SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1999
/ / 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 0-24928
THE SOLOMON-PAGE GROUP LTD.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 51-0353012
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(State or other jurisdiction of (IRS Employer Identification
incorporation or organization Number)
1140 Avenue of the Americas, New York, New York 10036
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 403-6100
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
Common Stock Purchase Warrants
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 / /
<PAGE>
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-K contained in this form, and no disclosure will 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. /X/
The aggregate market value of the voting stock held by non-affiliates
of the Registrant computed by reference to the price at which the stock was sold
on December 17, 1999 was approximately $5,093,064. Solely for the purposes of
this calculation, shares held by directors and officers of the Registrant have
been excluded. Such exclusion should not be deemed a determination or an
admission by the Registrant that such individuals are, in fact, affiliates of
the Registrant.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: At January 20, 2000,
there were outstanding 4,153,948 shares of the Registrant's Common Stock, $.001
par value.
<PAGE>
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Expiration of
Current Term of
Name Age Office as Director
- ---- --- ------------------
Class I Directors:
Lloyd Solomon 40 2000
Joel A. Klarreich 53 2000
Class II Directors:
Herbert Solomon 69 2001
Eric M. Davis 38 2001
Class III Directors:
Scott Page 34 2002
Edward Ehrenberg 69 2002
Lloyd Solomon (Class I) has been the Vice Chairman of the Board of
Directors and the Chief Executive Officer of the Company since June 1995. Prior
to his election to these positions, he had been the President or an Executive
Vice President and a director of the Company since the inception of its business
in 1990. From 1986 through 1990, Mr. Solomon served as an Executive Vice
President of Rand Thomson Consulting Group, a personnel services firm. Mr.
Solomon received an M.B.A. from New York University and a B.A. from Boston
University. He is the son of Herbert Solomon and the brother-in- law of Scott
Page.
Joel A. Klarreich (Class I) has been a director of the Company since
June 1995. Mr. Klarreich has been a practicing attorney since 1968 and member of
the law firm of Tannenbaum Helpern Syracuse & Hirschtritt LLP since 1996. He is
general counsel to the Association of Personnel Consultants of New York State,
the sole statewide trade association of permanent placement firms in New York.
From 1988 to 1996, Mr. Klarreich was a member of the law firm of Klein, Heisler
& Klarreich, P.C. He has a B.B.A. from the City College of the City of New York
and J.D. from St. John's University School of Law.
Herbert Solomon (Class II) has been the Chairman of the Board of the
Company since August 1990, shortly after he retired from his previous executive
career in the apparel and retail industries. From 1981 to 1990, Mr. Solomon was
Executive Vice President -- Merchandising of Amcena Corporation, which owned
Ohrbach's, a leading apparel retailer. From 1976 to 1981, he served as Chairman
of the Board and Chief Executive Officer of Ohrbach's. Mr. Solomon received a
B.B.A. degree from Bernard Baruch College of the City of New York. Mr. Solomon
is the father of Lloyd Solomon and the father-in-law of Scott Page.
Eric M. Davis (Class II) has been Vice President and Chief Financial
Officer of the Company since February 1994, and a director of the Company since
September 1994. From 1984 through February 1994, Mr. Davis was employed by
Mortensen and Associates, P.C., a predecessor of Moore Stephens, P.C., the
Company's auditors. Mr. Davis is a Certified Public Accountant and received a
B.S. degree from Davis & Elkins College, Elkins, West Virginia.
Scott Page (Class III) has been the President of the Company since June
1995. Prior to becoming President, he had been an Executive Vice President of
the Company since August 1991, when he was also elected a director. From 1989 to
1991, Mr. Page served as a managing director of Rand Thomson Consulting Group.
Mr. Page is the son-in-law of Herbert Solomon and the brother-in-law of Lloyd
Solomon.
<PAGE>
Edward Ehrenberg (Class III) has been a director of the Company since
June 1995. Mr. Ehrenberg has been the President of Tele-Matic Company, Inc., a
wholesale distributor of commercial laundry equipment, since 1999. Prior to
that, Mr. Ehrenberg was the President of E.E. Enterprises, a consulting firm,
since 1988. Mr. Ehrenberg was Vice President and General Manager of U.S.
Operations of Electrocatalytic, Inc., a manufacturer and marketer of cathodic
protection and chlorine generating products, from March 1995 to June 1995. He
was Executive Vice President of Enzon, Inc., a public biotech company in
Piscataway, New Jersey from August 1991 to August 1992. Mr. Ehrenberg has held
executive positions with the Ford Motor Company, Xerox, International Harvester
and was Chairman and Chief Executive Officer of CH Holdings, Chicago, Illinois
prior to moving to New Jersey. Mr. Ehrenberg has an M.B.A. from the Wharton
School of the University of Pennsylvania and a B.S. from New York University.
ITEM 11. EXECUTIVE COMPENSATION.
The following table provides summary information concerning cash and
certain other compensation paid or accrued by the Company to or on behalf of the
Company's Chief Executive Officer and each of the other most highly compensated
executive officers of the Company whose compensation exceeded $100,000 (the
"Named Executive Officers") for the three years ended September 30, 1999, 1998,
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------------------------- --------------------------
Other Annual Restricted All Other
Name and Compensation Stock Compensation
Principal Position Year Salary($) Bonus($) ($)(1) Awards ($) Options(#)(2) (3)
------------------ ---- --------- -------- ------ ---------- ------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Herbert Solomon 1999 $225,000 $130,000 -- -- -- $17,136
Chairman of the Board.......1998 225,000 -- -- -- -- 17,136
1997 225,000 -- -- -- -- 17,136
Lloyd Solomon 1999 $350,000 $312,335(4) -- -- -- $18,238
Chief Executive Officer.....1998 350,000 100,000 -- -- -- 18,238
1997 350,000 200,000 -- -- -- 18,238
Scott Page 1999 $200,000 $1,955,239(5) -- -- -- $13,457
President...................1998 200,000 942,090(5) -- -- -- 13,457
1997 200,000 731,505(5) -- -- -- 13,457
Eric M. Davis
Vice President - Finance 1999 $200,000 $50,000 -- -- -- --
Chief Financial Officer.....1998 175,000 25,000 -- -- -- --
1997 150,000 25,000 -- -- 10,000 --
</TABLE>
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(1) Although the Named Executive Officers receive certain perquisites
such as auto allowances and Company credit cards, the value of such
perquisites did not exceed for any officer the lesser of $50,000 or
10% of the officer's salary and bonus.
(2) No Stock Appreciation Rights have been awarded by the Company.
(footnotes continued on following page)
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<PAGE>
(3) Represents premiums paid by the Company with respect to split-dollar
life insurance obtained for the benefit of the Named Executive
Officers.
(4) Represents a bonus, the amount of which was calculated and paid in
accordance with the terms of Mr. Solomon's employment agreement.
(5) Represents commissions payable under Mr. Page's employment agreement
equal to 30% of the revenues generated by his recruitment and
placement activities as a recruitment and placement counselor.
The following table sets forth certain information regarding
unexercised stock options held by the Named Executive Officers as of September
30, 1999. No stock options were granted to or exercised by such officers during
the fiscal year ended September 30, 1999.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options at Value of Unexercised in-the-Money Options
September 30, 1999(#) at September 30, 1999($)
Name Exercisable/Unexercisable Exercisable/Unexercisable (1)
---- ------------------------- -----------------------------
<S> <C> <C>
Herbert Solomon............... 350,000/0 $294,748/0
Lloyd Solomon................. 350,000/0 $294,748/0
Scott Page.................... 350,000/0 $294,748/0
Eric M. Davis................. 56,667/23,333 $44,100/$22,300
</TABLE>
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(1) Based on the market value, as reported on the Nasdaq Small Cap Market,
of $2.69 per share of Common Stock at September 30, 1999 and exercise
prices ranging from $1.25 to $2.50 per share.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Herbert
Solomon, Lloyd Solomon and Scott Page, dated June 14, 1993 and amended June 8,
1995 in the case of Lloyd Solomon and Scott Page, pursuant to which Herbert
Solomon agreed to serve as Chairman of the Board of the Company, Lloyd Solomon
agreed to serve as Vice Chairman of the Board and Chief Executive Officer of the
Company and Scott Page agreed to serve as President of the Company. Pursuant to
his employment agreement, Herbert Solomon receives a base salary of $225,000,
which amount is to be annually reviewed and may be increased by the Board of
Directors and, in addition, payments equal to 20% of the revenues generated by
his recruitment and placement activities as a recruitment and placement
counselor. Pursuant to his employment agreement, Lloyd Solomon receives a base
salary of $350,000, which amount is to be annually reviewed and may be increased
by the Board of Directors, and, in addition, incentive compensation for each
fiscal year during the term of his employment equal to that percentage of the
Company's pre-tax operating income as equals the percentage of the Company's
revenue represented by the Company's pre-tax operating income. By way of
example, in a particular year, should the Company's pre-tax operating income
equal 5% of the Company's revenue, Lloyd Solomon would be entitled to receive as
incentive compensation an amount equal to 5% of the Company's pre-tax operating
income. Pursuant to his employment agreement, Scott Page receives a base salary
of $200,000, which amount is to be annually reviewed and may be increased by the
Board of Directors and, in addition, payments equal to 30% of the revenues
generated by his recruitment and placement activities as a recruitment and
placement counselor.
Each employment agreement provided for an initial term which ended June
13, 1998, and which was, and currently is expected to be, extended automatically
from year-to-year unless terminated by either party. Each employment agreement
provides that if the employee is terminated other than for "cause" (as defined
therein), he is to continue to receive the compensation provided for under his
employment agreement, and that if he becomes disabled (as defined therein), the
Company may elect to place him on disability status, in which event he would be
paid one-half
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<PAGE>
of the compensation provided for under his employment agreement. Each of these
employment agreements provides for liquidated damages equal to 2.99 times the
"base amount" (as such term is defined in Section 280G(b)(2)(A) of the Internal
Revenue Code of 1986, as amended, (the "Code")) of the employee's compensation
during the most recent fiscal year in the event of a change in control of the
Company, which is defined therein to mean (a) a change in control as defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (b) a person (as such term is defined in Sections 13(d) and 14(d) of the
Exchange Act) other than a current director or officer of the Company becoming
the beneficial owner, directly or indirectly, of 20% of the voting power of the
Company's outstanding securities or (c) the members of the Board of Directors at
the beginning of any two-year period ceasing to constitute at least a majority
of the Board of Directors at any time during such two-year period unless the
election of any new director during such period has been approved in advance by
two-thirds of the directors in office at the beginning of such two-year period.
Each employment agreement prohibits the employee from competing with the
Company's business during the term thereof and for a period of one year
thereafter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Herbert Solomon, one of three members of the Compensation Committee of
the Board of Directors, is a director, executive officer and employee of the
Company. The other members of the Compensation Committee are Edward Ehrenberg
and Joel A. Klarreich.
1993 LONG-TERM INCENTIVE PLAN
On August 6, 1993, the Company adopted the 1993 Incentive Plan in order
to motivate qualified employees of the Company, to assist the Company in
attracting employees and to align the interests of such persons with those of
the Company's stockholders. The 1993 Incentive Plan provides for the grant of
"incentive stock options" within the meaning of Section 422 of the Code,
"non-qualified stock options," restricted stock, performance grants and other
types of awards to officers, key employees, consultants and independent
contractors of the Company and its affiliates.
The 1993 Incentive Plan, which is administered by the Stock Option
Committee of the Board of Directors, currently authorizes the issuance of a
maximum of 1,500,000 shares of Common Stock, which may be either newly issued
shares, treasury shares, reacquired shares, shares purchased in the open market
or any combination thereof. If any award under the 1993 Incentive Plan
terminates, expires unexercised, or is cancelled, the shares of Common Stock
that would otherwise have been issuable pursuant thereto will be available for
issuance pursuant to the grant of new awards. The number of shares of Common
Stock available under the 1993 Incentive Plan and the terms of any option or
other award granted thereunder are subject to adjustment in the event of a stock
split, combination of shares, stock dividend or certain other events if the
Stock Option Committee determines that such event equitably requires such an
adjustment. In the event of a change in control of the Company (as defined in
the 1993 Incentive Plan), the 1993 Incentive Plan provides among other things
that all stock options outstanding on the date of such change in control shall
become immediately exercisable in full.
As of December 31, 1999, there were options outstanding under the 1993
Incentive Plan with respect to an aggregate of 1,335,918 shares of Common Stock.
Of these, Herbert Solomon, Lloyd Solomon and Scott Page held five-year options
with respect to 150,000 shares of Common Stock each, at an exercise price of
$1.375 per share, all of which were then exercisable. Other employees held
options with 10-year terms with respect to an aggregate of 815,918 shares, at
exercise prices ranging from $.625 to $3.50 per share. Of such options, Eric M.
Davis held options to purchase 30,000 shares exercisable at $2.50 per share and
options to purchase 40,000 shares exercisable at $1.25 per share. Each of these
options may be exercised as to one-third of the shares covered thereby
commencing on the third anniversary of the date of the grant, as to a further
one-third of such shares commencing on the fourth anniversary thereof, and as to
the remaining shares covered thereby commencing on the fifth anniversary
thereof.
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<PAGE>
1996 STOCK OPTION PLAN
On September 17, 1996, the Company adopted the 1996 Stock Option Plan
(the "1996 Plan") in order to provide additional incentive to the officers,
directors and employees of the Company who are primarily responsible for the
management and growth of the Company, and to consultants and advisors to the
Company who otherwise materially contribute to the conduct and direction of its
business, and to retain and attract to the Company's employ persons of
competence.
The 1996 Plan, which is administered by the Stock Option Committee of
the Board of Directors, currently authorizes the issuance of a maximum of
1,000,000 shares of Common Stock, no more than 200,000 of which may be granted
to any individual in any given year. In the event of a change in control of the
Company (as defined in the 1996 Plan), all stock options outstanding under the
1996 Plan shall become fully exercisable. In addition, if any option under the
1996 Plan shall expire or terminate for any reason without having been
exercised, the unpurchased shares shall again be available for the purposes of
the 1996 Plan.
As of the date hereof, pursuant to the 1996 Plan, options to purchase
132,156 shares of Common Stock at an exercise price of $2.27 per share and
options to purchase 67,844 shares of Common Stock at an exercise price of $2.06
per share have been granted to each of Herbert Solomon, Lloyd Solomon and Scott
Page, and options to purchase 10,000 shares of Common Stock at an exercise price
of $2.375 have been granted to Eric Davis. As of the date hereof, other
employees of the Company held options to purchase 255,500 shares pursuant to the
1996 Plan, at exercise prices ranging from $1.41 per share to $2.81 per share.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company receive such
compensation for their services as the Board of Directors may from time to time
determine. Currently, directors who are not employees of the Company receive a
fee of $1,000 for each Board of Directors meeting attended, and $1,000 per year
for each committee upon which such director serves, plus reasonable
out-of-pocket expenses. Directors who are officers or employees of the Company
are not entitled to any compensation for their service as a director.
1995 DIRECTORS' STOCK OPTION PLAN
On August 17, 1995, the Company adopted the 1995 Directors' Stock
Option Plan (the "Directors' Plan"), in which each director who is not an
officer or employee of the Company (each an "Eligible Director") is eligible to
participate. The purpose of the Directors' Plan is to secure for the Company and
its stockholders the benefits arising from stock ownership by its Eligible
Directors by providing a means whereby such Directors may purchase shares of
Common Stock pursuant to options granted in accordance with the Directors' Plan.
The Directors' Plan provides that each Eligible Director is to receive the grant
of an option to purchase 10,000 shares of Common Stock on the date such Eligible
Director is first elected as a member of the Board of Directors. To the extent
that shares of Common Stock remain available for the grant of options under the
Directors' Plan, on January 1st of each year commencing January 1, 1996, each
Eligible Director is to be granted an option to purchase 3,000 shares of Common
Stock. Unless terminated earlier by the Board of Directors, the Directors' Plan
will terminate on June 7, 2005.
The Directors' Plan, which is administered by the Board of Directors,
currently authorizes the issuance of a maximum of 100,000 shares of Common
Stock, subject to adjustment, pursuant to the exercise of options granted
thereunder. Such shares may be authorized but unissued shares or reacquired
shares. The number of shares of Common Stock available under the Directors' Plan
is subject to adjustment to prevent dilution in the event of a stock split,
combination of shares, stock dividend or certain other events. If an option
granted under the Directors' Plan, or any portion thereof, expires or terminates
for any reason without having been exercised in full, the unpurchased shares of
Common Stock covered by such option shall be available for future grants of
options.
As of the date hereof, options to purchase 20,000, 6,000, 6,000, 6,000,
6,000 and 6,000 shares of Common Stock at exercise prices of $2.00, $0.5625,
$1.875, $3.688, $1.563 and $2.438 per share, respectively, have been granted
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<PAGE>
pursuant to the Director's Plan, and are held in equal proportions by the
Eligible Directors, Edward Ehrenberg and Joel A. Klarreich.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information concerning ownership of the
Company's Common Stock as of January 20, 2000 by each person known by the
Company to be the beneficial owner of more than five percent of the Common
Stock, each director, each executive officer named in the summary compensation
table and by all directors and executive officers of the Company as a group.
Unless otherwise indicated, the address of each person or entity listed below is
the Company's principal executive offices.
<TABLE>
<CAPTION>
Name and Address Shares Percentage
of Beneficial Owner (1) Beneficially Owned(2) of Class
- ----------------------- ------------------ ---------
<S> <C> <C>
Herbert Solomon............................ 862,600(3) 17.20%
Lloyd Solomon.............................. 1,135,000(3) 21.46%
Scott Page................................. 951,900(3) 18.64%
Eric M. Davis.............................. 190,000(4) 4.37%
Edward Ehrenberg(5)........................ 20,500(6) (7)
Joel A. Klarreich(8)....................... 20,500(6) (7)
All Directors and Executive Officers
as a Group (6 persons).................... 3,180,500(9) 43.36%
</TABLE>
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(1) All of such persons have sole investment and voting power over the
shares listed as being beneficially owned by them.
(2) All persons identified below as holding options are deemed to be
beneficial owners of shares of Common Stock subject to such options by
reason of their right to acquire such shares within 60 days after
January 20, 2000.
(3) Includes 350,000 shares subject to options.
(4) Includes 80,000 shares subject to options.
(5) Mr. Ehrenberg's address is 711 Daylily Drive, Langhorne, Pennsylvania
19047.
(6) Represents 20,500 shares subject to options.
(7) Less than 1%.
(8) Mr. Klarreich's address is c/o Tannenbaum Helpern Syracuse &
Hirschtritt LLP, 900 Third Avenue, New York, New York 10022.
(9) Includes 1,171,000 shares subject to options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not Applicable.
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<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE SOLOMON-PAGE GROUP LTD.
Dated: January 27, 2000 By: /s/ Lloyd Solomon
-----------------
Lloyd Solomon
Vice Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report 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/ Herbert Solomon Chairman of the Board and Director January 27, 2000
- --------------------
Herbert Solomon
/s/ Lloyd Solomon Vice Chairman of the Board, Chief January 27, 2000
- -------------------- Executive Officer and Director
Lloyd Solomon (Principal Executive Officer)
/s/ Scott Page President and Director January 27, 2000
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Scott Page
/s/ Eric M. Davis Vice President - Finance, Chief January 27, 2000
- -------------------- Financial Officer and Director
Eric M. Davis (Principal Financial
and Accounting Officer)
*/s/ Edward Ehrenberg Director January 27, 2000
- --------------------
Edward Ehrenberg
*/s/ Joel A. Klarreich Director January 27, 2000
- ---------------------
Joel A. Klarreich
*/s/ Eric M. Davis
-------------------
By: Eric M. Davis
Attorney-in-Fact
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