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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K/A
AMENDMENT NO. 2
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE 0-25674
SKILLSOFT PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
REPUBLIC OF IRELAND NONE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
107 NORTHEASTERN BOULEVARD 03062
NASHUA, NEW HAMPSHIRE (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(603) 324-3000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF CLASS
Ordinary Shares, E 0.11
Subscription Rights
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 [ ] No [X]
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 amendment to this
Form 10-K. [ ]
Indicate by check mark whether registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
The approximate aggregate market value of voting shares held by
non-affiliates of the registrant as of June 28, 2002 was $173,566,073.
On April 11, 2003, the registrant had outstanding 99,608,695 Ordinary
Shares (issued or issuable in exchange for the registrant's outstanding American
Depository Shares ("ADSs")).
DOCUMENTS INCORPORATED BY REFERENCE
None.
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EXPLANATORY NOTE
This Annual Report on Form 10-K/A is being filed as Amendment No. 2 to the
Annual Report on Form 10-K of SkillSoft Public Limited Company (the "Registrant"
or the "Company") filed with the Securities and Exchange Commission (the "SEC")
on April 29, 2003, as amended on May 23, 2003, for the purpose of amending the
following items: Items 10, 11, 12 and 13.
Each American Depositary Share of the Company ("ADS") represents one
ordinary share, nominal value Euro 0.11 per share, of the Company. References to
the ADSs herein shall also include a reference to the underlying ordinary shares
of the Company.
SKILLSOFT PUBLIC LIMITED COMPANY
FORM 10-K
TABLE OF CONTENTS
PAGE
----
PART III
ITEM 10. Directors and Executive Officers of the Registrant.......... 1
ITEM 11. Executive Compensation...................................... 3
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.................. 10
ITEM 13. Certain Relationships and Related Transactions.............. 15
Signatures............................................................ 16
Certifications........................................................ 17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the directors of the Company and certain
information about their background.
Gregory M. Priest, age 39, was appointed Chairman of the Board of Directors
in November 2000. Mr. Priest has served as the Company's Chief Strategy Officer
since the Company's merger with SkillSoft Corporation in September 2002. Mr.
Priest served as the Company's President and Chief Executive Officer from
December 1998 to September 2002. From February 1998 until December 1998, Mr.
Priest was President and Chief Executive Officer of Knowledge Well Group Limited
and of Knowledge Well Limited. Mr. Priest served as SmartForce Public Limited
Company's Vice President, Finance and Chief Financial Officer from December 1995
to January 1998. Mr. Priest has been a director since June 1996.
Charles E. Moran, age 48, has served as President and Chief Executive
Officer and as a director of the Company since the Company's merger with
SkillSoft Corporation in September 2002. Mr. Moran is a founder of SkillSoft
Corporation and served as its Chairman of the Board, President and Chief
Executive Officer from January 1998 until September 2002.
William T. Coleman III, age 55, has served as a director of the Company
since the Company's merger with SkillSoft Corporation in September 2002. Mr.
Coleman served as a director of SkillSoft Corporation from August 1999 to
September 2002. Mr. Coleman is a founder of BEA Systems ("BEA") and has served
as BEA's Chief Customer Advocate since August 2002. Mr. Coleman served as
Chairman of the Board of Directors of BEA from BEA's inception in 1995 until
August 2002 and was Chief Strategy Officer from October 2001 to August 2002.
From 1995 to October 2001, Mr. Coleman served as Chief Executive Officer of BEA.
Prior to founding BEA, Mr. Coleman was employed by Sun Microsystems, Inc. from
1985 to January 1995, where his last position was Vice President and General
Manager of its Sun Integration Division. Mr. Coleman serves as a director of BEA
and Symantec Corporation. Mr. Coleman holds a B.S. from the Air Force Academy
and an M.S. from Stanford University.
P. Howard Edelstein, age 48, has served as a director of the Company since
the Company's merger with SkillSoft Corporation in September 2002. Mr. Edelstein
has served as an Entrepreneur in Residence with Warburg Pincus LLC since January
2002. Mr. Edelstein previously served as President and Chief Executive Officer
of Thomson Financial ESG (now known as Omgeo), a provider of electronic
commerce, transaction processing and information services to the international
securities/trading community, from 1993 to 2001. Mr. Edelstein is also a
director of Alacra, a privately held financial information company.
Stewart K.P. Gross, age 43, has served as a director of the Company since
the Company's merger with SkillSoft Corporation in September 2002. Mr. Gross
served as a director of SkillSoft Corporation from January 1998 to September
2002. Mr. Gross is a Senior Managing Director of Warburg Pincus LLC, where he
has been employed since July 1987. Mr. Gross is a director of BEA and several
privately held companies.
James S. Krzywicki, age 50, has served as a director of the Company since
October 1998. Mr. Krzywicki has been Vice President, Channel Services of
Parametric Technology Corporation ("PTC"), a provider of software solutions for
manufacturers for product development and improvement, since April 2003. Prior
to joining PTC, Mr. Krzywicki served as President of North American Services of
RoweCom, a provider of knowledge resource management and acquisition services,
from October 1999 to February 2001, and as Chief Operating Officer from February
2001 to November 2001. In November 2001, RoweCom, Inc. was acquired by divine,
inc., a premier integrated solution provider focused on the extended enterprise,
and Mr. Krzywicki became Senior Vice President and General Manager, divine
information services, and held this position until December 2002. From 1992 to
1999, Mr. Krzywicki held various positions with Lotus Development Corporation,
which is now owned by International Business Machines Corporation, most recently
as Director, Distributed Learning, IBM Global Services.
Ferdinand von Prondzynski, age 48, has served as a director of the Company
since November 2001. Dr. von Prondzynski has been the President of Dublin City
University, one of Ireland's leading higher
1
education institutions, since July 2000. From January 1991 to July 2000, Dr. von
Prondzynski served as Professor of Law and Dean of the Faculty of Social
Services, the University of Hull, UK.
Information about the Company's executive officers is set forth following
Item 4 of the Company's Annual Report on Form 10-K, as originally filed with the
SEC, under the heading "Executive Officers of SkillSoft."
There are no family relationships among any of the directors or executive
officers of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and holders of more than 10% of a registered class
of the Company's equity securities to file with the SEC initial reports of
ownership of the Company's equity securities on a Form 3 and reports of changes
in such ownership on a Form 4 or Form 5. Officers, directors and 10%
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of copies of such filings by the Company's
directors and executive officers and 10% shareholders or written representations
from certain of those persons, the Company believes that all filings required to
be made by those persons during the fiscal year ended January 31, 2003 were
timely made with the following exceptions: The automatic initial option grants
to purchase 25,000 ordinary shares granted under the Company's 2001 Outside
Director Option Plan (the "Director Plan") to each of Messrs. Coleman, Gross and
Edelstein on September 6, 2002 and the option to purchase 50,000 ordinary shares
granted under the 2002 Share Option Plan (the "2002 Plan") to Colm M. Darcy on
September 6, 2002 were reported late on their respective Forms 5 for the fiscal
year ended January 31, 2003; and the automatic annual option grants to purchase
10,000 ordinary shares granted under the Director Plan to each of Mr. Krzywicki
and Dr. von Prondzynski on January 1, 2003 were reported late on their
respective Forms 4 filed on January 23, 2003.
DIRECTORS' COMPENSATION
No director receives any cash compensation for his services as a member of
the Company's Board of Directors or any committee of the Board of Directors,
although each director is reimbursed for his expenses in attending Board of
Directors and related committee meetings. As described in the following
paragraph, non-employee directors may receive stock compensation for their
services as a member of the Board of Directors.
On initial election to the Board of Directors, each new non-employee
director receives an option to purchase 25,000 ordinary shares under the
Company's Director Plan. Each non-employee director who has been a director for
at least six months receives an option to purchase 10,000 ordinary shares on
January 1st of each year. All options granted under the Director Plan have a
term of ten years and an exercise price equal to fair market value of the
ordinary shares on the date of grant. Each option becomes exercisable as to 25%
of the shares subject to the option on each anniversary of the date of grant,
provided the non-employee director remains a director on such dates. Upon
exercise of an option, the non-employee director may elect to receive his
ordinary shares in the form of ADSs. After termination as a non-employee
director, an optionee may exercise an option during the period set forth in his
option agreement. If termination is due to death or disability, the option will
remain exercisable for 12 months. In all other cases, the option will remain
exercisable for a period of three months. However, an option may never be
exercised later than the expiration of its ten-year term. A non-employee
director may not transfer options granted under the Director Plan other than by
will or the laws of descent and distribution. Only the non-employee director may
exercise the option during his lifetime. In the event of the Company's merger
with or into another corporation or a sale of substantially all of the Company's
assets, the successor corporation may assume, or substitute a new option in
place of, each option. If such assumption or substitution occurs, the options
will continue to be exercisable according to the same terms as before the merger
or sale of assets. Following such assumption or substitution, if a non-employee
director is terminated other than by voluntary resignation, the option will
become fully exercisable and generally will remain exercisable for a period of
three months. If the outstanding options are not assumed or substituted for, the
Company's Board of Directors will notify each non-employee director that he has
the right to exercise the option as to all shares subject to the option for a
period of 30 days following the
2
date of the notice. The option will terminate upon the expiration of the 30-day
period. Unless terminated sooner, the Director Plan will automatically terminate
in 2011. The Company's Board of Directors has the authority to amend, alter,
suspend, or discontinue the Director Plan, but no such action may adversely
affect any grant previously made under the Director Plan.
On November 26, 2001, Dr. von Prondzynski was granted an option to purchase
25,000 ordinary shares at an exercise price of $20.68 per share reflecting his
appointment to the Board of Directors in November 2001. Upon appointment to the
Board of Directors on September 6, 2002, Messrs. Coleman, Edelstein and Gross
were each granted an option to purchase 25,000 ordinary shares at an exercise
price of $4.25 per share. On January 1, 2002, Mr. Krzywicki was granted an
option to purchase 10,000 ordinary shares at an exercise price of $24.80 per
share. On January 1, 2003, Mr. Krzywicki and Dr. von Prondzynski were each
granted an option to purchase 10,000 ordinary shares at an exercise price of
$2.75 per share. Each option granted to a non-employee director was in
accordance with the terms of the Director Plan described above.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the total
compensation for the years ended December 31, 2000 and 2001 and the 13 months
ended January 31, 2003 for each person who served as chief executive officer of
the Company during the fiscal year ended January 31, 2003, the four most highly
compensated executive officers who were serving as executive officers on January
31, 2003 and two other executive officers who ceased serving as executive
officers during the fiscal year ended January 31, 2003 but for whom disclosures
would have been provided but for the fact that they were not serving as
executive officers at the end of the fiscal year ended January 31, 2003 (the
"Named Executive Officers"), as required under applicable rules of the SEC.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION(3)
------------------------------------- ---------------
AWARDS
---------------
SHARES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS COMPENSATION(2) OPTIONS COMPENSATION
--------------------------- ------- -------- -------- --------------- --------------- ------------
Charles E. Moran(4)......... 2002 $ 93,750 $ -- $ -- -- $ 4,327(5)
President and Chief
Executive Officer
Gregory M. Priest(6)........ 2002 270,833 250,000(7) 142,917(8) 2,137,500 8,379(9)
Chairman of the Board and 2001 250,000 314,320 60,000(10) 220,000 9,981(11)
Chief Strategy Officer 2000 250,000 339,320 60,000(10) -- 8,379(9)
Colm M. Darcy............... 2002 206,667 66,250 -- 530,000 92,230(12)
Executive Vice President,
Content Development
Jerald A. Nine Jr.(13)...... 2002 84,333 -- -- -- 3,846(5)
Executive Vice President,
Global Sales & Marketing
and General Manager,
Content Solutions Division
Mark A. Townsend(14)........ 2002 66,667 -- -- -- 3,077(5)
Executive Vice President,
Technology
Thomas J. McDonald(15)...... 2002 62,500 -- -- -- 2,885(5)
Executive Vice President,
Operations and Chief
Financial Officer
3
LONG TERM
ANNUAL COMPENSATION COMPENSATION(3)
------------------------------------- ---------------
AWARDS
---------------
SHARES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS COMPENSATION(2) OPTIONS COMPENSATION
--------------------------- ------- -------- -------- --------------- --------------- ------------
Former Officers
Jeffrey N. Newton(16)....... 2002 150,000 -- 82,500(17) 1,010,000 923,560(18)
Former Chief Customer 2001 200,000 187,200 60,000(17) 160,000 7,200(9)
Officer 2000 200,000 150,000 -- -- 7,200(9)
Thomas F. McKeagney(19)..... 2002 50,000 -- 25,000(20) -- 215,554(21)
Former Executive Vice 2001 150,000 112,500 -- 130,000 5,416(9)
President, Research and 2000 150,000 125,000 -- 70,000 5,454(9)
Development
---------------
(1) In connection with the closing of the merger with SkillSoft Corporation on
September 6, 2002, the Company's fiscal year end changed from December 31
to January 31. Accordingly, this table presents compensation for the years
ended December 31, 2000 ("2000") and December 31, 2001 ("2001") and the
period from January 1, 2002 through January 31, 2003 ("2002").
(2) Other compensation in the form of perquisites and other personal benefits
has been omitted, in accordance with the rules of the SEC, in those
instances in which the aggregate amount of such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of the
total annual salary and bonus for the executive officer in the fiscal year
covered.
(3) The Company did not grant any stock appreciation rights or make any
long-term incentive plan payouts during any fiscal year covered. This table
excludes options granted by SkillSoft Corporation prior to the merger on
September 6, 2002 to each of Messrs. Moran, Nine, McDonald and Townsend,
which options were assumed by the Company in connection with the merger
and, based on the merger exchange ratio of 1 share of SkillSoft Corporation
common stock for 2.3674 ordinary shares of the Company, are exercisable to
purchase an aggregate of 1,657,180, 1,065,330, 946,960 and 946,960 ordinary
shares, respectively, at an exercise price of $4.06 per share.
(4) Mr. Moran has served as the Company's Chief Executive Officer since the
closing of the Company's merger with SkillSoft Corporation on September 6,
2002, and, therefore, the salary reported on this table reflects salary
paid to Mr. Moran from such date through January 31, 2003. Mr. Moran's
current annual base salary is $225,000.
(5) Consists of amounts paid as accrued vacation time.
(6) Mr. Priest served as the Company's Chief Executive Officer until the
closing of the Company's merger with SkillSoft Corporation on September 6,
2002.
(7) Consists of amounts paid as a bonus earned and approved prior to the merger
with SkillSoft Corporation on September 6, 2002.
(8) Consists of $65,000 paid to Mr. Priest as an accommodation allowance (see
"Employment Agreements -- Gregory M. Priest's Employment Agreement") and a
total of $77,917 paid to Mr. Priest as a non-recoverable advance against
bonuses on a monthly basis from January 1, 2002 through September 30, 2002.
(9) Consists of amounts paid as car allowances.
(10) Consists of amounts paid as an accommodation allowance (see "Employment
Agreements -- Gregory M. Priest's Employment Agreement").
(11) Consists of $8,379 paid to Mr. Priest as a car allowance and $1,602 paid by
the Company for the premium payment of Mr. Priest's life insurance policy.
The Company no longer pays premiums with respect to this policy.
(12) Consists of $69,153 paid to Mr. Darcy in connection with his relocation to
Nashua, New Hampshire and $23,077 paid to Mr. Darcy as accrued vacation
time.
4
(13) Mr. Nine has served as the Company's Executive Vice President, Global Sales
and Marketing and General Manager, Content Solutions Division, since the
closing of the Company's merger with SkillSoft Corporation on September 6,
2002, and, therefore, the salary reported on this table reflects salary
paid to Mr. Nine from such date through January 31, 2003. Mr. Nine's
current annual base salary is $200,000.
(14) Mr. Townsend has served as the Company's Executive Vice President,
Technology, since the closing of the Company's merger with SkillSoft
Corporation on September 6, 2002, and, therefore, the salary reported on
this table reflects salary paid to Mr. Townsend from such date through
January 31, 2003. Mr. Townsend's current annual base salary is $160,000.
(15) Mr. McDonald has served as the Company's Executive Vice President,
Operations and Chief Financial Officer, since the closing of the Company's
merger with SkillSoft Corporation on September 6, 2002, and, therefore, the
salary reported on this table reflects salary paid to Mr. McDonald from
such date through January 31, 2003. Mr. McDonald's current annual base
salary is $150,000.
(16) Mr. Newton resigned from his position as an executive officer of the
Company upon the closing of the Company's merger with SkillSoft Corporation
on September 6, 2002.
(17) Consists of $45,000 paid to Mr. Newton in 2002 and $60,000 paid in 2001 as
an accommodation allowance and a total of $37,500 paid to Mr. Newton as a
non-recoverable advance against commissions and bonuses on a monthly basis
from January 1, 2002 through September 30, 2002.
(18) Consists of $5,400 paid to Mr. Newton as a car allowance, $23,077 paid to
Mr. Newton as accrued vacation time and $895,083 paid to Mr. Newton as
severance (see "Severance Agreements -- Jeffrey N. Newton's Severance
Agreement" for more information regarding the severance payment).
(19) Mr. McKeagney resigned from his position as an executive officer of the
Company on April 8, 2002.
(20) Consists of amounts paid to Mr. McKeagney as a non-recoverable advance
against bonuses paid to Mr. McKeagney on a monthly basis from January 1,
2002 through April 30, 2002.
(21) Consists of $7,499 paid to Mr. McKeagney as accrued vacation time, $1,805
paid to Mr. McKeagney as a car allowance, a total of $168,750 paid to Mr.
McKeagney as severance (of which $131,250 was paid during the fiscal year
ended January 31, 2003 and the remaining $37,500 was paid in two equal
monthly installments in February and March 2003) and $37,500 paid to Mr.
McKeagney as consulting fees (see "Severance Agreements -- Thomas F.
McKeagney's Severance Agreement" for more information regarding the
severance payments and consulting fees).
5
Option Grants Table. The following table provides certain information with
respect to stock options granted during the 13 months ended January 31, 2003 to
each of the Named Executive Officers. The Company granted no stock appreciation
rights during the 13 months ended January 31, 2003.
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
ORDINARY SHARES TOTAL OPTIONS EXERCISE SHARE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE PER OPTION TERM(3)
OPTIONS EMPLOYEES IN ORDINARY EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR(2) SHARE DATE 5% 10%
---- --------------- -------------- --------- ---------- ------------- -------------
Charles E. Moran......... -- -- -- -- -- --
Gregory M. Priest........ 412,500 5.8% $5.55 5-8-12 $1,439,776 $3,648,674
254,166 3.6% $3.30 7-12-12 $ 527,484 $1,336,748
1,470,834 20.8% $3.30 7-12-12 $3,052,499 $7,735,631
Colm M. Darcy............ 130,000 1.8% $5.55 5-8-12 $ 453,747 $1,149,885
350,000 5.0% $3.30 7-12-12 $ 726,373 $1,840,773
50,000 0.7% $4.25 9-6-12 $ 133,640 $ 338,670
Jerald A. Nine Jr........ -- -- -- -- -- --
Mark A. Townsend......... -- -- -- -- -- --
Thomas J. McDonald....... -- -- -- -- -- --
Former Officers
Jeffrey N. Newton(4)..... 300,000 4.3% $5.55 12-5-05 $ 262,446 $ 551,115
366,666 5.2% $3.30 12-5-05 $ 190,726 $ 400,509
343,334 4.9% $3.30 12-5-05 $ 178,589 $ 375,024
Thomas F. McKeagney...... -- -- -- -- -- --
---------------
(1) All options granted to the Named Executive Officers were granted under the
Company's 1994 Share Option Plan (the "1994 Plan) and 2002 Plan. The
exercise price of all options was equal to the fair market value of the
Company's ADSs on the date of grant. In general, under each of the 1994 Plan
and the 2002 Plan, such options vest as to 25% of the ordinary shares
subject to the option one year from the vesting commencement date, which is
generally the date of grant or the date of hire of the optionee, and as to
1/48th of the shares subject to the option each month thereafter. The
options are generally not transferable by the optionee, are exercisable for
a ten year period from the date of the grant, and must generally be
exercised within three months after the end of the optionee's status as an
employee or within twelve months after the optionee's death or disability.
This table excludes options granted by SkillSoft Corporation prior to the
merger on September 6, 2002 to each of Messrs. Moran, Nine, McDonald and
Townsend, which options were assumed by the Company in connection with the
merger and, based on the merger exchange ratio of 1 share of SkillSoft
Corporation common stock for 2.3674 ordinary shares of the Company, are
exercisable to purchase an aggregate of 1,657,180, 1,065,330, 946,960 and
946,960 ordinary shares, respectively, at an exercise price of $4.06 per
share.
(2) Based on a total of 7,060,844 ordinary shares subject to options granted by
the Company to its employees during the 13 months ended January 31, 2003.
(3) 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 share price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The grants shown are net of their option exercise
price but do not include deductions for taxes or other expenses associated
with the exercise of the option or the sale of the underlying shares. The
actual gains, if any, on the exercises of options will depend on the market
price of the ADSs, the optionee's continued employment through the option
period, and the date on which the options are exercised.
(4) Pursuant to Mr. Newton's severance agreement, Mr. Newton's options continue
to vest until September 6, 2005 (see "Severance Agreements -- Jeffrey N.
Newton's Severance Agreement").
6
Fiscal Year-End Option Value Table. The following table provides certain
information concerning the value of unexercised share options held by each of
the Named Executive Officers as of January 31, 2003. None of the Named Executive
Officers exercised options during the 13 months ended January 31, 2003.
NUMBER OF ORDINARY SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS AT
JANUARY 31, 2003(1) JANUARY 31, 2003(2)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Charles E. Moran.............................. 236,739 2,130,659 $ -- $ --
Gregory M. Priest............................. 1,251,868 2,098,542 $ -- $ --
Colm M. Darcy................................. 99,833 524,167 $ -- $ --
Jerald A. Nine Jr............................. 118,370 1,302,068 $ -- $ --
Mark A. Townsend.............................. 78,913 1,104,785 $ -- $ --
Thomas J. McDonald............................ 78,913 1,104,785 $ -- $ --
Former Officers
Jeffrey N. Newton............................. 807,641 818,598 $ -- $ --
Thomas F. McKeagney........................... 287,703 0 $ -- $ --
---------------
(1) This table includes options granted by SkillSoft Corporation prior to the
merger on September 6, 2002 to each of Messrs. Moran, Nine, McDonald and
Townsend, which options were assumed by the Company in connection with the
merger and, based on the merger exchange ratio of 1 share of SkillSoft
Corporation common stock for 2.3674 ordinary shares of the Company, are
exercisable to purchase an aggregate of 1,657,180, 1,065,330, 946,960 and
946,960 ordinary shares, respectively, at an exercise price of $4.06 per
share.
(2) The value of the in-the-money options is the excess of the fair market value
(determined on the basis of the closing price per share of the Company's
ADSs on the NASDAQ National Market) of the underlying ordinary shares on
January 31, 2003 ($2.86 per share) over the exercise price of the option
multiplied by the number of ordinary shares underlying the option.
EMPLOYMENT AGREEMENTS
Charles E. Moran's Employment Agreement. In connection with the Company's
merger with SkillSoft Corporation, the Company entered into an employment
agreement, effective on September 6, 2002, the date of completion of the merger,
with Charles E. Moran, to employ Mr. Moran as its President and Chief Executive
Officer. Mr. Moran's agreement provides for a cash compensation plan that
reflects the level established by the SkillSoft Corporation board of directors
for the then current fiscal year. Specifically, Mr. Moran's employment agreement
provides that he will be paid a base salary of $225,000 per year to be reviewed
for increases at least annually by the Company's Board of Directors. In
addition, Mr. Moran will be entitled to receive an annual performance bonus
based on performance metrics established by the Board of Directors. Mr. Moran's
employment is at-will, but if Mr. Moran's employment is terminated without cause
or if he resigns with good reason, each as defined in the agreement, he will be
entitled to receive a payment equal to the sum of his base salary and target
bonus for a period which is the greater of (i) one year after the date of
termination, and (ii) the period between the date of termination and September
6, 2004, the second anniversary of the completion of the merger. In addition, if
Mr. Moran is terminated without cause or if he resigns with good reason, he may
elect to continue vesting of the options granted to him by the Company for a
period which is the greater of (i) one year after the date of termination, and
(ii) the period between the date of termination and September 6, 2004, if he
agrees to be bound by the nonsolicitation and noncompete provisions contained in
his employment agreement. The employment agreement also includes a covenant not
to solicit employees and a covenant not to compete for a period extending until
the later of one year after the termination of his employment and September 6,
2004, if Mr. Moran's termination is voluntary (other than for good reason) or
the Company terminates him for cause.
7
Gregory M. Priest's Employment Agreement. In connection with the Company's
merger with SkillSoft Corporation, the Company entered into an employment
agreement, effective on September 6, 2002, the date of completion of the merger,
with Gregory M. Priest, to employ Mr. Priest as Chairman of the Board of
Directors and Chief Strategy Officer of the Company. Mr. Priest's agreement
provides for a cash compensation plan that reflects the level established by the
Board of Directors for 2002 (which plan was not increased from Mr. Priest's cash
compensation plan for the fiscal year ended December 31, 2001). Specifically,
Mr. Priest's employment agreement provides that he will be paid a base salary of
$250,000 per year to be reviewed for increases at least annually by the Board of
Directors. In addition, Mr. Priest will be entitled to a $60,000 per year
accommodation allowance and an auto allowance in the amount of $8,379. He will
also be entitled to receive an annual performance bonus of $265,000 upon the
attainment of agreed upon performance objectives to be reviewed for increases at
least annually by the Board of Directors. Mr. Priest's employment is at-will,
but if his employment is terminated without cause or if he resigns with good
reason, each as defined in the agreement, he will be entitled to receive a
payment equal to the sum of his base salary and target bonus for a period which
is the greater of (i) one year after the date of termination, and (ii) the
period between the date of termination and September 6, 2005, the third
anniversary of the completion of the merger. In addition, if Mr. Priest is
terminated without cause or if he resigns with good reason, he may elect to
continue vesting of the options granted to him by the Company for a period which
is the greater of (i) one year after the date of termination, and (ii) the
period between the date of termination and September 6, 2005, if he agrees to be
bound by the nonsolicitation and noncompete provisions contained in his
employment agreement. The employment agreement also includes a covenant not to
solicit employees and a covenant not to compete for a period extending until the
later of one year after the termination of his employment and September 6, 2005,
if Mr. Priest's termination is voluntary (other than for good reason) or the
Company terminates him for cause.
Colm M. Darcy's Employment Agreement. In connection with the Company's
merger with SkillSoft Corporation, the Company entered into an employment
agreement, effective on September 6, 2002, the date of completion of the merger,
with Colm M. Darcy, to employ Mr. Darcy as Executive Vice President, Content
Development, of the Company. Mr. Darcy's employment agreement provides that he
will be paid a base salary of $200,000 per year to be reviewed for increases at
least annually by the Board of Directors. Pursuant to the employment agreement,
on September 6, 2002, the Company granted Mr. Darcy an option to purchase an
aggregate of 50,000 shares of the Company at an exercise price of $4.25 per
share. The option grant will vest as to 25% of the shares on September 6, 2003
and thereafter in 48 equal monthly installments on each monthly anniversary of
the date of the grant. Mr. Darcy will also be reimbursed for certain
supplemental travel expenses for him and his wife. In addition, Mr. Darcy will
be entitled to receive relocation expense reimbursement in the event Mr. Darcy
either relocates to Ireland at the Company's request or returns there within
three months after his employment is terminated without cause or if he resigns
with good reason, each as defined in the agreement. Mr. Darcy's employment is
at-will, but if his employment is terminated without cause or if he resigns with
good reason, he will be entitled to receive a payment equal to the sum of
$75,000 plus his base salary for a period which is the greater of (i) six months
after the date of termination, and (ii) the period between the date of
termination and September 6, 2003, the first anniversary of the completion of
the merger. In addition, if Mr. Darcy is terminated without cause or if he
resigns with good reason, he may elect to continue vesting of the options
granted to him by the Company for a period which is the greater of (i) six
months after the date of termination, and (ii) the period between the date of
termination and September 6, 2003, if he agrees to be bound by the
nonsolicitation and noncompete provisions contained in his employment agreement.
The employment agreement also includes a covenant not to solicit employees and a
covenant not to compete for a period extending until the later of six months
after the termination of his employment and September 6, 2006, if Mr. Darcy's
termination is voluntary (other than for good reason) or the Company terminates
him for cause.
Thomas J. McDonald's Employment Agreement. The Company's subsidiary,
SkillSoft Corporation, is a party to an employment agreement with Thomas J.
McDonald, dated February 2, 1998. Under the terms of the employment agreement,
Mr. McDonald is entitled to receive an annual base salary of $135,000, which may
be increased in accordance with SkillSoft Corporation's regular salary review
practices. Mr. McDonald is entitled to participate in any bonus plan that
SkillSoft Corporation may establish for its senior executives. Either SkillSoft
Corporation or Mr. McDonald may terminate the employment agreement at will for
any
8
reason, upon three months' prior notice in the case of termination by SkillSoft
Corporation, or upon two months' prior notice in the case of termination by Mr.
McDonald. If SkillSoft Corporation terminates Mr. McDonald's employment without
cause, or if Mr. McDonald terminates his employment for good reason (as defined
in the employment agreement), then SkillSoft Corporation will be required to pay
Mr. McDonald his base salary and benefits for a period of six months following
termination. In addition, in the event of such a termination, Mr. McDonald's
stock options will continue to vest and be exercisable if he performs consulting
services for SkillSoft Corporation of up to ten hours per week during the six
months following termination.
Jerald A. Nine's Employment Agreement. In connection with the Company's
merger with SkillSoft Corporation, the Company entered into an employment
agreement, effective on September 6, 2002, the date of completion of the merger,
with Jerald A. Nine, to employ Mr. Nine as its Executive Vice-President, Content
Solutions and General Manager Books Division. Mr. Nine's agreement provides for
a cash compensation plan that reflects the level established by the SkillSoft
Corporation Board of Directors for the then current fiscal year. Mr. Nine's
employment agreement with the Company provides that he will be paid a base
salary of $200,000 per year to be reviewed for increases at least annually by
the Board of Directors. In addition, Mr. Nine will be entitled to receive an
annual performance bonus based on performance metrics established by the Board
of Directors. Mr. Nine's employment is at-will, but if Mr. Nine's employment is
terminated without cause or if he resigns with good reason, as defined in the
agreement, he will be entitled to receive a payment equal to the sum of his base
salary plus the then maximum performance bonus for a period of one year. In
addition, if Mr. Nine is terminated without cause or if he resigns with good
reason, he may elect to continue vesting of the options granted to him by the
Company for a period of one year. The employment agreement also includes a
covenant not to solicit employees and a covenant not to compete for a period
extending until one year after the termination of his employment if Mr. Nine's
termination is voluntary (other than for good reason) or the Company terminates
him for cause.
Mark A. Townsend's Employment Agreement. SkillSoft Corporation is also a
party to an employment agreement with Mark A. Townsend, dated January 12, 1998.
Under the terms of the employment agreement, Mr. Townsend is entitled to receive
a base salary of $145,000, which may be increased in accordance with SkillSoft
Corporation's regular salary review practices. Mr. Townsend is also entitled to
participate in any bonus plans that SkillSoft Corporation may establish for its
senior executives. Mr. Townsend's employment agreement provides for the same
termination provisions and severance benefits as Mr. McDonald.
SEVERANCE AGREEMENTS
Thomas F. McKeagney's Severance Agreement. On April 30, 2002, the Company
and its former executive officer, Thomas F. McKeagney, entered into a Separation
Agreement and Release. The agreement provides Mr. McKeagney with COBRA coverage,
aggregate severance payments of $168,750 to be paid in monthly installments of
$18,750, a possible bonus payment of up to $75,000, acceleration of vesting
applicable to certain options held by him, and an extension of his
post-termination option exercise period until May 31, 2003. Pursuant to this
agreement, Mr. McKeagney was paid a total of $131,250 in the fiscal year ended
January 31, 2003. In addition, pursuant to this agreement, Mr. McKeagney entered
into a consulting agreement with the Company and received a total of $37,500 for
these consulting services during the fiscal year ended January 31, 2003.
Jeffrey N. Newton's Severance Agreement. On September 13, 2002, the
Company and its former executive officer, Jeffrey N. Newton, entered into an
Agreement and Release. The agreement provides Mr. Newton with COBRA coverage,
aggregate severance payments of up to $914,400 and an extension of his
post-termination option vesting period until September 6, 2005. Pursuant to the
separation agreement, Mr. Newton was paid a total of $895,083 during the fiscal
year ended January 31, 2003.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 31, 2003, the members of the
Compensation Committee of the Company's Board of Directors were Mr. Krzywicki,
Mr. Patrick J. McDonagh, who served until his resignation as a director on
September 6, 2002, and Messrs. Coleman and Gross (Chair), who were appointed
9
as members of the Compensation Committee in October 2002. No executive officer
of the Company has served as a director or member of the compensation committee
of any other entity whose executive officers served as a director or member of
the Company's Compensation Committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of January 31, 2003
with respect to the beneficial ownership of the Company's ADSs by:
- each person known to the Company to own beneficially more than 5% of the
Company's outstanding securities;
- each director;
- each of the Named Executive Officers; and
- the current directors and executive officers of the Company as a group.
The number of ADSs beneficially owned by each 5% shareholder, director or
executive officer is determined under rules of the SEC. Under such rules,
beneficial ownership includes any shares as to which the individual or entity
has sole or shared voting power or investment power and includes any ADSs
representing the ordinary shares which the individual has the right to acquire
on or before April 1, 2003 through the exercise of share options, and any
reference in the footnotes to this table to shares subject to share options
refers only to share options that are so exercisable. For purposes of computing
the percentage of outstanding ADSs held by each person or entity, any shares
which that person or entity has the right to acquire on or before April 1, 2003,
are deemed to be outstanding but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person. Unless
otherwise indicated, each person or entity has sole investment and voting power
(or shares such power with his or her spouse) with respect to the shares set
forth in the following table. The inclusion herein of any shares deemed
beneficially owned does not constitute an admission of beneficial ownership of
those shares. As of January 31, 2003, the Company had approximately 99,603,965
ordinary shares outstanding. The shareholders of the Company may elect to hold
their respective shares of the Company's outstanding securities in the form of
ordinary shares or ADSs. In addition, holders of options to purchase ordinary
shares of the Company may, upon exercise of their options, elect to receive such
ordinary shares in the form of ADSs. The 5% shareholders, directors and
executive officers identified in the following table hold their respective
shares of the Company's outstanding securities in the form of ADSs.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-----------------------
PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER ADSS OWNED
------------------------------------ ---------- ----------
5% SHAREHOLDERS
Warburg, Pincus Ventures, L.P.(1)........................... 13,279,987 13.3%
Liberty Wanger Asset Management, L.P.(2).................... 10,660,000 10.7%
Cramer Rosenthal McGlynn, LLC(3)............................ 5,869,500 5.9%
Transamerica Investment Management, LLC(4).................. 4,983,069 5.0%
10
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-----------------------
PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER ADSS OWNED
------------------------------------ ---------- ----------
DIRECTORS
Stewart K.P. Gross(5)....................................... 13,279,987 13.3%
Charles E. Moran(6)......................................... 2,464,191 2.5%
Gregory M. Priest(7)........................................ 1,354,975 1.3%
James S. Krzywicki(8)....................................... 111,750 *
William T. Coleman III(9)................................... 73,777 *
Ferdinand von Prondzynski(10)............................... 6,260 *
P. Howard Edelstein......................................... -- *
OTHER NAMED EXECUTIVE OFFICERS
Mark A. Townsend(11)........................................ 913,421 *
Jeffrey N. Newton(12)....................................... 848,158 *
Jerald A. Nine(13).......................................... 819,713 *
Thomas J. McDonald(14)...................................... 420,251 *
Thomas F. McKeagney(15)..................................... 291,456 *
Colm M. Darcy(16)........................................... 113,126 *
All current directors and executive officers as a group (11
persons).................................................. 19,557,451 19.2%
---------------
* Less than 1%
(1) On September 16, 2002, Warburg Pincus Ventures, L.P. ("WPV"), Warburg
Pincus & Co. ("WP") and Warburg Pincus LLC ("WP LLC") filed a Schedule 13D
with the SEC reporting beneficial ownership and shared voting and
dispositive power with respect to 13,279,987 ADSs, consisting of shares
beneficially owned by WPV, WP and WP LLC; the following information is
reported in reliance on such filing. WP is the sole general partner of WPV.
WPV is managed by WP LLC. The address for Warburg, Pincus is 466 Lexington
Avenue, 10th Floor, New York, New York 10017-3147.
(2) On September 12, 2002, Liberty Wanger Asset Management, L.P. ("WAM"), WAM
Acquisition GP, Inc. ("WAM GP") and Liberty Acorn Trust ("Acorn") filed a
Schedule 13G and on March 10, 2003 filed Amendment No. 2 to the Schedule
13G with the SEC reporting beneficial ownership and shared voting and
dispositive power with respect to 10,660,000 ADSs for WAM and WAM GP and
9,800,000 ADSs for Acorn, consisting of shares beneficially owned by WAM,
WAM GP and Acorn; the following information is reported in reliance on such
filing. WAM is an Investment Adviser registered under section 203 of the
Investment Advisors Act of 1940 and reports ADSs acquired on behalf of
discretionary clients. Acorn is a discretionary client of WAM. WAM GP is
the general partner of WAM. WAM, WAM GP and Acorn file jointly pursuant to
a Joint Filing Agreement dated March 10, 2003 among WAM, WAM GP and Acorn.
The address of WAM, WAM GP and Acorn is 227 West Monroe Street, Suite 3000,
Chicago, Illinois 60606.
(3) On January 27, 2003, Cramer Rosenthal McGlynn, LLC ("Cramer") filed a
Schedule 13G with the SEC reporting beneficial ownership with respect to
5,869,500 ADSs, consisting of 3,270,500 ADSs for which Cramer has sole
voting and dispositive power and 2,520,400 ADSs for which Cramer has shared
voting and dispositive power; the following information is reported in
reliance on such filing. The Schedule 13G filing with the SEC was filed
erroneously with respect to SkillSoft Corporation rather than SkillSoft
PLC. Cramer is an Investment Adviser registered under section 203 of the
Investment Advisors Act of 1940. The address of Cramer is 520 Madison
Avenue, New York, New York 10022.
(4) On December 2, 2002, Transamerica Investment Management, LLC ("TIM") filed
a Schedule 13G and on February 14, 2003 filed Amendment No. 1 to the
Schedule 13G with the SEC reporting
11
beneficial ownership and shared voting and dispositive power with respect
to 4,983,069 ADSs, consisting of 4,983,069 ADSs for which TIM has shared
voting and dispositive power; the following information is reported in
reliance on such filing. Each of the original Schedule 13G filing and the
amendment thereto filed with the SEC were filed erroneously with respect to
SkillSoft Corporation rather than SkillSoft PLC. TIM is deemed to be the
beneficial owner pursuant to separate arrangements whereby TIM acts as
investment adviser to certain individuals and entities. The address of TIM
is 1150 S. Olive Street, Los Angeles, California 90015.
(5) Mr. Gross, a director of the Company, is a managing director and member of
WP LLC and a general partner of WP. Mr. Gross disclaims beneficial
ownership of these shares. See Note 1 of this table. Mr. Gross's address is
c/o Warburg, Pincus is 466 Lexington Avenue, 10th Floor, New York, New York
10017-3147.
(6) Includes 266,332 ADSs issuable upon exercise of share options held by Mr.
Moran, 11 ADSs held by Mr. Moran's wife and 1,225,915 ADSs beneficially
owned by Mr. Moran's wife, as trustee of various trusts for the benefit of
Mr. Moran's children. Mr. Moran disclaims beneficial ownership of the
shares held in trust.
(7) Includes 1,283,951 ADSs issuable upon exercise of share options held by Mr.
Priest.
(8) Includes 108,750 ADSs issuable upon exercise of share options held by Mr.
Krzywicki.
(9) Consists of shares beneficially owned by the Coleman Family Trust, of which
Mr. Coleman is trustee.
(10) Includes 6,250 ADSs issuable upon exercise of share options held by Dr. von
Prondzynski.
(11) Includes 88,778 ADSs issuable upon exercise of share options held by Mr.
Townsend and 59,185 ADSs beneficially owned by Mr. Townsend's wife as
trustee of the MCM Trust. Mr. Townsend disclaims beneficial ownership of
the shares held in trust.
(12) Includes 830,974 ADSs issuable upon exercise of share options held by Mr.
Newton and 14,021 ADSs held in a trust. On September 6, 2002, Mr. Newton
resigned as an executive officer. Except for information relating to share
options, this information is based on the beneficial ownership information
reported by Mr. Newton to the Company as of June 5, 2002 and reported in
the Company's proxy statement filed with the SEC on June 17, 2002. The
information relating to share options is accurate as of January 31, 2003.
(13) Includes 133,167 ADSs issuable upon exercise of share options held by Mr.
Nine.
(14) Includes 88,778 ADSs issuable upon exercise of share options held by Mr.
McDonald, 1,953 ADSs beneficially owned by Mr. McDonald's wife as trustee
of a trust for the benefit of Mr. McDonald's family and 3,906 ADSs
beneficially owned by Mr. McDonald as custodian for his daughter under the
Uniform Gifts to Minors Act. Mr. McDonald disclaims beneficial ownership of
the shares held in trust and held by him as custodian for his daughter.
(15) Includes 287,703 ADSs issuable upon exercise of share options held by Mr.
McKeagney. On April 8, 2002, Mr. McKeagney resigned as an executive
officer. Except for information relating to options, this information is
based on the beneficial ownership information reported by Mr. McKeagney to
the Company as of June 5, 2002 and reported in the Company's proxy
statement filed with the SEC on June 17, 2002. The information relating to
share options is accurate as of January 31, 2003.
(16) Includes 108,791 ADSs issuable upon exercise of share options held by Mr.
Darcy.
12
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the ordinary shares
authorized for issuance under the Company's equity compensation plans as of
January 31, 2003.
(C)
NUMBER OF
ORDINARY SHARES
(A) (B) REMAINING
NUMBER OF WEIGHTED- AVAILABLE FOR
ORDINARY SHARES TO AVERAGE EXERCISE FUTURE ISSUANCE
BE ISSUED UPON PRICE OF UNDER EQUITY
EXERCISE OF OUTSTANDING COMPENSATION
OUTSTANDING OPTIONS, PLANS (EXCLUDING
OPTIONS, WARRANTS WARRANTS AND SECURITIES REFLECTED
PLAN CATEGORY(1) AND RIGHTS RIGHTS IN COLUMN (A))
---------------- ------------------ ---------------- --------------------
Equity compensation plans approved by
security holders........................... 7,555,900(2) $ 9.58(2) 2,890,365
Equity compensation plans not approved by
security holders........................... 6,391,632(3) $13.35 5,944,621(4)
---------- ------ ---------
Total...................................... 13,947,532 $11.31 8,834,986
---------------
(1) This table excludes an aggregate of 11,709,927 ordinary shares issuable upon
exercise of outstanding options that the Company assumed in connection with
its merger with SkillSoft Corporation. The weighted average exercise price
of the excluded options is $5.56 per share. The Company assumed the
SkillSoft Corporation 1998 Stock Incentive Plan, 1999 Non-Employee Director
Stock Option Plan, 2001 Stock Incentive Plan and Books24x7.com, Inc. 1994
Stock Option Plan only insofar as they related to options outstanding under
the plans at the time of the merger, and the Company may not grant any
future options under any of the plans.
(2) Excludes ordinary shares issuable under the Company's 1995 Employee Stock
Purchase Plan in connection with the current offering period; such ordinary
shares are included in column (c).
(3) Consists of 6,381,031 ordinary shares subject to outstanding options under
the Company's 1996 Supplemental Stock Plan (the "1996 Plan"), 6,567 ordinary
shares subject to outstanding options under the ForeFront Group, Inc.
Amended and Restated 1996 Stock Option Plan (the "ForeFront 1996 Plan"),
3,424 ordinary shares subject to outstanding options under the Knowledge
Well Group Limited 1998 Share Option Plan (the "Knowledge Well Group 1998
Plan") and 610 ordinary shares subject to outstanding options under the
Knowledge Well Limited 1998 Share Option Plan (the "Knowledge Well 1998
Plan").
(4) Consists of 4,749,527 ordinary shares available for issuance under the 1996
Plan, 2 ordinary shares available for issuance under the ForeFront Group,
Inc. 1996 Non-employee Director's Stock Option Plan (the "ForeFront 1996
Director Plan"), 337,230 ordinary shares available for issuance under the
ForeFront 1996 Plan, 624,203 ordinary shares available for issuance under
the Knowledge Well Group 1998 Plan and 233,659 ordinary shares available for
issuance under the Knowledge Well 1998 Plan.
1996 PLAN
On October 15, 1996, the Board of Directors approved the 1996 Plan. The
1996 Plan provides for the granting of non-qualified share options to employees
(excluding officers, as defined by the 1996 Plan, and directors) and consultants
at a price determined by the Compensation Committee of the Board of Directors or
its designee (the "Compensation Committee"). Options granted under the 1996 Plan
vest at a rate determined by the Compensation Committee on a grant-by-grant
basis. The 1996 Plan provides that vested options may be exercised for up to
three months after termination of employment and for 12 months after termination
of employment as a result of disability. The Compensation Committee may select
alternative periods of time for exercise upon termination of service. The 1996
Plan permits options to be exercised with cash, check, promissory notes, certain
other ordinary shares of the Company or consideration received by the Company
under a "cashless exercise" program. In the event that the Company merges with
or into another
13
corporation, or sells substantially all of its assets, the 1996 Plan provides
that each outstanding option may be assumed or substituted for by the successor
corporation. If such substitution or assumption does not occur, each option will
fully vest and become exercisable. As of January 31, 2003, there were 14,000,000
ordinary shares reserved under the 1996 Plan, and 4,749,527 ordinary shares
remaining for future issuance.
FOREFRONT 1996 DIRECTOR PLAN
On May 28, 1998, the Company assumed the ForeFront 1996 Director Plan and
outstanding options thereunder exercisable for 18,822 of the Company's ordinary
shares. The ForeFront 1996 Director Plan provides for the granting of
non-qualified stock options to nonemployee directors of ForeFront Group, Inc. at
the fair market value of the shares as of the date of grant determined by the
Compensation Committee. Options granted under the ForeFront 1996 Director Plan
generally vest over two years. The ForeFront 1996 Director Plan provides that
vested options may be exercised within two years of termination of directorship
and for one year after termination of directorship as a result of death or
disability. The ForeFront 1996 Director Plan permits options to be exercised
with cash, check, or certain other ordinary shares of the Company. In the event
that the Company merges with or into another corporation, or sells substantially
all of its assets, the ForeFront 1996 Director Plan provides that each
outstanding option will fully vest and become exercisable. As of January 31,
2003, there were no ordinary shares subject to options outstanding under the
ForeFront 1996 Director Plan, and 2 ordinary shares available for future
issuance. The Company has not granted any further options under the ForeFront
1996 Director Plan since the date it was assumed and will not make future grants
thereunder.
FOREFRONT 1996 PLAN
On May 28, 1998, the Company assumed the ForeFront 1996 Plan and
outstanding options thereunder exercisable for 798,924 of the Company's ordinary
shares. The ForeFront 1996 Plan provides for the granting of incentive stock
options to employees (including officers and directors) and non-qualified stock
options to employees (including officers and directors) and consultants at an
exercise price determined by the Compensation Committee (not less than the fair
market value of the shares as of the date of grant for incentive stock options).
Options granted under the ForeFront 1996 Plan vest at a rate determined by the
Compensation Committee on a grant-by-grant basis. The ForeFront 1996 Plan
provides that vested options may be exercised within 90 days after termination
of employment and within 12 months after termination of employment as a result
of death or disability. The ForeFront 1996 Plan permits options to be exercised
with cash, check, promissory note, certain other shares of the Company's capital
stock or consideration received by the Company under a "cashless exercise"
program. In the event that the Company merges with or into another corporation,
or sells substantially all of its assets, the ForeFront 1996 Plan provides that
each outstanding option will fully vest and become exercisable. As of January
31, 2003, there were 6,567 ordinary shares subject to options outstanding under
the ForeFront 1996 Plan, and 337,230 ordinary shares available for future
issuance. The Company has not granted any further options under the ForeFront
1996 Plan since the date it was assumed and has no current intention of making
future grants thereunder.
KNOWLEDGE WELL 1998 PLAN
On June 18, 1999, the Company assumed the Knowledge Well 1998 Plan and
outstanding options thereunder exercisable for 654,800 of the Company's ordinary
shares. The Knowledge Well 1998 Plan provides for the granting of incentive
share options to employees (including officers and directors) and non-qualified
share options to non-employee directors of Knowledge Well Limited, employees
(including officers and directors) and consultants at an exercise price
determined by the Compensation Committee (not less than the fair market value of
the shares as of the date of grant for incentive stock options). Options granted
under the Knowledge Well 1998 Plan vest at a rate determined by the Compensation
Committee on a grant-by-grant basis. The Knowledge Well 1998 Plan provides that
vested options may be exercised for 90 days after termination of employment or
directorship and for 12 months after termination of employment or directorship
as a result of death or disability. The Compensation Committee may select
alternative periods of time for
14
exercise upon termination of service. The Knowledge Well 1998 Plan permits
options to be exercised with cash, check, promissory note, certain other
ordinary shares of the Company or consideration received by the Company under a
"cashless exercise" program. In the event that the Company merges with or into
another corporation, or sells substantially all of its assets, the Knowledge
Well 1998 Plan provides that each outstanding option may be assumed or
substituted for by the successor corporation. If such substitution or assumption
does not occur, each option will fully vest and become exercisable. As of
January 31, 2003, there were 610 ordinary shares subject to options outstanding
under the Knowledge Well 1998 Plan, and 233,659 ordinary shares available for
future issuance. The Company has not granted any further options under the
Knowledge Well 1998 Plan since the date it was assumed and has no current
intention of making future grants thereunder.
KNOWLEDGE WELL GROUP 1998 PLAN
On June 18, 1999, the Company assumed the Knowledge Well Group 1998 Plan
and outstanding options thereunder exercisable for 654,800 of the Company's
ordinary shares. The Knowledge Well Group 1998 Plan provides for the granting of
incentive share options and non-qualified share options to non-employee
directors of Knowledge Well Group Limited, employees (including officers and
directors) and consultants at an exercise price determined by the Compensation
Committee (not less than the fair market value of the shares as of the date of
grant for incentive share options). Options granted under the Knowledge Well
Group 1998 Plan vest at a rate determined by the Compensation Committee on a
grant-by-grant basis. The Knowledge Well Group 1998 Plan provides that vested
options may be exercised for 90 days after termination of employment or
directorship and for 12 months after termination of employment or directorship
as a result of death or disability. The Compensation Committee may select
alternative periods of time for exercise upon termination of service. The
Knowledge Well Group 1998 Plan permits options to be exercised with cash, check,
promissory note, certain other ordinary shares of the Company or consideration
received by the Company under a "cashless exercise" program. In the event that
the Company merges with or into another corporation, or sells substantially all
of its assets, the Knowledge Well Group 1998 Plan provides that each outstanding
option may be assumed or substituted for by the successor corporation. If such
substitution or assumption does not occur, each option will fully vest and
become exercisable. As of January 31, 2003, there were 3,424 ordinary shares
subject to options outstanding under the Knowledge Well Group 1998 Plan, and
624,203 ordinary shares available for future issuance. The Company has not
granted any further options under the Knowledge Well Group 1998 Plan since the
date it was assumed and has no current intention of making future grants
thereunder.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Approximately 9% of the issued share capital of CBT (Technology) Limited,
one of the Company's Irish subsidiaries, representing a special non-voting
class, is owned by Stargazer Productions ("Stargazer"), an unlimited company
which is wholly-owned by certain employees of the Company. All of the voting
securities of CBT (Technology) Limited are owned by the Company and, except for
the securities owned by Stargazer, there are no other outstanding securities of
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. Stargazer has the right to
receive periodic dividends as and when declared by CBT (Technology) Limited, but
does not have any rights to the assets of CBT (Technology) Limited. Except for
the fact that Stargazer is wholly owned by certain employees of the Company, the
Company has no relationship with Stargazer. These employees do not include any
of the Company's directors or executive officers.
In August 1999, Gregory M. Priest, the Company's President and Chief
Executive Officer, received a loan in the amount of $450,000 which was repayable
in four equal annual installments, commencing in August 2000. Interest accrued
on the principal amount at a rate of 5.96%, which was paid annually. Mr. Priest
repaid all remaining amounts due on the loan in August 2002.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SKILLSOFT PUBLIC LIMITED COMPANY
(Registrant)
By: /s/ CHARLES E. MORAN
------------------------------------
Charles E. Moran
President and Chief Executive
Officer
Date: May 31, 2003
16
CERTIFICATIONS
I, Charles E. Moran, certify that:
1. I have reviewed this annual report on Form 10-K/A of SkillSoft Public
Limited Company; and
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report.
/s/ CHARLES E. MORAN
--------------------------------------
Charles E. Moran
President and Chief Executive Officer
Dated: May 31, 2003
17
CERTIFICATIONS
I, Thomas J. McDonald, certify that:
1. I have reviewed this annual report on Form 10-K/A of SkillSoft Public
Limited Company; and
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report.
/s/ THOMAS J. MCDONALD
--------------------------------------
Thomas J. McDonald
Chief Financial Officer
Dated: May 31, 2003
18