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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 2001
Commission File Number 0-20008
VTEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-2415696
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
108 Wild Basin Road
Austin, Texas 78746
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (512) 437-2700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ).
The aggregate market value of Common Stock held by nonaffiliates of the
registrant as of October 31, 2001 was $65,376,629. For purposes of this
computation, all officers, directors and 5% beneficial owners of the registrant
are deemed to be affiliates. Such determination should not be deemed an
admission that such officers, directors and beneficial owners are, in fact,
affiliates of the registrant.
As of October 31, 2001, there were 24,797,474 shares of the registrant's
Common Stock, $0.01 par value, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
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VTEL Corporation, a Delaware corporation (the "Company"), hereby amends, as
set forth herein, the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on October 29, 2001 (the "Company Form
10-K"). The item numbers and responses thereto are in accordance with the
requirements of Form 10-K. All capitalized terms used and not otherwise defined
herein shall have the meaning specified in the Company Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Company's Board of Directors consists currently of six directors.
Directors are elected for one-year terms and serve until their successors are
elected and qualified. All of the executive officers of the Company are
full-time employees of the Company. Executive officers of the Company are
appointed for a one-year term and serve until their respective successors have
been selected and qualified; provided, however, such officers are subject to
removal at any time by the affirmative vote of a majority of the Board of
Directors.
Reference is made to Part I hereof for a description of the executive
officers of the Company.
The following is a description of the principal occupations and other
employment during the past five years and their directorships in certain
companies of the directors of the Company.
Present
Office(s) Held Director
Name Age In the Company Since
---- --- -------------- --------
Richard N. Snyder........................... 57 Chairman of the Board, President and 1997
Chief Executive Officer
F. H. (Dick) Moeller........................ 56 None 1989
Gordon H. Matthews ......................... 65 Chief Intellectual Property Officer 1994
T. Gary Trimm............................... 54 None 1997
Kathleen A. Cote............................ 52 None 1999
James H. Wells.............................. 54 None 1999
The following information regarding the principal occupations and other
employment of the directors during the past five years and their directorships
in certain companies is as reported by the respective directors:
RICHARD N. SNYDER, age 57, has served as a director of the Company since
December 1997 and was elected chairman of the board in March 2000. In June 2001,
Mr. Snyder was elected as president and chief executive officer of the Company.
From September 1997 until assuming the positions of president and chief
executive officer of the Company, Mr. Snyder served as founder and chief
executive officer of Corum Cove Consulting, LLC, a consulting firm specializing
in providing strategic guidance to high technology businesses. From 1996 until
1997, Mr. Snyder was the senior vice president of World Wide Sales, Marketing,
Service and Support of Compaq Computer Corp., a worldwide computer company. From
1995 until 1996, Mr. Snyder was the senior vice president and general manager of
Dell Americas, a computer manufacturer and marketer. Prior to 1993, Mr. Snyder
served as group general manager of the Deskjet Products Group of Hewlett
Packard. He also serves as a director of Symmetricom, Inc., based in San Jose,
California.
F.H. (DICK) MOELLER, age 56, joined the Company as chief executive officer,
president and director in October 1989 and became the chairman of the board in
March 1992. In March 2000, Mr. Moeller resigned as chairman of the board,
2
and in September 1998, Mr. Moeller resigned from the position of president and
chief executive officer. In October 1998, Mr. Moeller was named general partner
of SSM Venture Partners, a venture capital investment firm. Mr. Moeller is
currently a general partner of Verity Ventures, an Austin, Texas based venture
capital investment firm.
GORDON H. MATTHEWS, age 65, has served as a director of the Company since
October 1994. In October 2001, Mr. Matthews entered into an agreement with the
Company to provide services as its chief intellectual property officer. Prior to
that, Mr. Matthews served as the chairman of Matthews Communications Management,
Inc., a provider of telephone control systems for residences and small
businesses, and chairman and president of Matthews Communication Systems, Inc.,
a consulting firm providing assistance to corporations on intellectual property
processes. From May 1996 to June 1998 he also served as chief executive officer
of Matthews Communications Management, Inc. He currently serves as a director
and the intellectual property officer of a publicly traded company, Tanisys
Technology, Inc. Mr. Matthews also serves as a director on two privately held
companies. He is president and chief executive officer of Strategic Innovation &
Creativity, a company founded by him that installs a strategic patent process in
other companies. Prior to 1992, Mr. Matthews founded and managed a number of
companies in the telecommunications industry. Mr. Matthews is a named inventor
in over thirty-three United States patents, including the U.S. Pioneer Patent
#4,371,752 for voicemail. Mr. Matthews is the acknowledged inventor of
voicemail.
T. GARY TRIMM, age 54, has served as a director of the Company since May
1997. Since May 1997, he has been a principal of Strategic Management, Inc. and
an officer and director Millenium Technologies, where he is engaged in
consulting and investment activities in telecommunications and other industries.
Previously he was president, chief executive officer and a member of the board
of directors of Compression Labs, Incorporated from February 1996 to May 1997
and the principal financial officer of Compression Labs, Incorporated from April
1996 to May 1997.
KATHLEEN A. COTE, age 52, has served as a director of the Company since
December 1999. She is currently the chief executive officer of WorldPort
Communications, Inc., a provider of internet managed services to the European
market. In January 1998, Ms. Cote founded Seagrass Partners, a provider of
expertise in business planning and strategic development, and served as its
president until May 24, 2001, when she began her role as chief executive officer
of Worldport. From November 1996 to January 1998, Ms. Cote served as chief
executive officer of ComputerVision Corporation, a hardware, software and
consulting business. From November 1986 to November 1996, she held various
senior management positions with ComputerVision Corporation. In January 1998,
ComputerVision Corporation was acquired by Parametric Technology Corporation.
Ms. Cote is also a director of WorldPort Communications, Inc., based in
Lincolnshire, Illinois, Radview Corporation and Western Digital Corporation.
JAMES H. WELLS, age 54, has served as a director of the Company since
December 1999. He currently consults with early stage internet start-up
companies. Mr. Wells was the senior vice president of marketing and business
development of Dazel, a Hewlett Packard enterprise software company, from
January 1999 through February 2000. From April 1995 to March 1998, Mr. Wells
served as vice president of sales and was a founding officer in the internet
streaming company, RealNetworks, Inc.
None of the directors is related to any other director or to any executive
officer of the Company by blood, marriage or adoption (except relationships, if
any, more remote than first cousin).
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who beneficially own more than 10% of the
Company's common stock (the "Common Stock"), par value $.01 per share (the "10%
Stockholders"), to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based solely upon information provided to
the Company by individual officers, directors and 10% Stockholders, the Company
believes that all of these filing requirements were satisfied by the Company's
officers, directors and 10% Stockholders, except with respect to Mr. Snyder, who
filed one Form 4 late with respect to one transaction.
3
ITEM 11. EXECUTIVE COMPENSATION.
The following table summarizes certain information regarding compensation
paid or accrued to (i) the Company's Chief Executive Officer, (ii) each of the
Company's four other most highly compensated executive officers, and (iii) two
additional former executive officers for whom disclosure would have been
required by the rules of the Securities and Exchange Commission but for the fact
that these two individuals were not serving as executive officers as of July 31,
2001 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards(1)
---------------------------------------------- -------------------------
Restricted Securities All other
Name and Principal Position Period Salary($) Bonus and Other Annual Stock Underlying Compensation
--------------------------- Ended --------- Commissions Compensation Awards Options/SARs Compensation
July 31 ($) ($)(1) $ # ($)(2)
------- ----------- ------------ ---------- ------------ ------------
Richard N. Snyder 2001 98,333 32,100 -0- -0- 250,000 824
Chief Executive Officer and 2000 N/A N/A -0- N/A 12,500 N/A
President (3) 1999 N/A N/A -0- N/A N/A N/A
Stephen L. Von Rump
Former Chief Executive 2001 225,977(5) 100,000(6) -0- -0- -0- 89,921(7)
Officer 2000 272,500 -0- -0- -0- 150,000 1,320
and President (4) 1999 175,360 82,562(8) 53,800(9) 287(10) 250,000 1,032
David Turnbull
Former Chief Marketing 2001 165,577 77,500 (11) -0- -0- 100,000 61,919(12)
Officer and Sr. Vice 2000 N/A N/A N/A N/A N/A N/A
President, Sales and 1999 N/A N/A N/A N/A N/A N/A
Marketing (4)
Robert R. Swem 2001 191,067 78,665(13) -0- -0- 40,000 5,812(14)
Vice President, Operations 2000 172,473 -0- -0- -0- 27,500 2,673
1999 157,833 22,925 -0- 287(5) 24,048 4,005
Dennis Egan 2001 178,549 79,580(15) -0- -0- 15,000 4,100(16)
Vice President, Service 2000 154,600 23,895 -0- -0- 20,000 921
1999 148,877 -0- -0- 287(5) 24,120 1,240
Jay Peterson 2001 165,259 56,205(17) -0- -0- 40,000 3,580(18)
Chief Financial 2000 126,667 9,751 -0- -0- 10,000 481
Officer, and Vice 1999 102,500 19,063 -0- 287(5) 4,700 550
President, Finance
Rodney S. Bond 2001 33,333 -0- -0- -0- -0- 168,880(7)
Former Chief Financial 2000 191,250 -0- -0- -0- 27,500 2,207
Officer, Secretary and Vice 1999 180,833 25,656 -0- 287(5) 30,967 2,749
President, Finance (4)(19)
Kenneth Kalinoski 2001 85,185 34,881(20) -0- -0- 200,000 11,630(21)
Chief Technology 2000 N/A N/A N/A N/A N/A N/A
Officer and Vice President, 1999 N/A N/A N/A N/A N/A N/A
Engineering
- --------------------
(1) Includes perquisites and other personal benefits if value is greater
than the lesser of $50,000 or 10% of reported salary and bonus.
(2) Represents the dollar value of any insurance premiums paid by the
Company during the covered fiscal year with respect to term life insurance and
long term disability insurance for the benefit of the chief executive officer or
Named Executive Officer.
4
(3) During fiscal year 2001, consulting fees in the amount of $81,332.99
were paid to Mr. Snyder prior to his employment as chief executive officer and
president. These consulting fees are not reflected in this Summary Compensation
Table. For a discussion of the consulting fees, see the section titled "Certain
Transactions" in Item 12 below.
(4) Mr. Von Rump, Mr. Turnbull, and Mr. Bond resigned from the Company
effective April 13, 2001, July 21, 2001, and September 1, 2000, respectively.
(5) Includes $17,018.58 of vacation payout.
(6) Includes $100,000 retention bonus.
(7) Includes salary continuation in the amounts of $86,042 for Mr. Von Rump
and $166,667 for Mr. Bond in exchange for consulting services provided during
the fiscal year. Mr. Von Rump also received a $2,835 tax preparation allowance.
(8) Includes $50,000 paid to Mr. Von Rump upon his initial acceptance of
employment with the Company and $32,563 fourth quarter executive bonus.
(9) Includes temporary living expenses allowance paid to Mr. Von Rump.
(10) Includes 100 shares of restricted stock issued to Mr. Von Rump. The
restriction on the shares has lapsed.
(11) Includes $25,000 signing bonus, $26,250 second quarter executive bonus
and $26,250 third quarter executive bonus.
(12) Includes $52,500 severance payment, $3,108 tax preparation allowance
and $5,439 referral bonus.
(13) Includes $63,300 executive retention bonus and $15,365 fourth quarter
executive bonus.
(14) Includes $2,835 tax preparation allowance.
(15) Includes $21,250 second quarter executive bonus and $58,330 executive
retention bonus.
(16) Includes $2,928 tax preparation allowance.
(17) Includes $8,705 fourth quarter executive bonus and $47,500 executive
retention bonus.
(18) Includes $2,835 tax preparation allowance.
(19) During fiscal year 2001, consulting fees in the amount of $103,200
were paid to Sherman Partners, a company owned by Mr. Bond. These consulting
fees are not reflected in the Summary Compensation Table. For a discussion of
the consulting fees, see the section titled "Certain Transactions" in Item 12
below.
(20) Includes $15,000 signing bonus and $19,881 fourth quarter executive
bonus.
(21) Includes $6,993 referral bonus.
5
Stock Option Grants During Fiscal 2001
The following table sets forth information with respect to grants of stock
options to purchase Common Stock pursuant to the Company's equity plans to the
Company's Named Executive Officers reflected in the Summary Compensation Table
above. No stock appreciation rights (SARs) were granted during fiscal 2001 and
none were outstanding as of July 31, 2001.
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value of Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option Term(1)
--------------------------------------------------------- -------------------------------
% of Total
Number of Options/SARs
Securities Granted to Exercise
Underlying Employees or Base
Options/SARs In Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 0% ($) 5% ($) 10% ($)
---- ----------- ----------- ------ ---- ------ ------ -------
Richard N. Snyder 250,000 16.29 1.025 7/30/2011 -0- 161,154 408,396.50
12,500 .81 1.110 12/19/2010 -0- 8,726 22,113.18
Steven L. Von Rump -0- -0- -0- -0- -0- -0- -0-
David Turnbull 100,000 6.52 1.844 11/20/2001 -0- 115,968 293,886.11
Robert R. Swem 40,000 2.61 1.290 5/1/2011 -0- 32,451 82,237.11
Dennis Egan 15,000 .98 1.290 5/1/2011 -0- 12,169 30,838.92
Jay Peterson 40,000 2.61 1.290 5/1/2011 -0- 32,451 82,237.11
Rodney S. Bond -0- -0- -0- -0- -0- -0- -0-
Kenneth Kalinoski 200,000 13.03 1.290 5/1/2011 -0- 162,255 411,185.56
All employee options 1,527,307 100.00 1.290(2) N/A N/A 1,239,315 3,140,628.49
All stockholders (3) N/A N/A N/A N/A N/A 20,191,800 51,169,986.00
Optionee gains as % of N/A N/A N/A N/A N/A 6.14% 6.14%
all stockholder gains
- ---------------
(1) The dollar amounts under these columns represent the potential
realizable value of each grant of options assuming that the market price of the
Common Stock appreciates in value from the date of grant at the five percent and
ten percent annual rates compounded over the ten year term of the option as
prescribed by the Securities and Exchange Commission and therefore are not
intended to forecast possible future appreciation, if any, of the price of the
Common Stock.
(2) Weighted average grant price of all stock options granted to employees
in fiscal 2001.
(3) Appreciation for all stockholders is calculated using the average
exercise price for all employee optionees ($1.29) granted during fiscal 2001 and
using the number of shares of the Common Stock outstanding on July 31, 2001 of
24,889,000.
6
Aggregated Stock Option/SAR Exercises During Fiscal 2001 and Stock Option SAR
Values as of July 31, 2001
The following table sets forth information with respect to the Company's
Named Executive Officers concerning the exercise of options during fiscal 2001
and unexercised options held as of July 31, 2001:
Aggregate Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values (1)
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs at
Year End (#) Fiscal Year End ($)
---------------------- ----------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Richard N. Snyder -0- -0- 14,430 260,070 -0- -0-
Steven L. Von Rump -0- -0- 93,333 -0- -0- -0-
David Turnbull -0- -0- 16,666 -0- -0- -0-
Robert R. Swem -0- -0- 104,019 53,481 -0- -0-
Dennis Egan -0- -0- 91,143 26,357 -0- -0-
Jay Peterson -0- -0- 25,241 42,584 -0- -0-
Rodney S. Bond -0- -0- 116,007 18,576 -0- -0-
Kenneth Kalinoski -0- -0- 10,416 189,584 -0- -0-
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(1) All options held by the Company's Named Executive Officers were granted
under the Company's 1989 Stock Option Plan (the "1989 Plan") or the Company's
1996 Stock Option Plan (the "1996 Plan"). All options granted under the 1989
Plan and the 1996 Plan are immediately exercisable. However, the Company can
repurchase shares issued upon exercise of those options, at the exercise price,
to the extent of the number of shares that have not vested if the optionee's
employment terminates before all of the optionee's option shares become vested.
The amounts under the headings entitled "Exercisable" reflect vested options as
of July 31, 2001 and the amounts under the headings entitled "Unexercisable"
reflect option shares that have not vested as of July 31, 2001.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries or had any relationship
requiring disclosure pursuant to Item 404 of Securities and Exchange Commission
Regulation S-K (Certain Relationships and Related Transactions), with the
exception of Mr. Trimm, one of the Company's directors who is a principal of
Strategic Management, Inc. and Mr. Matthews, one of the Company's directors, who
owns Matthews Consulting. The Company has agreed to pay fees to Strategic
Management, Inc. as described in Item 12 below under the heading "Certain
Transactions--Agreement with Strategic Management, Inc." The board of directors
has determined that Mr. Trimm's relationship with Strategic Management, Inc.
does not affect his ability to exercise independent judgment as a member of the
Compensation Committee. The Company has agreed to pay consulting fees to
Matthews Consulting, as described in Item 12 below under the heading "Certain
Transactions--Agreement with Matthews Consulting." The board of directors has
determined that Mr. Matthews' relationship with Matthews Consulting does not
affect his ability to exercise independent judgment as a member of the
Compensation Committee. No member of the Compensation Committee served on the
compensation committee or as a director of another corporation, one of whose
directors or executive officers served on the Compensation Committee of or whose
executive officers served on the Company's board of directors.
7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Stock Ownership of Certain Beneficial Owners and Management
The Company has only one outstanding class of equity securities, its Common
Stock, par value $.01 per share.
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of October 15, 2001 by: (i) each
person who is known by the Company to beneficially own more than five percent of
the Common Stock; (ii) each of the Company's directors and Named Executive
Officers; and (iii) all directors and officers as a group.
Shares Beneficially
Owned (1), (2)
-------------------------------
Name and Address of Beneficial Owner Number Percent
------------------------------------ ----------------- -------------
Dimensional Fund Advisors
1299 Ocean Avenue
Santa Monica, CA 90401..................................................... 1,782,288 7.2%
Marathon Fund L.P......................................................... 1,610,600 6.5%
6300 Ridglea Place, Suite 1111
Fort Worth, TX 76116
Richard N. Snyder.......................................................... 420,819(3) 1.7%
Stephen L. Von Rump........................................................ 110,433(4) *
F.H. (Dick) Moeller........................................................ 394,483(5) 1.6%
Gordon H. Matthews ........................................................ 30,774(6) *
T. Gary Trimm.............................................................. 260,557(7) 1.0%
Kathleen A. Cote........................................................... 26,972(8) *
James H. Wells............................................................. 30,972(9) *
Robert R. Swem............................................................. 169,600(10) *
Jay Peterson............................................................... 112,722(11) *
Kenneth Kalinoski.......................................................... 261,200(12) 1.0%
Dennis M. Egan............................................................. 117,500(13) *
David Turnbull............................................................. 16,666(14) *
Rodney S. Bond............................................................. 156,794(15) *
All directors and officers as a group
(13 persons) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15................ 2,109,492(16) 8.0%
8
* Indicates ownership of less than 1% of Common Stock
- -----------------
(1) Beneficial ownership as reported in the above table has been determined
in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. The persons and entities named in the table have sole voting and
investment power with respect to all shares shown as beneficially owned by them,
except as noted below. Amounts shown include shares of Common Stock issuable
upon exercise of certain outstanding options within 60 days after October 15,
2001.
(2) Except for the percentages of certain parties that are based on
presently exercisable options which are indicated in the following footnotes to
the table, the percentages indicated are based on 24,751,486 shares of Common
Stock issued and outstanding on October 15, 2001. In the case of parties holding
presently exercisable options, the percentage ownership is calculated on the
assumption that the shares presently held or purchasable within the next 60 days
underlying such options are outstanding.
(3) Consists of 155,000 shares held by Mr. Snyder directly and 265,819
shares (250,000 of which are subject to repurchase at December 13, 2001 by the
Company at the optionee's exercise prices pursuant to the option agreements)
which Mr. Swem may acquire upon the exercise of options within 60 days after
October 15, 2001.
(4) Consists of 17,100 shares held by Mr. Von Rump directly and 93,333
shares which Mr. Von Rump may acquire upon the exercise of options within 60
days after October 15, 2001.
(5) Consists of 168,010 shares held by Mr. Moeller directly and 226,473
shares which Mr. Moeller may acquire upon the exercise of options within 60 days
after October 15, 2001.
(6) Consists of 11,594 shares held by Mr. Matthews directly and 19,180
shares which Mr. Matthews may acquire upon the exercise of options within 60
days after October 15, 2001.
(7) Consists of 12,307 shares held by Mr. Trimm directly and 248,250 shares
which Mr. Trimm may acquire upon the exercise of options within 60 days after
October 15, 2001.
(8) Consists of 11,000 shares held by Ms. Cote directly and 15,972 shares
which Ms. Cote may acquire upon the exercise of options within 60 days after
October 15, 2001.
(9) Consists of 15,000 shares held by Mr. Wells directly and 15,972 shares
which Mr. Wells may acquire upon the exercise of options within 60 days after
October 15, 2001.
(10) Consists of 12,100 shares held by Mr. Swem directly and 157,500 shares
(44,972 of which are subject to repurchase at December 13, 2001 by the Company
at the optionee's exercise prices pursuant to the option agreements) which Mr.
Swem may acquire upon the exercise of options within 60 days after October 15,
2001.
(11) Consists of 43,321 shares held by Mr. Peterson directly and 69,401
shares (36,428 of which are subject to repurchase at December 13, 2001 by the
Company at the optionee's exercise prices pursuant to the option agreements)
which Mr. Peterson may acquire upon the exercise of options within 60 days after
October 15, 2001.
(12) Consists of 61,200 shares held by Mr. Kalinoski directly and 200,000
shares (181,250 of which are subject to repurchase at December 13, 2001 by the
Company at the optionee's exercise prices pursuant to the option agreements)
which Mr. Kalinoski may acquire upon the exercise of options within 60 days
after October 15, 2001.
(13) Consists of 117,500 shares (21,157 of which are subject to repurchase
at December 13, 2001 by the Company at the optionee's exercise prices pursuant
to the option agreements) which Mr. Egan may acquire upon the exercise of
options within 60 days after October 15, 2001.
(14) Consists of 16,666 shares which Mr. Turnbull may acquire upon the
exercise of options on or before November 1, 2001. Effective July 21, 2001 Mr.
Turnbull was no longer employed by the Company.
9
(15) Consists of 36,838 shares held by Mr. Bond directly and 119,956 shares
which Mr. Bond may acquire upon the exercise of options on or before October 30,
2001. Effective September 1, 2000 Mr. Bond was no longer employed by the
Company.
(16) All options held by the chief executive officer and the Named
Executive Officers were granted under the 1989 Plan or the 1996 Plan. Pursuant
to these stock option plans, all options granted thereunder are immediately
exercisable, however, shares issued upon exercise are subject to repurchase by
the Company, at the exercise price, to the extent of the number of shares that
have not vested in the event that the optionees' employment terminates prior to
all such optionees' options becoming vested.
Certain Transactions
Officer and Director Stock Loan Program
As of July 31, 2001, under the Company's Officer and Director Stock Loan
Program, the aggregate principal amount of stock loans outstanding was $661,692.
Of this balance, the Named Executive Officers had stock loans outstanding in the
aggregate principal amount of $239,604. Mr. Moeller and Mr. Swem had stock loans
outstanding under this program in the aggregate principal amount of $179,783 and
$62,327, respectively.
Confidential Separation Agreements
The Company entered into a confidential separation agreement with Stephen
Von Rump effective April 13, 2001, pursuant to which Mr. Von Rump agreed to
resign from all offices, directorships and other positions he then held with the
Company and all of its subsidiaries. Mr. Von Rump also agreed to certain
confidentiality restrictions as a part of his severance. As consideration for
Mr. Von Rump's past services to the Company and his promises listed in the
agreement, the Company paid him an amount equal to $17,019, representing his
accrued but unpaid vacation. The Company also agreed to pay him his current
salary, which was $295,000 per annum, for a period of five months from the date
of the agreement, and to provide him with certain other rights and benefits for
a limited period of time.
The Company entered into a confidential separation agreement with Rodney S.
Bond effective September 1, 2000, pursuant to which Mr. Bond agreed to resign
from all offices, directorships and other positions he then held with the
Company and all of its subsidiaries, with the exception of Onscreen 24 Corp. and
CampusStream, Inc. As consideration for Mr. Bond's past services to the Company
and his ongoing transition services, the Company agreed to pay him his current
salary, which was $200,000 per annum, for a period of one year from September
30, 2000, and to provide him with certain other rights and benefits for a
limited period of time.
The Company entered into a confidential separation agreement with David
Turnbull effective July 21, 2001, pursuant to which Mr. Turnbull agreed to
resign from all offices, directorships and other positions he then held with the
Company and all of its subsidiaries. Mr. Turnbull also agreed to certain
confidentiality restrictions as a part of his severance. As consideration for
Mr. Turnbull's past services to the Company and his promises listed in the
agreement, the Company agreed to pay him his current salary, which was $210,000
per annum, for a period of three months from the date of the agreement, and to
provide him with certain other rights and benefits for a limited period of time.
Agreement with Sherman Partners, Inc.
On September 8, 2000, the Company engaged Sherman Partners, Inc. for a
period of six months to assist the Company with strategic and financial
planning, corporate alliances and agreements, and general advisory and
consulting services. Rodney S. Bond, the Company's former chief financial
officer, owns Sherman Partners, Inc.
Agreement with Strategic Management, Inc.
On October 5, 2000, the Company agreed to pay a fee to Strategic
Management, Inc., a company in which T. Gary Trimm, one of the Company's
directors, is a principal, to assist the Company in developing a plan to
establish the Company's
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videoconferencing systems products division as a independent, self-sustaining
unit, and to assist the Company in assessing strategic alternatives for this
division as part of the Company's efforts to restructure the Company's business
around its video network consulting services business. Pursuant to this
engagement, the Company agreed to pay Strategic Management, Inc. an hourly rate
for services rendered, up to a maximum of $60,000. In addition, the engagement
provides additional contingent compensation to Strategic Management, Inc. if a
transaction is consummated involving the Company's videoconferencing systems
products division. If the division is sold, this includes a fee equal to seven
percent of the consideration the Company receives, with a minimum fee upon a
sale of $750,000. This fee will be paid pro-rata, as cash or stock related to
the sale of the Company's videoconferencing systems products division is
received by the Company. If new investors invest in the division, the Company
agreed to pay Strategic Management, Inc. a fee equal to seven percent of the
cash proceeds the Company receives. The engagement was approved by the
disinterested directors of the Company.
Agreement with Matthews Consulting
In October 2000, the Company agreed to pay an hourly consulting fee to
Matthews Consulting, a company owned by Gordon Matthews, one of the Company's
directors, to assist the Company in maximizing the value of the Company's
intellectual property through prosecution of patents and licensing efforts.
Payment For Consulting Services Provided By Officers And Directors
The following payments were made to the Company's officers and directors
during the fiscal year:
o Sherman Partners, owned by Rodney S. Bond, former officer of the
Company, was paid consulting fees of $103,200.
o Strategic Management Inc., in which T. Gary Trimm, current
director of the Company, is a principal, was paid consulting fees
of $69,810 and will be paid an additional $750,000 if the sale of
the Company's videoconferencing systems products division is
completed.
o Matthews Consulting, owned by Gordon H. Matthews, current
director of the Company, was paid consulting fees of $101,208.
o James H. Wells was paid consulting fees of $12,125.
o Richard N. Snyder was paid consulting fees of $81,332.99 prior to
his employment as the chief executive officer and president of
the Company.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
(1) Financial Statements:
The following consolidated financial statements were previously
filed as part of the Company's Form 10-K:
Consolidated Balance Sheets as of July 31, 2000 and 2001.
Consolidated Statements of Operations for the years ended July
31, 1999, 2000 and 2001.
Consolidated Statements of Changes in Stockholders' Equity for
the years ended July 31, 1999, 2000 and 2001.
Consolidated Statements of Cash Flows for the years ended July
31, 1999, 2000 and 2001.
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Notes to Consolidated Financial Statements.
(2) Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts.
(3) Exhibits:
Not applicable.
(b) Reports on Form 8-K:
The Registrant filed one report on Form 8-K during the quarterly
period ended October 31, 2001, on August 20, 2001.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized.
VTEL CORPORATION
By: /s/ Richard N. Snyder
--------------------------------
Richard N. Snyder
Chairman of the Board, President
and Chief Executive Officer
Date: November 28, 2001
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