UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
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Commission File Number 000-27707
AETHER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-2186634
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
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11460 CRONRIDGE DRIVE
OWINGS MILLS, MARYLAND 21117
(Address of principal executive offices) (Zip Code)
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Registrant's Telephone Number, Including Area Code: (410) 654-6400
Securities Registered Pursuant to Section 12(b) of the Act:
NONE.
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01
CONVERTIBLE SUBORDINATED NOTES DUE 2005
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 of this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of
the registrant as of March 8, 2002 was $213,545,572.
As of April 22, 2002, 42,131,212 shares of the Registrant's common
stock, $.01 par value per share, were outstanding.
Document Incorporated By Reference: NONE
EXPLANATORY NOTE
The registrant amends its Annual Report on Form 10-K for the fiscal year
ended December 31, 2001, filed with the Securities and Exchange Commission
("SEC") on April 1, 2002, by adding the following Items: (1) Part III, Item 10,
Directors and Executive Officers of the Registrant, (2) Part III, Item 11,
Executive Compensation, (3) Part III, Item 12, Security Ownership of Certain
Beneficial Owners and Management and (4) Part III, Item 13, Certain
Relationships and Related Transactions. No other changes were made.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information relating to the Company's executive
officers and directors as of April 30, 2002.
NAME AGE POSITION
---- --- --------
David S. Oros...................... 42 Chairman of the Board and Chief Executive Officer
George M. Davis.................... 46 President and Vice Chairman
David C. Reymann................... 43 Chief Financial Officer
Brian W. Keane..................... 43 President, Enterprise Solutions Group
Michael S. Mancuso................. 56 Group President, Mobile Government, Small Business Solutions and
International
William B. Hannon.................. 48 President, Transportation and Logistics
John Clarke........................ 39 Senior Vice President, Business Operations
J. Carter Beese, Jr. (1)(2)........ 45 Director
Frank A. Bonsal, Jr. (2)........... 65 Director
George P. Stamas................... 51 Director
Devin N. Wenig..................... 35 Director
Thomas E. Wheeler (1)(2)........... 56 Director
----------
(1) Member of the compensation committee.
(2) Member of the audit committee.
David S. Oros founded Aether in 1996, and currently serves as our chairman
and chief executive officer. Prior to the closing of our acquisition of Riverbed
Technologies, he also served as president from Aether's inception. Mr. Oros also
serves on the board of directors of Novatel Wireless Inc. and Corvis Corp. From
1994 until 1996, Mr. Oros was president of NexGen Technologies, L.L.C., a
wireless software development company that contributed all of its assets to
Aether. From 1992 until 1994, he was president of the Wireless Data Group at
Westinghouse Electric ("Westinghouse"). Prior to that, Mr. Oros spent from 1982
until 1992 at Westinghouse directing internal research and managing large
programs in advanced airborne radar design and development. Mr. Oros received a
B.S. in mathematics and physics from the University of Maryland, and holds a
U.S. patent for a multi-function radar system.
George M. Davis is our president and vice chairman. He previously served as
our chief operating officer and president of our enterprise solutions and
services group. He joined us in September 1996 as vice president, business
development, to lead initiatives required to launch, maintain and develop
business opportunities for our services. From September 1994 until September
1996, Mr. Davis was director of enterprise management systems at Northrop
Grumman Corp. ("Northrop"). Prior to that time, Mr. Davis spent more than 14
years at Westinghouse where he managed advanced military electronic development
and production projects. He received a B.S. in business and economics from
Bethany College.
David C. Reymann has served as our chief financial officer since joining us
in June 1998. Mr. Reymann is also responsible for our treasury management
services, investor relations and human resources. Before joining us, Mr. Reymann
was director of finance and accounting for The Sweetheart Cup Company from June
1996 until May 1998, where he managed the financial analysis department and the
accounting operations for 11 North American manufacturing plants. Prior to that,
Mr. Reymann spent 12 years with Procter & Gamble, serving in several key
finance, accounting and operations positions. Prior to that, Mr. Reymann spent
five years at Ernst & Young, where
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he most recently specialized in emerging growth companies. Mr. Reymann received
a B.S. in accounting from the University of Baltimore, and is a certified public
accountant.
Brian W. Keane has served as president of our enterprise solutions
division since October 2001. From November 2000 until October 2001, Mr. Keane
was our executive vice president, corporate development with responsibility for
mergers and acquisitions, strategic investments and joint ventures. Prior to
then, Mr. Keane was senior vice president, business affairs since joining us in
August 1999. From February 1998 until August 1999, Mr. Keane was chief financial
officer for Management Information Consulting, Inc., a technology consulting
company. Prior to that, Mr. Keane spent ten years as an investment banker with
Smith Barney Inc. Mr. Keane received a B.A. in history and mathematics from
Cornell University and an M.B.A. from Harvard Business School.
Michael S. Mancuso has served as group president, mobile government, small
business solutions and international since January 2002. Prior to then, Mr.
Mancuso served as our executive vice-president, vertical business unit
operations, engineering services group and sales organization since the closing
of our Cerulean Technology Inc. ("Cerulean") acquisition in September 2000. From
December 1999 until September 2000, he was the president and chief operating
officer at Cerulean. Mr. Mancuso served as vice president of U.S. sales and
services at the Data General division of EMC Corporation and as vice president
of Data General's original equipment manufacturers division from June 1997 until
December 1999. He also served as general manager within Hewlett-Packard
Company's healthcare information systems division from February 1995 until June
1997. Previously, Mr. Mancuso was at Digital Equipment Corporation/Compaq where
he held leadership positions in sales and marketing. Mr. Mancuso holds an M.B.A.
from Babson College and a B.S. in finance/accounting from the University of
Massachusetts.
William B. Hannon has served as president, transportation and logistics
since January 2002. From November 2000 until January 2002, he served as our
corporate vice president, transportation and logistics and from September 1999
until November 2000 he served as our vice president and general manager,
financial systems. From April 1997 until September 1999, Mr. Hannon was business
manager, land combat systems for Northrop, where his responsibilities included
finance, contract and business management for certain U.S. government programs,
including the Longbow Fire Control Radar and the Hellfire Missile. Mr. Hannon
received a B.S. in business administration from Towson State University and an
M.B.A. from Loyola College.
John Clarke has served as our senior vice president, business operations
since January 2002. Prior to then, Mr. Clarke has held a variety of positions
since joining us in January 1996, including: corporate vice president,
operations; corporate vice president, OmniSky initiative; corporate vice
president, wireless hosting services; and corporate vice president, global
initiatives. Mr. Clarke received a B.S. in electrical engineering from Clarkson
University, a B.A. in mathematics from SUC Potsdam and an M.B.A. from Loyola
College.
J. Carter Beese, Jr. was elected a director of Aether on October 20, 1999.
Since July 1998, Mr. Beese has served as president of Riggs Capital Partners, a
division of Riggs National Corp., where he oversees a venture capital fund
valued in excess of $100 million. From September 1997 until July 1998, he
served as vice chairman of the Global Banking Group of BT Alex. Brown. Prior to
the merger of Bankers Trust and Alex. Brown, Mr. Beese was chairman of Alex.
Brown International from November 1994 until September 1997. From February 1992
until November 1994, Mr. Beese served as a commissioner of the SEC. Mr. Beese
serves as a senior advisor to the Center for Strategic and International
Studies, a non-partisan public policy think tank and is involved in the World
Economic Forum. He serves as a director on the boards of China.com; Internet
Securities, Inc., a company majority owned by Euromoney Institutional Investor,
Inc.; and Riggs National Corp. Mr. Beese received a B.S. in economics and
political science from Rollins College.
Frank A. Bonsal, Jr. was elected a director of Aether on October 20, 1999.
Since 1978, Mr. Bonsal has been a founding partner of New Enterprise Associates
("NEA"), one of the largest venture capital firms in the United
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States. Mr. Bonsal focuses on the development of early stage companies. He
currently serves as a director on the boards of Codeon Corp. and Brown
Investment Advisors Trust Co. In addition, he is a special limited partner of
Amadeus Capital Partners, Boulder Venture, Novak Biddle, Trellis Ventures and
Windward Ventures. Mr. Bonsal received a B.A. in economics from Princeton
University.
George P. Stamas was elected a director of Aether on October 20, 1999.
Since January 2002, Mr. Stamas has been a senior partner with the law firm of
Kirkland and Ellis. Also, since November 2001, Mr. Stamas has been a venture
partner with NEA and has served on the advisory board of DB Capital Partners
Inc., the private equity arm of Deutsche Banc Alex. Brown ("Deutsche Banc").
From December 1999 until December 2001, Mr. Stamas served as the vice chairman
of the board and managing director of Deutsche Banc. From April 1996 until
December 1999, Mr. Stamas was a partner with the law firm of Wilmer, Cutler &
Pickering. Mr. Stamas is counsel to, and a limited partner of, the Baltimore
Orioles baseball team. Mr. Stamas also serves on the board of directors of FTI
Consulting, Inc., a provider of litigation support services. He received a B.S.
in economics from the Wharton School of the University of Pennsylvania and a
J.D. from University of Maryland Law School.
Devin N. Wenig was elected a director of Aether on October 20, 1999. In
1994, Mr. Wenig joined Reuters America, Inc. and was promoted to managing
director, marketing, of Reuters Information in February 2000, president, Reuters
Information in January 2001 and president of the investment banking and
brokerage division in January 2002. Mr. Wenig serves as a director on the boards
of Sila Communications, Nastech Pharmaceutical Company, Inc. and Multex.com. He
received a B.S. from Union College and a J.D. from Columbia University.
Thomas E. Wheeler was elected a director of Aether on October 20, 1999.
Since 1992, Mr. Wheeler has served as president and chief executive officer of
the Cellular Telecommunications & Internet Association. In 1994 and 2000, Mr.
Wheeler was appointed by the President of the United States as a trustee of the
John F. Kennedy Center for the Performing Arts. Mr. Wheeler is a director on the
boards of the Public Broadcasting System and the National Archives Foundation.
He is the author of "Take Command! Leadership Lessons from the Civil War." He
received a B.S. in business administration from Ohio State University.
Directors serve for a one year term.
Our executive officers are appointed by, and serve at the discretion of,
our Board of Directors. We expect that each of our officers will devote
substantially full time to our affairs. We expect that our non-employee
directors will devote such time to our affairs as is necessary to discharge
their duties. There are no family relationships among any of our executive
officers, directors or key employees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act") requires our officers (as defined in regulations issued by the SEC) and
directors, and persons who own more than ten percent of a registered class of
Aether's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file.
Based solely on a review of copies of such reports of ownership
furnished to us and certifications from executive officers and directors, we
believe that during the past fiscal year all filing requirements applicable to
our officers, directors and greater than ten percent beneficial owners were
complied with.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation. The following table sets forth compensation for 1999,
2000 and 2001 awarded to, earned by or paid to our chief executive officer and
the four other most highly paid executive officers. In addition, we have
provided this information with respect to two persons who were executive
officers during 2001, but are no longer executive officers: Mr. Jackson, who
separated from the Company in September 2001; and Mr. Shelton, who separated
from the Company in April 2002. We refer to these seven officers as the "named
executive officers."
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LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ --------------------------------
RESTRICTED SHARES ALL OTHER
STOCK AWARDS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (3) OPTIONS (#) ($)
--------------------------- ---- ---------- --------- ------- ----------- ---
David S. Oros....................... 2001 $ 200,000 -- -- 18,000 --
Chairman and Chief Executive 2000 $ 200,000 -- -- 350,000 --
Officer 1999 $ 200,000 $ 250,000 -- 945,100 --
George M. Davis..................... 2001 $ 210,231 $ 20,000 -- 98,000 --
President and Vice Chair 2000 $ 200,000 $ 40,000 -- 145,000 --
1999 $ 157,292 $ 24,504 -- 55,000 --
David C. Reymann.................... 2001 $ 157,673 $ 20,000 -- 50,000 --
Chief Financial Officer 2000 $ 150,000 $ 30,000 -- 80,000 --
1999 $ 126,042 -- -- 51,250 --
Brian W. Keane...................... 2001 $ 157,673 $ 20,000 -- 50,000 --
President, Enterprise 2000 $ 150,000 $ 30,000 -- 50,000 --
Solutions Group 1999 $ 56,817 $ 50,000 -- 125,000 --
Michael S. Mancuso (1).............. 2001 $ 200,000 $ 60,000 -- 50,000 $55,000(5)
Group President, Mobile 2000 $ 34,615 $ 22,192 -- 73,119 (4) --
Government, Small Business Systems
and International
--------------------------------
E. Wayne Jackson III................ 2001 $ 198,775 (2) $ -- -- -- --
Chief Strategist, Software Products 2000 $ 160,423 $ 29,100 -- -- --
Group through September 2001 1999 -- -- -- -- --
Dale R. Shelton..................... 2001 $ 157,673 $ 10,000 -- 80,000 --
Chief Technology Officer through 2000 $ 150,000 $ 30,000 -- 100,000 --
April 2002 1999 $ 129,167 $ 20,000 -- 42,500 --
-------------
(1) Mr. Mancuso became executive vice president, vertical markets in September
2000 upon the completion of our acquisition of Cerulean and was not an executive
officer as of December 31, 2000. As of January 2002, Mr. Mancuso became group
president.
(2) Mr. Jackson earned $147,365 before his separation from the Company in
September 2001. The remaining amount was paid to Mr. Jackson as salary
continuation following his separation from the Company.
(3) Shares of restricted stock which were received by our named executive
officers in exchange for options are not included in this table. This exchange
was disclosed in our 2001 proxy statement, beginning on page 6.
(4) Of these options, 23,119 were granted to Mr. Mancuso to replace options
that he held for shares of Cerulean stock.
(5) Compensation pursuant to a retention agreement entered into with Mr.
Mancuso in connection with Aether's acquisition of Cerulean, of which Mr.
Mancuso was an officer.
Option Grants in Last Fiscal Year. The following table shows information
regarding stock options granted to the named executive officers during the year
ended December 31, 2001. No stock appreciation rights were granted to these
individuals during the year. All options were granted under Aether's 1999 Equity
Incentive Plan.
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INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SHARES TOTAL OPTIONs EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE PER OPTION TERM ($)
OPTION GRANTED EMPLOYEES IN SHARE EXPIRATION ------------------------
NAME (#) FISCAL YEAR ($) DATE (1) 5% (2) 10% (2)
---- -------------- ------------ ----------- ---------- ----------- ----------
David S. Oros............ 18,000(3) 0.5% $ 8.54 07/25/11 $ 245,434 $ 398,710
George M. Davis.......... 18,000(3) 2.6% $ 8.54 07/25/11 $ 245,434 $ 398,710
80,000(4) $ 8.54 07/25/11 $1,090,816 $1,772,045
David C. Reymann......... 50,000(4) 1.3% $ 8.54 07/25/11 $ 681,760 $1,107,528
Brian W. Keane........... 50,000(4) 1.3% $ 8.54 07/25/11 $ 681,760 $1,107,528
Michael S. Mancuso....... 50,000(4) 1.3% $ 8.54 07/25/11 $ 681,760 $1,107,528
----------------------------------------
E. Wayne Jackson III..... -- -- -- -- -- --
Dale R. Shelton.......... 80,000(5) 2.1% $ 8.54 07/25/11(5) $1,090,816 $1,772,045
----------
(1) Options expire 90 days after the termination of employment of the option
holder.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the SEC and are based on the assumption that the exercise
price was the fair market value of the shares on the date of grant. There
is no assurance provided to any executive officer or any other holder of
our securities that the actual price appreciation over the ten-year option
term will be at the assumed 5% and 10% levels or at any other defined
level.
(3) Options will vest on July 25, 2002.
(4) Options will vest 25% on July 2, 2002 and 25% annually on the following
three anniversaries.
(5) Upon Mr. Shelton's separation from Aether, in accordance with Aether's
usual practice, Mr. Shelton and Aether agreed to prorate his stock options
through April 2002, his last month of employment. Accordingly, the option
for 80,000 shares has been replaced with an immediately-exercisable,
non-qualified option for 15,000 shares, and the expiration date of these
and other of Mr. Shelton's options has been extended to April 1, 2004.
Aggregate Option Exercises and Holdings. The following table provides
information concerning option exercises during the year ended December 31, 2001,
and the shares represented by outstanding options held by each of the named
executive officers as of December 31, 2001.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END (#) FISCAL YEAR-END ($) (1)
SHARES ACQUIRED -------------------------------- ------------------------------
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------------ ----------- --------------- ----------- -------------
David S. Oros........... 0 -- 825,100 18,000 $ 5,797,000 $ 11,880
George M. Davis......... 0 -- 125,000 98,000 $ 926,250 $ 64,680
David C. Reymann........ 0 -- 58,750 50,000 $ 240,791 $ 33,000
Brian W. Keane.......... 0 -- 70,000 50,000 $ 308,000 $ 33,000
Michael S. Mancuso...... 0 -- 22,339 100,780 $ 0 $ 33,000
-------------------------------
E. Wayne Jackson III.... 17,530 $ 109,808 15,000 0 $ 107,790 $ 0
Dale R. Shelton......... 0 -- 97,500 80,000 $ 729,500 $ 52,800
----------
(1) Options were "in the money" to the extent the closing price of Aether's
common stock on December 31, 2001 exceeded the exercise price of the
options. The value of unexercised options represents the difference
between the exercise price of options and $9.20, which was the last
reported sale price of Aether common stock on December 31, 2001.
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DIRECTOR COMPENSATION
Except for reimbursement for reasonable travel expenses relating to
attendance at board meetings and discretionary grants of stock options,
directors are not compensated for their services as directors. Directors who are
employees are eligible to participate in our equity incentive plan. The
following table identifies options that we have granted to our current
non-employee directors since January 1, 2001.
NUMBER OF
SHARES
UNDERLYING EXERCISE VESTING EXPIRATION
NON-EMPLOYEE DIRECTOR OPTIONS(#) PRICE($) DATE DATE
--------------------- ---------- -------- ------- ----------
J. Carter Beese, Jr.... 28,000 $ 8.54 07/25/02 07/24/11
Frank A. Bonsal, Jr.... 23,000 $ 8.54 07/25/02 07/24/11
Thomas E. Wheeler...... 28,000 $ 8.54 07/25/02 07/24/11
George P. Stamas....... 18,000 $ 8.54 07/25/02 07/24/11
Devin N. Wenig......... 18,000 $ 8.54 07/25/02 07/24/11
EMPLOYMENT AGREEMENTS
We have entered into an employment contract with Mr. Oros, which became
effective June 22, 1999, and provides for a salary of $200,000 per year, a
performance bonus of up to $100,000 per year, and additional bonuses based on
annual revenue targets and proceeds raised from private placements of our equity
securities in 1999. The contract has an initial term expiring in June 2002, and
automatically extends for additional one month increments until terminated by
Aether or Mr. Oros on 15 days notice. Pursuant to the contract, in 1999 we
granted Mr. Oros a warrant to acquire 875,000 shares of our common stock. The
warrant currently has an exercise price of $1.60 per share of common stock. Mr.
Oros subsequently received our permission to assign part of his warrant, leaving
him with a warrant to acquire 775,000 shares. We also gave Mr. Oros the right to
allocate to key employees of his choosing warrants to acquire 125,000 shares of
common stock having the same terms and conditions. Mr. Oros awarded warrants for
106,250 shares of our common stock to current and past executive officers of
Aether. In 1999, Mr. Oros also received a warrant to acquire 175,000 shares of
our common stock at an exercise price of $4 per share. From this grant, Mr. Oros
subsequently assigned a warrant exercisable for 17,500 shares of our common
stock. Each of these warrants became exercisable upon completion of our initial
public offering. Warrants that Mr. Oros and other named executive officers
continue to hold are included in the table headed "Aggregate Option Exercises
and Holdings," above. If we terminate Mr. Oros without cause, he is entitled to
receive from us an amount equal to the salary he would have received during the
balance of the term of the employment contract. Under the contract, "cause"
means committing an act of gross negligence or other willful act that materially
adversely affects Aether, refusing to comply in any respect with specific
directions of our Board of Directors, or being convicted or pleading no contest
to any felony or any misdemeanor involving fraud, breach of trust or
misappropriation.
On June 8, 2001, we entered into an employment agreement with Mr.
Reymann. The agreement has an initial term expiring in June 2003, and
automatically extends for additional one year increments until terminated by
Aether or Mr. Reymann on 90 days notice before the end of the initial term or
the extensions. The agreement provides for a salary of not less than $150,000
per year and annual bonuses to be established by the Board, the Compensation
Committee or, if the board directs, our chief executive officer or president.
Mr. Reymann may resign with 90 days notice to Aether. If we terminate Mr.
Reymann without cause, he is entitled to receive an amount equal to 12 month's
salary, COBRA group health coverage premium costs, immediate vesting of options,
restricted stock or other equity instruments, and a pro rata share of the bonus
for the year of his termination. Under the agreement, "cause" means committing a
material breach of the agreement, committing an act of gross negligence with
respect to Aether or otherwise acting with willful disregard for Aether's best
interests, or being convicted of or pleading guilty or no contest to a felony
or, with respect to his employment, committing either a material dishonest act
or common law fraud or knowingly violating any federal or state securities or
tax laws. The agreement provides that if there is a change in control of Aether
and within 12 months Mr. Reymann resigns for good reason or is terminated
without cause, all options, restricted stock or other equity instruments held by
Mr. Reymann will become fully exercisable. A "change in control" means the
occurrence of any of the following: a sale of all or substantially all of
Aether's assets, the dissolution or liquidation of Aether, a person or group
purchasing over half of Aether's voting securities, a merger or consolidation of
Aether, a successful proxy contest replacing our board of directors, or
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during any two year period the incumbent board ceasing to constitute a majority
of the board, provided that individuals that a majority of the incumbent
directors approve for service on the board are treated as incumbent directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our Compensation Committee is or has ever been an
officer or employee of Aether or any of its subsidiaries. None of our executive
officers serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving on our Board of
Directors or Compensation Committee, except that Messrs. Clarke, Oros and Keane
serve on the board of directors of Sila Communications, Limited, of which Mr.
Oros is an executive officer.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of our common stock as of April 22, 2002, as to:
- each of our directors and named executive officers individually;
- all our directors and executive officers as a group; and
- each person (or group of affiliated persons) known by us to own
beneficially more than 5% of our outstanding common stock.
For the purposes of calculating percentage ownership as of April 22, 2002,
42,131,212 shares were issued and outstanding and, for any individual who
beneficially owns (i) shares of restricted stock which will vest on or before
June 22, 2002 or (ii) shares represented by options exercisable on or before
June 22, 2002, these shares are treated as if outstanding for that person, but
not for any other person. In preparing the following table, we relied upon
statements filed with the SEC by beneficial owners of more than five percent
(5%) of the outstanding shares of our common stock pursuant to Section 13(d) or
13(g) of the Securities Act of 1934, unless we knew or had reason to believe
that the information contained in such statements was not complete or accurate,
in which case we relied upon information which we considered to be accurate and
complete. Unless otherwise indicated, the address of each of the individuals and
entities named below is: c/o Aether Systems, Inc., 11460 Cronridge Drive, Owings
Mills, Maryland 21117.
BENEFICIAL OWNERSHIP
OF SHARES
-----------------------
NAME AND ADDRESS NUMBER PERCENT
--------------------------------------- ---------- --------
DIRECTORS AND EXECUTIVE OFFICERS:
David S. Oros (1)...................... 5,278,357 12.5%
George M. Davis (2).................... 153,050 *
David C. Reymann (3)................... 70,950 *
Brian W. Keane (4)..................... 32,834 *
Michael S. Mancuso (5)................. 29,081 *
J. Carter Beese, Jr. (6)............... 161,302 *
Frank A. Bonsal, Jr. (7)............... 83,118 *
1119 St. Paul Street
Baltimore, MD 21202
George P. Stamas (8)................... 33,868 *
Devin N. Wenig (9)..................... 12,600 *
c/o Reuters America, Inc.
1700 Broadway, 2nd Floor
New York, NY 10019
Thomas E. Wheeler (10)................. 139,325 *
All directors and officers as a group
(12 persons) (11).................... 6,082,805 14.3%
5% STOCKHOLDERS:
NexGen Technologies, L.L.C. ........... 3,326,757 7.9%
Reuters MarketClip Holdings Sarl (12).. 2,828,055 6.7%
c/o Reuters America, Inc.
1700 Broad, 2nd Floor
-8-
New York, NY 10019
Telcom-ATI Investors, L.L.C. .......... 3,244,535 7.7%
211 N. Union St., Suite 300
Alexandria, VA 22314
Janus Capital Corporation (13)......... 2,620,220 6.2%
100 Fillmore Street
Denver, CO 80206
Putnam Investments, LLC. (14).......... 4,172,307 9.9%
One Post Office Square
Boston, MA 02109
----------
* Less than 1%.
(1) Includes 3,326,757 shares of common stock owned by NexGen Technologies,
L.L.C. over which Mr. Oros exercises voting and investment control by
virtue of his position as managing member of NexGen. Also includes
exercisable warrants to purchase 812,500 shares of common stock and
exercisable options to purchase 12,600 shares of common stock. Excludes
84,000 shares of unvested restricted stock.
(2) Includes exercisable warrants to purchase 45,000 shares of common stock
and exercisable options to purchase 80,000 shares of common stock.
Excludes 34,800 shares of unvested restricted stock.
(3) Includes exercisable warrants to purchase 5,416 shares of common stock and
options to purchase 53,334 shares of common stock. Excludes 19,200 shares
of unvested restricted stock.
(4) Includes exercisable options to purchase 28,334 shares of common stock.
Excludes 12,000 shares of unvested restricted stock.
(5) Includes exercisable options to purchase 25,229 shares of common stock.
Excludes 12,000 shares of unvested restricted stock.
(6) Includes exercisable options to purchase 20,600 shares of common stock.
Excludes shares held by NexGen, in which Mr. Beese has a currently
exercisable option to become a non-managing member.
(7) Includes exercisable options to purchase 54,100 shares of common stock.
(8) Includes exercisable options to purchase 18,850 shares of common stock.
(9) Includes exercisable options to purchase 12,600 shares of common stock.
(10) Includes exercisable options to purchase 49,825 shares of common stock.
Also includes 5,000 shares owned by the Carol and Tom Wheeler Foundation
of which Mr. Wheeler is a trustee, 5,000 shares owned by Mr. Wheeler, and
79,500 shares owned by a trust of which Mr. Wheeler is the beneficiary.
Excludes Mr. Wheeler's indirect interest in shares held by NexGen, of
which Mr. Wheeler is a non-managing member.
(11) Includes exercisable warrants to purchase 862,916 shares of common stock
and exercisable options to purchase 419,222 shares of common stock.
(12) Reuters MarketClip Holdings Sarl is an indirect wholly-owned subsidiary of
Reuters Group PLC.
(13) Based solely on reports filed by this person with the Securities and
Exchange Commission as of April 22, 2002.
(14) Based solely on reports filed by this person with the Securities and
Exchange Commission as of April 22, 2002. Includes 1,937,596 shares
beneficially owned by Putnam Investment Management, LLC and 2,234,710
shares beneficially owned by The Putnam Advisory Company, LLC, each of
which is a subsidiary of Putnam Investments, LLC.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2001, we have engaged in the following transactions or
there are currently proposed transactions with the following persons:
- directors, nominees for election as directors, or executive officers;
- beneficial owners of 5% or more of the Company's common stock;
- immediate family members of the above, and
- entities in which the above persons have substantial interests.
REUTERS
On May 6, 2000, Aether and Reuters Limited ("Reuters") formed Sila
Communications Limited ("Sila"). Reuters was one of our original investors and
continues to hold approximately 6.7% of our common stock. In addition, under the
terms of a voting agreement among some of our stockholders, Reuters has the
right to appoint one director, who is currently Devin N. Wenig. David S. Oros,
our Chairman and Chief Executive Officer, serves as chairman of Sila, and two of
our directors, J. Carter Beese, Jr. and Devin N. Wenig, and two of our executive
officers, Brian Keane and John Clarke, also serve on the board of Sila.
On November 21, 2001, Aether, Reuters and Sila entered into a Funding
Agreement pursuant to which each party agreed to restructure the operations of
Sila. In connection with the restructuring, Aether and Reuters agreed to provide
an aggregate of (pound)5,000,000 (of which Aether's portion was
(pound)3,000,000), or such higher amounts as Aether and Reuters may agree in
amounts pro-rata to their existing shareholdings in Sila. On November 30, 2001,
Aether paid $2,136,600 to Sila and Sila issued a promissory note to Aether in
the original principal amount of $2,136,600, which will increase as Aether
makes future payments to Sila under the Funding Agreement up to a total of
$4,273,200, which amount was equivalent to the (pound)3,000,000 total Aether has
agreed to pay Sila under the Funding Agreement. Future payments up to the
(pound)3,000,000 total are to be paid by Aether at the written request of Sila.
In consideration of the funding, Sila agreed to prepare, within a reasonable
time after the date of the funding, a rationalization plan containing provisions
relating to the restructuring of its business. Also in connection with the
restructuring, Sila, Sila Technology Limited ("Sila Technology"), a wholly-owned
subsidiary of Sila, Reuters S.A., and Aether entered into a Software License
Agreement pursuant to which Sila and Sila Technology granted a license to Aether
and Reuters S.A. allowing the use of certain Sila and Sila Technology software.
The license, which is in consideration of the funding and is non-exclusive,
world-wide, perpetual, irrevocable and royalty-free, is a license to install,
use, sell, modify, enhance, adapt, copy, and create derivative works from the
licensed software.
Reuters also provided financial data services to Aether during 2001 and
received $347,034 in payment for these services. Aether provided Reuters'
employees MarketClip services during 2001 and Aether received compensation of
$13,862 for these services.
HUBER OROS & COMPANY, LLC
Since the middle of 2000, Huber Oros & Company, LLC ("Huber Oros") has been
the administrative agent of our corporate benefits program. Matthew Oros, the
chief executive officer and founder of Huber Oros, is the brother of David S.
Oros, our Chairman and Chief Executive Officer. Aether paid Huber Oros $316,152
in agency fees in 2001, which is based on a percentage of the total claims
processed by Huber Oros on behalf of Aether during 2001.
DEUTSCHE BANC ALEX. BROWN
Deutsche Banc Alex. Brown ("Deutsche Banc") provides financial services and
investment banking services to Aether. George P. Stamas, one of our directors,
served as the vice chairman of the board and managing director of Deutsche Banc
until December 2001 and currently serves on the advisory board of DB Capital
Partners Inc., the private equity arm of Deutsche Banc. During 2001, we incurred
fees to Deutsche Banc in connection with financial advice and we paid for
software acquired from a third party who assigned the account receivable to a
financing subsidiary of Deutsche Banc.
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AIRCRAFT RENTAL
During 2001, Dave Oros, our Chairman and Chief Executive Officer,
reimbursed Aether $273,756 for his personal use of Aether's corporate jet, which
the Company is currently seeking to sell. The amount reimbursed to Aether
included the direct costs associated with the flights as well as a portion of
the indirect overhead costs that are billed to Aether by an independent
management company.
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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 on Form 10-K/A
to be signed on its behalf by the undersigned, thereunto duly authorized on
April 30, 2002.
Aether Systems, Inc.
By: /s/ DAVID C. REYMANN
-----------------------------
David C. Reymann
Chief Financial Officer
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