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SCHEDULE 14A
(RULE 14-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
| | Preliminary Proxy Statement
| | Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NEW ERA OF NETWORKS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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| | Fee paid previously with preliminary materials.
| | Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO OF NEW ERA OF NETWORKS, INC.]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2000
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of New Era
of Networks, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, May 23, 2000 at 2:00 p.m., local time, at the Company's headquarters,
6550 S. Greenwood Plaza Boulevard, Englewood, Colorado 80111, for the following
purposes:
1. To elect two Class I directors to serve for terms of three years
and until their successors are duly elected and qualified.
2. To approve an amendment to the Company's 1997 Director Option Plan
to (a) increase the number of shares reserved for issuance thereunder by
200,000 shares, (b) include a provision providing for the automatic
increase in the number of shares available for grant each fiscal year and
(c) increase the annual option grant to non-employee directors from 10,000
to 11,000 shares.
3. To ratify the appointment by the Board of Directors of Arthur
Andersen LLP as independent auditors for the Company for the fiscal year
ending December 31, 2000.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
Only stockholders of record of the Company's Common Stock at the close of
business on March 31, 2000, the record date, are entitled to vote at the Annual
Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to sign and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Annual Meeting may vote in person even if he or she has returned a proxy.
By the Order of the Board of
Directors
of New Era of Networks, Inc.
/s/LENOARD M.GOLDSTEIN
Leonard M. Goldstein
Senior Vice President,
Chief Administrative Officer and
Secretary
Englewood, Colorado
April 17, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
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NEW ERA OF NETWORKS, INC.
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PROXY STATEMENT
FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
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PROCEDURAL MATTERS
GENERAL
This Proxy Statement is being furnished to holders of common stock, par
value $0.0001 per share (the "Common Stock") of New Era of Networks, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors (the "Board") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on May 23, 2000 at 2:00 p.m.,
local time, and at any adjournment or postponement thereof, for the purposes of
considering and acting upon the matters set forth herein.
The Annual Meeting will be held at the Company's headquarters, 6550 S.
Greenwood Plaza Boulevard, Englewood, Colorado 80111. The Company's telephone
number is (303) 694-3933.
This Proxy Statement and the accompanying form of proxy card are first
being mailed on or about April 17, 2000, together with the Company's 1999 Annual
Report to Stockholders, to all holders of Common Stock entitled to vote at the
Annual Meeting.
VOTING AT THE ANNUAL MEETING; RECORD DATE
Only holders of record of the Company's Common Stock at the close of
business on March 31, 2000 (the "Record Date") are entitled to notice of and to
vote at the Annual Meeting. Such stockholders are entitled to cast one vote for
each share of Common Stock held as of the Record Date on all matters properly
submitted for the vote of stockholders at the Annual Meeting. As of the Record
Date, there were 35,265,071 shares of the Company's Common Stock outstanding. No
shares of preferred stock were outstanding. For information regarding security
ownership by management and by the beneficial owners of more than 5% of the
Company's Common Stock, see "Beneficial Share Ownership by Principal
Stockholders and Management."
QUORUM; REQUIRED VOTE
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to be voted generally at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. A plurality of the votes duly cast is
required for the election of directors. The affirmative vote of a majority of
the votes duly cast is required to ratify the amendment to the Company's 1997
Director Plan and to ratify the appointment of auditors.
Under the General Corporation Law of the State of Delaware, an abstaining
vote and a broker "non-vote" are counted as present and entitled to vote and
are, therefore, included for purposes of determining whether a quorum of shares
is present at a meeting. However, broker non-votes are not deemed to be "votes
cast." As a result, broker non-votes are not included in the tabulation of the
voting results on the election of directors or issues requiring approval of a
majority of the votes cast and, therefore, do not have the effect of votes in
opposition in such tabulations. Abstentions are deemed to be "votes cast" and
will have the effect of votes in opposition of a given proposal. A broker
"non-vote" occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by that
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proxy will be voted as recommended by the Board. If any other matters are
properly presented for consideration at the Annual Meeting, including, among
other things, consideration of a motion to adjourn the Annual Meeting to another
time or place (including, without limitation, for the purpose of soliciting
additional proxies), the persons named in the enclosed proxy and acting
thereunder will have discretion to vote on those matters in accordance with
their best judgment. The Company does not currently anticipate that any other
matters will be raised at the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. A proxy may be revoked (1) by filing
with the Secretary of the Company, at or before the taking of the vote at the
Annual Meeting, a written notice of revocation or a duly executed proxy, in
either case later dated than the prior proxy relating to the same shares or (2)
by attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not of itself revoke a proxy). Any written notice of
revocation or subsequent proxy must be received by the Secretary of the Company
prior to the taking of the vote at the Annual Meeting. Such written notice of
revocation or subsequent proxy should be hand delivered to the Secretary of the
Company or should be sent so as to be delivered to New Era of Networks, Inc.,
6550 S. Greenwood Plaza Boulevard, Englewood, Colorado 80111, Attention:
Secretary.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. The Company may
reimburse brokerage firms, custodians, nominees, fiduciaries and other persons
representing beneficial owners of the Company's Common Stock for their
reasonable expenses in forwarding solicitation material to such beneficial
owners. Directors, officers and employees of the Company may also solicit
proxies in person or by telephone, telegram, letter, facsimile or other means of
communication. Such directors, officers and employees will not be additionally
compensated, but they may be reimbursed for reasonable out-of-pocket expenses in
connection with such solicitation.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
Stockholders may present proper proposals for inclusion in the Company's
proxy statement and for consideration at the next annual meeting of its
stockholders by submitting their proposals in writing to the Secretary of the
Company in a timely manner. In order to be included in the Company's proxy
materials for the annual meeting of stockholders to be held in 2001, stockholder
proposals must be received by the Secretary of the Company no later than
December 4, 2000, and must otherwise comply with the requirements of Rule 14a-8
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, the Company's Bylaws establish an advance notice procedure
with regard to certain matters, including stockholder proposals not included in
the Company's proxy statement, to be brought before an annual meeting of the
stockholders. To be properly brought before an annual meeting or special
meeting, nominations for the election of director or other business must be (1)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board or other person so authorized pursuant to the
Company's Bylaws, (2) otherwise properly brought before the meeting by or at the
direction of the Board or (3) otherwise properly brought before the meeting by a
stockholder. For such nominations or other business to be considered properly
brought before the meeting by a stockholder, such stockholder must have given
timely notice and in proper form of his or her intent to bring such business
before such meeting.
To be timely, such stockholder's notice must be delivered to or mailed and
received by the Secretary of the Company not less than 90 days prior to the
meeting; provided, however, that in the case of a meeting called by or on behalf
of the Board of Directors of the Company where prior notice, or public
disclosure, of the meeting has not been given or made at least 100 days prior to
such meeting, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. To be in proper form, a stockholder's notice to the Secretary shall set
forth: (1) the name and address of the stockholder who intends to make the
nominations, propose the business, and, as the case may be, the name and address
of the person or persons to be nominated or the nature of the business to be
proposed; (2) a representation that the stockholder
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is a holder of record of stock of the Company entitled to vote at such meeting
and, if applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice or introduce the business
specified in the notice; (3) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (4) such other information
regarding each nominee or each matter of business to be proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, or the matter been
proposed, or intended to be proposed by the Board of Directors and (5) if
applicable, the consent of each nominee to serve as director of the Company if
so elected. The chairman of the meeting may refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance with the
foregoing procedures. All notices of proposals by stockholders, whether or not
included in the Company's proxy materials, should be sent to New Era of
Networks, Inc., 6550 S. Greenwood Plaza Boulevard, Englewood, Colorado 80111,
Attention: Secretary.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors is currently comprised of eight members
who are divided into three classes with overlapping three-year terms. A director
serves in office until his or her respective successor is duly elected and
qualified or until his or her earlier death or resignation. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of an equal number of directors.
NOMINEES FOR CLASS I DIRECTORS
Two Class I directors are to be elected at the Annual Meeting for
three-year terms ending on the date of the annual stockholder's meeting in 2003.
The Board of Directors has nominated George F. (Rick) Adam, Jr. and Steven
Lazarus for re-election as Class I directors. Unless otherwise instructed, the
persons named in the enclosed proxy intend to vote proxies received by them for
the election of Mr. Adam and Mr. Lazarus. The Company expects that George F.
(Rick) Adam, Jr. and Steven Lazarus will accept such nomination; however, in the
event that Mr. Adam or Mr. Lazarus are unable or decline to serve as a director
at the time of the Annual Meeting, proxies will be voted for a substitute
nominee or nominees designated by the present Board of Directors to fill the
vacancy. The term of office of the persons elected as directors will continue
until such directors' terms expire in 2003 or until such directors' successors
have been elected and qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.
INFORMATION REGARDING NOMINEE AND OTHER DIRECTORS
Set forth below is certain information regarding the nominees for Class I
directors and each other director of the Company whose term of office continues
after the Annual Meeting.
NOMINEES FOR CLASS I DIRECTORS FOR TERMS EXPIRING IN 2003
NAME AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---- --- --------------------------------------------
George F. (Rick) Adam, Jr. 53 Chairman of the Board of Directors and CEO of the Company.
Mr. Adam has served as Chairman of the Board, Chief
Executive Officer and a Director of the Company since
founding the Company in June 1993. From 1987 to 1993, Mr.
Adam was a General Partner of Goldman, Sachs & Co. and
served as the Chief Information Technology Officer. From
1980 to 1987, Mr. Adam was Chief Information Officer and
Vice President of Personnel for Baxter Health Care
Corporation. Mr. Adam received a B.S. degree from the U.S.
Military Academy, West Point, New York.
Steven Lazarus 68 Venture Capitalist. Mr. Lazarus has served as a Director of
the Company since April 1995. Since 1986, Mr. Lazarus has
served as a senior principal of various venture capital
funds associated with ARCH Venture, including President and
Chief Executive Officer of ARCH Development Corporation and
Managing Director of ARCH Venture Partners. From 1986 to
1994, Mr. Lazarus served as the Associate Dean of the
Graduate School of Business of the University of Chicago. He
currently serves as a director of Amgen, Primark, Nanophase
Technologies and Illinois Superconductor. Mr. Lazarus holds
a B.A. degree from Dartmouth College and an M.B.A. degree
from the Harvard Graduate School of Business.
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INCUMBENT CLASS II DIRECTORS WHOSE TERMS EXPIRE IN 2002
NAME AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
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Joseph E. Kasputys 63 Chairman, President and Chief Executive Officer of Primark
Corporation. Mr. Kasputys has served as a director of the
Company since July 1998. Since 1988, Mr. Kasputys has served
as Chairman, President and Chief Executive Officer of
Primark Corporation. He currently serves as a director of
Lifeline Systems. Mr. Kasputys holds a B.A. degree from
Brooklyn College and masters and doctorate degrees in
Business Administration from the Harvard Graduate School of
Business where he was a Baker Scholar and a Warren G.
Harding Aerospace Fellow.
Harold A. Piskiel 53 Information Technology Consultant. Mr. Piskiel has served as
a director of the Company since March 1995. Mr. Piskiel
served as Executive Vice President and Chief Technology
Officer from March 1995 to February 2000 and continues to
serve as consultant to the Company. From 1993 to 1995, Mr.
Piskiel served as the Chief Architect and Project Manager
for the Information Technology Division of Merrill Lynch &
Co. From 1984 to 1993, Mr. Piskiel served as Vice President
of Data Administration and Distribution Architecture at
Goldman, Sachs & Co. Mr. Piskiel holds a B.A. degree from
Long Island University.
Melvyn E. Bergstein 57 Chairman, Chief Executive Officer of Diamond Technology
Partners, Inc. Mr. Bergstein has served as a director of the
Company since August 1999. Mr. Bergstein co-founded Diamond
Technology Partners, Inc. in January 1994 and serves as its
Chairman and Chief Executive Officer. Prior to co-founding
Diamond Technology Partners, Inc., Mr. Bergstein held
several senior executive positions with Technology Solutions
Company from 1991 to 1993. Prior to that time, Mr. Bergstein
held several senior positions with other consulting firms,
including twenty-one years in various positions with the
Arthur Andersen & Co.'s consulting division (now Andersen
Consulting). Mr. Bergstein holds a B.S. degree in Economics
from The Wharton School of the University of Pennsylvania
and is a Certified Public Accountant.
INCUMBENT CLASS III DIRECTORS WHOSE TERMS EXPIRE IN 2001
NAME AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---- --- --------------------------------------------
Patrick J. Fortune 52 President and Chief Operating Officer of the Company. Dr.
Fortune has served as a Director of the Company since
February 1998. Since April 1999, Dr. Fortune has been
President and Chief Operating Officer of the Company. From
October 1995 to April 1999 he served as Vice President,
Information Technology, and Chief Information Officer for
Monsanto Company. From September 1994 to September 1995, Dr.
Fortune served as President and Chief Operating Officer of
Coram Healthcare Corporation in Colorado. From December 1991
to August 1994, Dr. Fortune was Vice President, Information
Management, at Bristol-Myers Squibb. He currently serves as
a director of Parexel International Corporation. Dr. Fortune
holds a B.A. degree from the University of Wisconsin, an
M.B.A. degree from Northwestern University and a Ph.D. in
physical chemistry from the University of Wisconsin.
Mark L. Gordon 49 Attorney at Law. Mr. Gordon has served as a Director of the
Company since the Company's inception. Since 1979, Mr.
Gordon has been a partner in the law firm of Gordon &
Glickson PC, directing the firm's information communications
and technology practice. Mr. Gordon holds a B.A. degree from
the University of Michigan and a J.D. degree from the
Northwestern University School of Law.
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NAME AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---- --- --------------------------------------------
Elisabeth W. Ireland 42 Partner, The Hamilton Companies. Ms. Ireland has served as a
Director of the Company since January 1998. Since January
1994, Ms. Ireland has been a partner with The Hamilton
Companies, an investment partnership. From 1988 to 1994, Ms.
Ireland was a private investor and consultant. From 1986 to
1988, Ms. Ireland was Director of Marketing and Sales for
Bloomberg L.P., a financial information service. Ms. Ireland
holds an A.B. degree from Smith College and an M.B.A. degree
from The Wharton School at the University of Pennsylvania.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of seven meetings (including regularly
scheduled and special meetings) during 1999. During the last fiscal year, no
incumbent director while a member of the Board of Directors, attended fewer than
75% of the aggregate of (1) the total number of meetings of the Board of
Directors and (2) the total number of meetings held by all committees on which
such director served except for Melvyn E. Bergstein who attended two of the
three meetings of the Board held in 1999 after his appointment to the Board.
The Board of Directors of the Company has three standing committees: an
Audit Committee, a Compensation Committee and a Nominating Committee.
The Audit Committee, which currently consists of Ms. Ireland and Mr.
Bergstein, is responsible for (1) recommending engagement of the Company's
independent auditors, (2) approving the services performed by such auditors, (3)
consulting with such auditors and reviewing with them the results of their
examination, (4) reviewing and approving any material accounting policy changes
affecting the Company's operating results, (5) reviewing the Company's control
procedures and personnel, and (6) reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls. The Audit
Committee held two meetings during 1999.
The Compensation Committee, which currently consists of Messrs. Lazarus,
Gordon and Kasputys, is responsible for (1) reviewing and approving the
compensation and benefits for the Company's officers and other employees, (2)
administering the Company's stock purchase and stock option plans, and (3)
making recommendations to the Board of Directors regarding such matters. The
Compensation Committee held no formal meetings during fiscal 1999. Messrs.
Lazarus, Gordon and Kasputys are not officers or employees of the Company.
The Nominating Committee, which currently consists of Messrs. Lazarus and
Adam (1) recommends candidates to fill vacancies on the Board of Directors and a
slate of directors for election at the Annual Meeting, (2) evaluates the size
and composition of the Board of Directors, and recommends criteria for the
selection of persons to the Board of Directors, and (3) periodically reviews and
makes recommendations to the Board of Directors with respect to the Company's
overall compensation programs for directors.
COMPENSATION OF DIRECTORS
In 1999, each non-employee director received $1,000 per meeting, plus all
expenses associated with attendance at Board of Directors meetings, as their
sole cash remuneration. In addition, non-employee directors participate in the
Company's 1997 Director Option Plan (the "Director Plan").
The Board of Directors adopted the Director Plan in January 1997 and it
became effective in June 1997 following the Company's initial public stock
offering. The Director Plan provides for the automatic grant to non-employee
directors of the Company of options to purchase shares of Common Stock. The
Director Plan is administered by the Board of Directors, unless the Board
delegates administration to a committee. An aggregate of 200,000 shares of
Common Stock has been reserved for issuance under the Director Plan, subject to
adjustment in the event of certain capital changes. Each non-employee director
is automatically granted an option to purchase 33,332 shares on the date such
person first becomes a non-employee director. In addition,
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each non-employee director is automatically granted an option to purchase 10,000
shares for each subsequent year of service, on the day following the annual
stockholder meeting.
Options granted under the Director Plan expire ten years after the date of
grant unless terminated sooner upon termination of optionee's status as a
director or otherwise pursuant to the Director Plan, and have an exercise price
equal to 100% of the fair market value of the Common Stock on the date of grant.
Initial options granted under the Director Plan become exercisable cumulatively
over a three-year period as to one-third of the shares subject to the option on
each anniversary of the grant date, provided the optionee continues to serve as
a director. Each annual grant under the Director Plan becomes exercisable in
full on the third anniversary of the grant date, provided the optionee continues
to serve as a director. In the event of any change in control of the Company, as
defined in the Director Plan, outstanding options under the Director Plan must
be assumed (or an equivalent option substituted) by the successor corporation,
or the options shall become exercisable in full for at least 15 days after
notice of the change of control is given by the Company to the optionee. In
addition, if within one year following such a change in control a director shall
involuntarily cease to be a director, such director shall be entitled to option
vesting through the date of termination as a director plus one additional year
thereafter.
In August 1999, the Company granted Mr. Bergstein options to purchase
33,332 shares of Common Stock under the Director Plan at an exercise price of
$13.00 per share. In June 1999, the Company granted each of Mr. Lazarus, Mr.
Gordon, Ms. Ireland and Mr. Kasputys options to purchase 10,000 shares of Common
Stock under the Director Plan at an exercise price of $38.875 per share.
REQUIRED VOTE
The two nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to be voted shall be elected as
directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
but they have no legal effect under Delaware law.
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PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE COMPANY'S
1997 DIRECTOR OPTION PLAN
GENERAL
The Company's 1997 Director Option Plan (the "Director Plan") was adopted
in 1997 to provide stock option grants to non-employee members of the Company's
Board of Directors. An aggregate of 200,000 shares of Common Stock were reserved
for issuance under the Director Plan, of which, as of March 15, 2000, options to
purchase an aggregate of 162,576 shares were outstanding and no shares remained
available for future grants. Since 1997 the Board has expanded from three to
five outside directors and consequently has fully utilized the initial number of
shares reserved under the Director Plan.
PROPOSAL
At the Annual Meeting, the stockholders are being requested to approve the
amendment to the Director Plan to (i) increase the number of shares reserved for
issuance thereunder by 200,000 shares for an aggregate of 400,000 shares
reserved for issuance thereunder, (ii) provide for the automatic increase in the
number of shares of Common Stock reserved for issuance under the Director Plan
upon the expiration of each fiscal year following the date of Annual Meeting in
an amount equal to the lesser of (a) 200,000 shares or (b) a lesser amount
determined by the Board of Directors and (iii) increase the annual option grant
to non-employee directors from 10,000 to 11,000 shares. The amendment to
increase the number of shares reserved under the Director Plan is proposed in
order to continue the Company's ability to grant stock options in order to
attract and retain non-employee members to serve on the Board of Directors. The
Company believes that this policy is of great value in attracting and retaining
the best available personnel for service as a Director who is not an Employee
(an "Outside Director") of the Company, to provide additional incentive to
Outside Directors of the Company to serve as directors, and to encourage their
continued service on the Board. The Board of Directors believes that the ability
to grant options will be important to the future success of the Company by
allowing it to accomplish these objectives.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the votes duly cast
will be required to approve the Board of Directors' amendment to the Director
Plan.
SUMMARY OF THE DIRECTOR PLAN
Administration. The Director Plan provides for grants of options to be made
in two ways:
(a) Each Outside Director is automatically granted an option to
purchase 33,332 shares (the "First Option") upon the date such individual
first becomes a director, whether through election by the stockholders of
the Company or by appointment by the Board in order to fill a vacancy; and
(b) Currently each non-employee director is automatically granted an
option to purchase 10,000 shares (the "Subsequent Option") on the first day
following the annual stockholder meeting of each year, if on such date he
or she shall have served on the Board for at least the preceding six (6)
months. The proposed amendment would increase the Subsequent Option grant
to an option to purchase 11,000 shares.
The Board has the authority, in its discretion, to: (i) determine the fair
market value of the Common Stock; (ii) interpret the Director Plan; (iii)
prescribe, amend and rescind rules and regulations relating to the Director
Plan; (iv) authorize any person to execute, on behalf of the Company, any
instrument required to effectuate the grant of an option previously granted
under the Director Plan; and (v) make all other determinations deemed necessary
or advisable for the administration of the Director Plan. All decisions,
determinations and interpretations of the Board are final.
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Eligibility; Limitations. Only non-employee directors of the Board are
eligible to receive nonstatutory stock options under the Director Plan.
Terms and Conditions of Options. Each option is evidenced by a director
option agreement between the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) Exercise Price. The exercise price of options granted under the
Director Plan is 100% of the fair market value per share of the Common
Stock on the date of grant, generally determined with reference to the
closing sale price for the Common Stock (or the closing bid if no sales
were reported) on the date of grant.
(b) Exercise of Option. The First Option shall vest as to 1/3 of the
optioned stock on the first anniversary after the date of grant, and as to
an additional 1/3 of the optioned stock on the second anniversary after the
date of grant, and as to the remaining 1/3 on the third anniversary after
the date of grant. Each Subsequent Option shall vest as to 100% of the
optioned stock on the third anniversary after the date of grant. An option
shall be exercisable in whole or in part by giving written notice to the
Company, stating the number of shares with respect to which the option is
being exercised, accompanied by payment in full for such shares.
(c) Forms of Consideration. The means of payment for shares issued
upon exercise of an option is specified in each option agreement. The
Director Plan permits payment to be made by cash, check, promissory note,
other shares of Common Stock of the Company (with some restrictions),
cashless exercises, any payment permitted under applicable law, or any
combination thereof.
(d) Term of Option. The term of any option shall be ten (10) years
from the date of grant. No option may be exercised after the expiration of
its term.
(e) Termination of Directorship. If an optionee's status as a director
terminates for any reason, then all options held by the optionee under the
Director Plan expire three months following the termination. If the
optionee's status as a director terminates due to death or disability, then
all options held by the optionee under the Director Plan expire twelve
months following the termination. In no case may an option be exercised
after the expiration date of the option.
(f) Nontransferability of Options. Options granted under the Director
Plan are not transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionee's lifetime only by
the optionee.
(g) Other Provisions. The director option agreement may contain other
terms, provisions and conditions not inconsistent with the Director Plan as
may be determined by the Board.
Adjustments Upon Changes in Capitalization. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Director Plan, the number and class of shares of stock subject to
any option outstanding under the Director Plan, and the exercise price of any
such outstanding option.
Unless otherwise determined by the Board, in the event of a proposed
liquidation or dissolution, any unexercised options will terminate prior to such
action. The Board may give the optionee the right to exercise any unexercised
options, including shares as to which the option would not otherwise be
exercisable, prior to their termination.
In the event of a merger of the Company or the sale of substantially all of
the assets of the Company, each option may be assumed or an equivalent option
substituted for by the successor corporation. If an option is assumed or
substituted for by the successor corporation, it shall continue to vest as
provided in the Director Plan. If the successor corporation does not agree to
assume or substitute for the option, each option shall
10
12
become fully vested and exercisable for a period of fifteen (15) days from the
date the Board notifies the optionee of the option's full exercisability, after
which period the option will terminate.
Change in Control. In the event of the termination of optionee's status as
a director other than by voluntary resignation within one year after a change of
control, any options outstanding on the date of such change in control that are
not yet exercisable and vested on such date shall become fully vested and
exercisable. A change of control is defined as the acquisition of at least fifty
percent of the voting power of the Company by a "person" (as defined in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934).
Amendment and Termination of the Director Plan. The Board may amend, alter,
suspend or terminate the Director Plan, or any part thereof, at any time and for
any reason. However, the Company shall obtain stockholder approval for any
amendment to the Director Plan to the extent necessary to comply with applicable
laws or regulations. No such action by the Board or shareholders may alter or
impair any option previously granted under the 1997 Director Plan without the
consent of the optionee. Unless terminated earlier, the Director Plan shall
terminate in June 2007. Any options outstanding under the Director Plan at the
time of termination shall remain outstanding until they expire by their terms.
Federal Income Tax Consequences. The following discussion summarizes
certain U.S. federal income tax considerations for directors receiving options
under the Director Plan and certain tax effects on the Company, based upon the
provisions of the Code as in effect on the date of this Proxy Statement, current
regulations and existing administrative rulings of the Internal Revenue Service.
However, the summary is not intended to be a complete discussion of all the
federal income tax consequences of this plan. Options granted under the Director
Plan do not qualify as incentive stock options under Section 422 of the Code (a
"nonstatutory option"). An optionee does not recognize any taxable income at the
time he or she is granted a nonstatutory stock option. Upon exercise, the
optionee recognizes taxable income generally measured by the excess of the then
fair market value of the shares over the exercise price. The Company is entitled
to a deduction in the same amount as the ordinary income recognized by the
optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period. Net capital
gains on shares held more than 12 months may be taxed at a maximum federal rate
of 20%. Capital losses are allowed in full against capital gains and up to
$3,000 against other income.
THE FOREGOING SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON
OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF OPTIONS
UNDER THE DIRECTOR PLAN DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE
MADE TO THE APPLICABLE PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES
NOT DISCUSS THE TAX CONSEQUENCES OF THE OPTIONEE'S DEATH OR THE INCOME TAX LAWS
OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH AN OPTIONEE MAY RESIDE.
PLAN BENEFITS
The Company cannot currently determine the number of shares for which
options will be granted in the future pursuant to the Director Plan to the
non-employee directors. However, see "Compensation of Directors" for the number
of stock options granted pursuant to the Director Plan to the non-employee
directors in the last fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE
DIRECTOR PLAN. THE EFFECT OF AN ABSTENTION IS THE SAME AS A VOTE AGAINST THE
AMENDMENT TO THE DIRECTOR PLAN.
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PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 2000, and has determined that it would be
desirable to request that the stockholders ratify such appointment.
Arthur Andersen LLP has audited the Company's financial statements since
the Company's inception. A representative of Arthur Andersen LLP is expected to
be present at the Annual Meeting, will have the opportunity to make a statement,
and is expected to be available to respond to appropriate questions.
REQUIRED VOTE
Although stockholder approval is not required for the appointment of Arthur
Andersen LLP since the Board of Directors has the responsibility of selecting
auditors, the Board of Directors has conditioned its appointment of the
Company's independent auditors upon the receipt of the affirmative vote of a
majority of the votes duly cast at the Annual Meeting. In the event that the
stockholders do not approve the selection of Arthur Andersen LLP, the Board of
Directors will reconsider its appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR
ENDING DECEMBER 31, 2000.
BENEFICIAL SHARE OWNERSHIP BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of Common Stock of the Company as of March 15, 2000 for the
following: (1) each person or entity who is known by the Company to own
beneficially more than 5% of the outstanding shares of the Company's Common
Stock; (2) each of the Company's directors; (3) each of the officers named in
the Summary Compensation Table on page 15 hereof; and (4) all directors and
executive officers of the Company as a group.
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
5% STOCKHOLDERS, DIRECTORS AND OFFICERS(1) OWNED(2) OWNED
- ------------------------------------------ ------------ ------------
George F. (Rick) Adam, Jr.(3)............................... 4,863,101 13.9%
FMR Corp. (nominee for Fidelity Management & Research
Company)(4)............................................... 4,568,580 13.1%
AXA Financial, Inc. (formerly The Equitable Companies
Incorporated)(5).......................................... 2,504,199 7.2%
DIRECTORS
Patrick J. Fortune(6)....................................... 89,020 *
Mark L. Gordon(7)........................................... 44,332 *
Elisabeth W. Ireland(8)..................................... 39,853 *
Joseph E. Kasputys(9)....................................... 15,110 *
Steven Lazarus(10).......................................... 85,031 *
Harold A. Piskiel........................................... 231,998 *
Melvyn E. Bergstein(11)..................................... 0 *
EXECUTIVE OFFICERS
Robert I. Theis(12)......................................... 182,801 *
Frederick T. Horn 13)....................................... 114,931 *
Stephen E. Webb(14)......................................... 103,655 *
All directors and executive officers as a group (14
persons)(15).............................................. 5,867,057 16.6%
- ---------------
* Less than 1%.
(1) This information was obtained from filings made with the SEC pursuant to
Sections 13(d) or 13(g) of the Exchange Act. Unless otherwise indicated,
the address of each of the individuals or entities named
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14
above is: c/o New Era of Networks, Inc., 6550 S. Greenwood Plaza Boulevard,
Englewood, Colorado 80111.
(2) The number and percentage of shares beneficially owned is determined is
determined in accordance with Rule 13d-3 of the Exchange Act, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rule, beneficial ownership includes any shares as
to which the individual or entity has voting power or investment power and
also any shares which the individual or entity has the right to acquire
within 60 days of March 15, 2000 through the exercise of any stock option
or other right. Unless otherwise indicated in the footnotes, each person
has sole voting and investment power (or shares such powers with his or her
spouse) with respect to the shares shown as beneficially owned.
(3) Mr. Adam is also Chairman of the Board and Chief Executive Officer of the
Company. Includes 54,982 shares of the Common Stock held in the name of
Adam's Investments I, LLLP, George F. Adam, III; 60,982 shares of Common
Stock held in the name of Adam's Investments II, LLLP, John C. Adam; 30,604
shares of Common Stock held in the name of Adam's Investments III, LLLP,
George F. Adam, Jr., Trustee for Gregory S. Adam; 30,604 shares of Common
Stock held in the name of Adam's Investments IV, LLLP, George F. Adam, Jr.,
Trustee for Rebecca Adam; 1,000 shares of Common Stock held in the name of
Adam's Investments V, LLLP, George F. Adam, Jr., Trustee for Naomi Adam;
6,000 shares of Common Stock held in the name of the Adam Family
Foundation, George F. Adam, Jr., Trustee and 270,000 shares held in various
GRATs (Grantor Retained Annuity Trusts). Also includes 14,333 shares of
Common Stock issuable upon exercise of stock options that are exercisable
within 60 days of March 15, 2000.
(4) The address of FMR Corp. (nominee for Fidelity Management & Research
Company) is 82 Devonshire Street, Boston, Massachusetts 02109.
(5) The address of AXA Financial, Inc. (formerly The Equitable Companies
Incorporated) is 1290 Avenue of the Americas, New York, New York 10104.
(6) Dr. Fortune is also President and Chief Operating Officer of the Company.
Includes 67,577 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days of March 15, 2000.
(7) Includes 3,000 shares held by Mark L. Gordon, Trustee of the Mark L. Gordon
Trust and 500 shares held by Mr. Gordon's wife. Also includes 38,332 shares
of Common Stock issuable upon exercise of stock options that are
exercisable within 60 days of March 15, 2000.
(8) Includes 14,444 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days of March 15, 2000.
(9) Includes 11,110 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days of March 15, 2000.
(10) Includes 5,496 shares of Common Stock registered in the name of ARCH
Venture Fund II, L.P., a limited partnership of which Steven Lazarus is a
general partner. Also includes 20,581 shares held in The Lazarus Gift Trust
dated 8/13/93, F/B/O Arlene Lazarus. Also includes 38,332 shares of Common
Stock issuable upon exercise of stock options that are exercisable within
60 days of March 15, 2000.
(11) Mr. Bergstein joined the Board of Directors in August 1999. Mr. Bergstein
owns no Common Stock and is not yet vested in any stock options.
(12) Includes 120,124 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of March 15, 2000.
(13) Includes 200 shares registered in the name of Frederick T. Horn, Custodian
F/B/O Annie Gray Horn, minor. Also includes 58,960 shares of Common Stock
issuable upon the exercise of stock options exercisable within 60 days of
March 15, 2000.
(14) Includes 45,126 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of March 15, 2000.
(15) Includes 426,839 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of March 15, 2000.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the
Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers, Inc. Such officers, directors and ten-percent stockholders
are also required by SEC rules to furnish the Company with copies of all such
forms that they file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons that no Forms
5 were required for such persons, the Company believes that during 1999 all
Section 16(a) filing requirements applicable to its officers, directors and
ten-percent stockholders were complied with.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of Messrs. Lazarus,
Gordon and Kasputys. No interlocking relationship exists between any member of
the Company's Board of Directors or Compensation Committee and any member of the
Board of Directors or compensation committee of any other Company, nor has any
such interlocking relationship existed in the past. No member of the
Compensation Committee is or was formerly an officer or an employee of the
Company or its subsidiaries.
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EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning total
compensation received by the Chief Executive Officer and each of the four most
highly compensated executive officers during the last fiscal year (the "Named
Officers") for services rendered to the Company in all capacities during the
last three fiscal years.
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------------
--------------------- RESTRICTED SECURITIES ALL OTHER
FISCAL SALARY BONUS STOCK AWARD UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($) ($) OPTIONS (#) ($)
- --------------------------- ------ -------- -------- ----------- ----------- ------------
George F. (Rick) Adam, Jr. .... 1999 $308,333 $113,750 $ -- -- --
Chairman of the Board and 1998 205,000 -- -- 20,000 --
Chief Executive Officer 1997 162,500 -- -- 22,000 --
Patrick J. Fortune(2).......... 1999 $225,000 $ -- $295,000(5) 410,000 --
President and Chief 1998 -- -- -- -- --
Operating Officer 1997 -- -- -- -- --
Robert I. Theis................ 1999 $264,063(3) $ 30,000 $ -- 55,001 --
Executive Vice President, 1998 181,768(4) 75,092 -- 80,000 --
Chief Marketing Officer 1997 142,500 -- -- 26,000 --
Frederick T. Horn.............. 1999 $204,375 $ 32,000 $ -- 25,001 --
Senior Vice President, 1998 148,334 4,000 -- 40,000 --
President Commercial 1997 134,167 -- -- 22,000 --
Business Unit
Stephen E. Webb................ 1999 $200,000 $ 33,000 $ -- 22,000 --
Senior Vice President, 1998 157,500 4,000 -- 20,000 --
Chief Financial Officer 1997 139,167 45,079 -- 20,334 --
- ---------------
(1) These amounts reflect salary paid for the full fiscal year 1999.
(2) Commenced employment in April 1999.
(3) Includes $57,813 of commissions.
(4) Includes $22,185 of commissions.
(5) In August 1999 Patrick J. Fortune purchased 20,000 shares of Common Stock at
a nominal price pursuant to a restricted stock award. These shares vest as
follows: 6,667 on April 1, 2000, 6,667 on April 1, 2001 and 6,666 on April
1, 2002. As of December 31, 1999, Mr. Fortune's restricted stock holdings
were 20,000 shares and the value on that date of such shares, using the
closing price on such date, was $952,500.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, as to the Named Officers, information
concerning stock options granted during the year ended December 31, 1999.
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(4)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR(2) PRICE DATE(3) 5% 10%
- ---- ---------- -------------- -------- ---------- ------------- -------------
George F. (Rick) Adam, Jr. .... -- -- -- -- -- --
Patrick J. Fortune............. 350,000 10.26% $41.00 04/22/04 $3,964,640 $8,760,819
60,000 1.76% 14.00 07/23/04 232,077 512,828
Robert I. Theis................ 25,001 .73% 14.00 07/23/04 96,702 213,687
30,000 .88% 20.50 10/06/04 169,913 375,464
Frederick T. Horn.............. 25,001 .73% 14.00 07/23/04 96,702 213,687
Stephen E. Webb................ 20,000 .59% 14.00 07/23/04 77,359 170,943
2,000 .06% 20.50 10/06/04 11,328 25,031
- ---------------
(1) The options in this table are either incentive stock options granted under
the Amended and Restated 1995 Stock Option Plan or non-qualified stock
options granted under the 1998 Non-Statutory Stock Option Plan; all of the
options have exercise prices equal to the fair market value on the date of
grant. All such options have five-year terms.
(2) The Company granted options to purchase 3,411,561 shares of Common Stock to
employees and consultants in 1999.
(3) Options may terminate before their expiration upon the termination of
optionee's status as an employee or consultant, the optionee's death or an
acquisition of the Company.
(4) Potential realizable value assumes that the stock price increases from the
exercise price at the date of grant until the end of the option term (5
years) at the annual rate specified (5% and 10%). Annual compounding results
in total appreciation of approximately 28% (at 5% per year) and 61% (at 10%
per year). If the price of the Company's Common Stock were to increase at
such rates from the price at 1999 fiscal year end ($47.625 per share) over
the next 5 years, the resulting stock price at 5% and 10% appreciation would
be $60.78 and $76.70, respectively. The assumed annual rates of appreciation
are specified in SEC rules and do not represent the Company's estimate or
projection of future stock price growth. The Company does not necessarily
agree that this method can properly determine the value of an option.
OPTION EXERCISES AND HOLDINGS
The following table sets forth, as to the Named Officers, certain
information concerning stock options exercised during 1999 and the number of
shares subject to both exercisable and unexercisable stock options as of
December 31, 1999. Also reported are values for "in-the-money" options that
represent the positive spread between the respective exercise prices of
outstanding stock options and the fair market value of the Company's Common
Stock as of December 31, 1999.
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AGGREGATED OPTION EXERCISES IN 1999 AND 1999 YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS
SHARES VALUE END(#) AT FISCAL YEAR END ($)(1)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ---------- ----------- ------------- ----------- -------------
George F. (Rick) Adam, Jr. ... -- -- 14,333 27,666 $ 543,695 $ 918,352
Patrick J. Fortune............ 14,443 557,861 -- 438,889 -- 5,446,670
Robert I. Theis............... 20,000 1,002,300 144,460 134,665 5,702,354 4,548,481
Frederick T. Horn............. 65,436 2,679,570 63,232 69,333 2,760,989 2,474,445
Stephen E. Webb............... 41,938 1,245,650 84,064 49,666 3,584,087 1,772,018
- ---------------
(1) Market value of underlying securities based on the closing price of
Company's Common Stock on December 31, 1999 (the last trading day of fiscal
1999) on the Nasdaq National Market of $47.625 minus the exercise price.
CERTAIN TRANSACTIONS
During 1999, the Company funded approximately $19,666,000 toward a
short-term loan to Greenwood Plaza Partners, LLP ("GPP") for construction of two
buildings and a parking structure. GPP is principally owned by George F. Adam,
Jr., the Company's Chairman/Chief Executive Officer. The Company is currently
leasing the completed portions of the buildings from GPP for use as its
principal corporate headquarters. The initial lease term is for 10 years at an
annual rental amount of approximately $941,000 and commenced upon occupancy of
the building during August 1999. This initial annual lease rate is subject to
two scheduled lease escalations in years six and nine at market rates. Total
rent expense paid by the Company in 1999 under this lease was $425,000.
In connection with this loan, the Company has committed to fund up to an
additional $11,774,000. The loan matures in April 2000 and bears interest at a
floating interest rate of 90-day LIBOR plus 2.05%. For 1999, the Company
recorded interest income of approximately $684,000 from this note. GPP intends
to obtain permanent financing from a third-party lender. The terms of the note
receivable are consistent with those that were in place with GPP's previous
construction financing lender and have been approved by the Company's Board of
Directors. The loan is secured by the project's assets, the project's rental
income and the personal guarantee of George F. Adam, Jr.
A company owned by George F. Adam, Jr. and his family members provides air
transportation service for the Company. Total expenses incurred during the year
1999 for services rendered by this related party were approximately $354,000.
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee")
consists of directors Steven Lazarus, Mark L. Gordon and Joseph E. Kasputys,
none of whom is an employee or officer of the Company. The Committee sets policy
and administers the Company's cash and equity incentive programs for the purpose
of attracting and retaining highly skilled executives who will promote the
Company's business goals and build long-term stockholder value. The Committee is
also responsible for reviewing and making recommendations to the Board of
Directors regarding all forms of compensation to be provided to the executive
officers and directors of the Company, including stock compensation and loans,
and all bonus and stock compensation to all employees.
To the extent appropriate, the Company intends to take the necessary steps
to conform its compensation practices to comply with the $1 million compensation
deduction cap under Section 162(m) of the Internal Revenue Code of 1986, as
amended.
COMPENSATION PHILOSOPHY AND POLICIES
The policy of the Committee is to attract and retain key personnel through
the payment of competitive base salaries and to encourage and reward performance
through bonuses and stock ownership. The Committee's objectives are to:
- ensure that there is an appropriate relationship between executive
compensation and the creation of stockholder value;
- ensure that the total compensation program will motivate, retain and
attract executives of outstanding abilities; and
- ensure that current cash and equity incentive opportunities are
competitive with comparable companies.
ELEMENTS OF COMPENSATION
Compensation for officers and key employees includes both cash and equity
elements.
Cash compensation consists of base salary, which is determined on the basis
of the level of responsibility, expertise and experience of the employee, and
competitive conditions in the industry. The Committee believes that the salaries
of its officers fall within the software industry norm. In addition, cash
bonuses may be awarded to officers and other key employees. Compensation of
sales personnel also includes sales commissions tied to quarterly targets.
Ownership of the Company's Common Stock is a key element of executive
compensation. Officers and other employees of the Company are eligible to
participate in the Amended and Restated 1995 Stock Option Plan and the 1997
Employee Stock Purchase Plan (the "Purchase Plan"), each of which was adopted
prior to the Company's initial public offering in June 1997 and the 1998 Non
Statutory Stock Option Plan which was adopted in 1998 by the Board of Directors
(collectively the "Option Plans"). The Option Plans permit the Board of
Directors or the Committee to grant stock options to employees on such terms as
the Board of Directors or the Committee may determine. The Committee has the
sole authority to grant stock options to executive officers of the Company and
is currently administering stock option grants to all employees. In determining
the size of a stock option grant to a new officer or other key employee, the
Committee takes into account equity participation by comparable employees within
the Company, external competitive circumstances and other relevant factors.
Additional options may be granted to current employees to reward exceptional
performance or to provide additional unvested equity incentives. The Purchase
Plan permits employees to acquire Common Stock of the Company through payroll
deductions and promotes broad-based equity participation throughout the Company.
The Committee believes that such stock plans align the interests of the
employees with the long-term interests of the stockholders.
The Company also maintains a 401(k) Plan to provide retirement benefits
through tax deferred salary deductions for all its employees. The Company did
not contribute to the 401(k) Plan in 1999 or previous years, but does intend to
commence a matching contribution using Common Stock of the Company in 2000.
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20
1999 EXECUTIVE COMPENSATION
Executive compensation for 1999 included base salary, cash and equity-based
incentive compensation and, in the case of sales executives, sales commissions.
Cash incentive compensation is designed to motivate executives to attain
corporate, business unit and individual goals. The Company's policy is to have a
significant portion of an executive's total compensation at risk based on the
Company's overall performance. Executive officers, like other employees, were
eligible for option grants under the Option Plans.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation for the Chief Executive Officer is determined by a process
similar to that discussed above for executive officers. The Chief Executive
Officer's target base pay level has been analyzed using data for comparable
software companies. Mr. Adam receives no other material compensation or benefits
not provided to all executive officers.
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code of 1986, as amended, which limits the tax deductibility of
cash compensation paid to individual executive officers to $1 million per
officer. The cash compensation to be paid to the Company's executive officers in
fiscal 1999 is not expected to exceed the $1 million limit per individual
officer.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Steven Lazarus
Mark L. Gordon
Joseph E. Kasputys
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COMPANY STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders on
the Company's Common Stock with the cumulative return of the Nasdaq Composite
Stock Market Index (the "Nasdaq Composite Index") and the Standard & Poors 500
Index (the "S&P 500 Index"). The graph assumes that $100 was invested on June
19, 1997 in the Company's Common Stock, the Nasdaq Composite Index and the S&P
500 Index, including reinvestment of dividends. No dividends have been declared
or paid on the Company's Common Stock. Historic price performance is not
indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG NEW ERA OF NETWORKS, INC., THE S&P 500 INDEX AND THE NASDAQ COMPOSITE
INDEX
[GRAPH]
- ----------------------------------------------------------------------------------------------------------------------------------
6/19/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99
- ----------------------------------------------------------------------------------------------------------------------------------
New Era of Networks, Inc. 100 138 115 94 200 254 340 733 1,129 732
NASDAQ Stock Market (U.S.) 100 100 117 109 128 131 119 154 172 188
S&P 500 100 99 106 109 124 128 116 140 147 157
- ------------------------------ -------------------
9/99 12/99
- ------------------------------ -------------------
New Era of Networks, Inc. 360 794
NASDAQ Stock Market (U.S.) 193 278
S&P 500 148 170
20
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OTHER MATTERS
The Board of Directors does not know of any other matters to be presented
at the Annual Meeting. If any other matters are properly presented at the Annual
Meeting, the persons named on the enclosed proxy card will have the discretion
to vote the shares they represent in accordance with their own judgment on such
matters.
It is important that your shares be presented at the meeting, regardless of
the number of shares you hold. You are, therefore, urged to execute and return,
at your earliest convenience, the accompanying proxy card in the enclosed
envelope.
THE BOARD OF DIRECTORS
Englewood, Colorado
April 17, 2000
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NEW ERA OF NETWORKS, INC.
AMENDED AND RESTATED 1997 DIRECTOR OPTION PLAN
The 1997 Director Option Plan has been amended and restated as of April 13, 2000
pursuant to Action by Unanimous Consent of the Board of Directors on that date.
All share amounts set forth within the Plan have been adjusted to reflect the
two-for-one stock split which occurred November 23, 1998.
1. Purposes of the Plan. The purposes of this 1997 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" means the occurrence of any of the following
events:
(i) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets.
(ii) The acquisition by any Person or Group of Persons as
Beneficial Owner (as such terms are defined in the Securities Exchange Act of
1934, as amended), directly or indirectly, other than George F. (Rick) Adam,
Jr., of securities of the Company representing a majority of the total voting
power represented by the Company's then outstanding voting securities.
(iii) A majority of the Board of Directors of the Company in
office at the beginning of any thirty-six (36) month period is replaced during
the course of such thirty-six (36) month period (other than by voluntary
resignation of individual directors in the ordinary course of business) and such
replacement was not initiated by the Board of Directors of the Company as
constituted at the beginning of such thirty-six (36) month period.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
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(d) "Common Stock" means the Common Stock of the Company.
(e) "Company" means New Era of Networks, Inc., a Delaware
corporation.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable, or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(j) "Inside Director" means a Director who is an Employee.
(k) "Option" means a stock option granted pursuant to the Plan.
(l) "Optioned Stock" means the Common Stock subject to an Option.
(m) "Optionee" means a Director who holds an Option.
(n) "Outside Director" means a Director who is (i) not an Employee
and (ii) not a partner nor a member of any venture capital firm which owns
securities of the Company having more than five percent (5%) of the total voting
power of the Company.
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(o) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(p) "Plan" means this 1997 Director Option Plan.
(q) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(r) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 400,000 Shares of Common Stock (the "Pool") plus an annual
increase to be added on the first day of the Company's fiscal year beginning in
2001, equal to the lesser of (i) 200,000 shares or (ii) an amount determined by
the Board. The Shares may be authorized, but unissued, or reacquired Common
Stock. The number of Shares in the Pool and the number of Shares subject to each
grant provided for in Section 4 below give effect to a 2 for 9 reverse stock
split of the Common Stock approved by the Board in June 1997 and to a 2 for 1
forward stock split effected on November 23, 1998.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. Administration and Grants of Options under the Plan.
(a) Procedure for Grants. All grants of Options to Outside Directors
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) Each Outside Director who shall first become an Outside
Director following completion of the Company's initial underwritten public
offering shall be automatically granted an Option to purchase 33,332 Shares (the
"First Option") on the date on which the later of the following events occurs:
(A) the effective date of this Plan, as determined in accordance with Section 6
hereof, or (B) the date on which such person first becomes an Outside Director,
whether through election by the shareholders of the Company or appointment by
the Board to fill a vacancy; provided, however, that an Inside Director who
ceases to be an Inside Director but who remains a Director shall not receive a
First Option.
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(iii) Each Outside Director shall be automatically granted an
Option to purchase 11,000 Shares (a "Subsequent Option") each year following
completion of the Company's initial underwritten public offering on the first
day after the annual stockholder meeting provided he or she is then an Outside
Director and as of such date he or she shall have served on the Board for at
least the preceding six (6) months.
(iv) Notwithstanding the provisions of subsections (ii) and (iii)
hereof, any exercise of an Option granted before the Company has obtained
shareholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such shareholder approval of the Plan in accordance
with Section 16 hereof.
(v) The terms of a First Option granted hereunder shall be as
follows:
(A) the term of the First Option shall be ten (10) years.
(B) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option. In the event
that the date of grant of the First Option is not a trading day, the exercise
price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the First Option.
(D) subject to Section 10 hereof, the First Option shall
become exercisable as to one-third (1/3) of the Shares subject to the First
Option on each year on the anniversary of its date of grant, provided that the
Optionee continues to serve as a Director on such dates.
(vi) The terms of a Subsequent Option granted hereunder shall be
as follows:
(A) the term of the Subsequent Option shall be ten (10)
years.
(B) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option. In the
event that the date of grant of the Subsequent Option is not a trading day, the
exercise price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the Subsequent Option.
(D) subject to Section 10 hereof, the Subsequent Option
shall become exercisable as to 100% of the Shares subject to the Subsequent
Option on the third anniversary of its date of grant, provided that the Optionee
continues to serve as a Director on such date.
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(vii) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the shareholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to
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exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment may consist
of any consideration and method of payment allowable under Section 7 of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. A share certificate for the number
of Shares so acquired shall be issued to the Optionee as soon as practicable
after exercise of the Option. No adjustment shall be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or total and permanent disability (as
defined in Section 22(e)(3) of the Code)), the Optionee may exercise his or her
Option, but only within three (3) months following the date of such termination,
and only to the extent that the Optionee was entitled to exercise it on the date
of such termination (but in no event later than the expiration of its ten (10)
year term). To the extent that the Optionee was not entitled to exercise an
Option on the date of such termination, and to the extent that the Optionee does
not exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as a
Director terminates as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), the Optionee may exercise his or her Option, but
only within twelve (12) months following the date of such termination, and only
to the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
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9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution or Change in
Control.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, the number of
shares that may be added annually to the shares reserved under the Plan
(pursuant to Section 3(a)(i)), as well as the price per Share covered by each
such outstanding Option, and the number of Shares issuable pursuant to the
automatic grant provisions of Section 4 hereof shall be proportionately adjusted
for any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of Shares subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Change in Control.
(i) In the event of a Change in Control, if the transaction is
described in Section 2(b)(i), then each outstanding Option may be assumed or an
equivalent option may be substituted by such successor corporation or a Parent
or Subsidiary of such successor corporation (the "Successor Corporation"). In
the event the Successor Corporation refuses to assume or substitute for the
Option, the Optionee shall fully vest in and have the right to exercise the
Option as to all of the Optioned Stock, including such Shares as to which the
Option would not otherwise be vested or exercisable. If an Option becomes fully
vested and exercisable in lieu of assumption or substitution in the event of a
Change in Control, the Board shall notify the Optionee that the Option is fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice and the Option shall be canceled upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the Change in Control, the Option confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option immediately
prior to the Change in Control, the consideration (whether stock, cash, or other
securities or property) received in the Change of Control event by holders of
Common Stock for each Share held on the effective date of the transaction (and
if the holders are offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares). If such
consideration
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received in the Change of Control event is not solely common stock of the
Successor Corporation or its Parent, the Board may, with the consent of the
Successor Corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Optioned Stock subject to the Option,
to be solely common stock of the Successor Corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the outstanding Change in Control; and
(ii) In the event of the termination of the Optionee's status as
either a Director or a director of the Successor Corporation for any reason
other than a voluntary resignation at any time within one (1) year after a
Change in Control, each Option then held by an Optionee (including any assumed
or substituted Options as a result of the Change in Control) shall immediately
become vested and exercisable (and shall remain exercisable for a period of at
least 15 days after notice from the Company or the Successor Corporation) with
respect to all shares which would have otherwise become vested and exercisable
within one (1) year of the date of Optionee's termination.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable
law, regulation or stock exchange rule, the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such
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Shares, if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law and any stock exchange rules.
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Appendix A
Dear Stockholder:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the operation of the Company that require your
immediate attention.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
New Era of Networks, Inc.
33
DETACH HERE
PROXY
NEW ERA OF NETWORKS, INC.
6550 S. Greenwood Plaza Boulevard
ENGLEWOOD, CO 80111
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints George F. Adam, Jr., Stephen Webb and
Leonard Goldstein each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side, all
shares of common stock of New Era of Networks, Inc. (the "Company") held of
record by the undersigned on March 31, 2000 at the Annual Meeting of
Shareholders to be held on May 23, 2000 and any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE
VOTED FOR SUCH PROPOSAL.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
34
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. Election of Directors
Nominees: George F. (Rick) Adam, Jr. and Steven Lazarus
FOR WITHHELD
[ ] [ ]
[ ]
----------------
For all nominees except as noted above
2. To approve an amendment to the Company's 1997 Director Option Plan to
(a) increase the number of shares reserved for issuance thereunder by
200,000 shares, (b) include a provision providing for the automatic
increase in the number of shares available for grant each fiscal year
and (c) increase the annual option grant to non-employee directors from
10,000 to 11,000 shares.
FOR WITHHELD
[ ] [ ]
3. To ratify the appointment of Arthur Andersen LLP as independent auditors
for the Company.
FOR WITHHELD
[ ] [ ]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as name appears hereon. Joint owners should each sign.
Executors, administrators, trustees, guardians or other fiduciaries should give
full title as such. If signing for a corporation, please sign in full corporate
name by a duly authorized officer.
Signature: Date:
--------------------------- ----------------
Signature: Date:
--------------------------- ----------------