<PAGE>
SCHEDULE 14A INFORMATION
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 ss. 240.14a-11(c) or ss. 240.14a-12
Newgen Results Corporation
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------------
(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)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------------------
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):
- ------------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
5. Total fee paid:
/ / 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.
- ------------------------------------------------------------------------------
6. Amount Previously Paid:
- ------------------------------------------------------------------------------
7. Form, Schedule or Registration Statement No.:
- ------------------------------------------------------------------------------
8. Filing Party:
- ------------------------------------------------------------------------------
9. Date Filed:
- ------------------------------------------------------------------------------
<PAGE>
NEWGEN RESULTS CORPORATION
12680 HIGH BLUFF DRIVE, SUITE 300
SAN DIEGO, CALIFORNIA 92130
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 2000
TO THE STOCKHOLDERS OF NEWGEN RESULTS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
NEWGEN RESULTS CORPORATION, a Delaware corporation (the "Company"), will be
held on Thursday, June 8, 2000 at 10:00 a.m. local time in the Torrey Pines
Room at the Del Mar Doubletree Hotel, located at 11915 El Camino Real, San
Diego, California 92130 for the following purposes:
1. To elect three Class I directors to hold office until the 2003 Annual
Meeting of Stockholders.
2. To approve the Company's 1998 Equity Incentive Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized
for issuance under such plan by 750,000 shares.
3. To ratify the selection of Arthur Anderson LLP as independent
auditors of the Company for its fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 20,
2000, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ SAMUEL SIMKIN
----------------------------------
SAMUEL SIMKIN
Senior Vice President, Chief
Financial Officer and Secretary
San Diego, California
May 5, 2000
- ------------------------------------------------------------------------------
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO
ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS
POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE.
EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY
A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
- ------------------------------------------------------------------------------
<PAGE>
NEWGEN RESULTS CORPORATION
12680 HIGH BLUFF DRIVE, SUITE 300
SAN DIEGO, CALIFORNIA 92130
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 8, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors
of Newgen Results Corporation, a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders to be held on June 8, 2000, at
10:00 a.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting. The Annual Meeting will be held in the
Torrey Pines Room at the Del Mar Doubletree Hotel, located at 11915 El Camino
Real, San Diego, California 92130. The Company intends to mail this proxy
statement and accompanying proxy card on or about May 5, 2000 to all
stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy
statement, the proxy card and any additional information furnished to
stockholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be
supplemented by telephone, telegram or personal solicitation by directors,
officers or other regular employees of the Company. No additional
compensation will be paid to directors, officers or other regular employees
for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
April 20, 2000 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on April 20, 2000 the Company had
outstanding and entitled to vote 10,175,164 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled
to one vote for each share held on all matters to be voted upon at the Annual
Meeting.
All votes will be tabulated by the inspector of election appointed
for the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards
a quorum, but are not counted for any purpose in determining whether a matter
has been approved.
VOTING VIA THE INTERNET OR BY TELEPHONE
A number of brokers and banks are participating in programs provided
through ADP Investor Communication Services and American Stock Transfer and
Trust Company, the Company's transfer agent, that offer telephone and
Internet voting options. If your shares are held in an account with a broker
or bank participating in either of these programs, or if your shares are
registered in your name, you may vote those share telephonically by calling
the telephone number shown on the voting form received from your broker or
bank or from American Stock Transfer and Trust Company, or via the Internet
at either ADP Investor Communication Services' voting Web site
(www.proxyvote.com or American Stock Transfer and Trust Company's voting Web
site (www.voteproxy.com).
<PAGE>
Votes submitted via the Internet or by telephone using the program
provided by ADP Investor Communication Services must be received by 11:59
p.m. eastern time on June 7, 2000. Submitting your proxy via the Internet or
by telephone will not affect your right to vote in person should you decide
to attend the Annual Meeting.
THE TELEPHONE AND INTERNET VOTING PROCEDURES ARE DESIGNED TO
AUTHENTICATE STOCKHOLDERS' IDENTITIES, TO ALLOW STOCKHOLDERS TO GIVE THEIR
VOTING INSTRUCTIONS AND TO CONFIRM THAT STOCKHOLDERS' INSTRUCTIONS HAVE BEEN
RECORDED PROPERLY. STOCKHOLDERS VOTING VIA THE INTERNET SHOULD UNDERSTAND
THAT THERE MAY BE COSTS ASSOCIATED WITH ELECTRONIC ACCESS, SUCH AS USAGE
CHARGES FROM INTERNET ACCESS PROVIDERS AND TELEPHONE COMPANIES, THAT MUST BE
BORNE BY THE STOCKHOLDER.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office,
12680 High Bluff Drive, Suite 300, San Diego, California 92130, a written
notice of revocation or a duly executed proxy bearing a later date, or it may
be revoked by attending the meeting and voting in person. Attendance at the
meeting will not, by itself, revoke a proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in
the Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is January 15, 2001. Stockholders wishing to submit proposals or
director nominations that are not to be included in such proxy statement and
proxy must do so earlier than the close of business on April 9, 2001.
Stockholders are also advised to review the Company's Bylaws, which contain
additional requirements with respect to advance notice of stockholder
proposals and director nominations.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and
Bylaws provide that the Board of Directors shall be divided into three
classes, with each class having a three-year term. Vacancies on the Board may
be filled only by persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy (including a vacancy created
by an increase in the number of directors) shall serve for the remainder of
the full term of the class of directors in which the vacancy occurred and
until such director's successor is elected and qualified.
The Board of Directors is presently composed of eleven members. There
are three directors in the class whose term of office expires in 2000, Class
I. Two of these directors, H. Robert Gill and Todd A. Springer, have
indicated to the Company that they will resign as directors of the Company
effective as of the Annual Meeting. As a result of their resignations, only
one of the directors currently serving in Class I, Gerald L. Benowitz, is
being nominated for election in the Annual Meeting. The other two nominees,
Jess R. Marzak and John Moragne, are presently directors of the Company
serving in Class II (with a term ending in 2001) and Class III (with a term
ending in 2002), respectively. If elected to serve as members of Class I at
the Annual Meeting, Messrs. Marzak and Moragne would resign as members of
Class II and Class III, respectively. In addition, effective as of the date
of the Annual Meeting the authorized number of directors shall be reduced
from eleven to nine.
Each of the nominees for election to Class I is currently a director
of the Company who was previously appointed to the Board of Directors. If
elected at the Annual Meeting, each of the nominees would serve until the
2003 annual meeting and until his successor is elected and has qualified, or
until such director's earlier death, resignation or removal.
Set forth below is biographical information for each person nominated
and each person whose term of office as a director will continue after the
Annual Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING
(CLASS I)
GERALD L. BENOWITZ
Mr. Benowitz, age 55, has served as Chairman, President and Chief
Executive Officer of the Company since its inception. From October 1984 to
June 1991, Mr. Benowitz served as Project Manager for Otay International
Center, a 400-acre multi-use industrial park. From May 1980 to August 1984,
he served as President and Chief Operating Officer of Harco Medical
Electronic Devices, a medical device company. Mr. Benowitz holds a B.S. from
the University of Tennessee.
JESS R. MARZAK
Mr. Marzak, age 49, has served as a director of the Company since
August 1996. Since January 1994, Mr. Marzak has been a managing director
of BankAmerica Ventures and General Partner of BAVenture Partners II, each
a venture capital firm. Prior to that, Mr. Marzak was a co-founder and
general partner of Paragon Partners and Paragon Venture Partners II, each
a venture capital firm. Mr. Marzak holds a B.A. from Occidental College
and an M.B.A. from The Wharton School at the University of Pennsylvania.
JOHN MORAGNE
Mr. Moragne, age 42, has been a director of the Company since
December 1997. Since 1993, Mr. Moragne has been a Managing Director of
Trident Capital Management, LLC, a private investment firm that he helped
found ("Trident Capital"). From 1989 to 1993, Mr. Moragne served as a
principal of Information Partners, a private equity firm, and from 1989 to
1993, he served as a principal of Bain Capital, a leveraged-buyout firm. Mr.
Moragne is also a director of DAOU Systems, Inc. and Mapquest.com, Inc. Mr.
Moragne holds a B.A. from Dartmouth College, an M.S. from the Stanford
Graduate School of Applied Earth Sciences and an M.B.A. from Stanford
Graduate School of Business.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
<PAGE>
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING (CLASS II)
GARY SIMKIN
Mr. Simkin, age 51, has served as a director of the Company since
March 1994. Since 1972, Mr. Simkin has been an active private investor in
information and communication-based companies. Since the early 1990s, Mr.
Simkin has served on the Board of Directors of SNS/Assure, Inc., a Canadian
company that provides electronic commerce solutions to a variety of
industries and electronically processes insurance claims. He also serves on
the Board of Directors of Doubleday Canada Limited, a publishing company. Mr.
Simkin holds a Bachelor of Commerce degree from the University of Manitoba.
BERT WINEMILLER
Mr. Winemiller, age 57, has served as Director of the Company since
December 1997. Since 1998, Mr. Winemiller has been the President, Chief
Executive Officer and a Director of PROS Revenue Management, Inc., a
privately held software company. Mr. Winemiller is also a private investor
and President of Albert Winemiller, Inc., a privately held consulting company
focused on the new economy. From 1996 to 1997, Mr. Winemiller served as
President and Chief Executive Officer of Research Ltd., an Internet
investment database and electronic publishing company. From 1993 to 1996, Mr.
Winemiller served as President and Chief Operating Officer of infoUSA, Inc.,
a credit and business information provider. Mr. Winemiller holds a B.S. and
an M.A. from the University of Missouri and an M.B.A. from Harvard Business
School.
BOB DORF
Mr. Dorf, age 50, has served as a director of the Company since
February 2000. Since 1993, Mr. Dorf has served as President of Pepper and
Rogers Group / The Relationship Factory, Inc., a consulting firm
specializing in one-to-one marketing. From 1991 to 1998, Mr. Dorf also
served as Chief Executive Officer of Connecticut Phoenix Ventures, Inc.
an Office Furniture Rental Company, and from 1991 to 1997 he served as
Chief Executive Officer of Connecticut Video Ventures, a video rental
company. Mr. Dorf holds a B.A. from Hobart College.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING (CLASS III)
ABRAHAM L. SIMKIN
Mr. Simkin, age 77, has served as a director of the Company since
March 1994. Since 1960, Mr. Simkin has served as Chairman and Chief
Executive Officer of C.M.S. Creative Management Services, Inc., a consulting
and private investment company. From the late 1980s to 1999, Mr. Simkin was
Chairman of SNS/Assure, Inc. Mr. Simkin holds an L.L.B. from the University
of Manitoba law school.
BERNARD C. SIMKIN
Mr. Simkin, age 50, has served as a director of the Company since
March 1994. Since the early 1990s, Mr. Simkin has served as a director of
SNS/Assure, Inc. Since 1997, Mr. Simkin has also served as Vice President and
is a director of Westkin Properties, a real estate development company. Mr.
Simkin holds a B.A. and an L.L.B. from the University of Manitoba law school.
EUGENE J. FISCHER
Mr. Fischer, age 53, has been a director of the Company since August
1996. Since July 1996, Mr. Fischer has been President of Capstone SBIC
Management, Inc. and a Managing Member of Capstone Management L.L.C. and
Capstone Ventures Management LLC, each a venture capital firm. Since October
1988, Mr. Fischer has been a general partner of Pathfinder Venture Capital
Funds, a venture capital firm, and a Vice President of Pathfinder Ventures,
Inc., its management company. Mr. Fischer is a member of the Board of
Directors of InnerDyne Inc., a medical device company and Spatial, Inc., a
Internet CAD portal. Mr. Fischer holds a B.S. from the University of
Minnesota and a M.S. from the University of California.
Gary Simkin and Bernard C. Simkin are brothers. Abraham L. Simkin is
their father and Samuel Simkin (the Company's Senior Vice President, Chief
Financial Officer and Secretary) is their first cousin.
<PAGE>
BACKGROUND OF EXECUTIVES NOT DESCRIBED ABOVE
The names of and certain information regarding the Company's
executives, other than those set forth in above, are set forth below:
SAMUEL SIMKIN
Mr. Simkin, age 44, was named Senior Vice President of the Company
in August 1998. Mr. Simkin has served as Vice President and Chief Financial
Officer of the Company since its inception. From November 1986 to June 1991,
Mr. Simkin served as president of Morite Investments, Inc., a private
investment company. From June 1978 to November 1986, Mr. Simkin served as
Vice President and Secretary of Rudacel Investment Company Limited where he
was responsible for investing in and managing various companies. Mr. Simkin
holds both a B.A. and an L.L.B. from the University of Manitoba, and an
M.B.A. from the University of Western Ontario. He is a member of the Manitoba
and California bar associations, and is also a Certified General Accountant.
LESLIE J. SILVER
Mr. Silver, age 49, was named Executive Vice President of the Company
in August 1998. Mr. Silver has served as President of Newgen Consulting
Services since its inception and President of Newgen Management Services
since October 1999, both wholly owned subsidiaries of the Company. From May
1982 until February 1994, Mr. Silver served in various senior management
capacities at Newgen Service Systems, Inc., and its successor corporations,
which developed and sold database management and customer retention software
to automobile dealerships, primarily in Canada. From May 1976 to April 1982,
Mr. Silver served as Vice President of the western Canadian division of SHL
Systemhouse, Inc., an international software development and systems
integration company. Mr. Silver holds both a B.S. and a M.S. from the
University of Manitoba.
JAMES K. ROCHE
Mr. Roche, age 40, was named President of Carabunga.com, Inc., a
wholly owned subsidiary of the Company, in February 2000. Prior to then, Mr.
Roche served as Senior Vice President, Operations of the Company since August
1998, and Vice President, Operations of the Company since its inception.
Since 1983, Mr. Roche has held management positions with several companies
that were providing consulting and hardware and software systems to the
service departments of automobile dealerships. From May 1991 to September
1993, Mr. Roche served as the general manager of United States support
services of Newgen Services, L.P. From September 1990 to April 1991, he
served as director of international operations of Newgen Services Systems
International. From September 1987 to August 1990, Mr. Roche served as
director of United States operations of Newgen Services Systems, Inc. Mr.
Roche holds a B.S. from St. Louis University.
MARIO SANCHEZ
Mr. Sanchez, age 44, joined the Company in May 1998 as Vice President
and Chief Information Officer. Mr. Sanchez is responsible for initiating,
developing and directing the Company's information technology projects. From
April 1997 to May 1998, Mr. Sanchez served as Divisional Vice President,
Information Technology for American International Underwriters, a worldwide
marketer of propertycasualty products. From 1996 to 1997, Mr. Sanchez served
as Director of Information Technology for Precision Response Corporation, a
telephonebased marketing and customer service company. From 1994 to 1996, Mr.
Sanchez served as Director of Communications of the High Performance Database
Research Center at Florida International University. Mr. Sanchez holds both a
B.A. and a M.S. from Florida International University.
FRED WALLACE
Mr. Wallace, age 53, joined the Company in June 1998 as Vice
President, Marketing. From 1997 to June 1998, Mr. Wallace served as Vice
President, Vehicle Acquisition and Remarketing of AutoNation USA, a division
of Republic Industries, Inc., an automobile consolidator. From 1996 to 1997,
Mr. Wallace served as Director, Sales and Marketing of Fleetwood Enterprises,
Inc., a motorhome manufacturer. From 1990 to 1996, Mr. Wallace directed
marketing and promotional activities for Mazda Motor of America. From 1981 to
1990, Mr. Wallace developed and directed marketing plans for Volkswagen of
America. From 1968 to 1981, Mr. Wallace developed and coordinated the initial
marketing launch for Ford Motor Company's extended service plan. Mr. Wallace
holds a B.S. from the University of Florida, Gainesville.
<PAGE>
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1999 the Board of Directors
held five meetings and acted by unanimous written consent four times. The
Board has an Audit Committee and a Compensation Committee.
The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors and reviews the scope and
results of the audit and other services provided by the Company's independent
auditors. The Audit Committee also reviews and evaluates the Company's
internal control functions. The Audit Committee consists of Bernard C.
Simkin, H. Robert Gill and John Moragne. It met twice during 1999.
The Compensation Committee makes recommendations regarding the
Company's 1998 Equity Incentive Plan and makes recommendations concerning
salaries and incentive compensation for the Company's employees and
consultants. The Compensation Committee consists of Bernard C. Simkin, Jess
R. Marzak and Bert Winemiller. It met two times during 1999.
During the fiscal year ended December 31, 1999, each Board member
except Abraham Simkin attended 75% or more of the aggregate of the meetings
of the Board and of the committees on which he served, held during the period
for which he was a director or committee member, respectively.
<PAGE>
PROPOSAL 2
APPROVAL OF THE AMENDMENT TO THE 1998 EQUITY INCENTIVE PLAN
In August 1998, the Board of Directors adopted the Company's 1998
Equity Incentive Plan ("Incentive Plan"). In April 2000 the Board of
Directors approved an amendment to the Incentive Plan, subject to stockholder
approval, to increase the number of shares of Common Stock reserved for
issuance under the Incentive Plan by 750,000 shares. The Board of Directors
adopted this amendment in order to ensure that the Company can continue to
grant stock options at levels determined to be appropriate by the Board of
Directors.
As of February 1, 2000 awards (net of canceled or expired awards)
covering an aggregate of 847,930 shares of the Company's Common Stock had
been granted under the Incentive Plan. Without taking into account the
increase that the stockholders are being asked to approve in this proposal,
only 121,427 shares of Common Stock (plus any shares that might in the future
be returned to the Incentive Plan as a result of cancellations or expiration
of awards under the Incentive Plan or under the Company's 1996 Equity
Incentive Plan) remained available for future grant under the Incentive Plan.
In addition to the Incentive Plan, the Company also maintains the 1996 Equity
Incentive Plan, Non-Employee Director's Stock Option Plan, and Employee Stock
Purchase Plan, each of which are discussed below in the section entitled
"Compensation of Executive Officers."
Stockholders are requested in this Proposal 2 to approve the
Incentive Plan, as amended, to increase the number of shares of Common Stock
reserved for issuance under the Incentive Plan by 750,000 shares, bringing
the total number of shares reserved under the Incentive Plan as of February
1, 2000 to 1,880,810 shares, plus up to 311,500 additional shares which may
automatically be reserved for future issuance under the Incentive Plan to the
extent that options currently outstanding under the Company's 1996 Equity
Incentive Plan are cancelled or terminated without being exercised. The
affirmative vote of the holders of a majority of the shares present in person
or represented by proxy and entitled to vote at the meeting will be required
to approve the Incentive Plan, as amended. Abstentions will be counted toward
the tabulation of votes cast on proposals presented to the stockholders and
will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether
this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Incentive Plan are outlined below:
GENERAL
The Incentive Plan provides for the grant of incentive stock options,
nonstatutory stock options, stock appreciation rights, stock bonuses and
restricted stock purchase awards (collectively "awards"). Incentive stock
options granted under the Incentive Plan are intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Nonstatutory stock options
granted under the Incentive Plan are not intended to qualify as incentive
stock options under the Code. Stock appreciation rights granted under the
Incentive Plan may be tandem rights, concurrent rights or independent rights.
See "Federal Income Tax Information" for a discussion of the tax treatment of
awards. To date, the Company has granted only stock options under the
Incentive Plan.
PURPOSE
The Board adopted the Incentive Plan to provide a means by which
employees, directors and consultants of the Company and its affiliates may be
given an opportunity to purchase stock in the Company, to assist in retaining
the services of such persons, to secure and retain the services of persons
capable of filling such positions and to provide incentives for such persons
to exert maximum efforts for the success of the Company and its affiliates.
All of the approximately 653 employees, directors and consultants of the
Company and its affiliates, as of February 1, 2000, are eligible to
participate in the Incentive Plan.
ADMINISTRATION
The Board administers the Incentive Plan. Subject to the provisions
of the Incentive Plan, the Board has the power to construe and interpret the
Incentive Plan and to determine the persons to whom and the dates on which
awards
<PAGE>
will be granted, the number of shares of Common Stock to be subject to each
award, the time or times during the term of each award within which all or a
portion of such award may be exercised, the exercise price, the type of
consideration and other terms of the award.
The Board has the power to delegate administration of the Incentive
Plan to a committee composed of not fewer than two members of the Board. In
the discretion of the Board, a committee may consist solely of two or more
outside directors in accordance with Section 162(m) of the Code or solely of
two or more non-employee directors in accordance with Rule 16b-3 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Board
has delegated administration of the Incentive Plan to the Compensation
Committee of the Board. As used herein with respect to the Incentive Plan,
the "Board" refers to any committee the Board appoints as well as to the
Board itself. The Board has also delegated to Gerald Benowitz the power to
grant awards under the Incentive Plan to persons who are not officers,
directors or 10% stockholders of the Company subject to Section 16 of the
Exchange Act, and to determine the terms of such awards.
The regulations under Section 162(m) of the Code require that the
directors who serve as members of the committee must be "outside directors."
The Incentive Plan provides that, in the Board's discretion, directors
serving on the committee may be "outside directors" within the meaning of
Section 162(m). This limitation would exclude from the committee directors
who are (i) current employees of the Company or an affiliate, (ii) former
employees of the Company or an affiliate receiving compensation for past
services (other than benefits under a tax-qualified pension Incentive Plan),
(iii) current and former officers of the Company or an affiliate, (iv)
directors currently receiving direct or indirect remuneration from the
Company or an affiliate in any capacity (other than as a director), and (v)
any other person who is otherwise considered an "outside director" for
purposes of Section 162(m). The definition of an "outside director" under
Section 162(m) is generally narrower than the definition of a "non-employee
director" under Rule 16b-3 of the Exchange Act.
ELIGIBILITY
Incentive stock options and stock appreciation rights appurtenant
thereto may be granted under the Incentive Plan only to employees (including
officers) of the Company and its affiliates. Employees (including officers),
directors, and consultants of both the Company and its affiliates are
eligible to receive all other types of awards under the Incentive Plan.
No option may be granted under the Incentive Plan to any person who,
at the time of the grant, owns (or is deemed to own) stock possessing more
than 10% of the total combined voting power of the Company or any affiliate
of the Company, unless the exercise price is at least 110% of the fair market
value of the stock subject to the option on the date of grant and the term of
the option does not exceed five years from the date of grant. Likewise, no
restricted stock award may be granted under the Incentive Plan to any such
10% stockholder unless the exercise price is at least 100% of the fair market
value of the stock subject to the award. In addition, the aggregate fair
market value, determined at the time of grant, of the shares of Common Stock
with respect to which incentive stock options are exercisable for the first
time by a participant during any calendar year (under the Incentive Plan and
all other such plans of the Company and its affiliates) may not exceed
$100,000.
No person may be granted options and stock appreciation rights under
the Incentive Plan exercisable for more than 300,000 shares of Common Stock
during any calendar year (the "Section 162(m) Limitation"). However, this
limitation applies only upon the earliest to occur of (i) the first material
modification to the Incentive Plan, (ii) the issuance of all the shares of
Common Stock reserved for issuance under the Incentive Plan, (iii) the
expiration of the Incentive Plan, or (iv) the first meeting of stockholders
at which directors are to be elected that occurs after the close of the third
calendar year following the Company's initial public offering, or such other
date required by Section 162(m) of the Code and the rules and regulations
promulgated thereunder.
STOCK SUBJECT TO THE INCENTIVE PLAN
Subject to this Proposal, as of February 1, 2000, an aggregate of up
to 1,880,810 shares of Common Stock is reserved for issuance under the
Incentive Plan. Up to an additional 311,500 shares of Common Stock will
automatically be reserved for future issuance under the Incentive Plan to the
extent that options currently outstanding under the Company's 1996 Equity
Incentive Plan are cancelled or terminated, in whole or in part, without
being exercised. If awards granted under the Incentive Plan expire or
otherwise terminate without being exercised, the shares of Common Stock not
acquired pursuant to such awards again becomes available for issuance under
the Incentive Plan. If the Company reacquires unvested stock issued under the
Incentive Plan, the reacquired stock will again become available for
reissuance under the Incentive Plan.
<PAGE>
TERMS OF OPTIONS
The following is a description of the permissible terms of options
under the Incentive Plan. Individual option grants may be more restrictive as
to any or all of the permissible terms described below.
EXERCISE PRICE; PAYMENT. The exercise price of incentive stock
options may not be less than 100% of the fair market value of the stock
subject to the option on the date of the grant and, in some cases (see
"Eligibility" above), may not be less than 110% of such fair market value.
The exercise price of nonstatutory options may not be less than 85% of the
fair market value of the stock on the date of grant and, in some cases (see
"Eligibility" above), may not be less than 110% of such fair market value. If
options were granted with exercise prices below market value, deductions for
compensation attributable to the exercise of such options could be limited by
Section 162(m) of the Code. See "Federal Income Tax Information." As of April
26, 2000, the closing price of the Company's Common Stock as reported on the
Nasdaq National Market System was $11.25 per share.
The exercise price of options granted under the Incentive Plan must
be paid either in cash at the time the option is exercised or at the
discretion of the Board, (i) by delivery of other Common Stock of the
Company, (ii) pursuant to a deferred payment arrangement or (iii) in any
other form of legal consideration acceptable to the Board.
REPRICING. In the event of a decline in the value of the Company's
Common Stock, the Board has the authority to offer participants the
opportunity to replace outstanding higher priced options with new lower
priced options. To the extent required by Section 162(m) of the Code, a
repriced option is deemed to be canceled and a new option granted. Both the
option deemed to be canceled and the new option deemed to be granted will be
counted against the Section 162(m) Limitation.
OPTION EXERCISE. Options granted under the Incentive Plan may become
exercisable in cumulative increments ("vest") as determined by the Board.
Shares covered by currently outstanding options granted to the Company's
executive officers under the Incentive Plan typically vest in 25% increments
once a year over four years during the participant's employment by, or
service as a director or consultant to, the Company or an affiliate
(collectively, "service"). Shares covered by currently outstanding options
granted under the Incentive Plan to employees other than executive officers
typically vest in 20% increments once a year over five years during the
participant's service to the Company or an affiliate. Shares covered by
options granted in the future under the Incentive Plan may be subject to
different vesting terms. The Board has the power to accelerate the time
during which an option may vest or be exercised. In addition, options granted
under the Incentive Plan may permit exercise prior to vesting, but in such
event the participant may be required to enter into an early exercise stock
purchase agreement that allows the Company to repurchase unvested shares,
generally at their exercise price, should the participant's service terminate
before vesting. To the extent provided by the terms of an option, a
participant may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such option by a cash payment upon
exercise, by authorizing the Company to withhold a portion of the stock
otherwise issuable to the participant, by delivering already-owned Common
Stock of the Company or by a combination of these means.
TERM. The maximum term of options under the Incentive Plan is 10
years, except that in certain cases (see "Eligibility") the maximum term is
five years. Options under the Incentive Plan generally terminate thirty days
after termination of the participant's service unless (i) such termination is
due to the participant's permanent and total disability (as defined in the
Code), in which case the option may, but need not, provide that it may be
exercised (to the extent the option was exercisable at the time of the
termination of service) at any time within twelve months of such termination;
(ii) the participant dies before the participant's service has terminated, or
within thirty days after termination of such service, in which case the
option may, but need not, provide that it may be exercised (to the extent the
option was exercisable at the time of the participant's death) within
eighteen months of the participant's death by the person or persons to whom
the rights to such option pass by will or by the laws of descent and
distribution; or (iii) the option by its terms specifically provides
otherwise. A participant may designate a beneficiary who may exercise the
option following the participant's death. Individual option grants by their
terms may provide for exercise within a longer period of time following
termination of service.
The option term generally is not extended in the event that exercise
of the option within these periods is prohibited. A participant's option
agreement may provide that if the exercise of the option following the
termination of the participant's service would result in liability under
Section 16(b) of the Exchange Act, then the option shall terminate on the
earlier of (i) the expiration of the term of the option or (ii) the 10th day
after the last date on which such exercise would result in such liability
under Section 16(b). A participant's option agreement also may provide that
if the exercise of the option following the termination of the participant's
service would be prohibited because the issuance of stock would violate the
registration requirements under the Securities Act of 1933, as amended (the
"Securities Act"), then the
<PAGE>
option will terminate on the earlier of (i) the expiration of the term of the
option or (ii) three months after the termination of the participant's
service during which the exercise of the option would not be in violation of
such registration requirements.
TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK
PAYMENT. The Board determines the purchase price under a restricted
stock purchase agreement but the purchase price may not be less than 85% of
the fair market value of the Company's Common Stock on the date of grant. The
Board may award stock bonuses in consideration of past services without a
purchase payment.
The purchase price of stock acquired pursuant to a restricted stock
purchase agreement under the Incentive Plan must be paid either in cash at
the time the option is exercised or at the discretion of the Board, (i)
pursuant to a deferred payment arrangement or (ii) in any other form of legal
consideration acceptable to the Board.
VESTING. Shares of stock sold or awarded under the Incentive Plan
may, but need not be, subject to a repurchase option in favor of the Company
in accordance with a vesting schedule as determined by the Board. The Board
has the power to accelerate the vesting of stock acquired pursuant to a
restricted stock purchase agreement under the Incentive Plan.
RESTRICTIONS ON TRANSFER. Rights under a stock bonus or restricted
stock bonus agreement may be transferred where such assignment is purusuant
to a domestic relations order satisfying the requirements of Rule 16b-3 of
the Exchange Act and is expressly authorized by the terms of the applicable
stock bonus or restricted stock purchase agreement.
STOCK APPRECIATION RIGHTS
The Incentive Plan authorizes three types of stock appreciation rights.
TANDEM STOCK APPRECIATION RIGHTS. Tandem stock appreciation rights
are tied to an underlying option and require the participant to elect whether
to exercise the underlying option or to surrender the option for an
appreciation distribution equal to the market price of the vested shares
purchasable under the surrendered option less the aggregate exercise price
payable for such shares. Appreciation distributions payable upon exercise of
tandem stock appreciation rights must be made in cash or in shares of stock.
CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent stock appreciation
rights are tied to an underlying option and are exercised automatically at
the same time the underlying option is exercised. The participant receives an
appreciation distribution equal to the market price of the vested shares
purchased under the option less the aggregate exercise price payable for such
shares. Appreciation distributions payable upon exercise of concurrent stock
appreciation rights must be made in cash or in shares of stock.
INDEPENDENT STOCK APPRECIATION RIGHTS. Independent stock appreciation
rights are granted independently of any option and entitle the participant to
receive upon exercise an appreciation distribution equal to the market price
of a number of shares equal to the number of share equivalents to which the
participant is vested under the independent stock appreciation right less
than fair market value of such number of shares of stock on the date of grant
of the independent stock appreciation rights. Appreciation distributions
payable upon exercise of independent stock appreciation rights may, at the
Board's discretion, be made in cash or in shares of stock.
REPRICING. In the event of a decline in the value of the Company's
Common Stock, the Board has the authority to offer participants the
opportunity to replace outstanding higher priced stock appreciation rights
with new lower priced stock appreciation rights. To the extent required by
Section 162(m) of the Code, a repriced stock appreciation right is deemed to
be canceled and a new stock appreciation right granted. Both the stock
appreciation right deemed to be canceled and the new stock appreciation right
deemed to be granted will be counted against the Section 162(m) Limitation.
RESTRICTIONS ON TRANSFER
The participant may not transfer an option otherwise than by will or
by the laws of descent and distribution. During the lifetime of the
participant, only the participant may exercise an option. The Board may grant
nonstatutory stock options that are transferable. Shares subject to
repurchase by the Company under an early exercise stock purchase agreement
may be subject to restrictions on transfer that the Board deems appropriate.
<PAGE>
ADJUSTMENT PROVISIONS
Transactions not involving receipt of consideration by the Company,
such as a merger, consolidation, reorganization, stock dividend, or stock
split, may change the class and number of shares of Common Stock subject to
the Incentive Plan and outstanding awards. In that event, the Incentive Plan
will be appropriately adjusted as to the class and the maximum number of
shares of Common Stock subject to the Incentive Plan and the Section 162(m)
Limitation, and outstanding awards will be adjusted as to the class, number
of shares and price per share of Common Stock subject to such awards.
EFFECT OF CERTAIN CORPORATE EVENTS
The Incentive Plan provides that, in the event of a dissolution,
liquidation or sale of substantially all of the assets of the Company,
specified types of merger, or other corporate reorganization ("change in
control"), any surviving corporation will be required to either assume awards
outstanding under the Incentive Plan or substitute similar awards for those
outstanding under the Incentive Plan. If any surviving corporation declines
to assume awards outstanding under the Incentive Plan, or to substitute
similar awards, then, with respect to participants whose service has not
terminated, the vesting and the time during which such awards may be
exercised will be accelerated. An outstanding award will terminate if the
participant does not exercise it before a change in control. The acceleration
of an award in the event of an acquisition or similar corporate event may be
viewed as an anti-takeover provision, which may have the effect of
discouraging a proposal to acquire or otherwise obtain control of the Company.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Incentive Plan without
stockholder approval or ratification at any time or from time to time. Unless
sooner terminated, the Incentive Plan will terminate on August 13, 2008.
The Board may also amend the Incentive Plan at any time or from time
to time. However, no amendment will be effective unless approved by the
stockholders of the Company within 12 months before or after its adoption by
the Board if such stockholder approval is required for the Incentive Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 of the
Exchange Act or any securities exchange listing requirements. The Board may
submit any other amendment to the Incentive Plan for stockholder approval,
including, but not limited to, amendments intended to satisfy the
requirements of Section 162(m) of the Code regarding the exclusion of
performance-based compensation from the limitation on the deductibility of
compensation paid to certain employees.
FEDERAL INCOME TAX INFORMATION
Long-term capital gains currently are generally subject to lower tax
rates than ordinary income or short-term capital gains. The maximum long-term
capital gains rate for federal income tax purposes is currently 20% while the
maximum ordinary income rate and short-term capital gains rate is effectively
39.6%. Slightly different rules may apply to participants who acquire stock
subject to certain repurchase options or who are subject to Section 16(b) of
the Exchange Act.
INCENTIVE STOCK OPTIONS. Incentive stock options under the Incentive
Plan are intended to be eligible for the favorable federal income tax
treatment accorded "incentive stock options" under the Code.
There generally are no federal income tax consequences to the
participant or the Company by reason of the grant or exercise of an incentive
stock option. However, the exercise of an incentive stock option may increase
the participant's alternative minimum tax liability, if any.
If a participant holds stock acquired through exercise of an
incentive stock option for at least two years from the date on which the
option is granted and at least one year from the date on which the shares are
transferred to the participant upon exercise of the option, any gain or loss
on a disposition of such stock will be a long-term capital gain or loss if
the participant held the stock for more than one year.
Generally, if the participant disposes of the stock before the
expiration of either of these holding periods (a "disqualifying
disposition"), then at the time of disposition the participant will realize
taxable ordinary income equal to the lesser of (i) the excess of the stock's
fair market value on the date of exercise over the exercise price, or (ii)
the participant's actual gain, if any, on the purchase and sale. The
participant's additional gain or any loss upon the
<PAGE>
disqualifying disposition will be a capital gain or loss, which will be
long-term or short-term depending on whether the stock was held for more than
one year.
To the extent the participant recognizes ordinary income by reason of
a disqualifying disposition, the Company will generally be entitled (subject
to the requirement of reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of a tax reporting obligation) to a corresponding
business expense deduction in the tax year in which the disqualifying
disposition occurs.
NONSTATUTORY STOCK OPTIONS, RESTRICTED STOCK PURCHASE AWARDS AND
STOCK BONUSES. Nonstatutory stock options, restricted stock purchase awards
and stock bonuses granted under the Incentive Plan generally have the
following federal income tax consequences:
There are no tax consequences to the participant or the Company by
reason of the grant. Upon acquisition of the stock, the participant normally
will recognize taxable ordinary income equal to the excess, if any, of the
stock's fair market value on the acquisition date over the purchase price.
However, to the extent the stock is subject to certain types of vesting
restrictions, the taxable event will be delayed until the vesting
restrictions lapse unless the participant elects to be taxed on receipt of
the stock. With respect to employees, the Company is generally required to
withhold from regular wages or supplemental wage payments an amount based on
the ordinary income recognized. Subject to the requirement of reasonableness,
the provisions of Section 162(m) of the Code and the satisfaction of a tax
reporting obligation, the Company will generally be entitled to a business
expense deduction equal to the taxable ordinary income realized by the
participant.
Upon disposition of the stock, the participant will recognize a
capital gain or loss equal to the difference between the selling price and
the sum of the amount paid for such stock plus any amount recognized as
ordinary income upon acquisition (or vesting) of the stock. Such gain or loss
will be long-term or short-term depending on whether the stock was held for
more than one year. Slightly different rules may apply to participants who
acquire stock subject to certain repurchase options or who are subject to
Section 16(b) of the Exchange Act.
STOCK APPRECIATION RIGHTS. No taxable income is realized upon the
receipt of a stock appreciation right, but upon exercise of the stock
appreciation right the fair market value of the shares (or cash in lieu of
shares) received must be treated as compensation taxable as ordinary income
to the participant in the year of such exercise. Generally, with respect to
employees, the Company is required to withhold from the payment made on
exercise of the stock appreciation right or from regular wages or
supplemental wage payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness, Section 162(m) of the Code and
the satisfaction of a reporting obligation, the Company will be entitled to a
business expense deduction equal to the taxable ordinary income recognized by
the participant.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. Section 162(m) of the
Code denies a deduction to any publicly-held corporation for compensation
paid to certain "covered employees" in a taxable year to the extent that
compensation to such covered employee exceeds $1 million. It is possible that
compensation attributable to awards, when combined with all other types of
compensation received by a covered employee from the Company, may cause this
limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m),
compensation attributable to stock options and stock appreciation rights will
qualify as performance-based compensation if the award is granted by a
compensation committee comprised solely of "outside directors" and either (i)
the plan contains a per-employee limitation on the number of shares for which
such awards may be granted during a specified period, the per-employee
limitation is approved by the stockholders, and the exercise price of the
award is no less than the fair market value of the stock on the date of
grant, or (ii) the award is granted (or exercisable) only upon the
achievement (as certified in writing by the compensation committee) of an
objective performance goal established in writing by the compensation
committee while the outcome is substantially uncertain, and the award is
approved by stockholders.
Compensation attributable to restricted stock and stock bonuses will
qualify as performance-based compensation, provided that: (i) the award is
granted by a compensation committee comprised solely of "outside directors"
and (ii) the purchase price of the award is no less than the fair market
value of the stock on the date of grant. Stock bonuses qualify as
performance-based compensation under the Treasury regulations only if (i) the
award is granted by a compensation committee comprised solely of "outside
directors," (ii) the award is granted (or exercisable) only upon the
achievement of an objective performance goal established in writing by the
compensation committee while the outcome is substantially uncertain, (iii)
the compensation committee certifies in writing prior to the granting (or
exercisability) of the award that the performance goal has been satisfied and
(iv) prior to the granting (or exercisability) of the award, stockholders
have
<PAGE>
approved the material terms of the award (including the class of employees
eligible for such award, the business criteria on which the performance goal
is based, and the maximum amount -- or formula used to calculate the amount
- -- payable upon attainment of the performance goal).
NEW PLAN BENEFITS
The following table presents certain information with respect to
options granted under the Incentive Plan during the year ended December 31,
1999 to (i) the Company's Chief Executive Officer and its four other most
highly compensated executive officers at December 31, 1999, (ii) all
executive officers as a group, (iii) all non-executive officer employees as a
group and (iv) all non-executive officer directors as a group.
NEW PLAN BENEFITS
NAME AND POSITION NUMBER OF SHARES UNDERLYING OPTIONS GRANTED
- ----------------- -------------------------------------------
Gerald L. Benowitz.................................................. 135,234
President and Chief Executive Officer
Samuel Simkin....................................................... 42,622
Senior Vice President, Chief Financial Officer and Secretary
Leslie J. Silver.................................................... 92,940
Executive Vice President and President, Newgen Management
Services, Inc.
James K. Roche...................................................... 39,777
President, Carabunga.com, Inc.
Frederick Wallace................................................... 5,380
Vice President, Marketing
All Executive Officers as a Group................................... 336,663
All Non-Executive Officer Employees as a Group...................... 246,450
All Non-Executive Officer Directors as a Group...................... --
<PAGE>
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Anderson LLP as the
Company's independent auditors for the fiscal year ending December 31, 2000
and has further directed that management submit the selection of independent
auditors for ratification by the stockholders at the Annual Meeting. Arthur
Anderson LLP has audited the Company's financial statements since fiscal year
1995. Representatives of Arthur Anderson LLP are expected to be present at
the Annual Meeting, will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Arthur Anderson LLP as
the Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Arthur Anderson
LLP to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the Audit
Committee and the Board will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Audit Committee and the Board in their
discretion may direct the appointment of different independent auditors at
any time during the year if they determine that such a change would be in the
best interests of the Company and its stocholders.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the Annual
Meeting will be required to ratify the selection of Arthur Anderson LLP.
Abstentions will be counted toward the tabulation of votes cast on proposals
presented to the stockholders and will have the same effect as negative
votes. Broker non-votes are counted towards a quorum, but are not counted for
any purpose in determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of February 1, 2000 by: (i) each
director and nominee for director; (ii) each of the executive officers named
in the Summary Compensation Table; (iii) all executive officers and directors
of the Company as a group; and (iv) all those known by the Company to be
beneficial owners of more than five percent of its Common Stock.
Unless otherwise indicated in the footnotes to this table and subject
to community property laws where applicable, the Company believes that each
of the stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. Applicable
percentages are based on 10,052,259 shares outstanding on February 1, 2000,
adjusted as required by rules promulgated by the SEC. Except as shown
otherwise in the footnotes to the table, the address of each person listed is
in care of Newgen Results Corporation, 12680 High Bluff Drive, Suite 300, San
Diego, CA 92130.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
--------------------------------------------------
SHARES ISSUABLE UPON
EXERCISE OF OPTIONS
OR WARRANTS
EXERCISABLE WITHIN
TOTAL NUMBER 60 DAYS OF PERCENT OF
BENEFICIAL OWNER OF SHARES (2) FEBRUARY 1, 2000 TOTAL
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Todd A. Springer 1,593,921 -- 15.9%
Trident Capital Management (3)
John Moragne 1,593,346 -- 15.9%
Trident Capital Management (3)
Jess R. Marzak 1,150,246 60,455 11.3%
BankAmerica Ventures (4)
Bernard C. Simkin 798,055 -- 7.9%
Gary Simkin 750,629 7,575 7.5%
Johari Investment Company Ltd. (5)
Eugene J. Fischer (6) 496,863 22,842 4.9%
Gerald L. Benowitz (7) 453,431 20,059 4.5%
Samuel Simkin 300,023 6,533 3.0%
K&S Imports, Inc. (8)
Leslie J. Silver (9) 290,266 23,860 2.9%
James K. Roche 52,131 4,215 *
Fred Wallace 11,155 11,155 *
Bob Dorf 25,400 5,400 *
Bert Winemiller 6,000 6,000 *
H. Robert Gill 6,900 6,900 *
Abraham L. Simkin -- -- *
All executive officers and directors as a group (16 persons) (10) 5,946,518 186,067 58.1%
</TABLE>
- ------------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors
and principal stockholders and Schedules 13D and 13G filed with the
SEC.
(2) Includes shares issuable pursuant to options and other rights to
purchase shares of the Company's common stock exercisable within 60
days of February 1, 2000.
(3) Of the total shares indicated as beneficially owned: Information
Associates-II, L.P. owns 923,430 shares, which represent 9.2% of the
total shares; Information Associates, L.P. owns 598,908 shares,
which represents 6.0% of the total shares of the Company outstanding
as of the date set forth above; and IA-II Affiliates Fund, L.L.C.
owns 53,869 shares and Information Associates, C.V. owns 16,714
shares, which in each case represent less than one percent of the
total shares of the Company outstanding as of the date set forth
above. The general partner of
<PAGE>
Information Associates-II, L.P. and the coordinating member of IA-II
Affiliates Fund, L.L.C. is Trident Capital Management-II, L.L.C., a
Delaware limited liability company. Two of the Company's directors,
John Moragne and Todd Springer are members of Trident Capital
Management-II, L.L.C. The general partner of Information Associates,
L.P. and the investment general partner of Information Associates,
C.V. is Trident Capital Management, L.L.C., a Delaware limited
liability company. Mr. Moragne is also a member of Trident Capital
Management, L.L.C. Trident Capital Management-II, L.L.C. and Trident
Capital Management, L.L.C. are collectively referred to as "Trident
Capital." Messrs. Moragne and Springer disclaim beneficial ownership
of the shares held by these entities, except to the extent of their
pecuniary interest in such shares arising from their interest in
Trident Capital. The address of Messrs. Moragne and Springer and
each entity is 2480 Sand Hill Road, Menlo Park, CA 94025.
(4) Of the total shares indicated as beneficially owned, BankAmerica
Ventures owns 980,812 shares and warrants to purchase 54,409 shares,
which (assuming the exercise of such warrants) represents 10.2% of
the total shares of the Company as of the date set forth above; and
BA Venture Partners II owns 108,979 shares and warrants to purchase
6,046 shares which (assuming the exercise of such warrants)
represents 1.1% of the total shares of the Company as of the date
set forth above. Jess R. Marzak, a director of the Company, is a
managing director of BankAmerica Ventures and a general partner of
BA Venture Partners II. Mr. Marzak disclaims beneficial ownership of
all shares owned by BankAmerica Ventures and BA Venture Partners II
except to the extent of his proportionate general partnership
interest in BA Venture Partners II. The address Mr. Marzak and each
entity is 950 Tower Lane, Suite 700, Foster City, CA 94404.
(5) Includes 7,575 shares issuable upon the exercise of warrants held
by Johari Investment Company Ltd. Gary Simkin, a director of the
Company, is the President of Johari Investment Company Ltd. Mr.
Simkin disclaims beneficial ownership of such shares except to the
extent of his pecuniary interest therein.
(6) Includes 473,221 shares owned by Capstone Ventures and 22,842
shares issuable upon the exercise of warrants held by Capstone
Ventures. Eugene J. Fischer, a director of the Company, is a
managing member of Capstone Management LLC, the general partner of
Capstone Ventures. Mr. Fischer disclaims beneficial ownership of
such shares except to the extent of his pecuniary interest therein.
The address of Mr. Fischer and Capstone Ventures is 3000 Sand Hill
Road, Suite 1-290, Menlo Park, CA 94025.
(7) Includes 327,185 shares held by Gerald L. Benowitz and Sandra H.
Benowitz as trustees of the Gerald and Sandra Benowitz Trust dated
January 29, 1999.
(8) Includes 271,218 shares held by K&S Imports. Mr. Samuel Simkin,
one of the Company's executive officers, is President of K&S and
disclaims beneficial ownership of such shares except to the extent
of his pecuniary interest therein.
(9) Includes 232,623 shares held by Leslie J. Silver and Francis Silver
as trustees of the Silver Family Trust dated January 15, 1996, and
an aggregate of 7,500 shares held by Leslie J. Silver as custodian
for Leigh Silver, Mason Silver and Darcy Silver, Mr. Silver's minor
children.
(10) Includes shares listed in notes 3 to 9 above, and 11,073 shares
purchasable by exercise of options held by an executive officer of
the Company not listed in the above table.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934
Act") requires the Company's directors and executive officers, and persons
who own more than ten percent of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and written representations that no
other reports were required, during the fiscal year ended December 31, 1999,
all Section 16(a) filing requirements applicable to its officers, directors
and greater than ten percent beneficial owners were complied with; except
that one report, covering one transaction, was filed late by Mr. Eugene
Fischer and the following individuals filed timely reports that inadvertently
contained the following errors and omissions:
<PAGE>
Mr. Murray Simkin timely reported his initial ownership on a Form 3
report but inadvertently reported ownership of a warrant that had been
exercised. This error was corrected by amending the applicable Form 3 report.
Mr. Gerald Benowitz timely reported his initial ownership on a Form
3 report but inadvertently misstated the nature of his ownership for certain
shares he owned through trusts. This error was corrected by amending the
applicable Form 3 report.
Mr. Jess Marzak timely reported his initial ownership on a Form 3
report but inadvertently misreported the number of shares that he
beneficially owned. This error was corrected by amending the applicable Form
3 report.
BankAmerica Ventures and BA Venture Partners II each timely
reported its initial ownership on a Form 3 report but inadvertently
misreported the number of shares it beneficially owned. These errors
were corrected by amending the applicable Form 3 reports.
Messrs. H. Robert Gill and Bert Winemiller timely reported their
initial ownership on Form 3 reports but inadvertently misstated the vesting
provisions applicable to options that they held. These errors were corrected
by amending the applicable Form 3 reports.
Messrs. H. Robert Gill, Gary Simkin, Bert Winemiller, Eugene
Fischer, Abraham Simkin, Jess R. Marzak, and Bernard Simkin each timely
reported the grant of an option on a Form 4 report but inadvertently
misstated the vesting provisions applicable to such option. These errors were
corrected by amending the applicable Form 4 reports.
Mr. Murray Simkin timely reported the grant of an option on a Form
4 report but inadvertently misstated the number of shares underlying the
option and the vesting provisions applicable to the option. These errors have
been corrected by amending the applicable Form 4 report.
Messrs. Todd A. Springer and John Moragne each timely reported the
grant of an option on a Form 4 report but inadvertently (i) misstated the
vesting provisions applicable to such option and (ii) inadvertently failed to
report an open market purchase of the Company's common stock. These errors
and omissions have been corrected by amending the applicable Form 4 reports.
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Company's directors do not currently receive cash compensation
for services on the Board of Directors or any committees. All members of the
Board of Directors are eligible for reimbursement for their expenses incurred
in connection with attendance at Board meetings in accordance with Company
policy.
All directors are eligible to participate in the Company's 1998
Equity Incentive Plan. Each non-employee director of the Company also
receives stock option grants under the Non-Employee Directors' Stock Option
Plan (the "Directors' Plan"). Only non-employee directors of the Company or
an affiliate of such directors (as defined in the Code) are eligible to
receive options under the Directors' Plan. Options granted under the
Directors' Plan are intended by the Company not to qualify as incentive stock
options under the Code.
Option grants under the Directors' Plan are non-discretionary. On
the date of the annual meeting of stockholders of each year, each member of
the Company's Board of Directors who is not an employee of the Company is
automatically granted under the Directors' Plan, without further action by
the Company, the Board of Directors or the stockholders of the Company, an
option to purchase 2,000 shares of Common Stock of the Company (the "Annual
Grant"). Furthermore, each person, upon appointment as a non-employee
director for the first time, automatically receives a one-time grant of 6,000
shares of the Company's Common Stock (the "Inaugural Grant"). Each person
acting as a non-employee director at the time of the Company's initial public
offering also received an Inaugural Grant of 6,000 shares. No other options
may be granted at any time under the Directors' Plan. The exercise price of
options granted under the Directors' Plan is 100% of the fair market value of
the Common Stock subject to the option on the date of the option grant.
Options granted under the Directors' Plan may be exercised as they vest:
monthly over one year for Annual Grants and monthly over three years for
Inaugural Grants, each in accordance with its terms. The term of options
granted under the Directors' Plan is ten years. In the event of certain
changes in control, these options will be accelerated in full.
During the last fiscal year, concurrently with the Company's initial
public offering, the Company granted options covering 6,000 shares to each
non-employee director of the Company, at an exercise price per share of
$13.00. The fair market value of such Common Stock on the date of grant was
$13.00 per share (based on the per share price to the public offered by the
Company in its initial public offering, which closed on May 24, 1999). As of
February 1, 2000, no options had been exercised under the Directors' Plan.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ended December 31,
1998 and 1999, compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and its other four most highly compensated executive
officers at December 31, 1999 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (1)
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- -------------
SECURITIES ALL OTHER
YEAR UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION (1) SALARY ($) BONUS ($) OPTIONS (#) ($) (2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gerald L. Benowitz...................... 1999 $281,501 $309,625 135,234 $15,000
President and Chief Executive Officer 1998 $254,550 $6,000 24,750 $12,000
Samuel Simkin........................... 1999 $162,283 $95,840 42,622 $12,000
Senior Vice President, Chief Financial 1998 $146,755 $11,000 6,160 $12,000
Officer and Secretary
Leslie J. Silver........................ 1999 $218,252 $258,750 92,940 $15,000
Executive Vice President and President, 1998 $166,620 $418,390 22,500 $18,000
Newgen Management Services, Inc.
James K. Roche.......................... 1999 $134,241 $59,800 39,777 $12,000
President, Carabunga.com, Inc. 1998 $118,408 $22,400 10,300 $12,000
Frederick Wallace....................... 1999 $151,038 $46,200 5,380 $12,000
Vice President, Marketing 1998 $83,136 $13,540 44,620 $6,000
- ------------------
</TABLE>
(1) As permitted by the rules promulgated by the SEC, no amounts are shown
for 1997.
(2) Includes automobile expenses and miscellaneous reimbursable expenses.
STOCK OPTION GRANTS AND EXERCISES
The Company currently grants options to its executive officers under
its 1998 Equity Incentive Plan. As of February 1, 2000, options to purchase a
total of 847,930 shares were outstanding under the 1998 Equity Incentive
Plan, including options granted to executive officers, and options to
purchase 121,427 shares remained available for grant thereunder.
Generally, options granted to executive officers under the
1998 Equity Incentive Plan vest 25% on the first anniversary of the
vesting commencement date and 25% on each anniversary thereafter. In
addition, the vesting of the options granted to the executive officers
listed will accelerate fully upon (i) involuntary termination without
cause or (ii) voluntary termination for good reason, in either case
within twelve months of certain changes in the Company's control. For
purposes of this acceleration provision, the terms "cause," "good
reason" and "change in control" are each defined in the option
agreements governing the option. Options granted under prior plans do
not contain similar acceleration provisions.
<PAGE>
The following tables show for the fiscal year ended December
31, 1999, certain information regarding options granted to, exercised
by and held at year-end by, each of the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF VALUE AT ASSUMED
NUMBER TOTAL ANNUAL RATES OF
OF SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OPTION TERM (3)
GRANTED IN FISCAL PRICE EXPIRATION ----------------------------
NAME (#) YEAR (1) ($/SH) (2) DATE 5% ($) 10% ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Benowitz 24,481 4.2% $9.25 2/01/2009 $142,413 $360,902
55,753 9.6% $9.25 2/01/2009 $324,331 $821,917
55,000 9.4% $10.38 11/19/2009 $359,036 $909,868
Mr. Simkin 19,969 3.4% $9.25 2/01/2009 $116,165 $294,385
16,575 2.8% $10.38 11/19/2009 $108,200 $274,201
6,078 1.0% $10.38 11/19/2009 $39,677 $100,549
Mr. Silver 32,526 5.6% $9.25 2/01/2009 $189,213 $479,502
40,414 6.9% $9.25 2/01/2009 $235,099 $595,788
65 0.0% $10.38 11/19/2009 $424 $1,075
19,935 3.4% $10.38 11/19/2009 $130,134 $329,786
Mr. Roche 16,857 2.9% $9.25 2/01/2009 $98,062 $248,508
19,523 3.3% $10.38 11/19/2009 $127,445 $322,970
3,397 0.6% $10.38 11/19/2009 $22,175 $56,197
Mr. Wallace 5,380 0.9% $10.38 11/19/2009 $35,120 $89,002
- -----------------------
</TABLE>
(1) Based on options to purchase 583,113 shares granted to employees in 1999.
(2) Options were granted at and exercise price equal to the fair market
value of the Company's common stock on the date of grant, as determined by
the Board of Directors.
(3) The potential realizable value is calculated based on the term of the
option (10 years) and is calculated assuming that the fair market value of
the common stock on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and the common stock received therefor is sold on the
last day of the term of the option for the appreciated price. The 5% and 10%
rates of appreciation are derived from the rules of the Securities and
Exchange Commission. The actual value realized may be greater than or less
than the potential realizable values set forth in the table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Value Underlying Unexercised In-the-Money
Shares Acquired Realized Options at FY-End (#) Options at FY-End ($) (2)
Name on Exercise (#) ($) (1) Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mr. Benowitz 50,000 417,500 56,188 / 253,796 520,640 / 1,194,127
Mr. Simkin 12,500 104,375 14,040 / 72,242 130,118 / 299,915
Mr. Silver -- -- 30,625 / 134,815 275,664 / 443,251
Mr. Roche -- -- 8,325 / 53,252 71,170 / 128,700
Mr. Wallace -- -- 11,155 / 38,845 87,627 / 263,863
</TABLE>
- ------------------
(1) Value realized is based on the fair market value of the Company's
Common Stock on the date of exercise minus the exercise price without taking
into account any taxes that may be payable in connection with the transaction.
(2) Value is calculated by taking the fair market value of the Company's
Common Stock at December 31, 1999, subtracting the exercise price per shares
under the options, and multiplying the result by the number of shares
underlying the options.
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain of
its executive officers. On April 29, 1999, the Company entered into
employment agreements with the following officers: Gerald L. Benowitz,
President and Chief Executive Officer; Samuel Simkin, Senior Vice
President, Chief Financial Officer and Secretary; Leslie J. Silver,
Executive Vice President and President, Newgen Management Services,
Inc.; and James K. Roche, President, Carabunga.com, Inc. Pursuant to the
employment agreements, the base salaries of such officers for 1999 were set
as follows: Mr. Benowitz--$275,000; Mr. Silver--$250,000; Mr.
Simkin--$154,000; and Mr. Roche--$130,000. Except with respect to each
officer's position and base salary, the terms of each employment
agreement are substantially the same.
The employment agreements have a two-year term. Under the employment
agreements, in the event any of these officers is terminated by the Company
without cause, such officer shall be engaged to perform services pursuant to
a consulting agreement for up to a one-year period in exchange for consulting
fees equal to such officer's annual base salary in effect as of the date of
termination. In addition, such officer shall receive, as severance, a payment
equal to the bonus earned by such officer in the previous year. In the event
any such officer voluntarily terminates his employment without cause or his
employment is terminated by the Company for cause (as defined in the
employment agreement), such officer may be engaged, at the Company's
election, to perform services pursuant to a consulting agreement for up to a
one-year period. The Company has granted options to purchase shares of its
common stock to certain of its directors and executive officers.
1996 EQUITY INCENTIVE PLAN
The Company adopted the 1996 Equity Incentive Plan (the "1996
Plan") in August 1996. The Board of Directors has reserved 700,000 shares of
common stock for issuance under the 1996 Plan. The 1996 Plan provides for the
grant, to the Company's employees, directors and consultants, of incentive
stock options within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended, nonstatutory stock options and rights to purchase
restricted stock ("Awards").
The maximum term of options granted under the 1996 Plan is 10 years.
The exercise price of options granted under the 1996 Plan is determined by
the Board of Directors in accordance with the guidelines set forth in the
1996 Plan. The exercise price of an incentive stock option cannot be less
than 100% of the fair market value of the common stock on the date of the
grant. The exercise price of a nonstatutory stock option cannot be less than
85% of the fair market value of the common stock on the date of grant. Upon
certain changes in control of the Company, all outstanding Awards under the
1996 Plan shall either be assumed or substituted by the surviving entity. If
the surviving entity determines not to assume or substitute those Awards,
then the vesting of such Awards will accelerate in full, but if the Awards
are not exercised at or before the change of control, they will be terminated.
As of February 1, 2000, options to purchase 311,500 shares of common
stock were outstanding under the 1996 Plan and the Board of Directors has
determined that no additional options will be granted under the 1996 Plan.
The 1996 Plan will terminate in August 2006 unless sooner terminated by the
Board of Directors.
1998 EQUITY INCENTIVE PLAN
For a description of the 1998 Equity Incentive Plan, see Proposal 2
above. As of February 1, 2000, options to purchase 847,930 shares of common
stock were outstanding under the 1998 Equity Incentive Plan, and 121,427
shares were reserved for future issuance.
EMPLOYEE STOCK PURCHASE PLAN
In August 1998, the Board of Directors approved the Company's
Employee Stock Purchase Plan (the "Purchase Plan"). A total of 350,000 shares
of common stock are reserved for issuance under the Purchase Plan. The
Purchase Plan is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Code. Under the Purchase Plan, the
Board of Directors may authorize participation by eligible employees,
including officers, in periodic offerings following the commencement of the
Purchase Plan. The initial offering under the Purchase Plan commenced on
August 1, 1999 and will terminate on July 31, 2000.
Unless otherwise determined by the Board of Directors, employees are
eligible to participate in the Purchase Plan only if they are employed by the
Company or one of its subsidiaries designated by the Board of Directors for
at least 20 hours per week and are customarily employed by the Company or one
of its subsidiaries designated by the Board of Directors for at least five
months each calendar year. Employees who participate in an offering may have
up to 15% of their earnings withheld under the Purchase Plan. The amount
withheld is then used to purchase shares of the common
<PAGE>
stock on specified dates determined by the Board of Directors. The price of
common stock purchased under the Purchase Plan will be equal to 85% of the
lower of the fair market value of the common stock at the commencement date
of each offering period or the relevant purchase date. Employees may end
their participation in the offering at any time during the offering period
and participation ends automatically on termination of employment with the
Company or one of its subsidiaries, as the case may be.
In the event of a merger, reorganization, consolidation or
liquidation involving the Company, the Board of Directors has discretion to
provide that each right to purchase common stock will be assumed or an
equivalent right substituted by the successor corporation or the Board of
Directors may provide for all sums collected by payroll deductions to be
applied to purchase stock immediately prior to such merger or other
transaction. The Board of Directors has the authority to amend or terminate
the Purchase Plan, provided, however, that no such action may adversely
affect any outstanding rights to purchase common stock.
401(k) PLAN
In January 1996, the Board of Directors adopted an employee
retirement savings plan covering certain of the Company's employees who have
at least one year of service with us and work a minimum of 1,000 hours during
the plan year. Eligible employees may make pre-tax contributions to the
401(k) Plan of up to 20% of their eligible earnings, subject to a statutorily
determined annual limit. In addition, eligible employees may make roll-over
contributions to the 401(k) Plan from a tax-qualified retirement plan. The
401(k) Plan allows the Company to make discretionary matching and additional
profit sharing contributions to an employee's account. In 1999, the Company
made contributions of approximately $103,000 into the 401(k) Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the Company's executive officers serves as a member of the
board of director or compensation committee of any entity that has one or
more executive officers serving as a member of the Company's Board of
Directors of Compensation Committee.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION 1
Thc Compensation Committee is currently composed of three
non-employee directors, Jess R. Marzak, Bernard C. Simkin and Bert
Winemiller. The Committee is responsible for establishing the Company's
compensation programs for all employees, including executives. For executive
officers, the Committee evaluates performance and determines compensation
policies and levels.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance and to enable the Company to attract and
retain the highest quality executive officers and other key employees, reward
them for the Company's progress and motivate them to enhance long-term
stockholder value. Key elements of this philosophy are as follows:
Thc Company provides compensation that is competitive with what
comparable companies offer to their employees. To ensure that
compensation is competitive, the Company compares its practices
with other business to business companies, both inside and outside
the Company's industry, and sets its parameters based on this
comparison.
The Company maintains short- to long-term incentive opportunities
sufficient to motivate employees to achieve specific operating
goals and to generate rewards that bring total employee
compensation to competitive levels.
The Company provides significant equity-based incentives for
executives and other key employees to ensure that they are
motivated over the long-term to respond to the Company's business
challenges and opportunities as owners.
BASE SALARY. The Committee annually reviews each executive officer's
base salary. When reviewing base salaries, the Committee considers individual
and corporate performance, levels of responsibility, prior experience,
breadth of knowledge and competitive pay practices. Base salaries for
executive officers were increased by 10% to 25% for fiscal 1999 compared to
fiscal 1998. The increases were due to fiscal 1998 financial performance and
the need to remain within the range of competitive salaries for comparable
companies.
NEAR-TERM INCENTIVES. Thc Company has adopted a Key Employee Bonus
Plan for certain employees of the Company, including all executive officers.
Cash bonuses are paid on an annual basis based upon achievement of specified
corporate goals.
Amounts reflected as "bonuses" in the "Summary Compensation Table"
above were paid based on the criteria set forth in the bonus plan.
LONG-TERM INCENTIVES. The Company's long-term incentive
program consists of the 1996 Equity Incentive Plan and the 1998 Equity
Incentive Plan (collectively, the "Stock Plans"), as well as the
Employee Stock Purchase Plan ("ESPP"). As of December 31, 1999, options
to purchase 1,653,883 shares of the Company's Common Stock have been
granted under the Stock Plans. Generally, stock options granted to the
Company's executive officers under the Stock Plans vest on a yearly
basis over four years, which the Company believes provides a strong
incentive for employees to remain with the Company. Through option
grants, executives and employees receive significant equity incentives
to build long-term stockholder value. Stock Option grants to employees
under the Stock Plans are made at 100% of fair market value on the date
of grant. Employees receive value from these grants only if the
Company's Common Stock appreciates over the long-term.
LIMITATION ON DEDUCTION OF COMPENSATION PAID TO CERTAIN EXECUTIVE OFFICERS
Section 162(m) of the Code limits the Company to a deduction for
federal income tax purposes of no more than $1 million of compensation paid
to certain Named Executive Officers in a taxable year. Compensation above $1
million may be deducted if it is "performance-based compensation" within the
meaning of the Code.
- -------------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before or
after the date hereof and irrespective of any general incorporation language
contained in such filing."
<PAGE>
The statute containing this law and the applicable proposed Treasury
regulations offer a number of transitional exceptions to this deduction limit
for pre-existing compensation plans, arrangements and binding contracts. As a
result, the Compensation Committee believes that at the present time it is
quite unlikely that the compensation paid to any Named Executive Officer in a
taxable year that is subject to the deduction limit will exceed $1 million.
Therefore, the Compensation Committee has not yet established a policy for
determining which forms of incentive compensation awarded to its Named
Executive Officers shall be designed to qualify as "performance-based
compensation."
CORPORATE PERFORMANCE AND CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Benowitz's base salary during fiscal 1999 as President and Chief
Executive Officer was $275,000. His bonus for the fiscal year was $309,625,
which was determined in accordance with the Key Employee Bonus Plan. Mr.
Benowitz's fiscal 1999 base salary was based largely on fiscal 1998
performance. In fiscal 1998, the Company achieved several key objectives.
These achievements included achieving record revenues, increasing the number
of dealers to whom the Company sells its services, decreasing the variable
cost associated with the provision of those services, and expanding the
Company's relationship with its major customers. Accordingly, Mr. Benowitz
received an increase in base salary of $25,000 for fiscal 1999 over the prior
year. In fiscal 1999, Mr. Benowitz also received additional stock option
grants for an aggregate of 79,481 shares of Common Stock.
CONCLUSION
Through the plans described above, a significant portion of the
Company's executive compensation program, including portions of Mr.
Benowitz's compensation, is contingent on Company performance, and
realization of benefits is closely linked to increases in long-term
stockholder value. The Company remains committed to this philosophy of pay
for performance, recognizing that the competitive market for talented
executives and the volatility of the Company's business may result in highly
variable compensation for a particular time period.
From the members of the Compensation Committee of Newgen Results
Corporation.
Jess R. Marzak
Bernard C. Simkin
Bert Winemiller
<PAGE>
Performance Measurement Comparison(1)
The following graph shows the total stockholder return of an
investment of $100 in cash on May 21, 1999 for (i) the Company's Common
Stock, (ii) the Russell 2000 Index and (iii) the Chase H&Q Information
Services Index. All values assume reinvestment of the full amount of all
dividends and are calculated as of the last business day of each period:
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT SINCE MAY 21, 1999
[GRAPH]
Cumulative Total Return
-------------------------------------------------------
5/21/1999 6/99 9/99 12/99 3/00
NEWGEN RESULTS CORPORATION 100.00 92.31 83.65 81.25 117.31
RUSSELL 2000 100.00 102.32 94.31 95.76 99.42
CHASE H & Q INFORMATION 100.00 97.36 92.43 139.62 119.80
SERVICES
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a description of transactions since January 1,
1999, to which the Company has been a party, in which the amount involved in
the transaction exceeded $60,000 and in which any of the Company's directors,
executive officers or holders of more than 5% of the Company's capital stock
had or will have a direct or indirect material interest.
In January 1996, the Simkin Children Irrevocable Trust and Samuel
Simkin, the Company's Senior Vice President, Chief Financial Officer and
Secretary, loaned the Company $220,000 and $380,000, respectively. The loans
were made under secured promissory notes. The principal amounts under such
notes were due on the earlier of the completion of the Company's initial
public offering and December 31, 1999. Interest was payable monthly and was
charged at a rate equal to the prime rate plus 2.0%. In addition, a bonus was
payable annually to the noteholders at a rate of 1.7%. These promissory notes
were repaid in full following the close of the Company's initial public
offering in May 1999.
In addition to the indemnification required in the Company's
Restated Certificate of Incorporation and Bylaws, the Company has entered
into indemnity agreements with each of its current directors and officers.
These agreements provide, among other things, for the indemnification of its
officers and directors for all expenses and liabilities incurred in
connection with any action or proceeding brought against them, including
liability under the Securities Act of 1933, by reason of the fact that they
are or were agents of the Company. In addition, the Company maintains
directors' and officers' insurance to cover its directors, officers and
certain employees for certain liabilities. The Company believes that these
indemnification provisions and agreements and this insurance are necessary to
attract and retain qualified directors and officers.
- ------------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be
presented for consideration at the Annual Meeting. If any other matters are
properly brought before the meeting, it is the intention of the persons named
in the accompanying proxy to vote on such matters in accordance with their
best judgment.
By Order of the Board of Directors
/s/ Samuel Simkin
----------------------------------
Samuel Simkin
Senior Vice President, Chief Financial Officer
and Secretary
May 5, 2000
<PAGE>
NEWGEN RESULTS CORPORATION
1998 EQUITY INCENTIVE PLAN, AS AMENDED
ADOPTED AUGUST 14, 1998
APPROVED BY STOCKHOLDERS NOVEMBER 3, 1998
AMENDED OCTOBER 1, 1998
APPROVED AS AMENDED BY STOCKHOLDERS MARCH 17, 1999
AMENDED APRIL 26, 2000
1. Purposes.
(a) The purpose of the 1998 Equity Incentive Plan ("Plan") is to provide a
means by which selected Employees and Directors and Consultants may be given an
opportunity to benefit from increases in value of the common stock of the
Company ("Common Stock") through the granting of (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to purchase
restricted stock, and (v) stock appreciation rights, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company and
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof, or (iii) stock
appreciation rights granted pursuant to Section 8 hereof. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. Definitions.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
<PAGE>
(e) "COMPANY" means Newgen Results Corporation, a Delaware corporation.
(f) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT" mean a
right granted pursuant to subsection 8(b)(ii) of the Plan.
(g) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director of the
Company will not constitute an interruption of Continuous Service. The Board or
the chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.
(i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:
(i) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in Common Stock) on the last market trading day
prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable;
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
2
<PAGE>
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT" means a
right granted pursuant to subsection 8(b)(iii) of the Plan.
(p) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.
(q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
of 1933 ("Regulation S-K"), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(s) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "OPTION" means a stock option granted pursuant to the Plan.
(u) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement shall be subject to the terms and conditions of the Plan.
(v) "OPTIONEE" means a person to whom an Option is granted pursuant to the
Plan.
(w) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
3
<PAGE>
(x) "PARTICIPANT" means a person to whom a Stock Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Stock
Award.
(y) "PLAN" means this Newgen Results Corporation 1998 Equity Incentive
Plan.
(z) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect with respect to the Company when discretion is being
exercised regarding the Plan.
(aa) "STOCK APPRECIATION RIGHT" means any of the various types of rights
which may be granted under Section 8 of the Plan.
(bb) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and any right to acquire restricted stock, and a Stock
Appreciation Right.
(cc) "STOCK AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(dd) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a right
granted pursuant to subsection 8(b)(i) of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted
stock, a Stock Appreciation Right, or a combination of the foregoing; the
provisions of each Stock Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive stock
pursuant to a Stock Award; whether a person shall be permitted to receive
stock upon exercise of an Independent Stock Appreciation Right; and the
number of shares with respect to which a Stock Award shall be granted to each
such person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in Section 14.
4
<PAGE>
(iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board, and the term "Committee"
shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
At such time as the Common Stock is publicly traded, in the
discretion of the Board, a Committee may consist solely of two or more
Outside Directors, in accordance with Section 162(m) of the Code, and/or
solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.
Within the scope of such authority, the Board or the Committee may (i)
delegate to a committee of one or more members of the Board who are not
Outside Directors the authority to grant Stock Awards to eligible persons who
are either (1) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Stock
Award or (2) not persons with respect to whom the Company wishes to comply
with Section 162(m) of the Code and/or) (ii) delegate to a committee of one
or more members of the Board who are not Non-Employee Directors the authority
to grant Stock Awards to eligible persons who are not then subject to Section
16 of the Exchange Act.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate two million two hundred fifty thousand
(2,250,000) shares of the Common Stock, subject to the following sentence. An
aggregate one million seven hundred fifty thousand (1,750,000) shares shall
initially be authorized for issuance pursuant to Stock Awards; provided,
however, such total shall increase automatically, as and to the extent that
options to purchase Common Stock outstanding as of the Effective Date under
the Company's 1996 Equity Incentive Plan terminate or expire prior to
exercise, by the number of shares underlying such terminated or expired
options, subject to a maximum increase of 500,000 shares (bringing the
maximum total to an aggregate 2,250,000 shares). If any Stock Award shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full (or vested in the case of Restricted Stock), the stock
not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan. Shares subject to Stock Appreciation
Rights exercised in accordance with Section 8 of the Plan shall not be
available for subsequent issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5
<PAGE>
5. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than Incentive
Stock Options and Stock Appreciation Rights appurtenant thereto may be
granted only to Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an Option or an award
to purchase restricted stock if, at the time of grant, such person owns (or
is deemed to own pursuant to Section 424(d) of the Code) stock possessing
more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company or of any of its Affiliates unless the exercise price
of such Option is at least one hundred ten percent (110%) of the Fair Market
Value of such stock at the date of grant and the Option is not exercisable
after the expiration of five (5) years from the date of grant, or in the case
of a restricted stock purchase award, the purchase price is at least one
hundred percent (100%) of the Fair Market Value of such stock at the date of
grant.
(c) Subject to the provisions of Section 13 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options and Stock
Appreciation Rights covering more than three hundred thousand (300,000)
shares of the Common Stock in any calendar year. This subsection 5(c) shall
not apply until (i) the earliest of: (A) the first material modification of
the Plan (including any increase to the number of shares reserved for
issuance under the Plan in accordance with Section 4); (B) the issuance of
all of the shares of Common Stock reserved for issuance under the Plan; (C)
the expiration of the Plan; or (D) the first meeting of stockholders at which
directors are to be elected that occurs after the close of the third calendar
year following the calendar year in which occurred the first registration of
an equity security under Section 12 of the Exchange Act; or (ii) such other
date required by Section 162(m) of the Code and the rules and regulations
promulgated thereunder.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted and the
exercise price of each Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to
the Option on the date the Option is granted. Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code.
6
<PAGE>
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or the Committee, at the time of the grant of
the Option, (A) by delivery to the Company of other Common Stock of the
Company, (B) according to a deferred payment arrangement, except that payment
of the common stock's "par value" (as defined in the Delaware General
Corporation Law) shall not be made by deferred payment, or other arrangement
(which may include, without limiting the generality of the foregoing, the use
of other Common Stock of the Company) with the person to whom the Option is
granted or to whom the Option is transferred pursuant to subsection 6(d), or
(C) in any other form of legal consideration that may be acceptable to the
Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.
(d) TRANSFERABILITY. Prior to the Listing Date an Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person. After the Listing Date, a Nonstatutory Stock
Option may be transferred to the extent provided in the Option Agreement;
provided that if the Option Agreement does not expressly permit the transfer
of a Nonstatutory Stock Option, the Nonstatutory Stock Option shall not be
transferable except by will, by the laws of descent and distribution or
pursuant to a domestic relations order satisfying the requirements of Rule
16b-3 and shall be exercisable during the lifetime of the person to whom the
Option is granted only by such person or any transferee pursuant to a
domestic relations order. Notwithstanding the foregoing, the person to whom
the Option is granted may, by delivering written notice to the Company, in a
form satisfactory to the Company, designate a third party who, in the event
of the death of the Optionee, shall thereafter be entitled to exercise the
Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period,
and may be exercised with respect to some or all of the shares allotted to
such period and/or any prior period as to which the Option became vested but
was not fully exercised, provided however that prior to the Listing Date an
Option granted to a non-officer Employee shall vest at least twenty percent
(20%) of the shares per year. The Option may be subject to such other terms
and conditions on the time or times when it may be exercised (which may be
based on performance or other criteria) as the Board may deem appropriate.
The provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(f) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it at the date of termination, unless
otherwise provided in the Option Agreement) but only within such period of
7
<PAGE>
time ending on the earlier of (i) the date thirty (30) days after the
termination of the Optionee's Continuous Service (or after the Listing Date
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionee does not exercise his or her Option
within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Service
(other than upon the Optionee's death or disability) would result in
liability under Section 16(b) of the Exchange Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the Option Agreement, or (ii) the tenth (10th) day after the last
date on which such exercise would result in such liability under Section
16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also
provide that if the exercise of the Option following the termination of the
Optionee's Continuous Service (other than upon the Optionee's death or
disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of
the Option set forth in the first paragraph of this subsection 6(f), or (ii)
the expiration of a period of thirty (30) days (or such longer or shorter
period provided in the Option Agreement) after the termination of the
Optionee's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's disability, the Optionee may
exercise his or her Option (to the extent that the Optionee was entitled to
exercise it at the date of termination), but only within such period of time
ending on the earlier of (i) the date six (6) months following such
termination (or after the Listing Date such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option after the termination of, the
Optionee's Continuous Service, the Option may be exercised (to the extent the
Optionee was entitled to exercise the Option at the date of death) by the
Optionee's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the option
upon the Optionee's death pursuant to subsection 6(d), but only within the
period ending on the earlier of (i) the date twelve (12) months following the
date of death (or after the Listing Date such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, at the time of death,
the Optionee was not entitled to exercise his or her entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
8
<PAGE>
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to
any other restriction the Board determines to be appropriate.
(j) RIGHT OF REPURCHASE. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
repurchase all or any part of the vested shares acquired by the Optionee
pursuant to the exercise of the Option. The terms of such repurchase option
shall comply with the requirements of Section 260.140.42 of Title 10 of the
California Code of Regulations.
(k) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
exercise a right of first refusal following receipt of notice from the
Optionee of the intent to transfer all or any part of the shares exercised
pursuant to the Option. Except as expressly provided in this subsection 6(k),
such right of first refusal shall otherwise comply with any applicable
provisions of the Bylaws of the Company.
(l) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation) to
include as part of any Option Agreement a provision entitling the Optionee to
a further Option (a "Re-Load Option") in the event the Optionee exercises the
Option evidenced by the Option agreement, in whole or in part, by
surrendering other shares of Common Stock in accordance with this Plan and
the terms and conditions of the Option Agreement. Any such Re-Load Option (i)
shall be for a number of shares equal to the number of shares surrendered as
part or all of the exercise price of such Option; (ii) shall have an
expiration date which is the same as the expiration date of the Option the
exercise of which gave rise to such Re-Load Option; and (iii) shall have an
exercise price which is equal to one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option. Notwithstanding the foregoing, a Re-Load
Option which is granted to a 10% stockholder (as described in subsection
5(c)), shall have an exercise price which is equal to one hundred ten percent
(110%) of the Fair Market Value of the stock subject to the Re-Load Option on
the date of exercise of the original Option and shall have a term which is no
longer than five (5) years.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the
time of the grant of the original Option; PROVIDED, HOWEVER, that the
designation of any Re-Load Option as an Incentive Stock Option shall be
subject to the one hundred thousand dollars ($100,000) annual limitation on
exercisability of Incentive Stock Options described in subsection 12(d) of
the Plan and in Section 422(d) of the Code. There shall be no Re-Load Options
on a Re-Load Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares under subsection 4(a) and shall be subject
to such other terms and conditions as the Board or Committee may determine
which are not inconsistent with the express provisions of the Plan regarding
the terms of Options.
9
<PAGE>
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement but in no event shall the purchase
price be less than eighty-five percent (85%) of the stock's Fair Market Value
on the date such award is made. Notwithstanding the foregoing, the Board or
the Committee may determine that eligible participants in the Plan may be
awarded stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of
descent and distribution or, after the Listing Date and if the agreement so
provides, pursuant to a domestic relations order satisfying the requirements
of Rule 16b-3 so long as stock awarded under such agreement remains subject
to the terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
restricted stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board or the Committee,
according to a deferred payment arrangement, except that payment of the
common stock's "par value" (as defined in the Delaware General Corporation
Law) shall not be made by deferred payment, or other arrangement with the
person to whom the stock is sold; or (iii) in any other form of legal
consideration that may be acceptable to the Board or the Committee in its
discretion. Notwithstanding the foregoing, the Board or the Committee to
which administration of the Plan has been delegated may award stock pursuant
to a stock bonus agreement in consideration for past services actually
rendered to the Company or for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee, provided however that prior to the Listing Date, stock sold or
awarded to a non-officer Employee shall vest at least twenty percent (20%) of
the shares per year. Prior to the Listing Date the terms of such repurchase
option shall otherwise comply with the requirements of Section 260.140.42 of
Title 10 of the California Code of Regulations.
(e) TERMINATION OF CONTINUOUS SERVICE. In the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have
not vested as of the date of termination under the terms
10
<PAGE>
of the stock bonus or restricted stock purchase agreement between the Company
and such person.
8. STOCK APPRECIATION RIGHTS.
(a) The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation Rights under
the Plan to Employees or Directors of or Consultants to, the Company or its
Affiliates. To exercise any outstanding Stock Appreciation Right, the holder
must provide written notice of exercise to the Company in compliance with the
provisions of the Stock Award Agreement evidencing such right. Except as
provided in subsection 5(c), no limitation shall exist on the aggregate
amount of cash payments the Company may make under the Plan in connection
with the exercise of a Stock Appreciation Right.
(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:
(i) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation
Rights will be granted appurtenant to an Option, and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains.
Tandem Stock Appreciation Rights will require the holder to elect between the
exercise of the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation distribution. The
appreciation distribution payable on the exercised Tandem Right shall be in
cash (or, if so provided, in an equivalent number of shares of stock based on
Fair Market Value on the date of the Option surrender) in an amount up to the
excess of (A) the Fair Market Value (on the date of the Option surrender) of
the number of shares of stock covered by that portion of the surrendered
Option in which the Optionee is vested over (B) the aggregate exercise price
payable for such vested shares.
(ii) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights will be
granted appurtenant to an Option and may apply to all or any portion of the
shares of stock subject to the underlying Option and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains. A
Concurrent Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of stock
to which the Concurrent Right pertains. The appreciation distribution payable
on an exercised Concurrent Right shall be in cash (or, if so provided, in an
equivalent number of shares of stock based on Fair Market Value on the date
of the exercise of the Concurrent Right) in an amount equal to such portion
as shall be determined by the Board or the Committee at the time of the grant
of the excess of (A) the aggregate Fair Market Value (on the date of the
exercise of the Concurrent Right) of the vested shares of stock purchased
under the underlying Option which have Concurrent Rights appurtenant to them
over (B) the aggregate exercise price paid for such shares.
(iii) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights will
be granted independently of any Option and shall, except as specifically set
forth in this Section 8, be subject to the same terms and conditions
applicable to Nonstatutory Stock Options as set forth in Section 6. They
shall be denominated in share equivalents. The appreciation distribution
payable on the exercised Independent Right shall be not greater than an
amount equal to the
11
<PAGE>
excess of (A) the aggregate Fair Market Value (on the date of the exercise of
the Independent Right) of a number of shares of Company stock equal to the
number of share equivalents in which the holder is vested under such
Independent Right, and with respect to which the holder is exercising the
Independent Right on such date, over (B) the aggregate Fair Market Value (on
the date of the grant of the Independent Right) of such number of shares of
Company stock. The appreciation distribution payable on the exercised
Independent Right shall be in cash or, if so provided, in an equivalent
number of shares of stock based on Fair Market Value on the date of the
exercise of the Independent Right.
9. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding Options
and/or any Stock Appreciation Rights under the Plan and/or (ii) with the
consent of any adversely affected holders of Options and/or Stock
Appreciation Rights, the cancellation of any outstanding Options and/or Stock
Appreciation Rights under the Plan and the grant in substitution therefor of
new Options and/or Stock Appreciation Rights under the Plan covering the same
or different numbers of shares of stock, but having an exercise price per
share not less than eighty-five percent (85%) of the Fair Market Value for a
Nonstatutory Stock Option, one hundred percent (100%) of the Fair Market
Value for an Incentive Stock Option or, in the case of an Incentive Stock
Option (any Option if effected prior to the Listing Date) held by a 10%
stockholder (as described in subsection 5(c)), not less than one hundred ten
percent (110%) of the Fair Market Value per share of stock on the new grant
date. Notwithstanding the foregoing, the Board or the Committee may grant an
Option and/or Stock Appreciation Rights with an exercise price lower than
that set forth above if such Option and/or Stock Appreciation Right is
granted as part of a transaction to which section 424(a) of the Code applies.
(b) Shares subject to an Option or Stock Appreciation Right canceled
under this Section 9 shall continue to be counted against the maximum award
of Options or Stock Appreciation Rights permitted to be granted pursuant to
subsection 5(c) of the Plan. The repricing of an Option and/or Stock
Appreciation Right under this Section 9, resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original Option
and/or Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the original
and the substituted Options and Stock Appreciation Rights shall be counted
against the maximum awards of Options and Stock Appreciation Rights permitted
to be granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 9(b) shall be applicable only to the extent required by Section
162(m) of the Code.
10. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares under Stock Awards; provided, however, that this
undertaking shall not require the Company to
12
<PAGE>
register under the Securities Act of 1933, as amended (the "Securities Act")
either the Plan, any Stock Award or any stock issued or issuable pursuant to
any such Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Stock Awards unless and
until such authority is obtained.
11. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
12. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest pursuant to subsection 6(e), 7(d) or 8(a),
notwithstanding the provisions in the Stock Award stating the time at which
it may first be exercised or the time during which it will vest.
(b) Neither an Employee, Director nor a Consultant nor any person to
whom a Stock Award is transferred in accordance with the Plan shall be deemed
to be the holder of, or to have any of the rights of a holder with respect
to, any shares subject to such Stock Award unless and until such person has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or
any Affiliate or to continue serving as a Consultant and Director, or shall
affect the right of the Company or any Affiliate to terminate the employment
of any Employee with or without notice and with or without cause, or the
right to terminate the relationship of any Consultant pursuant to the terms
of such Consultant's agreement with the Company or Affiliate or service as a
Director pursuant to the Company's Bylaws and the laws of the state in which
the Company is incorporated.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
(e) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred in accordance with the
Plan, as a condition of exercising or acquiring stock under any Stock Award,
(i) to give written assurances satisfactory to the Company as to such
person's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters, and that
he or she is capable of
13
<PAGE>
evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that such person is acquiring the stock
subject to the Stock Award for such person's own account and not with any
present intention of selling or otherwise distributing the stock. The
foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (A) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered
under a then currently effective registration statement under the Securities
Act, or (B) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in order
to comply with applicable securities laws, including, but not limited to,
legends restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
stock under a Stock Award by any of the following means or by a combination
of such means: (i) tendering a cash payment; (ii) authorizing the Company to
withhold shares from the shares of the Common Stock otherwise issuable to the
participant as a result of the exercise or acquisition of stock under the
Stock Award; or (iii) delivering to the Company owned and unencumbered shares
of the Common Stock of the Company.
(g) Throughout the term of any Stock Award, the Company shall deliver to
the holder of such Stock Award, not later than one hundred twenty (120) days
after the close of each of the Company's fiscal years during the term of such
Stock Award, a balance sheet and an income statement. This subsection shall
not apply (i) after the Listing Date, or (ii) when issuance is limited to key
employees whose duties in connection with the Company assure them access to
equivalent information.
13. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the receipt
of consideration by the Company), the Plan will be appropriately adjusted in
the class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a) and the maximum number of shares subject to award to any
person during any calendar year pursuant to subsection 5(c), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding
Stock Awards. Such adjustments shall be made by the Board or the Committee,
the determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated
as a "transaction not involving the receipt of consideration by the Company.")
14
<PAGE>
(b) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then outstanding Stock Awards
shall be terminated if not exercised (if applicable) prior to such event.
(c) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (i) a sale of substantially all of the assets of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise, then any
surviving corporation or acquiring corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar stock awards
(including an award to acquire the same consideration paid to the
shareholders in the transaction described in this subsection 13(c) for those
outstanding under the Plan). In the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to substitute
similar stock awards for those outstanding under the Plan, then with respect
to Stock Awards held by Participants whose Continuous Service has not
terminated, the vesting of such Stock Awards (and, if applicable, the time
during which such Stock Awards may be exercised) shall be accelerated in
full, and the Stock Awards shall terminate if not exercised (if applicable)
at or prior to such event. With respect to any other Stock Awards outstanding
under the Plan, such Stock Awards shall terminate if not exercised (if
applicable) prior to such event.
14. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary
for the Plan to satisfy the requirements of Section 422 of the Code, Rule
16b-3 or any Nasdaq or securities exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible
Employees, Directors or Consultants with the maximum benefits provided or to
be provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan
and/or Incentive Stock Options granted under it into compliance therewith.
Rights and obligations under any Stock Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.
(d) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award
15
<PAGE>
shall not be impaired by any such amendment unless (i) the Company requests
the consent of the person to whom the Stock Award was granted and (ii) such
person consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Stock Award was granted.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date adopted by the Board (the
"Effective Date"), but no Stock Awards granted under the Plan shall be
exercised unless and until the Plan has been approved by the stockholders of
the Company, which approval shall be within twelve (12) months before or
after the date the Plan is adopted by the Board.
16
<PAGE>
NEWGEN RESULTS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 2000
The undersigned hereby appoints Gerald L. Benowitz and Samuel Simkin,
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of Newgen Results
Corporation which the undersigned may be entitled to vote at the Annual Meeting
of Stockholders of Newgen Results Corporation to be held in the Torrey Pines
Room at the Del Mar Doubletree Hotel, 11915 El Camino Real, San Diego, CA 92130
on Thursday, June 8, 2000 at 10:00 a.m. (local time), and at any and all
postponements, continuations and adjournments thereof, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
- -------------------------------DETACH HERE------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect three directors to hold office until the 2003 Annual
Meeting of Stockholders.
/ / FOR all nominees listed below (except / / WITHHOLD AUTHORITY to vote
as marked to the contrary below). for all nominees listed below.
NOMINEES: Gerald L. Benowitz, Jess R. Marzak, John Moragne
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S) WRITE SUCH NOMINEE(S)' NAME(S)
BELOW:
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3.
PROPOSAL 2: To approve the Company's 1998 Stock Option Plan, as amended
to increase the aggregate number of shares of Common Stock
authorized for issuance under such plan by 750,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
PROPOSAL 3: To ratify selection of ARTHUR ANDERSEN LLP as independent auditors
of the Company for its fiscal year ending DECEMBER 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
Dated _________________ ____________________________________
____________________________________
SIGNATURE(S)
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. IF THE STOCK IS
REGISTERED IN THE NAMES OF TWO OR
MORE PERSONS, EACH SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS AND ATTORNEYS-IN-FACT
SHOULD ADD THEIR TITLES. IF SIGNER
IS A CORPORATION, PLEASE GIVE FULL
CORPORATE NAME AND HAVE A DULY
AUTHORIZED OFFICER SIGN, STATING
TITLE. IF SIGNER IS A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
