July 26, 2006

Using a Form 10-Q as a Free Writing Prospectus

Corel Corporation, a Canadian issuer, filed an IPO on Form F-1 that went effective on April 26. They filed their first Form 10-Q on May 5, and concurrently filed this free writing prospectus that basically just adds an FWP legend to their Form 10-Q.

Linda DeMelis of Heller Ehrman Venture Law Group notes: “I suspect Corel did this because they were in the immediate post-effective period of their IPO. Previously, they might have done a sticker supplement or even a post-effective amendment. The same strategy could probably be used to keep resale S-1’s and SB-2s up to date; currently, those forms are a real problem to update because they don’t permit forward incorporation by reference.”

Issues Raised by Employee-Bloggers

As more companies are becoming aware of the numerous – and complex – issues raised when their employees blog (either anonymously or authorized), policies that address these issues have materialized. For example, Sun Microsystems has many employees that blog – and has made their blogging-related policy publicly available.

In this podcast, Karen Dempsey of Heller Ehrman analyzes the federal securities law issues raised when employees blog, including:

– What are some examples of company’s authorizing employee blogs?
– How can a company tell if an employee is blogging anonymously?
– What are the Regulation FD implications of employee blogging?
– What about Rule 10b-5 implications?
– Do you have any thoughts on how companies can minimize the risks of employee blogging?

The Condiment Approach: Solicitation Via Ketchup

In the midst of a vicious proxy fight with activist shareholders, HJ Heinz is distributing ketchup bottles with its familiar label containing a message urging employee-shareholders to vote with management.” A picture of this cool bottle is on the Blog. I’m waiting for the insurgents’ inevitable response that they are tired of Heinz “making them wait” for S-L-O-W growth. Remember the TV ads to the tune of “Anticipation?

From Jim McRitchie’s “H.J. Heinz Company (NYSE:HNZ) said retail shareholders with “street name” holdings (shares held through brokers or intermediaries) of approximately 75 million shares (30% of outstanding shares) have been prevented by a combination of actions by the Trian fund and ADP Proxy Services from casting votes via the Internet or by telephone since July 17.

Street name shareholders trying to use the Internet or phone system receive an “error” message from the ADP system that their control number on their proxy card is wrong, when the real issue is that the Internet and phone system at ADP is not working. Until this problem is remedied, the only way for these shareholders to vote is by mail. (Heinz Retail Shareholders Prevented from Voting via Internet or Telephone, Pittsburgh Daily Business News, 7/24/06)

At an employee meeting this past week, the company distributed bottles of its signature product with labels urging them to re-elect the firm’s slate of directors and reject those nominated by Peltz and his partners. Peltz and his New York-based Trian Group, an investment firm that owns 5.5 percent of Heinz’s shares, are seeking to add his board nominees to implement an aggressive plan designed to boost shareholder returns. (Heinz Enlists Ketchup Ally,, 7/23/06) For a discussion of the issues, see Heinz Proxy Fight Heats Up, ISS Corporate Governance Blog, 7/24/06).”