UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-26387
BE INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware 94-3123667
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
655 West Evelyn Avenue, Suite 6, Mountain View, California 94041
(Address of principal executive offices, including zip code)
(650) 965-4842
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.001 PAR VALUE
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 or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___
The approximate aggregate market value of the common stock held by
non-affiliates of the Registrant, based upon the last sale price of the Common
Stock reported on the Nasdaq National Market, as of March 15, 2002, was
approximately $4,698,000.
The number of shares of Common Stock outstanding as of March 15, 2002 was
38,450,527
THE COMPANY HAS FILED A FORM 12B-25 NOTIFICATION OF LATE FILING WITH THE
SECURITIES AND EXCHANGE COMMISSION TO DEFER DISCLOSURE FOR ITEMS 6, 7, 8 AND 14
(SELECTED FINANCIAL DATA; MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS; CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA; AND FINANCIAL STATEMENT SCHEDULE), PENDING RESOLUTION OF A
NO ACTION RELIEF REQUEST WITH THE SEC.
BE INCORPORATED
FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2001
Table of Contents
PART I page
Item 1. Business......................................................... 3
Item 2. Properties....................................................... 8
Item 3. Legal Proceedings................................................ 8
Item 4. Submission of Matters to a Vote of Security Holders.............. 9
PART II
Item 5. Market for Registrants Common Equity and
Related Stockholder Matters...................................... 10
Item 6. Selected Financial Data.......................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 11
Item 8. Consolidated Financial Statements and Supplementary Data......... 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............................. 11
PART III
Item 10. Directors and Executive Officers of the Registrant............... 12
Item 11. Executive Compensation........................................... 13
Item 12. Security Ownership of Certain Beneficial Owners and Management... 18
Item 13. Certain Relationships and Related Transactions................... 19
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K... 19
Signatures................................................................. 21
2
PART I
ITEM 1. BUSINESS
BUSINESS OF BE INCORPORATED
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE
PURSUANT TO THE PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON OUR CURRENT EXPECTATIONS,
ESTIMATES AND PROJECTIONS ABOUT THE COMPANY'S BUSINESS, MANAGEMENT'S BELIEFS AND
ASSUMPTIONS MADE BY MANAGEMENT. WORDS SUCH AS "ANTICIPATES," "EXPECTS,"
"INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES," "LIKELY," AND VARIATIONS
OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT
ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS AND OUTCOMES MAY DIFFER
MATERIALLY FROM WHAT IS EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING
STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE THOSE SET FORTH BELOW UNDER
"FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION" AND
OUR OTHER PUBLIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. WE
UNDERTAKE NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
Be was founded in 1990 and prior to the cessation of its business
operations offered software solutions designed for Internet appliances and
digital media applications.
Be's software solution products consisted of (i) BeIA: the Complete
Internet Appliance Solution TM, comprised of three components: BeIA Client
Platform, BeIA Management and Administration Platform and BeIA Integration
Services; and (ii) BeOS, our operating system designed for digital media
applications. Prior to 1998, Be had no revenues and our operations consisted
primarily of research and development. In December 1998, Be shipped the first
version of BeOS, our desktop operating system targeted primarily to end users.
Prior releases of BeOS were targeted primarily to software developers. Having
experienced losses and negative cash flow from operations since inception, in
the latter half of 1999 we began a review of our BeOS desktop operating system
business model and its potential to create stockholder value. As a result of the
barriers to entry and intense competition in the market relevant to the BeOS
operating system, the then anticipated market for the BeIA operating system and
the limited resources available to Be for the development and marketing of its
products, we announced our intention to shift our primary focus from the
marketing and distribution of BeOS to the development, marketing and deployment
of BeIA, our software solution intended for Internet appliances.
While we were initially successful in 2000 in rapidly entering the
developing Internet appliance market, and our efforts culminated in the
execution of a contract with Sony for its eVilla Network Entertainment Center in
early 2001, the Internet appliance market as a whole unfortunately failed to
materialize as anticipated. Despite our efforts in the Internet appliance
market, Be's financial difficulties continued and we were unable to generate
revenues sufficient to meet operating expenses. In April and July of 2001, we
substantially reduced our workforce and announced the elimination of our sales
and marketing departments in order to conserve resources.
We undertook extensive activities since early 2000 to evaluate and pursue
financing alternatives for the company to allow for its continuation and the
creation of value for Be stockholders. We endeavored to obtain additional equity
capital from numerous sources. Private placements with institutions, funds and
private investors, equity lines of credit and private placements with strategic
investors were all thoroughly investigated. By the end of March 2001, it was
clear no adequate source of capital was available on terms beneficial to Be
stockholders. Faced with this reality, our board of directors approved the
exploration of strategic and financial alternatives for maximizing stockholder
value. Alternatives considered included, but were not limited to, a merger or
similar business combination, an equity investment by a strategic investor, or
the sale of all or substantially all of the business or assets for stock or cash
in a transaction of the type ultimately entered into with Palm, Inc. ("Palm").
Beginning in April 2001, we worked with professional financial advisors
with the intent of maximizing the return of value to stockholders under the
circumstances. We conducted an extensive search for potential interested
parties, directly contacted a number of these parties and discussed with them a
variety of possible transactions. As part of this effort, we held numerous
discussions and negotiations with third parties, including Palm, in an effort to
obtain financing necessary to the continuation or the potential sale of Be's
business. Except for the proposed transaction with Palm, these discussions did
not result in any acceptable offers and during this period our financial
resources continued to deteriorate.
3
On August 16, 2001, our Board of Directors unanimously adopted resolutions
approving the sale of substantially all Be's intellectual property and other
technology assets (the "Asset Sale") to ECA Subsidiary Acquisition Corporation,
a Delaware corporation and an indirect wholly-owned subsidiary of Palm pursuant
to an Asset Purchase Agreement dated August 16, 2001, as amended on September
10, 2001 (the "Purchase Agreement"). On October 9, 2001, we filed a definitive
proxy statement soliciting stockholder approval for the Asset Sale and the
dissolution of the Company pursuant to a plan of dissolution (the "Plan of
Dissolution"). The Plan of Dissolution provides for the orderly liquidation of
Be's remaining assets, the winding-up of Be's business and operations and the
dissolution of the Company. In accordance with the terms of the Plan of
Dissolution, Be will pay, or provide for the payment of, all of its liabilities
and obligations following the approval of the Board to proceed with the
liquidation and dissolution of the company. If there are any remaining assets
after the payment, or the provision for payment, of all of its liabilities and
obligations, Be will then distribute such assets to its stockholders in one or
more distributions.
At a special meeting of stockholders held on November 12, 2001, the
stockholders of Be approved the Asset Sale and the Plan of Dissolution. The
Asset Sale was completed on November 13, 2001. Under the terms of the Purchase
Agreement, Be received an aggregate of 4,104,478 shares of Palm common stock
valued at approximately $11,000,000 on the closing date of the transaction.
On January 16, 2002, we liquidated the vast majority of our remaining
equipment and hard assets by selling our remaining inventory, equipment and
other assets at auction. Proceeds from this sale as well as the consideration
received from the sale of Palm stock received under the terms of the Purchase
Agreement are owed to Be or are being held by the Company for distribution to
stockholders in accordance with the Plan of Distribution.
Pursuant to the terms of the Asset Sale, we also retained certain rights,
assets and liabilities in connection with the transaction, including our cash
and cash equivalents, receivables, certain contractual liabilities under
in-licensing agreements, and rights to assert and bring certain claims and
causes of action, including under antitrust laws. On February 15, 2002, we
engaged Susman Godfrey LLP on a contingency basis to bring forth claims against
Microsoft Corporation for the destruction of Be's business resulting from
anticompetitive business practices. On February 19, 2002, we filed a lawsuit in
the United States District Court in San Francisco alleging, among other things,
Microsoft harmed Be through a series of illegal, exclusionary and
anticompetitive acts designed to maintain its monopoly in the Intel-compatible
PC operating system market and created exclusive dealing arrangements with PC
OEMs prohibiting the sale of PCs with multiple preinstalled operating systems
(the "Microsoft Litigation").
Following the approval of the Board to proceed with the liquidation and
dissolution of the Company, on March 15, 2002 we filed a certificate of
dissolution with the Delaware Secretary of State in accordance with the Plan of
Dissolution approved by stockholders on November 12, 2001 and as set forth in
the Definitive Proxy Statement filed with the Securities and Exchange Commission
on October 9, 2001. We set a record date of March 15, 2002 (the "Record Date")
for purposes of determining the stockholders that will be eligible to
participate in the distribution of Be's assets, if any. Also on that day, we
closed our stock transfer books and ceased recording transfers of shares of our
common stock. We also voluntarily delisted from the Nasdaq National Market and
our shares stopped trading on the Nasdaq beginning the next trading day
following the filing of the certificate of dissolution.
Pursuant to Delaware law, Be will continue to exist for three years after
the dissolution becomes effective or for such longer period as the Delaware
Court of Chancery shall direct, solely for the purposes of prosecuting and
defending lawsuits (including but not limited to pursuing its antitrust case
against Microsoft), settling and closing its business in an orderly manner,
disposing of any remaining property, discharging its liabilities and
distributing to its stockholders any remaining assets, but not for the purpose
of continuing any business. In accordance with the Plan of Dissolution, after
payment in full of all claims finally determined to be due, we will make
distributions of any remaining assets (including assets acquired after the
Record Date), if any, only to stockholders of record as of the Record Date. The
timing and amounts of any such distributions will be determined by our Board of
Directors in accordance with the Plan of Dissolution. We may also establish a
liquidating trust for the purpose of pursuing the Microsoft Litigation,
liquidating the remaining assets of Be, paying or providing for the payment of
Be's remaining liabilities and obligations, and making distributions to Be's
stockholders, if any. If a liquidating trust is established, stockholders will
receive beneficial interests in the assets transferred to the liquidating trust
in proportion to the number of Be's shares owned by such stockholders as of the
Record Date.
4
Employees
As of December 31, 2001, we had 5 employees, all in general and
administrative. After April 1, 2002, we anticipate that only our President and
General Counsel will remain with the Company in order to facilitate the wind up
of the Company's activities.
FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION
The following is a discussion of certain risks, uncertainties and other factors
that currently impact or may impact our business, operating results and/or
financial condition. Anyone evaluating us and making an investment decision with
respect to our common stock or other securities is cautioned to carefully
consider these factors, along with similar factors and cautionary statements
contained in our filings with the Securities and Exchange Commission.
Our stockholders may be liable to our creditors for an amount up to the amount
received from the Company if our reserves for payments to creditors are
inadequate.
Although we filed a certificate of dissolution on March 15, 2002 with the
State of Delaware, Be will continue to exist for three years following this date
or for such longer period as the Delaware Court of Chancery shall direct for the
purpose of prosecuting and defending lawsuits and enabling Be to close its
business, to dispose of its property, to discharge its liabilities and to
distribute to its stockholders any remaining assets. Under Delaware law, in the
event Be fails to create an adequate contingency reserve for payment of its
expenses and liabilities during this period, each Be stockholder could be held
liable for payment to Be's creditors of such stockholder's pro rata share of
amounts owed to creditors in excess of the contingency reserve. The liability of
any stockholder would be limited to the amounts previously received by such
stockholder from Be (and from any liquidating trust or trusts). As a result, a
stockholder could be required to return all distributions previously made to
such stockholder and would receive no amounts from Be under the Plan of
Dissolution. Moreover, in the event a stockholder has paid taxes on amounts
previously received, a repayment of all or a portion of such amount could result
in a stockholder incurring a net tax cost if the stockholder's repayment of an
amount previously distributed does not cause a commensurate reduction in taxes
payable. Although Be intends to exercise caution in setting up its contingency
reserve and making distributions to stockholders, there can be no assurance that
the contingency reserve established by Be will be adequate to cover our expenses
and liabilities.
Our stock transfer books were closed on March 15, 2002, the final record date,
after which any trades will not be recorded by the Company.
We closed our stock transfer books and discontinued recording transfers of
Common Stock at the close of business on March 15, 2002 (the "Record Date"), the
date of effectiveness of the Certificate of Dissolution we filed with the
Delaware Secretary of State. Thereafter, certificates representing our Common
Stock will not be assignable or transferable on our books except by will,
intestate succession or operation of law. Although our Common Stock continues to
trade on the "over-the-counter" securities market, the proportionate interests
of our stockholders have been fixed on the basis of their respective stock
holdings at the close of business on the Record Date, and, after the Record
Date, any distributions made by the Company will be made solely to the
stockholders of record at the close of business on the Record Date, except as
may be necessary to reflect subsequent transfers recorded on our books as a
result of any assignments by will, intestate succession or operation of law. For
any other trades after the Record Date, the seller and purchaser of the stock
will need to negotiate and rely on contractual obligations between themselves
with respect to the allocation of stockholder proceeds arising from ownership of
the shares.
Our stock was delisted from the Nasdaq National Market on March 15, 2002 and is
significantly less liquid than before.
We voluntarily requested that our stock be delisted from trading on the
Nasdaq Stock Market on March 15, 2002 due to the fact that we had ceased our
business operations. Following delisting, the ability of stockholders to buy and
sell our shares has been materially impaired, and is limited primarily to
over-the-counter quotation services, such as Pink Sheets, that handle high-risk
ventures and are not regulated by the Securities and Exchange Commission.
5
We cannot guarantee how much cash, if any, will be available to distribute to
our stockholders and if there is cash to distribute, the timing of any such
distribution.
There is currently no firm timetable for the distribution of proceeds to
our stockholders because of contingencies inherent in winding up the Company's
business. The proportionate interests of all of our stockholders will be fixed
on the basis of their respective stock holdings at the close of business on the
Record Date, and after such date, any distributions made by the Company will be
made solely to stockholders of record on the close of business on the Record
Date, except to reflect permitted transfers. We are, however, currently unable
to predict the precise nature, amount or timing of any distribution to
stockholders. The actual nature, amount and timing of all distributions will be
determined by our Board of Directors, in its sole discretion.
Uncertainties as to the precise net value of our non-cash assets, the
resolution of our outstanding claim against Microsoft Corporation and the
ultimate amount of our debts and liabilities make it impracticable to predict
the aggregate net value ultimately distributable to stockholders. Claims,
liabilities and expenses from operations (including costs associated with the
sale of our remaining assets and the settlement of our remaining liabilities,
taxes, legal and accounting fees and miscellaneous office expenses) will
continue to be incurred. These expenses will reduce the amount of cash available
for ultimate distribution to stockholders. However, no assurances can be given
that available cash and amounts received on the sale of assets will be adequate
to provide for our obligations, liabilities, expenses and claims and to make
cash distributions to stockholders. If such available cash and amounts received
from the sale of assets are not adequate to provide for our obligations,
liabilities, expenses and claims, we may not be able to distribute meaningful
cash, or any cash, to our stockholders.
The filing of the antitrust lawsuit against Microsoft or the engagement of legal
counsel for that purpose does not guarantee that the outcome of the suit will be
favorable for Be.
On February 15, 2002, Be engaged Susman Godfrey LLP on a contingency basis
to bring forth claims against Microsoft Corporation for the destruction of Be's
business resulting from anticompetitive business practices. On February 19,
2002, the Company filed a lawsuit in the United States District Court in San
Francisco alleging, among other things, Microsoft harmed Be through a series of
illegal, exclusionary and anticompetitive acts designed to maintain its monopoly
in the Intel-compatible PC operating system market and created exclusive dealing
arrangements with PC OEMs prohibiting the sale of PCs with multiple preinstalled
operating systems. While Susman Godfrey was hired by Be to represent the company
and to seek a recovery for the benefit of stockholders, Susman Godfrey does not
directly represent the stockholders themselves, either individually or as a
class. The filing of the antitrust lawsuit or the engagement of legal counsel
for that purpose does not guarantee that the outcome of the suit will be in Be's
favor or that stockholders can assume that any distribution of proceeds will
occur as a result of a settlement of the lawsuit or a judgment against
Microsoft. In addition, we have engaged Susman Godfrey on a contingency basis
such that any amounts collected as a result of a settlement of the lawsuit or a
judgment against Microsoft would be divided between the Company for the benefit
of its stockholders and Susman Godfrey under the terms of the engagement letter
entered into between the parties.
The proceeds from the sale of our remaining assets may be less than anticipated.
Sales of any remaining assets will be made on such terms as are approved by
the Board of Directors and may be conducted by competitive bidding, public sales
or privately negotiated sales. The prices at which we will be able to sell these
assets will depend largely on factors beyond our control such as general market
conditions. Because some of our remaining assets may decline in value over time,
we may not be able to consummate the sale of these assets in time to generate
meaningful value. In addition, we may not obtain as high a price for a
particular asset as we might secure if we were not in liquidation.
We may be unable to negotiate settlements with respect to our remaining
liabilities.
We are currently in the process of negotiating settlements with respect to
our remaining obligations and liabilities which include, without limitation, tax
obligations, claims by licensees, and contractual and trade payables with third
parties including vendors and service providers. If we are unable to
successfully negotiate termination of these obligations, we will have fewer cash
proceeds to distribute to our stockholders.
6
If Be fails to retain the services of its remaining executive officer and Board
members, the plan of dissolution may not succeed.
The success of the Plan of Dissolution depends in large part upon Be's
ability to retain the services of its current President and Board of Directors.
For this reason, Be approved incentive arrangements with its President and the
three remaining members of its Board of Directors. Despite these arrangements,
the retention of qualified personnel is particularly difficult under Be's
current circumstances.
We may continue to incur the expense of complying with public company reporting
requirements.
We have an obligation to continue to comply with the applicable reporting
requirements of the Securities Exchange Act of 1934, as amended, even though
compliance with such reporting requirements is economically burdensome. In order
to curtail expenses in connection with our wind-up and dissolution, we have
sought relief from the Securities & Exchange Commission from the reporting
requirements under the Exchange Act. Until such relief is granted we will
continue to make obligatory Exchange Act filings. We expect that even if such
relief is granted in the future, we will continue to file current reports on
Form 8-K to disclose material events relating to our liquidation and dissolution
along with any other reports that the Securities & Exchange Commission may
require.
The decline in the value of our stock and our resulting cessation of business
operations and dissolution could give rise to securities class action claims
against us, which could deplete any proceeds that may be distributed to
stockholders.
Securities class action claims have been brought against companies in the
past where the market price of the company's securities has fallen due to an
inability of the company to achieve operational profitability. Any such
litigation could be very costly and divert our remaining resources from being
available for distribution to our stockholders. Any adverse determination in
this kind of litigation could also deplete our cash position, and reduce
proceeds that would otherwise be distributed to our stockholders.
7
ITEM 2. PROPERTIES
The lease on our principal executive offices located in approximately
23,963 square feet of space in Menlo Park, California, expired on February 28,
2002. We now lease an office of approximately 400 square feet in Mountain View,
California.
ITEM 3. LEGAL PROCEEDINGS
Stockholder lawsuit
As previously disclosed in the Company's filings with the Securities and
Exchange Commission, in November 2000, our stock transfer agent, Wells Fargo
Bank Minnesota, N.A., received a demand letter from Financial Square Partners, a
Be stockholder, alleging damages resulting from the transfer agent's failure to
timely issue its stock certificates. While Be was not named as a party in such
demand letter, Be was named as a party on the stockholder's draft claim attached
to the demand letter. On May 9, 2001, the claim was in fact filed, naming Be and
Wells Fargo Bank Minnesota, N.A. as defendants, and is currently active in the
Superior Court of California. A settlement conference is scheduled for April
2002 and a trial, if required, is scheduled for June. Financial Square Partners
is seeking damages in the amount of approximately $2.4 million. Prior to this
filing, the Company had been participating in communications with the parties
involved in an effort to resolve the matter prior to a lawsuit being filed.
Be management continues to believe that the allegations as they relate to
Be in the filed claim are without merit and intends to defend Be against this
legal action. However, there can be no assurance this claim will be resolved
without costly litigation, or require Be's participation in the settlement of
such claim, in a manner that is not adverse to our financial position, results
of operations or cash flows. No estimate can be made of the possible loss or
possible range of loss associated with the resolution of this contingency. If Be
were held liable, it is our intent to seek reimbursement under our D&O insurance
policy.
Antitrust lawsuit
On February 15, 2002, Be engaged Susman Godfrey LLP on a contingency basis
to bring forth claims against Microsoft Corporation for the destruction of Be's
business resulting from anticompetitive business practices. On February 19,
2002, the Company filed a lawsuit in the United States District Court in San
Francisco alleging, among other things, Microsoft harmed Be through a series of
illegal, exclusionary and anticompetitive acts designed to maintain its monopoly
in the Intel-compatible PC operating system market and created exclusive dealing
arrangements with PC OEMs prohibiting the sale of PCs with multiple preinstalled
operating systems.
Be is seeking recovery of an unspecified amount of damages for the benefit
of the company and its stockholders.
8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a Special Meeting of Stockholders held on November 12, 2001,
stockholders voted on the following:
Proposal I - To approve the sale by Be of substantially all of Be's
intellectual property and other technology assets, including those related to
the BeOS and BeIA operating systems, to an indirect wholly owned subsidiary of
Palm, Inc. pursuant to the terms of an asset purchase agreement dated August 16,
2001, as amended and restated as of September 10, 2001.
The results were as follows:
For Against Abstain Non-Vote
--- ------- ------- --------
19,969,516 920,976 26,542 15,875,529
Proposal II - To approve the dissolution of the Company and adopt the Plan
of Dissolution of Be.
The results were as follows:
For Against Abstain Non-Vote
--- ------- ------- --------
19,910,095 960,360 46,309 15,875,529
9
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information for Common Stock
Our common stock was traded on the Nasdaq National Market ("NNM") under the
symbol "BEOS" from July 19, 1999 to March 15, 2002. On March 15, 2002, we
voluntarily delisted from the NNM and our shares stopped trading on the NNM
effective March 18, 2002. The following table shows, for the periods indicated,
the high and low per share prices of common stock, as reported on the NNM. Such
prices represent prices between dealers, do not include retail mark-ups,
mark-downs or commissions and may not represent actual transactions.
Quarter Ended High Low
------------- ---- ----
September 30, 1999............................................. $10.93 $5.87
December 31, 1999.............................................. $39.56 $3.28
March 31, 2000................................................. $24.44 $12.13
June 30, 2000.................................................. $17.00 $4.00
September 30, 2000............................................. $6.44 $3.75
December 31, 2000.............................................. $6.44 $0.53
March 31, 2001................................................. $2.88 $0.78
June 30, 2001.................................................. $1.59 $0.44
September 30, 2001............................................. $0.66 $0.11
December 31, 2001.............................................. $0.22 $0.08
From January 1, 2002 to March 15, 2002 ........................ $0.15 $0.09
On March 15, 2002, the closing price of our common stock as listed on the
NNM was $ 0.14 per share. Since March 18, 2002, our common stock has traded on
"over-the-counter" securities markets such as the "Pink Sheets" market.
Stockholders
As of March 15, 2002, we had approximately 335 record holders of our common
stock.
Dividend Policy
We have never declared or paid cash dividends on our capital stock. We do
not anticipate paying any cash dividends on our capital stock in the foreseeable
future; however, in the event liquidation proceeds are distributed to
stockholders, such proceeds may be distributed in the form of a cash dividend
pursuant to the Plan of Dissolution approved by stockholders on November 12,
2001.
Recent Sales of Unregistered Securities
None
10
ITEM 6. SELECTED FINANCIAL DATA
In order to further curtail expenses in connection with our wind-up and
dissolution, we have sought relief from the Securities & Exchange Commission
from the filing of audited financial statements with our Annual Report on Form
10-K for the fiscal year ended December 31, 2001. As a result, we have not filed
financial statements with this Form 10-K filing. We are concurrently filing a
Form 12b-25 requesting deferral from filing financial statements while we await
a response from the SEC. If the SEC denies the Company's no-action request, we
intend to file audited financial statements for the fiscal year 2001 by filing
an Amended Annual Report on Form 10-K/A as soon as practical in accordance with
SEC regulations and guidelines and pursuant to any instruction from the SEC in
it's response to the Company's no-action request. If such relief is granted, we
will file unaudited financial statements via an Amended Annual Report on Form
10-K/A no later than April 16, 2002. Selected financial data will be provided
under Item 6 of any such amended filing.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In order to further curtail expenses in connection with our wind-up and
dissolution, we have sought relief from the Securities & Exchange Commission
from the filing of audited financial statements with our Annual Report on Form
10-K for the fiscal year ended December 31, 2001. As a result, we have not filed
financial statements with this Form 10-K filing. We are concurrently filing a
Form 12b-25 requesting deferral from filing financial statements while we await
a response from the SEC. If the SEC denies the Company's no-action request, we
intend to file audited financial statements for the fiscal year 2001 by filing
an Amended Annual Report on Form 10-K/A as soon as practical in accordance with
SEC regulations and guidelines and pursuant to any instruction from the SEC in
it's response to the Company's no-action request. If such relief is granted, we
will file unaudited financial statements via an Amended Annual Report on Form
10-K/A no later than April 16, 2002. Management's discussion and analysis of
financial condition and results of operations will be provided under Item 7 of
any such amended filing.
Item 7A. Quantitative and qualitative disclosures about market risk
We considered the provision of Financial Reporting Release No. 48
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosure of Quantitative and Qualitative
Information about Market Risk Inherent in Derivative Financial Instruments,
Other Financial Instruments and Derivative Commodity Instruments." We had no
holdings of derivative financial or commodity instruments at December 31, 2001.
However, we are exposed to interest rates risks. We believe that the fair value
of our money market accounts or related income would not be significantly
impacted by increases or decreases in interest rates due mainly to the
short-term nature of our money market accounts. However, a sharp decline in
interest rates could seriously harm interest earnings of our money market
accounts.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
In order to further curtail expenses in connection with our wind-up and
dissolution, we have sought relief from the Securities & Exchange Commission
from the filing of audited financial statements with our Annual Report on Form
10-K for the fiscal year ended December 31, 2001. As a result, we have not filed
financial statements with this Form 10-K filing. We are concurrently filing a
Form 12b-25 requesting deferral from filing financial statements while we await
a response from the SEC. If the SEC denies the Company's no-action request, we
intend to file audited financial statements for the fiscal year 2001 by filing
an Amended Annual Report on Form 10-K/A as soon as practical in accordance with
SEC regulations and guidelines and pursuant to any instruction from the SEC in
it's response to the Company's no-action request. If such relief is granted, we
will file unaudited financial statements via an Amended Annual Report on Form
10-K/A no later than April 16, 2002. Consolidated financial statements and
supplementary data will be provided under Item 8 of any such amended filing.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of the
executive officer and directors of the Company as of March 15, 2002:
Name Age Position
- ------------------------------------------ --- ----------------------------
Daniel S. Johnston....................... 38 President and General Counsel
P.C. Berndt.............................. 38 Director
Andrei M. Manoliu........................ 50 Director
Barry M. Weinman......................... 63 Director
Dan Johnston served as Be's Vice-President and General Counsel from March
1999 to December 2001 and has served as President and General Counsel since
January 1, 2002. Prior to joining Be, Mr. Johnston served as Be's outside
counsel with Cooley Godward LLP, primarily responsible for legal representation
of Be regarding its commercial transactions and technology partner
relationships. Mr. Johnston was an associate in Cooley Godward's Information
Technology Licensing group from 1994 to 1999. From 1991 to 1994, Mr. Johnston
earned his Juris Doctorate degree from Santa Clara University School of Law.
From 1986 to 1991, he was employed by Lockheed Missiles and Space Company as a
software programmer, designing application software systems, and then a computer
systems manager in charge of the inventory control systems for the U.S. Navy's
fleet ballistic missile program. Mr. Johnston also has a Bachelor of Science
degree in Computer Information Systems from Humboldt State University.
P.C. Berndt served as Chief Financial Officer of Be from August of 2000
until December 2001 and was elected to the Board of Directors on December 10,
2001. Prior to joining Be, Mr. Berndt was at Coca-Cola where he was director of
revenue management of the Greater Europe Group. Prior to his five-year tenure
with Coca-Cola, Mr. Berndt held positions with Deloitte & Touche Management
Consulting as a manager in the finance, operations and strategy group and with
Arthur Andersen & Co. as a member of the senior financial valuation staff. Mr.
Berndt has advised numerous high-profile clients, including Anheuser-Busch,
BellSouth, Inc., First Republic Bank, W H Smith, Aeromexico Airlines and several
professional sport franchises. Mr. Berndt has an M.B.A. from the University of
Michigan at Ann Arbor, a B.S. in Accounting and a B.S. in Finance from the
University of Illinois at Champaign-Urbana.
Andrei M. Manoliu has served as a director of the Company since February
2000. Since April 2000, Dr. Manoliu has been an independent business and
financial consultant to emerging growth companies. From 1982 to March 2000, Dr.
Manoliu was associated with Cooley Godward LLP, the Company's outside legal
counsel, most recently as a senior partner. Dr. Manoliu studied Physics at the
University of Bucharest, Romania, obtained a Ph.D. in Solid State Physics from
the University of California, Berkeley and a J.D. from Stanford Law School.
Barry M. Weinman has served as one of our directors since February 1998.
Since 1993, Mr. Weinman has served as a General Partner AVI Management Partners
and is also Managing Director of Allegis Capital (the Media technology Ventures
family of Funds) a spinout from AVI. Mr. Weinman also serves on the Board of
LiveWorld, Inc. (formerlyTalkCity, Inc.). Mr. Weinman holds a B.S. from the
Clarkson University, and an M.A. from the London School of Economics/University
of Southern California.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), requires the Company's directors and executive officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 2001, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
12
ITEM 11.EXECUTIVE COMPENSATION
Compensation of Directors
Directors who are also executive officers of the Company do not receive any
additional compensation for serving as members of the Board of Directors or any
committee of the Board of Directors. The members, however, are eligible for
reimbursement for their expenses incurred in connection with attendance at Board
meetings in accordance with Company policy. Only those directors who are not
also employees of the Company or an affiliate, as defined in the Internal
Revenue Code (the "Code"), are eligible to receive options under the 1999
Non-Employee Directors' Stock Option Plan (the "Directors' Plan"). Stock options
granted under the Directors' Plan cannot qualify as incentive stock options
under the Code.
Option grants under the Directors' Plan are non-discretionary. On the date
of approval of the Directors' Plan by the Board, each non-employee director then
serving as a director was automatically granted a stock option to purchase
150,000 shares of Common Stock. Under the terms of the Directors' Plan,
non-employee directors subsequently elected to the Board are automatically
granted a stock option to purchase 100,000 shares of Common Stock upon election
or appointment as a non-employee director. On the date that any stock option
granted under the Directors' Plan becomes fully vested, the optionholder, if
still a non-employee director, will automatically be granted an additional stock
option to purchase 100,000 shares of Common Stock. The exercise price of a stock
option granted under the Directors' Plan is 100% of the fair market value of a
share of the Common Stock subject to the stock option on the date of grant.
Stock options granted under the Directors' Plan have a term of ten years and
vest over a four year period with 25% of the shares vesting at the end of the
first year of service and thereafter at a rate of 1/48th of the shares monthly
in accordance with their terms. In certain circumstances, in the event of a
Change of Control of the Company (as defined in the Directors' Plan), the
vesting of options held by non-employee directors who continue to provide
services to the Company (whether as an employee, director or consultant), may
accelerate in full with such options terminating if not exercised at or prior to
the consummation of the transaction. The Asset Sale to Palm completed on
November 13, 2001 did not trigger the acceleration of any options granted to
non-employee directors under the Directors' Plan.
During the last fiscal year, no options were granted to directors. On
December 10, 2001, Garrett P. Gruener, Jean-Louis Gassee, Stewart Alsop, William
F. Zuendt, and Steve M. Sakoman resigned from the Board of Directors of the
Company in accordance with the cessation and winding up of the Company's
business operations. P.C. Berndt, former Chief Financial Officer of the Company,
was appointed to the Board of Directors on December 10, 2001 but was not awarded
any stock options typically granted to directors upon election to the Board
under the Directors Plan as a result of the cessation of the Company's business
operations. As of March 15, 2002, no options had been exercised by current or
former directors who held options under the Directors' Plan. Reference is made
to certain compensation arrangements established for remaining members of the
Board of Directors in "Employment, Severance and Change of Control Agreements."
13
Summary of Compensation
The following table shows for the fiscal years ended December 31, 2001,
2000 and 1999, compensation awarded or paid to, or earned by: (i) the Company's
Chief Executive Officer; and (ii) its other highest compensated executive
officers whose annual salary and bonus were in excess of $100,000 at December
31, 2001 (the "Named Executive Officers"):
Long-Term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
---------------------------------------- -----------------------------------------
Other Stock Securities
Annual Bonus Underlying
Name and Principal .. Compensation Awards Options/ LTIP
Position ....... Year Salary Bonus (5) (6) SARs Payouts
---- --------- --------- --------- --------- --------- --------- --------
Daniel S. Johnston ...... 2001 $ 196,000 $ 35,000 $ 212,000 40,000 -- -- --
President and General ... 2000 $ 171,000 -- -- -- 115,000 -- --
Counsel ................. (1) 1999 $ 112,500 -- -- -- 175,000 --
---- --------- --------- --------- --------- --------- --------- --------
Jean Louis F. Gassee (2) 2001 $ 300,000 -- $ 311,000 60,000 -- -- --
Former Chief Executive .. 2000 $ 300,000 -- -- -- 60,000 -- --
Officer and former ...... 1999 $ 275,000 -- -- -- 500,000 -- --
Director
---- --------- --------- --------- --------- --------- --------- --------
Steve M. Sakoman (3) .... 2001 $ 237,000 $ 40,000 $ 287,000 55,000 -- -- --
Former Chief Operating .. 2000 $ 270,000 -- -- -- 340,000 -- --
Officer and former ...... 1999 $ 213,000 -- -- -- 250,000 -- --
Director
---- --------- --------- --------- --------- --------- --------- --------
P.C. Berndt (4) ......... 2001 $ 248,000 $ 35,000 $ 281,000 54,000 -- -- --
Director and Former Chief 2000 $ 108,000 -- -- -- 290,000 -- --
Financial Officer ....... 1999 -- -- -- -- -- -- --
---- --------- --------- --------- --------- --------- --------- --------
<FN>
(1) Mr. Johnston served as Vice-President and General Counsel of the Company
from March 30, 1999 to December 31, 2001. Mr. Johnston became an executive
officer of the Company on January 1, 2002 when he was appointed President
and General Counsel by the Board and currently receives an annualized
salary of $200,000 per year.
(2) Mr. Gassee was an executive officer and served as Chief Executive Officer
of the Company until December 31, 2001. Mr. Gassee resigned from the Board
on December 10, 2001.
(3) Mr. Sakoman was an executive officer and served as Chief Operating Officer
of the Company until November 13, 2001. Mr. Sakoman resigned from the Board
on December 10, 2001.
(4) Mr. Berndt became an executive officer of the Company on August 29, 2000.
His annualized base salary in 2000 was $270,000. Mr. Berndt served as Chief
Financial Officer and was an executive officer until he stepped down as
Chief Financial Officer on November 30, 2001. Mr. Berndt was appointed to
the Board on December 10, 2001.
(5) Amounts shown in this column reflect severance amounts paid under Change of
Control Agreements entered into by each Named Executive Officer and the
Company and triggered by the Asset Sale to Palm on November 13, 2001. See
"Employment, Severance and Change of Control Agreements."
(6) Reflect stock grants awarded upon completion of the Asset Sale to Palm in
connection with stock bonus award rights granted to the Named Executive
Officers in April 2001.
</FN>
14
Stock Option Grants and Exercises
The Company grants options to its Named Executive Officers under its 1999
Equity Incentive Plan (the "Incentive Plan"). As of March 15, 2002, options to
purchase a total of 649,177 shares were outstanding under the Incentive Plan and
options to purchase 6,084,966 shares remained available for grant thereunder. If
these outstanding options are exercised, any shares of the Company's Common
Stock resulting from exercise of such options will not entitle the holder to
participate in any distribution of Be's assets, for which a Record Date of March
15, 2002 was set.
There were no grants of stock options or stock appreciation rights made to
any Named Executive during the fiscal year ended December 31, 2001.
The following table shows for the fiscal year ended December 31, 2001,
certain information regarding the exercisability of options held at year-end by
the Named Executive Officer:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Securities Underlying Value of Unexercised
Unexercised Options at December In-the-Money Options at
31, 2001 December 31, 2001 (2)
------------------------------- ---------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable (1) Unexercisable Exercisable Unexercisable
- ------------------------- -------- -------- ------------- ---------- ---------- ------------
Daniel S. Johnston -- -- 275,000 -- -- --
Jean Louis F. Gassee...... -- -- 358,750 -- -- --
Steve M. Sakoman.......... -- -- 606,454 -- -- --
P.C. Berndt............... -- -- 290,000 -- -- --
<FN>
(1) The Asset Sale to Palm on November 13, 2001 triggered a Change of Control
as defined in the Change of Control Agreements entered into between each
Named Executive Officer and the Company, and as a result all outstanding
options were accelerated in full so as to be fully exercisable as of
November 13, 2001.
(2) All unexercised options held by the Named Executives were exercisable
options but were out-of-the money at December 31, 2001.
</FN>
Employment, Severance and Change of Control Agreements
We had previously entered into Change of Control Agreements with certain
officers and other employees. These agreements, provided that, among other
things, if the employee was terminated without cause or if at any time during
the period commencing six months prior to the date of a Change of Control (as
defined in the agreement) and ending eighteen months following the Change of
Control, employee resigned for good reason (which includes any material
reduction in the package of benefits and incentives provided to the employee or
the elimination of employee's duties or responsibilities), then all of the
outstanding unvested options issued to the employee would be accelerated in full
and immediately exercisable and the employee would be entitled to a severance
payment equal to twelve months of the employee's base salary immediately prior
to the termination. The agreement also provided for a release by the employee of
any claim against us including any claim arising under the employee's employment
or termination of employment with us.
The Asset Sale to Palm completed on November 13, 2001 was deemed by the
Board of Directors to be a Change Control as defined in the Change of Control
Agreements entered into between each Named Executive Officer and the Company.
Following the approval by the Company's stockholders of the Plan of Dissolution
on November 12, 2001, it was deemed that these officers' and employees'
employment with the Company had been constructively terminated and that the
severance provisions in the Change of Control Agreements had been triggered.
At a meeting of the Board of Directors of the Company on December 10, 2001,
the Board determined that a smaller board of directors and executive management
team was appropriate for governing the winding up of the Company's business
operations. At this meeting, the previously authorized number of directors that
constitutes the whole Board of Directors was reduced from seven (7) members (the
"Former Board") to three (3) members (the "New Board"). In accordance with this
resolution, the Former Board accepted the resignations of directors Jean-Louis
Gassee, Steve M. Sakoman, Garrett P. Gruener, William F. Zuendt and Stewart
Alsop (the "Former Board Members") and appointed P.C. Berndt, former Chief
Financial Officer of the Company, to the third Board position. Prior to the
resignations of the Former Board Members, the Former Board approved a
compensation arrangement for the New Board and any remaining executive officer
of the Company in order to provide an incentive for such persons to remain with
the Company and oversee the successful completion of the Plan of Dissolution.
The Former Board structured such compensation arrangement such that it would
promote the maximization of stockholder value, would not dilute any possible
stockholder return resulting from the Asset Sale to Palm and was payable only in
the event of an award or settlement in connection with the Microsoft Litigation.
Accordingly, the Former Board determined that the new President of the Company
would receive (in addition to an annual salary of $200,000 per year as
determined by the New Board) two percent (2%) of the portion of any total award
or settlement available for distribution to stockholders after payment of legal
fees and expenses related to the Microsoft Litigation in the event of the
payment of such award or settlement. In addition, the Former Board approved a
compensation arrangement for the New Board whereby each member of the New Board
would receive one percent (1%) of the portion of the total award or settlement
upon the payment of any award or settlement in connection with the Microsoft
Litigation available for distribution to stockholders after payment of legal
fees and related expenses. In setting the compensation for the new President of
the Company and the New Board members, the Former Board determined that the
arrangements were fair, just and equitable compensation for the duties required.
Barry M. Weinman and Andrei M. Manoliu, the two members of the Former Board who
continue to serve on the New Board of the Company, abstained from voting on
these compensation arrangements in order to avoid any conflict of interest
issues. On December 31, 2001, Dan Johnston, former Vice President and General
Counsel of the Company, was elected President of the Company by the New Board
effective January 1, 2002 and is currently the only remaining executive officer
of the Company.
15
Report of the Compensation Committee of the Board of Directors - on Executive
Compensation (1)
From January 1, 2001 through December 10, 2001, the Compensation Committee
of the Board of Directors (the "Committee") was composed of three non-employee
directors: Mr. Gruener, Mr. Alsop and Mr. Weinman. On December 10, 2001, Mssrs.
Gruener and Alsop resigned from the Board of Directors and the Committee and the
Board disbanded the Committee as a result of the cessation of the Company's
business operations. Prior to disbanding, the Committee did make decisions
regarding compensation for officers and employees of the Company during the 2001
fiscal year and was responsible for determining salaries, incentive
compensation, and awarding stock options to our employees and officers and for
establishing policies governing our stock programs. The Committee met via phone
conference or through unanimous written consent two (2) times during the fiscal
year ended December 31, 2001. Going forward, the determination of executive
compensation, stock options grants and compensation policies will be determined,
as needed, by the Board of Directors.
Compensation Policy
The goals of the compensation program were to align compensation with
business objectives and performance and to enable the Company to attract, retain
and award the highest quality executive officers and key employees. The key
elements of this policy were:
o The Company paid competitively with leading software and other technology
companies with which the Company competed for talent;
o The Company provided significant equity-based incentives for executives and
employees to ensure that they were motivated over the long-term to respond
to the Company's business challenges and opportunities as owners and not
just as employees; and
o The Company rewarded executives and key employees who contributed to the
Company's progress and long-term success.
Base Salary and Long-Term Incentives for Executives
Salaries for executive officers in 2001 were established by the Committee
and approved by the Board based on a determination of several factors,
including, individual and corporate performance, levels of responsibility, prior
experience, breadth of knowledge and competitive pay practices. In general, the
salaries and stock options awarded to executive officers have not been
determined by the Company's achievement of specific corporate performance
criteria but rather a subjective evaluation of the officer's performance and
contribution to the Company's long-term success. The Board approved an increase
in executive officers' base salaries in 2001 in the average of approximately 3%
in order to bring salaries in line with executives of other public software and
technology companies and to reflect each of the officers' contributions to the
Company's progress. The bonuses awarded to executives in 2001 were used as an
incentive for officers to remain with the Company until the successful
completion of the Asset Sale to Palm.
In awarding stock options, the Committee and the Board of Directors
considered individual performance, overall contribution to the Company,
retention, whether the options were vested or unvested and the total number of
stock options to be awarded. No stock options were awarded in 2001 to executive
officers.
In April 2001, stock bonus award rights were granted to all of the
Company's executive officers and employees as an incentive for them to remain
with the Company until a merger or sale of the Company could be successfully
completed. The number of stock bonus award rights granted to each employee was
determined by multiplying the employee's annual salary by 20% and dividing it by
$1, the then current market price of the Company's stock. Upon completion of the
Asset Sale to Palm on November 13, 2001, the stock bonus award rights were
converted into unrestricted shares of the Company's common stock for all
employees employed by the Company at that date.
(1) The material in this report is not "soliciting material," is not
deemed "filed" with the SEC, and is not to be incorporated by
reference into any filing of the Company under the 1933 Act or 1934
Act, whether made before or after the date hereof and irrespective of
any general incorporation language contained in such filing.
16
Chief Executive Officer Compensation
The Committee used the same procedures described above in setting the
annual salary and stock option awards for Jean-Louis Gassee, the Company's
former Chief Executive Officer. Mr. Gassee's base annual salary for 2001 was
identical to his salary in the fiscal year 2000. In setting this amount, the
Board took into account (i) Mr. Gassee's significant and broad-based experience
in the software and computer industry and general acknowledgment as a leading
executive in the software industry; (ii) the scope of Mr. Gassee's
responsibilities, and (iii) the Board's confidence in Mr. Gassee to lead the
overall management, development and marketing efforts of the Company.
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company
to a deduction for federal income tax purposes of no more than $1 million of
compensation paid to certain named executive officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. The Compensation Committee has not
yet established a policy for determining which forms of incentive compensation
awarded to its named executive officers shall be designed to qualify as
"performance-based compensation."
The Board of Directors of Be Incorporated:
P.C. Berndt
Andrei M. Manoliu
Barry M. Weinman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Company's Compensation Committee of the Board of
Directors has been, at any time since our formation, an officer or employee of
the Company. Prior to the formation of the Compensation Committee, all decisions
regarding compensation for directors, officers, employees and consultants and
administration of stock and incentive plans were made solely by the Board of
Directors. No transaction or series of similar transactions, since the beginning
of the fiscal year ended December 31, 2001, has taken place or is currently
proposed to take place between the Company and any member of the Company's
Compensation Committee. On December 10, 2001, the Board of Directors disbanded
the Compensation Committee as a result of the cessation of the Company's
business operations.
17
PERFORMANCE MEASUREMENT COMPARISON
The following graph shows the total stockholder return as of December 31,
2001 of an investment of $100 in cash invested in (i) the Company's Common Stock
(as invested on July 20, 1999); (ii) the Nasdaq Stock Market Index (as invested
on July 20, 1999) and (iii) the S&P Computers (Software & Services) Index (as
invested on July 20, 1999). All values assume reinvestment of the full amount of
all dividends and are calculated as of December 31st of each year:
COMPARISON OF 29 MONTH CUMULATIVE TOTAL RETURN
AMONG BE INCORPORATED, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASADQ COMPUTER INDEX
Cumulative Total Return
-----------------------------------------------------------------------------------
7/20/99 7/99 8/99 9/99 10/99 11/99 12/99 1/00 2/00
- ---------------------------------------- -----------------------------------------------------------------------------------
BE INCORPORATED 100.00 113.54 104.17 117.71 95.83 239.58 380.22 214.58 245.83
- ---------------------------------------- -----------------------------------------------------------------------------------
NASDAQ STOCK MARKET (U.S.) 100.00 98.20 102.35 102.49 110.70 124.17 151.49 145.88 173.61
- ---------------------------------------- -----------------------------------------------------------------------------------
NASDAQ COMPUTER INDEX 100.00 96.63 105.80 106.45 114.23 129.83 164.61 156.62 188.79
- ---------------------------------------- -----------------------------------------------------------------------------------
Cumulative Total Return
----------------------------------------------------------------------------------------
3/00 4/00 5/00 6/00 7/00 8/00 9/00 10/00 11/00 12/00
- ---------------------------------------- ----------------------------------------------------------------------------------------
BE INCORPORATED 251.05 132.30 70.83 83.33 69.27 77.60 67.72 51.05 29.17 12.50
- ---------------------------------------- ----------------------------------------------------------------------------------------
NASDAQ STOCK MARKET (U.S.) 170.03 143.02 125.77 147.84 139.83 156.36 136.05 124.82 96.23 91.16
- ---------------------------------------- ----------------------------------------------------------------------------------------
NASDAQ COMPUTER INDEX 191.22 159.55 139.86 165.93 158.84 179.09 150.32 140.64 104.73 91.67
- ---------------------------------------- ----------------------------------------------------------------------------------------
Cumulative Total Return
-----------------------------------------------------------------------------------------
1/01 2/01 3/01 4/01 5/01 6/01 7/01 8/01 9/01 10/01 11/01 12/01
- ---------------------------------------- -----------------------------------------------------------------------------------------
BE INCORPORATED 33.33 25.00 19.27 12.50 9.17 7.50 8.00 2.50 2.83 1.42 1.50 2.33
- ---------------------------------------- -----------------------------------------------------------------------------------------
NASDAQ STOCK MARKET (U.S.) 102.74 79.73 68.19 78.41 78.19 80.05 75.11 66.90 55.53 62.63 71.53 72.27
- ---------------------------------------- -----------------------------------------------------------------------------------------
NASDAQ COMPUTER INDEX 104.48 76.11 62.86 75.12 73.40 76.76 71.41 60.13 47.81 58.16 69.21 69.41
- ---------------------------------------- -----------------------------------------------------------------------------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of March 15, 2002 by:
o each stockholder who is known by us to own beneficially more than 5%
percent of the Common Stock of the Company;
o each of our directors;
o each of our Named Executive Officers (as listed in the Summary Compensation
Table); and
o all of our directors and executive officers as a group.
Unless otherwise indicated, to our knowledge, all persons listed below have
sole voting and investment power with respect to their shares of Company's
Common Stock, except to the extent authority is shared by spouses under
applicable law. Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission. Applicable percentage ownership is
based on 38,450,527 shares of Common Stock outstanding as of March 15, 2002,
together with options for that stockholder that are currently exercisable or
exercisable within 60 days of March 15, 2002. In computing the number and
percentage of shares beneficially owned by a person, shares of Common Stock
subject to options currently exercisable, or exercisable within 60 days of March
15, 2002 are counted as outstanding, while these shares are not counted as
outstanding for computing the percentage ownership of any other person. Any
outstanding option exercised after the March 15, 2002 Record Date would not
entitle the holder of any resulting shares of Common Stock to be eligible for
participation in any liquidation distribution to stockholders.
Shares
Issuable
pursuant to Shares Beneficially Owned
Options (Including the Number of
Exercisable Shares Shown in
within 60 the First Column)
days of
March 15,
Name of Beneficial Owner 2002 (3) Number Percent
- ------------------------------------- ---------- ---------- ---------
Jean-Louis Gassee............... - 4,024,240 10.47
Daniel S. Johnston................. 275,000 335,000 *
Barry M. Weinman (1) .............. 118,750 866,396 2.25
Andrei M. Manoliu (2) ............. 56,250 62,615 *
P.C. Berndt ....................... 290,000 344,000 *
All officers and directors as a group
(4 persons)................... 740,000 1,608,011 4.10
<FN>
* Represents beneficial ownership of less than one percent of the common stock
(1) Consists of 745,646 shares held by AVl Capital, L.P. and 2,000 shares held
by Virginia Weinman, the wife of Mr. Weinman. AVl Capital Management, L.P.
is the general partner of AVl Capital, L.P. Mr. Weinman is a general
partner of AVl Capital Management. Mr. Weinman disclaims beneficial
ownership of these shares except to the extent of his pecuniary interest
therein.
(2) Shares are held by the Manoliu-Neimat Living Trust, of which Mr. Manoliu is
a trustee. Dr. Manoliu was formerly a partner in the law firm of Cooley
Godward LLP, the Company's outside legal counsel.
(3) If these options are exercised, the resulting shares will not be eligible
to participate in the final distribution of Be's assets, for which a record
date of March 15, 2002 was set.
</FN>
18
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company had previously entered into Change of Control Agreements with
certain officers and key employees of the Company. These agreements were entered
into prior to the Company's initial public offering in July 1999 or at the time
the officer or employee commenced employment with the Company if such officer or
employee was not employed by the Company at the time of its initial public
offering. Each Named Executive Officer of the Company (as defined in Item 11 of
this Annual Report on Form 10-K) was a party to such a Change of Control
Agreement. The Asset Sale to Palm completed on November 13, 2001 was deemed by
the Board of Directors to be a Change Control as defined in the Change of
Control Agreements and following the approval by the Company's stockholders of
the Plan of Dissolution on November 12, 2001, it was deemed that these Named
Executive Officers' employment with the Company had been constructively
terminated and that the severance provisions in the Change of Control Agreements
had been triggered. As a result, each Named Executive Officer of the Company
received cash severance in the amounts reflected in the Summary of Compensation
table under Item 11 of this Annual Report on Form 10-K.
We have entered into indemnification agreements with certain current or
former directors and executive officers for the indemnification of and
advancement of expenses to these persons to the full extent permitted under
Delaware law and the Company's bylaws.
We believe that each of the foregoing transactions were in the best
interest of the Company. As a matter of policy the transactions were, and all
future transactions between the Company and its officers, directors or principal
stockholders will be, approved by a majority of the independent and
disinterested members of the Board of Directors.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
In order to further curtail expenses in connection with our wind-up and
dissolution, we have sought relief from the Securities & Exchange Commission
from the filing of audited financial statements with our Annual Report on Form
10-K for the fiscal year ended December 31, 2001. As a result, we have not filed
financial statements with this Form 10-K filing. We are concurrently filing a
Form 12b-25 requesting deferral from filing financial statements while we await
a response from the SEC. If the SEC denies the Company's no-action request, we
intend to file audited financial statements for the fiscal year 2001 by filing
an Amended Annual Report on Form 10-K/A as soon as practical in accordance with
SEC regulations and guidelines and pursuant to any instruction from the SEC in
it's response to the Company's no-action request. If such relief is granted, we
will file unaudited financial statements via an Amended Annual Report on Form
10-K/A no later than April 16, 2002.
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------
2.1*** Asset Purchase Agreement by and among Palm Inc., ECA Subsidiary
Acquisition Corporation and the Company, dated August 16, 2001, as
amended and restated on September 10, 2001
2.2*** Plan of Dissolution of the Company as approved by the stockholders of
the Company on November 12, 2001
3.1* Amended and Restated Certificate of Incorporation
3.2* Bylaws
4.1* Form of Common Stock Certificate
4.2* Form of Warrant to purchase an aggregate of up to 1,046,102 shares of
common stock issued in connection with the Series 1 convertible
preferred stock financing
4.3* Warrant to purchase up to 1,538,462 shares of common stock, dated
December 23, 1998, issued by Be Incorporated to Intel Corporation
4.4* Amended and Restated Investors' Rights Agreement, dated February 4,
1998
9.1*** Form of Stockholder Support Agreement by and among Palm Inc., ECA
Subsidiary Acquisition Corporation and the Company, dated August 16,
2001, as amended and restated on September 10, 2001
10.1* Form of Indemnity Agreement entered into between the Company and its
directors and officers
19
10.2.1* 1992 Stock Option Plan
10.2.2* Form of 1992 Stock Option Agreement
10.3.1* 1999 Equity Incentive Plan
10.3.2* Form of 1999 Equity Incentive Plan Stock Option Agreement
10.3.3* Form of 1999 Stock Option Grant Notice
10.4.1* Employee Stock Purchase Plan
10.4.2* Form of Employee Stock Purchase Plan Offering
10.5.1* Non-Employee Directors' Stock Option Plan
10.5.2* Form of Nonstatutory Stock Option
10.6.1* Office Lease dated June 24, 1994, by and between Menlo Station
Development and the Company
10.6.2* Amendment to Office Lease, dated April 10, 1997, by and between Menlo
Station Development and the Company
10.7* Employment Agreement, dated June 22, 1998, by and between the Company
and Wesley S. Saia
10.8* Employment Agreement, dated March 12, 1999, by and between the
Company and Roy Graham
10.9* Employment Agreement, dated October 9, 1998, by and between the
Company and Jean R. Calmon
10.10* Stock Purchase Agreement, dated as May 1, 1998, by and among StarCode
Software, Inc., the Stockholders of StarCode Software, Inc., and Be
Incorporated
10.11*+ Software Distribution Agreement, dated November 5, 1998, by and
between the Company and Plat'Home Co. Ltd.
10.12** Form of Change in Control Agreement
10.13*** Funding Agreement, dated August 16, 2001, by and between Palm Inc.
and the Company
10.14*** Form of Non-Competition Agreement, effective November 13, 2001, by
and between Palm, Inc. and certain stockholders or optionholders of
the Company
21.1* List of Subsidiaries
24.1 Power of Attorney (see signature page)
* Incorporated by reference from the Registrant's Registration
Statement on Form S-1, as amended (File No. 333-77855)
** Incorporated by reference from the Registrant's Annual Report on Form
10-K, filed with the SEC on March 30, 2000
*** Incorporated by reference from the Registrant's Definitive Proxy
Statement, filed with the SEC on October 9, 2001
+ Confidential Treatment has been granted with respect to certain
portions of this agreement
(b) Reports on Form 8-K
Current Report on Form 8-K, filed November 28, 2001, announcing that Be
completed Palm's acquisition of substantially all of the intellectual
property and other technology assets of Be pursuant to the terms of an
Amended and Restated Asset Purchase Agreement, dated September 10, 2001,
entered into between Be, Palm and ECA Subsidiary Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of Palm.
Current Report on Form 8-K, filed March 6, 2002, announcing that (i) on
February 19, 2002 Be had filed suit against Microsoft Corporation for the
destruction of Be's business resulting from the anticompetitive business
practices of Microsoft and (ii) on March 4, 2002, the Company planned to
file a certificate of dissolution with the Delaware Secretary of State on
March 15, 2002 in accordance with the Plan of Dissolution approved by
stockholders on November 12, 2001.
Current Report on Form 8-K, filed March 28, 2002, announcing that on March
15, 2002, Be had filed a certificate of dissolution with the Delaware
Secretary of State and voluntarily delisted from the Nasdaq National
Market.
(c) (d) Exhibits and Financial Statement Schedules
In order to further curtail expenses in connection with our wind-up and
dissolution, we have sought relief from the Securities & Exchange Commission
from the filing of audited financial statements with our Annual Report on Form
10-K for the fiscal year ended December 31, 2001. As a result, we have not filed
financial statements with this Form 10-K filing. We are concurrently filing a
Form 12b-25 requesting deferral from filing financial statements while we await
a response from the SEC. If the SEC denies the Company's no-action request, we
intend to file audited financial statements for the fiscal year 2001 by filing
an Amended Annual Report on Form 10-K/A as soon as practical in accordance with
SEC regulations and guidelines and pursuant to any instruction from the SEC in
it's response to the Company's no-action request. If such relief is granted, we
will file unaudited financial statements via an Amended Annual Report on Form
10-K/A no later than April 16, 2002. Accordingly, either audited or unaudited
financial statements for the fiscal year ended December 31, 2001 will be
provided under Item 14 of such amended filing.
20
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Mountain View, State of California, on April 1, 2002.
BE INCORPORATED
By: /S/ DANIEL S. JOHNSTON
-----------------------------------------
Name: Daniel S. Johnston
Title: President and General Counsel
21
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and Daniel S. Johnston, his attorney-in-fact, with the power
of substitution, for him in any and all capacities, to sign all amendments to
this Form 10-K and to file this Form 10-K (including all exhibits and other
documents related to the Form 10-K) with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such
attorney-in-fact, or his substitute, may lawfully do or cause to be done by
virtue hereof. This Power of Attorney may be signed in several counterparts.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
Signature Title(s) Date
/s/ DANIEL S. JOHNSTON President and General Counsel April 1, 2002
---------------------------
Daniel S. Johnston
/s/ P.C. BERNDT Director April 1, 2002
----------------------------
P.C. Berndt
/s/ ANDREI M. MANOLIU Director April 1, 2002
----------------------------
Andrei M. Manoliu
/s/ BARRY M. WEINMAN Director April 1, 2002
----------------------------
Barry M. Weinman
22