canadian investors at a price of US$21.25 per Special Warrant. The net proceeds from the offering after deducting underwriting discounts, fees and expenses were $63.7 million. The Special Warrants were deemed to have been exercised by the holders thereof on June 26, 1998, without payment of additional consideration on the basis of one Common Share for each Special Warrant so held. On June 19, 1998, the Company filed a final prospectus with Canadian securities regulators to register the 2,200,000 Common Shares issuable on exercise of the Special Warrants. The Company does not intend to register such Common Shares under the United States Securities Act of 1933. In June 1990, the Company adopted an Employee Stock Option Plan (the "1990 Plan") pursuant to which 400,000 Common Shares were reserved for the grant of options. On March 4, 1993, the Board of Directors voted to terminate the 1990 Plan effective as of the consummation of the Company's initial public offering dated April 20, 1993, at which time the 1993 Employee Stock Option Plan (the "1993 Plan") became effective. On March 4, 1993, the Board of Directors adopted the 1993 Plan. The 1993 Plan is administered by the Compensation Committee of the Board of Directors and options are not granted at less than the fair market value of the Common Shares on the date of grant. Options outstanding under the 1993 Plan remain in effect pursuant to their terms. Options granted under the 1993 Plan have a term of five years and vest at the rate of one-third of the shares covered on each of the first three anniversary dates of the date of grant. Options granted under the 1993 Plan are not transferable and are exercisable only by the optionee during the optionee's lifetime. The Company established the 1995 Plan on June 28, 1995, to replace the 1993 Plan. The 1995 Plan is administered by the Compensation Committee of the Board of Directors and provides for the grant to all eligible full-time employees, directors, officers and others of options to purchase Common Shares at a price based upon the last trading price of the Common Shares on the NASDAQ National Market on the trading day immediately preceding the date of grant. Pursuant to the 1995 Plan, the aggregate number of Common Shares available to be issued is 4,425,763. Options granted under the 1995 Plan have a term of four, five or seven years and vest ratably during the first three years following grant. Options granted are non-transferable. On September 11, 1997, the Shareholders of the Company approved the 1997 Employee Stock Purchase Plan (the "Stock Purchase Plan"). A total of 400,000 Common Shares of the Company have been reserved for issuance pursuant to the Stock Purchase Plan. Shares may be purchased under the Stock Purchase Plan by employees through payroll deduction. The purchase price of Common Shares issued under the Stock Purchase Plan is the lower of 95% of the fair market of the Common Shares of the Company at the beginning of the offering period and 95% of the fair market value of the Common Shares of the Company at the end of the offering period. The following table presents the number of options and warrants outstanding and exercisable, and the weighted average exercise price:
Weighted average Other exercise IPO options price Underwriter's and in U.S. 1995 Plan 1993 Plan 1990 Plan warrants Moore warrants Total dollars ------------------------------------------------------------------------------------------------------- Number of outstanding options and warrants Balance at April 30, 1996................... 516,860 928,455 213,341 97,955 8,021,341 286,127 10,064,079 13.50 Grants................... 719,071 -- -- -- -- -- 719,071 18.85 Repurchase of Moore Options................ -- -- -- -- (7,726,375) -- (7,726,375) 15.00 Cancellations and forfeitures............ (73,705) (21,979) -- -- -- (8,408) (104,092) 14.83 Exercises................ (10,172) (125,337) (129,091) (20,477) (178,750) (187,719) (651,546) 4.34 ---------- --------- --------- -------- ----------- --------- ---------- Balance at April 30, 1997................... 1,152,054 781,139 84,250 77,478 116,216 90,000 2,301,137 12.70 Grants................... 2,048,905 -- -- -- -- 5,000 2,053,905 13.39 Cancellations and forfeitures............ (164,557) (31,830) -- -- -- (2,219) (198,606) 15.25 Exercises................ (60,261) (342,176) (84,250) (77,478) -- (47,781) (611,946) 6.95 ---------- --------- --------- -------- ----------- --------- ---------- Balance at April 30, 1998................... 2,976,141 407,133 -- -- 116,216 45,000 3,544,490 13.95 Grants................... 1,037,960 63,550 -- -- -- -- 1,101,510 4.50 Cancellations and forfeitures............ (360,813) (175,059) -- -- -- -- (535,872) 12.49 Exercises................ (47,485) (98,116) -- -- -- (20,000) (165,601) 9.38 ---------- --------- --------- -------- ----------- --------- ---------- Balance at April 30, 1999................... 3,605,803 197,508 -- -- 116,216 25,000 3,944,527 11.71 ========== ========= ========= ======== =========== ========= ========== Weighted average exercise price at April 30, 1998, in U.S. dollars......... $14.73 $7.70 N/A N/A $16.50 $11.54 $13.95 ========== ========= ========= ======== =========== ========= ========== Weighted average exercise price at April 30, 1999, in U.S. dollars......... $11.78 $ 6.93 N/A N/A $16.50 $15.98 $11.71 ========== ========= ========= ======== =========== ========= ========== Number of exercisable options and warrants April 30, 1997............ 183,557 608,275 84,250 77,478 38,739 70,001 1,062,300 8.50 April 30, 1998............ 509,854 397,974 -- -- 77,478 38,334 1,023,640 12.88 April 30, 1999............ 1,397,776 180,759 -- -- 116,216 25,000 1,719,751 14.44 Range of exercise prices in U.S. dollars at April 30, 1999 From....................... $ 3.81 $ 3.81 N/A N/A $16.50 $15.25 $ 3.81 To......................... $22.00 $16.00 N/A N/A $16.50 $18.88 $22.00 Range of expiry dates at April 30, 1999 From....................... March 3, May 9, N/A N/A Mar. 31, April 24, May 9, 2000 1999 2001 2000 1999 To......................... Dec. 1, June 28, N/A N/A Mar. 31, Oct. 24, Dec. 1, 2004 2000 2001 2001 2004 ========== ========= ========= ======== =========== ========= ==========
JETFORM CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table presents the exercise prices and average remaining life of the outstanding options as at April 30, 1999.
--------------------------------------------------------------------------------------------------------------- Range of exercise prices Options outstanding Options exercisable -------------------------- ------------------------------------------------- ------------------------------- Weighted average Weighted Weighted exercise average average From To Number price remaining life Number exercise price ----------- ------------ ------------- -------------- --------------- ------------- --------------- (U.S. dollars) (U.S. (Years) (U.S. dollars) dollars) $ 3.81 $ 3.81 1,031,530 $ 3.81 3.75 63,550 $ 3.84 3.94 13.00 268,660 10.21 2.30 151,447 9.29 13.25 13.25 521,542 13.25 3.09 197,330 13.25 13.37 13.37 1,046,733 13.37 3.84 454,363 13.37 13.50 16.50 521,362 15.53 2.82 479,844 15.55 16.81 19.00 527,560 18.77 4.22 361,831 18.78 19.38 22.00 27,140 20.63 4.15 11,386 19.96 ============= ============= 3,944,527 11.71 3.53 1,719,751 14.44 ============= =============
Options and warrants outstanding at April 30, 1999, had a weighted average remaining contractual life of approximately 3.06 years. The exercise price of all options granted during the years ended April 30, 1999, 1998 and 1997 was equal to the fair market value of the underlying shares at the date of grant. No compensation expense has been recorded in the Consolidated Statements of Operations for stock based compensation. The following table presents net income and earnings per share for the periods presented on a pro forma basis after recording the pro forma compensation expense relating to stock options granted to employees, in accordance with SFAS 123: Year ended April 30, ------------------------------------ 1999 1998 1997 ------------------------------------ (in thousands of Canadian dollars, except per share amounts) Net income (loss) reported............... $(29,135) $10,864 $(148,480) Pro forma compensation expense........... (6,770) (5,430) (3,704) --------- -------- ---------- Pro forma net income (loss).............. $(35,905) $ 5,434 $(152,184) ========= ======== ========== Pro forma basic income (loss) per share.................................. $ (1.81) $ 0.33 $ (10.28) ========= ======== ========== Pro forma fully diluted income (loss) per share.............................. $ (1.81) $ 0.31 $ (10.28) ========= ======== ========== SFAS 123 requires that pro forma compensation expense be recognized over the vesting period, based on the fair value of options granted to employees. The pro forma compensation expense presented above has been estimated using the Black Scholes option pricing model. Assumptions used in the pricing model include: (i) risk free interest rates for the periods of between 4.8% and 6.25%; (ii) expected volatility of 40% for the year ended April 30, 1999; 35% for the year ended April 30, 1998; and 60% for the year ended April 30, 1997; (iii) expected dividend yield of nil; and (iv) an estimated average life of three to four years. SFAS 123 requires that pro forma compensation expense be reported for options granted in fiscal years beginning after December 15, 1994, which in the case of the Company was the year ended April 30, 1996. Since the compensation expense is recognized over the vesting period, the pro forma compensation expense presented above is not necessarily indicative of the pro forma compensation expense that will be reported in future periods if the Company continues to grant options. 8. EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 128, "Earnings Per Share", which was required to be adopted on December 31, 1997. As a result, the Company has changed the method used to compute income per share and has restated all prior periods. The Common Shares and Preference Shares represent equivalent residual interests and have been included in the computation of weighted average number of shares outstanding for purposes of the earnings per share computation. The reconciliation of the numerator and denominator for the calculation of net income per share and diluted net income per share is as follows: Year ended April 30, ----------------------------------------- 1999 1998 1997 ----------------------------------------- (in thousands of Canadian dollars except share and per share amount) Net Income per Share Net income....................... $ (29,135) $ 10,864 $ (148,480) ============ =========== ============ Weighted average number of shares outstanding............... 19,826,057 16,622,835 14,796,852 ============ =========== ============ Net income per share............. $ (1.47) $ 0.65 $ (10.03) ============ =========== ============ Diluted Net Income per Share Net income....................... $ (29,135) $ 10,864 $ (148,480) ============ =========== ============ Weighted average number of shares outstanding............... 19,826,057 16,622,835 14,796,852 Dilutive effect of stock options*......................... -- 992,760 -- ------------ ----------- ------------ Adjusted weighted average number of shares outstanding............ 19,826,057 17,615,595 14,796,852 ============ =========== ============ Diluted net income per share..... $ (1.47) $ 0.62 $ (10.03) ============ =========== ============ * All anti-dilutive options have been excluded 9. INCOME TAXES The Company operates in several tax jurisdictions. Its income is subject to varying rates of tax, and losses incurred in one jurisdiction cannot be used to offset income taxes payable in another. A reconciliation of the combined Canadian federal and provincial income tax rate with the Company's effective income tax rate is as follows: Year ended April 30, ----------------------------------------- 1999 1998 1997 ----------------------------------------- (in thousands of Canadian dollars) Expected statutory rate (recovery)....................... (44%) 44% (44%) Expected provision for (recov- ery of) income tax............... $(14,134) $ 5,600 $(65,777) Effect of foreign tax rate differences...................... 2,816 (313) (319) Benefit of losses not recognized... 1,567 117 8,472 Realized benefit of prior years' losses and SR&ED carry forwards......................... (1,120) (3,350) (385) Repurchase of Moore Options........ -- -- 20,860 Temporary differences for which no tax benefit was recognized.... 12,557 59 37,103 Temporary differences for which no accounting benefit was recognized....................... (6,120) (649) -- Non deductible restructuring costs.......................... 1,372 -- -- Other items........................ 510 226 239 ============ =========== ============ Provision for income taxes......... $ (2,552) $ 1,690 $ 193 ============ =========== ============ The primary temporary differences which gave rise to deferred taxes at April 30, 1999 and 1998 are: Year ended April 30, ------------------------------- 1999 1998 ------------- ------------ (in thousands of Canadian dollars) Deferred tax assets: Scientific research and experimental development expenditures.................... $ 3,195 $ 1,589 Net operating loss carryforwards.............. 18,670 17,776 Depreciation and amortization................. 470 -- Provision for restructuring costs............. 3,331 -- In process research and development........... 31,147 31,147 ------------- ------------ 56,813 50,512 Less, valuation allowance..................... (49,153) (43,895) ------------- ------------ 7,660 6,617 ------------- ------------ Deferred tax liabilities: Investment tax credits........................ 1,574 923 Depreciation and amortization................. 6,086 5,694 Marketing and distribution rights............. 164 4,450 ------------- ------------ 7,824 11,067 ============= ============ Net deferred tax liability.................... $ 164 $ 4,450 ============= ============ The valuation allowance for deferred taxes is required due to the Company's operating history and management's assessment of various uncertainties related to their future realization. Since the realization of deferred tax assets is dependent upon generating sufficient taxable income in the tax jurisdictions which gave rise to the deferred tax asset, the amount of the valuation allowance for deferred taxes may be reduced if it is demonstrated that positive taxable income in the various tax jurisdictions is sustainable. 10. RELATIONSHIP WITH MOORE CORPORATION LIMITED The Company concluded an investment agreement with Moore in August 1994 under which Moore acquired 2,263,782 convertible preference shares, an option to purchase an additional 178,750 Common Shares of the Company, and a conditional option to acquire 7,726,375 Common Shares of the Company no later than December 30, 1999 subject to certain anti-dilution provisions (the "Moore Options"). In accordance with these anti-dilution rights, during the year ended April 30, 1996, Moore also acquired an option to acquire 116,216 Common Shares of the Company. On June 27, 1996, the Company entered into an agreement with Moore under which a subsidiary of the Company repurchased the Moore Options for consideration of US$34.0 million ($46.3 million), paid for through the issuance by the Company to Moore of 1,813,334 Common Shares and incurred additional expenses associated with the transaction of $749,000. The consideration paid for the options was determined by arm's length negotiation between the parties. During the year ended April 30, 1998, the Company reexamined its relationship with Moore and determined that Moore did not have a significant influence over the management and operating policies of the Company. Accordingly, transactions and balances with Moore for the year ended April 30, 1998 and subsequent years are not disclosed as related party transactions. For the year ended April 30, 1997 revenues from Moore were $5.8 million. 11. COMMITMENTS As at April 30, 1999, the Company was committed under certain operating leases for rental of office premises and equipment as follows: Years ending April 30, 2000 $5,554,000 2001 $4,934,000 2002 $5,671,000 2003 $5,448,000 2004 and beyond $21,827,000 Total rent expense for the years ended April 30, 1999, 1998 and 1997 was $5.9 million, $3.6 million and $2.4 million respectively. 12. NET CHANGE IN OPERATING COMPONENTS OF WORKING CAPITAL The net change in operating components of working capital is comprised of: Year ended April 30, ----------------------------------------- 1999 1998 1997 ----------------------------------------- (in thousands of Canadian dollars) Decrease (increase) in: Accounts receivable and term accounts receivable............ $(4,316) $(8,582) $(12,895) Unbilled receivables............. 2,799 (3,902) (1,177) Inventory........................ (12) (49) (466) Prepaid expenses and deferred charges........................ (468) 404 (1,710) Taxes and investment tax credits recoverable.................... (1,575) (728) 198 Increase (decrease) in: Accounts payable................. 3,375 (254) (71) Accrued liabilities.............. 6,013 4,041 (1,742) Unearned revenue................. 3,266 2,201 3,576 -------- -------- --------- $9,082 $(6,869) $(14,287) ======== ======== ========== 13. SEGMENTED INFORMATION In June 1997, FASB issued SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" that was effective for fiscal years beginning after December 15, 1997. The Company adopted this new Statement in fiscal year 1999 and has restated all prior periods. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Company's chief decision maker in deciding how to allocate resources and assessing performance. The Company's chief decision maker is the Chief Executive Officer. The Company's reportable segments include Product, Consulting and Customer Support. The Product segment engages in business activities from which it earns license revenues from the Company's E-Process software products. The Consulting segment earns revenues from assisting customers in configuring, implementing and integrating the Company's products and when required, customizing products and designing automated processes to meet the customer's specific business needs as well as providing all necessary training. The Customer Support segment earns revenues through after sale support for software products as well as providing software upgrades under the Company's maintenance and support programs. The accounting policies of the Company's operating segments are the same as those described in Note 1. The Company evaluates performance based on the contribution of each segment The Product segment costs include all costs associated with selling product licenses, consulting services, and customer support. The costs of the Consulting and Customer Support segments include all costs associated with the delivery of the service to the customer. Inter-segment revenues as well as charges such as depreciation and amortization, interest expense, and overhead allocation are not included in the calculation of segment profit. The Company does not use a measure of segment assets to assess performance or allocate resources. As a result, segment asset information is not presented. Year ended April 30, 1999 -------------------------------------------------------- Customer Product Consulting Support Total ------------ -------------- ------------ -------------- Revenues $ 66,662 $ 25,612 $ 21,938 $114,212 Costs 43,756 8,843 3,904 56,503 -------------------------------------------------------- Contribution $ 22,906 $ 16,769 $ 18,034 57,709 ========================================== Research and development (15,384) Other expenses (43,509) Provisions for restructuring costs (30,503) Recovery of income taxes 2,552 -------------- Net Loss $(29,135) ============== Year ended April 30, 1998 -------------------------------------------------------- Customer Product Consulting Support Total ------------ -------------- ------------ --------------- Revenues $ 74,781 $ 18,959 $ 17,487 $111,227 Costs 38,974 6,947 1,874 47,795 -------------------------------------------------------- Contribution $ 35,807 $ 12,012 $ 15,613 63,432 ========================================== Research and development (10,620) Other expenses (40,258) Provision for income taxes (1,690) -------------- Net income $ 10,864 ============== Year ended April 30, 1997 -------------------------------------------------------- Customer Product Consulting Support Total ------------ -------------- ------------ --------------- Revenues $ 54,935 $ 12,442 $ 9,237 $ 76,614 Costs 25,186 6,407 1,602 33,195 -------------------------------------------------------- Contribution $ 29,749 $ 6,035 $ 7,635 43,419 =========== ============= Research and development (7,422) Other expenses (30,238) Repurchase of Moore Option (47,084) In process research and development (106,962) Provision for income taxes (193) -------------- Net Loss $ (148,480) ============== The following table details the revenue and assets attributable to Canada (the Company's country of domicile), the United States and all other foreign jurisdictions. The Company attributes revenue to geographic areas based on the location of the customer to which the products or services were sold. Year ended April 30, ------------------------------------------------------- 1999 1998 1997 ------------------ ----------------- ----------------- Revenue Assets Revenue Assets Revenue Assets (in thousands of Canadian dollars) Canada $ 6,584 $35,110 $ 15,637 $41,815 $ 9,418 $38,192 United States 72,616 3,299 65,915 4,343 44,764 3,930 Other 35,012 6,082 29,675 20,678 22,432 21,146 -------- ------- -------- ------- ------- ------- $114,212 $44,491 $111,227 $66,836 $76,614 $63,268 ======== ======= ======== ======= ======= ======= 14. DELRINA ASSETS On September 10, 1996, the Company acquired certain assets, including title to intellectual property, related to the forms software group (the "Delrina Assets") of Delrina Corporation ("Delrina"), a subsidiary of Symantec Corporation of Cupertino, California, USA. Under the asset purchase agreement, the Company will make unequal quarterly payments to Delrina, from September 27, 1996 to June 27, 2000. This is a non-interest bearing obligation which was originally valued using a discount rate of 6%. The current estimated fair value of the Delrina obligation is approximately the same as that recorded in these consolidated financial statements. On February 12, 1998, the Company and Delrina re-negotiated certain terms of the Delrina Asset Purchase Agreement whereby the Company agreed to accelerate payment of its obligation in consideration for a reduction in the effective interest rate, resulting in a reduction in imputed interest charges. In addition, the amended agreement provided that the Company may issue its Common Shares to Delrina in satisfaction of a portion of its payment obligations provided that: (i) the total market value of the Company's Common Shares held by Delrina immediately following such issuance does not exceed US$14.0 million; and (ii) the Company continues to meet certain registration requirements in respect of such issued Common Shares. As at April 30, 1999, the Company believes that Delrina held no Common Shares of the Company. The consideration paid and the net assets acquired were as follows: (in thousands of Canadian dollars) Assets acquired: Tangible assets............................................ $ 460 Trademarks, trade names and workforce...................... 6,949 Technology................................................. 9,132 In process research and development........................ 106,962 Accrued liabilities and unearned revenue................... (3,194) ========= Original value of Delrina obligation....................... $120,309 ========= The allocation of the purchase price is based on an independent valuation. The amount allocated to in process research and development related to the purchased Delrina technology which had not reached technological feasibility at the time of the acquisition. In accordance with SFAS No.2, this amount has been recorded as a charge to earnings in the period of the acquisition. The intangible assets acquired and the in process research and development are treated as capital assets for Canadian income tax purposes and can be used to reduce taxable income earned in Canada. 15. PROVISION FOR RESTRUCTURING COSTS On March 17, 1999, the Corporation announced a restructuring plan directed at reducing costs. The key restructuring actions included: o Consolidation of management responsibilities and reduction in headcount. o Closure of redundant facilities. o Reduction in the carrying value of certain capital assets primarily related to past acquisitions. o Cancellation of certain commitments and other cost. The following table summarizes the activity in the provision for restructuring costs during the year: Other Total Non Employee Cash Cash Cash Total Termination Facilities Costs Costs Costs Provision ------------------------------------------------------------ Restructuring provision......... $5,252 $2,914 $726 $8,892 $21,611 $30,503 Cash payments....... (1,175) (36) (207) (1,418) -- (1,418) Non-cash items...... -- -- -- -- (21,611) (21,611) ---------------------------------------- ----------------- Balance, April 30, 1999.... $4,077 $2,878 $519 $7,474 $ -- $ 7,474 ======================================== ======== ======== Long term balance... $ 500 $2,307 $418 $3,225 $ -- $ 3,225 ======================================== ======== ======== Employee terminations totalled 105 and included 46 in sales and marketing, 40 in research and development, 12 in internal corporate services, and 7 in systems and consulting services. Facilities costs consisted primarily of $2.1 million related to the closure of the Company's UK facilities and $780,000 related to the closure of the Company's Toronto facility. The provision for redundant facilities includes management's best estimates and actual costs could differ from these estimates. Other cash costs related primarily to the cancellation of trade shows and other commitments. Non-cash costs include impairment losses of $21.6 million related to assets held for use. The losses are comprised of $16.7 million related to marketing and distribution rights, $3.1 million related to goodwill, and $1.9 million related to other capital assets. In accordance with SFAS 121 management reviews the carrying value of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. As part of the restructuring of the Company's operations, management will focus on its core products and traditional markets. As a result, the carrying value of certain of the Company's long-lived assets related to, among others, the Eclipse and Proactive acquisitions was higher than their fair value. Management used the discounted cash flows method to arrive at the estimated fair value of the assets. The cash costs of restructuring relating to facilities are payable over a period of 10 years. All other cash costs of restructuring are payable over the next two years. 16. RECENT ACCOUNTING PRONOUNCEMENTS The Company has adopted the SFAS No. 130, "Reporting Comprehensive Income" in 1999. In December 1998, the American Institute of Certified Public Accountants (AICPA) issued the SOP 98-9 "Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions". The Company will adopt SOP 98-9 during the year ending April 30, 2000. The Company is currently studying the impact, if any, of such adoption on its future results of operations and financial position. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). This statement establishes accounting and reporting standards for derivative instruments and hedging activities and is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. Although the impact of SFAS 133 on the Company's financial disclosures is not known at this time, the Company will adopt SFAS 133 during the year ending April 30, 2001. In April, 1998, the AICPA issued SOP 98-5, "Reporting Costs of Start-Up Activities". This statement establishes accounting and reporting standards for start-up costs and organization costs. This SOP is effective for fiscal years beginning after December 15, 1998. The Company will adopt SOP 98-5 in its fiscal year ending April 30, 2000. 17. THE YEAR 2000 The Year 2000 issue arises because many computerized systems use two digits rather than four to identify a year. Date sensitive systems may recognize the Year 2000 as 1900 or some other date, resulting in errors when information using Year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the Year 2000 issue affecting the Company, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. 18. SUBSEQUENT EVENTS In May 1999, the Company sold all of the Common and Preference Shares of its multimedia subsidiary, Why Interactive, to a third party for $6.4 million. The assets held by Why Interactive have been grouped as "Asset for sale". 19. RECLASSIFICATIONS Certain reclassifications have been made to the prior years' balances to conform to the current year's presentation. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Company is a "foreign private issuer" and as such is not subject to section 16(a) of the Securities and Exchange Act of 1934. The following table sets forth certain information concerning the executive officers and directors of the Company: Name Age Title - -------------------------------------------------------------------------------- Abraham E. Ostrovsky....... 56 Chairman and Director John B. Kelly.............. 59 President and Chief Executive Officer and Director James Bursey................ 41 Senior Vice President & General Manager, Operations Ted Capes.................. 45 Vice President, Product Development and Customer Services Jeffrey McMullen........... 39 Vice President Finance and Chief Financial Officer Hugh Millikin.............. 42 Senior Vice President, Asia/Pacific Andrew Jackson............. 29 Senior Vice President, Marketing Keith Sinclair............. 48 Vice President, Human Resources & Corporate Services Deborah L. Weinstein....... 39 Secretary John Gleed................. 53 Director Thomas E. Hicks............ 46 Director Robert F. Allum............ 53 Director Eric R. Goodwin............ 57 Director Stephen A. Holinski........ 52 Director Graham C. Macmillan........ 46 Director Dennis B. Maloney.......... 51 Director John B. Millard............ 60 Director Donald J. Payne............ 66 Director Stanley A. Young........... 72 Director Siegfried E. Buck.......... 50 Director Mr. Ostrovsky joined the Company in August 1991 as Executive Vice President and Chief Operating Officer. He served as President and Chief Executive Officer from November 1991 to March 1994, and as the Company's Chairman and Chief Executive Officer from March 1994 to August 1995, when he resigned as the Company's Chief Executive Officer. He has served as a director of the Company since 1991. Mr. Ostrovsky was Chairman of the Board of Directors and Chief Executive Officer of Compressant Corporation from March 1996 to December 1997. Mr. Ostrovsky is a director of SEEC, Inc., Indigo N.V. and Net Manage. Mr. Kelly joined the Company in March 1994 as President and Chief Operating Officer, and was appointed Chief Executive Officer on August 24, 1995. Mr. Kelly has served as a director of the Company since 1988. Prior to joining the Company, he was President and Chief Executive Officer of Why Interactive Inc. (formerly DVS Communications Inc.), a multi-media based integrated learning systems company between 1985 and March 1994. Why Interactive Inc. was acquired by the Company on March 31, 1994. Mr. Bursey joined JetForm as Vice President of Services in May 1995. He was promoted to his current position in February 1999. Prior to joining the Company, Mr. Bursey was Managing Director Financial Services at SHL Systemhouse and Executive Director at Datacor Atlantic. Mr. Capes joined the Company in January 1999 as Vice President, Product/Program Management. In February 1999 he was promoted to Vice President, Product Development and Customer Services. Prior to joining the Company, Mr. Capes was Vice President of Public Carrier Networks at Nortel, where he had worked since 1988. Prior to that, he spent a number of years with Bell Canada. Mr. McMullen joined the Company in October 1994 as Controller. He was promoted to Vice President and Controller in June 1997, and to his current position in September 1998. Prior to joining the Company, Mr. McMullen was employed by Asea Brown Boveri Inc., the Canadian subsidiary of the ABB Group, a multinational provider of electro-technical equipment. Mr. Millikin joined the Company in February 1994, as president and CEO of JetForm Pacific Pty Limited. He was promoted to Senior Vice President Asia Pacific in May 1996. Prior to joining the Company Mr. Millikin was employed by Indigo Pacific as Managing Director. Mr. Jackson joined JetForm in 1989 on a part-time basis as an Application Developer. He joined the Company on a full time basis as Director, Customer Training in June 1992, and was then promoted to Product Manager in June 1996, to Vice President, Product Marketing in May, 1998, and finally, to his current position as Senior Vice President, Marketing in May 1999. Mr. Sinclair joined JetForm Corporation on May 19, 1999 as V. P. Human Resources & Corporate Services. Prior to joining the Company, Mr. Sinclair was Vice-President, Organizational Leadership & Development with Milltronics Limited, a Peterborough, Ontario based designer, manufacturer and marketer of electronic process measurement instrumentation. Ms. Weinstein has served as secretary of the Company since September 1993. Ms. Weinstein is a founding partner of LaBarge Weinstein, Canadian legal counsel to the Company. From February 1991 to January 1997, Ms. Weinstein was a partner with the law firm of Blake, Cassels & Graydon. Ms. Weinstein currently acts as a director of MOSAID Technologies Incorporated and AIT Advanced Information Technologies Corporation. Mr. Gleed is a founder of the Corporation and was its President from June 1982 until June 1990, when he was appointed to the position of Senior Vice President and Chief Technology Officer with the Corporation, which he held until his retirement on June 30, 1999. See "Termination of Employment" below. Mr. Gleed served as Chairman of the Board from June 1990 to March 1994. Mr. Hicks is a founder of the Corporation and served as a senior project manager from the Corporation's inception until September 1991, when he was appointed Vice President, Systems Engineering. In March 1994, he was appointed Vice President, Strategic Programs and became Vice President and Chief Information Officer in January 1997. In May 1998, he became Vice President--Group Product Manager for the Corporation's Output Products. Mr. Allum has served as a director of the Company since 1983. He is a founder of the Company and was Chairman of the Board from 1983 until June 1990, when he was appointed to the position of Executive Vice President -- Consulting Services, which he held until March 1994. From March 1994 until April 1996, Mr. Allum was the Company's Vice President--Special Projects. In April 1996, Mr. Allum resigned as an officer of the Company to take his current position as President of Tierra Communications Inc. Mr. Goodwin has served as a director of the Company since September 1996. He is a founder of Fulcrum Technologies Inc., a provider of text retrieval software, and was its President and Chief Executive Officer from 1990 until January 1997, when he became its Chairman and Chief Executive Officer. He is currently Chairman and Chief Executive Officer of Media Synergy Inc. Mr. Holinski has served as a director of the Company since 1995. He has been Executive Vice President and Chief Financial Officer of North American Gateway Inc. since May 1999. Prior to joining North American Gateway, he was the Senior Vice President and Chief Financial Officer of Moore Corporation Limited between May 1994 and May 1999. Prior to joining Moore, Mr. Holinski was Treasurer of Northern Telecom Ltd. from March 1994 until May 1994, and Vice President Product Finance from September 1993 until March 1994. Mr. Holinski was Vice President Finance with Northern Telecom Europe from January 1991 until September 1993. Mr. Macmillan has served as a director of the Company since 1994. Mr. Macmillan was a Director of Investment Banking at Richardson Greenshields of Canada Ltd. ("Richardson Greenshields") from 1989 to November 1996. Mr. Macmillan became a Vice President and Director of RBC Dominion Securities Inc. following the completion of the acquisition of Richardson Greenshields by RBC Dominion Securities Inc. in November 1996. Mr. Maloney has served as a director of the Company since 1994 and is currently President and Chief Executive Officer of Insurdata Inc. ("Insurdata"), a leading supplier of technology solutions to the health care industry. Prior to joining Insurdata in January 1997, Mr. Maloney spent 20 years with SHL Systemhouse Inc., most recently as President of the Global Outsourcing Division. Mr. Maloney began his career with IBM. Dr. Millard has served as a director of the Company since June 1998. Mr. Millard was President and Chief Executive Officer, and director of Mitel Corporation between 1993 and 1998. Prior to joining Mitel, Dr. Millard was Senior Vice President of NEC America from 1990 to 1993. Mr. Millard is a director of Mitel Corporation, Mosaid Technologies Incorporated, SiGe Microsystems and Positron Public Safety Systems. Mr. Payne has served as a director of the Company since 1995. He became the Chief Operating Officer of Bitwise Designs Inc. in 1996. Mr. Payne was President of the Air Courier Division, Federal Armored Express, Inc. from 1993 to 1996. From 1990 to 1993, he was President and Chief Executive Officer of Enable Software, Inc. In June 1996, Mr. Payne was elected to the Board of Directors of Flo Management Technologies, a developer of medical software, and effective October 1998, he became President, HealthCare Division. Mr. Young has served as a director of the Company since 1990. Mr. Young has been active as a consultant and venture capital investor for the past six years and has been Chairman, President and Chief Executive Officer of Young Management Group, Inc., a management consulting firm, since March 1994. Mr. Buck joined Moore Corporation in 1996. Prior to joining Moore, Mr. Buck was Group President of Bell Sports Corporation. Committees of the Board of Directors There are two standing committees of the Board of Directors: the Audit Committee and the Compensation Committee. The Board of Directors does not have a Nominating Committee. The Audit Committee oversees the Company's financial reporting process and internal controls, and consults with management, internal accountants, and the Company's independent auditors on matters related to the annual audit of the Company and the internal controls, published financial statements, accounting principles and auditing procedures being applied. The Committee also reviews management's evaluation of the auditors' independence and submits to the Board of Directors its recommendations for the appointment of auditors. The members of the Audit Committee are Messrs. Holinski, Allum and Young. The Compensation Committee has administered the Company's 1990 Employee Stock Option Plan and 1993 Employee Stock Option Plan and currently administers the 1995 Stock Option Plan and the 1997 Employee Stock Purchase Plan. The Committee also consults generally with, and makes recommendations to, the Board of Directors on matters concerning executive compensation, including individual salary rates, supplemental compensation and special awards. The members of the Compensation Committee are Messrs. Allum, Macmillan and Payne. Board and Board Committee Meetings During the fiscal year ended April 30, 1999, the Board of Directors held 8 meetings, the Audit Committee held 4 meetings and the Compensation Committee held 4 meetings. All Directors attended at least 75% of the aggregate of all meetings of the Board and all committees on which they served. Item 11. EXECUTIVE COMPENSATION The following table sets forth the total compensation paid to the Chief Executive Officer, the four other most highly compensated executive officers of the Company and the two other former executive officers whose compensation would have been disclosed if they were still employed by the Company for the fiscal years ended April 30, 1999, 1998 and 1997:
Long Term Compensation Annual Compenation Awards ------------------- ------------ Year Name and ended Number of Other Principal Position April 30, Salary(1) Bonus(1) Options(2) Compensation(1) - ------------------------------------------------------------------------------------------------ John B. Kelly 1999 $455,000 $ - 84,600 $ - President and Chief 1998 $348,750 $111,019 190,000 $ - Executive Officer 1997 $240,000 $ - 50,000 $ - James Bursey 1999 $229,628 $ 40,000 59,340 $10,000 Senior Vice President 1998 $ - $ - - $ - Operations 1997 $ - $ - - $ - John Gleed(3) 1999 $211,250 $ - 25,300 $10,000 Senior Vice President and 1998 $202,500 $ 64,463 82,000 $ - Chief Technology Officer 1997 $150,000 $ - 20,000 $ - Carlos Fox(4) 1999 $220,000 $ 20,000 - $11,000 Senior Vice President 1998 $ - $ - - $ - Marketing 1997 $ - $ - - $ - Hugh Milliken 1999 $177,333 $ - 16,600 $ - Senior Vice President 1998 $ - $ - - $ - Business Development 1997 $ - $ - - $ - Philip Weaver(5) 1999 $340,416 $ - - $46,620 Former Executive Vice President 1998 $300,000 $ 95,500 152,000 $ - and Chief Operating Officer 1997 $230,000 $ - 35,000 $ - Ian Fraser(6) 1999 $220,000 $ 13,000 - $11,000 Former Senior Vice President 1998 $222,318 $ 47,750 35,000 $ - Sales 1997 $ 43,750 $ 17,500 30,000 $ -
(1) All references to "$" in this section are to Canadian dollars. (2) The Company has not issued any stock appreciation rights. (3) Mr. Gleed was serving as an executive officer on April 30, 1999 but retired from the Corporation on June 30, 1999. (4) Mr. Fox was serving as an executive officer on April 30, 1999, but his employment was terminated on June 30, 1999. (5) Mr. Weaver's employment with the Corporation was terminated on February 19, 1999. This additional disclosure is provided as Mr. Weaver would have been included as part of the four most highly paid executive officers above but for the fact that the individual was not serving as an executive officer of the Company at the end of fiscal 1999. (6) Mr. Fraser's employment with the Corporation was terminated on April 30, 1999. This additional disclosure is provided as Mr. Fraser would have been included as part of the four most highly paid executive officers above but for the fact that the individual was not serving as an executive officer of the Company at the end of fiscal 1999. The following table sets forth the stock options granted during the fiscal year ended April 30, 1999 to each of the Company's executive officers named in the Summary Compensation Table:
1999 Stock Option Grants - ----------------------------------------------------------------------------------------------------------------- % of total Potential Realized Value Shares options at Assumed Annual Rate underlying granted to Exercise of Stock Price number of employees Price per Appreciation over options in Fiscal Share Option Term (3) ------------------------- Name granted 1999 (in US$) Expiry 5% 10% ---- ------- ---- -------- ------ -- --- John B. Kelly 84,600(1) 8.2% 3.813 April 6, 2003 104,485 225,013 63,550(2) 6.1% 3.813 April 6, 2000 18,210 36,420 John Gleed 25,300(1) 2.4% 3.813 April 6, 2003 31,247 67,291 James Bursey 59,340(1) 5.7% 3.813 April 6, 2003 73,288 157,828 Hugh Millikin 16,560(1) 1.6% 3.813 April 6, 2003 20,452 44,045 Carlos Fox -- -- -- -- -- -- Ian Fraser -- -- -- -- -- -- Philip Weaver -- -- -- -- -- --
- --------------- (1) Options are exercisable starting 6 months after the date of grant, with one-sixth of the shares becoming exercisable at that time and with an additional one-sixth of the option shares becoming exercisable on each successive six month period, with full vesting occurring on the third anniversary date. All options expire on the fourth anniversary date. (2) Options are exercisable on date of grant and expire on the first anniversary of grant. (3) The calculated potential realized value is expressed in Canadian dollars using the exchange rate in effect at the date of option grant. Aggregate Option Exercises and Year-end Option Values The following table sets forth the number of shares acquired on exercise of stock options and the aggregate gains realised on exercise during the fiscal year ended on April 30, 1999, by the Company's executive officers named in the Summary Compensation Table. The table also sets forth the number of shares covered by exercisable and unexercisable options held by such executives on April 30, 1999, and the aggregate gains that would have been realised had these options been exercised on April 30, 1999, even though the exercisable options were not exercised, and the unexercisable options could not have been exercised, on April 30, 1999.
Shares Acquired Number of Shares on Covered by Value of Unexercised Exercise Unexercised Options in-the-money Options duromg at April 30, 1999 at April 30, 1999(b) Fiscal Value -------------------------- -------------------------- Name 1999 Realized(a) Exercisable Unexercisable Exercisable Unexercisable - ----------------------------------------------------------------------------------------------- John B. Kelly 61,924 $1,190,133 225,218 192,932 $98,333 $130,904 John Gleed - - 66,335 70,965 - 39,147 James Bursey - - 59,334 84,006 - 91,818 Carlos Fox - - 40,334 27,666 - - Hugh Millikin - - 26,669 29,891 - 25,623 Philip Weaver 17,000 247,795 119,668 87,332 - - Ian Fraser - - 38,334 26,666 - -
- --------------- (a) Value is based on the closing price on the date of exercise less the exercise price and the closing exchange rate on the date of exercise. (b) Value of exercisable and unexercisable options is based on the April 30, 1999, closing bid price of US$ 4.875 per share and exchange rate of US$1.00 'Cdn. $1.4570, less the exercise price. Options are in-the-money if the market value of the shares covered thereby is greater than the option exercise price. The company does not maintain any long-term incentive plans. Compensation of Directors The Board of Directors has determined for the year ended April 30, 1999 that each non-employee, non-Moore nominated director be paid $10,000 in director's fees, and be granted 10,000 options, one half of which vested immediately and one half of which vests on the first anniversary of grant. The Chairman of the Board was granted an additional 5,000 options with the same terms. Non-employee directors are reimbursed for their reasonable expenses incurred in attending Board and committee meetings. Employment Agreements The Corporation has entered into employment agreements with John Kelly, Hugh Millikin, John Gleed, Carlos Fox, Philip Weaver and Ian Fraser, each of which, except as noted below, contain substantially similar provisions. Each employment agreement provides that the executive shall devote his full time and attention to performing his duties for the Corporation. In the event of termination by the executive for good reason (a material change in his responsibilities, a failure to maintain his compensation and benefits with industry standards, a material breach by the Corporation under the employment agreement, or the failure by the Corporation to have the employment agreement assumed by any successor to the Corporation), or by the Corporation for other than cause, death, disability or retirement, the Corporation will pay salary and vacation pay earned to the date of termination as well as a multiple of the executive's salary and up to $30,000 for job relocation (the "Termination Payments"). Except as noted below, the Corporation will also continue all granted options according to their terms. Either party may terminate the employment agreement on thirty days notice within 90 days of a change in control of the Corporation and if the Corporation does so, it shall be obligated to make the Termination Payments and all granted options shall become immediately exercisable if the executive is terminated by the Corporation within a year of the change in control. Each employment agreement provides that the executive maintain the confidentiality of the Corporation's confidential information indefinitely and further provides that the executive shall not compete with the Corporation nor solicit its employees for a certain period of time following termination (the "Non-compete Term"). Mr. Kelly's Termination Payments are equal to three times his then current salary and up to $30,000 for job relocation expenses. His Non-compete Term is for three years. Mr. Millikin's Termination Payments are equal to one times his then current salary and up to $15,000 for job relocation expenses. His Non-compete Term is for one year. Mr. Millikin's options will continue to vest and be exercisable in accordance with their terms for a period of one year after termination by the Corporation for other than just cause, disability or death or for termination by executive for good reason. Mr. Gleed's Termination Payments are equal to 1.25 times his then current salary and up to $30,000 for job relocation expenses. His Non-compete Term is for 18 months. Mr. Fox's Termination Payments are equal to one times his then current salary and up to $15,000 for job relocation expenses. His Non-compete Term is for one year. Mr. Fox's options will continue to vest and be exercisable in accordance with their terms for a period of one year after termination by the Corporation for other than just cause, disability or death or for termination by executive for good reason. Mr. Weaver's Termination Payments are equal to two times his then current salary and up to $30,000 for job relocation expenses. His Non-compete Term is for two years. Mr. Fraser's Termination Payments are equal to one times his then current salary and up to $15,000 for job relocation expenses. His Non-compete Term is for one year. Mr. Fraser's options will continue to vest and be exercisable in accordance with their terms for a period of one year after termination by the Corporation for other than just cause, disability or death or for termination by executive for good reason. The Corporation entered into an employment agreement with James Bursey. For termination by the Corporation other than for serious misconduct, the Corporation shall provide the greater of six month's notice or the statutory requirement and reserves the option of paying the amount of salary Mr. Bursey would have earned during such period instead. For termination for serious misconduct, the Corporation may terminate without prior notice or salary in lieu of notice. Mr. Bursey may terminate on one month's notice. Termination of Employment Effective February 19, 1999, Mr. Weaver's employment was terminated by the Corporation for other than cause, death or disability in accordance with the terms of his employment agreement. Effective April 30, 1999, Mr. Fraser's employment was terminated by the Corporation for other than cause, death or disability in accordance with the terms of his employment agreement. Effective June 30, 1999, Mr. Fox's employment was terminated by the Corporation for other than cause, death or disability in accordance with the terms of his employment agreement. Mr. Fox will provide five hours of consulting services per month from July 1, 2000 to December 31, 2000. In return, he may exercise all options that vest on or prior to December 31, 2000. Effective June 30, 1999, John Gleed retired from the Corporation. From July 1, 1999 to April 30, 2002, the Corporation will pay him a retainer of $7,500 per month for up to five days of work with additional time billed at $1,500 per day. Mr. Gleed's anticipated activities are strategic consulting and competitive analysis for the Corporation. The Corporation will continue his medical and life insurance coverage and the vesting of his granted stock options for so long as he continues to be a strategic consultant or director of the Corporation. Directors' And Officers' Liability Insurance The Company presently maintains directors' and officers' liability insurance in the aggregate principal amount of US$10.0 million. The annual premium payable for this insurance during the year ended April 30, 1999, was $185,500. The by-laws of the Company generally provide that the Company shall indemnify a director or officer of the Company and certain other bodies corporate against liability incurred in such capacity to the extent permitted or required by the Canada Business Corporations Act. To the extent the Company is required to indemnify the directors or officers pursuant to the By-laws, the insurance policy provides that the Company is liable for the initial US$100,000 in the aggregate for each loss with respect to the insuring agreement. Compensation Committee Interlocks and Insider Participation in Compensation Decisions At April 30, 1999, the members of the Compensation Committee were Messrs. Allum, Macmillan and Payne, all non-employee directors of the Company. Graham C. Macmillan, a director of the Company and a member of the Compensation Committee, is a Vice President and Director of RBC Dominion Securities Inc., a provider of investment banking and other services to the Company. The Committee has a mandate to: (a) monitor compliance with legislation applicable in respect of employment practices of the Company, (b) determine the appropriate allocation of options, (c) recommend Chief Executive Officer and senior officer compensation, (d) monitor compliance with statutory requirements for employment matters including remittances and legislation, and (e) review levels of compensation generally for the Company. The Committee met three times in fiscal 1999 and acted by way of resolution on other occasions. Report on Executive Compensation The philosophy of the Corporation in the determination of senior executive compensation is to encourage performance in order to expand the position of the Corporation in a highly competitive environment. For the year ended April 30, 1999, the process utilized by the Compensation Committee in determining executive officer compensation levels was based upon the Committee's subjective judgment and took into account both qualitative and quantitative factors. Among the factors considered by the Committee were the recommendations of the Chief Executive Officer with respect to the compensation of the Corporation's key executive officers. However, the Committee made the final compensation decisions concerning such officers. The Committee established the compensation payable for John B. Kelly, President and Chief Executive Officer. Mr. Kelly then recommended, subject to the Committee's review and the Board's approval, the compensation payable to the other executive officers. The Committee's fundamental policy is to offer the Corporation's executive officers competitive compensation opportunities based upon overall Corporation performance, their individual contribution to the financial success of the Corporation, and their personal performance. It is the Committee's objective to have a substantial portion of each officer's compensation contingent upon the Corporation's performance, as well as upon his or her own level of performance. Accordingly, each executive officer's compensation package comprises three elements: (i) base salary, which is established primarily on the basis of individual performance and market considerations; (ii) annual variable incentive compensation awards payable in cash and tied to the Corporation's achievement of financial performance goals and the executive's contribution and, (iii) stock option grants at market price which strengthen the mutuality of interests between the executive officers and the shareholders. In general, under the terms of the stock option plan, options must be exercised within a period of five years from the date of the grant. All options granted terminate 30 days after termination of employment unless otherwise determined by the Chief Executive Officer, or as provided in an executive's employment agreement. Performance Graph The Common Shares of the Company began trading on the NASDAQ Small Cap Market System in April 1993. The following graph compares the yearly percentage return since April 30, 1993 on the Company's Common Shares, compared with the percentage change in the NASDAQ index of all US and foreign issues and the NASDAQ index of computer and data processing companies.
Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99 Common shares of the Company 34% 173% 326% 229% 345% 4% NASDAQ index of US and Foreign issues 11% 27% 79% 92% 187% 281% NASDAQ index of Computer and Data Processing companies 10% 56% 134% 160% 305% 520%
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Principal Shareholders The following table sets forth certain information regarding beneficial ownership of the Company's Common Shares as of July 26, 1999: (i) by each person who is known by the Company to own beneficially more than five percent of the outstanding Common Shares, (ii) by each director and executive officer of the Company and (iii) by all directors and executive officers of the Company as a group at any time during fiscal year ended April 30, 1999. There is no family relationship between any directors or executive officers of the Corporation. Number of Shares Percentage of Shares Beneficial Owner(1) Beneficially Owned Beneficially Owned Directors and Executive Officers Robert F. Allum(2)................. 209,977 1.08% John Gleed(3)...................... 250,142 1.28% Eric R. Goodwin(4)................. 18,667 * Thomas E. Hicks(5)................. 194,892 1.00% Stephen A. Holinski................ 2,000 * John B. Kelly(6)................... 455,384 2.31% James Bursey(7).................... 63,334 * Jeffrey McMullen(8)................ 22,041 * Hugh Millikin(9)................... 45,685 * Graham C. Macmillan(10)............ 20,867 * Dennis B. Maloney(11).............. 23,667 * John B. Millard(12)................ 8,334 * Abraham E. Ostrovsky(13)........... 151,312 * Donald J. Payne(14)................ 43,167 * Deborah L. Weinstein(15)........... 30,167 * Stanley A. Young(16)............... 177,284 * Siegfried E. Buck.................. -- * Ted Capes.......................... 5,300 * Andrew Jackson(17)................. 6,987 * Keith Sinclair..................... 4,000 * All directors and executive officers (18) 1,774,919 8.81% 5% Shareholders Moore Corporation Limited(19)...... 2,558,748 12.79% TAL Investment Counsel(20) ........ 1,756,600 9.03% - --------------- * Less than 1% (1) A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from July 26, 1999, whether pursuant to the exercise of options, conversion of securities or otherwise. Each beneficial owner's percentage of ownership is determined by assuming that options (and, in the case of Moore, convertible Preference Shares) that are held by such person (but not those held by any other person) and which are exercisable (or convertible) within 60 days of July 26, 1999, have been exercised. Unless otherwise noted in the footnotes below, the Company believes all persons named in the table have sole voting power and investment power with respect to all Common Shares beneficially owned by them. Statements as to securities beneficially owned by directors, nominees for directors and executive officers, or as to securities over which they exercise control or direction, are base upon information obtained from such directors, nominees and executives and from records available to the Corporation. (2) Includes 61,029 common shares owned by Mr. Allum's spouse. Also includes 16,667 common shares subject to options. Mr. Allum disclaims any beneficial interest in shares owned by his spouse. (3) Includes 100,000 common shares owned by two holding companies controlled by Mr. Gleed for the benefit of is children. Also includes 73,001 common shares subject to options. Also includes 5,000 common shares and 11,986 common shares subject to options owned by Mr. Gleed's spouse. Mr. Gleed disclaims any beneficial interest in such common shares and options owned by his spouse. (4) All common shares subject to options. (5) Includes 82,268 common shares owned by Mr. Hicks' spouse. Also includes 31,334 common shares subject to options. Also includes 5,675 common shares subject to options owned by Mr. Hicks' spouse. Mr. Hicks disclaims any beneficial interest in such common shares and options owned by his spouse. (6) Includes 241,884 common shares subject to options. (7) All common shares subject to options. (8) Includes 21,333 common shares subject to options. (9) Includes 30,002 common shares subject to options. (10) Includes 18,667 common shares subject to options. (11) Includes 18,867 common shares subject to options. (12) Includes 3,334 common shares subject to options. (13) Includes 35,000 common shares owned by two trusts (17,500 common shares each) of which Mr. Ostrovsky is the trustee, for the benefit of Mr. Ostrovsky's two children. Also includes 53,000 common shares subject to options. (14) Includes 32,667 common shares subject to options. (15) Includes 16,667common shares subject to options. (16) Includes 19,200 common shares owned by the SAY Family Limited Partnership of which Mr. Young is one of the general partners and in which Mr. Young holds a 20% beneficial interest. Also includes 50,617 common shares owned by Mr. Young's spouse. Mr. Young disclaims any beneficial interest in the common shares owned by his spouse. Also includes 76,800 common shares owned by the Stanley Young Trust. Also includes 6,667 common shares subject to options. (17) All common shares subject to options. (18) Includes common shares indirectly owned and 670,539 common shares that may be acquired upon exercise of options as described in footnotes (2) - (17). Excludes the 2,558,748 common shares beneficially owned by Moore Corporation Limited, which are also deemed to be beneficially owned by Mr. Buck, a director of the Corporation, by virtue of the fact that he is an officer of Moore Corporation Limited. The beneficial ownership of such common shares by Moore Corporation limited is set forth above. Also includes 1,378 common shares and 40,334 common shares subject to options owned by Carlos Fox who was terminated on June 30, 1999. (19) Includes 1,992,084 common shares, 450,448 convertible preference shares which are convertible at any time into 450,448 common shares, subject to anti-dilution provisions, and 116,216 common shares subject to options. (20) The Business address of TAL Investment Counsel Ltd. Is 1000, de la Gauchetiere West, Suite 3100, Montreal, Quebec, H3B 4W5. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company concluded an investment agreement with Moore in August 1994 under which Moore acquired 2,263,782 convertible preference shares (the "Preference Shares") representing approximately 18.5% of the Company's common share equivalents then outstanding for net proceeds of approximately $24.8 million. Moore also acquired an option to purchase 178,750 Common Shares of the Company for a price of US$8.25 per share (the "Special Options") and a conditional option to acquire 7,726,375 Common Shares of the Company no later than December 30, 1999, at prices ranging from US$15.00 per share to US$20.00 per share, subject to certain anti-dilution provisions (the "Moore Options"). In accordance with these anti-dilution rights, during the year ended April 30, 1996, Moore also acquired an option to acquire 116,216 Common Shares of the Company at US$16.50 per share. In June 1996, the Company negotiated the repurchase of the Moore Options in order to eliminate the perceived dilutive effect of the Moore Options on the price of the Company's Common Shares. As a result, on June 27, 1996, the Company entered into an agreement with Moore under which a subsidiary of the Company repurchased the Moore Options for consideration of US$34.0 million ($46.3 million), paid for through the issuance by the Company to Moore of 1,813,334 Common Shares and incurred additional expenses associated with the transaction of $749,000. The consideration paid for the options was determined by arm's length negotiation between the parties. Subsequently, Moore sold to various third parties 1,813,334 of its Preference Shares which were converted into an equal number of Common Shares and Moore exercised the Special Options to acquire 178,750 Common Shares at US$8.25 per share. As a result of the foregoing, at April 30, 1999, Moore held 1,992,084 Common Shares, 450,448 Preference Shares and options to purchase 116,216 Common Shares, or approximately 12% of all outstanding Common and Preference Shares on a fully diluted basis. The Company and Moore also entered into a long-term strategic alliance in August 1994, under which sales of the Company's products and services in certain vertical markets would be focused through Moore. Moore also committed to make certain minimum purchases from the Company of E-Forms products for resale. The Company and Moore amended the terms of the strategic alliance as of June 27, 1996, April 30, 1997, and April 30, 1998. Pursuant to the amended strategic alliance, effective January 1, 2000, Moore will relinquish exclusive marketing rights in all vertical markets and non-exclusive marketing and distribution rights to all markets worldwide. The amended strategic alliance continues to provide for the promotion by Moore and the Company of each other's forms automation solutions. Under the amended strategic alliance, Moore is committed to make purchases of the Company's products for resale of US$1.0 million in each of calendar years 1998 through 2003. Certain other agreements entered into with Moore in August 1994 were also amended and restated as at June 27, 1996. As long as Moore beneficially owns at least 10% of the outstanding common and preference shares of the Company, Moore is entitled to nominate two directors to the Company's board of directors and as long as Moore beneficially owns at least 5% of the outstanding common and preference shares of the Company, Moore is entitled to nominate one director to the Company's board of directors. For purposes of calculating Moore's beneficial ownership, any common shares issued after June 27, 1996, pursuant to the exercise of options or other rights granted after such date pursuant to employee stock plans are treated as not outstanding. Certain insiders have agreed to vote their shares in favor of Moore's nominees for election to JetForm's board of directors. So long as Moore owns not less than 10% of the outstanding common and preference shares, Moore continues to be entitled to a pre-emptive right with respect to issuances by the Company of additional equity shares or shares convertible into equity shares, although the pre-emptive right does not apply to securities issued by the Company pursuant to employee stock purchase or stock option or other employee stock incentive plans. Prior to conversion, each preference share is entitled to one vote and is to vote with the common shares as a single class; provided, that if at any time Moore's beneficial ownership of common and preference shares is less than 15% of the outstanding common and preference shares, Moore has agreed to vote its preference shares as directed by the Company, with certain exceptions. The Company and Moore have also entered into a Registration Rights Agreement pursuant to which Moore may require the Company to register Common Shares issued upon conversion of the Preference Shares or exercise of the options (a "Demand Registration") under the Securities Act of 1933 (the "Act"), subject to certain limitations. Moore will be entitled to require up to three Demand Registrations at any time, one of which must be paid for by the Company, and participate in any other registration of the Company's securities under the Act, subject to certain limitations. Moore may publicly sell any Common Shares registered under the Act. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements The following Financial Statements are filed as part of this report under Item 8 "Financial Statements and Supplementary Data". Auditors' Report Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (a) 2. Financial Statement Schedule The following financial statement schedule is filed as part of this report: Schedule V Valuation and Qualifying Accounts All other schedules are omitted as they are not required or the required information is shown in the financial statements or notes thereto. (a) 3. Exhibits Exhibit Number Description 3.1(1) Certificate of Incorporation of Registrant, as amended 3.2(1) By-laws of Registrant, as amended 10.1(1) Form of Underwriter's Warrant Agreement. (this Agreement was executed by the parties without material change on April 21, 1993.) 10.2(1) Consulting Agreement, dated June 1, 1990, between the Registrant and Stanley A. Young 10.3(l) Form of Consulting Agreement between the Registrant and Whale Securities Co., L.P. (This Agreement was executed by the parties without material change on April 28, 1993.) 10.4.1(3) Investment Agreement dated June 10, 1994, between the Registrant and Moore Corporation Limited 10.4.2(6) Agreement to amend Investment Agreement dated June 27, 1996 between the Registrant and Moore Corporation Limited 10.5.1(3) Form of Option Agreement to be entered into between the Registrant and Moore Corporation Limited 10.5.2(6) Assignment of Option Agreement between Moore Corporation Limited and 3272303 Canada Inc., a wholly-owned subsidiary of the Registrant 10.6.1(5) Strategic Alliance Agreement dated August 11, 1994 between the Registrant and Moore Corporation Limited 10.6.2(8) Agreement to amend the Strategic Alliance Agreement dated June 27, 1996 between the Registrant and Moore Corporation Limited 10.6.3(8) Amendment to the Strategic Alliance Agreement dated April 30, 1998, between the Registrant and Moore Corporation Limited. 10.6.4(11) Amendment to the Strategic Alliance Agreement dated April 30, 1999, between the Registrant and Moore Corporation Limited. 10.7.1(6) Consulting Agreement dated August 24, 1995 between the Registrant and Abraham Ostrovsky 10.8(5) Employment Agreement dated August 11,1994 between the Registrant and John Gleed 10 9(1) Lease of Space in Watermill Center, Waltham, Massachusetts dated September 30, 1992 10.10(2) Lease dated as of February 1, 1993, between the Registrant and Arnon Development Corporation and Baix Developments Inc. for Ottawa, Canada facility 10.11(4) Form of Amendment to Lease to be entered into between Registrant and Arnon Development Corporation Limited and Baix Developments, Inc. 10.12(5) Letter Agreement dated June 1995 between Arnon Development Corporation and the Registrant 10.13(4) Lease dated April 24, 1991 between Arnon Development Corporation and Baix Developments, Inc. and CCC Cable Consumer Channel Inc (d/b/a Why Interactive) and amendment dated June 28, 1991. 10.14(4) Agency Agreement between the Registrant, Selling Shareholders of the Registrant and Richardson Greenshields of Canada Limited. 10.15(5) Employment Agreement dated August 1994 between the Registrant and Lynne Boyd 10.16(5) Employment Agreement dated August 1994 between the Registrant and Philip Weaver 10.17(5) Employment Agreement dated August 1994 between the Registrant and John Kelly 10.18(1) Registrant's 1990 Employee Stock Option Plan 10.19(l) Registrant's 1993 Employee Stock Option Plan 10.20(5) Registrant's 1995 Employee Stock Option Plan 10.21(7) Credit Facility dated October 25, 1996 between the Registrant and Royal Bank of Canada 10.21.1(11) Credit Facility dated October 14, 1997 between the Registrant and Royal Bank of Canada 10.21.2 Credit Facility dated April 7, 1999 between the Registrant and Royal Bank of Canada 10.22(7) Receivables Purchase Agreement and Amendment Agreement dated July 31, 1996, between the Registrant and Royal Bank Export Finance Co. Ltd. 10.23(9) Amendment to the Asset Purchase Agreement dated February 12, 1998 between the Registrant and Delrina Corporation 10.24(11) Registrant's 1997 Employee Stock Purchase Plan 10.25(10) Registrant's Shareholder Rights Plan Agreement dated June 25, 1998 10.26(11) Underwriting Agreement between the Registrant and RBC Dominion Securities Inc., Midland Walwyn Capital Inc., Goldman Sachs Canada and TD Securities Inc. dated April 2, 1998. 10.27 Amendment dated September 28, 1998 to the employment agreement dated August 11, 1994 between the Registrant and John Gleed 10.28 Amendment dated September 26, 1998 to the employment agreement dated August 11, 1994 between the Registrant and John Kelly 10.29 Amendment dated September 25, 1998 to the employment agreement dated August 11, 1994 between the Registrant and Phil Weaver 10.30 Employment Agreement dated September 22, 1998 between the Registrant and Carlos Fox 10.31 Employment Agreement dated September 22, 1998 between the Registrant and Ian Fraser 10.32 Employment Agreement dated September 22, 1998 between the Registrant and James Bursey 10.33 Employment Agreement dated September 22, 1998 between the Registrant and Hugh Millikin 10.34 Termination Agreement dated February 19, 1999 between the Registrant and Phil Weaver 10.35 Termination Agreement dated April 29, 1999 between the Registrant and Ian Fraser 10.36 Termination Agreement dated June 1, 1999 between the Registrant and Carlos Fox 21.1(6) Subsidiaries of the Registrant 23.0 Consent of PricewaterhouseCoopers LLP (1) Incorporated by reference to the exhibits filed with the Registrant's Registration Statement on Form SB-2 (no. 33-47864-B) (previously filed on Form S-18) filed on May 12, 1992, and amended on March 5, 1993, and April 19, 1993, which Registration Statement became effective April 20, 1993. (2) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 10-KSB for the fiscal year ended April 30, 1993. (3) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 8-K dated June 10, 1994. (4) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 10-KSB for the fiscal year ended April 30, 1994. (5) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 10-KSB for the fiscal year ended April 30, 1995. (6) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 10-K for the fiscal year ended April 30, 1996. (7) Incorporated by reference to the exhibits filed with the Registrant's Statement on Form S-1 (no. 333-6368) (originally filed on Form S-3) filed on April 30,1997, as amended on March 3, 1997 and March 17, 1997, which Registration Statement became effective on March 19, 1997. (8) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 10-K for the fiscal year ended April 30, 1997. (9) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 10-Q for the three months ended January 31, 1998. (10) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 8-K, filed July 23, 1998. (11) Incorporated by reference to the exhibits filed with the Registrant's Report on Form 10-K for the fiscal year ended April 30, 1998. (b) Reports on Form 8-K During the year ended April 30, 1999, the Company filed the following Reports on From 8-K and Form 8-K/A: 1. Reports on Form 8-K, dated July 23, 1998, with respect to the Company's Shareholder Rights Plan Agreement dated June 25, 1998. Our report on the financial statements of JetForm Corporation is included in Item 8 of their Form 10-K. In connection with our audits of such financial statements, we have also audited the related financial statement schedule V listing in Item 14(a)2 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considering in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. PricewaterhouseCoopers, LLP Chartered Accountants Ottawa, Ontario June 22, 1999 JETFORM CORPORATION SCHEDULE V VALUATION AND QUALIFYING ACCOUNTS Allowance for doubtful accounts (in thousands of Canadian dollars) Balance as at April 30, 1996 $ 462 Bad debt expense for the year 681 Write-off/adjustments (408) -------- Balance as at April 30, 1997 735 Bad debt expense for the year 1,045 Write-off/adjustments (381) -------- Balance as at April 30, 1998 1,399 Bad debt expense for the year 2,528 Write-offs/adjustments (2,003) -------- Balance as at April 30, 1999 $ 1,924 ======= SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JetForm Corporation Dated: July 24, 1999 /s/ John B. Kelly - ----------------------------------- ---------------------------------------- John B. Kelly President and Chief Executive Officer and Director (Principal Executive Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Abraham Ostrobsky /s/ Jeffrey McMullen - ----------------------------------- ---------------------------------------- Abraham Ostrovsky Jeffrey McMullen Chairman and Director Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer) /s/ John Gleed /s/ Stanley A. Young - ----------------------------------- ------------------------------------------- John Gleed Stanley A. Young Director Director /s/ Eric R. Goodwin /s/ Thomas E. Hicks - ----------------------------------- ------------------------------------------- Eric R. Goodwin Thomas E. Hicks Director Director /s/ Robert F. Allum /s/ Deborah L. Weinstein - ----------------------------------- ------------------------------------------- Robert F. Allum Deborah L. Weinstein Director Secretary /s/ Graham C. Macmillan /s/ Stephen A. Holinski - ----------------------------------- ------------------------------------------- Graham C. Macmillan Stephen A. Holinski Director Director /s/ Donald J. Payne /s/ Dennis B. Maloney - ----------------------------------- ------------------------------------------- Donald J. Payne Dennis B. Maloney Director Director /s/ John B. Millard /s/ Siegfried E. Buck - ----------------------------------- ------------------------------------------- John B. Millard Siegfried E. Buck Director Director EX-10.21.2 2 CREDIT FACILITY Exhibit 10.21.2 April 7, 1999 Private and Confidential JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Attention: Mr. Jeffrey McMullen Chief Financial Officer Dear Sirs: Further to our recent discussions, we are pleased to offer the Credit Facility described below, superseding all previous offers, subject to the following terms and conditions. 1. Definitions: The definitions attached hereto in Schedule "A" are incorporated in this agreement by reference as if set out in full herein. 2. Borrower: JetForm Corporation (the "Borrower"). 3. Lender: Royal Bank of Canada (the "Bank"), through its Branch at 90 Sparks Street, Ottawa, Ontario. 4. Credit Facility: Segments (1) through (4) of the Credit Facility are available in Canadian Dollars or the Equivalent Amount in US Dollars if US Dollars is stipulated. (1) Operating: (a) Royal Bank Prime based loans ("RBP Loans"). (b) Royal Bank US Base Rate based loans in US Dollars ("RBUSBR Loans"). (c) Standby Letters of Credit and/or Guarantee ("L/G's"). (d) US Eurodollar Loans ("Libor" loans). (e) REFCO Recourse Facilities. (2) Foreign exchange facilities in US Dollars or the equivalent in other foreign currencies ("FEF Contracts"). (3) Corporate Visa Purchasing Card. (4) Term Loan: (a) RBP Loans. (b) RBUSBR Loans. (c) Libor Loans. (d) Bankers Acceptances ("B/As"). (collectively the "Borrowings"). 5. Amounts: (1) $ 10,000,000 (2) $ 50,000,000US (3) $ 500,000 (4) $ 10,000,000 6. Purpose: (1) Working capital requirements. (2) Foreign exchange hedging of day-to-day transactions. (3) Corporate purchases. (4) Term facility to replenish working capital. 7. Repayment: (1) Borrowings under this segment are expected to fluctuate, and are repayable on the later of September 30, 1999 and the date of demand by the Bank, should this segment have been converted to a demand facility as provided for in the following sentence. Notwithstanding compliance with the Covenants section herein, this segment shall convert to a demand facility on September 30, 1999. (2) Notwithstanding any other terms contained herein and regardless of the maturity of the instruments or contracts outstanding, the Bank may, at its sole discretion, terminate this segment of the Credit Facility at any time. (3) In accordance with the cardholder agreement. (4) Borrowings under this segment are repayable on June 30, 2000. Upon demand of Segment (1), the Borrower shall pay to the Bank all Borrowings under this segment including the face amount of all L/G's and an amount to reimburse the Bank for any payment made in respect of FEF Contracts (the "Repayment Amount"). The Repayment Amount shall be determined by the Bank based upon the mark-to-market cost to unwind such FEF Contracts prior to their maturity. The Bank may enforce its rights to realize upon its security and retain sufficient funds to cover amounts outstanding by way of these instruments. 8. Availability: (1) The Borrower may borrow, repay, convert and reborrow up to the amount of this operating segment, provided that: (a) The aggregate of Borrowings under Segments (1) and (4) must not exceed the aggregate of: (i) 67% of consolidated trade accounts receivable falling due within the next 12 months, but excluding amounts 90 days or more past due; PLUS (ii) 90% of trade receivables insured by Export Development Corporation ("EDC"), or other similar insurer satisfactory to the Bank; MINUS (iii) Potential Preferred Claims and contra-accounts. (collectively the "Available Margin Value"). (b) L/G's will be issued for periods not exceeding one year, except with the agreement of the Bank. (c) Libor loans shall be for not less than US $1,000,000 and shall have a term of not less than 30 days and not more than 180 days, subject to the availability of US dollars in the London interbank market for the terms selected on terms satisfactory to the Bank; (d) Libor loans require prior notice by 10:00 am two Banking Days prior to Settlement Date. (2) (a) FEF Contracts may not have maturities which exceed 12 months; (b) The amount of Borrowings ascribed to FEF Contracts shall be determined by the Bank in its sole discretion and notified to the Borrower upon request. (4) The Borrower may borrow and convert up to the amount of this term segment, provided that: (b) Borrowings under this segment must not exceed 25% of the aggregate of consolidated cash, cash equivalents and trade accounts receivable falling due within the next twelve months, but excluding amounts 90 days or more past due; (c) B/As shall be in multiples of $100,000 (minimum $500,000) and shall have a term of not less than 90 days and not more than 180 days; (d) Libor loans shall be for not less than US $1,000,000 and shall have a term of not less than 30 days and not more than 180 days, subject to the availability of US dollars in the London interbank market for the term selected on terms satisfactory to the Bank; (e) Libor loans require prior notice by 10:00 a.m. two Banking Days prior to Settlement Date; (f) Notwithstanding any other provisions of this agreement, the maturity of the borrowing instruments selected will not be later than June 30, 2000. 9. Interest Rates & Fees: (1) (a) Royal Bank Prime ("RBP"). (b) Royal Bank US Base Rate ("RBUSBR"). (c) Fees will be advised on a transaction by transaction basis. (d) Libor plus 1%. (2) N/A. (3) The interest rates and fees may change in accordance with the cardholder agreement, which changes will be advised in writing. (4) (a) RBP plus 1.5%. (b) RBUSBR plus 1.5%. (c) B/A stamping fee of 1.5%. (d) Libor plus 1.5%. The rates applicable to Segment 4 will be increased by 1/2 of 1%, effective the first day of the respective fiscal quarter, if the Borrower's reported Tangible Net Worth falls below $47,500,000. The increase shall remain in effect until the last day of the fiscal quarter in which reported Tangible Net Worth again exceeds $47,500,000. 10. Payment of Interest & Fees: RBP Loans, RBUSBR Loans: Interest on these loans shall be computed on the daily principal amounts outstanding, at the aforementioned rates, based on the actual number of days elapsed divided by three hundred and sixty five (365), and shall be payable in arrears on the 25th of each month. B/A's: Upon the Bank accepting B/A's hereunder, the Borrower shall forthwith pay to the Bank a stamping fee equal to 1.5% per annum, calculated on the face amount of each accepted B/A and on the basis of the number of days in the term of such B/A's and based on a year of 365 days or 366 days, as the case may be. Libor Loans: Interest on Libor loans shall be payable, at the aforementioned rates, on each Libor Interest Date as defined in Schedule "A" attached. L/G's: The Borrower shall pay fees at the rates set forth above in advance at the time of issue of the L/G. This fee shall be based upon the amount of the instrument issued and shall be calculated on the number of days that it will be outstanding. The yearly rates of interest to which the rates determined in accordance with the Payment of Interest and Fees section of this agreement are equivalent, are the rates so determined multiplied by the actual number of days in the calendar year and divided by three hundred and sixty-five (365), or, in the case of Libor Loans, three hundred and sixty (360). 11. Libor Loan & B/A Indemnity: The Borrower shall reimburse the Bank for any additional costs or reduction of income arising as a result of the imposition of or increase in taxes (other than on the overall net income of the Bank) on amounts paid by the Borrower to the Bank, an imposition of or increase in reserve requirements, or the imposition of any other condition affecting the Credit Facility by any government, governmental agency or body, tribunal or regulatory authority. It is understood by the Bank and the Borrower that the general indemnity provided for herein shall relate only to borrowings made by the Borrower with respect to the B/A and/or the US Eurodollar Loan ("Libor Loan") segments of the credit facility. The Borrower shall not be required to reimburse the Bank as provided for in the general indemnity for any additional costs or reduction of income howsoever caused to the Bank as a result of the Borrower's use of any other segment of the credit facility. 12. Other Fees: Standby Fee: A standby fee equal to 1/8 of 1% per annum calculated on the unused portion of Segment (1) is payable monthly in arrears. Commitment Fee: A commitment fee of .3% with respect to Segment (4) is payable upon acceptance of this agreement. The commitment fee is non-refundable and will be deemed to have been earned by the Bank upon acceptance of this offer to compensate for time, effort and expense incurred by the Bank approve these facilities. Nothing in this agreement shall be construed as obliging the Borrower to pay any interest, charges or other expenses as provided by this agreement or in any other security agreement related thereto in excess of what is permitted by law. 13. Collateral Security: General Security Agreement signed by the Borrower providing a first charge on all corporate assets other than real property and assets under capital lease. Assignment of receivables insurance, if any. Pledge of all issued and outstanding shares of any Material Subsidiary. 14. Conditions Precedent: The obligation of the Bank to make available the Borrowings to the Borrower is subject to and conditional upon: (1) Receipt by the Bank of the within stipulated Collateral Security in form and substance satisfactory to the Bank, together with such corporate authorizations and legal opinions as the Bank may require; 15. Evidence of Indebtedness: The Bank shall open and maintain at the Branch of Account accounts and records evidencing the Borrowings made available to the Borrower by the Bank under this agreement. The Bank shall record the principal amount of such Borrowings, the payment of principal and interest on account of the loans, and all other amounts becoming due to the Bank under this agreement. The Bank's accounts and records constitute, in the absence of manifest error, prima facie evidence of the indebtedness of the Borrower to the Bank pursuant to this agreement. The Borrower authorizes and directs the Bank to automatically debit, by mechanical, electronic or manual means, any bank account of the Borrower for all amounts payable under this agreement, including but not limited to, the repayment of principal and the payment of interest, fees and all charges for the keeping of such bank accounts. 16. Representations and Warranties: The Borrower represents and warrants to the Bank that: (a) it is a corporation validly incorporated and subsisting under the laws of Canada, and that it is duly registered or qualified to carry on business in all jurisdictions where the character of the properties owned by it or the nature of its business transacted makes such registration or qualification necessary; (b) the execution and delivery of this agreement has been duly authorized by all necessary actions and does not violate any law or any provision of its constating documents or by-laws or any unanimous shareholders' agreement to which it is subject, or result in the creation of any encumbrance on its properties and assets except as contemplated hereunder; (c) all Material Subsidiaries as at the date of this agreement are listed below and any changes thereto will be advised to the Bank in writing within 30 days of the Borrower becoming aware of such change: (i) JetForm Corporation (Delaware). 17. Non-Merger: The provisions of this Agreement shall not merge with any security given by the Borrower to the Bank, but shall continue in full force for the benefit of the parties hereto. 18. Covenants: The Borrower agrees: (a) To pay all sums of money when due under this agreement; (b) To provide the Bank with the following reports within a) 45 days of each fiscal quarter end, and b) with respect to (i) below, within 30 days of each month end if consolidated cash and cash equivalents are less than $30,000,000 : (i) aged lists of accounts receivable and statement of cash holdings; (ii) statement of Potential Preferred Claims; (iii) internal consolidated and non-consolidated financial statements; (iv) Certificate of its Chief Financial Officer substantially in the form attached as Schedule "B"; (c) To provide the Bank with audited consolidated and unaudited, non-consolidated annual financial statements within 90 days of each fiscal year-end; (d) To provide the Bank with annual business plans, including pro forma balance sheets, profit & loss and cash flow statements for the next fiscal year and such other reports as the Bank may reasonably request from time to time; (e) To give the Bank prompt notice of any Event of Default or any event which, with notice or lapse of time or both, would constitute an Event of Default; (f) To file all material tax returns which are or will be required to be filed, to pay or make provision for payment of all material taxes (including interest and penalties) and other Potential Preferred Claims which are or will become due and payable and to provide adequate reserves for the payment of any tax, the payment of which is being contested; (g) Not to dispose of shares of any Material Subsidiary; (h) Not to grant, create, assume or suffer to exist any mortgage, charge, lien, pledge, security interest, including a Purchase Money Security Interest, or other encumbrance affecting any of its properties, assets or other rights; (i) Not to sell, transfer, convey, lease or otherwise dispose of any part of its property or assets, without the prior written consent of the Bank, except in the ordinary course of business; (j) Not to, directly or indirectly, guarantee or otherwise provide for, on a direct or indirect or contingent basis, the payment of any monies or performance of any obligations by any third party except wholly-owned subsidiaries or, in other cases, amounts not exceeding $2,500,000 in aggregate; (k) To insure and to keep fully insured all properties customarily insured by companies carrying on a similar business to that of the Borrower; (l) Not to change its name or merge, amalgamate or consolidate with any other corporation; (m) To comply with all applicable environmental laws and regulations; to advise the Bank promptly of any material breach of any environmental regulations or licenses or any control orders, work orders, stop orders, action requests or violation notices received concerning any of the Borrower's property; to comply with any such requests or notices, to diligently clean up any spills; and to hold the Bank harmless for any costs or expenses which the Bank incurs for any environment-related liabilities existent now or in the future with respect to the Borrower's property; and (n) To exercise its controlling interest in Material Subsidiaries to ensure their compliance with (h), (i) (j), (k), (l), and (m) above; and (o) The Borrower covenants to provide to the Bank any and all information that the Bank may reasonably request from time to time relating to the state of the Year 2000 readiness of the Borrower. For the purpose of the foregoing the "Year 2000 readiness" of the Borrower means the ability of all information technology used by the Borrower [and its suppliers] to continue to perform all date-related functions and computations accurately on and after January 1, 2000. With respect to Segment (1) only (p) To maintain, on a consolidated basis, Tangible Net Worth of not less than $40,000,000; (q) To maintain, on a consolidated basis, the ratio of its total liabilities to Tangible Net Worth at not greater than 2.0:1. Total liabilities include all direct liabilities, except deferred taxes; (r) To maintain, on a consolidated basis, a Quick Ratio of not less than 1.25:1. With respect to Segment (4) only (s) To refrain from making any cash payment with respect to the Delrina indebtedness if such payment would reduce consolidated cash holdings to less than $20,000,000; (t) Upon request of the Bank, to exercise its controlling interest in Material Subsidiaries to provide the Bank with collateral security on all assets of such Material Subsidiaries. 19. Events of Default: Without limitation and notwithstanding the terms for repayment of certain facilities as recited herein, if any one or more of the following events has occurred and is continuing: (a) The non-payment when due of principal, interest and any other amounts due under this agreement; (b) The breach by the Borrower of any provisions of this agreement or any other agreement with the Bank; (c) The default by the Borrower under any obligation to repay borrowed money where such obligation exceeds $1,000,000, other than amounts due under this agreement, or in the performance or observance of any agreement or condition in respect of such borrowed money where as a result the maturity of such obligation is accelerated or may be accelerated; (d) If any representation or warranty made herein shall be false or inaccurate in any materially adverse respect; (e) If in the opinion of the Bank there is material adverse change in the financial condition, ownership, or operation of the Borrower; or (f) If proceedings for the dissolution, liquidation or winding-up of the Borrower or for the suspension of the operations of the Borrower are commenced, unless such proceedings are being actively and diligently contested by the Borrower in good faith, or in the event of the bankruptcy, liquidation, or general insolvency of the Borrower, or if a receiver or receiver-manager is appointed for all or any part of the business or assets of the Borrower; (g) The breach at any time and in any material respect of the provisions of any applicable law, regulation, by-law, ordinance or work order of any lawful authority whether federal, provincial, state, municipal, local or otherwise, (including without restriction, those dealing with pollution of the environment and toxic materials or other environmental hazards, or public health and safety), affecting any property of the Borrower or any activity or operation carried out thereon; With respect to Segment (1) only (h) A loss in any fiscal quarter greater than $7,500,000 or consecutive quarterly losses which aggregate more than $7,500,000 on a consolidated basis commencing with the fiscal quarter ending July 31, 1999; then the right of the Borrower to make further Borrowings under this agreement shall immediately terminate and the Bank may, by written notice to the Borrower, declare the Borrowings under this agreement to be immediately due and payable without further notice or demand. Upon receipt of such notice, the Borrower shall immediately pay to the Bank all Borrowings under this agreement, including the face amount all L/G's and an amount to reimburse the Bank for any payment made in respect of FEF Contracts (the "Repayment Amount"). The Repayment Amount shall be determined by the Bank based upon the mark-to-market cost to unwind such FEF Contracts prior to their maturity. The Bank may enforce its rights to realize upon its security and retain sufficient funds to cover amounts outstanding by way of these instruments. 20. Periodic Review: Segment (1) of the Credit Facility is subject to annual review by the Bank, the next such review to be on or before September 30, 1999. The Bank may, in its sole discretion, terminate this segment of the facilities following any annual review or any Event of Default, or a demand for payment should Segment (1) have converted to a demand facility. If this segment is so terminated, any outstanding Borrowings under it at the time of termination shall be repaid forthwith. Furthermore, the Borrower shall immediately pay to the Bank all Borrowings under Segments (2) and (3) of this agreement including the face amount of all L/G's and an amount to reimburse the Bank for any payment made in respect of FEF Contracts (the "Repayment Amount"). The Repayment Amount shall be determined by the Bank based upon the mark-to-market cost to unwind such FEF Contracts prior to their maturity. The Bank may enforce its rights to realize upon its security and retain sufficient funds to cover amounts outstanding by way of these instruments. 21. Expenses: The Borrower agrees to pay all of the Bank's reasonable costs incurred from time to time in the preparation, negotiation and execution of this agreement and the collateral security, and any costs incurred in the operation or enforcement of this agreement or any other agreement entered into pursuant to this agreement. 22. GAAP: Unless otherwise provided, all accounting terms used in this agreement shall be interpreted in accordance with United States Generally Accepted Accounting Principles from time to time. 23. Severability: If any provision of this agreement is or becomes prohibited or unenforceable in any jurisdiction, such prohibition or unenforceability shall not invalidate or render unenforceable the provision concerned in any other jurisdiction nor shall it invalidate, affect or impair any of the remaining provisions. 24. Governing Law: This agreement shall be construed in accordance with and governed by the laws of the Province of Ontario and of Canada applicable therein. 25. Acceptance: This offer expires if not accepted by April 21, 1999 unless extended in writing by the Bank. If this agreement is acceptable, kindly sign and return the attached copy to the attention of the writer. Yours truly, We acknowledge and accept the within terms and conditions. JETFORM CORPORATION Per: ______________________________________________ Per: ______________________________________________ Date: ______________________________________________ SCHEDULE "A" Schedule "A" to the Letter Agreement dated as of the 7th day of April, 1999 between JetForm Corporation as the Borrower and Royal Bank of Canada as the Bank. For purposes of the foregoing agreement, the following terms and phrases shall have the following meanings: "Banking Day" means a Business Day on which the Bank's Main Branch in London, England, is open for business; "Business Day" means a day on which the Branch of Account is open for business; "Canadian Dollars" and "Cdn$" means lawful money of Canada; "Equivalent Amount" determines the amount of availability only and means on any date, the amount of Canadian Dollars required to convert from Canadian Dollars to: US Dollars at the rate of 1.52 Canadian Dollars for 1.00 US$; The Equivalent Amount will be amended by the Bank from time to time to reflect changes in the rate of exchange and such amendments will be advised to the Borrower in writing. "Libor" means the rates of interest, rounded upwards, if necessary, to the nearest whole multiple of one sixteenth of one percent (1/16th%), at which the Bank, in accordance with its normal practice, would be prepared to offer deposits to leading banks in the London Interbank Market for delivery on the first day of each of the relative Libor Interest Periods for a period equal to each such Libor Interest Period based on the number of days comprised therein, such deposits being in US Dollars of comparable amounts to be outstanding during such Libor Interest Period, at or about 10:00 a.m. (Toronto time) two (2) Banking Days prior to a Drawdown Date or a Conversion Date as the case may be, for the initial Libor Interest Period, and, thereafter two (2) Banking Days prior to the first day of each successive Libor Interest Period; "Libor Interest Date" means the last day of each Libor Interest Period and if the Borrower selects a Libor Interest Period for a period longer than 3 months, the Libor Interest Date shall be the date falling every 3 months after the beginning of such Libor Interest Period and on the last day of such Libor Interest Period; "Libor Interest Period" means with respect to a Libor Loan the initial period (subject to availability) of approximately 1, 3, 6, or 9 months or one year or such longer period up to 5 years as the Bank and Borrower may agree, commencing with the date on which a Libor Loan is made or on which another basis of borrowing is converted into a Libor Loan and ending on the Libor Interest Date falling on the last day of the applicable Libor Interest Period, and thereafter each successive period (subject to availability) of approximately 3, 6, or 9 months or one year or such longer period up to 5 years as the Bank and Borrower may agree, commencing on the last day of the immediately prior Libor Interest Period; "Material Subsidiary" means any subsidiary which comprises 20% or more of consolidated revenues (determined on the basis of the most recent four fiscal quarters) or consolidated assets (at any fiscal quarter end). SCHEDULE "B" Schedule "B" to the Letter Agreement dated the 7th day of April, 1999 between JetForm Corporation as Borrower and Royal Bank of Canada as the Bank. OFFICER'S COMPLIANCE CERTIFICATE I, [Name], of the [City] of in the Province of , hereby - - certify as follows: 1. That I am the Chief Financial Officer of JetForm Corporation. 2. That I am familiar with and have examined the provisions of the letter agreement (the "Letter Agreement") dated April 7, 1999 between JetForm Corporation (the "Borrower"), and Royal Bank of Canada (the "Bank") and have made reasonable investigations of corporate records and inquiries of other officers and senior personnel of the Borrower and, based on the foregoing, that as of the date of this Certificate: (a) the representations and warranties contained in the Letter Agreement are true and correct; (b) the Borrower is not in default under the Letter Agreement nor has any event occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default under the Letter Agreement and the Borrower is not in default under any other material agreement for monies borrowed, raised, or guaranteed to which the Borrower is a party or by which it is bound; and (c) the covenants contained in the Letter Agreement have not been breached and during the next fiscal quarter of the Borrower there is no reason to believe that any of such covenants will be breached; (d) the attached list of receivables and Potential Preferred Claims is correct. 3. That, as at the fiscal [year/quarter] ended [date], on a consolidated basis: (a) the Quick Ratio was :1; (b) the Tangible Net Worth was ; (c) the ratio of total liabilities to Tangible Net Worth was :1; (d) the Available Margin Value was $ . -------------------------------------- Date: ________________ EX-10.27 3 EMPLOYMENT AGREEMENT Exhibit 10.27 THIS AMENDMENT dated as of the 28th day of September, 1998 to the Employment Agreement made as of August 11, 1994 (the "Employment Agreement") by and between JETFORM CORPORATION, a corporation incorporated pursuant to the laws of Canada ("JetForm") and JOHN GLEED ("Executive"). WHEREAS JetForm and Executive wish to amend certain provisions of the Employment Agreement and make certain further agreements, in each case as set forth below; NOW THEREFORE in consideration of the mutual covenants and agreements contained in this Amendment and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties hereto agree as follows: ARTICLE 1. INTERPRETATION 1.01 Unless otherwise specified, all capitalized terms used in this Addendum and not otherwise defined in this Amendment shall have the meanings given to them in the Employment Agreement. Where reference is made in this Amendment to a section number, it shall refer to a section number in the Employment Agreement. Except as amended hereby, the parties confirm that the Employment Agreement remains in full force and effect in accordance with the terms thereof and the terms not hereby amended shall apply to this Amendment as though stated herein. ARTICLE 2. AMENDMENTS TO EMPLOYMENT AGREEMENT 2.01 Additional Duties. The Corporation and the Executive hereby agree to delete the period and add the word "and" following clause (c) of Section 2.1 and add the following clause (d) to Section 2.1: "(d) use diligent efforts to observe in all material respects the material rules, regulations and policies of the Corporation applicable to the Executive, (including without limitation the Corporation's policies respecting insider trading) from time to time in force which are brought to the attention of the Executive or which he should reasonably be aware." 2.02 Change of Control. The Corporation and the Executive hereby agree that the following clause (d) shall be added to Section 3.1: "(d) Change of Control. The parties agree that this Agreement will not automatically terminate upon (i) any sale of all or substantially all of the assets of the Corporation or (ii) any change of voting control of the Corporation, whether by way of share acquisition, merger amalgamation, plan of arrangement or otherwise. However, the Corporation and the Executive acknowledge and agree that both the Corporation (or its successor) and the Executive shall have the right to terminate this Agreement within ninety days of the legal closing of the change event, on thirty days notice to the other party. If the Executive's employment is so terminated. (i) the Corporation shall pay to or to the order of the Executive the aggregate of the following amounts (less any deductions required by law): (A) if not theretofore paid, the Executive's Annual Salary for the then current fiscal year of the Corporation for the period to and including the Date of Termination; and (B) an amount equal to the Annual Salary times 1.25; (ii) all options held by the Executive, whether then vested or not, shall immediately become exercisable (and shall remain exercisable as set forth in clause 3.1(c)(ii)) in the event that the Executive's employment is terminated by the Corporation (other than for Just Cause, Disability or Death) within one year following the acquisition by a third party of greater than 50% of the then issued and outstanding JetForm common shares; (iii) the Corporation shall not seek in any way to amend the terms of any loans from the Corporation or its subsidiaries to the Executive; (iv) the Corporation shall provide the Executive with the job relocation counselling services of the firm acceptable to the Corporation for an amount not to exceed $30,000; (v) if, at the Date of Termination, there were any memberships in any clubs, social or athletic organizations paid for by the Corporation that were for the regular use of the Executive at the Date of Termination, the Corporation will not take any action to terminate such memberships but need not renew any such membership that expires; and (vi) the Corporation shall pay to the Executive all outstanding and accrued vacation pay to the Date of Termination." 2.03 Amendment to Payment and Benefit Requirements following Termination. The last sentence of Section 3.3 of the Employment Agreement is deleted and replaced with the following: "If the Executive secures employment after the Date of Termination and prior to receiving all amounts owing hereunder, the Executive shall immediately inform the Corporation and the Corporation shall have the right to terminate all health, life and disability benefits being carried by the Corporation for the Executive." 2.04 Amendment to Board Resignation Provision. The parties agree that the Executive shall not be required to resign from the board of directors of the Corporation upon the termination of the Executive's employment. Accordingly, Section 5.2 is hereby deleted in its entirety and replaced with the following: "5.2 The Executive agrees that after termination of his employment for whatever reason, he will tender his resignation from any position he may hold as an officer of the Corporation or as an officer or director of any of its affiliated or associated companies, provided that doing so will not reduce the obligations of the Corporation described herein." ARTICLE 3. GENERAL A. Independent Legal Advice. The Executive acknowledges that he has had an opportunity to obtain independent legal advice before signing this Amendment and agrees that either such advice has been obtained or that he does not wish to seek or obtain such independent legal advice. The Executive acknowledges that he has read this Amendment and fully understands the nature and effect of it and the terms contained herein and that the said terms are fair and reasonable and correctly set out the Executive's intentions. B. Address for Notice. Until changed in accordance therewith, the Executive's address for notice as set forth in Section 5.5 of the Employment Agreement shall be:John Gleed13679 Fontenay CrescentOttawa, OntarioK1V 7K5 C. Governing Law. This Amendment shall be governed by the laws of the Province of Ontario and the federal IN WITNESS WHEREOF the parties have executed this Amendment. JETFORM CORPORATION By: -------------------------------- Authorized Officer - ------------------------------- ----------------------------------- Witness JOHN GLEED EX-10.28 4 EMPLOYMENT AGREEMENT Exhibit 10.28 THIS AMENDMENT dated as of the 26th day of September, 1998 to the Employment Agreement made as of August 11, 1994 (the "Employment Agreement") by and between JETFORM CORPORATION, a corporation incorporated pursuant to the laws of Canada ("JetForm") and JOHN B. KELLY ("Executive"). WHEREAS JetForm and Executive wish to amend certain provisions of the Employment Agreement and make certain further agreements, in each case as set forth below; NOW THEREFORE in consideration of the mutual covenants and agreements contained in this Amendment and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties hereto agree as follows: ARTICLE 1. INTERPRETATION 1.01 Unless otherwise specified, all capitalized terms used in this Addendum and not otherwise defined in this Amendment shall have the meanings given to them in the Employment Agreement. Where reference is made in this Amendment to a section number, it shall refer to a section number in the Employment Agreement. Except as amended hereby, the parties confirm that the Employment Agreement remains in full force and effect in accordance with the terms thereof and the terms not hereby amended shall apply to this Amendment as though stated herein. ARTICLE 2. AMENDMENTS TO EMPLOYMENT AGREEMENT 2.01 Additional Duties. The Corporation and the Executive hereby agree to delete the period and add the word "and" following clause (c) of Section 2.1 and add the following clause (d) to Section 2.1: "(d) use diligent efforts to observe in all material respects the material rules, regulations and policies of the Corporation applicable to the Executive, (including without limitation the Corporation's policies respecting insider trading) from time to time in force which are brought to the attention of the Executive or which he should reasonably be aware." 2.02 Amendment to Termination Payment. The Corporation and Executive agree that the amount payable by the Corporation to the Executive upon termination of the Executive's employment by the Corporation for reasons other than Just Cause, Disability, retirement or death or by the Executive for Good Reason should be increased from 1.25 times Annual Salary to 3 times Annual Salary. Accordingly, the reference to "1.25" in clause 3.1(c)(i)(B) is hereby deleted and replaced with "3". 2.03 Change of Control. The Corporation and the Executive hereby agree that the following clause (d) shall be added to Section 3.1: "(d) Change of Control. The parties agree that this Agreement will not automatically terminate upon (i) any sale of all or substantially all of the assets of the Corporation or (ii) any change of voting control of the Corporation, whether by way of share acquisition, merger amalgamation, plan of arrangement or otherwise. However, the Corporation and the Executive acknowledge and agree that both the Corporation (or its successor) and the Executive shall have the right to terminate this Agreement within ninety days of the legal closing of the change event, on thirty days notice to the other party. If the Executive's employment is so terminated. (i) the Corporation shall pay to or to the order of the Executive the aggregate of the following amounts (less any deductions required by law): (A) if not theretofore paid, the Executive's Annual Salary for the then current fiscal year of the Corporation for the period to and including the Date of Termination; and (B) an amount equal to the product obtained by multiplying the Annual Salary by 3; (ii) all options held by the Executive, whether then vested or not, shall immediately become exercisable (and shall remain exercisable as set forth in clause 3.1(c)(ii)) in the event that the Executive's employment is terminated by the Corporation (other than for Just Cause, Disability or Death) within one year following the acquisition by a third party of greater than 50% of the then issued and outstanding JetForm common shares; (iii) the Corporation shall not seek in any way to amend the terms of any loans from the Corporation or its subsidiaries to the Executive; (iv) the Corporation shall provide the Executive with the job relocation counselling services of the firm acceptable to the Corporation for an amount not to exceed $30,000; (v) if, at the Date of Termination, there were any memberships in any clubs, social or athletic organizations paid for by the Corporation that were for the regular use of the Executive at the Date of Termination, the Corporation will not take any action to terminate such memberships but need not renew any such membership that expires; and (vi) the Corporation shall pay to the Executive all outstanding and accrued vacation pay to the Date of Termination." 2.04 Amendment to Payment and Benefit Requirements following Termination. The last sentence of Section 3.3 of the Employment Agreement is deleted and replaced with the following: "If the Executive secures employment after the Date of Termination and prior to receiving all amounts owing hereunder, the Executive shall immediately inform the Corporation and the Corporation shall have the right to terminate all health, life and disability benefits being carried by the Corporation for the Executive." A. Amendment to Duration of Non-Compete/Non-Solicitation. In consideration of the amendment to the termination payment as set forth in Section 2.02 above, the Corporation and Executive agree that the duration of the non-compete and non-solicitation covenants contained in Sections 4.1 and 4.2 of the Employment Agreement shall be extended so as to apply for a period of three years following the Date of Termination. Accordingly, the reference to "18 months" in each of Sections 4.1 and 4.2 is hereby deleted and replaced with "36 months". 2.06 Amendment to Board Resignation Provision. The parties agree that the Executive shall not be required to resign from the board of directors of the Corporation upon the termination of the Executive's employment. Accordingly, Section 5.2 is hereby deleted in its entirety and replaced with the following: "5.2 The Executive agrees that after termination of his employment for whatever reason, he will tender his resignation from any position he may hold as an officer of the Corporation or as an officer or director of any of its affiliated or associated companies, provided that doing so will not reduce the obligations of the Corporation described herein." ARTICLE 3. GENERAL 3.01 Independent Legal Advice. The Executive acknowledges that he has had an opportunity to obtain independent legal advice before signing this Amendment and agrees that either such advice has been obtained or that he does not wish to seek or obtain such independent legal advice. The Executive acknowledges that he has read this Amendment and fully understands the nature and effect of it and the terms contained herein and that the said terms are fair and reasonable and correctly set out the Executive's intentions. 3.02 Address for Notice. Until changed in accordance therewith, the Executive's address for notice as set forth in Section 5.5 of the Employment Agreement shall be: John B. Kelly 23 Hyde Park Way Nepean, Ontario K2G 5R7 3.03 Governing Law. This Amendment shall be governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. IN WITNESS WHEREOF the parties have executed this Amendment. JETFORM CORPORATION By: ------------------------------------- Authorized Officer - ------------------------------- ---------------------------------------- Witness JOHN B. KELLY EX-10.29 5 EMPLOYMENT AGREEMENT Exhibit 10.29 THIS AMENDMENT dated as of the 25th day of September, 1998 to the Employment Agreement made as of August 11, 1994 (the "Employment Agreement") by and between JETFORM CORPORATION, a corporation incorporated pursuant to the laws of Canada ("JetForm") and PHILIP WEAVER ("Executive"). WHEREAS JetForm and Executive wish to amend certain provisions of the Employment Agreement and make certain further agreements, in each case as set forth below; NOW THEREFORE in consideration of the mutual covenants and agreements contained in this Amendment and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties hereto agree as follows: ARTICLE 1. INTERPRETATION 1.01 Unless otherwise specified, all capitalized terms used in this Addendum and not otherwise defined in this Amendment shall have the meanings given to them in the Employment Agreement. Where reference is made in this Amendment to a section number, it shall refer to a section number in the Employment Agreement. Except as amended hereby, the parties confirm that the Employment Agreement remains in full force and effect in accordance with the terms thereof and the terms not hereby amended shall apply to this Amendment as though stated herein. ARTICLE 2. AMENDMENTS TO EMPLOYMENT AGREEMENT 2.01 Additional Duties. The Corporation and the Executive hereby agree to delete the period and add the word "and" following clause (c) of Section 2.1 and add the following clause (d) to Section 2.1: "(d) use diligent efforts to observe in all material respects the material rules, regulations and policies of the Corporation applicable to the Executive, (including without limitation the Corporation's policies respecting insider trading) from time to time in force which are brought to the attention of the Executive or which he should reasonably be aware." 2.02 Amendment to Termination Payment. The Corporation and Executive agree that the amount payable by the Corporation to the Executive upon termination of the Executive's employment by the Corporation for reasons other than Just Cause, Disability, retirement or death or by the Executive for Good Reason should be increased from 1.25 times Annual Salary to 2 times Annual Salary. Accordingly, the reference to "1.25" in clause 3.1(c)(i)(B) is hereby deleted and replaced with "2". 2.03 Change of Control. The Corporation and the Executive hereby agree that the following clause (d) shall be added to Section 3.1: "(d) Change of Control. The parties agree that this Agreement will not automatically terminate upon (i) any sale of all or substantially all of the assets of the Corporation or (ii) any change of voting control of the Corporation, whether by way of share acquisition, merger amalgamation, plan of arrangement or otherwise. However, the Corporation and the Executive acknowledge and agree that both the Corporation (or its successor) and the Executive shall have the right to terminate this Agreement within ninety days of the legal closing of the change event, on thirty days notice to the other party. If the Executive's employment is so terminated. (i) the Corporation shall pay to or to the order of the Executive the aggregate of the following amounts (less any deductions required by law): (A) if not theretofore paid, the Executive's Annual Salary for the then current fiscal year of the Corporation for the period to and including the Date of Termination; and (B) an amount equal to the product obtained by multiplying the Annual Salary by 2; (ii) all options held by the Executive, whether then vested or not, shall immediately become exercisable (and shall remain exercisable as set forth in clause 3.1(c)(ii)) in the event that the Executive's employment is terminated by the Corporation (other than for Just Cause, Disability or Death) within one year following the acquisition by a third party of greater than 50% of the then issued and outstanding JetForm common shares; (iii) the Corporation shall not seek in any way to amend the terms of any loans from the Corporation or its subsidiaries to the Executive; (iv) the Corporation shall provide the Executive with the job relocation counselling services of the firm acceptable to the Corporation for an amount not to exceed $30,000; (v) if, at the Date of Termination, there were any memberships in any clubs, social or athletic organizations paid for by the Corporation that were for the regular use of the Executive at the Date of Termination, the Corporation will not take any action to terminate such memberships but need not renew any such membership that expires; and (vi) the Corporation shall pay to the Executive all outstanding and accrued vacation pay to the Date of Termination." 2.04 Amendment to Payment and Benefit Requirements following Termination. The last sentence of Section 3.3 of the Employment Agreement is deleted and replaced with the following: "If the Executive secures employment after the Date of Termination and prior to receiving all amounts owing hereunder, the Executive shall immediately inform the Corporation and the Corporation shall have the right to terminate all health, life and disability benefits being carried by the Corporation for the Executive." 2.05 Amendment to Duration of Non-Compete/Non-Solicitation. In consideration of the amendment to the termination payment as set forth in Section 2.02 above, the Corporation and Executive agree that the duration of the non-compete and non-solicitation covenants contained in Sections 4.1 and 4.2 of the Employment Agreement shall be extended so as to apply for a period of two years following the Date of Termination. Accordingly, the reference to "18 months" in each of Sections 4.1 and 4.2 is hereby deleted and replaced with "24 months". ARTICLE 3. GENERAL 3.01 Independent Legal Advice. The Executive acknowledges that he has had an opportunity to obtain independent legal advice before signing this Amendment and agrees that either such advice has been obtained or that he does not wish to seek or obtain such independent legal advice. The Executive acknowledges that he has read this Amendment and fully understands the nature and effect of it and the terms contained herein and that the said terms are fair and reasonable and correctly set out the Executive's intentions. 3.02 Governing Law. This Amendment shall be governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. IN WITNESS WHEREOF the parties have executed this Amendment. JETFORM CORPORATION By: ------------------------------------- Authorized Officer - ------------------------------- ---------------------------------------- Witness PHILIP WEAVER EX-10.30 6 EMPLOYMENT AGREEMENT Exhibit 10.3 September 22, 1998 Carlos Fox c/o JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Re: Employment Agreement We are pleased to confirm the terms and conditions of the employment of Carlos Fox ("you" or the "Executive") with JetForm Corporation (the "Corporation"). The Corporation believes that it is reasonable and fair to the Corporation that you receive fair treatment in the event of the termination without cause or adverse modification without cause of your employment. In consideration thereof, and by your execution of this Agreement below, you wish to abide by various non-competition and confidentiality restrictions contained herein, your violation of which would be highly detrimental to the Corporation, and both you and the Corporation wish formally to agree as to the terms and conditions contained herein that will govern the termination or modification of your employment. Article I - Preamble and Interpretation 1.0 The parties agree that the Executive's original date of employment with the corporation for the purposes of this agreement is July 15, 1996. 1.1 The parties agree, and represent and warrant to each other, that the above preamble is true and accurate and is incorporated into the terms of this Agreement. 1.2 The headings of the Articles, sections, subsections and clauses herein are inserted for convenience of reference only and shall not affect the meaning or construction hereof. 1.3 For the purposes of this Agreement, the following terms shall have the following meanings, respectively: (a) "Annual Salary" means the sum of: (i) the annual salary of the Executive, payable to the Executive by the Corporation at the Date of Termination or as at the end of the month immediately preceding the month in which termination occurs (the "Prior Month"), whichever is greater, and if an annual salary has not been established, it shall be calculated by multiplying the monthly salary of the Executive in effect for the Prior Month by 12; and (ii) the aggregate amount of all remuneration, salaries, bonuses and benefits (including, without limitation, health, dental and disability coverage) not included in clause (i) above that the board of directors of the Corporation acting reasonably estimates would be payable to the Executive during the 12 month period following the termination of the Executive's employment by the Corporation assuming: (1) the employment of the Executive was not terminated during such period; and (2) the Executive benefited from and participated in such remuneration, salaries, bonuses and benefits on a basis consistent with practices in effect for senior executives of the Corporation immediately prior to the Date of Termination; (b) "Date of Termination" shall mean the date of termination of the Executive's employment, whether by the Executive or by the Corporation or by death of the Executive; (c) "Disability" shall mean the Executive's failure to substantially perform his duties on a full-time basis for a period of six months out of any 18-month period, where such failure is a result of physical or mental illness; (d) "Good Reason" shall include, without limitation, the occurrence of any of the following without the Executive's written consent (except in connection with the termination of the employment of the Executive for Just Cause or Disability): (i) a material reduction by the Corporation of the Executive's salary, benefits or any other form of remuneration or any change in the basis upon which the Executive's salary, benefits or any other form of remuneration payable by the Corporation is determined other than a reduction or change in a manner which is consistent with industry practices generally in effect prior to such reduction or change. (ii) any failure by the Corporation to continue in effect any substantive benefit, bonus, profit sharing, incentive, remuneration or compensation plan, pension plan or retirement plan in which the Executive was participating or entitled to participate immediately prior to such failure other than a failure to continue such benefits, bonuses or plans on a basis consistent with industry practices generally in effect prior to such failure, or the Corporation taking any action or failing to take any action, the failure of which would adversely affect the Executive's participation in or reduce his rights or benefits under or pursuant to any such plan other than an action or failure to take an action on a basis consistent with industry practices generally in effect prior to such action or failure, or the Corporation failing to increase or improve such rights or benefits on a basis consistent with industry practices generally in effect prior to such failure; or (iii) any material breach by the Corporation of any provision of this Agreement; or (iv) the failure by the Corporation to obtain, in a form satisfactory to the Executive acting reasonably, an effective assumption of its obligations hereunder by any successor to the Corporation, including a successor to a material portion of its business; and (g) "Just Cause" shall mean: (i) gross insubordination; (ii) the continued failure or refusal by the Executive to substantially perform his duties according to the terms of his employment, after the Corporation has given the Executive notice of such failure or refusal and a reasonable opportunity to correct it, except where such acts or omissions by the Executive: (A) follow an event defined herein as "Good Reason"; or (B) result from the Executive's Disability. (iii) dishonesty by the Executive affecting the Corporation; (iv) use by the Executive of drugs or of alcohol in a manner which materially affects his ability to perform his employment duties; (v) any improper act by the Executive that the Executive knows or should reasonably know is substantially inconsistent with his duties as an Executive; or (vi) any criminal act of dishonesty by the Executive resulting or intended to result directly or indirectly in personal gain of the Executive at the Corporation's expense. Article II - Duties and Compensation 2.1 The Executive shall serve the Corporation and any subsidiaries of the Corporation in such capacity or capacities and shall perform such duties and exercise such powers pertaining to the management and operation of the Corporation and any subsidiaries of the Corporation as may be determined from time to time by the board of directors of the Corporation consistent with the office of the Executive. The Executive shall: (a) devote his full time and attention and his reasonable best efforts during normal business hours to the business and affairs of the Corporation; (b) perform those duties that may reasonably be assigned to the Executive diligently and faithfully to the best of the Executive's abilities and in the best interests of the Corporation; (c) faithfully observe and abide by all the rules, regulations and policies of the Corporation applicable to the Executive, (including without limitation the Corporation's policies respecting insider trading) from time to time in force which are brought to the attention of the Executive or which he should reasonably be aware; and (d) use his reasonable best efforts to promote the interests and goodwill of the Corporation. 2.2 Subject to Article 3 hereof, the Annual Salary payable to the Executive shall be determined during the annual review process by the direct line reporting executive and approved where applicable by the Chief Operating Officer, the President, or the Compensation Committee of the Board of Directors. 2.3 The Executive shall also be entitled to receive the vacation and benefits set forth on a basis consistent with the company practice generally in effect for other executives of the corporation which benefits may be amended from time to time by the Corporation but subject always to the provisions of Article 3 hereof. Article III - Obligations of the Corporation upon Termination 3.1 The Corporation shall have the following obligations in the event that the Executive's employment is terminated: (a) Death, Disability or Retirement. If the Executive's employment is terminated by reason of the Executive's death, Disability or retirement, the Executive or the Executive's family, as the case may be, shall be entitled to receive benefits in a manner consistent with and at least equal in amount to those made available by the Corporation to senior executives or surviving families of the senior executives of the Corporation under such plans, programs and policies relating to (i) family death benefits, if any, as are in effect at the date of the Executive's death; or (ii) Disability or retirement, if any, as are in effect at the Date of Termination, as the case may be. (b) Termination by the Corporation for Just Cause and Termination by the Executive Other Than for Good Reason. If the Executive's employment is terminated by the Corporation for Just Cause, or is terminated by the Executive other than for Good Reason, the Corporation shall pay to the Executive, if not theretofore paid, the fraction of the Annual Salary and vacation pay, if any, earned by or payable to the Executive by the Corporation during the then current fiscal year of the Corporation for the period to and including the Date of Termination, and the Corporation shall not have any further obligations to the Executive under this Agreement or otherwise. (c) Termination by the Corporation Other Than for Just Cause, Disability or Death and Termination by the Executive for Good Reason. Either party must give 60 days written notice of such termination. If the Executive's employment is terminated by the Corporation other than for Just Cause, Disability, retirement or death or is terminated by the Executive for Good Reason: (i) the Corporation shall pay to or to the order of the Executive the aggregate of the following amounts (less any deductions required by law): (A) if not theretofore paid, the Executive's Annual Salary for the then current fiscal year of the Corporation for the period to and including the Date of Termination; and (B) an amount equal to the annual salary; (ii) subject to the provisions of Section 9 of the 1995 Stock Option Plan and Section 16 of the 1993 Stock Option Plan, the Corporation shall ensure that all options to acquire common shares of the Corporation held by the Executive on the Date of Termination shall continue to vest and be exercisable for the full period during which Executive is compensated by the Corporation as set forth in Section 3.2. As of the last day of such period, the executive shall have 30 days to exercise all vested options. On the 31st day, all unexercised options vested or unvested are cancelled. Notwithstanding the foregoing, all options held by the Executive, whether then vested or not, shall immediately become exercisable (and shall remain exercisable for the period of thirty days following the Date of Termination in the event that the Executive's employment is terminated by the Corporation (other than for Just Cause, Disability or Death) within one year following: the acquisition by any third party of greater than 50% of the then issued and outstanding JetForm common shares. (iii) the Corporation shall not seek in any way to amend the terms of any loans from the Corporation or its subsidiaries to the Executive; (iv) the Corporation shall provide the Executive with the job relocation counselling services of the firm acceptable to the Corporation for an amount not to exceed $15,000; (v) if, at the Date of Termination, there were any memberships in any clubs, social or athletic organizations paid for by the Corporation that were for the regular use of the executive at the Date of Termination, the Corporation will not take any action to terminate such memberships but need not renew any such membership that expires; and (vi) the Corporation shall pay to the Executive all outstanding and accrued vacation pay to the Date of Termination. Upon compliance with clauses (c)(i) through (vi) above, the Corporation shall have no further obligations to the Executive under this Agreement or otherwise and the Executive agrees that notwithstanding any other provision contained herein, the Executive shall not have any right to commence any action for wrongful dismissal or termination. 3.2 The benefits payable under this Article III shall be paid as follows: (a) with respect to that portion of the Annual Salary relating to salary and related benefits of the Executive, at the Corporation's regular pay periods and (b) with respect to all other amounts, on a basis consistent with practices in effect immediately prior to the Date of Termination. If the Executive secures employment after the Date of Termination and prior to receiving all amounts owing hereunder, the Executive shall immediately inform the Corporation and the Corporation shall have the right to terminate all health, life and disability benefits being carried by the Corporation for the Executive. Article IV - Non-Competition, Confidentiality and Inventions and Patents 4.1 The Executive shall not while an Executive of the Corporation and for a period of 12 months following the Date of Termination, for any reason whatsoever, anywhere in North America, directly or indirectly, either individually or in partnership, or in conjunction with any other persons or corporations as principal, agent, shareholder, employee, advisor, lender, guarantor or in any other capacity whatsoever: (a) carry on or be engaged in or be connected with or interested in or receive royalties or other compensation from a segment of any business which is directly or indirectly competitive with the business of the Corporation or any of its subsidiaries; or (b) contact or solicit any designated customers of the Corporation or any of its subsidiaries for the purposes of selling to the designated customers any products or services which are the same as or are competitive with, the products or services sold by the Corporation or any of its subsidiaries during the term of this Agreement. For the purpose of this section, a designated customer means any person or entity who was a customer of the Corporation or any of its subsidiaries while the Executive was an Executive of the Corporation. Notwithstanding the foregoing, the Executive may hold up to five per cent of the issued and outstanding securities of any publicly traded company. 4.2 The Executive shall not while an Executive of the Corporation and for a period of 12 months thereafter, directly or indirectly, employ or retain as an independent contractor any employee of the Corporation or any of its subsidiaries or induce or solicit, or intend to induce, any such person to leave his/her employment. 4.3 The Executive acknowledges and agrees that: (a) in the course of performing his duties and responsibilities as an officer of the Corporation, he has had and will continue in the future to have access to and has been and will be entrusted with detailed confidential information and trade secrets (printed or otherwise) concerning past, present, future and contemplated products, services, operations and marketing techniques and procedures of the Corporation and its subsidiaries, including, without limitation, information relating to past, present and prospective clients, customers, suppliers and employees of the Corporation and its subsidiaries (collectively "Trade Secrets"), the disclosure of any of which to competitors of the Corporation or to the general public, or the use of same by the Executive or any competitor of the Corporation or any of its subsidiaries, would be highly detrimental to the interests of the Corporation; (b) the Executive, while an officer and/or employee of the Corporation, owes fiduciary duties to the Corporation, including the duty to act in the best interests of the Corporation; and (c) the right to maintain the confidentiality of the Trade Secrets, the right to preserve the goodwill of the Corporation and the right to the benefit of any relationships that have developed between the Executive and the customers, clients and suppliers of the Corporation by virtue of the Executive's employment with the Corporation constitute proprietary rights of the Corporation, which the Corporation is entitled to protect. In acknowledgement of the matters described above, the Executive hereby agrees that he will not, during the term of this Agreement or any time thereafter following the termination of employment for any reason, directly or indirectly disclose to any person or in any way make use of (other than for the benefit of the Corporation), in any manner, any of the Trade Secrets, provided that such Trade Secrets shall be deemed not to include information that is or becomes generally available to the public other than as a result of disclosure by the Executive. 4.4 Any invention (whether patentable or otherwise), improvement, device, industrial design, copyright, know-how or other intellectual or industrial property developed, invented, created or improved by the Executive during the term of this Agreement or prior to the date hereof while the Executive was employed by the Corporation in respect of the Corporation's business (collectively, the "Intellectual Property") shall be the exclusive property of the Corporation. The Corporation shall have the exclusive right to file patent applications and to obtain patents, to register industrial designs and copyright in the name of the Corporation in connection with the Intellectual Property. The Executive shall execute, from time to time, upon request by the Corporation, assignments of the Executive's rights in the Intellectual Property to the Corporation, shall co-operate with the Corporation in documenting the ownership of the Intellectual Property by the Corporation, and shall provide all necessary assistance in the filing and prosecution of any applications to register the Intellectual Property. The Executive hereby waives his moral rights to the Intellectual Property at common law and under section 14.1 of the Copyright Act or successor provisions from time to time, which are acknowledged to include the right to the integrity of the Intellectual Property and the right, where reasonable in the circumstances, to be associated with the Intellectual Property or an author by name or under a pseudonym and the right to remain anonymous when any translation of the Intellectual Property is produced, performed or published. 4.5 The Executive acknowledges that a breach or threatened breach by the Executive of the provisions of any of this Article 4 will result in the Corporation and its shareholders suffering irrevocable harm which is not capable of being calculated and which cannot be fully or adequately compensated by the recovery of damages alone. Accordingly, the Executive agrees that the Corporation shall be entitled to interim and permanent injunctive relief, specific performance and other equitable remedies, in addition to any other relief to which the Corporation may be entitled. Article V- General 5.1 The Executive acknowledges that he has had an opportunity to obtain independent legal advice before signing this Agreement and agrees that either such advice has been obtained or that he does not wish to seek or obtain such independent legal advice. The Executive acknowledges that he has read this Agreement and fully understands the nature and effect of it and the terms contained herein and that the said terms are fair and reasonable and correctly set out the Executive's position in the event of termination. 5.2 The Executive agrees that after termination of his employment for whatever reason, he will tender his resignation from any position he may hold as an officer of the Corporation or as an officer or director of any of its affiliated or associated companies, provided that doing so will not reduce the obligations of the Corporation described herein. 5.3 If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate, distinct and severable. 5.4 Any notice required or permitted to be given under this Agreement shall be in writing and shall be properly given if delivered by hand or mailed by prepaid registered mail addressed as follows: (a) in the case of the Corporation, to: JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Attention: Chief Executive Officer (b) in the case of the Executive, to: Carlos Fox c/o JetForm Corporation or to such other address as the parties may from time to time specify by notice given in accordance herewith. Any notice so given shall be conclusively deemed to have been given or made on the day of delivery, if delivered, or if mailed by registered mail, upon the date shown on the postal return receipt as the date upon which the envelope containing such notice was actually received by the addressee provided in the event of mail disruption, delivery may only be made by hand. 5.5 This Agreement shall enure to the benefit of and be binding upon the Executive and his heirs, executors and administrators and upon the Corporation and its successors and assigns. 5.6 Nothing herein derogates from any rights the Executive may have under applicable law, and in particular the parties agree that the rights, entitlements and benefits set out in this Agreement to be paid to the Executive shall in no event be less than the Executive's entitlement pursuant to the Employment Standards Act (Ontario) or any successor legislation from time to time. Any payments made hereunder are agreed to be inclusive of all payments required of the Corporation under the said legislation. 5.7 This Agreement may be amended only by an instrument in writing signed by both parties. 5.8 Neither party may waive or shall be deemed to have waived any right it has under this Agreement (including under this section) except to the extent that such waiver is in writing. ********* If you are in agreement with the foregoing terms and conditions, kindly execute below where indicated and return one fully executed copy of this Agreement to the attention of Rosemary Laurin, Vice President Human Resources, JetForm Corporation, 560 Rochester Street, Ottawa, Ontario K1S 5K2 Yours very truly, JETFORM CORPORATION Per:----------------------------------- Authorized Officer Accepted and agreed this ____ day of ____________, 1998. - --------------------------------- EX-10.31 7 EMPLOYMENT AGREEMENT Exhibit 10.31 September 22, 1998 Ian Fraser c/o JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Re: Employment Agreement We are pleased to confirm the terms and conditions of the employment of Ian Fraser ("you" or the "Executive") with JetForm Corporation (the "Corporation"). The Corporation believes that it is reasonable and fair to the Corporation that you receive fair treatment in the event of the termination without cause or adverse modification without cause of your employment. In consideration thereof, and by your execution of this Agreement below, you wish to abide by various non-competition and confidentiality restrictions contained herein, your violation of which would be highly detrimental to the Corporation, and both you and the Corporation wish formally to agree as to the terms and conditions contained herein that will govern the termination or modification of your employment. Article I - Preamble and Interpretation 1.0 The parties agree that the Executive's original date of employment with the corporation for the purposes of this agreement is January 13, 1997. 1.1 The parties agree, and represent and warrant to each other, that the above preamble is true and accurate and is incorporated into the terms of this Agreement. 1.2 The headings of the Articles, sections, subsections and clauses herein are inserted for convenience of reference only and shall not affect the meaning or construction hereof. 1.3 For the purposes of this Agreement, the following terms shall have the following meanings, respectively: (a) "Annual Salary" means the sum of: (i) the annual salary of the Executive, payable to the Executive by the Corporation at the Date of Termination or as at the end of the month immediately preceding the month in which termination occurs (the "Prior Month"), whichever is greater, and if an annual salary has not been established, it shall be calculated by multiplying the monthly salary of the Executive in effect for the Prior Month by 12; and (ii) the aggregate amount of all remuneration, salaries, bonuses and benefits (including, without limitation, health, dental and disability coverage) not included in clause (i) above that the board of directors of the Corporation acting reasonably estimates would be payable to the Executive during the 12 month period following the termination of the Executive's employment by the Corporation assuming: (1) the employment of the Executive was not terminated during such period; and (2) the Executive benefited from and participated in such remuneration, salaries, bonuses and benefits on a basis consistent with practices in effect for senior executives of the Corporation immediately prior to the Date of Termination; (b) "Date of Termination" shall mean the date of termination of the Executive's employment, whether by the Executive or by the Corporation or by death of the Executive; (c) "Disability" shall mean the Executive's failure to substantially perform his duties on a full-time basis for a period of six months out of any 18-month period, where such failure is a result of physical or mental illness; (d) "Good Reason" shall include, without limitation, the occurrence of any of the following without the Executive's written consent (except in connection with the termination of the employment of the Executive for Just Cause or Disability): (i) a material reduction by the Corporation of the Executive's salary, benefits or any other form of remuneration or any change in the basis upon which the Executive's salary, benefits or any other form of remuneration payable by the Corporation is determined other than a reduction or change in a manner which is consistent with industry practices generally in effect prior to such reduction or change. (ii) any failure by the Corporation to continue in effect any substantive benefit, bonus, profit sharing, incentive, remuneration or compensation plan, pension plan or retirement plan in which the Executive was participating or entitled to participate immediately prior to such failure other than a failure to continue such benefits, bonuses or plans on a basis consistent with industry practices generally in effect prior to such failure, or the Corporation taking any action or failing to take any action, the failure of which would adversely affect the Executive's participation in or reduce his rights or benefits under or pursuant to any such plan other than an action or failure to take an action on a basis consistent with industry practices generally in effect prior to such action or failure, or the Corporation failing to increase or improve such rights or benefits on a basis consistent with industry practices generally in effect prior to such failure; or (iii) any material breach by the Corporation of any provision of this Agreement; or (iv) the failure by the Corporation to obtain, in a form satisfactory to the Executive acting reasonably, an effective assumption of its obligations hereunder by any successor to the Corporation, including a successor to a material portion of its business; and (g) "Just Cause" shall mean: (i) gross insubordination; (ii) the continued failure or refusal by the Executive to substantially perform his duties according to the terms of his employment, after the Corporation has given the Executive notice of such failure or refusal and a reasonable opportunity to correct it, except where such acts or omissions by the Executive: (A) follow an event defined herein as "Good Reason"; or (B) result from the Executive's Disability. (iii) dishonesty by the Executive affecting the Corporation; (iv) use by the Executive of drugs or of alcohol in a manner which materially affects his ability to perform his employment duties; (v) any improper act by the Executive that the Executive knows or should reasonably know is substantially inconsistent with his duties as an Executive; or (vi) any criminal act of dishonesty by the Executive resulting or intended to result directly or indirectly in personal gain of the Executive at the Corporation's expense. Article II - Duties and Compensation 2.1 The Executive shall serve the Corporation and any subsidiaries of the Corporation in such capacity or capacities and shall perform such duties and exercise such powers pertaining to the management and operation of the Corporation and any subsidiaries of the Corporation as may be determined from time to time by the board of directors of the Corporation consistent with the office of the Executive. The Executive shall: (a) devote his full time and attention and his reasonable best efforts during normal business hours to the business and affairs of the Corporation; (b) perform those duties that may reasonably be assigned to the Executive diligently and faithfully to the best of the Executive's abilities and in the best interests of the Corporation; (c) faithfully observe and abide by all the rules, regulations and policies of the Corporation applicable to the Executive, (including without limitation the Corporation's policies respecting insider trading) from time to time in force which are brought to the attention of the Executive or which he should reasonably be aware; and (d) use his reasonable best efforts to promote the interests and goodwill of the Corporation. 2.2 Subject to Article 3 hereof, the Annual Salary payable to the Executive shall be determined during the annual review process by the direct line reporting executive and approved where applicable by the Chief Operating Officer, the President, or the Compensation Committee of the Board of Directors. 2.3 The Executive shall also be entitled to receive the vacation and benefits set forth on a basis consistent with the company practice generally in effect for other executives of the corporation which benefits may be amended from time to time by the Corporation but subject always to the provisions of Article 3 hereof. Article III - Obligations of the Corporation upon Termination 3.1 The Corporation shall have the following obligations in the event that the Executive's employment is terminated: (a) Death, Disability or Retirement. If the Executive's employment is terminated by reason of the Executive's death, Disability or retirement, the Executive or the Executive's family, as the case may be, shall be entitled to receive benefits in a manner consistent with and at least equal in amount to those made available by the Corporation to senior executives or surviving families of the senior executives of the Corporation under such plans, programs and policies relating to (i) family death benefits, if any, as are in effect at the date of the Executive's death; or (ii) Disability or retirement, if any, as are in effect at the Date of Termination, as the case may be. (b) Termination by the Corporation for Just Cause and Termination by the Executive Other Than for Good Reason. If the Executive's employment is terminated by the Corporation for Just Cause, or is terminated by the Executive other than for Good Reason, the Corporation shall pay to the Executive, if not theretofore paid, the fraction of the Annual Salary and vacation pay, if any, earned by or payable to the Executive by the Corporation during the then current fiscal year of the Corporation for the period to and including the Date of Termination, and the Corporation shall not have any further obligations to the Executive under this Agreement or otherwise. (c) Termination by the Corporation Other Than for Just Cause, Disability or Death and Termination by the Executive for Good Reason. Either party must give 60 days written notice of such termination. If the Executive's employment is terminated by the Corporation other than for Just Cause, Disability, retirement or death or is terminated by the Executive for Good Reason: (i) the Corporation shall pay to or to the order of the Executive the aggregate of the following amounts (less any deductions required by law): (A) if not theretofore paid, the Executive's Annual Salary for the then current fiscal year of the Corporation for the period to and including the Date of Termination; and (B) an amount equal to the annual salary; (ii) subject to the provisions of Section 9 of the 1995 Stock Option Plan and Section 16 of the 1993 Stock Option Plan, the Corporation shall ensure that all options to acquire common shares of the Corporation held by the Executive on the Date of Termination shall continue to vest and be exercisable for the full period during which Executive is compensated by the Corporation as set forth in Section 3.2. As of the last day of such period, the executive shall have 30 days to exercise all vested options. On the 31st day, all unexercised options vested or unvested are cancelled. Notwithstanding the foregoing, all options held by the Executive, whether then vested or not, shall immediately become exercisable (and shall remain exercisable for the period of thirty days following the Date of Termination in the event that the Executive's employment is terminated by the Corporation (other than for Just Cause, Disability or Death) within one year following: the acquisition by any third party of greater than 50% of the then issued and outstanding JetForm common shares. (iii) the Corporation shall not seek in any way to amend the terms of any loans from the Corporation or its subsidiaries to the Executive; (iv) the Corporation shall provide the Executive with the job relocation counselling services of the firm acceptable to the Corporation for an amount not to exceed $15,000; (v) if, at the Date of Termination, there were any memberships in any clubs, social or athletic organizations paid for by the Corporation that were for the regular use of the executive at the Date of Termination, the Corporation will not take any action to terminate such memberships but need not renew any such membership that expires; and (vi) the Corporation shall pay to the Executive all outstanding and accrued vacation pay to the Date of Termination. Upon compliance with clauses (c)(i) through (vi) above, the Corporation shall have no further obligations to the Executive under this Agreement or otherwise and the Executive agrees that notwithstanding any other provision contained herein, the Executive shall not have any right to commence any action for wrongful dismissal or termination. 3.2 The benefits payable under this Article III shall be paid as follows: (a) with respect to that portion of the Annual Salary relating to salary and related benefits of the Executive, at the Corporation's regular pay periods and (b) with respect to all other amounts, on a basis consistent with practices in effect immediately prior to the Date of Termination. If the Executive secures employment after the Date of Termination and prior to receiving all amounts owing hereunder, the Executive shall immediately inform the Corporation and the Corporation shall have the right to terminate all health, life and disability benefits being carried by the Corporation for the Executive. Article IV - Non-Competition, Confidentiality and Inventions and Patents 4.1 The Executive shall not while an Executive of the Corporation and for a period of 12 months following the Date of Termination, for any reason whatsoever, anywhere in North America, directly or indirectly, either individually or in partnership, or in conjunction with any other persons or corporations as principal, agent, shareholder, employee, advisor, lender, guarantor or in any other capacity whatsoever: (a) carry on or be engaged in or be connected with or interested in or receive royalties or other compensation from a segment of any business which is directly or indirectly competitive with the business of the Corporation or any of its subsidiaries; or (b) contact or solicit any designated customers of the Corporation or any of its subsidiaries for the purposes of selling to the designated customers any products or services which are the same as or are competitive with, the products or services sold by the Corporation or any of its subsidiaries during the term of this Agreement. For the purpose of this section, a designated customer means any person or entity who was a customer of the Corporation or any of its subsidiaries while the Executive was an Executive of the Corporation. Notwithstanding the foregoing, the Executive may hold up to five per cent of the issued and outstanding securities of any publicly traded company. 4.2 The Executive shall not while an Executive of the Corporation and for a period of 12 months thereafter, directly or indirectly, employ or retain as an independent contractor any employee of the Corporation or any of its subsidiaries or induce or solicit, or intend to induce, any such person to leave his/her employment. 4.3 The Executive acknowledges and agrees that: (a) in the course of performing his duties and responsibilities as an officer of the Corporation, he has had and will continue in the future to have access to and has been and will be entrusted with detailed confidential information and trade secrets (printed or otherwise) concerning past, present, future and contemplated products, services, operations and marketing techniques and procedures of the Corporation and its subsidiaries, including, without limitation, information relating to past, present and prospective clients, customers, suppliers and employees of the Corporation and its subsidiaries (collectively "Trade Secrets"), the disclosure of any of which to competitors of the Corporation or to the general public, or the use of same by the Executive or any competitor of the Corporation or any of its subsidiaries, would be highly detrimental to the interests of the Corporation; (b) the Executive, while an officer and/or employee of the Corporation, owes fiduciary duties to the Corporation, including the duty to act in the best interests of the Corporation; and (c) the right to maintain the confidentiality of the Trade Secrets, the right to preserve the goodwill of the Corporation and the right to the benefit of any relationships that have developed between the Executive and the customers, clients and suppliers of the Corporation by virtue of the Executive's employment with the Corporation constitute proprietary rights of the Corporation, which the Corporation is entitled to protect. In acknowledgement of the matters described above, the Executive hereby agrees that he will not, during the term of this Agreement or any time thereafter following the termination of employment for any reason, directly or indirectly disclose to any person or in any way make use of (other than for the benefit of the Corporation), in any manner, any of the Trade Secrets, provided that such Trade Secrets shall be deemed not to include information that is or becomes generally available to the public other than as a result of disclosure by the Executive. 4.4 Any invention (whether patentable or otherwise), improvement, device, industrial design, copyright, know-how or other intellectual or industrial property developed, invented, created or improved by the Executive during the term of this Agreement or prior to the date hereof while the Executive was employed by the Corporation in respect of the Corporation's business (collectively, the "Intellectual Property") shall be the exclusive property of the Corporation. The Corporation shall have the exclusive right to file patent applications and to obtain patents, to register industrial designs and copyright in the name of the Corporation in connection with the Intellectual Property. The Executive shall execute, from time to time, upon request by the Corporation, assignments of the Executive's rights in the Intellectual Property to the Corporation, shall co-operate with the Corporation in documenting the ownership of the Intellectual Property by the Corporation, and shall provide all necessary assistance in the filing and prosecution of any applications to register the Intellectual Property. The Executive hereby waives his moral rights to the Intellectual Property at common law and under section 14.1 of the Copyright Act or successor provisions from time to time, which are acknowledged to include the right to the integrity of the Intellectual Property and the right, where reasonable in the circumstances, to be associated with the Intellectual Property or an author by name or under a pseudonym and the right to remain anonymous when any translation of the Intellectual Property is produced, performed or published. 4.5 The Executive acknowledges that a breach or threatened breach by the Executive of the provisions of any of this Article 4 will result in the Corporation and its shareholders suffering irrevocable harm which is not capable of being calculated and which cannot be fully or adequately compensated by the recovery of damages alone. Accordingly, the Executive agrees that the Corporation shall be entitled to interim and permanent injunctive relief, specific performance and other equitable remedies, in addition to any other relief to which the Corporation may be entitled. Article V- General 5.1 The Executive acknowledges that he has had an opportunity to obtain independent legal advice before signing this Agreement and agrees that either such advice has been obtained or that he does not wish to seek or obtain such independent legal advice. The Executive acknowledges that he has read this Agreement and fully understands the nature and effect of it and the terms contained herein and that the said terms are fair and reasonable and correctly set out the Executive's position in the event of termination. 5.2 The Executive agrees that after termination of his employment for whatever reason, he will tender his resignation from any position he may hold as an officer of the Corporation or as an officer or director of any of its affiliated or associated companies, provided that doing so will not reduce the obligations of the Corporation described herein. 5.3 If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate, distinct and severable. 5.4 Any notice required or permitted to be given under this Agreement shall be in writing and shall be properly given if delivered by hand or mailed by prepaid registered mail addressed as follows: (a) in the case of the Corporation, to: JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Attention: Chief Executive Officer (b) in the case of the Executive, to: Ian Fraser c/o JetForm Corporation or to such other address as the parties may from time to time specify by notice given in accordance herewith. Any notice so given shall be conclusively deemed to have been given or made on the day of delivery, if delivered, or if mailed by registered mail, upon the date shown on the postal return receipt as the date upon which the envelope containing such notice was actually received by the addressee provided in the event of mail disruption, delivery may only be made by hand. 5.5 This Agreement shall enure to the benefit of and be binding upon the Executive and his heirs, executors and administrators and upon the Corporation and its successors and assigns. 5.6 Nothing herein derogates from any rights the Executive may have under applicable law, and in particular the parties agree that the rights, entitlements and benefits set out in this Agreement to be paid to the Executive shall in no event be less than the Executive's entitlement pursuant to the Employment Standards Act (Ontario) or any successor legislation from time to time. Any payments made hereunder are agreed to be inclusive of all payments required of the Corporation under the said legislation. 5.7 This Agreement may be amended only by an instrument in writing signed by both parties. 5.8 Neither party may waive or shall be deemed to have waived any right it has under this Agreement (including under this section) except to the extent that such waiver is in writing. ********* If you are in agreement with the foregoing terms and conditions, kindly execute below where indicated and return one fully executed copy of this Agreement to the attention of Rosemary Laurin, Vice President Human Resources, JetForm Corporation, 560 Rochester Street, Ottawa, Ontario K1S 5K2 Yours very truly, JETFORM CORPORATION Per: ------------------------------------ Authorized Officer Accepted and agreed this ____ day of ____________, 1998. - --------------------------------- EX-10.32 8 EMPLOYMENT AGREEMENT Exhibit 10.32 September 22, 1998 Jim Bursey c/o JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Re: Employment Agreement We are pleased to confirm the terms and conditions of the employment of Jim Bursey ("you" or the "Executive") with JetForm Corporation (the "Corporation"). The Corporation believes that it is reasonable and fair to the Corporation that you receive fair treatment in the event of the termination without cause or adverse modification without cause of your employment. In consideration thereof, and by your execution of this Agreement below, you wish to abide by various non-competition and confidentiality restrictions contained herein, your violation of which would be highly detrimental to the Corporation, and both you and the Corporation wish formally to agree as to the terms and conditions contained herein that will govern the termination or modification of your employment. Article I - Preamble and Interpretation 1.0 The parties agree that the Executive's original date of employment with the corporation for the purposes of this agreement is May 08, 1995. 1.1 The parties agree, and represent and warrant to each other, that the above preamble is true and accurate and is incorporated into the terms of this Agreement. 1.2 The headings of the Articles, sections, subsections and clauses herein are inserted for convenience of reference only and shall not affect the meaning or construction hereof. 1.3 For the purposes of this Agreement, the following terms shall have the following meanings, respectively: (a) "Annual Salary" means the sum of: (i) the annual salary of the Executive, payable to the Executive by the Corporation at the Date of Termination or as at the end of the month immediately preceding the month in which termination occurs (the "Prior Month"), whichever is greater, and if an annual salary has not been established, it shall be calculated by multiplying the monthly salary of the Executive in effect for the Prior Month by 12; and (ii) the aggregate amount of all remuneration, salaries, bonuses and benefits (including, without limitation, health, dental and disability coverage) not included in clause (i) above that the board of directors of the Corporation acting reasonably estimates would be payable to the Executive during the 12 month period following the termination of the Executive's employment by the Corporation assuming: (1) the employment of the Executive was not terminated during such period; and (2) the Executive benefited from and participated in such remuneration, salaries, bonuses and benefits on a basis consistent with practices in effect for senior executives of the Corporation immediately prior to the Date of Termination; (b) "Date of Termination" shall mean the date of termination of the Executive's employment, whether by the Executive or by the Corporation or by death of the Executive; (c) "Disability" shall mean the Executive's failure to substantially perform his duties on a full-time basis for a period of six months out of any 18-month period, where such failure is a result of physical or mental illness; (d) "Good Reason" shall include, without limitation, the occurrence of any of the following without the Executive's written consent (except in connection with the termination of the employment of the Executive for Just Cause or Disability): (i) a material reduction by the Corporation of the Executive's salary, benefits or any other form of remuneration or any change in the basis upon which the Executive's salary, benefits or any other form of remuneration payable by the Corporation is determined other than a reduction or change in a manner which is consistent with industry practices generally in effect prior to such reduction or change. (ii) any failure by the Corporation to continue in effect any substantive benefit, bonus, profit sharing, incentive, remuneration or compensation plan, pension plan or retirement plan in which the Executive was participating or entitled to participate immediately prior to such failure other than a failure to continue such benefits, bonuses or plans on a basis consistent with industry practices generally in effect prior to such failure, or the Corporation taking any action or failing to take any action, the failure of which would adversely affect the Executive's participation in or reduce his rights or benefits under or pursuant to any such plan other than an action or failure to take an action on a basis consistent with industry practices generally in effect prior to such action or failure, or the Corporation failing to increase or improve such rights or benefits on a basis consistent with industry practices generally in effect prior to such failure; or (iii) any material breach by the Corporation of any provision of this Agreement; or (iv) the failure by the Corporation to obtain, in a form satisfactory to the Executive acting reasonably, an effective assumption of its obligations hereunder by any successor to the Corporation, including a successor to a material portion of its business; and (g) "Just Cause" shall mean: (i) gross insubordination; (ii) the continued failure or refusal by the Executive to substantially perform his duties according to the terms of his employment, after the Corporation has given the Executive notice of such failure or refusal and a reasonable opportunity to correct it, except where such acts or omissions by the Executive: (A) follow an event defined herein as "Good Reason"; or (B) result from the Executive's Disability. (iii) dishonesty by the Executive affecting the Corporation; (iv) use by the Executive of drugs or of alcohol in a manner which materially affects his ability to perform his employment duties; (v) any improper act by the Executive that the Executive knows or should reasonably know is substantially inconsistent with his duties as an Executive; or (vi) any criminal act of dishonesty by the Executive resulting or intended to result directly or indirectly in personal gain of the Executive at the Corporation's expense. Article II - Duties and Compensation 2.1 The Executive shall serve the Corporation and any subsidiaries of the Corporation in such capacity or capacities and shall perform such duties and exercise such powers pertaining to the management and operation of the Corporation and any subsidiaries of the Corporation as may be determined from time to time by the board of directors of the Corporation consistent with the office of the Executive. The Executive shall: (a) devote his full time and attention and his reasonable best efforts during normal business hours to the business and affairs of the Corporation; (b) perform those duties that may reasonably be assigned to the Executive diligently and faithfully to the best of the Executive's abilities and in the best interests of the Corporation; (c) faithfully observe and abide by all the rules, regulations and policies of the Corporation applicable to the Executive, (including without limitation the Corporation's policies respecting insider trading) from time to time in force which are brought to the attention of the Executive or which he should reasonably be aware; and (d) use his reasonable best efforts to promote the interests and goodwill of the Corporation. 2.2 Subject to Article 3 hereof, the Annual Salary payable to the Executive shall be determined during the annual review process by the direct line reporting executive and approved where applicable by the Chief Operating Officer, the President, or the Compensation Committee of the Board of Directors. 2.3 The Executive shall also be entitled to receive the vacation and benefits set forth on a basis consistent with the company practice generally in effect for other executives of the corporation which benefits may be amended from time to time by the Corporation but subject always to the provisions of Article 3 hereof. Article III - Obligations of the Corporation upon Termination 3.1 The Corporation shall have the following obligations in the event that the Executive's employment is terminated: (a) Death, Disability or Retirement. If the Executive's employment is terminated by reason of the Executive's death, Disability or retirement, the Executive or the Executive's family, as the case may be, shall be entitled to receive benefits in a manner consistent with and at least equal in amount to those made available by the Corporation to senior executives or surviving families of the senior executives of the Corporation under such plans, programs and policies relating to (i) family death benefits, if any, as are in effect at the date of the Executive's death; or (ii) Disability or retirement, if any, as are in effect at the Date of Termination, as the case may be. (b) Termination by the Corporation for Just Cause and Termination by the Executive Other Than for Good Reason. If the Executive's employment is terminated by the Corporation for Just Cause, or is terminated by the Executive other than for Good Reason, the Corporation shall pay to the Executive, if not theretofore paid, the fraction of the Annual Salary and vacation pay, if any, earned by or payable to the Executive by the Corporation during the then current fiscal year of the Corporation for the period to and including the Date of Termination, and the Corporation shall not have any further obligations to the Executive under this Agreement or otherwise. (c) Termination by the Corporation Other Than for Just Cause, Disability or Death and Termination by the Executive for Good Reason. Either party must give 60 days written notice of such termination. If the Executive's employment is terminated by the Corporation other than for Just Cause, Disability, retirement or death or is terminated by the Executive for Good Reason: (i) the Corporation shall pay to or to the order of the Executive the aggregate of the following amounts (less any deductions required by law): (A) if not theretofore paid, the Executive's Annual Salary for the then current fiscal year of the Corporation for the period to and including the Date of Termination; and (B) an amount equal to the annual salary; (ii) subject to the provisions of Section 9 of the 1995 Stock Option Plan and Section 16 of the 1993 Stock Option Plan, the Corporation shall ensure that all options to acquire common shares of the Corporation held by the Executive on the Date of Termination shall continue to vest and be exercisable for the full period during which Executive is compensated by the Corporation as set forth in Section 3.2. As of the last day of such period, the executive shall have 30 days to exercise all vested options. On the 31st day, all unexercised options vested or unvested are cancelled. Notwithstanding the foregoing, all options held by the Executive, whether then vested or not, shall immediately become exercisable (and shall remain exercisable for the period of thirty days following the Date of Termination in the event that the Executive's employment is terminated by the Corporation (other than for Just Cause, Disability or Death) within one year following: the acquisition by any third party of greater than 50% of the then issued and outstanding JetForm common shares. (iii) the Corporation shall not seek in any way to amend the terms of any loans from the Corporation or its subsidiaries to the Executive; (iv) the Corporation shall provide the Executive with the job relocation counselling services of the firm acceptable to the Corporation for an amount not to exceed $15,000; (v) if, at the Date of Termination, there were any memberships in any clubs, social or athletic organizations paid for by the Corporation that were for the regular use of the executive at the Date of Termination, the Corporation will not take any action to terminate such memberships but need not renew any such membership that expires; and (vi) the Corporation shall pay to the Executive all outstanding and accrued vacation pay to the Date of Termination. Upon compliance with clauses (c)(i) through (vi) above, the Corporation shall have no further obligations to the Executive under this Agreement or otherwise and the Executive agrees that notwithstanding any other provision contained herein, the Executive shall not have any right to commence any action for wrongful dismissal or termination. 3.2 The benefits payable under this Article III shall be paid as follows: (a) with respect to that portion of the Annual Salary relating to salary and related benefits of the Executive, at the Corporation's regular pay periods and (b) with respect to all other amounts, on a basis consistent with practices in effect immediately prior to the Date of Termination. If the Executive secures employment after the Date of Termination and prior to receiving all amounts owing hereunder, the Executive shall immediately inform the Corporation and the Corporation shall have the right to terminate all health, life and disability benefits being carried by the Corporation for the Executive. Article IV - Non-Competition, Confidentiality and Inventions and Patents 4.1 The Executive shall not while an Executive of the Corporation and for a period of 12 months following the Date of Termination, for any reason whatsoever, anywhere in North America, directly or indirectly, either individually or in partnership, or in conjunction with any other persons or corporations as principal, agent, shareholder, employee, advisor, lender, guarantor or in any other capacity whatsoever: (a) carry on or be engaged in or be connected with or interested in or receive royalties or other compensation from a segment of any business which is directly or indirectly competitive with the business of the Corporation or any of its subsidiaries; or (b) contact or solicit any designated customers of the Corporation or any of its subsidiaries for the purposes of selling to the designated customers any products or services which are the same as or are competitive with, the products or services sold by the Corporation or any of its subsidiaries during the term of this Agreement. For the purpose of this section, a designated customer means any person or entity who was a customer of the Corporation or any of its subsidiaries while the Executive was an Executive of the Corporation. Notwithstanding the foregoing, the Executive may hold up to five per cent of the issued and outstanding securities of any publicly traded company. 4.2 The Executive shall not while an Executive of the Corporation and for a period of 12 months thereafter, directly or indirectly, employ or retain as an independent contractor any employee of the Corporation or any of its subsidiaries or induce or solicit, or intend to induce, any such person to leave his/her employment. 4.3 The Executive acknowledges and agrees that: (a) in the course of performing his duties and responsibilities as an officer of the Corporation, he has had and will continue in the future to have access to and has been and will be entrusted with detailed confidential information and trade secrets (printed or otherwise) concerning past, present, future and contemplated products, services, operations and marketing techniques and procedures of the Corporation and its subsidiaries, including, without limitation, information relating to past, present and prospective clients, customers, suppliers and employees of the Corporation and its subsidiaries (collectively "Trade Secrets"), the disclosure of any of which to competitors of the Corporation or to the general public, or the use of same by the Executive or any competitor of the Corporation or any of its subsidiaries, would be highly detrimental to the interests of the Corporation; (b) the Executive, while an officer and/or employee of the Corporation, owes fiduciary duties to the Corporation, including the duty to act in the best interests of the Corporation; and (c) the right to maintain the confidentiality of the Trade Secrets, the right to preserve the goodwill of the Corporation and the right to the benefit of any relationships that have developed between the Executive and the customers, clients and suppliers of the Corporation by virtue of the Executive's employment with the Corporation constitute proprietary rights of the Corporation, which the Corporation is entitled to protect. In acknowledgement of the matters described above, the Executive hereby agrees that he will not, during the term of this Agreement or any time thereafter following the termination of employment for any reason, directly or indirectly disclose to any person or in any way make use of (other than for the benefit of the Corporation), in any manner, any of the Trade Secrets, provided that such Trade Secrets shall be deemed not to include information that is or becomes generally available to the public other than as a result of disclosure by the Executive. 4.4 Any invention (whether patentable or otherwise), improvement, device, industrial design, copyright, know-how or other intellectual or industrial property developed, invented, created or improved by the Executive during the term of this Agreement or prior to the date hereof while the Executive was employed by the Corporation in respect of the Corporation's business (collectively, the "Intellectual Property") shall be the exclusive property of the Corporation. The Corporation shall have the exclusive right to file patent applications and to obtain patents, to register industrial designs and copyright in the name of the Corporation in connection with the Intellectual Property. The Executive shall execute, from time to time, upon request by the Corporation, assignments of the Executive's rights in the Intellectual Property to the Corporation, shall co-operate with the Corporation in documenting the ownership of the Intellectual Property by the Corporation, and shall provide all necessary assistance in the filing and prosecution of any applications to register the Intellectual Property. The Executive hereby waives his moral rights to the Intellectual Property at common law and under section 14.1 of the Copyright Act or successor provisions from time to time, which are acknowledged to include the right to the integrity of the Intellectual Property and the right, where reasonable in the circumstances, to be associated with the Intellectual Property or an author by name or under a pseudonym and the right to remain anonymous when any translation of the Intellectual Property is produced, performed or published. 4.5 The Executive acknowledges that a breach or threatened breach by the Executive of the provisions of any of this Article 4 will result in the Corporation and its shareholders suffering irrevocable harm which is not capable of being calculated and which cannot be fully or adequately compensated by the recovery of damages alone. Accordingly, the Executive agrees that the Corporation shall be entitled to interim and permanent injunctive relief, specific performance and other equitable remedies, in addition to any other relief to which the Corporation may be entitled. Article V- General 5.1 The Executive acknowledges that he has had an opportunity to obtain independent legal advice before signing this Agreement and agrees that either such advice has been obtained or that he does not wish to seek or obtain such independent legal advice. The Executive acknowledges that he has read this Agreement and fully understands the nature and effect of it and the terms contained herein and that the said terms are fair and reasonable and correctly set out the Executive's position in the event of termination. 5.2 The Executive agrees that after termination of his employment for whatever reason, he will tender his resignation from any position he may hold as an officer of the Corporation or as an officer or director of any of its affiliated or associated companies, provided that doing so will not reduce the obligations of the Corporation described herein. 5.3 If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate, distinct and severable. 5.4 Any notice required or permitted to be given under this Agreement shall be in writing and shall be properly given if delivered by hand or mailed by prepaid registered mail addressed as follows: (a) in the case of the Corporation, to: JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Attention: Chief Executive Officer (b) in the case of the Executive, to: Jim Bursey c/o JetForm Corporation or to such other address as the parties may from time to time specify by notice given in accordance herewith. Any notice so given shall be conclusively deemed to have been given or made on the day of delivery, if delivered, or if mailed by registered mail, upon the date shown on the postal return receipt as the date upon which the envelope containing such notice was actually received by the addressee provided in the event of mail disruption, delivery may only be made by hand. 5.5 This Agreement shall enure to the benefit of and be binding upon the Executive and his heirs, executors and administrators and upon the Corporation and its successors and assigns. 5.6 Nothing herein derogates from any rights the Executive may have under applicable law, and in particular the parties agree that the rights, entitlements and benefits set out in this Agreement to be paid to the Executive shall in no event be less than the Executive's entitlement pursuant to the Employment Standards Act (Ontario) or any successor legislation from time to time. Any payments made hereunder are agreed to be inclusive of all payments required of the Corporation under the said legislation. 5.7 This Agreement may be amended only by an instrument in writing signed by both parties. 5.8 Neither party may waive or shall be deemed to have waived any right it has under this Agreement (including under this section) except to the extent that such waiver is in writing. ********* If you are in agreement with the foregoing terms and conditions, kindly execute below where indicated and return one fully executed copy of this Agreement to the attention of Rosemary Laurin, Vice President Human Resources, JetForm Corporation, 560 Rochester Street, Ottawa, Ontario K1S 5K2 Yours very truly, JETFORM CORPORATION Per: ------------------------------------ Authorized Officer Accepted and agreed this ____ day of ____________, 1998. - --------------------------------- EX-10.33 9 EMPLOYMENT AGREEMENT Exhibit 10.33 September 22, 1998 Hugh Millikin c/o JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Re: Employment Agreement We are pleased to confirm the terms and conditions of the employment of Hugh Millikin ("you" or the "Executive") with JetForm Corporation (the "Corporation"). The Corporation believes that it is reasonable and fair to the Corporation that you receive fair treatment in the event of the termination without cause or adverse modification without cause of your employment. In consideration thereof, and by your execution of this Agreement below, you wish to abide by various non-competition and confidentiality restrictions contained herein, your violation of which would be highly detrimental to the Corporation, and both you and the Corporation wish formally to agree as to the terms and conditions contained herein that will govern the termination or modification of your employment. Article I - Preamble and Interpretation 1.0 The parties agree that the Executive's original date of employment with the corporation for the purposes of this agreement is January 01, 1994. 1.1 The parties agree, and represent and warrant to each other, that the above preamble is true and accurate and is incorporated into the terms of this Agreement. 1.2 The headings of the Articles, sections, subsections and clauses herein are inserted for convenience of reference only and shall not affect the meaning or construction hereof. 1.3 For the purposes of this Agreement, the following terms shall have the following meanings, respectively: (a) "Annual Salary" means the sum of: (i) the annual salary of the Executive, payable to the Executive by the Corporation at the Date of Termination or as at the end of the month immediately preceding the month in which termination occurs (the "Prior Month"), whichever is greater, and if an annual salary has not been established, it shall be calculated by multiplying the monthly salary of the Executive in effect for the Prior Month by 12; and (ii) the aggregate amount of all remuneration, salaries, bonuses and benefits (including, without limitation, health, dental and disability coverage) not included in clause (i) above that the board of directors of the Corporation acting reasonably estimates would be payable to the Executive during the 12 month period following the termination of the Executive's employment by the Corporation assuming: (1) the employment of the Executive was not terminated during such period; and (2) the Executive benefited from and participated in such remuneration, salaries, bonuses and benefits on a basis consistent with practices in effect for senior executives of the Corporation immediately prior to the Date of Termination; (b) "Date of Termination" shall mean the date of termination of the Executive's employment, whether by the Executive or by the Corporation or by death of the Executive; (c) "Disability" shall mean the Executive's failure to substantially perform his duties on a full-time basis for a period of six months out of any 18-month period, where such failure is a result of physical or mental illness; (d) "Good Reason" shall include, without limitation, the occurrence of any of the following without the Executive's written consent (except in connection with the termination of the employment of the Executive for Just Cause or Disability): (i) a material reduction by the Corporation of the Executive's salary, benefits or any other form of remuneration or any change in the basis upon which the Executive's salary, benefits or any other form of remuneration payable by the Corporation is determined other than a reduction or change in a manner which is consistent with industry practices generally in effect prior to such reduction or change. (ii) any failure by the Corporation to continue in effect any substantive benefit, bonus, profit sharing, incentive, remuneration or compensation plan, pension plan or retirement plan in which the Executive was participating or entitled to participate immediately prior to such failure other than a failure to continue such benefits, bonuses or plans on a basis consistent with industry practices generally in effect prior to such failure, or the Corporation taking any action or failing to take any action, the failure of which would adversely affect the Executive's participation in or reduce his rights or benefits under or pursuant to any such plan other than an action or failure to take an action on a basis consistent with industry practices generally in effect prior to such action or failure, or the Corporation failing to increase or improve such rights or benefits on a basis consistent with industry practices generally in effect prior to such failure; or (iii) any material breach by the Corporation of any provision of this Agreement; or (iv) the failure by the Corporation to obtain, in a form satisfactory to the Executive acting reasonably, an effective assumption of its obligations hereunder by any successor to the Corporation, including a successor to a material portion of its business; and (g) "Just Cause" shall mean: (i) gross insubordination; (ii) the continued failure or refusal by the Executive to substantially perform his duties according to the terms of his employment, after the Corporation has given the Executive notice of such failure or refusal and a reasonable opportunity to correct it, except where such acts or omissions by the Executive: (A) follow an event defined herein as "Good Reason"; or (B) result from the Executive's Disability. (iii) dishonesty by the Executive affecting the Corporation; (iv) use by the Executive of drugs or of alcohol in a manner which materially affects his ability to perform his employment duties; (v) any improper act by the Executive that the Executive knows or should reasonably know is substantially inconsistent with his duties as an Executive; or (vi) any criminal act of dishonesty by the Executive resulting or intended to result directly or indirectly in personal gain of the Executive at the Corporation's expense. Article II - Duties and Compensation 2.1 The Executive shall serve the Corporation and any subsidiaries of the Corporation in such capacity or capacities and shall perform such duties and exercise such powers pertaining to the management and operation of the Corporation and any subsidiaries of the Corporation as may be determined from time to time by the board of directors of the Corporation consistent with the office of the Executive. The Executive shall: (a) devote his full time and attention and his reasonable best efforts during normal business hours to the business and affairs of the Corporation; (b) perform those duties that may reasonably be assigned to the Executive diligently and faithfully to the best of the Executive's abilities and in the best interests of the Corporation; (c) faithfully observe and abide by all the rules, regulations and policies of the Corporation applicable to the Executive, (including without limitation the Corporation's policies respecting insider trading) from time to time in force which are brought to the attention of the Executive or which he should reasonably be aware; and (d) use his reasonable best efforts to promote the interests and goodwill of the Corporation. 2.2 Subject to Article 3 hereof, the Annual Salary payable to the Executive shall be determined during the annual review process by the direct line reporting executive and approved where applicable by the Chief Operating Officer, the President, or the Compensation Committee of the Board of Directors. 2.3 The Executive shall also be entitled to receive the vacation and benefits set forth on a basis consistent with the company practice generally in effect for other executives of the corporation which benefits may be amended from time to time by the Corporation but subject always to the provisions of Article 3 hereof. Article III - Obligations of the Corporation upon Termination 3.1 The Corporation shall have the following obligations in the event that the Executive's employment is terminated: (a) Death, Disability or Retirement. If the Executive's employment is terminated by reason of the Executive's death, Disability or retirement, the Executive or the Executive's family, as the case may be, shall be entitled to receive benefits in a manner consistent with and at least equal in amount to those made available by the Corporation to senior executives or surviving families of the senior executives of the Corporation under such plans, programs and policies relating to (i) family death benefits, if any, as are in effect at the date of the Executive's death; or (ii) Disability or retirement, if any, as are in effect at the Date of Termination, as the case may be. (b) Termination by the Corporation for Just Cause and Termination by the Executive Other Than for Good Reason. If the Executive's employment is terminated by the Corporation for Just Cause, or is terminated by the Executive other than for Good Reason, the Corporation shall pay to the Executive, if not theretofore paid, the fraction of the Annual Salary and vacation pay, if any, earned by or payable to the Executive by the Corporation during the then current fiscal year of the Corporation for the period to and including the Date of Termination, and the Corporation shall not have any further obligations to the Executive under this Agreement or otherwise. (c) Termination by the Corporation Other Than for Just Cause, Disability or Death and Termination by the Executive for Good Reason. Either party must give 60 days written notice of such termination. If the Executive's employment is terminated by the Corporation other than for Just Cause, Disability, retirement or death or is terminated by the Executive for Good Reason: (i) the Corporation shall pay to or to the order of the Executive the aggregate of the following amounts (less any deductions required by law): (A) if not theretofore paid, the Executive's Annual Salary for the then current fiscal year of the Corporation for the period to and including the Date of Termination; and (B) an amount equal to the annual salary; (ii) subject to the provisions of Section 9 of the 1995 Stock Option Plan and Section 16 of the 1993 Stock Option Plan, the Corporation shall ensure that all options to acquire common shares of the Corporation held by the Executive on the Date of Termination shall continue to vest and be exercisable for the full period during which Executive is compensated by the Corporation as set forth in Section 3.2. As of the last day of such period, the executive shall have 30 days to exercise all vested options. On the 31st day, all unexercised options vested or unvested are cancelled. Notwithstanding the foregoing, all options held by the Executive, whether then vested or not, shall immediately become exercisable (and shall remain exercisable for the period of thirty days following the Date of Termination in the event that the Executive's employment is terminated by the Corporation (other than for Just Cause, Disability or Death) within one year following: the acquisition by any third party of greater than 50% of the then issued and outstanding JetForm common shares. (iii) the Corporation shall not seek in any way to amend the terms of any loans from the Corporation or its subsidiaries to the Executive; (iv) the Corporation shall provide the Executive with the job relocation counselling services of the firm acceptable to the Corporation for an amount not to exceed $15,000; (v) if, at the Date of Termination, there were any memberships in any clubs, social or athletic organizations paid for by the Corporation that were for the regular use of the executive at the Date of Termination, the Corporation will not take any action to terminate such memberships but need not renew any such membership that expires; and (vi) the Corporation shall pay to the Executive all outstanding and accrued vacation pay to the Date of Termination. Upon compliance with clauses (c)(i) through (vi) above, the Corporation shall have no further obligations to the Executive under this Agreement or otherwise and the Executive agrees that notwithstanding any other provision contained herein, the Executive shall not have any right to commence any action for wrongful dismissal or termination. 3.2 The benefits payable under this Article III shall be paid as follows: (a) with respect to that portion of the Annual Salary relating to salary and related benefits of the Executive, at the Corporation's regular pay periods and (b) with respect to all other amounts, on a basis consistent with practices in effect immediately prior to the Date of Termination. If the Executive secures employment after the Date of Termination and prior to receiving all amounts owing hereunder, the Executive shall immediately inform the Corporation and the Corporation shall have the right to terminate all health, life and disability benefits being carried by the Corporation for the Executive. Article IV - Non-Competition, Confidentiality and Inventions and Patents 4.1 The Executive shall not while an Executive of the Corporation and for a period of 12 months following the Date of Termination, for any reason whatsoever, anywhere in North America, directly or indirectly, either individually or in partnership, or in conjunction with any other persons or corporations as principal, agent, shareholder, employee, advisor, lender, guarantor or in any other capacity whatsoever: (a) carry on or be engaged in or be connected with or interested in or receive royalties or other compensation from a segment of any business which is directly or indirectly competitive with the business of the Corporation or any of its subsidiaries; or (b) contact or solicit any designated customers of the Corporation or any of its subsidiaries for the purposes of selling to the designated customers any products or services which are the same as or are competitive with, the products or services sold by the Corporation or any of its subsidiaries during the term of this Agreement. For the purpose of this section, a designated customer means any person or entity who was a customer of the Corporation or any of its subsidiaries while the Executive was an Executive of the Corporation. Notwithstanding the foregoing, the Executive may hold up to five per cent of the issued and outstanding securities of any publicly traded company. 4.2 The Executive shall not while an Executive of the Corporation and for a period of 12 months thereafter, directly or indirectly, employ or retain as an independent contractor any employee of the Corporation or any of its subsidiaries or induce or solicit, or intend to induce, any such person to leave his/her employment. 4.3 The Executive acknowledges and agrees that: (a) in the course of performing his duties and responsibilities as an officer of the Corporation, he has had and will continue in the future to have access to and has been and will be entrusted with detailed confidential information and trade secrets (printed or otherwise) concerning past, present, future and contemplated products, services, operations and marketing techniques and procedures of the Corporation and its subsidiaries, including, without limitation, information relating to past, present and prospective clients, customers, suppliers and employees of the Corporation and its subsidiaries (collectively "Trade Secrets"), the disclosure of any of which to competitors of the Corporation or to the general public, or the use of same by the Executive or any competitor of the Corporation or any of its subsidiaries, would be highly detrimental to the interests of the Corporation; (b) the Executive, while an officer and/or employee of the Corporation, owes fiduciary duties to the Corporation, including the duty to act in the best interests of the Corporation; and (c) the right to maintain the confidentiality of the Trade Secrets, the right to preserve the goodwill of the Corporation and the right to the benefit of any relationships that have developed between the Executive and the customers, clients and suppliers of the Corporation by virtue of the Executive's employment with the Corporation constitute proprietary rights of the Corporation, which the Corporation is entitled to protect. In acknowledgement of the matters described above, the Executive hereby agrees that he will not, during the term of this Agreement or any time thereafter following the termination of employment for any reason, directly or indirectly disclose to any person or in any way make use of (other than for the benefit of the Corporation), in any manner, any of the Trade Secrets, provided that such Trade Secrets shall be deemed not to include information that is or becomes generally available to the public other than as a result of disclosure by the Executive. 4.4 Any invention (whether patentable or otherwise), improvement, device, industrial design, copyright, know-how or other intellectual or industrial property developed, invented, created or improved by the Executive during the term of this Agreement or prior to the date hereof while the Executive was employed by the Corporation in respect of the Corporation's business (collectively, the "Intellectual Property") shall be the exclusive property of the Corporation. The Corporation shall have the exclusive right to file patent applications and to obtain patents, to register industrial designs and copyright in the name of the Corporation in connection with the Intellectual Property. The Executive shall execute, from time to time, upon request by the Corporation, assignments of the Executive's rights in the Intellectual Property to the Corporation, shall co-operate with the Corporation in documenting the ownership of the Intellectual Property by the Corporation, and shall provide all necessary assistance in the filing and prosecution of any applications to register the Intellectual Property. The Executive hereby waives his moral rights to the Intellectual Property at common law and under section 14.1 of the Copyright Act or successor provisions from time to time, which are acknowledged to include the right to the integrity of the Intellectual Property and the right, where reasonable in the circumstances, to be associated with the Intellectual Property or an author by name or under a pseudonym and the right to remain anonymous when any translation of the Intellectual Property is produced, performed or published. 4.5 The Executive acknowledges that a breach or threatened breach by the Executive of the provisions of any of this Article 4 will result in the Corporation and its shareholders suffering irrevocable harm which is not capable of being calculated and which cannot be fully or adequately compensated by the recovery of damages alone. Accordingly, the Executive agrees that the Corporation shall be entitled to interim and permanent injunctive relief, specific performance and other equitable remedies, in addition to any other relief to which the Corporation may be entitled. Article V- General 5.1 The Executive acknowledges that he has had an opportunity to obtain independent legal advice before signing this Agreement and agrees that either such advice has been obtained or that he does not wish to seek or obtain such independent legal advice. The Executive acknowledges that he has read this Agreement and fully understands the nature and effect of it and the terms contained herein and that the said terms are fair and reasonable and correctly set out the Executive's position in the event of termination. 5.2 The Executive agrees that after termination of his employment for whatever reason, he will tender his resignation from any position he may hold as an officer of the Corporation or as an officer or director of any of its affiliated or associated companies, provided that doing so will not reduce the obligations of the Corporation described herein. 5.3 If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate, distinct and severable. 5.4 Any notice required or permitted to be given under this Agreement shall be in writing and shall be properly given if delivered by hand or mailed by prepaid registered mail addressed as follows: (a) in the case of the Corporation, to: JetForm Corporation 560 Rochester Street Ottawa, Ontario K1S 5K2 Attention: Chief Executive Officer (b) in the case of the Executive, to: Hugh Millikin c/o JetForm Corporation or to such other address as the parties may from time to time specify by notice given in accordance herewith. Any notice so given shall be conclusively deemed to have been given or made on the day of delivery, if delivered, or if mailed by registered mail, upon the date shown on the postal return receipt as the date upon which the envelope containing such notice was actually received by the addressee provided in the event of mail disruption, delivery may only be made by hand. 5.5 This Agreement shall enure to the benefit of and be binding upon the Executive and his heirs, executors and administrators and upon the Corporation and its successors and assigns. 5.6 Nothing herein derogates from any rights the Executive may have under applicable law, and in particular the parties agree that the rights, entitlements and benefits set out in this Agreement to be paid to the Executive shall in no event be less than the Executive's entitlement pursuant to the Employment Standards Act (Ontario) or any successor legislation from time to time. Any payments made hereunder are agreed to be inclusive of all payments required of the Corporation under the said legislation. 5.7 This Agreement may be amended only by an instrument in writing signed by both parties. 5.8 Neither party may waive or shall be deemed to have waived any right it has under this Agreement (including under this section) except to the extent that such waiver is in writing. ********* If you are in agreement with the foregoing terms and conditions, kindly execute below where indicated and return one fully executed copy of this Agreement to the attention of Rosemary Laurin, Vice President Human Resources, JetForm Corporation, 560 Rochester Street, Ottawa, Ontario K1S 5K2 Yours very truly, JETFORM CORPORATION Per: ------------------------------------ Authorized Officer Accepted and agreed this ____ day of ____________, 1998. - --------------------------------- EX-10.34 10 TERMINATION AGREEMENT Exhibit 10.34 TERMINATION AGREEMENT Agreement made as of the 19th day of February, 1999, by and between JetForm Corporation, 560 Rochester Street, Ottawa, Ontario, K1S 5K2 (the ACompany@) and Philip Weaver, 12 Oakview Road, Kanata, Ontario, K2L 3G2 (AWeaver@). WHEREAS Weaver has served as a senior executive of the Company since 1994 and Weaver and the Company have agreed to terminate Weaver's employment in the Company; AND WHEREAS Weaver and the Company have entered into an agreement dated August 11, 1994 which Agreement was amended on September 25, 1998 (collectively the AAgreement@) and wish to set out the parties' respective rights and obligations under the Agreement as a result of Weaver's agreement to terminate his employment. NOW THEREFORE for the reasons set forth above and in consideration of the mutual premises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, it is hereby agreed as follows: 1. Weaver's employment with the Company shall terminate on the date hereof. I. Weaver may retain the Company's laptop computer and cell phone, the telephone number and account for which will be transferred from the Company to Weaver. I. Notwithstanding such termination, the Company will pay to Weaver (a) the aggregate amount of $665,000 over two years, which will be payable in arrears by direct deposit to Weaver's bank account on the Company's regular mid-month and end of month pay date commencing with the last pay in February 1999; (b) $30,000 for outplacement services payable within 30 days of the date hereof; and (c) $31,971.15 on account of accrued vacation pay payable within 30 days of the date hereof. In addition, the Company will continue (i) all health benefits for the earlier of two years or until Weaver obtains full time employment (Weaver shall notify the Company upon such event); (ii) a car allowance of $500 per month for a period of two years; and (iii) stock options granted to and currently vested or unvested by Weaver as though Weaver had continued to have been employed by the Company. II. Notwithstanding Weaver's termination, in the event the Company pays senior management (i) incentive compensation, whether on account of profit, customer satisfaction or otherwise, or (ii) benefits allowance whether in the form of base salary or otherwise, for all or any portion of the one year period following the date hereof, Weaver shall be entitled to receive compensation in the same percentages earned of corporate incentive and/or benefits allowance, same terms and timing as senior management based on an aggregate corporate incentive to Weaver of $142,500 and, if relevant, $129,780 based on Company profit and $12,780 on account of customer satisfaction and based on a benefits allowance to Weaver of $16,620. Weaver's entitlement hereunder shall be two times the amount determined to be payable, with the first half payable concurrently with the payment of incentive compensation and/or benefits allowance to senior management and the second half payable in 12 monthly instalments immediately thereafter. III. All amounts stated herein are before taxes. The Company shall withhold and remit all taxes and statutory withholdings and any other taxes based on Weaver's income as though Weaver was an employee during the Agreement. 6. Article IV of the Agreement shall continue in full force and effect. I. Attached hereto as Schedule A are recommendations on strategy, technology, priorities, personnel, alliance relationships, significant customers and potential priority customers. II. The validity, construction and enforceability of this Agreement shall be governed in all respects by the laws of Ontario and the laws of Canada applicable therein. III. Weaver acknowledges and agrees that it will be difficult to compute the amount of damage or loss to the Company if he violates this Agreement, that Company will not have an adequate legal remedy if Weaver violates the provisions of this Agreement and that any such violation will cause substantial irreparable injury and damage to the Company. Therefore, Weaver agrees that, in the event of any violation by him of this Agreement, the Company shall, in addition to damages, be entitled to specific performance, injunctive, or other equitable relief, of either a preliminary or permanent type. IV. Prior to any disclosure by the Company to the public, Weaver agrees to keep all terms of this Agreement confidential except for any disclosure to financial advisors. IN WITNESS WHEREOF, the Company and Weaver have executed this Termination Agreement as of the date first written above. JETFORM CORPORATION By: ------------------------------------- Title: ---------------------------------- - ---------------------------------- ---------------------------------------- Witness as to the signature of PHILIP WEAVER EX-10.35 11 TERMINATION AGREEMENT Exhibit 10.35 Personal & Confidential - by hand On a 'Without Prejudice Basis' SUPERSEDES LETTER DATED MARCH 23, 1999 April 29, 1999 Ian Fraser Dear Ian, Further to your conversation with Rosemary Laurin on or about March 01, 1999, this letter will confirm that JetForm Corporation has eliminated your position as Sr. Vice-President, Sales, effective April 30, 1999. In accordance with the Employment Agreement which was provided to you dated September 22, 1998, we will provide you with the following termination package. Salary Continuance As stipulated in your Employment Agreement, JetForm will provide salary continuance in the amount of $246,000 for the period May 01, 1999 to April 30, 2000, which has been based on the following: Base salary for the period May 01, 1999 to April 30, 2000 in the amount of $200,000 Commissions paid at 50% of target (current run rate) in the amount of $15,000 Expense incentive paid at 50% of target (current run rate) in the amount of 10,000 Revenue incentive paid at 25% of target (current run rate) in the amount of $5,000 Car Allowance in the amount of $6,000 Benefit Menu Allowance in the amount of $10,000 Benefit Continuance You will be provided with continuation of your medical, dental and life insurance benefits until April 30, 2000. It should be noted that you are not eligible for short or long term disability benefits effective immediately. As agreed upon, JetForm Corporation will reimburse you for reasonable expenses for long term disability insurance for the period from May 1, 1999 to April 30, 2000, or until you are re-employed should this occur prior to the end of your salary and benefit continuance period. In accordance with Section 3.2 of your Employment Agreement, should you secure employment prior to April 30, 2000 you will be required to advise JetForm Corporation of your start date and your medical, dental and life insurance benefits will then be discontinued. Vacation Accrual Your vacation will continue to accrue during the salary and benefit continuance period. You will receive payment representing your accrued vacation on the payroll deposit of April 30, 2000. Outplacement Services Based on approval of the services provided, JetForm will provide payment up to $15,000 towards outplacement services, or reasonable expenses. Expenses Any outstanding expenses should be submitted as soon as possible. Should you have outstanding expenses, you will receive a final expense cheque within two (2) weeks of submission. JetForm Property On your last day of work you will be required to immediately return all JetForm property including keys, passwords, equipment, company materials, etc. Ian, in recognition of your efforts we will release to you the laptop in your possession, which is provided "without prejudice". JetForm Stock Option Plan As outlined in your Employment Agreement, you will be entitled to exercise all options which are vested or which vest on or prior to April 30, 2000.. All unexercised options outstanding 30 days after April 30, 2000 will be canceled. Confidentiality Agreement We remind you of the confidentiality agreement that you signed on joining the company. You are also required to keep confidential the details of this settlement. Your Signature is Required In order to provide you with the termination package as outlined in this letter, we will require your signature, acknowledging your understanding and agreement of the terms and a signed release prior to May 3, 1999. Please sign this copy and fax both this letter and release to Human Resources at (613) 594-2944. If you should have any questions with respect to this letter, please contact Donna Morris at 751-5173. Yours truly, Keith Sinclair V.P. Human Resources & Corporate Services I agree and accept to the terms of this letter. Employee: Dated: --------------------------- --------------------- RELEASE AND DISCHARGE FROM: Ian Fraser TO: JetForm Corporation DATE: March 12, 1999 In consideration of the following paid to me: 1. compensation equivalent to payment for fifty-two weeks, equivalent to $236,000 less statutory deductions. 2. payment of outstanding vacation balance less statutory deductions. 3. payment for outplacement services up to a limit of $15,000. I hereby release and forever discharge JetForm and its directors, officers, employees and agents of and from all manner of actions, causes of action, suits, debts, duties, accounts, contracts, claims and demands whatsoever which I now have, ever had or hereafter can, shall or may have for or by reason of any cause, matter or thing whatsoever existing to the present time and arising from my employment with JetForm or from the termination of such employment, including, without limiting the generality of the foregoing all claims and demands for or with respect to salary, remuneration, commission, advances on commission, fringe benefits, vacation pay, severance allowance, termination pay, severance pay, notice of termination, deferred profit sharing plan, employee stock option plan, bonus or any other employment benefit or fringe benefit of any kind whatsoever. The abovementioned Consideration is inclusive of any and all obligations which JetForm has or might have in the future pursuant to the provisions of any legislation or rule of law pertaining to employment standards or other obligations of JetForm on my termination as an employee. I further agree not to make any claims (including without limitation any cross-claim, counter-claim, third party action or application) against any other person and/or entity which might claim contribution or indemnity against the persons and/or entities discharged by this release. The abovementioned Consideration is inclusive of indemnity from the persons and/or entities discharged by this release. Ian Fraser - ------------------------ Signature EX-10.36 12 TERMINATION AGREEMENT Exhibit 10.36 Personal & Confidential - by hand On a 'Without Prejudice Basis' SUPERSEDES COPY DATED MAY 26, 1999 June 1, 1999 Carlos Fox Dear Carlos, Further to your discussions with John Kelly, this letter will confirm that JetForm Corporation has terminated your employment as Sr. Vice-President, Marketing, effective June 30, 1999. As outlined in your conversations with Debbie Weinstein, in accordance with the Employment Agreement which was provided to you dated September 22, 1998, JetForm will provide you with the following termination package. Salary Continuance JetForm will provide salary continuance (paid at regular pay periods) in the amount of $247,000 for the period July 1, 1999 up to and including June 30, 2000, based on the following: Base salary for the period July 1, 1999 up to and including June 30, 2000 in the amount of $210,000 Quarterly expense incentive paid at 100% of target (current run rate) in the amount of $20,000 Car Allowance in the total amount of $6,000 Benefit Menu Allowance in the total amount of $11,000 As agreed upon, salary continuance will not include payment for the Company Profit Incentive or Customer Satisfaction Incentive. Benefit Continuance You will be provided with continuation of your medical, dental and life insurance benefits until June 30, 2000. It should be noted that you are not eligible for short or long term disability benefits effective June 30, 1999. As agreed upon, JetForm Corporation will reimburse you for reasonable expenses for long term disability insurance for the period from July 1, 1999 to June 30, 2000, or until you are re-employed should this occur prior to the end of your salary and benefit continuance period. In accordance with Section 3.2 of your Employment Agreement, should you secure employment prior to June 30, 2000 you will be required to advise JetForm Corporation of your start date and your medical, dental and life insurance benefits will then be discontinued. Vacation Accrual Your vacation will continue to accrue during the salary and benefit continuance period. You will receive payment representing your accrued vacation on the payroll deposit of June 30, 2000. It should be noted that your current balance of unused accrued vacation equates to approximately 212.56 hours. As discussed, you will receive payment of your unused accrued annual vacation on the payroll deposit of June 30, 1999. The remaining vacation accrual for the period from July 1, 1999 up to June 30, 200, will be paid on the June 30, 2000 payroll deposit. Outplacement Services Based on approval of the services provided, JetForm will provide payment up to $15,000 towards outplacement services, or reasonable expenses. As agreed upon, based upon approval by Human Resources, JetForm will agree to the utilization of all or a portion of this amount for job relocation. Expenses Any outstanding expenses should be submitted as soon as possible. Should you have outstanding expenses, you will receive a final expense cheque within two (2) weeks of submission. JetForm Property On your last day of work you will be required to immediately return all JetForm property including keys, passwords, equipment, company materials, etc. JetForm Stock Option Plan As agreed upon, based on your commitment to provide a minimum of five (5) hours of consulting services per month for the period from July 1, 2000 up to December 31, 2000, you will be entitled to exercise all options which are vested or which vest on or prior to December 31, 2000 Legal Fees As agreed upon, JetForm Corporation will reimburse, based on invoices, reasonable legal fees relating to the finalization of this agreement. Confidentiality Agreement We remind you of the confidentiality agreement that you signed on joining the company, and Article IV of the Employment Agreement dated September 22, 1998 as it relates to Non-Competition, Confidentiality and Non-Disclosure. You are also required to keep confidential the details of this termination agreement. Your Signature is Required In order to provide you with the termination package as outlined in this letter, we will require your signature, acknowledging your understanding and agreement of the terms and a signed release prior to May 31, 1999. Please sign this copy and fax both this letter and release to Human Resources at (613) 594-2944. If you should have any questions with respect to this letter, please contact Donna Morris at 751-4800, ext. 5173. Yours truly, Donna Morris Director Human Resources I agree and accept to the terms of this letter. Carlos Fox: Dated: ------------------------ ------------------ RELEASE AND DISCHARGE FROM: Carlos Fox TO: JetForm Corporation DATE: June 1, 1999 In consideration of the following paid to me: 1. compensation equivalent to salary continuance for a period of (52) fifty-two weeks, equivalent to $247,000, less statutory deductions. 2. payment of outstanding accrued vacation balance up to June 30, 2000, less statutory deductions. 3. payment for outplacement services or approved job relocation expenses up to a limit of $15,000. I hereby release and forever discharge JetForm and its directors, officers, employees and agents of and from all manner of actions, causes of action, suits, debts, duties, accounts, contracts, claims and demands whatsoever which I now have, ever had or hereafter can, shall or may have for or by reason of any cause, matter or thing whatsoever existing to the present time and arising from my employment with JetForm or from the termination of such employment, including, without limiting the generality of the foregoing all claims and demands for or with respect to salary, remuneration, commission, advances on commission, fringe benefits, vacation pay, severance allowance, termination pay, severance pay, notice of termination, deferred profit sharing plan, employee stock option plan, bonus or any other employment benefit or fringe benefit of any kind whatsoever. The abovementioned Consideration is inclusive of any and all obligations which JetForm has or might have in the future pursuant to the provisions of any legislation or rule of law pertaining to employment standards or other obligations of JetForm on my termination as an employee. I further agree not to make any claims (including without limitation any cross-claim, counter-claim, third party action or application) against any other person and/or entity which might claim contribution or indemnity against the persons and/or entities discharged by this release. The abovementioned Consideration is inclusive of indemnity from the persons and/or entities discharged by this release. Carlos Fox - -------------------------- Signature EX-23 13 CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS EXHIBIT 23 CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS As independent chartered accountants, we hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of JetForm Corporation, dated March 30, 1994, of our report dated June 22, 1999 relating to the consolidated financial statements of JetForm Corporation which is included in the Annual Report on Form 10-K of JetForm Corporation for the year ended April 30, 1999. As independent chartered accountants, we hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of JetForm Corporation, dated January 17, 1995, of our report dated June 22, 1999 relating to the consolidated financial statements of JetForm Corporation which is included in the Annual Report on Form 10-K of JetForm Corporation for the year ended April 30, 1999. As independent chartered accountants, we hereby consent to the incorporation by reference in the Registration Statement on Form S-3 of JetForm Corporation, dated June 30, 1995, and as subsequently amended, of our report dated June 22, 1999 relating to the consolidated financial statements of JetForm Corporation which is included in the Annual Report on Form 10-K of JetForm Corporation for the year ended April 30, 1999. As independent chartered accountants, we hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of JetForm Corporation, dated December 11, 1995, for its 1990 Employee Stock Option Plan and 1993 Employee Stock Option Plan, of our report dated June 22, 1999 relating to the consolidated financial statements of JetForm Corporation which is included in the Annual Report on Form 10-K of JetForm Corporation for the year ended April 30, 1999. As independent chartered accountants, we hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of JetForm Corporation, dated December 11, 1995, for its 1995 Employee Stock Option Plan, of our report dated June 22, 1999 relating to the consolidated financial statements of JetForm Corporation which is included in the Annual Report on Form 10-K of JetForm Corporation for the year ended April 30, 1999. As independent chartered accountants, we hereby consent to the incorporation by reference in the Registration Statement on Form S-3 of JetForm Corporation, dated December 20, 1996, of our report dated June 22, 1999 relating to the consolidated financial statements of JetForm Corporation which is included in the Annual Report on Form 10-K of JetForm Corporation for the year ended April 30, 1999. As independent chartered accountants, we hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of JetForm Corporation, dated July 8, 1998, of our report dated June 22, 1999 relating to the consolidated financial statements of JetForm Corporation which is included in the Annual Report on Form 10-K of JetForm Corporation for the year ended April 30, 1999. PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP and other members of the worldwide PricewaterhouseCoopers organization. Chartered Accountants Ottawa, Ontario July 24, 1999 PricewaterhouseCoopers LLP Chartered Accountants 99 Bank Street Suite 800 Ottawa Ontario Canada K1P 1E4 Telephone +1 (613) 237 3702 -----END PRIVACY-ENHANCED MESSAGE-----