SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended: December 31, 2004 Commission File Number: 000-21685
INTELIDATA TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 54-1820617
(State of incorporation) (I.R.S. Employer Identification Number)
11600 Sunrise Valley Drive, Suite 100, Reston, VA 20191
(Address of Principal Executive Offices) (Zip Code)
(703) 259-3000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock par value $0.001 per share
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
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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 Common Stock held by non-affiliates of the
registrant on June 30, 2004, was approximately $31,499,000 based on the last
sales price reported that date on the Nasdaq Stock Market of $0.66 per share. In
determining this figure, the Registrant has assumed that all of its directors
and executive officers and each person who owns 5% or more of the outstanding
common stock are affiliates. Such assumptions should not be deemed to be
conclusive for any other purpose.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act):
Yes X No
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The number of shares of the registrant's Common Stock outstanding on March 28,
2005 was 51,133,492.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Explanatory Note
This amendment to the InteliData Technologies Corporation Annual Report on
Form 10-K for the fiscal year ended December 31, 2004 is being filed to add
information required by Item 307, Item 308(a) and Item 308(c) of Regulation S-K
and the attestation report of the Company's registered public accounting firm as
required by Item 308(b) of Regulation S-K on Part II of Form 10-K, which the
Company elected not to include in the Form 10-K originally filed on March 31,
2005, as permitted by Exemptive Order 34-50754.
InteliData Technologies Corporation has entered into an Agreement and Plan
of Merger, dated as of March 31, 2005, with Corillian Corporation pursuant to
which the Company will merge with and into a wholly-owned subsidiary of
Corillian Corporation. In light of the proposed merger, the Company does not
intend to mail a definitive proxy statement for an annual meeting of
stockholders before April 30, 2005. As a result, this amendment to the
InteliData Technologies Corporation Annual Report on Form 10-K for the fiscal
year ended December 31, 2004 is also being filed to add information required by
Part III of Form 10-K, which was cross-referenced to the Company's 2005 Proxy
Statement for its 2005 Annual Meeting of Stockholders in the Form 10-K
originally filed on March 31, 2005.
This amendment does not amend or update any other information set forth in
the original Annual Report on Form 10-K for the fiscal year ended December 31,
2004 previously filed on March 31, 2005.
PART II
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ITEM 9A. CONTROLS AND PROCEDURES
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(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Company maintains a set of disclosure controls and procedures, as
defined under Rule 13a-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that are designed to ensure that information
required to be disclosed by the Company in the reports that the Company files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to the Company's management,
including the Company's Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure. Pursuant
to Exchange Act Rule 13a-15(b), the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including
the Company's Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of December 31, 2004, the end of the period covered by this
report. Based upon that evaluation, the Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures were not effective as of December 31, 2004 for the reasons discussed
below related to the material weaknesses in the Company's internal control over
financial reporting. To address the control weaknesses described below, the
Company performed additional analysis and other post-closing procedures to
ensure that the financial statements originally filed on March 31, 2005, in the
Annual Report on Form 10-K fairly present in all material respects the financial
condition and results of operations of the Company for the fiscal years
presented.
(b) MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate
internal control over financial reporting, as defined in Exchange Act Rule
13a-15(f). Under the supervision and with the participation of the Company's
management, the Company conducted an evaluation of the effectiveness of its
internal control over financial reporting as of December 31, 2004, based on the
framework in the "Internal Control - Integrated Framework" issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation the Company has concluded that the Company did not maintain effective
internal control over financial reporting as of December 31, 2004 as a result of
the six material weaknesses discussed below.
Selection and Application of Generally Accepted Accounting Principles
The Company's controls over the selection and application of generally
accepted accounting principles are ineffective as a result of inadequate
resources and technical accounting expertise within the accounting function to
resolve non-routine or complex accounting matters. This resulted in adjustments,
which were material to the financial statements as of December 31, 2004. Such
adjustments related to the accounting for lease transactions and warrants issued
to purchase the Company's common stock and resulted in a restatement of the
Company's consolidated financial statements; the details and magnitude of which
are discussed in Note 2(n) and Note 14 (unaudited) to the consolidated financial
statements and Item 6 - Selected Financial Data, originally filed on March 31,
2005, in the Annual Report on Form 10-K.
Financial Close and Reporting Process
The Company's design and operation of controls with respect to the process
of preparing and reviewing the annual and interim financial statements are
ineffective. Deficiencies identified include the lack of appropriate review of
the footnotes, reconciliations, and supporting workpapers including the deferred
rent liability schedule and the schedule underlying the statement of cash flows.
The Company also lacks adequate controls related to complying with disclosure
requirements such as the use of disclosure checklists, lacks adequate controls
over spreadsheets used in the financial close and reporting process, and lacks
an independent review of journal entries. While these deficiencies did not
result in a material misstatement of the financial statements, due to the
potential pervasive effect on the financial statement account balances and
disclosures and the importance of the annual and interim financial closing and
reporting process, in the aggregate, management has concluded that there is more
than a remote likelihood that a material misstatement in our annual or interim
financial statements could occur and would not be prevented or detected.
<page>
Recognition of Revenue and Deferred Revenue
The Company did not design and implement appropriate controls related to
the recognition of revenue for software contracts and controls related to the
balance sheet classification of the related deferred revenue accounts in
accordance with generally accepted accounting principles. In particular, the
Company does not have adequate controls to capture and analyze the terms and
conditions of new contracts or procedures to capture, analyze, and properly
record the impact of amendments or side agreements to existing contracts. An
audit adjustment to reclassify deferred revenue from current to long-term was
recorded by the Company and side agreements were detected by management during
the fourth quarter of 2004. While the lack of adequate controls to capture and
analyze the terms and conditions of contracts including side agreements and the
deferred revenue adjustment did not result in a material misstatement of the
financial statements, based on the significance of revenue and the elevated risk
of misstatement associated with software revenue recognition, in the aggregate,
management has concluded there is more than a remote likelihood that a material
misstatement in our annual or interim financial statements could occur and
would not be prevented or detected.
Segregation of Duties
The Company did not design and implement controls related to the
segregation of duties including a lack of segregation of duties between a
preparer and reviewer of journal entries and a lack of segregation of duties in
the Company's revenue and payroll processes. While these deficiencies did not
result in a material misstatement of the financial statements, due to the
potential pervasive effect on financial statement account balances and
disclosures and the absence of other mitigating controls, management has
concluded there is more than a remote likelihood that a material misstatement in
our annual or interim financial statements could occur and would not be
prevented or detected.
Control Environment
The Company's design and operation of controls within the control
environment component are ineffective. Deficiencies identified include employees
do not have to sign a confirmation that they have read the code of conduct, a
lack of a comprehensive delegation of authority policy for approvals of
significant contracts and other transactions, and a lack of training programs
particularly in the financial close and reporting group. Management has
concluded that these deficiencies, when considered in the aggregate along with
the significance and number of all other deficiencies, including the material
weaknesses disclosed in this report, are indicative of an ineffective control
environment that constitutes a material weakness.
Risk Assessment
The Company's design of controls within the risk assessment component is
ineffective as the Company lacks an established process to identify risks and
changes in risks, including the risk of fraud. Due to the significance of the
risk assessment component and, in particular, the consideration of the risk of
fraud, management has concluded that this constitutes a material weakness.
Deloitte & Touche LLP, the Company's independent registered public
accounting firm, audited the consolidated financial statements and has issued an
attestation report on management's assessment of the Company's internal control
over financial reporting which is included herein.
(c) ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
InteliData Technologies Corporation
Reston, Virginia
We have audited management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting, that
InteliData Technologies Corporation (the "Company") did not maintain effective
internal control over financial reporting as of December 31, 2004, because of
the effect of the material
<page>
weaknesses identified in management's assessment based on criteria established
in Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"). The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Company's internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed by,
or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
A material weakness is a significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. The following material weaknesses have been identified and included
in management's assessment:
o The Company's controls over the selection and application of generally
accepted accounting principles are ineffective as a result of
inadequate resources and technical accounting expertise within the
accounting function to resolve non-routine or complex accounting
matters. This resulted in adjustments, which were material to the
financial statements as of December 31, 2004. Such adjustments related
to the accounting for lease transactions and warrants issued to
purchase the Company's common stock and resulted in a restatement of
the Company's consolidated financial statements; the details and
magnitude of which are discussed in Note 2(n) and Note 14 (unaudited)
to the consolidated financial statements.
o The Company's design and operation of controls with respect to the
process of preparing and reviewing the annual and interim financial
statements are ineffective. Deficiencies identified include the lack
of appropriate review of the footnotes, reconciliations, and
supporting workpapers including the deferred rent liability schedule
and the schedule underlying the statement of cash flows. The Company
also lacks adequate controls related to complying with disclosure
requirements such as the use of disclosure checklists, lacks adequate
controls over spreadsheets used in the financial close and reporting
process, and lacks an independent review of journal entries. While
these deficiencies did not result in a material misstatement of the
financial statements, due to the potential pervasive effect on the
financial statement account balances and disclosures and the
importance of the annual or interim financial closing and reporting
process, in the aggregate, there is more than a remote likelihood that
a material misstatement of the annual or interim financial statements
would not have been prevented or detected.
<page>
o The Company did not design and implement appropriate controls related
to the recognition of revenue for software contracts and controls
related to the balance sheet classification of the related deferred
revenue accounts in accordance with generally accepted accounting
principles. In particular, the Company does not have adequate controls
to capture and analyze the terms and conditions of new contracts or
procedures to capture, analyze, and properly record the impact of
amendments or side agreements to existing contracts. An audit
adjustment to reclassify deferred revenue from current to long-term
was recorded by the Company and side agreements were detected by
management during the course of our audit. While the lack of adequate
controls to capture and analyze the terms and conditions of contracts
including side agreements and the deferred revenue adjustment did not
result in a material misstatement of the financial statements, based
on the significance of revenue and the elevated risk of misstatement
associated with software revenue recognition, in the aggregate, there
is more than a remote likelihood that a material misstatement of the
annual or interim financial statements would not have been prevented
or detected.
o The Company did not design and implement controls related to the
segregation of duties including a lack of segregation of duties
between a preparer and reviewer of journal entries and a lack of
segregation of duties in the Company's revenue and payroll processes.
While these deficiencies did not result in a material misstatement of
the financial statements, due to the potential pervasive effect on
financial statement account balances and disclosures and the absence
of other mitigating controls, there is more than a remote likelihood
that a material misstatement of the annual or interim financial
statements would not have been prevented or detected.
o The Company's design and operation of controls within the control
environment component are ineffective. Deficiencies identified include
employees do not have to sign a confirmation that they have read the
code of conduct, a lack of a comprehensive delegation of authority
policy for approvals of significant contracts and other transactions,
and a lack of training programs particularly in the financial close
and reporting group. These deficiencies, when considered in the
aggregate along with the significance and number of all other
deficiencies, including the material weaknesses disclosed in this
report, are indicative of an ineffective control environment that
constitutes a material weakness.
o The Company's design of controls within the risk assessment component
is ineffective as the Company lacks an established process to identify
risks and changes in risks, including the risk of fraud. Due to the
significance of the risk assessment component and, in particular, the
consideration of the risk of fraud, this constitutes a material
weakness.
These material weaknesses were considered in determining the nature, timing, and
extent of audit tests applied in our audit of the consolidated financial
statements as of and for the year ended December 31, 2004 of the Company and
this report does not affect our report on such consolidated financial
statements.
In our opinion, management's assessment that InteliData Technologies Corporation
did not maintain effective internal control over financial reporting as of
December 31, 2004, is fairly stated, in all material respects, based on the
criteria established in Internal Control--Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Also in our
opinion, because of the effect of the material weaknesses described above on the
achievement of the objectives of the control criteria, InteliData Technologies
Corporation has not maintained effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended December 31, 2004, of the Company and
our report dated March 31, 2005 expressed an unqualified opinion on those
financial statements and included an explanatory paragraph which raises
substantial doubt about the Company's ability to continue as a going concern.
/s/ Deloitte & Touche LLP
McLean, Virginia
May 2, 2005
(d) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the most recent fiscal quarter, except for the changes discussed
above, there has been no change in the Company's internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, its internal
control over financial reporting. As described in (b) above, the Company has
restated its consolidated financial statements for the years ended December 31,
2003 and 2002.
PART III
========
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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InteliData Technologies Corporation's annual meeting of stockholders for
2005 has been postponed due to the pending merger with Corillian Corporation. An
annual meeting will be scheduled at a later date. As used in this report, except
where otherwise stated or indicated by the context, "InteliData" or "the
Company" means InteliData Technologies Corporation and its consolidated
subsidiaries.
Directors and Executive Officers
Information regarding the Company's executive officers may be found in the
section entitled "Executive Officers of the Registrant" in Part I of this Annual
Report on Form 10-K.
The following persons currently serve as directors of the Company:
Alfred S. Dominick, Jr., age 59, has served as the Chief Executive Officer
and a director of InteliData since August 1998. He has served as Chairman of the
Board since August 2002. Prior to joining InteliData, Mr. Dominick served as
President of the Retail Products Delivery Group at M&I Data Services. Prior to
joining M&I Data Services in July 1995, he was Executive Vice President of
Retail Banking and a member of the Executive Committee for Boatmen's Bancshares
Corporation for three years. From 1990 to 1992, Mr. Dominick was an Executive
Vice President with Bank One Texas. Prior to joining Bank One Texas, Mr.
Dominick was a Senior Vice President with Shawmut National Bank (now Fleet
National Bank). Mr. Dominick currently serves as a director of FB BanCorp.
Neal F. Finnegan, age 67, has served as a director of InteliData since
2001. He is a Director of Citizens Capital, Inc., and the principal in Clover
Capital, LLC and Data Products, USA, Inc. He is on the Board of SMH Fine Foods,
Inc. and is a managing partner of Clover Capital and Consulting LLP. He served
as Chairman of Citizens Bank of Massachusetts from January 2000 to January 2005
and also was a director of Citizens Financial Group, Inc. From February 2000
through May 2001, he served as President of Lumber Insurance Companies, a
specialty insurer to the lumber industry. From 1993 to January 2000, Mr.
Finnegan was Chairman and Chief Executive Officer of US Trust. Previously, he
served in the financial services sector as an executive with Bankers Trust
Company of New York, Bowery Savings Bank, Worcester Bancorp, and Shawmut
Corporation.
Patrick F. Graham, age 65, has served as a director of InteliData since
1996 and was a director of US Order, Inc. from 1993 until US Order and Colonial
Data Technologies Corp. merged to form InteliData in November 1996. Since
October 2001, he has been the Vice President of Business Development and
Strategic Projects for The Gillette Company, a consumer products marketer of
personal care and personal use products. From July 1999 until October 2001, he
was the Director of the Global Strategy Practice of A.T. Kearney, Inc., a
management consulting firm. From 1997 until June 1999, he served as Chief
Executive Officer of WorldCorp, Inc. On February 12, 1999, WorldCorp, Inc. filed
a voluntary petition and a proposed plan of reorganization under Chapter 11 of
the United States Bankruptcy Code with the United States Bankruptcy Court for
the district of Delaware. He was previously a director of Bain & Company, Inc.,
a management consulting firm Mr. Graham co-founded in 1973. In addition to his
primary responsibilities with Bain clients, he served as Bain's Vice Chairman
and Chief Financial Officer. Prior to founding Bain, Mr. Graham was a group Vice
President with the Boston Consulting Group. Mr. Graham is also a director of
Stericycle, Inc., a provider of medical waste services and OSHA compliance
services.
<page>
Michael E. Jennings, age 59, has served as a director of InteliData since
his appointment in August 2004. He served as President and Chief Operating
Officer of InteliData from May 2003 through August 2004. Prior to this, he
served as the Executive Vice President of Product Management and Payment
Solutions since joining InteliData in June 2000. Prior to joining InteliData,
Mr. Jennings served at Bank of America as a Senior Vice President of Self
Service Delivery. During the eight years prior to joining InteliData, he worked
on alternative delivery strategies and managing several different areas of
electronic banking including: Debit Cards, ATMs, ATM/POS Operations, PC and
Internet Banking, and EFT switches. Mr. Jennings is a former director of CIRRUS,
Money Transfer Systems, Credit Systems Inc., and was chairman of the American
Banking Association's Retail Payment Systems Committee.
L. William Seidman, age 83, has served as a director of InteliData since
1997. He is the publisher of Bank Director magazine and chief commentator on
CNBC-TV. He served on the board of US Order Inc., InteliData's predecessor, from
1995 to 1996. Mr. Seidman served from 1985 to 1991 as the Chairman of the
Federal Deposit Insurance Corporation (FDIC) and from 1989 to 1991 also served
as the Chairman of the Resolution Trust Corporation. Before joining the FDIC,
Mr. Seidman served as Dean of the College of Business at Arizona State
University. From 1977 to 1982 he was Vice-Chairman and Chief Financial Officer
of Phelps Dodge Corporation. Mr. Seidman has also served as managing partner of
Seidman & Seidman, Certified Public Accountants (now BDO Seidman), and as
Assistant to the President for Economic Affairs during the Ford Administration.
Mr. Seidman presently serves as a director of Fiserv, Inc., a data processing
company, Clark, Inc., a services company providing insurance-financed benefits
programs, LML Payment Systems, Inc., a financial payment process company, GMAC
Commercial Mortgage, and GMAC Bank, a retail banking business.
Norman J. Tice, age 69, has served as a director of InteliData since 1999
and is the Chairman of the Executive Committee of the Board and the designated
lead outside director. Mr. Tice is the former Chairman of the Board of
MasterCard International and of Blue Cross and Blue Shield of Missouri and Right
Choice Managed Care, Inc. He currently serves as a director of Consolidated
Financial Services, a brokerage firm and General Credit Forms, and is an
advisory director of 1st National Bank in St. Louis and of Lawrence and
Associates, an IT consulting firm. Mr. Tice has over 40 years experience in
banking as an executive with Boatmen's Bank of St. Louis, City Bank of St.
Louis, Charter Bank, N.A. of St. Louis, and Boatmen's Bancshares, Inc. From 1985
until his retirement in 1996, Mr. Tice's positions included service as Chairman
and Chief Executive Officer of Boatmen's Credit Card Bank, Chairman and Chief
Executive Officer of Boatmen's Community Development Corporation, and Executive
Vice President of Boatmen's Bank of St. Louis.
Audit Committee
The audit committee (consisting of Messrs. Finnegan, Graham and Tice)
selects InteliData's independent auditors, reviews related party transactions
for conflicts of interest, reviews with InteliData's independent auditors
matters relating to the scope and plan of the audit, the adequacy of internal
controls, and the preparation of InteliData's financial statements, and reports
and makes recommendations to the board of directors with respect thereto. The
audit committee held four regular meetings and four telephonic meetings during
fiscal year 2004. All of the committee members satisfy the current independence
requirements of The Nasdaq Stock Market. Each member of the committee meets The
Nasdaq Stock Market listing standards' financial literacy requirements for audit
committee members. The board of directors has determined that at least one audit
committee member, Mr. Finnegan, is an "audit committee financial expert," as
defined by the regulations promulgated by the SEC.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
InteliData's directors and executive officers and beneficial owners of more than
10% of InteliData's common stock to file with the SEC initial reports of
ownership and reports of changes in ownership of equity securities of
InteliData. Officers, directors and beneficial owners of more than 10% of
InteliData's common stock are required by SEC regulation to furnish InteliData
with copies of all Section 16(a) forms they file. To InteliData's knowledge
based solely upon a review of copies of such reports furnished to InteliData and
representations that no other reports were required, during the fiscal year
ended December 31, 2004, InteliData's officers, directors and beneficial owners
of more than 10% of InteliData's common stock complied with all applicable
Section 16(a) filing requirements, except for the Form 4 filed on December 30,
2004 reporting the surrender of shares of InteliData common stock by Mr.
Dominick to InteliData on December 15, 2004.
Corporate Governance Guidelines and Codes of Ethics
Corporate Governance Guidelines. InteliData's Corporate Governance
Guidelines are available on the Company's Website (www.intelidata.com).
Codes of Ethics. InteliData has adopted a Code of Ethics for its Chief
Executive Officer / Senior Financial Officers which may be found on its Website.
InteliData has also adopted a Code of Business Conduct and Ethics for directors,
officers and employees, which is available on its Website. InteliData intends to
satisfy the disclosure requirement under Item 5.05 of Form 8-K by posting such
information on its Website.
ITEM 11. EXECUTIVE COMPENSATION
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Compensation of Directors
Directors of InteliData who are not also executive officers of InteliData
or of an affiliate of InteliData receive a quarterly payment of $3,000 and $500
for each board of directors meeting attended, excluding telephonic meetings.
They are also reimbursed for usual and ordinary expenses of meeting attendance.
Under the Non-Employee Directors' Stock Option Plan, each non-employee director
is offered options to purchase 6,000 shares of common stock following
InteliData's annual meeting of stockholders. The exercise price for any option
grants under this plan will be the average closing price of the common stock
during the 30 trading days immediately preceding the date of grant. Options
granted under this plan vest in 12 equal monthly installments during the
non-employee director's continued service on the board of directors. The option
price may be paid in cash, by surrendering shares of common stock or by a
combination of cash and common stock. All options expire ten years after their
grant. Up to 200,000 shares of common stock may be issued under this plan,
subject to certain adjustments.
Mr. Jennings, in addition to the foregoing, received $3,333.33 per month in
consulting fees pursuant to the Consultant Agreement, dated August 16, 2004. As
a consultant, Mr. Jennings provided InteliData approximately 35 hours of
services per month. The Consultant Agreement was terminated on February 28,
2005. InteliData also entered into a separation agreement and general release
with Mr. Jennings dated August 16, 2004. This agreement terminated the
employment agreement Mr. Jennings had with InteliData dated June 14, 2000. The
separation agreement and general release provides for payment of the following
severance benefits and consideration to Mr. Jennings: current full salary and
accrued and unused vacation pay through August 15, 2004; all Mr. Jennings' stock
options and awards continued vesting until October 31, 2004; an automobile that
was purchased by InteliData and was titled in Mr. Jennings' name and, upon a
"change of control" of InteliData which occurs before August 16, 2005, a
severance payment of $200,000.00 in cash to be paid within thirty (30) days of
the date of a "change of control."
Summary Compensation Table
The following table sets forth information concerning the annual, long-term
and all other compensation for services rendered in all capacities to
InteliData, it subsidiaries and predecessors for the years ended December 31,
2004, 2003 and 2002 of (a) InteliData's Chief Executive Officer, and (b) each of
the other three highly compensated executive officers (other than the chief
executive officer) of InteliData, the named executive officers, whose aggregate
cash compensation exceeded $100,000 for the fiscal year ended December 31, 2004.
<page>
Long-Term Compensation
Awards
-----------------------------
Annual Compensation Restricted Securities
------------------------------------- Stock Underlying All Other
Executive Year Salary ($) Bonus ($) (1) Other ($) Awards ($) Options (#) Compensation ($)(2)
- --------- ---- ---------- ------------- --------- ---------- ----------- -------------------
Alfred S. Dominick, Jr. 2004 375,000 -- -- -- 80,000 9,006
Chairman & Chief 2003 354,233 -- -- -- -- 31,856
Executive Officer 2002 300,000 50,000 -- -- 63,417
Karen Kracher 2004 165,192 -- -- 19,500(5) 100,000 2,240
President(3) 2003 -- -- -- -- -- --
2002 -- -- -- -- -- --
Michael E. Jennings 2004 125,000 -- -- 7,800(6) -- 46,557
Former President & Chief 2003 200,000 -- -- 40,500 -- 62,090
Operating Officer(4) 2002 200,000 30,000 -- 42,500 45,000 65,115
Albert N. Wergley 2004 188,511(8) -- -- 7,800(9) -- 52,808
Former Vice President, 2003 200,000 -- -- 27,000 -- 2,585
General Counsel & 2002 200,000 20,000 -- 25,500 30,000 2,366
Secretary(7)
(1) Bonus awards are reported for the year earned, but may have been paid
in the subsequent year.
(2) For 2004, includes: (i) travel and temporary housing expenses for Mr.
Jennings ($21,361.63); (ii) the dollar value of insurance premiums
paid by InteliData for the benefit of Mr. Dominick ($6,505.94); (iii)
the amount of Company matching contributions made on behalf of the
named individual under InteliData's 401(k) Plan as follows: Mr.
Dominick ($2,500.00), Ms. Kracher ($2,240.35), Mr. Jennings
($1,961.46), and Mr. Wergley ($2,807.78); (iv) $5,229.49 for the
partial forgiveness of a loan from InteliData to Mr. Dominick; (v) the
fair market value ($6,935.00) of the 2000 Toyota Camry given to Mr.
Jennings pursuant to his Separation Agreement and General Release;
(vi) the amount of consulting fees ($15,000.00), plus expenses
($1,299.00) paid to Mr. Jennings in 2004; and (vii) an amount of
severance ($50,000.00) paid to Mr. Wergley pursuant to his Separation
Agreement and General Release.
For 2003, includes: (i) travel and temporary housing expenses for Mr.
Dominick ($17,490) and Mr. Jennings ($59,090); (ii) the dollar value
of insurance premiums paid by InteliData for the benefit of Mr.
Dominick ($11,866); and (iii) the amount of Company matching
contributions made on behalf of the named individual under
InteliData's 401(k) Plan as follows: Mr. Dominick ($2,500), Mr.
Jennings ($3,000), and Mr. Wergley ($2,585).
For 2002, includes: (i) travel and temporary housing expenses for Mr.
Dominick ($53,396) and Mr. Jennings ($62,365); (ii) the dollar value
of insurance premiums paid by InteliData for the benefit of Mr.
Dominick ($7,521); and (iii) the amount of Company matching
contributions made on behalf of the named individuals under
InteliData's 401(k) Plan as follows: Mr. Dominick ($2,500), Mr.
Jennings ($2,750), and Mr. Wergley ($2,366).
(3) Ms. Kracher joined InteliData in January 2004 and became an officer of
InteliData in August 2004.
(4) Mr. Jennings resigned from his position as President & Chief Operating
Officer on August 15, 2004.
(5) For 2004, consists of the fair market value of a restricted stock
award on the date of the award of 25,000 shares on May 21, 2004. The
award vests, subject to Ms. Kracher's continued employment, on
November 21, 2005. Based on the closing price of InteliData's common
stock on December 31, 2004, the unvested restricted stock award was
valued at $16,750.
<page>
(6) For 2004, consists of the fair market value of a restricted stock
award on the date of the award of 10,000 shares on May 21, 2004. This
award terminated due to Mr. Jennings' resignation on August 15, 2004.
For 2003, consists of the fair market value of a restricted stock
award on the date of the award of 30,000 shares on April 15, 2003.
This award vested on October 15, 2004. For 2002, consists of the fair
market value of a restricted stock award on the date of the award of
25,000 shares on February 21, 2002. This award vested on August 21,
2003.
(7) Mr. Wergley resigned from his position as Vice President, General
Counsel & Secretary on November 5, 2004.
(8) Includes unused vacation pay ($11,588.47) accrued to Mr. Wergley
through November 5, 2004.
(9) For 2004, consists of the fair market value of a restricted stock
award on the date of the award of 10,000 shares on May 21, 2004. The
award terminated due to Mr. Wergley's resignation on November 5, 2004.
For 2003, consists of the fair market value of a restricted stock
award on the date of the award of 20,000 shares on April 15, 2003. The
award vested on October 15, 2004. For 2002, consists of the fair
market value of a restricted stock award on the date of the award of
15,000 shares on February 21, 2002. The award vested on August 21,
2003.
Option/SAR Grants in Last Fiscal Year
This table presents information regarding options granted to InteliData's
Named Executive Officers during the year ended December 31, 2004 to purchase
shares of InteliData's Common Stock. In accordance with SEC rules, the table
shows the hypothetical "gains" or "option spreads" that would exist for the
respective options based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the full
option term.
Individual Grants
--------------------------------------------------------
Potential Realizable Value
Percentage at Assumed Annual
of Total Rates of Stock Price
Number of Options Appreciation for the
Securities Granted to Exercise Option Term (3)
Underlying Employees in Price Per Expiration --------------------------
Executive b Grants(1) Fiscal Year (1) Share (2) Date 5% 10%
- --------------------------------------------------------------------------------------------------------------------
Alfred S. Dominick, Jr. 80,000(4) 14.7% $ 0.31 10/15/12 $ 11,841 $ 28,361
Karen Kracher 50,000(4) 9.2% 1.80 01/28/12 42,971 102,923
50,000 9.2% 0.31 10/15/12 7,401 17,726
Michael E. Jennings --(4) --% -- -- -- --
Albert N. Wergley --(4) --% -- -- -- --
(1) The total number of options granted to employees during the year ended
December 31, 2004 was 545,000.
(2) The exercise price per share of options granted represented the fair
market value of the underlying shares of Common Stock on the date the
options were granted.
(3) As required under the SEC's rules,amounts represent hypothetical gains
that could be achieved for the respective options if exercised at the
end of the option term. These gains are based on assumed rates of
stock price appreciation of 5% and 10% compounded annually from the
date the respective options were granted to their expiration date.
These assumptions are not intended to forecast future appreciation of
our stock price. The potential realizable value computation does not
take into account federal or state income tax consequences of option
exercises or sales of appreciated stock. If our stock price does not
actually increase to a level above the applicable exercise price at
the time of exercise, the realized value to the Named Executive
Officers from these options will be zero.
(4) These options become exercisable as follows: one-third on the first
anniversary date of the grant and then ratably over 24 months.
<page>
Option Exercises in Last Fiscal Year and Year-End Value Table
The following table sets forth information regarding the exercise of stock
options and the unexercised stock options as of December 31, 2004 granted to the
Chief Executive Officer and the named executive officers under InteliData's 1996
Incentive Plan or any stock plan of InteliData.
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs at
December 31, 2004 (#) December 31, 2004($)(2)
Shares Value --------------------- --------------------------
Executive Acquired Realized ($) (1) Exercisable Unexercisable Exercisable Unnexercisable
- --------- -------- ---------------- ----------- ------------- ----------- --------------
Alfred S. Dominick, Jr. -- -- 700,000 580,000 -- 28,800
Karen Kracher -- -- -- 100,000 -- 18,000
Michael E. Jennings -- -- -- -- -- --
Albert N. Wergley 2,001 1,541 -- -- -- --
</Table>
(1) Value based on last reported sale price of InteliData's common stock
on the exercise date minus the exercise price.
(2) Value based on last reported sale price of InteliData's common stock
on December 31, 2004 (the last trading day of the year) on the Nasdaq
SmallCap Market minus the exercise price. The last reported sale price
at December 31, 2004 was $0.67 per share.
Employment Contracts, Termination of Employment and Change-Of-Control
Arrangements
Alfred S. Dominick, Jr.
InteliData has an employment agreement with Alfred S. Dominick, Jr.,
providing that Mr. Dominick will serve as Chief Executive Officer of InteliData
until April 5, 2006, unless further extended or sooner terminated as set forth
in the agreement. Furthermore, InteliData will nominate and take such action as
may be appropriate or necessary to seek stockholder election of Mr. Dominick to
InteliData's board of directors. Mr. Dominick has agreed to resign from the
board of directors in connection with, and effective upon, termination of his
employment with InteliData.
Mr. Dominick is entitled to (i) a base salary of $375,000 per year and (ii)
an annual bonus of up to 75% of his base salary. In addition, Mr. Dominick is
entitled to participate in all medical, dental, life, disability, 401(k),
employee stock purchase and such other fringe benefit plans or arrangements
generally made available by InteliData to all salaried employees. As an
inducement to his becoming an employee of InteliData, Mr. Dominick was granted
options to purchase 1,200,000 shares of common stock pursuant to InteliData's
1998 CEO Incentive Plan. The options became exercisable as to 66,667 option
shares on August 17, 1999, 66,667 option shares on August 17, 2000, and 66,666
option shares on August 17, 2001. An additional 500,000 option shares became
exercisable based on the achievement of designated trading prices of the common
stock. The options as to an additional 500,000 option shares shall become
exercisable on April 15, 2008; provided that the options shall become
exercisable earlier upon the common stock trading above $25.00 per share for
sixty consecutive days during the term of the options. Mr. Dominick has agreed
to hold 100,000 shares of common stock for the remaining term of his employment
agreement. Upon entering into the employment agreement, Mr. Dominick purchased
200,000 shares of common stock for an aggregate purchase price of $200.00.
InteliData may terminate the agreement for "cause" (as defined) or if Mr.
Dominick incurs a disability that continues for a period of 180 consecutive
days. Mr. Dominick may terminate the agreement upon prior written notice to
InteliData or for "good reason" (as defined). If InteliData terminates Mr.
Dominick for other than "cause," or if Mr. Dominick terminates the agreement for
"good reason," then Mr. Dominick is entitled to: (i) an amount equal to twelve
months of his base salary then in effect; (ii) any amounts vested or payable
under any deferred salary, bonus compensation or other plan; (iii) an amount
equal to the highest incentive bonus paid to him during
<page>
the three years immediately preceding his termination, prorated through his
month of termination; and (iv) a continuation, at InteliData's expense, of life,
disability, accident and health insurance benefits for twelve months following
termination. Notwithstanding the above, if, within one year of a "change of
control" of InteliData (as defined), Mr. Dominick's employment is terminated by
InteliData for other than "cause" or by Mr. Dominick for "good reason," then Mr.
Dominick is entitled to: (i) an amount equal to the greater of the undiscounted
amount of twelve months base salary or the undiscounted remainder of his base
salary for the unexpired term of the employment agreement; (ii) any amounts
vested or payable under any deferred salary, bonus compensation or other plan;
(iii) an amount equal to the highest incentive bonus paid to him during the
three years immediately preceding his termination, prorated through his month of
termination; and (iv) a continuation, at InteliData's expense, of life,
disability, accident and health insurance benefits for the greater of twelve
months from termination or a period equal to the unexpired term of the
employment agreement. Mr. Dominick's employment agreement terminates
automatically upon his death in which case InteliData would have no further
obligation to Mr. Dominick or his estate other than the disposition of life
insurance, accrued and unpaid base salary, accrued vacation and bonuses and
other incentive compensation earned but not paid for periods prior to the date
of death.
The employment agreement also provides that during the term of the
agreement and for one year following his termination (other than in the event of
termination by InteliData other than for "cause" or by Mr. Dominick for "good
reason"), Mr. Dominick will not compete, directly or indirectly, with
InteliData. Furthermore, pursuant to a non-solicitation provision in the
employment agreement, Mr. Dominick may not solicit certain current or former
employees of InteliData during the term of the agreement or for a period of two
years thereafter.
Other Named Executive Officers
InteliData has an employment agreement with Karen Kracher, which provides
for her employment through August 16, 2005 unless further extended or sooner
terminated as set forth in the agreement.
Ms. Kracher is entitled to a base salary per year of not less than $200,000
and annual bonuses. In addition, Ms. Kracher is entitled to participate in all
bonus and incentive compensation plans or arrangements made available by
InteliData to its officers and is entitled to receive such benefits as provided
to all salaried employees as well as those established by the compensation
committee for InteliData's executives. Her employment agreement terminates
automatically upon her death in which case InteliData would have no further
obligation to Ms. Kracher or her estate other than the disposition of life
insurance and related benefits and accrued and unpaid base salary, bonus,
unreimbursed expenses and incentive compensation for periods prior to the date
of death, known as the standard termination payments. InteliData may terminate
the agreement for "cause" (as defined) or if Ms. Kracher incurs a disability
that continues for a period of 180 consecutive days or 180 days in any 365-day
period. Ms. Kracher may terminate the agreement for "good reason" (as defined).
She may also terminate the agreement in which case InteliData would have no
further obligation to Ms. Kracher except for the standard termination payments.
If InteliData terminates Ms. Kracher for other than "cause" or upon death or
total disability, or if she terminates the agreement because InteliData fails to
comply with the agreement or following a "change of control" of InteliData
whereby Ms. Kracher's duties are substantially diminished or she is relocated,
then Ms. Kracher is entitled to: (i) the standard termination payments; (ii) any
bonus earned but not yet paid under any bonus program then in effect; (iii) 100%
of her annual base salary; and (iv) any and all options granted shall be vested
for twelve months and exercisable for the longer of twelve months after
termination date or period for exercise as provided in her option agreement. For
termination subsequent to a "change of control," all granted but unvested
options shall become immediately vested and nonforfeitable and remain
exercisable for their respective remaining terms. InteliData will also continue
to cover Ms. Kracher under its medical, dental, life insurance and total
disability benefit plans for a period of 6 months at no cost to Ms. Kracher.
Change in Control Severance Agreement
The Company has entered into Change in Control Severance Agreement with Mr.
Dominick that provides for certain termination benefits in the event his
employment is terminated by the Company without "cause" (as defined in the
Change in Control Severance Agreement) or by Mr. Dominick for "good reason" (as
defined in the Change in Control Severance Agreement), and such termination
occurs either (a) within ninety days before or twenty-four months after a
"change in control" of the Company (as defined in the Change in Control
Severance Agreement) or (b) after the Company makes a public announcement or
files a report or proxy statement with the Securities and Exchange Commission
disclosing a transaction which, if completed, would constitute a change in
control of the Company and before the Board of Directors determines that such
transaction will not be completed or the transaction is completed.
<page>
The termination benefits consist of:
(a) a lump sum cash payment equal to (i) any unpaid base pay and accrued
leave or vacation pay through the termination date, (ii) any unpaid annual bonus
earned prior to the termination date, (iii) two times Mr. Dominick's annual
salary plus (iv) any unreimbursed expenses;
(b) acceleration of the vesting and exercisability of outstanding stock
options and awards previously granted to Mr. Dominick and the extension of the
period for exercising such options until their expiration date;
(c) payment or reimbursement for eighteen months after termination for (i)
any COBRA premiums for Mr. Dominick, his spouse and his dependents to the extent
they participated in the Company's health and medical plan prior to termination
and elect COBRA coverage or (ii) any premiums for continuation of other health
and medical insurance for the executive, his spouse and his dependents if Mr.
Dominick, his spouse and his dependents did not participate in the Company's
health and medical plan prior to termination, but the Company was paying or
reimbursing the executive for premiums on such other health and medical
insurance at the time of termination; and
(d) payment of or reimbursement for premiums for continuation of life
insurance coverage for eighteen months after termination if the Company paid or
reimbursed Mr. Dominick for such life insurance coverage immediately prior to
his termination of employment.
As a condition to receiving such payments and benefits, Mr. Dominick must
execute a valid release and waiver of any claims against the Company, its
related entities, and their shareholders, officers, directors, employees,
benefits plans, representatives, agents, successors and assigns.
In consideration for such termination benefits, the executive agrees during
the period of employment and for a period of twelve months after termination of
employment not to compete, directly or indirectly, with the Company or any
related entity, solicit employees of the Company or any related entity, solicit
any customer of the Company or any related entity, or make disparaging comments
about the Company or any related entity. Mr. Dominick also agrees not to
disclose any secret or confidential information related to the Company or any
related entity.
If the termination payments or benefits would be subject to change in
control or parachute payment excise taxes under federal, state, or local law,
then the termination payments and benefits must be reduced to the largest amount
that will result in no portion of the payments or benefits being subject to such
taxes.
The Change in Control Severance Agreement provides that amounts paid and
benefits provided shall be construed and interpreted so that amounts are paid
and benefits are provided only if and to the extent that similar amounts and
benefits are not paid or provided under any other similar agreements, policies,
plans, programs, or arrangements of the Company or any related entity, including
any employment agreement between the Company and Mr. Dominick. Accordingly, if
similar amounts and benefits are otherwise to be provided to an executive, then
amounts payable or benefits to be provided under his Change in Control Severance
Agreement shall be reduced by the amount of similar payments and benefits to be
provided under such other agreement, policy, plan, program or arrangement.
The initial term of the Change in Control Severance Agreement is through
February 3, 2005, but the term automatically extends for an additional
twelve-month period at the end of the initial term and each annual anniversary
thereafter, unless the Company gives the executive written notice at least
ninety days prior to the end of the initial term or the applicable extended term
date that the term will not be so extended.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was, during the last fiscal year,
an officer or employee of the Company nor was formerly an officer of the
Company. There are no Compensation Committee interlocks between the Company and
other entities involving the Company's executive officers and members of the
Board of Directors who serve as executive officer or board member of such other
entities.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
The following table sets forth information as of March 28, 2005, regarding
beneficial ownership of InteliData's common stock by (i) each person who is
known to InteliData to own beneficially more than five percent of InteliData's
common stock, (ii) each director of InteliData, (iii) each executive officer
named in the Summary Compensation Table, the named executive officers, set forth
on page 3 of this proxy statement, and (iv) all current directors and the named
executive officers of InteliData as a group. The information on beneficial
ownership in the table and the footnotes thereto is based upon InteliData's
records and the most recent Schedule 13G filed by each such person and
information supplied to InteliData by such person. Unless otherwise indicated,
each person has sole voting power and sole investment power with respect to the
shares shown. Under the proxy rules of the SEC, a person who directly or
indirectly has or shares voting power or investment power with respect to a
security is considered a beneficial owner of the security. Voting power is the
power to vote or to direct the voting of securities, and investment power is the
power to dispose of or to direct the disposition of securities. Securities as to
which voting power or investment power may be acquired within 60 days (e.g., by
the exercise of options or warrants to purchase common stock) are also
considered as beneficially owned under the proxy rules of the SEC.
Beneficial Ownership
--------------------
Name of Stockholder Number of Shares Percent
------------------- ---------------- -------
John H. Timmis 3,085,000(1) 6.0
28 Hawley Road
North Salem, NY 10560
Alfred S. Dominick, Jr. 804,600(2) 1.6
Karen A. Kracher 45,832(3) *
Monique L. Marcus 5,000 *
Albert N. Wergley 69,744 *
Michael E. Jennings 94,750 *
Norman J. Tice 66,000(4) *
L. William Seidman 61,000(5) *
Patrick F. Graham 50,500(6) *
Neal F. Finnegan 34,000(7) *
Directors and Executive Officers 1,231,426(8) 2.4
As a Group (9 persons)
(1) As reported in the Schedule 13G/A filed with the SEC on April 8, 2003
and includes 1,805,000 shares with sole voting and dispositive power
and 1,280,000 shares with shared voting and dispositive power.
(2) Includes 700,000 shares of common stock issuable upon the exercise of
options.
(3) Includes 20,832 shares of common stock issuable upon the exercise of
options.
(4) Includes 36,000 shares of common stock issuable upon the exercise of
options.
(5) Includes 48,000 shares of common stock issuable upon the exercise of
options.
(6) Includes 40,500 shares of common stock issuable upon the exercise of
options.
(7) Includes 24,000 shares of common stock issuable upon the exercise of
options.
(8) Includes 869,332 shares of common stock issuable upon the exercise of
options.
* Less than 1%.
Securities Authorized For Issuance Under Equity Compensation Plans
Number of securities to Weighted average
be issued upon exercise exercise price of Number of securities
of outstanding options, outstanding options, remaining available for
warrants and rights warrants and rights future issuance
----------------------- -------------------- -----------------------
Equity compensation plans
approved by stockholders 1,882,000 $ 2.32 888,762
Equity compensation plans not
approved by stockholders 1,250,000 $ 1.36 -
---------- ------ -------
Total 3,132,000 $ 1.93 888,762
========== ====== =======
The equity compensation plans not approved by stockholders consists of
warrants that are described in Note 7 to the consolidated financial statements
included in this Annual Report on Form 10-K and the 1998 Chief Executive
Officer's Plan.
The 1998 Chief Executive Officer's Plan (the "Plan") was adopted to induce
Alfred S. Dominick, Jr. to become the Company's Chief Executive Officer in
August 1998. The Plan provided for the grant of an option to purchase 1,200,000
shares of the Company's common stock at an exercise price of $1.22. Of the
option grant, 200,000 vested in one-third increments over a three-year period
from August 1998 to August 2001. Another 500,000 vested based on the achievement
of specified trading prices for the Company's common stock. The remaining
500,000 will vest subject to Mr. Dominick's continued employment and upon the
earlier of i) the Company's common stock trading above $25.00 per share for
sixty consecutive days, or ii) April 15, 2008.
Additionally, the Company has no i) individual options, rights or warrants
assumed in any merger, acquisition or consolidation transaction; ii) securities
available for future issuance under a compensation plan other than upon exercise
of options, rights or warrants; and iii) equity compensation plan that contains
a formula for calculating the number of securities available for issuance under
the plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
On December 21, 1999, InteliData provided a loan of $82,838 to Alfred S.
Dominick, Jr., President and Chief Executive Officer of InteliData, pursuant to
a Secured Promissory Note. The loan was originally due on December 21, 2000 and
bears interest at a rate of 5.74%. The compensation committee of the board of
directors of InteliData extended the loan through December 21, 2001. On December
22, 2001, the note was replaced with an Amended and Restated Secured Promissory
Note, which extended the due date until the earlier of December 22, 2004 or 90
days after the termination of Mr. Dominick's employment with InteliData. As
security for the loan, Mr. Dominick has pledged 200,000 shares of InteliData's
common stock owned by him.
As of December 15, 2004, the outstanding balance on this loan was
$105,229.49. On December 15, 2004, in anticipation of the upcoming maturity of
the Amended and Restated Secured Promissory Note, the Compensation Committee
determined that InteliData would exercise its rights under the pledge to acquire
the 200,000 shares of common stock in satisfaction of $100,000 of the loan
(200,000 X $0.50 (the closing share price on the Nasdaq SmallCap Market on
December 15, 2004)). The Compensation Committee determined to forgive the
remaining $5,229.49 of the loan and the Audit Committee ratified the
determination of the Compensation Committee on December 29, 2004.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
- -----------------------------------------------
Independent Auditor Fees and Services
The aggregate fees for professional services rendered to the Company by
Deloitte & Touche LLP for the fiscal years ended December 31, 2004 and 2003 are
as follows:
2004 2003
---- ----
Audit fees(1) $928,700 $182,500
Audit-related fees(2) 97,117 30,000
Tax fees(3) 2,500 --
All other fees -- --
Total fees $1,028,317 $212,500
(1) Audit fees include $343,700 and $182,500 of fees for services rendered
for the audit of InteliData's annual financial statements and the
review of the interim financial statements included in our quarterly
reports for 2004 and 2003, respectively. Audit fees also include
$585,000 of fees associated with rendering an opinion on InteliData's
internal controls as of December 31, 2004 in accordance with Section
404 of the Sarbanes-Oxley Act of 2002; no similar fees were incurred
in 2003.
(2) Audit-related fees include fees associated with assurance and related
services that are reasonably related to the performance of the audit
or review of InteliData's financial statements. This category include
fees related to consultations regarding U.S. generally accepted
accounting principles and general implementation of new SEC and
Sarbanes-Oxley Act of 2002 requirements. The audit-related fees for
2004 were for advisory services for matters related to accounting
consultation, due diligence, and assistance in compliance with
regulatory requirements. Audit-related fees for 2003 were for advisory
services for matters related to accounting consultation, review of
financial statements outside of SEC filings, and assistance in
compliance with regulatory requirements.
(3) Tax fees were for assistance with a prior year sales and tax audit
appeal.
The audit committee has considered whether the provision of the other
services is compatible with maintaining the principal accountants' independence
and has concluded that it is so compatible.
Audit Committee Pre-Approval Policies and Procedures
The audit committee reviews and considers all professional services
provided by Deloitte & Touche LLP when assessing auditor independence. The audit
committee approved all audit and non-audit services provided by InteliData's
independent auditors during 2003 and 2004 on a case-by-case basis in advance of
each engagement. The audit committee does not have a written policy or procedure
for the pre-approval by category of particular audit or non-audit services.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
- ---------------------------------------------------
(a) DOCUMENTS FILED AS PART OF THIS REPORT
1. FINANCIAL STATEMENTS - Previously filed in Item 8 of Form 10-K filed
on March 1, 2005
2. FINANCIAL STATEMENT SCHEDULES - None
3. EXHIBITS
(b) EXHIBITS
Exhibit No. Description
----------- -----------
3.1 Amended and Restated Certificate of Incorporation, dated June 14,
2002 (Incorporated herein by reference to Exhibit 3.1 to the
Company's Report on Form 10-Q for the quarter ended June 30,
2002).
3.2 Bylaws of InteliData Technologies Corporation. (Incorporated
herein by reference to Appendix V to the Joint Proxy Statement
/Prospectus included in the Registration Statement on Form S-4
filed with the Commission on August 29, 1996, as amended, File
Number 333-11081).
4.1 Rights Agreement, dated as of January 21, 1998, by and between
the Company and American Stock Transfer & Trust Company, as
Rights Agent. (Incorporated herein by reference to the
Registration Statement on Form 8-A filed with the Commission on
January 26, 1998).
4.1.1 Amendment No. 1 dated May 24, 2000 to the Rights Agreement,
dated as of January 21, 1998, by and between the Company and
American Stock Transfer & Trust Company, as Rights Agent.
(Incorporated herein by reference to the Current Report on Form
8-A/A filed with the Commission on July 6, 2000).
10.1 Description of InteliData Technologies Corporation Merger Stock
Compensation Plan. (Incorporated herein by reference to the
Company's Registration Statement on Form S-8, File Number
333-76631).
10.2 InteliData Technologies Corporation 1996 Incentive Plan.
(Incorporated herein by reference to the Company's Registration
Statement on Form S-8, File Number 333-16115).
10.2.1 Description of Amendment to the 1996 Incentive Plan.
(Incorporated herein by reference to the Company's Proxy
Statement filed with the Commission on August 6, 1999).
10.2.2 Description of Amendment to the 1996 Incentive Plan.
(Incorporated herein by reference to the Company's Proxy
Statement filed with the Commission on April 24, 2000).
10.2.3 Description of Amendment to the 1996 Incentive Plan.
(Incorporated herein by reference to the Company's Proxy
Statement filed with the Commission on April 20, 2001).
10.3 InteliData Technologies Corporation Non-Employee Directors' Stock
Option Plan. (Incorporated herein by reference to the Company's
Registration Statement on Form S-8, File Number 333-16117).
10.4 InteliData Technologies Corporation Employee Stock Purchase Plan.
(Incorporated herein by reference to the Company's Registration
Statement on Form S-8, File Number 333-16121).
10.5 Employment Agreement dated April 5, 1999 between InteliData
Technologies Corporation and Alfred S. Dominick, Jr.
(Incorporated herein by reference to the Company's Report on Form
10-Q for the quarter ended March 31, 1999).
10.5.1 InteliData Technologies Corporation 1998 Chief Executive
Officer's Plan. (Incorporated herein by reference to Exhibit 10
to the Company's Report on Form 10-K for the year ended December
31, 1999).
<page>
10.5.2 First Amendment to Employment Agreement between InteliData
Technologies Corporation and Alfred S. Dominick, Jr., dated April
5, 2002 (Incorporated herein by reference to Exhibit 10.5.2 to
the Company's Report on Form 10-Q for the quarter ended June 30,
2002).
10.5.3 Second Amendment to Employment Agreement between InteliData
Technologies Corporation and Alfred S. Dominick, Jr., dated
January 14, 2003 (Incorporated herein by reference to Exhibit
10.5.3 to the Company's Report on Form 10-K for the year ended
December 31, 2002).
10.5.4 Third Amendment to Employment Agreement between InteliData
Technologies Corporation and Alfred S. Dominick, Jr., dated April
2, 2003. (Incorporated herein by reference to Exhibit 10.5.4 to
the Company's Report on Form 10-Q for the quarter ended March 31,
2003).
10.5.5 Amended and Restated Change In Control Severance Agreement
between InteliData Technologies Corporation and Alfred S.
Dominick, Jr., dated February 3, 2003. (Incorporated herein by
reference to Exhibit 10.5.5 to the Company's Report on Form 10-K
for the year ended December 31, 2003).
10.5.6 Fourth Amendment to Employment Agreement between InteliData
Technologies Corporation and Alfred S. Dominick, Jr., dated
January 5, 2004. (Incorporated herein by reference to Exhibit
10.5.5 to the Company's Report on Form 10-Q for the quarter ended
March 31, 2004).
* 10.5.7 Fifth Amendment to Employment Agreement between InteliData
Technologies Corporation and Alfred S. Dominick, Jr., dated March
10, 2004.
10.6 Employment and Non-Competition Agreement dated December 17, 1997
between InteliData Technologies Corporation and Albert N.
Wergley. (Incorporated herein by reference to Exhibit 10 to the
Company's Report on Form 10-K for the year ended December 31,
1997).
10.6.1 Amendment to the Employment and Non-Competition Agreement between
InteliData Technologies Corporation and Albert N. Wergley, dated
June 14, 1999. (Incorporated herein by reference to Exhibit 10 to
the Company's Report on Form 10-K for the year ended December 31,
1999).
10.6.2 Amended and Restated Change In Control Severance Agreement
between InteliData Technologies Corporation and Albert N.
Wergley, dated February 3, 2003. (Incorporated herein by
reference to Exhibit 10.6.2 to the Company's Report on Form 10-K
for the year ended December 31, 2003).
* 10.6.3 Separation Agreement and General Release between InteliData
Technologies Corporation and Albert N. Wergley, dated November 2,
2004.
10.7 Employment and Non-Competition Agreement between InteliData
Technologies Corporation and Michael E. Jennings, dated June 14,
2000. (Incorporated herein by reference to Exhibit 10 to the
Company's Report on Form 10-Q for the quarter ended September 30,
2000).
10.7.1 Amended and Restated Change In Control Severance Agreement
between InteliData Technologies Corporation and Michael E.
Jennings, dated February 3, 2003. (Incorporated herein by
reference to Exhibit 10.7.1 to the Company's Report on Form 10-K
for the year ended December 31, 2003).
10.7.2 Separation Agreement between InteliData Technologies Corporation
and Michael E. Jennings, dated August 16, 2004. (Incorporated
herein by reference to Exhibit 10.1 to the Company's Report on
Form 10-Q for the quarter ended September 30, 2004).
10.7.3 Consultant Agreement between InteliData Technologies Corporation
and Michael E. Jennings, dated August 16, 2004. (Incorporated
herein by reference to Exhibit 10.2 to the Company's Report on
Form 10-Q for the quarter ended September 30, 2004).
<page>
10.8 Employment and Non-Competition Agreement between InteliData
Technologies Corporation and John R. Polchin, dated April 8,
2002. (Incorporated herein by reference to Exhibit 3.1 to the
Company's Report on Form 10-Q for the quarter ended June 30,
2002).
10.8.1 Amended and Restated Change In Control Severance Agreement
between InteliData Technologies Corporation and John R. Polchin,
dated February 3, 2003. (Incorporated herein by reference to
Exhibit 10.8.1 to the Company's Report on Form 10-K for the year
ended December 31, 2003).
10.9 Employment and Non-Competition Agreement between InteliData
Technologies Corporation and Karen Kracher, dated August 16,
2004. (Incorporated herein by reference to Exhibit 10.3 to the
Company's Report on Form 10-Q for the quarter ended September 30,
2004).
* 10.10 Letter of Employment Offer from InteliData Technologies
Corporation to Monique Marcus dated September 24, 2004, as
amended.
* 10.10.1 2004 Change of Control Agreement between InteliData
Technologies Corporation and Monique L. Marcus, dated December
15, 2004.
* 10.10.2 2005 Change of Control Agreement between InteliData Technologies
Corporation and Monique L. Marcus, dated January 3, 2005.
* 10.11 Director Compensation Arrangements.
* 21.1 InteliData Technologies Corporation List of Significant
Subsidiaries.
* 23.1 Consent of Independent Registered Public Accounting Firm.
# 23.2 Consent of Independent Registered Public Accounting Firm.
# 31 Certification of Principal Executive Officer and Principal
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
* 32 Certification of Principal Executive Officer and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
- -------------
* Filed previously on Form 10-K filed on March 31, 2005.
# Filed herewith.
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.
INTELIDATA TECHNOLOGIES CORPORATION
By: /s/ Alfred S. Dominick, Jr.
---------------------------------------------
Alfred S. Dominick, Jr.
Chairman, Chief Executive Officer, and
Acting Chief Financial Officer
(Principal Executive Officer and Principal
Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Alfred S. Dominick, Jr. Chairman, Chief Executive Officer, May 2, 2005
- ----------------------------
Alfred S. Dominick, Jr. and Acting Chief Financial Officer
/s/ Karen A. Kracher President and Chief Sales and May 2, 2005
- ----------------------------
Karen A. Kracher Marketing Officer
/s/ Monique L. Marcus Vice President, Finance & Treasurer May 2, 2005
- ----------------------------
Monique L. Marcus (Principal Accounting Officer)
/s/ Neal F. Finnegan Director May 2, 2005
- ----------------------------
Neal F. Finnegan
/s/ Patrick F. Graham Director May 2, 2005
- ----------------------------
Patrick F. Graham
/s/ Michael E. Jennings Director May 2, 2005
- ----------------------------
Michael E. Jennings
/s/ L. William Seidman Director May 2, 2005
- ----------------------------
L. William Seidman
/s/ Norman J. Tice Director May 2, 2005
- ----------------------------
Norman J. Tice