UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
-----
SECURITIES EXCHANGE ACT OF 1934
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 000-29793
OPUS360 CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-4023714
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or Identification No.)
organization)
39 West 13th Street, 3rd Floor, New York, N.Y. 10011
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 687-1086
---------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.001 par value
Securities registered pursuant to Section 12(g) of the 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 the 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. ( )
As of February 28, 2001, there were 50,741,504 shares of the
Registrant's Common Stock outstanding. The aggregate market value of the
Common Stock held by non-affiliates of the Registrant (based on the closing
price for the Common Stock on the NASDAQ National Market on February 28,
2001) was approximately $17,252,111.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
In compliance with General Instruction G(3) to Form 10-K, Opus 360
Corporation., a Delaware corporation (the "Company" or "Opus360") hereby
amends Items 10, 11, 12 and 13 of its Form 10-K for the fiscal year ended
December 31, 2000, as filed with the Securities and Exchange Commission on
March 20, 2001, to add the additional information contained herein.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The following individuals were serving as directors and executive officers of
the Company on April 20, 2001:
NAME AGE POSITION WITH THE COMPANY
-------- ------ --------------------------------------------
Ari B. Horowitz 32 Chairman of the Board and Chief Executive Officer, Director
Richard S. Miller 42 President and Chief Operating Officer, Director
Peter Schwartz 57 Executive Vice President and Chief Financial Officer
Jeanne Murphy 43 Executive Vice President, General Counsel and Secretary
Patrick Moore 50 Senior Vice President, Sales and Business Development
Carlos B. Cashman 29 Chief Technology Officer
James Cannavino1 55 Director
John K. Halvey2 39 Director
William R. Nuti1 36 Director
Brian Plug1 43 Director
Roger J. Weiss2 60 Director
----------------------
1 Member of Audit Committee
2 Member of Compensation Committee
ARI B. HOROWITZ, our co-founder, has served as Chairman of the Board since
inception, as Chief Executive Officer since April 1999 and as President
from November 1999 to January 2000. From June 1998 to March 1999, Mr.
Horowitz served as a Senior Managing Partner of USWeb/CKS. From March 1997
to June 1998, he served as President and Chief Financial Officer of Gray
Peak Technologies, a network consulting company. From September 1994 to
March 1997, he served as Chief Financial Officer and as Vice President,
Finance and Business Development of ICon CMT Corp., an Internet service
provider. From July 1992 until September 1994, Mr. Horowitz was a Principal
and Director of Finance and Business Development of Conley Corporation, a
developer of storage management software. Mr. Horowitz currently serves as
a director of NetVendor Systems, a provider of e-markets for the
industrial, electronics and automotive sectors.
RICHARD S. MILLER has served as our President and Chief Operating Officer
and as a director since February 2000. From December 1998 to January 2000,
he served as President of the Global Services Division at AT&T which
provides telecommunication services to AT&T's largest corporate clients.
From September 1995 to November 1998, he was Vice President of the Eastern
Region in Global Services and served as a member of the leadership team of
AT&T's Business Services Unit. From January 1995 to August 1995, he was
Vice President and General Manager, Communications Services Division at
Unisys Corporation. From January 1992 to December 1994, he served as
Regional Vice President at Unisys. Prior to 1994, he held a series of
sales, marketing and general management assignments at Unisys where he
began his career in 1980.
PETER SCHWARTZ has served as our Executive Vice President and Chief
Financial Officer since September 2000. From 1998 to 2000, he was Chief
Financial Officer of InterWorld Corporation, an e-commerce company. From
1987 to 1998, he served as Chief Financial Officer of Computer Associates
International, Inc., an enterprise software firm that he joined in 1983.
During the period 1977 to 1983, he was a Corporate Audit Specialist and
Financial Manager with Xerox Corporation. From 1974 to 1977, he was a
Financial Programs Manager at the Rochester Institute of Technology. Mr.
Schwartz currently serves as a director of General Semiconductor Inc., a
leading manufacturer of power management devices.
JEANNE MURPHY has served as our Executive Vice President, General Counsel
and Secretary since June 2000. Prior to joining Opus360, she was with
Cendant Corporation from 1990 to 2000, where she served as Senior Vice
President and Corporate Counsel. From 1985 through 1990, she was an
associate at the New York law firm of Battle Fowler and from 1981 through
1985 she was associated with the New York law firm of Hawkins, Delafield &
Wood.
PATRICK MOORE has served as our Senior Vice President of Sales and Business
Development since January 2001 and as a Vice President of Business
Development from August 1999 until December 2000. From May 1997 to August
1999, he served as Vice President of Sales for Softway, Inc. From May 1996
to April 1997 he was Vice President of North American Sales for ISOCOR
Corporation. Mr. Moore also served as Vice President of Business
Development for Platinum Technology from January 1995 to May 1996.
CARLOS B. CASHMAN, our co-founder, has served as Chief Technology Officer
since November 1999, as a director from inception until January 2000, and
as President from inception until November 1999. From June 1997 until June
1998, Mr. Cashman served as Chief Information Officer of Gray Peak
Technologies. From February 1996 to June 1997, he served as Chief
Technology Officer of Frankfurt Balkind Partners, an intranet and web
design firm. From July 1994 to January 1996, he was Manager of UNIX
Engineering at Conley Corporation, handling software development, hardware
engineering and OEM contracts for Unix products.
JAMES CANNAVINO has served as a director since January 1999. Mr. Cannavino
is Chief Executive Officer and Chairman of the Board of CyberSafe
Corporation, a developer of software used for security applications. Prior
to joining CyberSafe in March 1998, Mr. Cannavino served as President and
Chief Operating Officer for Perot Systems Corporation. Until March 1995, he
also held a variety of senior executive positions at IBM, serving as senior
vice president for strategy and development at the time of his departure
from IBM. Mr. Cannavino has served as a member of the IBM Corporate
Executive Committee and Worldwide Management Council and as a member of the
board of directors of IBM's Integrated Services and Solutions Company. He
currently serves as Chairman of the Internet Technology Committee of
Computer Concepts and as Chairman of the Board of Softworks, a provider of
enterprise data, storage and performance management products and services.
Currently, Mr. Cannavino is a member of the board of directors of
Learn2.com, Inc. and Direct Insite, Inc.
JOHN K. HALVEY has served as a director since September 1999. John K.
Halvey has served as a director since September 1999. Mr. Halvey currently
serves as Executive Vice President at Safeguard Scientifics, Inc., a leader
in identifying, developing and operating emerging technology companies
through its extensive network of partner companies and private equity
funds. Prior to joining Safeguard in June 1999, Mr. Halvey was a partner in
the law firm of Milbank, Tweed, Hadley and McCloy, from 1994 to June 1999,
where he was the head of its Business Technology Group.
WILLIAM R. NUTI has served as a director since June 1999. Since April 1992,
Mr. Nuti has been employed by Cisco Systems in a variety of positions, most
recently as Senior Vice President of World Wide Service Provider
Operations. From May 1990 to April 1992, he served as a sales manager with
Netrix Corporation, a developer of equipment for integrating voice, data
and video transmission over networks. From May 1988 to April 1990, he was a
sales manager at Network Equipment Technologies. From June 1982 to April
1988, he was employed in sales and as a senior sales staff member at IBM.
ROGER J. WEISS has served as a director since January 1999. Mr. Weiss was a
founding principal and is currently a Senior Managing Director of Weiss,
Peck & Greer Investments and chairman of all of the firm's mutual funds.
Previously, he was associated with A.G. Becker & Co., Inc. and the law firm
of Cleary, Gottlieb, Steen & Hamilton. He also was of counsel to the law
firm of Schulte Roth & Zabel LLP. Mr. Weiss served as a trustee fellow of
Cornell University for twenty years and is now a trustee emeritus. He is a
member of the Board of Overseers of the Cornell Medical College. He
previously serves as Vice Chairman of the Investment Committee of Cornell
University.
COMMITTEES OF THE BOARD
The audit committee of the Board of Directors reports to the Board
regarding the appointment of the Company's independent public accountants,
the scope and results of its annual audits, compliance with accounting and
financial policies and management's procedures and policies relative to the
adequacy of internal accounting controls. The members of the audit
committee appointed in February 2000 were Messrs. Cannavino, Nuti and Irwin
Lieber. After Mr. Lieber's resignation from the Board of Directors of the
Company, in September 2000, Mr. Plug was appointed to fill the vacancy on
the audit committee.
The compensation committee of the Board of Directors reviews and makes
recommendations regarding the Company's compensation policies and all forms
of compensation to be provided to the Company's executive officers and
directors. In addition, the compensation committee reviews bonus and stock
compensation arrangements for all of the Company's other employees and
administers the Company's equity compensation plans. The members of the
compensation committee since February 2000 are Messrs. Halvey and Weiss.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Based on the Company's review of the copies of Forms 3, 4, and 5 it has
received and written representations from certain reporting persons that
they were not required to file a Form 5 for a specified fiscal year, except
as set forth below, the Company believes that all its officers, directors,
and greater than ten percent beneficial owners complied with all filing
requirements applicable to them with respect to transactions during 2000.
John K. Halvey, a Director of the Company, inadvertently failed to file on
a timely basis a Form 4 disclosing transactions occurring on April 12,
2000. The required Form 4 filing was made on May 26, 2000. On April 12,
2000 Mr. Halvey acquired 27,039 shares of the Company's common stock as a
result of distributions from Safeguard Scientific, Inc., where he is an
Executive Vice President, and acquired ten (10) shares of the Company's
common stock at a price of $10.00 a share. On September 8, 2000, Peter
Schwartz became an Executive Vice President and the Company's Chief
Financial Officer. Mr. Schwartz filed an initial ownership report on Form 3
on September 19, 2000. Mr. Schwartz's Form 3 was due on September 18, 2000
and was filed one (1) day late as a result of a clerical error.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation paid
by the Company during Fiscal 2000 to the Company's Chief Executive Officer
and the four most highly compensated executive officers of the Company
whose total compensation during Fiscal Year 2000 exceeded $100,000, and
also includes two executives who, but for the fact that they were not
serving as executive officers of the Company as of December 31, 2000 would
have been included among the four most highly paid executives
(collectively, the "Named Executive Officers"):
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Securities
Other Annual Underlying All Other
Salary Bonus Compensation Options/SARs Compensation
Name & Principal Position Year1 ($) ($) ($)2 (#)3 ($)
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
Ari Horowitz, 2000 241,667 0 778,378 1,021,299 0
Chief Executive Officer
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
Richard S. Miller, 2000 229,167 0 2,254,245 1,718,800 0
President, Chief Operation
Officer
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
Mary Anne Walk4 2000 205,208 0 0 491,299 0
Executive Vice President,
Human Resources
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
Ram Chillarege5 2000 193,269 0 0 576,543 0
Executive Vice President
Software & Technology
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
Patrick Moore 2000 141,708 7,500 0 185,995 0
Senior Vice President
Sales & Business Development
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
Wendy Petty6 2000 178,910 40,000 0 30,750 0
Senior Vice President, Sales
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
Edyse Vogel7 2000 145,973 40,000 0 134,501 13,500
Senior Vice President,
Operations
------------------------------- -------- -------------- --------------- -------------- ------------------- ---------------
---------------------------------
1 The Company commenced operations in late 1998 and became a publicly
traded company in 2000.
2 Except as set forth below, other compensation in the form of
perquisites and other personal benefits has been omitted as the
aggregate amount of such perquisites and other personal benefits
constituted the lesser of $50,000 or 10% of the total annual salary
and bonus for each executive officer for such year. Amounts shown
represent income recognized from stock options exercised; stock
purchased through such exercises continues to be held by the executive
officer. $54,245 of Other Annual Compensation received by Mr. Miller
represents legal fees by paid by the Company on Mr. Miller's behalf in
connection with his employment agreement.
3 The Company has not issued any stock appreciation rights or made any
long-term incentive plan payments to any Named Executive Officers in
Fiscal Year 2000.
4 As of March 31, 2001 Ms. Walk retired from the Company.
5 As of April 20, 2001, Dr. Chillarege resigned from the Company.
6 As of October 13, 2000, Ms. Petty resigned from the Company.
7 As of December 1, 2000, Ms. Vogel resigned from the Company. As set
forth above as All Other Annual Compensation, Ms. Vogel received a
separation payment from the Company in the amount of $13,500.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to the stock option
grants made during Fiscal 2000 to the Named Executive Officers. No stock
appreciation rights were granted during Fiscal 2000.
Option/SAR Grants in Last Fiscal Year
----------------------- ---------------- ----------------- ------------ ------------ ----------------------------------
Potential Realizable Value at
Number of Percent of Assumed Annual Rates of Stock
Securities Total Price Appreciation for Option
Underlying Options/SARs Exercise Term(1)
Options/SARs Granted to or Base ($)
Granted Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% 10%
----------------------- ---------------- ----------------- ------------ ------------ ----------------------------------
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
Ari B. Horowitz 960,000 9.58 11.00 02/28/10 3,685,661 12,123,834
20,433 0.20 4.09 06/29/10 52,557 133,191
20,433 0.20 2.31 09/29/10 29,767 75,358
20,433 0.20 0.31 12/29/10 4,067 10,228
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
Richard S. Miller 900,000 8.98 2.67 02/01/10 10,952,307 18,863,094
574,583 5.73 8.00 02/01/10 3,929,705 8,980,154
32,918 0.33 9.11 02/01/10 188,595 477,936
150,000 1.50 9.11 02/28/10 859,384 2,177,849
20,433 0.20 4.09 06/29/10 52,557 133,191
20,433 0.20 2.31 09/29/10 29,767 75,357
20,433 0.20 0.31 12/29/10 4,067 10,228
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
Ram Chillarege 250,000 2.50 5.00 03/24/10 2,459,808 4,657,248
220,000 2.20 10.00 03/24/10 1,064,631 2,998,379
30,000 0.30 10.00 03/30/10 145,177 408,870
18,575 0.19 4.09 06/29/10 47,778 121,079
30,000 0.30 3.13 08/09/10 58,809 149,263
16,718 0.16 2.31 09/29/10 24,355 61,656
11,250 0.11 0.31 12/29/10 2,239 5,631
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
Patrick Moore 60,395 0.61 9.11 02/13/10 346,017 876,874
15,000 0.15 10.00 02/29/10 72,588 204,435
4,675 0.04 4.09 06/29/10 12,025 30,474
75,000 0.75 3.13 08/09/10 147,022 373,158
4,675 0.04 2.31 09/29/10 6,811 17,242
13,750 0.14 1.63 10/31/10 13,983 35,541
12,500 0.12 0.31 12/29/10 2,488 6,257
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
Mary Ann Walk 172,500 1.72 9.11 02/01/10 988,292 2,504,526
157,500 1.57 10.00 02/29/10 762,179 2,146,566
70,000 0.70 4.94 05/31/10 217,472 551,116
20,433 0.20 4.09 06/29/10 52,557 133,191
30,000 0.30 3.13 08/09/10 58,809 149,263
20,433 0.20 2.31 09/29/10 29,767 75,357
20,433 0.20 0.31 12/29/10 4,067 10,228
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
Wendy Petty 4,500 0.05 8.00 01/13/01 22,640 57,374
15,000 0.15 10.00 01/13/01 94,334 239,061
11,250 0.11 4.09 01/13/01 28,937 73,332
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
Edyse Vogel 4,501 0.05 8.00 12/01/00 22,645 57,387
75,000 0.75 10.00 12/01/00 471,670 1,195,306
12,500 0.12 4.09 12/01/00 32,152 81,480
30,000 0.30 3.13 12/01/00 59,053 149,652
12,500 0.12 2.31 12/01/00 18,159 46,019
----------------------- ---------------- ----------------- ------------ ------------ -------------- -------------------
1 Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These
gains are based on assumed rates of stock appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The assumed rates of appreciation are mandated by
the rules of the Securities and Exchange Commission and do not represent
the Company's estimate or projection of future stock prices. This table
does not take into account any appreciation or depreciation in the price
of the Common Stock to date. Actual gain, if any, on stock option
exercises will depend on future performance of the Common Stock and the
date on which the options are exercised. Values shown are net of the
option exercise price, but do not include deductions for tax or other
expenses associated with the exercise.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information with respect to the
Named Executive Officers regarding stock option exercises as of December
31, 2000. No stock appreciation rights were exercised by any Named
Executive Officer during Fiscal Year 2000 and no stock appreciation rights
were outstanding as of December 31, 2000.
Aggregated Option/SAR Exercises in 2000 and Year-End Option Values
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired on Value Options/SARs at Year-End (#) at Year-End ($)1
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- ------------ -------------- ---------------------------- -----------------------
Ari Horowitz 135,135 778,378 180,840/1,455,325 0/0
------------------------- ------------ -------------- ---------------------------- -----------------------
------------------------- ------------ -------------- ---------------------------- -----------------------
Richard S. Miller 300,000 2,200,000 384,482/1,034,318 0/0
------------------------- ------------ -------------- ---------------------------- -----------------------
------------------------- ------------ -------------- ---------------------------- -----------------------
Ram Chillarege 0 204,358/372,185 0/0
------------------------- ------------ -------------- ---------------------------- -----------------------
------------------------- ------------ -------------- ---------------------------- -----------------------
Mary Anne Walk 0 100,551/390,748 0/0
------------------------- ------------ -------------- ---------------------------- -----------------------
------------------------- ------------ -------------- ---------------------------- -----------------------
Patrick Moore 0 13,626/214,096 0/0
------------------------- ------------ -------------- ---------------------------- -----------------------
------------------------- ------------ -------------- ---------------------------- -----------------------
Wendy Petty 0 38,250/0 0/0
------------------------- ------------ -------------- ---------------------------- -----------------------
------------------------- ------------ -------------- ---------------------------- -----------------------
Edyse Vogel 0 99,997/0 0/0
------------------------- ------------ -------------- ---------------------------- -----------------------
1 The per share value of unexercised in-the-money options is calculated by
subtracting the per share option exercise price from the last per share sale
price of the Company's Common Stock on the Nasdaq National Market on December
29, 2000 ($0.31).
COMPENSATION OF DIRECTORS
Directors currently do not receive a stated salary from the Company for
their service as members of the Board of Directors. Although by resolution
of the Board, directors may receive a fixed sum and reimbursement for
expenses in connection with the attendance at Board and committee meetings,
the Company currently does not provide any compensation for attendance at
Board and committee meetings, committee participation or special
assignments of the Board of Directors. Directors who are employees of the
Company receive no compensation solely related to their role as a director
of the Company.
Historically, directors who are not our employee or the employee of any of
our subsidiaries ("non-employee directors") were eligible to receive stock
option grants under the Company's 1998 Stock Option Plan. In March 2000,
the Company also adopted the Opus360 Corporation 2000 Stock Option Plan for
Non-Employee Directors (the "Directors' Plan"). Under the Directors' Plan,
upon initially joining our board of directors each non-employee director
will receive an initial grant of options to purchase 12,000 shares of our
common stock at an exercise price equal to 100% of the fair market value of
the common stock as of such date. In addition, immediately following each
annual stockholders meeting, commencing with the annual meeting in 2001,
each of our non-employee directors who was not initially elected to the
Board and was not our employee or the employee of any of our subsidiaries
within the previous 12 months will automatically receive an annual grant of
options to purchase 12,000 shares of our common stock at an exercise price
equal to 100% of the fair market value of our common stock at the date of
grant of the option. A total of 1,125,000 shares of our common stock have
been reserved for issuance under the Directors' Plan. Options granted under
the Directors' Plan will vest ratably over a three-year period, commencing
on the first anniversary of the date of grant. The options will vest upon a
change of control as defined in the Directors' Plan.
EMPLOYMENT AGREEMENTS AND TERMINATION, SEVERANCE AND CHANGE OF CONTROL
ARRANGEMENTS
The Company has entered into employment agreements with each of the Named
Executive Officers.
Mr. Horowitz's employment agreement (the "Horowitz Agreement") became
effective on April 1, 1999 and was amended in September 1999. The Horowitz
Agreement is for a period of three years, and is automatically extended on
each anniversary by one year so that the remaining term continues to be
three years, unless either party to the Horowitz Agreement gives the other
party prior written notice of non-renewal. The annual salary for Mr.
Horowitz of $150,000 was raised to $250,000 effective February 1, 2000. If
Mr. Horowitz's employment is terminated for any reason, other than
termination by the Company for cause or his resignation without Good Reason
(as defined in the Horowitz Agreement), he shall be entitled to continue to
receive his salary and benefits for a period of two years after the date of
termination and his options shall vest and become immediately exercisable.
In the event of a Change of Control (as defined in the Horowitz Agreement),
Mr. Horowitz's options shall also vest and become immediately exercisable.
Mr. Miller is employed under an amended and restated employment agreement
dated as of February 2, 2000 (the "Miller Agreement") that expires on
January 31, 2003. Under the Miller Agreement, Mr. Miller's base salary is
$250,000, with an annual increase at the discretion of our board of
directors. Mr. Miller is eligible to receive an annual bonus of no less
than $100,000 during each calendar year of his employment period in the
event he achieves performance criteria mutually agreed upon by Mr. Miller
and us for such calendar year. In addition, as required by the Miller
Agreement, we have granted to Mr. Miller options to purchase up to
1,507,500 shares of our common stock. At least once each year commencing in
2001 Mr. Miller shall be considered for future annual or other grants of
stock options and other equity awards. If we terminate Mr. Miller's
employment pursuant to an involuntary termination or for poor or
incompetent performance, he shall receive his salary and benefits for a
period of 12 months and shall be credited with one additional year of
employment for purposes of calculating his vested interest in his options
and any other equity awards granted to him during his employment period
with us. If Mr. Miller's employment is terminated by us without cause or by
Mr. Miller with Good Reason (as defined in the Miller Agreement, which
includes resignation during a period of thirty (30) days commencing six (6)
months after the occurrence of a Change in Control, also as defined in the
Miller Agreement) he shall be entitled to continue to receive his salary
and benefits for a period lasting the longer of 12 months or the remainder
of his employment period and shall become fully vested in all of his
options and any other equity awards granted to him during his employment
period with us.
Dr. Chillarege was employed under an employment agreement dated March 23,
2000. Dr. Chillarege has resigned from the Company effective April 20,
2001. By agreement between Dr. Chillarege and the Company, Dr. Chillarege
will receive separation payments equaling an aggregate amount of $187,500
and continuation of certain benefits for a specified period in full
satisfaction of all of the Company's obligations with respect to Dr.
Chillarege's employment agreement.
Mr. Moore is employed under an employment agreement dated as of January 30,
2000, as amended, (the "Moore Agreement") that expires on February 24,
2003. Under the Moore Agreement, Mr. Moore's base salary is $185,000, with
an annual increase at the discretion of our board of directors. In
addition, under the Moore Agreement, Mr. Moore is eligible to receive
additional compensation of $1,250 per month for the first six months of
calendar year 2001, and bonuses in the amount of $17,500 for third quarter
2001, $17,500 for fourth quarter 2001 and $115,000 for calendar year 2001,
payment of which bonuses is based upon his achievement of performance
criteria mutually agreed upon by Mr. Moore and the Company. If Mr. Moore's
employment is terminated by us without cause or by Mr. Moore with Good
Reason (as defined in the Moore Agreement) he shall be entitled to continue
to receive his salary and benefits for a period of 12 months and 50% of Mr.
Moore's unvested options that would have vested on or before February 24,
2003 shall continue to vest and remain exercisable for the term.
Ms. Walk was employed under an employment agreement dated as of May 2,
2000. Ms. Walk retired from employment with the Company effective March 31,
2001. By agreement with the Company, certain stock options granted to Ms.
Walk during her employment shall continue to vest and to remain exercisable
for their full original term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationships exist between the members of the Company's
Board of Directors or the compensation committee and the board of directors
or compensation committee of any other company, nor has any such
interlocking relationship existed in the past. None of the members of the
compensation committee was an officer or employee of the Company at any
time during Fiscal 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information with respect to beneficial
ownership of the Company's Common Stock as of April 15, 2001, for (i) each
person known by the Company to beneficially own more than 5% of each class;
(ii) each Director; (iii) each Named Executive Officer; and (iv) all of the
Company's executive officers and Directors as a group. Except as indicated
by footnote, and applicable community property laws, the persons named in
the table have sole voting and investment power with respect to all shares
of common stock shown as beneficially owned by them.
Common Stock
Underlying Options
Name and Address of Beneficial Owners Total Amount of Shares Exercisable Percentage of Common
------------------------------------- ----------------------- ----------- --------------------
Beneficially Owned(1) Within 60 Days Stock Owned(2)
--------------------- -------------- --------------
Safeguard Scientifics, Inc.(3)
800 The Safeguard Building
435 Devon Park Drive
Wayne, Pennsylvania 19087-1945 4,649,820 - 9.4%
Michael S. Dell(4)
Dell Computer Corporation
One Dell Way
Round Rock, Texas 78682 3,357,484 _ 6.8%
Wheatley Partners, L..P.(5)
80 Cutter Mill Road 3,050,758 _ 6.1%
Great Neck, New York 11021
Weiss, Peck and Greer, L.L.C.(6)
One New York Plaza 3,453,193 _ 7.0%
New York, NY 10004
Crosspoint Venture Partners 1997,
L.L.C. (7)
2925 Woodside Road 3,050,758 _ 6.1%
Woodside, CA 94062
Directors, Executive Officers and
Nominees
Ari B. Horowitz 3,914,174 580,823 7.8%
Richard S. Miller 914,409 611,909 1.8%
*
Ram Chillarege 273,468 273,468
63,783 *
Patrick Moore 64,860
196,889
Mary Anne Walk 199,389
- *
Wendy Petty -
*
Edyse Vogel 103,472 99,997
135,000 *
James Cannavino 135,000
--------------------------------------------------------------------------------------------------------------
*
John K. Halvey(8) 27,049 -
*
William R. Nuti 45,000 45,000
Bryan Plug *
14,941 3,960
*
Roger J. Weiss(9) 353,881 -
All executive officers and directors as
a group (15 persons)(10) 7,766,966 2,346,214 14.9%
-----------
* Less than 1%.
(1) Shares beneficially owned includes direct and indirect ownership
of shares and stock options that are currently exercisable or
exercisable within sixty (60) days after April 15, 2001.
(2) Based on 49,665,798 shares outstanding as of April 15, 2001.
(3) Based upon information contained in a Form 13G dated March 13,
2001, filed by Safeguard Scientifics, Inc. on behalf of itself
and related entities, such entities own 4,649,820 shares of
Common Stock. Safeguard Scientifics, Inc. does not have sole
voting power or sole dispositive power with respect to any of
such shares. Mr. John K. Halvey, one of our directors, is an
executive vice president of Safeguard Scientifics, Inc.
(4) Based upon information contained in a Form 13G/A dated February
14, 2001, filed by Michael Dell on behalf of himself and related
entities, such entities own 3,357,484 shares of Common Stock. Mr.
Dell has sole voting power and sole dispositive power with
respect to all of such shares.
(5) Based upon information contained in a Form 13G dated February 14,
2001, filed by Wheatley Partners L.P., on behalf of itself and
other related entities, such entities beneficially own 3,050,758
shares of Common Stock. Wheatley Partners, L.P. has sole voting
power and sole dispositive power with respect to 2,806,698 of
such shares.
(6) Based upon information contained in a Form 13G dated February 12,
2001, filed by Weiss, Peck & Greer, an investment advisor and
broker-dealer, on behalf of itself and the entities named
therein, such entities own 3,453,193 shares of Common stock.
Weiss, Peck & Greer does not have sole voting power or sole
dispositive power with respect to any of such shares.
(7) Based upon information contained in a Form 13G dated February 13,
2001, filed by Crosspoint Venture Partners 1997, L.P. on behalf
of itself and related entities, such entities beneficially own
3,050,758 shares of Common Stock. Crosspoint Venture Partners
1997, L.P. does not have sole voting power or sole dispositive
power with respect to any of such shares.
(8) Excludes the 4,649,820 shares held indirectly by Safeguard
Scientifics, Inc. referred to in Note 3 above. Mr. Halvey, one of
our directors, is an executive vice president of Safeguard
Scientifics, Inc. Mr. Halvey disclaims beneficial ownership of
these shares.
(9) Shares held by G&R Partnership, L.P., the general partner of
which is Mr. Weiss, one of our directors.
(10) Excludes the 4,649,820 shares held indirectly by Safeguard
Scientific, Inc. referred to in Note 3 above as to which Mr.
Halvey, one of our directors, disclaims beneficial ownership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Since the Company's inception, Leonard Horowitz, the father of Ari
Horowitz, the Chairman of the Board and Chief Executive Officer of the
Company, has provided the Company with legal services. For such legal
services, the Company paid Mr. Horowitz $230,724 in fiscal year 2000. The
Company believes that the fees paid to Mr. Horowitz for legal services were
no less favorable to the Company than those the Company could have obtained
in an arm's-length transaction with an unaffiliated party.
John K. Halvey has served as a director of the Company since September of
1999 and currently serves as an Executive Vice President at Safeguard
Scientifics, Inc. ("Safeguard"). In September 2000, the Company licensed a
Private Labeled Site to Safeguard, for a fee of $100,000. The Company
believes that the terms of the licensing agreement with Safeguard were no
less favorable to the Company than those the Company could have obtained in
an arm's-length transaction with an unaffiliated party.
In February 2000, the Company entered into an agreement (the "Lucent
Agreement") with Lucent Technologies Inc. ("Lucent"), a company whose
former Executive Vice President was at the time a member of the Company's
board of directors. The Lucent Agreement, which was amended and restated in
November 2000, grants Lucent with a license to use the Company's Opus360
Workforce Management software solution. Lucent also purchased professional
services and post contract customer support under the Lucent Agreement.
Moreover, Lucent is to serve on the Company's Customer Advisory Board and
provide substantial assistance and practical advice to the Company in
developing its Opus360 Workforce Management product in exchange for two
warrants to purchase shares of the Company's common stock. The warrants are
not subject to restrictive vesting. The first warrant entitled Lucent to
purchase up to 225,000 shares of the Company's common stock at the exercise
price of $3.33 per share from February 2, 2000 through February 2, 2001.
The second warrant entitles Lucent to purchase up to 5,531,250 shares of
the Company's common stock at the exercise price of $0.74 per share for a
three year period commencing on December 3, 2000. The Company believes that
terms of its strategic relationship with Lucent and the Warrants are on
terms no less favorable to the Company than those that would have been
available to the Company in an arm's-length transaction with an
unaffiliated party.
CERTAIN BUSINESS RELATIONSHIPS
In September of 1999, The Company entered into an investment advisory
agreement with Weiss, Peck & Greer. Roger J. Weiss, a member of the
Company's board of directors, is a Senior Managing Director of Weiss, Peck
& Greer. Pursuant to the terms of the agreement, Weiss, Peck and Greer acts
as the investment manager of the Company's portfolio of short-term
investments. For such services, the Company has paid Weiss, Peck & Greer
the sum of $85,110 in fiscal year 2000. The Company believes that the fees
paid to Weiss, Peck & Greer for financial advisory services were no less
favorable to the Company than those the Company could have obtained in an
arm's-length transaction with an unaffiliated party.
INDEBTEDNESS OF MANAGEMENT
On March 23, 2000 Richard S. Miller, the Company's President and Chief
Operating Officer, exercised stock options to purchase 300,000 shares of
the Company's common stock at an exercise price of $2.67 per share. In
connection with Mr. Miller's exercise of these options, we loaned him
$1,538,000, at an interest rate of 7% per annum, compounded annually. The
term of the loan is three years, subject to acceleration upon the
occurrence of an event of default, including the termination of Mr.
Miller's employment with us for any reason whatsoever. The loan funded
$790,000 of the purchase price of $800,000 paid by Mr. Miller in connection
with his exercise of the options and $748,000 of the federal and state
withholding taxes arising as a result of the exercise. Mr. Miller paid the
remaining $10,000 of the purchase price. In connection with our loan to
him, Mr. Miller pledged the 300,000 shares to us as collateral security for
the repayment in full of the loan to us.
On November 21, 2000 the promissory note and the pledge and security
agreement between Mr. Miller and the Company were amended and restated. The
Company increased the loan amount by $278,700 to $1,816,700. The increase
funded additional federal and state withholding taxes due as a result of
the exercise of the stock options by Mr. Miller on March 23, 2000. In
addition the note was restated to change Mr. Miller's obligation under the
note from full-recourse to recourse limited to the shares received upon the
exercise of the stock options, and to provide that interest is payable only
on maturity or acceleration of the principal amount of the note. The annual
interest rate on the amended and restated loan is 7% per annum. As of
December 31, 2000 the loan balance including accrued interest was
approximately $1,899,000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this
Form 10-K/A to be signed on its behalf by the undersigned, who is duly
authorized, in the City of New York, State of New York on this 27th day of
April 2001.
OPUS360 CORPORATION
By: /s/ ARI B. HOROWITZ
-------------------------------
Chairman and Chief Executive Officer
(Principal Executive Officer)
By: /s/ PETER SCHWARTZ
-------------------------------
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Ari B. Horowitz and Peter
Schwartz, and each of them, his true and lawful attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign
any amendments to this Report on Form 10-K, and to file the same, with
Exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or substitute or substitutes, may do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Form 10-K/A has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE Date
/s/ ARI HOROWITZ Chief Executive Officer and
------------------ Chairman of the Board of Directors April 25, 2001
Ari Horowitz
/s/ RICHARD MILLER President and Chief Operating
------------------ Officer April 25, 2001
Richard Miller
/s/JAMES CANNAVINO
------------------
James Cannavino Director April 24, 2001
/s/
-----------------
John Halvey Director April ___, 2001
/s/
-----------------
William Nuti Director April ___, 2001
/s/
-----------------
Bryan Plug Director April ___, 2001
/s/ROGER WEISS
-----------------
Roger Weiss Director April 26, 2001