UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
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(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the fiscal year ended December
31, 1999.
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________.
Commission file number 0-22970
TREEV, INC.
(Exact name of registrant as specified in its charter)
Delaware 54-1590649
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
13900 Lincoln Park Drive, Herndon, VA 20171
(Address of principal executive offices and zip code)
(703) 478-2260
(Registrant's telephone number, including area code)
-------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
Securities registered pursuant to Section 12(g) of the Act:
(Title of class)
Common Stock, $.0001 par value per
share Series A Convertible Preferred Stock, $.0001
par value per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 of 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
amendments to this Form 10-K. Yes |_| No |_|
<PAGE>
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of filing: $104,455,876 as of May 31, 2000 (Price of Common Stock = $6.53).
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:15,997,837 shares of
Common Stock were outstanding as of May 31, 2000.
<PAGE>
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
Page
PART III
Item 11. Executive Compensation. 4
Item 12. Security Ownership of Certain Beneficial Owners and Management. 8
Item 13. Certain Relationships and Related Transactions. 9
3.
<PAGE>
PART III
ITEM 11. Executive Compensation
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below lists the Chief Executive Officer and
four other most highly compensated executive officers of TREEV (the "Named
Executive Officers") as of the end of 1999 and their compensation for services
in 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation -------------
---------------------------------------------- Securities All Other
Name and Principal Other Annual Underlying Compen-
Position Salary($) Bonus($) Compensation($) Options(#) sation($)
---------------------- ---------- ------------ ------------------------------ -----------
<S> <C> <C> <C>
Thomas A. Wilson 279,833 137,095 250,000
President and Chief Executive Officer 62,000(1) 65,000 125,000
Jorge R. Forgues 188,694(2) 56,309
Senior Vice President and Chief Financial 166,250 92,622 68,999
Officer 156,417 55,000 150,000
Brian H. Hajost 160,000 76,373 85,000
Executive Vice President, Finance & 140,000 79,278 65,000
Administration 135,967 29,500
Richard G. McMahon 140,000 52,131 10,000
Senior Vice President, Professional 132,417 57,000 65,000
Services 95,731(3) 31,750
Michael F. Guido 124,091(4) 68,874 100,000
Executive Vice President, Sales
___________
</TABLE>
(1) Mr. Wilson joined the Company as its President and Chief Operating Officer
in September 1998.
(2) Mr. Forgues resigned as Senior Vice President and Chief Operating Officer
in August 1999.
(3) Mr. McMahon joined the Company as its Senior Vice President, Professional
Services in April 1997.
(4) Mr. Guido joined the Company as its Executive Vice President, Sales in
April 1999.
4.
<PAGE>
STOCK OPTIONS
The following table sets forth certain information concerning the grant of
options to the Chief Executive Officer and the Named Executives in 1999.
The Company has not granted any stock appreciation rights.
<TABLE>
<CAPTION>
Option Grants in Last Year
Individual Grants
------------------------------------- Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to Exercise for Option Term
Options Employees in or Base Expiration ----------------------
Name Granted(#) Year Price($/sh) Date 5% 10%
---------------- ----------- ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas A. Wilson 83,016 5% 1.63 1/04/09 81,356 216,672
41,984 3% 1.63 1/04/09 41,144 109,578
125,000 8% 2.81 8/09/09 222,500 558,750
Jorge R. Forgues 0
Brian H. Hajost 35,000 2% 1.63 1/04/09 34,300 91,350
46,831 3% 2.81 8/09/09 83,359 91,350
3,169 .2% 2.81 8/09/09 5,641 14,165
Richard G. McMahon 10,000 .7% 1.63 1/04/09 9,800 26,100
Michael F. Guido 100,000 7% 1.84 3/30/09 116,000 291,000
----------------
</TABLE>
(1) Each of the indicated options was granted pursuant to the Company's
Employee Incentive Stock Option Plan and vests in equal installments over
two years from the date of grant, or, for the options held by the Chief
Executive Officer and the Named Executives, upon the acquisition of the
Company.
(2) The potential realizable value is calculated based on the term of the
option at its time of grant (10) years and is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and sold on the last day of its term for the
appreciated price. The 5% and 10% assumed rates of appreciation are derived
from the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the future Common Stock
price.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Year and
Year-End Option Values
The following table summarizes the value realized upon exercise of
outstanding stock options and the value of the outstanding options held by the
Chief Executive Officer and other Named Executives.
Number of Securities
Underlying Unexercised Value of Unexercised
Number of Options at Fiscal In-the-Money Options
Shares Year-End(#) at Fiscal-Year End($)(1)
Acquired on Value --------------------------- ----------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
----------------- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas A. Wilson 0 0 137,930 237,069 211,033 225,216
Jorge R. Forgues 218,999 335,068 0 0 0 0
Brian H. Hajost 0 0 82,501 67,500 126,227 44,275
Richard G. McMahon 0 0 70,000 5,000 107,100 7,650
Michael F. Guido 0 0 50,000 50,000 66,000 66,000
-------------
</TABLE>
(1) Computed by multiplying the number of options by the difference between (i)
the per share market value of the Company's Common Stock on December 31,
1999 and (ii) the exercise price per share.
5.
<PAGE>
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is directly responsible
for the approval and administration of the compensation program for Thomas A.
Wilson, the Company's President and Chief Executive Officer. The Compensation
Committee is also responsible for the grant of options to the Company's
employees under the Company's various stock option plans and administers the
plans. In 1999, the Compensation Committee consisted of two outside directors of
the Company, Robert P. Bernardi, John Burton and James J. Leto, who did not
participate in the administration of the compensation program related to his
employment with the Company through August 1999.
Mr. Wilson is responsible for the approval and administration of
compensation programs for the other executive officers of the Company, including
those named in the Summary Compensation Table, subject to review and approval by
the Compensation Committee and the Board of Directors.
Executive Compensation Philosophy
The Company's executive compensation program is designed to meet the
following objectives:
o To attract and retain highly qualified executives to lead and manage the
Company by providing competitive total compensation packages;
o To reward executives based on the business performance of the Company;
o To provide executives with incentives designed to maximize the long-term
performance of the Company; and
o To assure that objectives for corporate and individual performance are
established and measured.
For 1999, the components of the Company's executive compensation program
included annual base salary and short-term incentive bonus plans. In 1999, stock
options to purchase shares of the Company's Common Stock were awarded as a
long-term incentive to executive officers of the Company as follows: Thomas A.
Wilson, 250,000 shares; Brian H. Hajost, 85,000 shares; Richard G. McMahon,
10,000 shares; and Michael F. Guido, 100,000 shares.
Base Salaries and Short Term Incentive Plans
Base salaries for executive officers (including the Chief Executive Officer)
are determined by evaluating the responsibilities associated with their
respective positions and the experience of the officers and by reference to
salaries paid in the competitive marketplace to executive officers with
comparable ability and experience within the same industry following review of
compensation information available in certain widely-known surveys and
databases. Bonuses and annual salary adjustments, if any, are determined by
evaluating performance taking into account such factors as achievement of the
Company's strategic goals, assumption of additional responsibilities and
attainment of specific individual objectives. The Board believes that stock
ownership by management is especially beneficial in aligning management's and
stockholders' interests in the Company.
Base salaries are set by Mr. Wilson for the other executive officers. No
specific weight of relative importance is assigned to the various factors and
compensation information considered. Accordingly, the Company's executive
compensation policies and practices may be deemed informal and subjective,
although they are based on such factors and detailed investigation.
Long-Term Incentive Plans
The Company historically has provided long-term incentive compensation to
attract, motivate and retain executive officers and other employees through
grants of stock options under the Company's Employee Incentive Stock Option
Plan. The Compensation Committee believes that this form of compensation closely
aligns the interests of executive officers with those of the Company's
shareholders and provides a major incentive in building shareholder value. The
Compensation Committee designates the employees who shall be granted options and
the amount and terms of the options granted. The number of stock options granted
to each individual is based on his or her salary range, position, level of
responsibility, and performance during the relevant year. All grants are made
with an exercise price not less than the fair market value of the Common Stock
on the date of grant.
6.
<PAGE>
Section 162(m) of the Code imposes a limitation on the deductibility of
nonperformance-based compensation in excess of $1 million paid to the Named
Executives. The cash compensation of each of the Company's executive officers is
substantially below the $1 million threshold. The options granted under the
Company's stock option plans to date may not meet the requirement of being
performance-based as that term is used in the section and consequently their
exercise could reduce the compensation tax deduction that would otherwise be
available to the Company if the spread between the exercise price and the then
fair market value of the common stock should cause a specified executive's
compensation to exceed $1 million. The Board of Directors currently believes
that it should be able to continue to manage the executive compensation paid to
the Named Executives so as to preserve the related federal income tax
deductions.
Compensation Committee
Robert P. Bernardi
John F. Burton
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE OF
CONTROL AGREEMENTS
The Company has agreements with its officers that provide for their
continued employment with the Company. The officers are eligible to receive
severance equal to six months' base salary and bonuses in the event any of the
officers is terminated without cause.
In connection with an acquisition of the Company by merger or asset
sale or through a change of control, any officer who is terminated shall receive
a lump sum payment equal to fifteen months' base salary and bonuses. Each
outstanding option held by the officers under the Option Plan will automatically
accelerate in full and all unvested shares of Common Stock issued to such
individuals pursuant to the exercise of options granted or direct stock
issuances made under such plan will immediately vest in full.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Securities and Exchange Commission requires disclosure where an
executive officer of a company served or serves as a director or on the
compensation committee of another entity and an executive officer of such other
entity served or serves as a director or on the compensation committee of the
Company. The Company does not have any such interlocks. Decisions as to
executive compensation are made by the Compensation Committee. During fiscal
year 1999, the Compensation Committee was comprised entirely of non-employee
directors.
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock for the period
beginning with the Company's initial public offering on May 8, 1992 through
December 31, 1999 with cumulative total return for the Nasdaq Stock Market (US)
and for Nasdaq Computer & Data Processing Stocks (SIC code 737). The comparison
assumes $100 was invested on May 8, 1994 in the Company's Common Stock at the
$4.00 initial offering price and in each of the foregoing indices and assumes
reinvestment of dividends, if any.
7.
<PAGE>
<TABLE>
<CAPTION>
5 - YEAR CUMULATIVE TOTAL RETURN AMONG TREEV, INC., NASDAQ
MARKET INDEX AND PEER GROUP INDEX
5-YEAR CUMULATIVE TOTAL RETURN AMONG
TREEV, INC., NASDAQ MARKET INDEX AND PEER
GROUP INDEX
Base Period
Company/Index Name 1994 1995 1996 1997 1998 1999
------------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
TREEV, Inc. $100 $ 81.08 $ 66.22 $ 20.27 $ 8.95 $ 17.06
NASDAQ Market Index..... 100 129.71 161.18 197.16 278.08 490.46
NASDAQ Computer &
Data Processing Services 100 152.28 187.94 230.88 411.95 911.50
</TABLE>
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth certain information regarding the ownership, as
of May 15, 2000, with respect to the beneficial ownership of shares of the
Company's Common Stock by (i) each stockholder known by the Company to be the
beneficial owner of more than five (5%) of the outstanding shares of its Common
Stock, (ii) each director and nominee for director of the Company, (iii) the
Chief Executive Officer and the four other most highly compensated executive
officers of the Company and (iv) all directors and executive officers of the
Company as a group. Except as indicated in the footnotes to the table, persons
named in the table have sole voting and investment power with respect to all
shares of Common Stock that they respectively own beneficially.
The address of each person listed below, other than the Estate of Fred Kassner,
Mr.Ardinger and Mr. Adkins is 13900 Lincoln Park Drive, Herndon, Virginia 20171.
Number of Percent
Name and Address of Beneficial Owner Shares Of Class
Beneficially Owned(1)
Estate of Fred Kassner(2)................ 2,860,426 17.9%
Horace T. Ardinger, Jr.(3)............... 4,362,194 27.2
Douglas Adkins(4)........................ 1,179,788 7.4
Robert P. Bernardi(5).................... 240,574 1.5
James J. Leto(6)......................... 579,179 3.6
Thomas A. Wilson(7)...................... 250,000 1.6
John F. Burton(8)........................ 42,328 *
Edwin A. Adams(9)........................ 11,250 *
Brian H. Hajost(10)...................... 122,082 *
Richard G. McMahon(11)................... 73,768 *
C. Alan Peyser (12) ..................... 44,018 *
Michael F. Guido (13) ................... 50,000 *
Michael J. Smith (14).................... 3,750 *
Directors and executive officers
as a group (10) persons 1,402,949 8.7
---------
*represents less than 1%
(1) Under applicable rules of the SEC, a person is deemed to be the
beneficial owner of shares of Common Stock if, among other things, he or
she directly or indirectly has or shares voting power or investment
power with respect to such shares. A person is also considered to
beneficially own shares of Common Stock that he or she does not actually
own but has the right to acquire presently or within the next sixty (60)
days, by exercise of stock options or otherwise.
(2) The address of the Estate of Fred Kassner is 69 Spring Street, Ramsey,
New Jersey 07446. Of the total shares shown, the Estate of Fred Kassner
has shared voting and dispositive power with respect to 2,860,426
shares, including 20,000 shares underlying a warrant, held by Liberty
Travel, Inc. of which the Estate is a stockholder. Of the shares
reported as being held directly by the Estate, 63,500 are issuable upon
the exercise of warrants.
8.
<PAGE>
(3) The address of Mr. Ardinger is 3000 Thanksgiving Tower, Dallas, Texas
75201. The shares of Common Stock listed in the table as beneficially
owned by Mr. Ardinger consist of 4,362,194 shares of Common Stock
currently owned by Mr. Ardinger and and/or the investor warrants (the
"Investor Warrants") purchased by Mr. Ardinger and the Ardinger Family
Partnership, which Mr. Ardinger controls. The Investor Warrants were
purchased as a part of a private offering of common stock in September
1998.
(4) The address of Mr. Adkins is 3000 Thanksgiving Tower, Dallas, Texas
75201. The shares of Common Stock listed in the table as beneficially
owned by Mr. Adkins consist of 1,179,788 shares of Common Stock
currently owned by Mr. Adkins and the Adkins Family Trust Ltd. and the
Baker Family Trust (both of whose shares Mr. Adkins may be deemed to
beneficially own) and 43,750 shares issuable upon exercise of warrants
(including 40,000 issuable upon exercise of the Investor Warrants).
(5) Includes 12,500 warrants and 101,199 shares issuable upon exercise of
options.
(6) Includes 4,000 warrants and 450,492 shares issuable upon exercise of
options.
(7) All shares are issuable upon exercise of options.
(8) All shares are issuable upon exercise of options.
(9) All shares are issuable upon exercise of options.
(10) Includes 107,501 shares issuable upon exercise of options.
(11) Includes 70,000 shares issuable upon exercise of options.
(12) Includes 38,018 shares issuable upon exercise of options.
(13) Includes 50,000 shares issuable upon exercise of options.
(14) All shares are issuable upon exercise of options.
ITEM 13. Certain Relationships and Related Transactions
In December 1996, the Company entered into an agreement for a line of credit
for up to $5,000,000 with Fred E. Kassner at an interest rate of 2% above a
commercial lender's fluctuating prime rate. The line of credit is secured by a
lien against all of the accounts receivables of the Company. In connection with
the Kassner financing, the Company issued to Mr. Kassner warrants to acquire
25,000 shares of Common Stock, exercisable at $12.24 per share. Mr. Kassner is
the beneficial owner of more than five percent of the outstanding stock of the
Company. On December 27, 1997, Mr. Kassner converted $4.0 million of the $5.0
million line of credit into equity. The Company issued 1,000 shares of Series M
Convertible Preferred Stock. The Series M Convertible Preferred Stock is
convertible into 1,000,000 shares of Common Stock at a price of $4.00 per share,
plus interest which accumulates from the date of issuance of the preferred stock
through the date of conversion and shall be paid in additional shares of Common
Stock at the time of conversion. On June 30, 1998, Mr. Kassner converted the
remaining $1.0 million of the $5.0 million line of credit into equity. The
Company issued 1,000 shares of Series M1 Convertible Preferred Stock. The Series
M1 Convertible Preferred Stock is convertible into 250,000 shares of Common
Stock at a price of $3.32 per share, plus interest which accumulates from the
date of issuance of the preferred stock through the date of conversion and shall
be paid in additional shares of Common Stock at the time of conversion. In
January 2000, all of the shares of the Series M Convertible Preferred Stock and
the Series M1 Convertible Preferred Stock were converted into 1,514,938 shares
of Common Stock.
9.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to a report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: June 23, 2000 TREEV, INC.
By: /s/ Thomas A. Wilson
----------------------
Thomas A. Wilson
President and Chief Executive Officer
10.
