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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
FORM 10-K /A (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 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: 0-25674
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SMARTFORCE PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
REPUBLIC OF IRELAND NONE
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
900 Chesapeake Drive
Redwood City, California 94063
(Address of principal executive offices)
(650) 817-5900
(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 None
Securities registered pursuant to Section 12(b) of the Act:
Ordinary Shares IR9.375p
Subscription Rights
(Title of class)
--------------------
Indicate by check mark whether 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 of time 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
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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 shares held by non-affiliates of
Registrant was $2.3 billion as of March 27, 2000 (excludes 4,693,450 shares
which may be deemed to be held by directors, officers and affiliates of
Registrant as of March 27, 2000).
The number of Registrant's equivalent American Depositary Shares, or ADSs,
outstanding as of March 27, 2000 was 50,461,074.
________________________________________________________________________________
(1) This Annual Report on Form 10-K is restated to include information required
in Part III, Items 10, 11, 12 and 13, which was filed in Amendment No. 1 to our
Annual Report on Form 10-K.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Directors
The following table sets forth certain information as of April 24, 2000, for
our current directors:
Name Age Positions with the Company
---- --- --------------------------
William G. McCabe........... 43 Chairman of the Board of Directors
Gregory M. Priest........... 36 President, Chief Executive Officer and
Director
John P. Hayes............... 46 Vice President, Finance And Director
John M. Grillos............. 58 Director
Patrick J. McDonagh......... 48 Director
James S. Krzywicki.......... 48 Director
William G. McCabe was Chairman of our board of directors, Chief Executive
Officer and President from September 1991 until September 1996, when he resigned
as President. In December 1996, Mr. McCabe resigned as Chief Executive Officer.
In August 1998, Mr. McCabe resigned as Chairman but remained a member of the
board of directors. In December 1998, Mr. McCabe was re-appointed as the
Chairman of our board of directors.
Gregory M. Priest was appointed President and Chief Executive Officer in
December 1998. From February 1998 until December 1998, Mr. Priest was President
and Chief Executive Officer of Knowledge Well Group Limited and of Knowledge
Well Limited (collectively, "Knowledge Well"). Mr. Priest served as our Vice
President, Finance and Chief Financial Officer from December 1995 to January
1998. Mr. Priest has been a director since June 1996. Prior to joining
SmartForce, Mr. Priest was an attorney with Wilson Sonsini Goodrich & Rosati,
Professional Corporation, a private law firm representing technology companies,
where he was elected to the partnership in 1995. From June 1989 to July 1990,
Mr. Priest served as a law clerk to Justice Thurgood Marshall of the United
States Supreme Court.
John P. Hayes was appointed Vice President, Finance in January 1999. Mr.
Hayes has been a director since 1991. From 1991 to January 1999 Mr. Hayes served
as our Group Financial Controller and from 1987 to 1991, Mr. Hayes served as our
Financial Controller.
John M. Grillos has served as a director since February 1994. Mr. Grillos
is currently CEO of meVC Draper Fisher Jurvetson Fund I, a registered business
development company. Mr. Grillos served as Executive Vice President and Chief
Operation Officer from December 1998 through December 1999. Mr. Grillos
remains in our employment with responsibility for special projects. Since June
1996, Mr. Grillos has been the sole General Partner of ITech Partners, L.P., a
venture capital limited partnership focused on seed stage information
technology companies. Prior to joining ITech Partners, Mr. Grillos was
employed by BancBoston Robertson Stephens, an investment banking firm,
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in its venture capital group.
Patrick J. McDonagh was a founding member of SmartForce and has been a
director since September 1989. He has not taken an active role in our management
since 1991 and is currently a private investor. Mr. McDonagh is Chairman of the
board of directors of Riverdeep PLC. Riverdeep PLC was listed on Nasdaq in March
2000.
James S. Krzywicki was appointed as a director in October 1998. Since 1992
Mr. Krzywicki has held various positions, most recently as a Vice President,
with Lotus Development Corporation, which is now owned by International Business
Machines Corporation. In April 1999, Mr. Krzywicki was named Director,
Distributed Learning, IBM Global Services. In October 1999, Mr. Krzywicki joined
RoweCom as their President of North America.
There are no family relationships among any of our directors or executive
officers.
Executive Officers
In addition to Messrs. McCabe and Priest our executive officers, and
their respective ages and positions as of April 24, 2000, are as follows:
Name Age Position
---- --- --------
William A. Beamish.................. 45 Executive Vice President,
Product Strategy
David C. Drummond.................. 37 Executive Vice President,
Finance and Chief Financial Officer
William B. Lewis.................... 44 Executive Vice President,
Global Field Sales
Jeffrey N. Newton................... 45 Executive Vice President,
Global Channel Sales
William A. Beamish was appointed Executive Vice President, Product Strategy
in December 1998. Mr. Beamish was Vice President, Product Strategy and
Development from 1993 until he resigned on March 31, 1998. Mr. Beamish joined
SmartForce Ireland Limited in 1985 as a design consultant. He became head of
product development in 1988 and Development Center Manager in 1990.
William B. Lewis was appointed Executive Vice President, Global Field Sales
in December 1998. Since March 1997, Mr. Lewis served as Vice
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President, North American Sales. From January 1996 until March 1997, Mr. Lewis
served as Area Vice President of Sales for the southern region and served as
Regional Vice President of Sales for the southern region from January 1994 to
January 1996. Mr. Lewis joined as our sales manager for the southern region in
April 1992 and served in that capacity until January 1994.
Jeffrey N. Newton was appointed Executive Vice President, Global Channel
Sales in December 1998. Mr. Newton served as Vice President, Business
Development from March 1997 until he resigned in June 1998. From January 1996
until March 1997, Mr. Newton served as Area Vice President of Sales for the
northern region and served as Regional Vice President of Sales for the northern
region from January 1994 to January 1996. Mr. Newton joined as our sales manager
for the northern region in April 1992 and served in that capacity until January
1994.
Our Executive officers are elected by the board of directors on an annual
basis and serve until their successors have been duly elected. There are no
family relationships among our executive officers.
Recent Executive Officer Changes
David C. Drummond, 37, was appointed Executive Vice President, Finance and
Chief Financial Officer in July 1999. Prior to joining us, Mr. Drummond was a
partner in the corporate transactions group at Wilson Sonsini Goodrich and
Rosati, a private firm representing technology companies. Mr. Drummond's career
at Wilson Sonsini Goodrich and Rosati spanned a period of nine years before
joining us in July 1999.
As of December 31, 1999, Mr. John G. Grillos resigned as Executive Vice
President and Chief Operating Officer. Mr. Grillos continues to be a director
and remains in our employment with responsibility for special projects.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers (as defined in the
rules under Section 16) and directors, and persons who own more than ten percent
of a registered class of our equity securities, to file certain reports with the
SEC and the NASD regarding ownership of, and transactions in, our securities.
Such officers, directors and ten percent holders are also required by the SEC's
rules to furnish to us copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by us or
written representations from certain reporting persons we believe that our
executive officers, directors and ten percent holders complied with all
applicable Section 16(a) filing requirements during the last fiscal year.
Director Compensation
No director receives any cash compensation for his services as a member of
our board of directors, although each director is reimbursed for his expenses in
attending board of directors and related committee
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meetings. Directors who serve on committees of the board of directors receive
no additional compensation.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following tables disclose compensation earned by the Named Executive
Officers for the fiscal years ended December 31, 1999, 1998 and 1997:
Annual Compensation and Long-Term Compensation
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------- Long-Term
Compensation
Name and Principal Options to
Other Annual Purchase ADS All Other
Position Year Salary Bonus Compensation (2) Equivalents Compensation (3)
(1)
<S> <C> <C> <C> <C> <C> <C>
William G. McCabe (4)....... 1999 $250,000 $-- $-- 540,000 $24,100
Chairman of the Board 1998 250,000 -- -- 470,000 29,720
1997 250,000 -- -- -- 31,800
Gregory M. Priest (5)....... 1999 250,000 250,000 60,000 540,000 8,379
President and Chief 1998 56,601 -- -- 410,000 --
Executive Officer 1997 180,000 172,000 -- 90,000 --
William B. Lewis (6)........ 1999 200,000 225,000 60,000 400,000 7,200
Executive Vice President 1998 280,147 19,500 -- 365,196 --
Global Field Sales 1997 215,000 75,000 139,047 70,000 --
Jeffrey N. Newton (7)....... 1999 200,000 225,000 12,000 400,000 7,200
Executive Vice President 1998 203,121 86,398 40,000 350,000 --
Global Channel Sales 1997 223,000 57,000 86,086 70,000 --
William A. Beamish (8)..... 1999 200,000 135,000 -- 385,000 5,418
Executive Vice President 1998 527,500 -- -- 290,000 2,851
Product Strategy 1997 200,000 -- -- -- 6,072
John M. Grillos (9)......... 1999 202,128 127,270 -- 385,000 --
(Former)Executive Vice 1998 19,154 -- -- 290,000 --
President
And Chief Operating Officer 1997 -- -- -- -- --
</TABLE>
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(1) Salary includes amount deferred pursuant to our 401(k) plan.
(2) Includes $139,047 and $86,086 paid in 1997 to Messrs. Lewis and Newton,
respectively, and $40,000 paid to Mr. Newton in 1998 for relocation expenses
and $60,000, $60,000 and $12,000 accomodation allowances paid in 1999 to
Messrs. Priest, Lewis and Newton, respectively.
(3) Includes payments of $31,800 in 1997, $29,720 in 1998 and $24,100 in 1999 to
Mr. McCabe and payments of $6,072 in 1997, $2,851 in 1998 and $5,418 in 1999
to Mr. Beamish, pursuant to defined contribution pension schemes. Also
includes car allowances of $8,379, $7,200 and $7,200 paid to Messrs. Priest,
Lewis, and Newton, respectively, in 1999.
(4) Mr. McCabe was Chairman of the board of directors, Chief Executive Officer
and President until September 1996, when he resigned as President. In
December 1996, he resigned as our Chief Executive Officer and in August
1998, he resigned as Chairman of the Board. In December 1998, Mr. McCabe was
re-appointed Chairman of the board of directors. SmartForce obtains the
benefit of Mr. McCabe's management services through a third party consulting
firm from which he is contracted. Mr. McCabe is compensated for his
management services pursuant to a consulting agreement with a third party
consulting firm. Amounts are paid by SmartForce Ireland Limited to the
consulting firm which compensates its employees, including Mr. McCabe. We
have not reviewed any agreement between the consulting firm and its
employees with respect to compensation amounts. In addition to the amounts
paid to the consulting firm, we paid Mr. McCabe $25,000 pursuant to an
employment agreement, which we entered into with Mr. McCabe in June 1999, in
respect of services provided by him.
(5) Mr. Priest was elected as an executive officer in December 1995, and
resigned as an executive officer effective January 31, 1998. In December
1998, he was appointed as President and Chief Executive Officer. The amounts
shown for 1998 include both payment to Mr. Priest for his services as our
Chief Financial Officer in January of 1998 and payment for his services as
President and Chief Executive Officer during the fourth quarter of 1998. Mr.
Priest's annual base salary as President and Chief Executive Officer has
been set at $250,000.
(6) Mr. Lewis became Area Vice President of Sales for the southern region in
January 1996 and Vice President North American Sales in March 1997. Mr.
Lewis was appointed Executive Vice President Global Field Sales in December
1998.
(7) Mr. Newton became Area Vice President for the northern region in January
1996 and Vice President, Business Development in March 1997. He resigned in
June 1998. In December 1998, Mr. Newton was appointed Executive Vice
President, Global Channel Sales.
(8) Mr. Beamish was Vice President, Product Strategy and Development from 1993
until he resigned on March 31, 1998. In December 1998, he was appointed
Executive Vice President, Product Strategy. SmartForce obtains the benefit
of Mr. Beamish's management services through a third party consulting firm
from which he is
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contracted. Mr. Beamish is compensated for his management
services pursuant to a consulting agreement with a third party consulting
firm. Amounts are paid by SmartForce Ireland Limited to the consulting firm
which compensates its employees, including Mr. Beamish. We have not reviewed
any agreement between the consulting firm and its employees with respect to
compensation amounts. In addition to the amounts paid to a consulting firm,
we paid Mr. Beamish $25,000 pursuant to an employment agreement, which we
entered into with Mr. Beamish in June 1999, in respect of services provided
him.
(9) Mr. Grillos was appointed as Chief Operating Officer in December 1998. Mr.
Grillos has been a director of the Company since February 1994. As of
December 31, 1999, Mr. Grillos resigned as Executive Vice President and
Chief Operating Officer. Mr. Grillos continues to be a director and remains
in our employment with responsibility for special projects.
Option Grants in Last Fiscal Year
The following table provides information with respect to options granted
during fiscal 1999 to the Named Executive Officers:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Number of Percent of Total Potential Realizable Value At
Equivalent ADSs Options Granted Assumed Annual Rates of Stock
Over Which to Employees in Exercise Price Price Appreciatin for Option
Options Were Last Fiscal Per Equivalent Expiration Term (1)
Name Granted (2)(3) Year ADS(4) Date 5% 10%
- ---- -------------- ---- ------ ---- -- ---
William G. McCabe 540,000 9.0% $16.44 7/2/09 $5,582,226 $14,146,457
Gregory M. Priest 540,000 9.0% $16.44 7/2/09 $5,582,226 $14,146,457
William B. Lewis 400,000 6.7% $16.44 7/2/09 $4,134,982 $10,478,857
Jeffrey N. Newton 400,000 6.7% $16.44 7/2/09 $4,134,982 $10,478,857
William A. Beamish 385,000 6.4% $16.44 7/2/09 $3,979,920 $10,085,900
John M. Grillos 385,000 6.4% $16.44 7/2/09 $3,979,920 $10,085,900
</TABLE>
(1) Potential realizable value assumes that the share price (based on the fair
market value of the ADSs) increases from the date of grant until the end of
the ten-year option term at the annual rate specified (5% and 10%). If the
price of the ADSs were to increase at such rates from $16.44 per ADS, the
price at the date of grant, over the next ten years, the resulting ADS price
at 5% and 10% appreciation would be approximately $26.78 and $42.64
respectively. The assumed annual rates of appreciation are specified in SEC
rules and do not represent the Company's estimate or projection of future
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share price.We do not necessarily agree that this method can properly
determine the value of an option.
(2) All options in this table were granted under the 1994 Plan. The options
expire ten years from the date of grant, subject to earlier termination in
the event of the optionee's cessation of service with us. The 1994 Plan is
currently administered by the Stock Option Committee of the board of
directors, which has broad discretion and authority to amend outstanding
options and to reprice options, whether through an exchange of options or
an amendment thereto.
(3) Options granted to certain employees are exercisable in full at the date
of grant, subject to the company's right to repurchase the shares at the
original exercise price in the event that the employee's options are
unvested at the time of termination of employement. Unless otherwise
indicated, options generally vest over four years such that 1/4th of the
equivalent ADSs subject to the option vest one year from the respective date
of grant, 1/4th vest on the second anniversary of the respective date of
grant and 1/48th vest each month thereafter.
(4) Options were granted at an exercise price equal to the fair market value of
our ADSs, as determined by reference to the closing price of the ADSs as
reported on the Nasdaq National Market on the last trading day prior to the
date of grant.
Aggregated Option Exercises in Last Fiscal year
and Fiscal Year End Option Values
The following table provides information with respect to option exercises fiscal
1999 by the Named Executive Officers and the value of such officers' unexercised
options at December 31, 1999:
<TABLE>
<CAPTION>
Number of Equivalent ADSs Subject Value of Unexercised In-The-Money
to Unexercised Options at Fiscal Options at Fiscal Year End (4)
Year-End (3)
Equivalent
ADSs Value
Name Acquired on Realized (2) Exercisable Unexercisable Exercisable Unexercisable
Exercise (1)
<S> <C> <C> <C> <C> <C> <C>
Gregory M. Priest -- -- 1,233,314 -- $25,122,428 --
William G. McCabe -- -- 1,277,882 -- $25,902,231 --
William B. Lewis 19,450 $225,164 874,176 -- $18,549,675 --
Jeffrey N. Newton -- -- 885,552 -- $18,900,978 --
William A. Beamish -- -- 831,880 -- $17,557,035 --
John M. Grillos -- -- 178,750 506,250 $3,395,547 $10,051,641
</TABLE>
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(1) Our employees, including the Named Executive Officers, have a choice of
acquiring either ordinary shares or ADSs representing such ordinary shares
upon exercise of options.
(2) Market value of underlying shares based on the closing price of the ADSs on
the Nasdaq National Market on the date of exercise, minus the exercise price.
(3) Options granted to certain employees are exercisable in full at the date
of grant, subject to the company's right to repurchase the shares at the
original exercise price in the event that the employee's options are
unvested at the time of termination of employment. Unless otherwise
indicated, options generally vest over four years such that 1/4th of the
equivalent ADSs subject to the option vest one year from the respective
date of grant, 1/4th vest on the second anniversary of the respective date
of grant and 1/48th vest each month thereafter.
(4) Market value of shares underlying in-the-money share options is based on the
closing price of $33.50 per ADS on the Nasdaq National Market on December 31,
1999, which is the last trading day of fiscal 1999, minus the exercise price.
Employment Contracts and Arrangements
On June 18, 1999, following the acquisition of Knowledge Well, we entered into
an employment agreement with Gregory M. Priest, under which we agreed to employ
Mr. Priest as our President and Chief Executive Officer, effective as of
December 10, 1998. Under the terms of the agreement, Mr. Priest will be paid a
minimum base salary of $250,000 per year. In addition, Mr. Priest will be
eligible to receive an annual performance bonus at 100% achievement of $200,000
(the "Targeted Bonus") at the discretion of the board of directors. Mr. Priest's
employment is at-will. The employment agreement includes a covenant not to
solicit and a covenant not to compete in the event of a voluntary termination by
Mr. Priest or the termination for cause(as defined in the agreement) by
SmartForce. If Mr. Priest's employment is involuntarily terminated (as defined
in the agreement) or terminated without cause we are required to make a lump sum
payment to Mr. Priest equal to his then base salary plus the then maximum
performance bonus available to Mr. Priest for a period of one (1) year. Mr.
Priest may elect, in the event of an involuntary termination, to be bound by the
covenants not to solicit and not to compete in exchange for continued vesting of
the stock options granted to him by us for the term of the covenants.
Otherwise, Mr. Priest's stock options will discontinue to vest immediately upon
termination of employment.
On June 18, 1999, following the acquisition of Knowledge Well, we entered into
an employment agreement with William G. McCabe, under which we agreed to employ
Mr. McCabe as Chairman of our board of directors, effective as of December 10,
1998. Under the terms of the agreement, Mr. McCabe will be paid a minimum base
salary of $25,000 per year under this agreement. Mr. McCabe's employment is at-
will. The employment agreement includes covenants not to solicit and not to
compete in the event of a voluntary termination by Mr. McCabe or the termination
for cause(as defined in the agreement) by SmartForce. If Mr. McCabe's employment
is involuntarily terminated (as defined in the
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agreement) or terminated without cause, we are required to make a lump sum
payment to Mr. McCabe equal to his then base salary plus the then maximum
performance bonus available to Mr. McCabe for a period of one (1) year. Mr.
McCabe may elect, in the event of an involuntary termination, to be bound by
the covenants not to solicit and not to compete in exchange for continued
vesting of the stock options granted to him by us for the term of the
covenants. Otherwise, Mr. McCabe's stock options will discontinue to vest
immediately upon termination of employment.
On June 18, 1999, following the acquisition of Knowledge Well, we entered into
an employment agreement with William A. Beamish, under which we agreed to employ
Mr. Beamish as our Executive Vice President, Product Strategy, effective as of
December 10, 1998. Under the terms of the agreement, Mr. Beamish will be paid a
minimum base salary of $25,000 per year under this agreement. Mr. Beamish's
employment is at-will. The employment agreement includes covenants not to
solicit and not to compete on termination of Mr. Beamish's employment. If Mr.
Beamish's employment is involuntarily terminated (as defined in the agreement)
or terminated without cause, we are required to make a lump sum payment to Mr.
Beamish equal to his then base salary plus the then maximum performance bonus
available to Mr. Beamish for a period of one (1) year. Mr. Beamish may elect, in
the event of an involuntary termination, to be bound by the covenants not to
solicit and not to compete in exchange for continued vesting of the stock
options granted to him by us for the term of the covenants. Otherwise, Mr.
Beamish's stock options will discontinue to vest immediately upon termination of
employment.
On June 18, 1999, following the acquisition of Knowledge Well, we entered into
an employment agreement with William B. Lewis, under which we agreed to employ
Mr. Lewis as our Executive Vice President, Global Field Sales, effective as of
December 10, 1998. Under the terms of the agreement, Mr. Lewis will be paid a
minimum base salary of $200,000 per year. In addition to the base salary, Mr.
Lewis will be eligible to receive an annual performance bonus at 100%
achievement of $150,000 (the "targeted" bonus) at the discretion of the board of
directors. Mr. Lewis's employment is at-will. The employment agreement includes
covenants not to solicit and not to compete in the event of a voluntary
termination by Mr. Lewis or the termination for cause (as defined in the
agreement) by SmartForce. If Mr. Lewis's employment is involuntarily terminated
(as defined in the agreement) or terminated without cause, we are required to
make a lump sum payment to Mr. Lewis equal to his then base salary plus the then
maximum performance bonus available to Mr. Lewis for a period of one (1) year.
Mr. Lewis may elect, in the event of an involuntary termination, to be bound by
the covenants not to solicit and not to compete in exchange for continued
vesting of the stock options granted to him by us for the term of the covenants.
Otherwise, Mr. Lewis's stock options will discontinue to vest immediately upon
termination of employment.
On June 18, 1999, following the acquisition of Knowledge Well, we entered into
an employment agreement with Jeffrey N. Newton, under which we agreed to employ
Mr. Newton as our Executive Vice President, Global Channel Sales, effective as
of December 10, 1998. Under the terms of the agreement, Mr. Newton will be paid
a minimum base salary of $200,000 per year. In addition to the base salary, Mr.
Newton will
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be eligible to receive an annual performance bonus at 100% achievement of
$150,000 (the "targeted" bonus) at the discretion of the board of directors. Mr.
Newton's employment is at-will. The employment agreement includes covenants not
to solicit and not to compete in the event of a voluntary termination by Mr.
Newton or termination for cause (as defined in the agreement) by SmartForce. If
Mr. Newton's employment is involuntarily terminated (as defined in the
agreement) or terminated without cause we are required to make a lump sum
payment to Mr. Newton equal to his then base salary plus the then maximum
performance bonus available to Mr. Newton for a period of one (1) year. Mr.
Newton may elect, in the event of an involuntary termination, to be bound by the
covenants not to solicit and not to compete in exchange for continued vesting of
the stock options granted to him by us for the term of the covenants. Otherwise,
Mr. Newton's stock options will discontinue to vest immediately upon termination
of employment.
In addition to the employment agreements with Messrs. McCabe and Beamish
noted above, SmartForce Ireland Limited has entered into a consulting agreement
with a third-party consulting firm pursuant to which the consulting firm
provides certain management services to SmartForce Ireland Limited, including
the services of Messrs. McCabe, Beamish and Hayes. Messrs. McCabe, Beamish and
Hayes were employees of the consulting firm during 1999. Amounts due under the
consulting agreement are paid by SmartForce Ireland Limited to the consulting
firm. Messrs. McCabe, Beamish and Hayes are separately compensated by the
consulting firm. During 1999, the consulting firm billed SmartForce Ireland
Limited an aggregate of $859,936 for services provided by Messrs. McCabe,
Beamish and Hayes.
Compensation and Stock Option Committee Interlocks and Insider Participation
During fiscal 1999, the Compensation Committee of our board of directors
consisted of Messrs. McCabe, McDonagh and Grillos. During fiscal 1999, the Stock
Option Committee consisted of Messrs. McDonagh and Krzywicki. Mr. Krzywicki was
not one of our officers or employees or an officer or employee of our
subsidiaries during fiscal 1999 or at any time prior to fiscal 1999. Mr.
McDonagh was not one of our officers or employees or an officer or employee of
our subsidiaries during fiscal 1999 or at any time since September 1991. From
our inception to September 1991, Mr. McDonagh was our Chief Executive Officer.
Mr. McCabe has served on the Compensation Committee since February 1995. Mr.
McCabe also served as Chief Executive Officer through December 1996, President
through September 1996 and Chairman of the board of directors through August 12,
1998. From October 1, 1998 through December 10, 1998, Mr. McCabe was a member of
the interim management committee of the board of directors and since December
10, 1998, Mr. McCabe has been the Chairman of the board of directors. Mr.
Grillos was not one of our officers or employees or an officer or employee of
our subsidiaries at any time prior to October 1, 1998. From October 1, 1998
through December 10, 1998, Mr. Grillos was a member of the interim management
committee of the board of directors. From
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December 10, 1998 to December 31, 1999, Mr. Grillos was our Executive Vice
President and Chief Operating Officer.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our ADSs (or their equivalents) as of December 31, 1999 (unless
otherwise stated) by:
. each director;
. each Named Executive Officer, as defined below in "Executive Compensation and
Other Matters--Summary Compensation Table";
. each person who is the beneficial owner of more than five percent (5%) of our
ADSs; and
. all current directors and executive officers as a group.
The number and percentage of ADSs beneficially owned is determined under the
rules of the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any equivalent ADSs as to which the individual has sole or
shared voting power or investment power and also any equivalent ADSs that the
individual has the right to acquire within sixty (60) days of March 31, 2000,
through the exercise of share options or other rights. Unless otherwise
indicated, each person has sole voting and investment power (or shares such
powers with his spouse) with respect to the shares shown as beneficially owned.
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Equivalent
ADSs Approximate
Beneficially Percentage
Name of Person or Identity of Group Owned Owned(1)
- - ----------------------------------- ------------- ------------
Massachusetts Financial Services Company
("MFS")(2) ............................... 3,787,190 7.5%
500 Boylston Street
Boston, MA 02116
William G. McCabe (3)...................... 4,667,868 9.0%
Gregory M. Priest (4)...................... 1,586,671 3.1%
William A. Beamish (5)...................... 1,185,472 2.3%
William B. Lewis (6)...................... 992,311 1.9%
Jeffrey N. Newton (7)...................... 969,679 1.9%
John M. Grillos (8)...................... 259,570 *
John P. Hayes (9)...................... 406,689 *
Patrick J. McDonagh (10).................... 312,500 *
James S. Krzywicki (11)..................... 28,000 *
All current directors and executive officers
as a group (10 persons)(12)................ 10,634,177 18.8%
* less than 1%
(1) Based on 50,568,165 of our ADSs (or their equivalents) outstanding as of
March 31, 2000.
(2) Based on information contained in the Schedule 13G/A filed with the SEC for
the fiscal year ended December 31, 1999 by MFS. Certain shares are
beneficially owned by non-reporting entities as well as MFS.
(3) Includes 1,277,882 equivalent ADSs issuable upon the exercise of share
options held by Mr. McCabe, which options are exercisable within sixty (60)
days of March 31, 2000. Also includes 2,088,299 ADSs held in the name of
Peregrine Company Managers Ltd., a Company controlled by a family trust
established by Mr. McCabe. Mr. McCabe disclaims beneficial ownership of
these shares held on behalf of Bentico Trading Ltd. within the meaning of
Rule 13d-3 of the Exchange Act.
(4) Includes 1,233,314 equivalent ADSs issuable upon the exercise of share
options held by Mr. Priest, which options are exercisable within sixty (60)
days of March 31, 2000.
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<PAGE>
(5) Includes 831,880 equivalent ADSs issuable upon the exercise of share options
held by Mr. Beamish, which options are exercisable within sixty (60) days of
March 31, 2000. Also includes 314,304 ADSs held in the name of Peregrine
Company Managers Ltd. on behalf of Mr. Beamish.
(6) Includes 874,176 equivalent ADSs issuable upon the exercise of share options
held by Mr. Lewis, which options are exercisable within sixty (60) days of
March 31, 2000. Also includes 84,127 ADSs held in a trust. Under the rules
of the Securities and Exchange Commission, Mr. Lewis may be deemed to be the
beneficial owner of these shares. Mr. Lewis disclaims beneficial ownership
of these securities except to the extent of his pecuniary interest therein.
(7) Includes 885,552 equivalent ADSs issuable upon the exercise of share
options held by Mr. Newton, which options are exercisable within sixty (60)
days of March 31, 2000. Also includes 84,127 ADSs held in a trust. Under
the rules of the Securities and Exchange Commission, Mr. Newton may be
deemed to be the beneficial owner of these shares. Mr. Newton disclaims
beneficial ownership of these securities except to the extent of his
pecuniary interest therein.
(8) Includes 158,688 equivalent ADSs issuable upon the exercise of share options
held by Mr. Grillos, which options are exercisable within sixty (60) days of
March 31, 2000. Also includes 35,920 ADSs held by Itech Partners L.P. in
which Mr. Grillos is the sole General Partner. Mr. Grillos disclaims
beneficial ownership of these securities except to the extent of his
pecuniary interest therein.
(9) Includes 396,689 equivalent ADSs issuable upon the exercise of share options
held by Mr. Hayes, which options are exercisable within sixty (60) days of
March 31, 2000.
(10) Includes 12,500 equivalent ADSs issuable upon the exercise of share
options held by Mr. McDonagh, which options are exercisable within sixty
(60) days of March 31, 2000.
(11) Includes 25,000 equivalent ADSs issuable upon the exercise of share
options held by Mr. Krzywicki, which options are exercisable within sixty
(60) days of March 31, 2000.
(12) Includes 5,920,681 equivalent ADSs issuable upon the exercise of options
held by current directors and our executive officers as a group, which
options are exercisable within sixty (60) days of March 31, 2000.
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ITEM. 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Approximately 9% of the issued share capital of CBT (Technology) Limited, one
of our Irish subsidiaries, representing a special non-voting class, is owned by
Stargazer Productions ("Stargazer"), an unlimited company which is wholly-owned
by certain of our key employees. All of the voting securities of CBT
(Technology) Limited are owned by us and, except for the securities owned by
Stargazer, there are no other outstanding securities CBT (Technology) Limited.
CBT (Technology) Limited has in the past and may in the future declare and pay
dividends to Stargazer, and Stargazer may pay dividends to its shareholders out
of such amounts. Except for the fact that Stargazer is wholly owned by certain
of our key employees, we have no relationship with Stargazer.
In August 1999, Gregory M. Priest, our President and Chief Executive Officer,
received a loan in the amount of $450,000, which is repayable in four equal
annual installments, commencing in August 2000. Interest accrues on the
principal amount at a rate of 5.96%, to be paid annually. As of December 31,
1999, the balance outstanding under the loan, inclusive of accrued interest,
was $460,000.
In June 1999, we acquired Knowledge Well in a share for share exchange in
which we issued 4,374,896 ordinary shares in exchange for all of the outstanding
shares of Knowledge Well. We also assumed options to acquire Knowledge Well
stock exercisable for an issuance of up to approximately 0.4 million ordinary
shares. Prior to our acquisition of Knowledge well, a number of our directors
and officers were shareholders and had a controlling interest in Knowledge
Well. On the acquisition of Knowledge Well the following ADSs were issued to
our directors and officers:
<TABLE>
<CAPTION>
Name Number of ADSs Issued
<S> <C>
William G. McCabe (1) 3,083,986
Gregory M. Priest 349,594
William A. Beamish (2) 314,304
John M. Grillos (3) 80,820
William B. Lewis (4) 84,127
Jeffrey N. Newton (5) 84,127
</TABLE>
_______________________________________________________________________________
(1) Includes 2,088,299 ADSs held in the name of Peregrine Company Managers
Ltd., a Company controlled by a family trust established by Mr. McCabe. Mr.
McCabe disclaims beneficial ownership of these shares held on behalf of
Bentico Trading Ltd. within the meaning of Rule 13d-3 of the Exchange Act.
(2) The 314,304 ADSs held in the name of Peregrine Company Managers Ltd. on
behalf of Mr. Beamish.
(3) Includes 35,920 ADSs held by Itech Partners L.P. in which Mr. Grillos is
the sole General Partner. Mr. Grillos disclaims
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<PAGE>
beneficial ownership of
these securities except to the extent of his pecuniary interest therein.
(4) The 84,127 ADSs are held in a trust. Under the rules of the Securities and
Exchange Commission, Mr. Lewis may be deemed to be the beneficial owner of
these shares. Mr. Lewis disclaims beneficial ownership of these securities
except to the extent of his pecuniary interest therein.
(5) The 84,127 ADSs are held in a trust. Under the rules of the Securities and
Exchange Commission, Mr. Newton may be deemed to be the beneficial owner of
these shares. Mr. Newton disclaims beneficial ownership of these securities
except to the extent of his pecuniary interest therein.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Company has duly caused this Form 10-K/A to the Registrant's Annual
Report to be signed on its behalf by the undersigned, thereunto duly authorized
on the 28th day of April, 2000.
SMARTFORCE PUBLIC LIMITED COMPANY
/s/ Gregory M. Priest
-----------------------
Gregory M. Priest
President and Chief Executive Officer
/s/ David C. Drummond
-----------------------
David C. Drummond
Executive Vice President,
Finance and Chief Financial Officer
17
