UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1 to 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 February 28, 2001
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _______ to _______
Commission file number: 000-24659
CYBERIAN OUTPOST, INC.
(a/k/a OUTPOST.COM)
(Exact name of registrant as specified in its charter)
Delaware 06-1419111
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
23 North Main Street, PO Box 636
Kent, Connecticut 06757
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 927-2050
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.01 Par Value Per Share
(Title of Class)
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 aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant (without admitting that any person whose shares
are not included in such calculation is an affiliate) on May 23, 2001, was
$32,303,448 based on the last sale price as reported by the Nasdaq National
Market System.
As of May 23, 2001, the registrant had 31,670,047 shares of common stock
outstanding.
AMENDMENT TO THE ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2001
This Amendment to the Annual Report on Form 10-K for Cyberian Outpost, Inc.
("Outpost.com" or, the "Company") is being filed (i) to correct an error in the
information previously filed in Part II, Item 6 to the Annual Report on Form
10-K as filed with the Securities and Exchange Commission on May 29, 2001 and
(ii) to add the information required in Part III.
PART II
Item 6. SELECTED FINANCIAL DATA
Years Ended
----------------------------------------------------------
2/28/2001 2/29/2000 2/28/1999 2/28/1998 2/28/1997
--------- --------- --------- --------- ---------
(in thousands, except per share data)
Statements of Operations Data:
Net sales (1)....................................... $ 355,198 $ 190,337 $ 87,745 $ 22,710 $ 10,804
Cost of sales....................................... 302,456 166,847 76,919 20,525 9,535
--------- --------- --------- --------- ---------
Gross profit................................... 52,742 23,490 10,826 2,185 1,269
Operating expenses:
Sales and marketing (1)........................ 57,880 43,399 29,407 5,972 1,421
General and administrative..................... 13,575 7,401 4,285 1,623 805
Technology and development..................... 11,491 10,409 4,646 1,058 382
Amortization of goodwill....................... 1,121 -- -- -- --
--------- --------- --------- --------- ---------
Total operating expenses................... 84,067 61,209 38,338 8,653 2,608
--------- --------- --------- --------- ---------
Operating loss................................. (31,325) (37,719) (27,512) (6,468) (1,339)
Other income (expense), net......................... 1,932 2,103 2,292 (624) 1
--------- --------- --------- ---------- ---------
Net loss before minority interest.............. $ (29,393) $ (35,616) $ (25,220) $ (7,092) $ (1,338)
Minority interest................................... (893) -- -- -- --
---------- --------- --------- --------- ---------
Net loss....................................... $ (30,286) $ (35,616) $ (25,220) $ (7,092) $ (1,338)
========= ========= ========= ========= =========
Net loss applicable to common stockholders (2). $ (30,286) $ (35,616) $ (26,043) $ (7,092) $ (1,338)
========= ========= ========= ========= =========
Basic and diluted net loss per common share (2)..... $ (1.01) $ (1.52) $ (1.64) $ (1.07) $ (0.22)
========= ========= ========= ========= =========
Weighted average basic and diluted common shares
outstanding (2).................................. 29,893 23,382 15,886 6,633 6,145
========= ========= ========= ========= =========
Pro forma basic and diluted net loss per
common share (3) (unaudited)..................... $ (1.24) $ (0.86) $ (0.22)
========= ========= =========
Pro forma weighted average basic and diluted
common shares outstanding (3) (unaudited)........ 20,312 8,260 6,145
========= ========= =========
As of
----------------------------------------------------------
2/28/2001 2/29/2000 2/28/1999 2/28/1998 2/28/1997
--------- --------- --------- --------- ---------
(in thousands)
Balance Sheet Data:
Cash and cash equivalents........................... $ 21,970 $ 13,293 $ 26,828 $ 7,325 $ 41
Short term investments.............................. -- 7,694 28,735 -- --
Working capital (deficit)........................... 9,510 11,033 52,854 824 (1,336)
Total assets........................................ 89,705 52,878 71,464 10,940 755
Capital lease obligations, excluding current portion,
and other long term debt.......................... 389 718 778 136 23
Redeemable convertible preferred stock.............. -- -- -- 5,991 --
Common stock........................................ 317 237 230 67 65
Total stockholders' equity (deficit)................ $ 41,565 $ 24,520 $ 58,421 $ (3,671) $ (1,161)
(1) Amounts prior to February 28, 2001 have been reclassified to conform to the
requirements of Emerging Issues Task Force ("EITF") Issue No. 00-10,
"Accounting for Shipping and Handling Fees and Costs" and EITF No. 00-14,
"Accounting for Certain Sales Incentives". See note 1(f) to our consolidated
financial statements.
(2) See Note 1(k) to our consolidated financial statements for an explanation of
the determination of the number of common shares used in computing the
amount of basic and diluted net loss per common share and net loss
applicable to common stockholders.
(3) Pro forma net loss per share has been computed under SFAS No. 128, except
that it reflects the conversion of the convertible preferred stock as of the
beginning of the earliest period presented or date of issuance, whichever is
later. Therefore, the pro forma net loss per share does not include the
accretion of or dividends on the Series C Redeemable Convertible Preferred
Stock before it converted into common stock upon completion of our initial
public offering on August 5, 1998. The pro forma weighted average shares
outstanding includes the common stock resulting from the conversion of the
convertible stock as of the beginning of the earliest period presented or
the date of issuance, whichever is later.
2
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Board of Directors
The Company's Restated Certificate of Incorporation and Restated
Bylaws provide that its business is to be managed by or under the direction of
its Board of Directors. Outpost.com's Board of Directors is divided into three
classes for purposes of election. One class is elected at each annual meeting of
stockholders to serve for a three-year term. The Board of Directors currently
consists of four members, classified into three classes as follows: (1) Darryl
Peck constitutes a class with a term ending at the 2001 Annual Meeting; (2)
Robert A. Bowman and William H. Lane III constitute a class with a term ending
at the 2002 Annual Meeting and (3) Donald Riegle, Jr. constitutes a class with a
term ending at the 2003 Annual Meeting.
The names of the Company's current directors and certain information
about them are set forth below:
Name Age Position
--------- --- --------------
Darryl Peck................................. 42 President, Chief Executive Officer and Chairman
of the Board
Robert A. Bowman............................ 46 Director
William H. Lane III......................... 62 Director
Donald Riegle, Jr........................... 63 Director
The following is a brief summary of the background of each of
Outpost.com's current directors:
Mr. Peck has served as Outpost.com's President and Chief Executive
Officer since April 2001. Mr. Peck founded Outpost.com in March 1995 and has
served as a member of the Board of Directors since that time and as the Chairman
of the Board since September 1999. He also served as its President from March
1995 until September 1999 and as its Chief Executive Officer from April 1998 to
September 1999. In 1989, he formed Inline Software, a publisher of game and
utility software titles primarily for the Macintosh platform, and served as its
President until the company was sold to Focus Enhancements in May 1994. From
1989 to 1990, Mr. Peck was President of the New York Mac User's group, which at
the time was the third largest Mac user group in the world.
Mr. Bowman has served as a director of Outpost.com since September
1999. Mr. Bowman also served as Outpost.com's President and Chief Executive
Officer from September 1999 through November 2000. Since November 2000, he has
served as President and Chief Executive Officer of MLB Advanced Media,
overseeing all aspects of Major League Baseball's New Media and Internet
business interests. MLB Advanced Media is a separate entity, which includes
MLB.com and the Internet sites for all 30 Major League Baseball teams. Mr.
Bowman has also been an investor in more than a dozen Internet start-up
companies and creator of howtoguru.com and icontact.com. Prior to his
involvement in the Internet industry, Mr. Bowman was President and Chief
Operating Officer of ITT Corporation. At ITT he held the positions of Executive
Vice President and Chief Financial Officer of ITT Sheraton, Executive Vice
President and Chief Financial Officer of the ITT parent company and finally as
President and Chief Operating Officer. Before joining ITT, Mr. Bowman served as
Treasurer for the State of Michigan from 1983 to 1991. Mr. Bowman has also
worked as an investment banker at Goldman Sachs & Company and in the US
Department of the Treasury as Special Assistant to the Assistant Secretary for
Domestic Finance. Mr. Bowman is a member of the Board of Directors of !hey, inc.
He is also a member of the Board of Directors of Grupo Elecktra S.A., a leading
Latin American specialty retailer, and is an Advisory Board member of The
Wharton School.
Mr. Lane has served as a member of the Company's Board of Directors
since July 1999. Mr. Lane serves as President of Canyon Vista, Inc., a
management consulting business. In July 1996, he retired from Intuit, Inc., a
personal and small business finance software publisher after having served as
its Vice President, Chief Financial Officer, Secretary and Treasurer since
January 1994. Mr. Lane served in a similar capacity at ChipSoft, Inc., a tax
preparation software company, from July 1991 until its acquisition by Intuit in
December 1993. Mr. Lane is currently a director of DigitalThink, Inc., Digital
Now Inc. and a number of private companies.
3
Donald Riegle, Jr. has served as a member of the Company's Board of
Directors since July 2000. Since March 2001, he has served as Chairman of
Government Affairs of APCO Worldwide, a global public affairs and strategic
communications firm, headquartered in Washington, D.C., whose core public
affairs services include government relations, issues management, grassroots
advocacy, opinion research and litigation support. Senator Riegle served in the
United States Senate from 1976 through 1994 and in the U.S. House of
Representatives from 1967 through 1975. He served on the Senate Banking
Committee for eighteen years and as its chairman from 1989 through 1994. Senator
Riegle also served on the Finance Committee, the Commerce, Science and
Transportation Committee and the Budget Committee. Upon retiring from Congress
in 1994, Senator Riegle joined Shandwick International, where he was involved in
global business development and served on the company's Executive Management and
Ethics Committees. He was named Chairman, Shandwick International, Americas in
early 1999. Senator Riegle is a frequent television commentator and authored the
best-selling book, O Congress! In addition, Senator Riegle has served as an
adjunct professor on the faculty of the Eli Broad School of Business at Michigan
State University as well as on the faculties of Harvard University, the
University of Southern California and Boston University. He is a member of the
Visiting Committee of the Harvard Graduate School of Education, and is a
Collaborating Partner on the National Dialogue on Cancer, a U.S. leadership
group chaired by former President and Mrs. Bush. Senator Riegle is a director of
Anthem, Inc., a Fortune 500 company and one of the largest health care
management companies in the U.S. He is also a director of Rx Optical, a premium
eye glass company in Western Michigan.
Executive Officers
The following table sets forth certain information regarding the
Company's executive officers who are not also directors.
Name Age Position
- ------------------------------ ---- ---------------------------------------
Raymond A. Maccio............. 34 Senior Vice President and General Merchandise
Manager
Philip J. Rello............... 41 Vice President, Sales
Bruce C. Schellinkhout........ 43 Vice President, Operations
Christopher Walls............. 38 Vice President, Corporate Counsel
Raymond Karrenbauer........... 31 Chief Technology Officer
Mr. Maccio has served as the Company's Senior Vice President since
January 2001 and as its General Merchandise Manager since May 1999. He served as
Chief Purchasing Officer/Vice President of Purchasing from November 1998 to
January 2001. From April 1997 to November 1998, he was Outpost.com's Director of
Purchasing. From September of 1996 until joining Outpost.com, Mr. Maccio served
as Director of Purchasing for Global Computer Supplies, a leading catalog
retailer of computer supply products. From February of 1991 to September of
1996, Mr. Maccio worked for Micro Warehouse, Inc. where he held various
positions in the purchasing department, including Purchasing Manager.
Mr. Rello has served as the Company's Vice President, Sales since
January 2001. He served as the Company's Chief Sales Officer/Vice President of
Sales and Customer Service from September 1998 to January 2001 and served as its
Vice President of Sales from July 1997 to September 1998. From August 1990 until
July 1997, he worked at Micro Warehouse, Inc., a catalog retailer and direct
marketer of computer hardware, software and accessories, where he last served as
Director of Education Sales.
Mr. Schellinkhout has served as the Company's Vice President,
Operations since January 2001. Mr Schellinkhout served as Outpost.com's Chief
Fulfillment & Facilities Officer/Vice President of Operations from July 1998 to
January 2001. From January 1993 until joining Outpost.com, he was the Vice
President of Distribution for Micro Warehouse, Inc.
Mr. Walls joined Outpost.com in December 2000 as its Vice President,
Corporate Counsel. Prior to joining the Company, from October 1999 to December
2000, he worked for Real Media, Inc., a global provider of technology and
Internet advertising services, where he started as Counsel, Business Development
Manager and was promoted to Counsel, Vice President Business Affairs. From
December 1995 to October 1999, Mr. Walls served as in-house litigation counsel
for St. Paul Fire and Marine Insurance Company (formerly USF&G Insurance
Company).
Mr. Karrenbauer joined Outpost.com in April 2000 as its Chief
Technology Officer. He previously served as Vice President of Meta Group, an
international information technology research and analysis firm. Other positions
have included Vice President of Professional Services at Infomask, Inc (an
internetworking security solutions based engineering firm) and Chief Information
Officer and Vice President of Information Systems at GEN International, Inc. He
also held senior level information technology and engineering positions at
several engineering services firms.
4
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon review of the Company's records, all reports required to be
filed pursuant to Section 16(a) of the Exchange Act were filed on a timely basis
except for the following:
. a Statement of Changes in Beneficial Ownership on Form 4, for
the purchase of 20,000 shares of the Company's common stock in
March 2000, for Robert A. Bowman, a director and the Company's
former President and Chief Executive Officer, was filed late due
to a clerical error;
. an Initial Statement of Beneficial Ownership of Securities on
Form 3 was filed late for Derek Holding, the Company's former
Chief Design Officer;
. an Initial Statement of Beneficial Ownership of Securities on
Form 3 was filed late for Raymond Karrenbauer, the Company's
Chief Technology Officer;
. an Annual Statement of Changes in Beneficial Ownership on Form 5
was filed late for Raymond A. Maccio, the Company's Senior Vice
President and General Merchandise Manager;
. an Annual Statement of Changes in Beneficial Ownership on Form 5
was filed late for Philip J. Rello, the Company's Vice
President, Sales; and
. an Annual Statement of Changes in Beneficial Ownership on Form 5
was filed late for Bruce C. Schellinkhout, the Company's Vice
President, Operations.
5
Item 11. EXECUTIVE COMPENSATION
Compensation of Directors
Pursuant to the Outpost.com Director Retainer and Stock Option Policy,
which was adopted by Outpost.com on June 15, 1999, as amended on January 9,
2001, non-employee directors receive an annual retainer of $10,000 to serve on
the Company's Board and receive $1,500 for each meeting attended in person and
$500 for each meeting attended by telephone. At the election of the director,
these fees are paid either in cash or shares of the Company's common stock. If
the director elects to be paid in stock, shares of the Company's common stock
are granted to the director based on the fair market value of the stock as of
the date of grant. In addition, under this policy, upon initial election or
subsequent re-election to Outpost.com's Board of Directors, individuals who are
not salaried employees of Outpost.com receive automatic grants of non-qualified
stock options to purchase 25,000 shares of the Company's common stock pursuant
to its 1998 Employee, Director and Consultant Stock Option Plan. Each option
granted pursuant to this policy:
. has a term of ten years;
. has an exercise price equal to the fair market value of the
Company's common stock on the date of grant; and
. is exercisable immediately.
Under this policy, Mr. Lane, who was elected to Outpost.com's Board of
Directors at the 1999 Annual Meeting, received an automatic grant of an
immediately exercisable option to purchase 25,000 shares of common stock at an
exercise price of $11.44 per share and Senator Riegle, who was elected to
Outpost.com's Board of Directors at the 2000 Annual Meeting, received an
automatic grant of an immediately exercisable option to purchase 25,000 shares
of common stock at an exercise price of $4.66 per share.
In addition, in February 2001, the Company entered into a letter
agreement with Darryl Peck, the Company's current President, Chief Executive
Officer and Chairman of the Board (who at that time was serving solely as the
Chairman of the Board). Pursuant to this agreement, the Company agreed to the
following:
. that effective as of January 1, 2001, Mr. Peck would be paid a
monthly fee of $8,333.00 to serve as Chairman of the Board;
. that Mr. Peck was eligible to participate in the Company's
medical plan;
. that Mr. Peck would be eligible for reimbursement for reasonable
and customary business related expenses, up to a maximum of
$15,000.00; and
. that Mr. Peck would be paid a lump sum of $4,200 to continue his
life insurance coverage.
Pursuant to this agreement, for the fiscal year ended February 28, 2001, Mr.
Peck was paid a total of $20,866, which consisted of $16,666 in fees to serve as
Chairman of the Board and a lump sum payment of $4,200 to continue his life
insurance coverage.
Compensation Committee Interlocks and Insider Participation
Donald Riegle, Jr. and James E. Preston constituted Outpost.com's
Compensation Committee for the fiscal year ended February 28, 2001. Neither
Senator Riegle nor Mr. Preston are, or have ever been, employees of Outpost.com.
None of Outpost.com's executive officers serve as a member of the board of
directors or compensation committee of any entity that has any executive officer
serving as a member of Outpost.com's Board of Directors or Compensation
Committee.
6
Summary Compensation
The following table sets forth the total compensation paid or accrued
during the fiscal years ended February 28, 2001, February 29, 2000 and February
28, 1999 to: (1) the Company's two former Chief Executive Officers and (2) the
Company's four next most highly compensated executive officers who earned more
than $100,000 during the fiscal year ended February 28, 2001. Information is
provided for each executive officer only for the fiscal years in which the
executive served as the Company's Chief Executive Officer or for which the
executive earned more than $100,000 and was one of the four next most highly
compensated executive officers.
Summary Compensation Table
Long-term
Compensation
Awards
------
Annual Compensation Shares
------------------------- Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options (#) Compensation ($)
- --------------------------- ---- ----------- ----------- ------------- ----------------
Robert A. Bowman........................... 2001 $ 141,539 $ -- -- $ --
Former President and Chief 2000 73,076 -- 1,200,000 11,885
Executive Officer
Katherine N. Vick......................... 2001 184,770 -- 450,000 6,500
Former President and Chief 2000 164,250 56,000 100,000 18,627
Executive Officer 1999 143,269 20,000 300,000 --
Derek Holding.............................. 2001 181,846 -- 81,000 3,500
Former Chief Design Officer
Raymond Karrenbauer........................ 2001 169,231 -- 276,000 10,500
Chief Technology Officer
Bruce C. Schellinkhout.................... 2001 155,231 -- 32,000 10,483
Vice President, Operations 2000 132,426 17,000 10,000 12,021
Philip J. Rello........................... 2001 154,308 -- 12,000 6,550
Vice President, Sales 2000 129,782 22,000 40,000 13,777
1999 123,885 15,000 140,000 --
Mr. Bowman served as the Company's President and Chief Executive Officer
from September 1999 through November 2000 and Ms. Vick served as the Company's
President from November 2000 through April 2001 and as its Chief Executive
Officer from January 2001 through April 2001. Darryl Peck, the Company's current
President and Chief Executive Officer began serving in that capacity in April
2001. All Other Compensation, for the fiscal years ended February 28, 2001 and
February 29, 2000, includes life insurance premiums and other perquisites, such
as health benefits, auto allowances and tax planning, paid on behalf of
Outpost.com's executive officers.
Option Grants
The following table sets forth grants of stock options granted during
the fiscal year ended February 28, 2001 to each of the executive officers named
in the Summary Compensation Table. In accordance with the rules of the SEC, also
shown below is the potential realizable value over the term of the option (the
period from the grant date to the expiration date). This is calculated assuming
that the fair market value of common stock on the date of grant appreciates at
the indicated annual rate, 5% and 10% compounded annually, for the entire term
of the option and that the option is exercised and sold on the last day of its
term for the appreciated stock price. These amounts are based on certain assumed
rates of appreciation and do not represent the Company's estimate of future
stock price. Actual gains, if any, on stock option exercises will be dependent
on the future performance of the Company's common stock.
7
Option Grants in Last Fiscal Year
Individual Grants
-----------------------------------------------------
Value at Assumed
Number of Percent of Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted To Exercise for Option Terms
Options Employees in Price Expiration -------------------------
Granted Fiscal Year ($/Share) Date 5% 10%
----------- ----------- --------- ---------- --------- ----------
Robert A. Bowman............... -- -- -- -- -- --
Katherine N. Vick.............. 150,000 6.7% $ 4.125 5/30/10 $ 389,128 $ 986,128
300,000 13.7 1.219 1/9/11 229,987 582,832
Derek Holding.................. 15,000 0.7 4.125 5/30/10 38,913 98,613
6,000 0.3 3.000 10/24/10 11,320 28,687
60,000 2.7 1.219 1/9/11 45,997 116,566
Raymond Karrenbauer............ 200,000 9.0 4.625 4/24/10 581,727 1,474,212
50,000 2.2 4.125 5/30/10 129,709 328,709
6,000 0.3 3.000 10/24/10 11,320 28,687
20,000 0.9 1.219 1/9/11 15,337 38,855
Bruce C. Schellinkhout......... 6,000 0.3 4.125 5/30/10 15,565 39,455
6,000 0.3 3.000 10/24/10 11,320 28,687
20,000 0.9 1.219 1/9/11 15,337 38,855
Philip J. Rello................ 6,000 0.3 4.125 5/30/10 15,565 39,455
6,000 0.3 3.000 10/24/10 11,320 28,687
Option Exercises and Year-End Option Values
The following table sets forth certain information with respect to
exercises of options to purchase the Company's common stock by each executive
officer named in the Summary Compensation Table during the fiscal year ended
February 28, 2001 and with respect to the aggregate value of options held by
each executive officer named in the Summary Compensation Table as of February
28, 2001. Based on the closing price of the Company's stock on the Nasdaq
National Market on February 28, 2001 of $0.875, there were no unexercised
in-the-money options held by the executive officers named in the Summary
Compensation Table at fiscal year end.
Aggregate Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-The-Money Options at
Acquired Options at Fiscal Year-End (#) Fiscal Year-End ($)
on Value ------------------------------ -------------------
Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------ ----------- ----------- ------------- ----------- -------------
Robert A. Bowman.......... -- -- -- -- -- --
Katherine N. Vick......... -- -- 669,234 517,576 -- --
Derek Holding............. -- -- 24,125 136,875 -- --
Raymond Karrenbauer....... -- -- -- 301,000 -- --
Bruce C. Schellinkhout.... -- -- 120,892 124,108 -- --
Philip J. Rello........... -- -- 165,900 179,100 -- --
Employment Contracts and Termination of Employment and Change of Control
Arrangements
Katherine N. Vick. On January 9, 2001, Outpost.com entered into an
employment agreement with Katherine N. Vick, its former President and Chief
Executive Officer. This agreement was for an initial two-year term. Under this
agreement Ms. Vick received an initial base salary of $225,000. In addition, Ms.
Vick was eligible to participate in any bonus and employee benefit plans
provided by Outpost.com for senior executives and was provided a $1,000,000 term
life insurance policy. Under this agreement, Ms. Vick was also granted an option
to purchase 300,000 shares of the Company's common stock at an exercise price of
$1.219 per share. One-third of these shares were exercisable immediately upon
grant and the remaining shares were to vest in 24 equal monthly installments
thereafter. Under the agreement, if Ms. Vick were terminated without cause or
constructively terminated, she would be entitled to receive a lump-sum payment
equal to (1) the greater of the amount that would have been paid to her for the
remainder of the two-year term or one year base salary, plus (2) any earned but
unpaid bonus for the prior fiscal year. If Ms. Vick were terminated for cause or
if she were to terminate her employment for
8
other than a constructive termination, she would be entitled to any accrued and
unpaid base salary plus amounts for accrued but unused vacation time. On April
12, 2000, Ms. Vick resigned as President and Chief Executive Officer of
Outpost.com. She has asserted a claim against the Company that she was
constructively discharged and, as a result is entitled to a severance payment of
approximately $450,000 pursuant to the provisions set forth above. The Company
has taken the position that Ms. Vick voluntarily resigned and is entitled to no
severance. This agreement also contained a one-year post-termination non-compete
and non-solicitation provision, which is in effect through April 12, 2002.
Robert A. Bowman. On September 29, 1999, Outpost.com entered into an
executive employment agreement with Robert A. Bowman, its former President and
Chief Executive Officer. This agreement was for an initial two-year term. Under
this agreement Mr. Bowman received an initial base salary of $200,000. In
addition, Mr. Bowman was eligible to participate in any bonus and employee
benefit plans provided by Outpost.com for senior executives and was provided a
$1,000,000 term life insurance policy. Mr. Bowman was also granted an option to
purchase 1,200,000 shares of the Company's common stock at an exercise price of
$8.06 per share. 120,000 of these shares were exercisable immediately upon
grant, 360,000 shares became exercisable on September 29, 2000 and the remaining
shares were to vest in 18 equal monthly installments of 40,000 shares beginning
on October 30, 2000. Under the agreement, if Mr. Bowman were terminated without
cause or constructively terminated, he would have been entitled to receive a
lump-sum payment equal to (1) the greater of the amount that would have been
paid to him for the remainder of the two-year term or one year base salary, plus
(2) any earned but unpaid bonus for the prior fiscal year. On November 17, 2000,
Mr. Bowman voluntarily resigned as President and Chief Executive Officer of
Outpost.com and he received no severance payment. Mr. Bowman continues to serve
as a director of Outpost.com. This agreement also contained a one-year
post-termination non-compete and non-solicitation provision, which is in effect
through November 17, 2001.
Derek Holding. On January 18, 2001, the Company entered into a Letter
Agreement with Derek Holding, its former Chief Design Officer. This agreement
was for one year and provided Mr. Holding an initial base salary of $200,000. In
addition, Mr. Holding was eligible to receive a bonus and was eligible to
participate in any employee benefit plans provided for senior executives. Under
this agreement, Mr. Holding was also granted an option to purchase 60,000 shares
of the Company's common stock at an exercise price of $1.22 per share. 20,000 of
these shares were to vest on January 9, 2002 and the remaining 40,000 shares
were to vest in 24 equal monthly installments thereafter. This agreement was
terminable by Mr. Holding for any reason with 60 days notice and by the Company
for cause. If Mr. Holding were terminated without cause, under the agreement he
would have been entitled to receive severance pay for the greater of (i) the
unexpired portion of the term of the agreement or (ii) 6 months. This agreement
contains a six-month post-termination non-compete provision and a one-year
post-termination non-solicitation provision.
On April 19, 2001, Mr. Holding and the Company entered into a letter
agreement, pursuant to which Mr. Holding and the Company mutually agreed to
terminate Mr. Holding's employment with the Company as of April 20, 2001.
Pursuant to this agreement, Mr. Holding was paid a lump sum severance payment
equal to two months salary. In consideration therefore, Mr. Holding agreed to
waive and release the Company, its stockholders and affiliates from all claims,
including claims arising out of his employment with and separation from the
Company.
Bruce C. Schellinkhout. In August 1999, the Company entered into a
Letter Agreement with Bruce C. Schellinkhout, its Vice President, Operations.
This agreement is for two years and provides Mr. Schellinkhout an initial base
salary of $140,000. In addition, Mr. Schellinkhout is eligible to receive a
bonus, stock options and is eligible to participate in any employee benefit
plans provided for senior executives. This agreement is terminable by Mr.
Schellinkhout for any reason with 60 days notice and by the Company for cause.
If Mr. Schellinkhout is terminated without cause, he is entitled to receive
severance pay for the greater of (i) the unexpired portion of the term of the
agreement or (ii) 12 months. This agreement contains a one-year post-termination
non-compete and non-solicitation provision.
Philip J. Rello. On August 10, 1999, the Company entered into a Letter
Agreement with Philip J. Rello, its Vice President, Sales. This agreement is for
two years and provides Mr. Rello an initial base salary of $140,000. In
addition, Mr. Rello is eligible to receive a bonus, stock options and is
eligible to participate in any employee benefit plans provided for senior
executives. This agreement is terminable by Mr. Rello for any reason with 60
days notice and by the Company for cause. If Mr. Rello is terminated without
cause, he is entitled to receive severance pay for the greater of (i) the
unexpired portion of the term of the agreement or (ii) 12 months. This agreement
contains a one-year post-termination non-compete and non-solicitation provision.
9
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock as of June 14, 2001 for (a)
each of the Company's directors, (b) the current and former executive officers
named in the Summary Compensation Table, (c) all of the Company's current
directors and executive officers as a group and (d) each stockholder known by
the Company to own beneficially more than 5% of its common stock. Beneficial
ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to the securities. The address for each
director and executive officer listed is: c/o Outpost.com., 23 North Main
Street, P.O. Box 636, Kent, Connecticut 06757. Shares of common stock that may
be acquired by an individual or group within 60 days of June 14, 2001, pursuant
to the exercise of options or warrants are deemed to be outstanding for the
purpose of computing the percentage ownership of such individual or group, but
are not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person shown in the table. Except as indicated in
footnotes to this table, the Company believes that the stockholders named in
this table have sole voting and investment power with respect to all shares of
common stock shown to be beneficially owned by them based on information
provided to it by such stockholders. Percentage of ownership is based on
31,693,545 shares of common stock outstanding on June 14, 2001.
Shares Beneficially Owned
-------------------------
Name of Beneficial Owner Number Percent
- ------------------------ ------ -------
Directors and Current and Former Executive Officers
Darryl Peck(1)...................................................................... 3,641,222 11.3%
Robert A. Bowman.................................................................... 296,231 *
William H. Lane III (2)............................................................. 35,000 *
Donald Riegle, Jr. (3).............................................................. 34,315 *
Katherine N. Vick (4)............................................................... 707,647 2.2%
Derek Holding (5)................................................................... 32,877 *
Raymond Karrenbauer (6)............................................................. 129,250 *
Bruce C. Schellinkhout (7).......................................................... 192,912 *
Philip J. Rello (8)................................................................. 217,370 *
All current directors and executive officers as
a group (9 persons) (9).......................................................... 4,690,419 14.3%
Five Percent Stockholders
Fry's Electronics, Inc. (10)........................................................ 3,150,000 9.9%
600 East Brokaw Road
San Jose, California 95112
RS Investment Management, L.P. (11)................................................. 1,620,000 5.1%
388 Market Street, Suite 200
San Francisco, California 94111
_____________
* Less than 1%
(1) Includes 185,100 shares held by a limited partnership for the benefit of
Mr. Peck's children. Mr. Peck is the general partner of the limited
partnership and has sole voting and investment power with respect to
these shares. Also includes 500,000 shares subject to options exercisable
within 60 days of June 14, 2001.
(2) Includes 25,000 shares subject to options exercisable within 60 days of
June 14, 2001.
(3) Includes 25,000 shares subject to options exercisable within 60 days of
June 14, 2001.
(4) Includes 695,068 shares subject to options exercisable within 60 days of
June 14, 2001. Also includes 8,060 shares that were gifted by Ms. Vick
to her husband as custodian for her son and daughter under the
Connecticut Uniform Transfer to Minors Act. Ms. Vick disclaims beneficial
ownership of these shares. Ms. Vick is the former President and Chief
Executive Officer of the Company.
(5) Includes 29,877 shares subject to options exercisable within 60 days of
June 14, 2001. Mr. Holding is the former Chief Design Officer of the
Company.
(6) Consists of 129,250 shares subject to options exercisable within 60 days
of June 14, 2001.
(7) Consists of 192,912 shares subject to options exercisable within 60 days
of June 14, 2001.
(8) Includes 216,870 shares subject to options exercisable within 60 days of
June 14, 2001.
(9) See footnotes 1, 2, 3, 6, 7 and 8 above. Also includes 111,242 shares
subject to options exercisable within 60 days of June 14, 2001 held by
executive officers not listed individually in this table.
10
(10) This information, except the percentage beneficially owned, is based
solely on a Schedule 13D filed on May 18, 2001 with the Securities and
Exchange Commission by Fry's Electronics, Inc.
(11) This information, except the percentage beneficially owned, is based
solely on a Schedule 13G filed on February 15, 2001 with the Securities
and Exchange Commission by RS Investment Management Co. LLC and RS
Investment Management, L.P.
11
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the fiscal year ended February 28, 2001, Outpost.com was not a party to
any transaction or business relationship in which the amount exceeded $60,000
involving any of its executive officers, directors or five percent stockholders.
In addition, during the fiscal year ended February 28, 2001, there were no other
transactions between the Company and any of its directors or executive officers,
or any members of their immediate family, which are required to be disclosed
herein.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to its
Annual report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized, in Kent, Connecticut on June 27, 2001.
CYBERIAN OUTPOST, INC.
By: /s/ Darryl Peck
-------------------------------------------
Darryl Peck
President, Chief Executive Officer and
Chairman of the Board
13