UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1999
-----------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-26540
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NEWSEDGE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 04-3016142
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
80 Blanchard Road, Burlington, Massachusetts 01803
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (781) 229-3000
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
----------------------------
Title of Class
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___.
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, as of April 14, 2000, was approximately $23,400,000 (based upon
the closing bid price of the Registrant's Common Stock on April 14, 2000, of
$2.125 per share).
The number of shares outstanding of the Registrant's $.01 par value Common
Shares as of April 14, 2000 was 18,147,262.
The undersigned registrant hereby amend the following items of its Annual
Report on Form 10-K as set forth on the pages attached hereto:
-2-
DOCUMENTS INCORPORATED BY REFERENCE
None
-3-
PART III
ITEM 10. OCCUPATIONS OF DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth the director nominees, the directors,
executive officers and key employees of NewsEdge Corporation (the
"Corporation"), their ages and the positions currently held by each such person
with the Corporation.
Name Age Position
---- --- --------
Clifford M. Pollan 43 Chief Executive Officer, President
and Director
Michael E. Kolowich 47 Vice Chairman and Director
Ronald Benanto 51 Vice President - Finance, Chief
Financial Officer, Treasurer and
Assistant Secretary
Jon A. McNerney 42 Senior Vice President--Worldwide Sales
Alton Zink 44 Vice President--Human Resources
Thomas Karanian 37 Vice President--Client Services and
Operations
Rory J. Cowan(2) 47 Chairman of the Board of Directors
William A. Devereaux(1) 53 Director
James D. Daniell(1) 54 Director
Murat H. Davidson, Jr. 55 Director Nominee
Basil Regan(1) 59 Director
Peter Woodward(2) 27 Director
_____________________
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
Clifford M. Pollan joined the Corporation in 1989 as a Vice President,
served as Vice President-Sales and Marketing from May 1995 to March 1999 and as
President and Chief Operating Officer from April 1999. In March 2000, Mr. Pollan
was elected Chief Executive Officer and joined the Board of Directors. From 1986
to 1989, Mr. Pollan was a Director of Sales at Lotus Development Corporation, a
computer software company. From 1985 to 1986, Mr. Pollan was the Vice President
of Sales of Isys Corporation, a financial information company, and from 1978 to
1985 was employed by Data Resources, Inc., an economic information service
company, most recently as a Director of Consulting.
-4-
Michael E. Kolowich joined the Corporation in February 1998 as Vice
Chairman and Director in connection with the Corporation's merger with
Individual, Inc. ("Individual"). From September 1996 to February 1998, Mr.
Kolowich served as Individual's President, Chief Executive Officer and, Chairman
of the Board of Directors. Prior to joining Individual, Mr. Kolowich served from
July 1996 until September 1996 as Vice President/Business Operations of Nets
Inc., an Internet content provider formed in June 1996 when AT&T New Media
Services, a provider of interactive online information services for business
professionals, merged with Industry.Net. Mr. Kolowich served as President of
AT&T New Media Services and AT&T Interchange Online Network from December 1994
until the merger with Industry.Net in June 1996. From April 1991 until December
1994, Mr. Kolowich was President of Ziff-Davis Interactive, an electronic
publishing division of Ziff-Davis Publishing Company. Mr. Kolowich also serves
as a member of the Board of Directors of SmarterKids.com, Inc.
Ronald Benanto joined the Corporation in July 1999 as Vice President -
Finance and Operations, Treasurer and Assistant Secretary. From February 1998 to
July 1999, Mr. Benanto served as Vice President, Finance at Genesis Direct,
Inc., a direct marketing and e-commerce company that, subsequent to Mr.
Benanto's departure, filed for Chapter 11 bankruptcy in August 1999. From
October 1991 to December 1997, Mr. Benanto was the Senior Vice President,
Finance and Chief Financial Officer at Viewlogic Systems, Inc., an electronic
design automation company.
Jon A. McNerney joined the Corporation in 1994 as Director--European Sales,
served as Vice President and Managing Director--International Sales from
November 1996 through March, 2000 when he became Senior Vice President--
Worldwide Sales. Prior to joining the Corporation, Mr. McNerney was Vice
President, Sales and Marketing from November 1993 to May 1994 and Director,
Marketing and Sales from May 1992 to November 1993 at Investment Intelligence
Systems Corporation, a software company.
Alton Zink joined the Corporation in March 1998 as Director--Human
Resources. Mr. Zink became Vice President--Human Resources in April 1999. Prior
to joining the Corporation Mr. Zink was Director of Corporate Human Resources at
PictureTel Technologies, a telecommunications company, from 1989 to 1998.
Thomas Karanian joined the Corporation in September 1994 as Director--
Quality Engineering, served as Director--Client Services from December 1996
through August 1999, at which time he became Vice President--Client Services and
Operations. Prior to joining the Corporation, Mr. Karanian was Quality Engineer
Manager at Lotus Development Corporation, a computer software company.
Rory Cowan has served on the Board of Directors of the Corporation since
May 1993 and was elected Chairman in March 2000. Since December 1996, Mr. Cowan
has been Chairman and Chief Executive Officer of LioNBRIDGE Technologies, an
international software services company. From 1991 to 1996, Mr. Cowan was an
Executive Vice President of R.R. Donnelley & Sons Company, a supplier of
commercial print and print-related services. During 1995 and 1996, Mr. Cowan was
also the Chief Executive Officer of Stream International, Inc., a software
services company. Mr. Cowan also serves as Chairman of Interleaf, Inc.
James D. Daniell, Ph.D. became a director of the Corporation in February
1998, in connection with the Corporation's merger with Individual. Dr. Daniell
served on Individual's Board from 1997 until the merger. Dr. Daniell has been
Chief Executive Officer of Order Trust LLC, an electronic commerce company,
since November 1997. From February 1997 to November 1997, he served as Chief
Operating Officer and Vice President of Strategy and New Business Development at
AT&T Networked Commerce Services, an internet service provider. From November
1996 to February 1997, Dr. Daniell served as Vice President of Electronic
Messaging and New Business Development at AT&T Easy Commerce Services. From
December 1995 to November 1996, Dr. Daniell was Vice President of Corporate and
New Business Development at AT&T Corporation, an information and communication
services provider. Dr. Daniell served from April 1994 to December 1995 as Vice
President, Business Communications Services Strategy and New Business
Development, at AT&T Corporation. Prior to that, Dr. Daniell was a founder and
Vice President of Business Development and Strategic Relations at Bridge Builder
Technologies, a software vendor. Dr. Daniell served from March 1991 to May 1993
as Strategic Planning Director and Vice President at UNIX Systems Laboratories.
Dr. Daniell serves as Vice Chairman of the Massachusetts Software Council and is
also the Board of Advisors of espanol.com.
William A. Devereaux became a director of the Corporation in February 1998,
in connection with the Corporation's merger with Individual. Mr. Devereaux
served on Individual's Board from 1989 until the merger. Mr. Devereaux has been
Managing Director of American Capital Company, a venture capital and merchant
banking company, since 1988. From 1993 to 1994, Mr. Devereaux was Vice
President, Strategic Planning and Marketing at the GI Communications Division of
General Instrument Corp., a creator of analog and digital systems that provide
broadband telecommunications services. Prior to that, from 1979 to 1987, Mr.
Devereaux was a principal at American Cable Systems Corporation where he served
in various capacities including Executive Vice President, a national provider of
cable television.
-5-
Murat H. Davidson is nominated as a director of the Corporation in
connection with the Corporation's Annual Meeting. Mr. Davidson has been Managing
Director of Regan Partners L.P., a limited partnership that invests in
turnaround companies and special situations since 1996. From 1993 to 1995,
Mr. Davidson spent three years as a Managing Director at Tiger Management Corp.,
a hedge fund. Mr. Davidson serves as a member of the board of directors of
Zaring National Corporation.
Basil Regan became a director of the Corporation in March 2000. Mr. Regan
founded and is General Partner of Regan Partners, L.P., a limited partnership
that invests primarily in turnaround companies and special situations in 1989.
Mr. Regan is also President of Regan International Fund Ltd. and Regan Fund
Management Ltd. Mr. Regan serves as a member of the board of directors of
Hanover Direct Corporation.
Peter Woodward became a director of the Corporation in March 2000. Since
1996, Mr. Woodward has been a research analyst with Regan Partners L.P., a
limited partnership that invest primarily in turnaround companies and special
situations. Prior to joining Regan Partners, Mr. Woodward was a research analyst
for Munn, Bernhard & Associates, a New York investment management company,
focusing on technology and related companies.
Executive officers of the Corporation are elected by the Board of Directors
on an annual basis and serve until their successors have been duly elected and
qualified.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act, as amended, requires the
Corporation's directors, executive officers and holders of more than 10% of the
Corporation's Common Stock (collectively, "Reporting Persons") to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock of the Corporation. Such persons are
required by regulations of the Securities and Exchange Commission to furnish the
Corporation with copies of all such filings. Based on its review of the copies
of such filings received by it with respect to the fiscal year ended December
1999 and written representations from certain Reporting Persons, the Corporation
believes that all Reporting Persons, except for Michael Kolowich, William A.
Devereaux and Daniel F.X. O'Reilly complied with all Section 16(a) filing
requirements in the fiscal year ended December 31, 1999.
ITEM 11. COMPENSATION AND OTHER INFORMATION CONCERNING DIRECTORS AND OFFICERS
Compensation of Directors
On January 23, 1996, the Compensation Committee of the Board of Directors
approved the Director Compensation Plan. Under the Director Compensation Plan,
each non-employee director receives both an annual retainer of $5,000 and a fee
of $1,000 for each Board meeting physically attended. A "non-employee director,"
for purposes of the Director Compensation Plan, is a director who is not an
employee of the Corporation and not an officer, director, general partner or
employee of a securities firm, venture capital firm or other institution or
corporation which, together with its affiliates, holds more than 5% of the
Corporation's issued and outstanding Common Stock. Directors who are employees,
or who hold more than 5% of the Corporation's Common Stock, receive no
remuneration for serving as members of the Board or as members of committees of
the Board. Non-employee directors are also reimbursed for their reasonable out-
of-pocket travel expenses associated with their attendance at Board meetings.
During the fiscal year ended December 31, 1999, Messrs. Cowan and Daniell and
Ms. Rokoff each earned $15,000, Ms. Carnahan earned $14,000 and Mr. Deveraux
earned $13,000 under the Director Compensation Plan.
-6-
In addition, in order to provide an incentive to non-employee directors,
options are granted to non-employee directors pursuant to the 1995 Non-employee
Director Stock Option Plan, as amended, (the "Director Plan"). Under the
Director Plan, each non-employee director receives, on the date such person is
first elected to the Board, an option to purchase 20,000 shares (the "Initial
Option") of the Corporation's Common Stock, vesting over three years. Subsequent
to the grant of the Initial Option, each non-employee director who has attended
at least 75% of the board meetings during the previous fiscal year will receive
an option to purchase 2,500 shares of Common Stock, vesting on the first
anniversary of the date of such grant. All options granted under the Director
Plan will have an exercise price equal to the fair market value of the Common
Stock on the date of grant. Each option granted under the Director Plan will
expire ten years from the date of grant.
During the fiscal year ended December 31, 1999, Messrs. Cowan, Daniell and
Devereaux and Ms. Carnahan and Ms. Rokoff each received options to purchase
2,500 shares at an exercise price of $8.5630 per share pursuant to the Director
Plan.
-7-
Executive Compensation Summary
The following table sets forth summary information concerning the
compensation paid or earned for services rendered to the Corporation in all
capacities during the fiscal years ended December 31, 1999, 1998, and 1997 to
(i) the individual who served as the Corporation's Chief Executive Officer for
the fiscal year ended December 31, 1999 and (ii) each of the other four most
highly compensated executive officers of the Corporation who received total
annual salary and bonus in excess of $100,000 in the fiscal year ended December
31, 1999 (the "Named Executive Officers").
Summary Compensation Table
--------------------------
Long-Term
Compensation
------------
Annual Compensation Securities All
------ ------------ Underlying Other
Name and Principal Position Year Salary ($) Bonus ($)(1) Options(#) Compensation(2)
- --------------------------- ---- ---------- ------------ ---------- ---------------
Donald L. McLagan (3) 1999 $176,827 $13,779 -- $ 800
Chairman, Chief 1998 156,000 19,991 100,500 800
Executive Officer and Director 1997 147,500 18,925 -- 760
Clifford M. Pollan(3) 1999 172,497 44,690 120,000 800
President and Chief Operating 1998 156,000 35,591 80,500 800
Officer 1997 147,500 41,650 45,000(4) 760
Ronald Benanto(5) 1999 85,479 21,981 150,000 --
Vice President -- Finance, 1998 -- -- -- --
Chief Financial Officer, 1997 -- -- -- --
Treasurer & Assistant Secretary
Edward R. Siegfried(6) 1999 127,135 6,492 -- 800
Vice President - Finance, 1998 156,000 19,991 80,500 800
Chief Financial Officer, 1997 147,500 18,925 45,000(4) 760
Treasurer
and Assistant Secretary
Daniell F.X. O'Reilly (7) 1999 157,556 9,739 -- 1,944
Vice President and Chief 1998 156,000 19,991 50,000 --
Technology Officer 1997 147,500 18,925 45,000(4) 1,770
John M. Moss(8) 1999 185,596 5,341 -- --
Vice President - 1998 156,000 19,991 60,500 --
Development 1997 150,000 18,925 50,000(4) --
____________________
(1) Includes bonuses earned with respect to services rendered in the fiscal
year indicated, whether or not such bonus was actually paid during such
fiscal year.
(2) Represents matching contributions made by the Corporation to the Named
Executive Officer under the Corporation's 401(k) plan.
(3) Mr. McLagan retired as the Corporation's Chairman and Chief Executive
Officer in March 1999. Effective March 14, 2000, Mr. Pollan was named Chief
Executive Officer and was appointed to the Board of Directors.
-8-
(4) Includes options granted pursuant to the repricing of options in 1997.
(5) Mr. Benanto joined the Corporation as Vice President--Finance, Chief
Financial Officer, Treasurer and Assistant Secretary in July 1999.
(6) Mr. Siegfried officially retired as Vice President--Finance, Chief
Financial Officer, Treasurer and Assistant Secretary in March 1999, but
continued in this position until the hiring of his successor in July 2000.
$25,000 of Mr. Siegfried's 1999 annual salary is in connection with his
service as a consultant to the Corporation subsequent to his retirement.
(7) Mr. O'Reilly resigned as Vice President and Chief Technology Officer in
January 2000.
(8) Mr. Moss resigned as Vice President - Development in August 1999. $70,833
of Mr. Moss' annual salary consists of a severance payment made in 1999.
-9-
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides certain information concerning grants of
options to purchase the Corporation's Common Stock made during the year ended
December 31, 1999 to each of the Named Executive Officers. No stock appreciation
rights ("SARs") were granted during the fiscal year ended December 31, 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
-------------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted Exercise or Grant Date
Options/SARs to Employees Base Price Expiration Present
Name Granted in Fiscal Year ($/Share) Date $/Value(1)
- --------------------------------------------------------------------------------------------------------------------------
Donald L. McLagan -- -- -- -- --
Clifford M. Pollan 120,000(2) 7.48% $8.875 3/19/09 $636,000
Ronald Benanto 150,000(2) 9.34% $8.125 7/6/09 $795,000
Edward R. Siegfried -- -- -- -- --
Daniell F.X. O'Reilly 25,000(2) 1.56% $8.875 3/19/09 $132,500
John M. Moss 40,000(2) 2.49% $8.875 3/19/09 $212,000
____________________________
(1) In accordance with Securities and Exchange Commission rules, the Black-
Scholes option pricing model was chosen to estimate the grant date present
value of the options set forth in this table. The Corporation's use of this
model should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock price.
The following assumptions were made for purposes of calculating the Grant
Date Present Value: an option term of 5 years, volatility at .70, interest
rate at (4.60%-6.38%)%. The real value of the options in this table depends
upon the actual performance of the Corporation's stock during the
applicable period.
(2) Options will vest one-third on the first anniversary from the date of grant
with the remainder vesting in twenty-four equal monthly installments
thereafter.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information as to options exercised in 1999 by
the Named Executive Officers, the value realized upon such exercises and the
value of options held by such officers at year end based on the closing price of
the Corporation's Common Stock on December 31, 1999.
-10-
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SARs at Fiscal Year- In-the-Money Options at Fiscal
Acquired on Value End Year-End
-------------------------------- ----------------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable($)(1) Unexercisable($)(1)
- ---- -------- -------- ----------- ------------- ----------------- -------------------
Donald L. McLagan -- -- 46,333 54,167 -- $ 2,532
Clifford M. Pollan -- -- 78,411 167,089 $147,352 $377,485
Edward R. Siegfried 41,765 $82,069 36,646 47,089 $ 72,038 $ 39,925
Ronald Benanto -- -- -- 150,000 -- $534,450
Daniell F.X. O'Reilly -- -- 60,573 -- $131,105 --
John M. Moss 30,395 $53,382 28,461 -- $ 25,049 --
____________________________
(1) Value is based on the difference between the option exercise price and the
fair market value at December 31, 1999 ($11.688 per share as quoted on the
Nasdaq National Market) multiplied by the number of shares underlying the
option.
-11-
Compensation Committee's Report on Executive Compensation
This report is submitted by the Compensation Committee. The Compensation
Committee during fiscal year 1999 comprised Ms. Rokoff and Messrs. Cowan and
Daniell, each of whom are non-employee directors. In March 2000 subsequent to
Ms. Rokoff's resignation from the Board of Directors, the Compensation Committee
was re-constituted to comprise Messrs. Daniell, Devereaux and Regan. Pursuant to
authority delegated by the Board of Directors, the Compensation Committee is
responsible for reviewing and administering the Corporation's stock plans and
reviewing and approving compensation matters concerning the executive officers,
employees and consultants to the Corporation.
Cash Compensation. Messrs. McLagan, Pollan, Siegfried, O'Reilly and Moss
each received annual base salaries of $185,000, $178,000, $170,000, $164,000 and
$170,000, respectively effective April 1, 1999. From January 1, 1999 through
March 31, 1999, Messrs. McLagan, Pollan, Siegfried, O'Reilly and Moss each
received annual base salaries of $156,000. Mr. Benanto, who joined the
Corporation in July 1999, received an annual base salary of $175,000. The
Compensation Committee attempts to keep the base salary for the Corporation's
executive officers competitive by comparing it with those of other companies in
the computer software industry and other companies with similar market
capitalizations. The Compensation Committee's goal is to align the interests of
the Corporation's executive officers with its stockholders by incenting them
through performance based bonuses and equity compensation.
On February 13, 1997, the Compensation Committee of the Board of
Directors approved a short-term cash incentive compensation plan (the
"Accountability Group Bonus Plan"), which provides that the executive officers,
along with other designated members of senior management, receive bonuses based
upon the Corporation's financial performance in the current fiscal year. Each
executive officer's bonus may range from zero to a maximum amount determined by
reference to the final audited financial statements of the Corporation. During
the fiscal year ended December 31, 1999, Messrs. McLagan, Pollan, Siegfried,
O'Reilly and Moss each earned a bonus of $13,779, $16,683, $6,492, $9,739 and
$5,346, respectively pursuant to the Accountability Group Bonus Plan. Mr. Pollan
received in 1999, in addition to his base salary and bonus, an additional bonus
of $21,696 based upon a formula relating to the Corporation's revenues and
profits. In connection with Mr. Benanto's retention as Vice President--Finance,
Chief Financial Officer, Treasurer and Assistant Secretary in July 1999,
Mr. Benanto received a guaranteed bonus of $21,981 in 1999.
Equity Compensation. The Corporation's equity compensation program is
designed to provide long-term incentives to executive officers to encourage
executive officers to remain with the Corporation and to provide executives with
the opportunity to obtain significant, long-term stock ownership. The
Compensation Committee generally grants options that become exercisable over a
four-year period and that have exercise prices equal to the fair market value of
the Common Stock on the date of grant. However, in the case of executive
officers who beneficially own more than ten percent (10%) of the Corporation's
Common Stock, the Internal Revenue Code of 1986, as amended, requires that the
exercise price of incentive stock options granted to such executive officers be
110% of the fair market value of the Common Stock on the date of grant. In 1999,
pursuant to the 1995 Stock Plan, the Compensation Committee granted 40,000 non-
qualified stock options to Mr. Moss, 25,000 non-qualified stock options to Mr.
O'Reilly, 120,000 non-qualified stock options to Mr. Pollan and 113,079 non-
qualified stock options to Mr. Benanto. In addition, the Compensation Committee
granted 36,921 incentive stock options to Mr. Benanto.
Other Benefits. The Corporation also has various broad-based employee
benefit plans. Executive officers participate in these plans on the same terms
as eligible, non-executive employees, subject to any legal limits on the amounts
that may be contributed or paid to executive officers under these plans. The
Corporation offers a stock purchase plan under which employees may purchase
Common Stock at a discount. The Corporation also maintains insurance and other
benefit plans for its employees.
Tax Deductibility of Executive Compensation. In general, under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), the
Corporation cannot deduct for federal income tax purposes, compensation in
excess of $1 million paid to certain executive officers. This deduction
limitation does not apply, however, to compensation that constitutes "Qualified
performance-based compensation" within the meaning of Section 162(m) of the Code
and the regulations promulgated thereunder. The Compensation Committee has
considered the limitations on deductions imposed by Section 162(m) of the Code,
and it is the Compensation Committee's present intention that, for so long as it
is consistent with its overall compensation objective, substantially all tax
deductions attributable to executive compensation will not be subject to the
deduction limitations of Section 162(m) of the Code. The Compensation Committee
believes that compensation deductions attributable to options granted under the
corporations 1995 and 2000 Stock Plans qualify for an exception to the
requirements of Section 162(m).
-12-
Respectfully submitted by the Compensation Committee of the Board of Directors
Rory J. Cowan
James D. Daniell
June Rokoff (1)
(1) Ms. Rokoff resigned from the Compensation Committee and the Board of
Directors on March 13, 2000.
Compensation Committee Interlocks and Insider Participation
Interlocks. The Compensation Committee during fiscal year 1999 comprised
Ms. Rokoff and Messrs. Cowan and Daniell. The Corporation's Compensation
Committee of the Board of Directors currently consists of Messrs. Daniell,
Deveraux and Regan. No executive officer of the Corporation served as a member
of the compensation committee of another entity (or other committee of the Board
of Directors performing equivalent functions or, in the absence of any such
committee, the entire Board of Directors) of which either Ms. Rokoff or Messrs.
Cowan, Daniell and Regan is an executive officer.
Employment Agreement with Mr. Kolowich. In connection with the
Corporation's merger with Individual, the Corporation entered into an employment
agreement with Michael E. Kolowich, the Corporation's Vice Chairman and a
Director of the Corporation and formerly the Chairman, President and Chief
Executive Officer of Individual. Under this employment agreement, Mr. Kolowich
served as a full-time senior executive to the Corporation from February 24, 1998
(the effective date of the merger with Individual (the "Effective Date") until
April 30, 1998 (the "Transition Period"). From May 1, 1998 until the third
anniversary of the Effective Date, Mr. Kolowich has served and will continue to
serve as a senior executive consultant to the Corporation (the "Remaining
Term"). Furthermore, during the term of his employment agreement, the
Corporation shall take all action necessary and proper to cause Mr. Kolowich to
be elected to the Corporation's Board of Directors and to serve as the Vice
Chairman of the Corporation. Pursuant to the employment agreement, Mr. Kolowich
received a salary at the annual rate of $250,000 during the Transition Period
and receives a salary at an annual rate of $50,000 during the Remaining Term, or
until Mr. Kolowich accepts full time employment with a third party. Mr. Kolowich
is eligible to participate in the benefits plans maintained by the Corporation
during the term of the employment agreement. Also, under the terms of the
employment agreement, Mr. Kolowich will be bound by non-competition and non-
disclosure requirements. Upon the Effective Date, the Corporation assumed all
stock options then held by Mr. Kolowich all of which became immediately
exercisable, with the exception of 784 shares.
Consulting Agreement with Mr. Siegfried. In March 1999, the Corporation
entered into a consulting agreement with Edward R. Siegfried in connection with
his retirement as Vice President--Finance, Chief Executive Officer, Treasurer
and Assistant Secretary. Under the terms of the consulting agreement, during the
period from March 31, 1999 through June 30, 1999 Mr. Siegfried continued in his
capacity as Vice President--Finance, Chief Executive Officer, Treasurer and
Assistant Secretary of the Corporation in exchange for compensation at an
annualized rate of $178,000. Mr. Siegfried further agreed to serve as Senior
Executive Consultant to the Corporation for compensation at an annualized rate
of $50,000 from the period commencing April 1, 1999 until the termination of the
consulting agreement, such termination to be no later than June 30, 2002. The
Corporation also agreed that certain of Mr. Siegfried's options would continue
to be exercisable throughout the term of the consulting agreement.
Severance Agreement and Release with Mr. McLagan. In March 2000, the
Company entered into a severance agreement and release with Donald L. McLagan in
connection with his retirement as Chief Executive Officer and Chairman. Under
the terms of the severance agreement and release, Mr. McLagan will receive
severance at an annual rate of $185,000 commencing March 14, 2000 up to and
through March 14, 2001 The Company has further agreed that Mr. McLagan's options
shall be exercisable until March 14, 2001. Also under the terms of the severance
agreement and release, Mr. McLagan will be bound by non-competition, non-
solicitation and non-disclosure requirements.
-13-
Stock Performance Graph
The following graph compares the percentage change in the cumulative
total stockholder return on the Corporation's Common Stock during the period
from the Corporation's initial public offering on August 11, 1995 through
December 31, 1999, with the cumulative total return for the Nasdaq Stock Market
(U.S. Companies) and the Nasdaq Computer and Data Processing Services Stock
Index (the "Nasdaq Computer Index"). The comparison assumes $100 were invested
on August 11, 1995 in the Corporation's Common Stock at the $15.00 initial
offering price and in each of the foregoing indices and assumes reinvestment of
dividends, if any.
Comparison of Cumulative Total Return Among
NewsEdge Corporation, Nasdaq Stock Market Index
and Nasdaq Computer Index(1)(2)
[GRAPH APPEARS HERE]
IPO
8/11/95 9/29/95 12/29/95 3/29/96 6/28/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97
------- ------- -------- ------- ------- ------- -------- ------- ------- -------
NewsEdge Corporation $ 100 $ 232 $ 163 $ 245 $ 222 $ 193 $ 128 $ 85 $ 73 $ 68
Nasdaq Composite $ 100 $ 104 $ 105 $ 110 $ 119 $ 124 $ 130 $ 122 $ 145 $ 169
Nasdaq Computer $ 100 $ 102 $ 106 $ 111 $ 124 $ 126 $ 131 $ 122 $ 156 $ 171
12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
-------- ------- ------- ------- -------- ------- ------- ------- --------
NewsEdge Corporation $ 61 $ 94 $ 66 $ 58 $ 78 $ 57 $ 52 $ 62 $ 78
Nasdaq Composite $ 159 $ 186 $ 191 $ 173 $ 223 $ 251 $ 275 $ 281 $ 415
Nasdaq Computer $ 161 $ 213 $ 236 $ 223 $ 288 $ 347 $ 361 $ 374 $ 634
(1) Prior to August 11, 1995 the Corporation's Common Stock was not publicly
traded. Comparative data is provided only for the period since that date.
This chart is not "solicited material", is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filings of the Corporation under the Securities Act of
1933, as amended or the Securities Exchange Act of 1934, as amended,
whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
(2) The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used on this graph was
obtained from the Nasdaq Stock Market and the Nasdaq Stock Market and the
Nasdaq Computer indices were prepared for Nasdaq by the Center for Research
in Security Prices at the University of Chicago, a source believed to be
reliable, although the Corporation is not responsible for any errors or
omissions in such information.
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ITEM 12. MANAGEMENT AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of April 15, 2000: (i) the name of each
person who, to the knowledge of the Corporation, owned beneficially more than 5%
of the Common Stock of the Corporation outstanding as of such date; (ii) the
name of each director or nominee; (iii) the name of each executive officer
identified in the Summary Compensation Table set forth below under "Compensation
and Other Information Concerning Directors and Officers;" and (iv) the number of
shares owned by each of such persons and all officers, directors and nominees as
a group and the percentage of the outstanding shares represented thereby.
Shares Beneficially Percentage
Name Owned (1) Beneficially Owned (2)
---- --------- ----------------------
Principal Stockholders(3):
Donald L. McLagan(4) 2,220,747 12.20%
c/o NewsEdge Corporation
80 Blanchard Road
Burlington, MA 01803
Taunus Corporation 978,000 5.4%
31 West 52/nd/ Street
New York, NY 10019
Directors:
Rory J. Cowan(5) 63,876 *
Michael E. Kolowich(6) 544,133 2.91%
William A. Devereaux(7) 179,056 1%
James D. Daniell, Ph.D.(8) 23,999 *
Basil P. Regan(9) 4,455,400 25%
Murat H. Davidson, Jr.(10) 32,000 *
Peter Woodward -- --
Named Officers:
Clifford M. Pollan(11) 252,782 1.38%
Ronald Benanto -- --
Edward R. Siegfried(12) 65,186 *
Daniel F.X. O'Reilly, Ph.D. 162,993 1%
John Moss 400 *
All directors, director nominees and executive officers
as a group: (13 persons)(13) 8,000,572 42.05%
__________________________________
* Represents less than 1% of the outstanding shares.
(1) Except as otherwise noted, each person or entity named in the table has
sole voting and investment power with respect to the shares. The inclusion
herein of any shares of Common Stock deemed beneficially owned does not
constitute an admission of beneficial ownership of those shares.
(2) Applicable percentage of ownership as of April 15, 2000 is based upon
18,147,262 shares of Common Stock outstanding on such date. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission (the "Commission"), and includes voting and investment
power with respect to shares. Shares of Common Stock subject to options
currently exercisable or exercisable within 60 days of
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April 15, 2000 are deemed outstanding for computing the percentage
ownership of the person holding such options, but are not deemed
outstanding for computing the percentage of any other person.
(3) This information was obtained from filings made with the SEC pursuant to
Sections 13(d) and 13(g) of the Securities and Exchange Act of 1934, as
amended.
(4) Includes 444,442 shares held in trust for the benefit of Mr. McLagan's two
children, of which Mr. McLagan's wife is the sole trustee. Mr. McLagan
disclaims beneficial ownership of such shares. Also includes 56,748 shares
of Common Stock issuable pursuant to outstanding stock options exercisable
within 60 days of April 15, 2000 by Mr. McLagan.
(5) Includes 28,876 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of April 15, 2000.
(6) Includes 543,383 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of April 15, 2000.
(7) Includes 48,500 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of April 15, 2000.
(8) Includes 17,499 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of April 15, 2000.
(9) Includes 2,391,500 shares of Common Stock held by Regan Partners, L.P.;
1,436,400 shares of Common Stock held by the Regan International Fund,
L.P.; 200,000 shares of Common Stock held by The Wellcome Trust, Ltd.;
353,500 shares of Common Stock held by the Super Hedge Fund, L.P.;
37,000 shares of Common Stock held by Athena Partners, L.P.; and
2,000 shares of Common Stock held by Lenore Robins, of which Mr. Regan is
deemed the beneficial owner. Mr. Regan is President and sole stockholder of
Regan Fund Management, Ltd., general partner of Regan Partners L.P. and
co-general partner with Lenore Robins in Athena Partners, L.P. Regan Fund
Management Ltd. is the investment manager for Regan International Fund
L.P., provides investment management services to the Wellcome Trust, Ltd.
and has a trading advisory agreement with the Super Hedge Fund, L.P.
(10) Mr. Davidson is a director nominee. Includes 5,000 shares of Common Stock
held by the 1992 Davidson Family Trust. Also includes 5,000 shares of
Common Stock held by Mr. Davidson's son and 4,000 shares of Common Stock
held by Mr. Davidson's daughter. Mr. Davidson disclaims beneficial
ownership of such shares.
(11) Includes 134,450 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of April 15, 2000.
(12) Includes 27,076 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of April 15, 2000.
(13) Includes 856,532 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of April 15, 2000.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS CERTAIN TRANSACTIONS
William Blair & Company, an affiliate of William Blair Venture Partners III
("Blair"), is a customer of the Corporation and was billed an aggregate of
approximately $95,000 in NewsEdge subscriber fees in the year ended December 31,
1999. Ms. Carnahan, a general partner of Blair, served on the Board of
Directors of the Corporation through March 2000.
Employment Agreement with Mr. Kolowich. In connection with the
Corporation's merger with Individual, the Corporation has entered into an
employment agreement with Michael E. Kolowich, the Corporation's Vice Chairman
and a Director of the Corporation and formerly the Chairman, President and Chief
Executive Officer of Individual. Under this employment agreement, Mr. Kolowich
served as a full-time senior executive consultant to the Corporation from
February 24, 1998 (the effective date of the merger with Individual (the
"Effective Date") until April 30, 1998 (the "Transition Period"). From May 1,
1998 until the third anniversary of the Effective Date, Mr. Kolowich has served
and will continue to serve as a senior executive consultant to the Corporation
(the "Remaining Term"). Furthermore, during the term of his employment
agreement, the Corporation shall take all action necessary and proper to cause
Mr. Kolowich to be elected to the Corporation's Board of Directors and to serve
as the Vice Chairman of the Corporation. Pursuant to the employment agreement,
Mr. Kolowich received a salary at the annual rate of $250,000 during the
Transition Period and receives a salary at an annual rate of $50,000 during the
Remaining Term, or until Mr. Kolowich accepts full time employment with a third
party. Mr. Kolowich is eligible to participate in the benefits plans maintained
by the Corporation during the term of the employment agreement. Also, under the
terms of the employment agreement, Mr. Kolowich will be bound by non-competition
and non-disclosure requirements. Upon the Effective Date, the Corporation
assumed all stock options then held by Mr. Kolowich all of which became
immediately exercisable, with the exception of 784 shares.
Consulting Agreement with Mr. Siegfried. In March 1999, the Corporation
entered into a consulting agreement with Edward R. Siegfried in connection with
his retirement as Vice President--Finance, Chief Executive Officer, Treasurer
and Assistant Secretary. Under the terms of the consulting agreement, during the
period from March 31, 1999 through June 30, 1999 Mr. Siegfried continued in his
capacity as Vice President--Finance, Chief Executive Officer, Treasurer and
Assistant Secretary of the Corporation in exchange for compensation at an
annualized rate of $178,000. Mr. Siegfried further agreed to serve as Senior
Executive Consultant to the Corporation for compensation at an annualized rate
of $50,000 from the period commencing April 1, 1999 until the termination of the
consulting agreement, such termination to be no later than June 30, 2002. The
Corporation also agreed that certain of Mr. Siegfried's options would continue
to be exercisable throughout the term of the consulting agreement.
Severance Agreement and Release with Mr. McLagan. In March 2000, the
Company entered into a severance agreement and release with Donald L. McLagan in
connection with his retirement as Chief Executive Officer and Chairman. Under
the terms of the severance agreement and release, Mr. McLagan will receive
severance at an annual rate of $185,000 commencing March 14, 2000 up to and
through March 14, 2001 The Company has further agreed that Mr. McLagan's
options shall be exercisable until March 14, 2001. Also under the terms of the
severance agreement and release, Mr. McLagan will be bound by non-competition,
non-solicitation and non-disclosure requirements.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.
(a) List of documents filed as part of this report:
(1) Exhibits
--------
Exhibit
-------
Number Description of Document
------ -----------------------
2.1 Agreement and Plan of Merger and Reorganization by and among
the Company, and Individual, Inc. dated as of November 2,
1997 (attached as Annex A to the Prospectus/Joint Proxy
Statement contained in the Company's Registration Statement
on Form S-4, No. 333-44887)
2.2 Stock Purchase Agreement dated February 18, 2000 by and
among the Company, Office.com Inc. and Individual.com, Inc.
(filed as Exhibit 10.1 to the Company's Current Report on
Form 8-K dated March 6, 2000 and incorporated therein by
reference)
3.1 Amended and Restated Certificate of Incorporation of the
Company (filed as Exhibit 3.1 to the Company's Annual Report
on Form 10-K for the year-ended December 31, 1997 and
incorporated herein by reference)
3.2 Amended and Restated By-laws of the Company (filed as
Exhibit 3.4 to the Company's Registration Statement on Form
S-1, No. 33-94054 and incorporated herein by reference)
4.1 Specimen certificate representing the Common Stock (filed as
Exhibit 4.1 to the Company's Annual Report on Form 10-K for
the year-ended December 31, 1997 and incorporated herein by
reference)
10.1 1995 Stock Plan, as amended (filed as Exhibit 10.1 to the
Company's Registration Statement on Form S-4, No. 333-44887
and incorporated herein by reference)
10.2 1995 Non-Employee Director Stock Option Plan, as amended
(filed as Annex A to the Company's Proxy Statement filed on
April 29, 1996 and incorporated herein by reference)
10.3 1989 Stock Plan (filed as Exhibit 10.3 to the Company's
Registration Statement on Form S-1, No. 33-94054 and
incorporated herein by reference)
10.4 1995 Employee Stock Purchase Plan, as amended (filed as
Exhibit 10.4 to the Company's Registration Statement on Form
S-4, No. 333-44887 and incorporated herein by reference)
10.5 Amended and Restated 1989 Stock Option Plan (filed as
Exhibit 99.1 to the Company's Registration Statement on Form
S-8, No. 333-46863)
10.6 1995 Incentive Stock Option Plan (filed as Exhibit 99.2 to
the Company's Registration Statement on Form S-8, No. 333-
46863)
10.7 1996 Non-Employee Director Stock Option Plan (filed as
Exhibit 99.3 to the
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Exhibit
-------
Number Description of Document
------ -----------------------
Company's Registration Statement on Form S-8, No. 333-46863)
10.8 1996 Stock Option Plan (filed as Exhibit 99.4 to the
Company's Registration Statement on Form S-8, No. 333-46863)
10.9 1996 Amended and Restated Stock Plan (filed as Exhibit 99.5
to the Company's Registration Statement on Form S-8, No.
333-46863)
10.10 Amended and Restated Registration Agreement dated as of
October 20, 1992 by and among the Company and certain
stockholders named herein (filed as Exhibit 10.5 to the
Company's Registration Statement on Form S-1, No. 33-94054
and incorporated herein by reference)
10.11 Lease for 80 Blanchard Road (filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995 and incorporated herein by
reference)
10.12 Data Transmission Agreement between the Company and
Mainstream Data, Inc. dated as of November 24, 1993, as
amended (filed as Exhibit 10.9 to the Company's Registration
Statement on Form S-1, No. 33-94054 and incorporated herein
by reference)
10.13 Software Development and Marketing Agreement between the
Company and Reuters America Inc. dated as of November 1,
1993, as amended (filed as Exhibit 10.10 to the Company's
Registration Statement on Form S-1, No. 33-94054 and
incorporated herein by reference)
10.14 Letter Agreement between the Company and Teknekron Software
Systems, Inc. dated as of June 13, 1994 (filed as Exhibit
10.11 to the Company's Registration Statement on Form S-1,
No. 33-94054 and incorporated herein by reference)
10.15 Database License, Development and Delivery Agreement between
the Company and NBC Desktop, Inc. dated as of October 17,
1994 (filed as Exhibit 10.12 to the Company's Registration
Statement on Form S-1, No. 33-94054 and incorporated herein
by reference)
10.16 Employment Agreement dated as of February 24, 1998 between
Michael E. Kolowich and the Company (filed as Exhibit 10.16
to the Company's Annual Report on Form 10-K for the year-
ended December 31, 1997 and incorporated herein by
reference)
10.17 Form of Common Stock Purchase Warrant (filed as Exhibit 10.4
to Individual, Inc.'s Registration Statement on Form S-1,
No. 333-00792, and incorporated herein by reference).
10.18 Second Amended and Restated Investors' Rights Agreement
dated as of October 3, 1995 (filed as Exhibit 10.13 to
Individual, Inc.'s Registration Statement on Form S-1, No.
333-00792, and incorporated herein by reference).
10.19 Licensing Agreement with Cornell Research Foundation, Inc.
dated as of March 22, 1989 (filed as Exhibit 10.14 to
Individual, Inc.'s Registration Statement on Form S-1, No.
333-00792, and incorporated herein by reference).
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Exhibit
-------
Number Description of Document
------ -----------------------
10.20 Letter Agreement dated as of July 2, 1992 between
Individual, Inc. and Fleet Bank of Massachusetts, N.A.
(filed as Exhibit 10.15 to Individual, Inc.'s Registration
Statement on Form S-1, No. 333-00792, and incorporated
herein by reference).
10.21 Letter Agreement dated as of September 22, 1994 between
Individual, Inc. and Fleet Bank of Massachusetts, N.A.
(filed as Exhibit 10.16 to Individual, Inc.'s Registration
Statement on Form S-1, No. 333-00792, and incorporated
herein by reference).
10.22 Consent and Loan Modification Agreement dated as of November
29, 1995 between Individual, Inc. and Fleet Bank of
Massachusetts, N.A. (filed as Exhibit 10.17 to Individual,
Inc.'s Registration Statement on Form S-1, No. 333-00792,
and incorporated herein by reference).
10.23 Second Loan Modification Agreement dated as of December 29,
1995 between Individual, Inc. and Fleet Bank of
Massachusetts, N.A. (filed as Exhibit 10.18 to Individual,
Inc.'s Registration Statement on Form S-1, No. 333-00792,
and incorporated herein by reference).
10.24 Lease dated as of August 25, 1994 between Individual, Inc.
and Trustees of New England Executive Park Trust, 40
Spaulding Investment Company, Inc. (filed as Exhibit 10.19
to the Individual Inc. Registration Statement on Form S-1,
No. 333-00792, and incorporated herein by reference).
10.25 Third Loan Modification Agreement dated as of December 31,
1996 between Individual, Inc. and Fleet National Bank (filed
as Exhibit 10.24 to Individual, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1996).
*+10.26 Agreement dated as of March 31, 1999 between NewsEdge
Corporation and Edward R. Siegfried.
*+10.27 Severance Agreement and Release dated as of March 14, 2000
between Donald L. McLagan and the Company
**21.1 Subsidiaries of the Company.
**23.1 Consent of Arthur Andersen LLP
**23.2 Consent of PricewaterhouseCoopers LLP
**24.0 Power of Attorney (included on page 53)
**27.1 Financial Data Schedule for fiscal year ended 1999
________________________
* Filed herewith
** Filed with Form 10-K on March 30, 2000
+ Indicates a management contract or a compensatory plan, contract or
arrangement
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(b) Reports on Form 8-K.
On December 17, 1999 the Company filed a Current Report on Form 8-K with the
Securities and Exchange Commission, disclosing under Item 5 that the Company had
entered into an Agreement and Plan of Merger and Reorganization, by and between
the Company, RoweCom Inc. and RoweCom Merger Corporation dated as of December 7,
1999 (the "Merger Agreement") pursuant to which RoweCom Merger Corporation was
to be merged with and into the Company. The Merger Agreement was termination by
mutual consent of the parties on March 6, 2000. No financial statements were
required to be filed as part of this report.
(c) The exhibits required by this Item are listed under Item 14(a).
(d) The financial statement schedules required by this Item are listed under
Item 14(a).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NEWSEDGE CORPORATION
(Registrant)
Date: May 1, 2000 /s/ Clifford Pollan
-------------------------------------------
Clifford Pollan
Chairman, President and Chief Executive Officer
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