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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 000-22043
NEW ERA OF NETWORKS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1234845
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
ONE GREENWOOD PLAZA
6550 GREENWOOD PLAZA BOULEVARD
ENGLEWOOD, COLORADO 80111
(Address of principal executive offices)
Registrant's telephone number, including area code: (303) 694-3933
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 PAR VALUE PER SHARE
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of February 28, 2001, there were 36,839,240 shares of the Registrant's
common stock outstanding and the aggregate market value of such shares held by
nonaffiliates of the Registrant (based upon the closing sale price of
2
such shares on the Nasdaq National Market on February 28, 2001) was
approximately $243,147,401. Shares of the Registrant's common stock held by each
executive officer and director of the Registrant have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.
TABLE OF CONTENTS
PART III
EXPLANATORY NOTE................................................................ 2
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................ 3
ITEM 11 EXECUTIVE COMPENSATION............................................ 4
ITEM 12 BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.. 9
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 10
PART III
EXPLANATORY NOTE
On February 20, 2001, New Era of Networks, Inc., a Delaware corporation
("NEON," the "Registrant" or the "Company") entered into an Agreement and Plan
of Reorganization (the "Reorganization Agreement") with Sybase, Inc., a Delaware
corporation, and Neel Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of Sybase (the "Purchaser"), pursuant to which the Purchaser has
commenced an offer to exchange each outstanding share of common stock, par value
$0.0001 per share, of NEON (the "Shares"), including the associated rights
issued pursuant to the Preferred Shares Rights Agreement, dated as of August 5,
1998, as amended, for 0.3878 of a share of Sybase common stock (the "Exchange
Ratio"), par value $0.001 per share, upon the terms and subject to the
conditions set forth in the prospectus contained in the registration statement
on Form S-4 filed by Sybase with the Securities and Exchange Commission on March
15, 2001 (the "Prospectus"), and in the related Letter of Transmittal (the
"Letter of Transmittal," which, together with the Prospectus, as each may be
amended or supplemented from time to time, collectively constitute the "Offer").
The Reorganization Agreement provides that, among other things, as soon as
practicable following the satisfaction or waiver of the conditions set forth in
the Reorganization Agreement, the Purchaser will be merged with and into NEON
(the "Merger"). At the effective time of the Merger, such Shares outstanding
immediately prior to the effective time of the Merger (other than Shares held by
Sybase, the Purchaser or NEON or, if applicable, by stockholders who perfect
appraisal rights under Delaware law) will be converted into the right to receive
a fraction of a share of Sybase common stock equal to the Exchange Ratio. As a
result of the Offer and the Merger, NEON will become a wholly owned subsidiary
of Sybase.
2.
3
Due to the execution of the Reorganization Agreement and the commencement
of the Offer, the Company has decided to postpone indefinitely its annual
meeting of stockholders previously scheduled to occur on May 15, 2001. Effective
upon the acceptance for purchase by the Purchaser of at least a majority of the
Shares on a fully diluted basis, Sybase will be entitled to designate the number
of directors, rounded up to the next whole number, on the NEON board of
directors (the "Board") that equals the product of (i) the total number of
directors on the Board (giving effect to the election of any additional
directors pursuant to this provision) and (ii) the percentage that the number of
Shares owned by Sybase or the Purchaser (including Shares accepted for purchase)
bears to the total number of Shares outstanding (the "Sybase Designees"), and
NEON will take all action reasonably necessary to cause the Sybase Designees to
be elected or appointed to the Board, including, without limitation, increasing
the number of directors, or seeking and accepting resignations of incumbent
directors, or both, provided that, prior to the effective time of the Merger,
the Board will always have at least two members who were directors of NEON prior
to consummation of the Offer.
Sybase has informed NEON that it will choose the Sybase Designees to the
Board from the directors and executive officers of Sybase and the Purchaser
listed in Schedule I to the Prospectus.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS OF THE REGISTRANT
The Board is divided into three approximately equal classes, having
three-year terms that expire in successive years.
The following list sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years, of each director of NEON. Unless otherwise indicated, each such
person is a citizen of the United States and the business address of such person
is c/o New Era of Networks, Inc., One Greenwood Plaza, 6550 Greenwood Plaza
Boulevard, Englewood, Colorado 80111.
George F. (Rick) Adam, Jr., 54. Mr. Adam has served as Chairman of the
Board, Chief Executive Officer and a director of NEON since its founding 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
Healthcare Corporation. Mr. Adam holds a B.S. degree from the U.S. Military
Academy, West Point, New York.
Patrick J. Fortune, 53. Dr. Fortune has served as President and Chief
Operating Officer of NEON since April 1999 and a director since February 1998.
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.
Melvyn E. Bergstein, 58. Mr. Bergstein has served as a director of NEON
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 21 years in various positions with Arthur Andersen & Co.'s
consulting division (now Accenture). Mr. Bergstein holds a B.S. degree in
Economics from The Wharton School of the University of Pennsylvania and is a
Certified Public Accountant.
Mark L. Gordon, 50. Mr. Gordon has served as a director of NEON since its
inception in June 1993. 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. He currently serves as a director of DiamondCluster
International, Inc. Mr. Gordon holds a B.A. degree from the University of
Michigan and a J.D. degree from the Northwestern University School of Law.
3.
4
Joseph E. Kasputys, 64. Mr. Kasputys has served as a director of NEON since
July 1998. Since September 2000, Mr. Kasputys has served as Chairman of Thomson
Financial, a provider of e-information services and work solutions to the
financial community. Prior to joining Thomson, Mr. Kasputys served as Chairman,
President and Chief Executive Officer of Primark Corporation. He currently
serves as a director of Lifeline Systems and Primark Corporation. 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.
Steven Lazarus, 69. Mr. Lazarus has served as a director of NEON since
April 1995. Since 1986, Mr. Lazarus has served as a senior principal of various
venture capital funds associated with ARCH Ventures, 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 and First Consulting Group. Mr. Lazarus
holds a B.A. degree from Dartmouth College and an M.B.A. degree from the Harvard
Graduate School of Business.
Robert I. Theis, 39. Mr. Theis has served as a director of NEON since July
2000. Mr. Theis has served as a general partner of Doll Capital Management, a
venture capital firm, since July 2000, prior to which he served as Executive
Vice President and Chief Marketing Officer of NEON from October 1996. Prior to
joining NEON, Mr. Theis served as Managing Director of the Worldwide Financial
Services Industry Group of Sun Microsystems, Inc. from April 1986 to October
1996. Prior to joining Sun Microsystems, Mr. Theis served as the workstation
program manager for Silicon Graphics. Mr. Theis holds a B.S. degree from the
University of Pittsburgh, Pennsylvania.
EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning executive officers of NEON called for by Item
401 of Regulation S-K has been furnished in a separate item captioned "Executive
Officers of the Registrant" and is included in Part I of NEON's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 which was filed on March
5, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires NEON's
officers and directors, and persons who own more than ten percent of a
registered class of NEON's equity securities, to file reports of ownership on
Form 3 and changes in ownership on Form 4 or Form 5 with the SEC and the NASD.
Such officers, directors and ten-percent stockholders are also required by SEC
rules to furnish NEON with copies of all such forms that they file.
Based solely on a review of the copies of such forms received by NEON, or
written representations from certain reporting persons that no Forms 5 were
required for such persons, NEON believes that during 2000 all Section 16(a)
filing requirements applicable to its officers, directors and ten-percent
stockholders were complied with.
ITEM 11. EXECUTIVE 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 of NEON during the last fiscal year (the
"Named Officers") for services rendered to NEON in all capacities during the
last three fiscal years.
LONG-TERM
COMPENSATION AWARDS
----------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
FISCAL --------------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARD($)(1) OPTIONS(#) COMPENSATION($)
- --------------------------- ------ ---------- ---------- ------------ ----------- ---------------
George F. (Rick) Adam, Jr ................. 2000 $ 400,000 -- -- 30,000 $ 5,200(2)
Chairman of the Board and 1999 308,333 $ 113,750 -- -- --
Chief Executive Officer 1998 205,000 -- -- 20,000 --
Patrick J. Fortune(3) ..................... 2000 $ 344,375 $ 50,000 $ 843,450(4) 45,000 --
President and Chief Operating Officer 1999 225,000 -- 295,000(4) 410,000 --
Stephen E. Webb ........................... 2000 $ 221,743 $ 30,000 -- 34,998 --
Senior Vice President and Chief 1999 200,000 33,000 -- 22,000 --
Financial Officer 1998 157,500 4,000 -- 20,000 --
Frederick T. Horn ......................... 2000 $ 264,146 $ 30,000 $ 562,300(5) 98,333 --
Executive Vice President of 1999 204,375 32,000 -- 25,001 --
Operations 1998 148,334 4,000 -- 40,000 --
Franz Koepper(6) .......................... 2000 $ 394,807(7) -- -- 35,000 --
President of NEON Europe 1999 181,357 $ 15,113 -- -- --
4.
5
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(1) Represents the dollar value of Shares awarded, calculated by multiplying
the market value on the date of grant by the number of Shares awarded.
Dividends on restricted stock will be paid when, as and if declared on the
Shares by the Board; no dividends have been paid on the Shares to date.
(2) Life insurance premiums.
(3) Dr. Fortune's employment with NEON commenced in April 1999.
(4) Dr. Fortune purchased 20,000 Shares in August 1999 and 30,000 Shares in
September 2000 at a nominal price pursuant to restricted stock awards. The
Shares purchased in August 1999 vest in three equal installments, first on
April 1, 2000 and then annually thereafter. The Shares purchased in
September 2000 vest in four equal installments on the first four
anniversary dates of the award. At the end of fiscal 2000, Dr. Fortune's
aggregate restricted stockholdings of 70,000 Shares had a value of $293,750
based on the then-current market value of $5.875 per Share, without giving
effect to the diminution of value attributable to the restrictions on such
stock.
(5) Mr. Horn purchased 20,000 Shares in September 2000 at a nominal price
pursuant to a restricted stock award. The Shares vest in four equal
installments on the first four anniversary dates of the award. At the end
of fiscal 2000, Mr. Horn's aggregate restricted stockholdings of 20,000
Shares had a value of $117,500 based on the then-current market value of
$5.875 per Share, without giving effect to the diminution of value
attributable to the restrictions on such stock.
(6) Dr. Koepper's employment with NEON commenced in April 1999. Dr. Koepper's
compensation was paid in Swiss francs and has been converted to U.S.
dollars for purposes of this table based on average exchange rates during
the respective compensation periods.
(7) Includes $68,146 of commissions.
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, 2000.
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS 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..... 22,000 0.3% $ 49.50 1/2/05 $ 300,871 $ 664,845
8,000 0.1 54.45 1/2/05 120,348 265,938
Patrick J. Fortune............ 20,000 0.2% $ 49.50 1/2/05 $ 273,519 $ 604,405
25,000 0.3 19.81 5/22/05 136,828 302,355
Stephen E. Webb............... 9,998 0.1% $ 49.50 1/2/05 $ 136,732 $ 302,142
25,000 0.3 19.81 5/22/05 136,828 302,355
Frederick T. Horn............. 20,000 0.2% $ 49.50 1/2/05 $ 273,519 $ 604,405
25,000 0.3 27.58 4/18/05 190,496 420,947
53,333 0.7 25.00 8/16/05 368,373 814,008
Franz Koepper................. 10,000(5) 0.1% $ 7.00(5) 1/2/05(5) $ 19,340 $ 42,736
25,000(6) 0.3 7.00(6) 5/22/05(6) 48,349 106,839
5.
6
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(1) The options in this table are either incentive stock options granted under
the NEON 1995 Stock Option Plan or non-qualified stock options granted
under the NEON 1998 Nonstatutory Stock Option Plan. All of the options have
exercise prices at least equal to the fair market value of the Shares on
the date of grant and vest as follows: 25% on the first anniversary of the
grant date; 1/48 each month thereafter for 36 months. The Board may reprice
options under the terms of the option plans.
(2) NEON granted options to purchase an aggregate of 7,992,605 Shares to
employees in 2000, including repriced options to purchase 4,650,128 Shares.
(3) Options may terminate before their expiration upon the termination of the
optionee's status as an employee or consultant, the optionee's death or an
acquisition of NEON.
(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 (five
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 NEON's Shares were to increase at such
rates from the price at 2000 fiscal year end ($5.875 per share) over the
next five years, the resulting stock price at 5% and 10% appreciation would
be $7.50 and $9.46, respectively. The assumed annual rates of appreciation
are specified in SEC rules and do not represent NEON's estimate or
projection of future stock price growth. NEON does not necessarily agree
that this method can properly determine the value of an option.
(5) This option was originally granted on January 3, 2000 and was repriced from
$49.50 to $7.00 on December 7, 2000. All other terms of the option remained
unchanged.
(6) This option was originally granted on May 23, 2000 and was repriced from
$19.81 to $7.00 on December 7, 2000. All other terms of the option remained
unchanged.
OPTION EXERCISES AND HOLDINGS
The following table sets forth, as to the Named Officers, certain
information concerning stock options exercised during 2000 and the number of
Shares subject to both exercisable and unexercisable stock options as of
December 31, 2000. Also reported are values for "in-the-money" options that
represent the positive spread between the respective exercise prices of
outstanding stock options and the fair market value of the Shares as of December
31, 2000.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR END(#) FISCAL YEAR END($)(1)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ------------ ------------- ------------ -------------
George F. (Rick) Adam, Jr .... 14,333 $ 315,269 17,667 40,000 -- --
Patrick J. Fortune ........... 14,444 $ 538,302 79,583 389,861 -- --
Stephen E. Webb .............. 55,604 $ 2,748,561 53,793 59,332 $ 21,714 --
Frederick T. Horn ............ 24,375 $ 1,068,883 72,044 134,479 $ 84,239 --
Franz Koepper ................ -- -- -- 35,000 -- --
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(1) Market value of underlying securities based on the closing price of the
Shares on December 29, 2000 (the last trading day of fiscal 2000) on the
Nasdaq National Market of $5.875 minus the exercise price.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Between September 2000 and January 2001, NEON entered into change of
control severance agreements with each of Messrs. Adam, Horn, Webb and Koepper
and Dr. Fortune. In connection with the negotiation of the Reorganization
Agreement, Sybase required that such change of control severance agreements be
amended with new terms to be effective upon the consummation of the Offer. Each
of the amended change of control severance agreements provides that all NEON
options granted to such persons will vest and all restrictions on restricted
stock held by such persons will lapse upon consummation of the Offer. The
amended agreements of Mr. Horn and Dr. Fortune provide cash payments of
$1,092,000 and $1,560,000, respectively, based upon their continued employment
with Sybase following consummation of the Offer. The cash payments to Mr. Horn
and Dr. Fortune are payable as follows: 5/13 on the 12-month anniversary of the
consummation of the Offer, 3/13 on the 18-month anniversary of
6.
7
the consummation of the Offer, and the remaining 5/13 on the 24-month
anniversary of the consummation of the Offer. If Mr. Horn or Dr. Fortune is
terminated by Sybase without cause prior to the 24-month anniversary of the
consummation of the Offer, he will receive his respective cash payment (less any
amounts previously paid) in a lump sum payment. The amended agreement of Mr.
Adam does not provide for a cash payment.
The following discussion summarizes the terms of the original change of
control severance agreements which remain effective until consummation of the
Offer, or otherwise if for any reason the Offer is not consummated.
NEON entered into a Change of Control Severance Agreement with Mr. Adam,
effective as of November 27, 2000. The agreement provides that if Mr. Adam is
terminated for any reason other than "for cause" (as defined in the agreement)
within 18 months following a change of control of NEON, then Mr. Adam will be
entitled to receive a cash payment equal to 200% of his annual compensation,
accelerated vesting of all stock options and any restricted stock held by Mr.
Adam and continued employment benefits for a period of up to two years.
NEON entered into a Change of Control Severance Agreement with Dr. Fortune,
effective as of November 22, 2000. The agreement provides that if Dr. Fortune is
terminated other than "for cause" (as defined in the agreement) within 18 months
following a change of control of NEON, then Dr. Fortune will be entitled to
receive a cash payment equal to 200% of his annual compensation, accelerated
vesting of all stock options and any restricted stock held by Dr. Fortune and
continued employment benefits for a period of up to two years.
NEON entered into a Change of Control Severance Agreement with Mr. Horn,
effective as of September 25, 2000. The agreement provides that if Mr. Horn is
terminated other than "for cause" (as defined in the agreement) within 18 months
following a change of control of NEON, then Mr. Horn will be entitled to receive
a cash payment equal to 200% of his annual compensation, accelerated vesting of
all stock options and any restricted stock held by Mr. Horn and continued
employment benefits.
NEON has entered into a Change of Control Severance Agreement with Mr.
Webb, effective as of September 27, 2000. The agreement provides that if Mr.
Webb is terminated other than "for cause" (as defined in the agreement) within
18 months following a change of control of NEON, then Mr. Webb will be entitled
to receive a cash payment equal to 200% of his annual compensation, accelerated
vesting of all stock options and any restricted stock held by Mr. Webb and
continued employment benefits for a period of up to two years.
NEON has entered into an Employment Agreement with Dr. Koepper, dated
January 1, 1998, as amended on December 24, 2000. The agreement provides Dr.
Koepper with a base salary of 552,500 Swiss francs (approximately $334,384 based
on current exchange rates) and an annual target bonus based on 0.3% of the
revenues of NEON and SLI EMEA, a wholly owned subsidiary of NEON. If such
revenues exceed $100 million, Dr. Koepper's annual target bonus will increase to
0.5% of NEON and SLI EMEA revenues. Dr. Koepper's bonus will be paid in Swiss
francs, using an exchange ratio of 1.7 Swiss francs to each U.S. dollar. The
agreement also provides both parties with six months notice prior to termination
by the other party.
Dr. Koepper is a party to a Change of Control Severance Agreement with
NEON, dated January 30, 2001, which provides that if Dr. Koepper is terminated
other than "for cause" (as defined therein) within 18 months following
consummation of the Offer, Dr. Koepper will receive a lump sum cash payment
equal to 100% of his annual compensation, accelerated vesting of all NEON
options held and, for a period one year following the date of termination,
continued employee benefits.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Kasputys and
Lazarus. Mr. Gordon also served as a member of the Compensation Committee until
July 2000. No interlocking relationship exists between any member of the Board
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 NEON or its subsidiaries.
7.
8
COMPENSATION OF DIRECTORS
In 2000, each non-employee director received $1,000 per meeting, plus all
expenses associated with attendance at Board meetings, as their sole cash
remuneration. In addition, non-employee directors participate in NEON's 1997
Director Option Plan (the "Director Plan").
The Board adopted the Director Plan in January 1997. It became effective in
June 1997 following NEON's initial public stock offering, and was amended in May
2000. The Director Plan provides for the automatic grant to non-employee
directors of NEON of options to purchase Shares. The Director Plan is
administered by the Board, unless the Board delegates administration to a
committee. An aggregate of 400,000 Shares have 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, each non-employee director is automatically granted an
option to purchase 11,000 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 NEON, 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 NEON 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 May 2000, NEON granted each of Messrs. Bergstein, Gordon, Kasputys and
Lazarus options to purchase 11,000 Shares under the Director Plan at an exercise
price of $20.625 per share.
8.
9
ITEM 12. BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information concerning the
beneficial ownership of Shares as of February 15, 2001 for the following: (1)
each person or entity who is known by NEON to own beneficially more than 5% of
the outstanding Shares; (2) each of NEON's directors; (3) each of the executive
officers named in the Summary Compensation Table on page I-8 hereof; and (4) all
directors and executive officers of NEON as a group.
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
5% STOCKHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS(1) OWNED(2) OWNED(2)
- ---------------------------------------------------- ------------ ------------
George F. (Rick) Adam, Jr.(3) ........................................ 3,940,823 10.7%
Patrick J. Fortune(4) ................................................ 247,374 *
Melvyn E. Bergstein(5) ............................................... 11,110 *
Mark L. Gordon(6) .................................................... 27,499 *
Joseph E. Kasputys(7) ................................................ 44,554 *
Steven Lazarus(8) .................................................... 95,364 *
Robert I. Theis(9) ................................................... 192,185 *
Stephen E. Webb(10) .................................................. 145,923 *
Frederick T. Horn(11) ................................................ 215,478 *
Franz Koepper(12) .................................................... 71,667 *
All directors and executive officers as a group (12 persons)(13) ..... 5,197,834 13.8
- ----------
* 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 above is: c/o New
Era of Networks, Inc., 6550 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 February 15, 2001 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) Includes an aggregate of 383,272 Shares held by certain entities over
which Mr. Adam has voting and investment control. Also includes 122,278
Shares issuable upon exercise of stock options that are exercisable within
60 days of February 15, 2001.
(4) Includes 195,931 Shares issuable upon exercise of stock options that are
exercisable within 60 days of February 15, 2001.
(5) Consists solely of Shares issuable upon exercise of stock options that are
exercisable within 60 days of February 15, 2001.
(6) Includes 3,000 Shares held by the Mark L. Gordon Trust and 500 Shares held
by Mr. Gordon's wife. Also includes 19,999 Shares issuable upon exercise
of stock options that are exercisable within 60 days of February 15, 2001.
(7) Includes 25,554 Shares issuable upon exercise of stock options that are
exercisable within 60 days of February 15, 2001.
(8) Includes 5,496 Shares held by ARCH Venture Fund II, L.P., a limited
partnership of which Mr. Lazarus is a general partner. Also includes 2,000
Shares held by Mr. Lazarus's wife, 16,481 Shares held by the Arlene
Lazarus Trust and 4,100 Shares held by the Lazarus Investment Limited
Partnership. Also includes 46,665 Shares issuable upon exercise of stock
options that are exercisable within 60 days of February 15, 2001.
(9) Includes 129,269 Shares issuable upon exercise of stock options
exercisable within 60 days of February 15, 2001.
(10) Includes 100,655 Shares issuable upon exercise of stock options
exercisable within 60 days of February 15, 2001.
(11) Includes 200 Shares held by Mr. Horn as custodian for his daughter and
136,997 Shares issuable upon exercise of stock options exercisable within
60 days of February 15, 2001.
(12) Includes 3,125 Shares issuable upon exercise of stock options exercisable
within 60 days of February 15, 2001.
(13) Includes an aggregate of 900,015 Shares issuable upon exercise of stock
options exercisable within 60 days of February 15, 2001.
9.
10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
NEON has leased two buildings and a parking structure in Englewood,
Colorado from Greenwood Plaza Partners, LLP ("GPP") for use as NEON's principal
corporate headquarters and at December 31, 2000, had subleased all unused excess
capacity. GPP is principally owned by George F. Adam, Jr.
Through April 2000, NEON had funded approximately $25.4 million toward a
short-term loan to GPP for construction of the leased facilities. In May 2000,
GPP obtained interim (five-year) financing from a third-party lender and repaid
the loan from NEON in full. Terms of the interim financing require that NEON
maintain a balance of cash or investments with the lender. At December 31, 2000,
the restricted cash balance was $7.0 million. The restricted cash represents one
source of collateral to the lender in recognition that NEON has a long-term
master lease for the entire facility.
NEON leased and occupied completed portions of the facilities from August
1999 through April 2000. The lease for the entire completed facility commenced
May 1, 2000. The facilities include approximately 200,000 rentable square feet
of space and 720 parking spaces in the garage. Rent paid to GPP for year ended
December 31, 2000 was approximately $3.7 million. NEON is also responsible for
all taxes, insurance, utilities, repairs and maintenance of the facilities
during the lease term. The initial term is ten years from May 1, 2000, and is
renewable at NEON's option for two successive five-year periods at then
prevailing market rental rates.
A company owned by George F. Adam, Jr. and relatives provides air
transportation service for NEON. Total expenses incurred during the year 2000
for services rendered by this company was approximately $655,000.
On August 1, 1996, NEON entered into an agreement whereby NEON issued a
revolving line of credit to Frederick T. Horn. Under the terms of this
agreement, Mr. Horn may borrow up to $170,000, interest accrues at the prime
interest rate, and borrowings are secured by Mr. Horn's stock options in NEON.
The agreement matures on January 1, 2008, and interest is payable on a quarterly
basis. The amount outstanding under this agreement at December 31, 2000 was
approximately $58,000.
NEON believes that the terms of the foregoing transactions are no less
favorable to the Company than the terms of any similar transaction that could
have been obtained through arms' length negotiations with an unaffiliated third
party.
10.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized as of the 30th day of
March, 2001.
New Era of Networks, Inc.
By: /s/ Leonard M. Goldstein
-------------------------------
Name: Leonard M. Goldstein
Title: Senior Vice President,
Senior Counsel and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 30, 2001.
SIGNATURES TITLE
Chairman of the Board and Chief Executive Officer and
* Director
- -------------------------------------- (principal executive officer)
George F. (Rick) Adam, Jr.
*
- --------------------------------------
Patrick J. Fortune Director, President and Chief Operating Officer
* Senior Vice President and Chief Financial Officer
- -------------------------------------- (principal financial officer)
Stephen E. Webb
Vice President and Corporate Controller
* (principal accounting officer)
- --------------------------------------
Brian P. Duff
* Director
- --------------------------------------
Steven Lazarus
* Director
- --------------------------------------
Mark L. Gordon
* Director
- --------------------------------------
Joseph E. Kasputys
11.
12
* Director
- --------------------------------------
Mel Bergstein
* Director
- --------------------------------------
Robert I. Theis
* By: /s/ Leonard M. Goldstein
--------------------------------
Leonard M. Goldstein
Attorney-in-Fact pursuant to a power of
attorney filed as part of the original signature
page to the Annual Report on Form 10-K
12.