<PAGE> 1
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 Section 240.14a-11(c) or Section
240.14a-12
QUOKKA SPORTS, INC.
(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> 2
QUOKKA SPORTS, INC.
525 BRANNAN STREET, GROUND FLOOR
SAN FRANCISCO, CALIFORNIA 94107
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2000
TO THE STOCKHOLDERS OF QUOKKA SPORTS, INC.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Quokka
Sports, Inc., a Delaware corporation (the "Company"), will be held on Wednesday,
May 3, 2000 at 9:00 a.m. California time at The Ritz-Carlton Hotel, 600 Stockton
St., San Francisco, CA 94108 for the following purposes:
1. To elect three directors to hold office until the 2003 Annual Meeting of
Stockholders.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending December 31, 2000.
3. 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 March 21, 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/ Les Schmidt
-------------------
LES SCHMIDT
Secretary
San Francisco, California
April 6, 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> 3
QUOKKA SPORTS, INC.
525 BRANNAN STREET, GROUND FLOOR
SAN FRANCISCO, CALIFORNIA 94107
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Quokka Sports, Inc., a Delaware corporation ("Quokka" or the "Company"), for use
at the Annual Meeting of Stockholders to be held on May 3, 2000, at 9:00 a.m.
California 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 at The Ritz-Carlton Hotel, 600
Stockton St., San Francisco, CA 94108. The Company intends to mail this proxy
statement and accompanying proxy card on or about April 7, 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 March
21, 2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 21, 2000 the Company had outstanding and entitled to
vote 44,428,977 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
For Shares Registered in the Name of a Broker or Bank
A number of brokers and banks are participating in a program provided
through ADP Investor Communication Services that offers telephone and Internet
voting options. If your shares are held in an account with a broker or bank
participating in the ADP Investor Communication Services program, you may vote
those share telephonically by calling the telephone number shown on the voting
form received from your
1
<PAGE> 4
broker or bank, or via the Internet at ADP Investor Communication Services'
voting Web site (www.proxyvote.com).
General Information for All Shares Voted Via the Internet or By Telephone
Votes submitted via the Internet or by telephone must be received by 11:59
p.m., California time on Monday, May 1, 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, 525
Brannan Street, San Francisco, California, 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 December 7, 2000. 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.
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<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and Bylaws provide that the
Board of Directors shall be divided into three classes, each class consisting,
as nearly as possible, of one-third of the total number of directors, 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 seven members. There are
three directors in the class whose term of office expires in 2000. Each of the
nominees for election to this class is currently a director of the Company who
was previously elected by the stockholders. If elected at the Annual Meeting,
each of the nominees would serve until the 2003 annual meeting and until his or
her successor is elected and has qualified, or until such director's earlier
death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the three nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve.
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, with ages shown as of February 29, 2000.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING
Alan S. Ramadan, age 41, has served as the Company's President and Chief
Executive Officer and as a director since August 1996, when the Company
incorporated in Delaware under the name Quokka Productions, Inc. Additionally,
Mr. Ramadan served as Managing Director of the Company from 1990 to August 1996,
during which period the Company was known as Ozware Developments Unit Trust and
operated in Australia. In January 1993, Mr. Ramadan joined Fluid Thinking, Pty.
Ltd. in Melbourne, Australia as that company's Chief Executive Officer until
June 1995. As Chief Executive Officer of Fluid Thinking, Pty. Ltd., Mr. Ramadan
was responsible for drawing together a team of specialists that, together with
the Technology Foundation, developed key technology used by oneAustralia in the
America's Cup challenge. Mr. Ramadan also founded Best Knowledge Systems, a
consulting company, and worked as a research scientist at BHP Steel and as a
computer scientist at Monash University in Melbourne, Australia. Mr. Ramadan
holds a B.Sc. in Computer Science and Applied Mathematics from Monash University
and is a 1995 graduate of the Stanford Business School's Executive Program for
Growing Companies.
John Bertrand A.M., age 53, has served as a director since August 1996 when
the Company incorporated in Delaware under the name Quokka Productions, Inc.
Since April 1997, Mr. Bertrand has served as the Company's Vice Chairman of the
Board. From September 1992 to June 1995, Mr. Bertrand was the Chairman of the
Board of Fluid Thinking, Pty. Ltd. and the skipper of oneAustralia, the 1995
America's Cup Challenge team that received technological support from Fluid
Thinking, Pty. Ltd. From September 1995 to October 1998, Mr. Bertrand was
Chairman of the Australian Government's Industry Research and Development Board.
From June 1993 to the present, Mr. Bertrand has been the Chairman of the
Southern Cross Foundation, an Australian scholarship foundation for engineering
and applied science students. Mr. Bertrand holds a B.S. in Mechanical
Engineering from Monash University and a M.S. in Naval Architecture from M.I.T.
During his twenty-nine year international sailing career, from 1970 to the
present, Mr. Bertrand has represented Australia in five America's Cups and two
Olympic Games. Mr. Bertrand won the America's Cup for Australia in September
1983 and is a life member of the Australia's Sports Hall of Fame as well as the
International America's Cup Hall of Fame.
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<PAGE> 6
Roel Pieper, age 43, became a director of Quokka in December 1997. Mr.
Pieper joined Insight Capital Partners as General Partner in November 1999. From
May 1998 to May 1999, Mr. Pieper has served as a director and an Executive Vice
President of Royal Philips Electronics N.V. From August 1997 to March 1998, Mr.
Pieper served as Senior Vice President, Worldwide Sales and Marketing, of Compaq
Computer Corporation. From January 1996 to August 1997, Mr. Pieper served as the
President and Chief Executive Officer of Tandem Computers, Inc., where he helped
reposition the company for its eventual merger with Compaq Computer Corporation.
From September 1993 to December 1995, Mr. Pieper also served as the President
and Chief Executive officers of Ub Networks, Inc., a wholly-owned subsidiary of
Tandem Computers, Inc., until that subsidiary merged with Compaq Computer
Corporation. From December 1990 to August 1993, Mr. Pieper was the President and
Chief Executive Officer of AT&T's UNIX System Laboratories. Prior to that time,
Mr. Pieper spent ten years in the employ of Software AG, where he was eventually
promoted to the position of Chief Technology Officer. Mr. Pieper also serves on
the boards of directors of Computer Associates, Inc., Learnout & Hauspie Speech.
Mr. Pieper holds a Doctoral Degree in Mathematics and Computer Science from
Delft Technical University and is Crown Fellow of the Aspen Institute in the
United States.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
Walter W. Bregman, age 66, became a director of Quokka in October 1997.
From January 1988 to the present, Mr. Bregman has served as Chairman and Joint
Chief Executive Officer of S&B Enterprises, a marketing and consulting company.
In 1985, Mr. Bregman co-founded Cormorant Beach Club in St. Croix USVI and
served as its Chief Executive Officer and Manager from 1985 to 1987. Prior to
that time, Mr. Bregman was President of International Playtex, Inc. a
manufacturer of intimate apparel, toiletries, pantyhose and baby nursers. Before
joining International Playtex, Inc., Mr. Bregman served as Vice President of
Marketing and Advertising for E&J Gallo Winery and as President of NCK, Inc., a
worldwide advertising agency. Mr. Bregman also serves on the boards of directors
for Symantec, Inc. and Sento, Inc. Mr. Bregman holds an A.B. in English
Literature from Harvard College.
James G. Shennan, Jr., age 58, became a director of Quokka in December
1997. From June 1989 to the present, Mr. Shennan has been a General Partner of
Trinity Ventures, a venture capital firm. Mr. Shennan has over 25 years
experience in consumer products and services marketing. Mr. Shennan also serves
on the boards of directors of the Starbucks Coffee Company and P. F. Chang's
China Bistro, Inc., as well as several private consumer and e-commerce companies
in which Trinity Ventures is an investor. Mr. Shennan holds a B.A. in
International Politics from Princeton University and an M.B.A. from the Stanford
Graduate School of Business.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
Richard H. Williams, age 56, has served as a director since August 1996,
when the Company incorporated in Delaware under the name Quokka Productions,
Inc. Since April 1997, Mr. Williams has served as the Company's Chairman of the
Board. From December 1993 to February 1996, Mr. Williams was President and Chief
Executive Officer of Illustra Information Technologies, Inc. In February 1996,
Illustra Information Technologies, Inc. was acquired by Informix Software, Inc.,
where Mr. Williams served as Senior Vice President until August 1996. From
October 1991 to May 1992, Mr. Williams was Executive Vice President of Sales for
Novell, Inc., and General Manager of that company's Digital Research Systems
Group. Prior to that time, Mr. Williams served as President and Chief Executive
Officer of Digital Research, Inc. Before joining Digital Research, Inc., Mr.
Williams was employed by IBM for twenty-two years, where he served as Vice
President of Plans, Controls and Product Management for the General Products
Division from May 1984 to December 1986. Mr. Williams holds a B.S. in
Mathematics from the University of North Dakota and conducted graduate studies
at the University of Minnesota in numerical analysis and statistics.
4
<PAGE> 7
Barry M. Weinman, age 61, became a director of Quokka in December 1997.
From May 1993 to the present, Mr. Weinman has been a General Partner at Media
Technology Ventures/AVI Management and has been making high tech venture capital
investments in Silicon Valley since 1980. AVI Management and its new media fund,
Media Technology Ventures, had approximately $300 million under management as of
March 31, 1999. Mr. Weinman is also on the boards of directors of Women.com
Networks (Women's Wire), Be, Inc., InfoGear, Inc. and TalkCity, Inc. Mr. Weinman
holds a B.S. in Industrial Engineering from Clarkson College of Technology and
an M.A. in International Relations from the London School of
Economics/University of Southern California.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1999 the Board of Directors held
ten meetings and acted by unanimous written consent five times. The Board of
Directors has an audit committee, a compensation committee and a nominating
committee. The Board of Directors has also established a Single Person Non-
Officer Stock Option Committee and a Two Person Non-Officer Stock Option
Committee authorized to grant stock options to individuals below the level of
senior vice president.
The audit committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board of Directors the independent auditors to be
retained; and receives and considers the accountants' comments as to controls,
adequacy of staff and management performance and procedures in connection with
audit and financial controls. The audit committee is composed of two
non-employee directors, Messrs. Shennan and Weinman, and met once during the
1999 fiscal year. Mr. Williams, the Company's Chairman of the Board, was a
member of the audit committee through April 1999.
The compensation committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board of
Directors may delegate. The compensation committee is composed of three
non-employee directors: Messrs. Bregman, Shennan and Weinman. It met five times
during the 1999 fiscal year and acted by unanimous written consent once.
Mr. Ramadan, the Company's president and chief executive officer, is
authorized by the Board of Directors as the sole member of the Single Person
Non-Officer Stock Option Committee to approve the grant and acceleration of
stock options under the Company's 1997 Equity Incentive Plan to individuals
below the level of senior vice president, in accordance with guidelines
established by the Compensation Committee. Mr. Ramadan acted by written consent
19 times in his role on this committee. Messrs. Ramadan and Bertrand are
authorized by the Board of Directors as members of the Two Person Non-Officer
Stock Option Committee to approve the grant of stock options under the Company's
1997 Equity Incentive Plan to individuals below the level of senior vice
president outside the guidelines established by the Compensation Committee. The
two person committee did not take any action in 1999.
The nominating committee interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors and committees
thereof and nominates specific individuals to be elected as officers of the
Company by the Board of Directors. No procedure has been established for the
consideration of nominees recommended by stockholders. The nominating committee
is composed of three non-employee directors: Messrs. Williams, Bregman and
Shennan. It did not have any meetings nor did it act by unanimous consent during
the 1999 fiscal year.
During the fiscal year ended December 31, 1999, all directors except Roel
Pieper attended at least 75% of the aggregate of the meetings of the Board of
Directors and committee meetings on which such director served in 1999.
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PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers 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.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
the fiscal year ending December 31, 1997. Representatives of
PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP as
the Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers 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 stockholders.
In March 1998, KPMG LLP was dismissed and PricewaterhouseCoopers LLP
replaced KPMG LLP as the Company's independent accountants. The selection of
PricewaterhouseCoopers LLP as the Company's independent accountants was ratified
by the Board of Directors in April 1998. During the fiscal years ending December
31, 1997 and 1998, the Company has no disagreement with its former accountants,
KPMG LLP, on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements if not
resolved to their satisfaction would have caused them to make reference in
connection with their opinion to the subject matter of the disagreement. KPMG
LLP did not issue a report on the Company's financial statements with respect to
the years ended December 31, 1997 or 1998.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
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<PAGE> 9
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 29, 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, the address
is Quokka Sports, Inc., 525 Brannan Street, San Francisco, CA 94107.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
---------------- ---------- ----------
<S> <C> <C>
Entities associated with Media Technology Ventures(2)....... 4,895,932 11.0%
One First Street, Suite 2
Los Altos, CA 94022
Intel Corporation........................................... 4,184,093 9.4%
2200 Mission College Blvd
Santa Clara, CA 95052
MediaOne Interactive Services, Inc.(3)...................... 4,051,283 9.1%
9000 E. Nichols Avenue, Suite 100
Englewood, CO 80112
Entities associated with Accel VI LP(4)..................... 3,505,029 7.9%
428 University Avenue
Palo Alto, CA 94301
Entities associated with Trinity Ventures(5)................ 2,920,033 6.6%
3000 Sand Hill Road, Building 1, Suite 240
Menlo Park, CA 94025
Alan S. Ramadan(6).......................................... 2,390,572 5.4%
Richard H. Williams(7)...................................... 2,940,623 6.6%
P.O. Box 4281
Incline Village, NV 89450
John Bertrand(8)............................................ 2,267,704 5.1%
c/o Quokka Sports
133 Long Acre
London, England WC2E98D
Walter W. Bregman(9)........................................ 485,208 1.1%
Roel Pieper................................................. 1,303,555 2.9%
James G. Shennan, Jr.(10)................................... 2,963,515 6.7%
c/o Trinity Ventures V L.P.
Barry M. Weinman(11)........................................ 4,927,432 11.1%
c/o Media Technology Ventures
Les Schmidt(12)............................................. 736,923 1.6%
Alvaro Saralegui(13)........................................ 1,000,000 2.2%
Mark J. Ellis(14)........................................... 150,000 *
Michael W. Gough(15)........................................ 288,125 *
All directors and executive officers as a group (11
persons)(16).............................................. 19,628,657 41.7%
</TABLE>
- ---------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G, if any, filed with the
Securities and Exchange Commission (the "SEC"). 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
7
<PAGE> 10
based on 44,339,217 shares outstanding on February 29, 2000, adjusted as
required by rules promulgated by the SEC.
(2) Includes 3,654,794 shares held by Media Technology Ventures, LP, 696,290
shares held by Media Technology Equity Partners, LP, 471,907 shares held by
Media Technology Ventures Entrepreneurs Fund, LP, 48,464 shares held by
Media Technology Entrepreneurs Fund II, LP and 24,477 shares held by
Thomson Management Growth Fund, LP (collectively, the "MTV Funds"). Mr.
Weinman, a director of Quokka, is a general partner of each of the MTV
Funds and, as such, may be deemed to have an indirect pecuniary interest
(within the meaning of Rule 16a-1 under the Securities Exchange Act of
1934) in an indeterminate portion of the shares beneficially owned by the
MTV Funds. Mr. Weinman disclaims beneficial ownership of these shares
within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934.
(3) Includes warrants to purchase 153,846 shares that are currently
exercisable.
(4) Includes 2,839,875 shares held by Accel VI LP, 362,834 shares held by Accel
Internet Fund II LP, 240,726 shares held by Accel Investors '98 LP, 45,354
shares held by Accel Keiretsu VI LP and 16,240 shares owned by Accel
Investors '99 LP (collectively, the "Accel Funds").
(5) Includes 2,759,534 shares held by Trinity Ventures V, LP and 160,499 shares
held by Trinity V, Side-by-Side Fund, LP. Mr. Shennan, a director of
Quokka, is a general partner of Trinity Ventures V, LP and Trinity V,
side-by-side fund, LP. As such, Mr. Shennan may be deemed to have an
indirect pecuniary interest (within the meaning of Rule 16a-1 under the
Securities Exchange Act of 1934) in an indeterminate portion of the shares
beneficially owned by Trinity Ventures V, LP and Trinity V, side-by-side
fund, LP. Mr. Shennan disclaims beneficial ownership of these shares within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934.
(6) Includes 1,900,000 shares held by Pogmohane Partners, L.P. Mr. Ramadan, a
director of Quokka, is a general partner of Pogmohane Partners, L.P. As
such, Mr. Ramadan may be deemed to have an indirect pecuniary interest
(within the meaning of Rule 16a-1 under the Securities Exchange Act of
1934) in an indeterminate portion of the shares beneficially owned by
Pogmohane Partners, L.P. Mr. Ramadan disclaims beneficial ownership of
these shares within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934. Includes 300,000 shares underlying currently exercisable stock
options. If exercised in full within 60 days of the date of this table,
235,000 of the shares subject to the options would be subject to a
repurchase right in favor of Quokka.
(7) Includes 175,000 shares underlying currently exercisable stock options. If
exercised in full within 60 days of the date of this table, 117,500 of the
shares subject to the option would be subject to a repurchase right in
favor of Quokka.
(8) Includes 150,000 shares underlying currently exercisable stock options. If
exercised in full within 60 days of the date of this table, 117,501 of the
shares subject to the option would be subject to a repurchase right in
favor of Quokka. Includes an aggregate of 1,500 shares owned by Mr.
Bertrand's three children.
(9) Includes 348,208 shares held in the Bregman Revocable Trust u/a/d 8/21/92,
for which Mr. Bregman, a director of Quokka, serves as a trustee. Mr.
Bregman disclaims beneficial ownership of these shares within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934. Includes an
aggregate of 15,000 shares owned by Mr. Bregman's two children. Includes
137,000 shares underlying currently exercisable stock options.
(10) Includes 2,759,534 shares held by Trinity Ventures V, LP and 160,499 shares
held by Trinity V, Side-by-Side Fund, LP. See footnote (5) above regarding
Mr. Shennan's indirect pecuniary interest in these shares. Includes 25,000
shares underlying currently exercisable stock options.
(11) Includes 4,895,932 shares held by MTV Funds. See footnote (2) above
regarding Mr. Weinman's indirect pecuniary interest in these shares.
Includes 25,000 shares underlying currently exercisable stock options.
(12) Includes 304,423 shares held in The Les Schmidt and Joanne P. Hattum Family
Trust u/t/d 4/8/92, for which Mr. Schmidt, an executive officer of Quokka,
serves as a trustee. Mr. Schmidt disclaims
8
<PAGE> 11
beneficial ownership of these shares within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934. Includes 414,500 shares underlying
currently exercisable stock options. If exercised in full within 60 days of
the date of this table, 300,833 shares would be subject to a right of
repurchase in favor of Quokka. Includes an aggregate of 18,000 shares owned
in trust for the benefit of Mr. Schmidt's three children.
(13) Includes 976,472 shares underlying currently exercisable stock options. If
exercised in full within 60 days of the date of this table, 800,000 shares
would be subject to right of repurchase in favor of Quokka.
(14) Includes 150,000 shares underlying currently exercisable stock options. If
exercised in full within 60 days of the date of this table, all the shares
would be subject to right of repurchase in favor of Quokka.
(15) Includes 288,125 shares underlying currently exercisable stock options. If
exercised in full within 60 days of the date of this table, 196,334 shares
would be subject to right of repurchase in favor of Quokka.
(16) See footnotes (1) through (15) above, as applicable.
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 the Company's 10% stockholder,
Media Technology Ventures.
During fiscal 1999, Mr. Bertrand timely reported all transactions but
reported an incorrect number of shares owned due to a clerical error. This error
was corrected on a Form 4 report and by amending a previous Form 4 report.
9
<PAGE> 12
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Except for Mr. Bregman, the Company has not provided cash compensation to
non-employee directors solely for their services as directors. The 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.
Each non-employee director of the Company receives stock option grants
under the 1999 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. Upon the
closing of the Company's July 1999 initial public offering, each non-employee
director was automatically granted an option to purchase 25,000 shares of common
stock at an exercise price of $12.00 per share. Any individual who becomes a
non-employee director after this offering will automatically receive this
initial grant upon being elected to the Board of Directors. On June 1 of each
year (or the next business day should such date be a legal holiday), each
non-employee director or, where specified by the non-employee director, an
affiliate of such director, 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 25,000 shares of Common Stock
of the Company; provided that if any non-employee that had not served in that
capacity for the entire period since the preceding June 1, then the number of
shares subject to the annual grant will be reduced, pro rata, for each full
quarter the person did not serve during the previous period. No other options
may be granted at any time under the Directors' Plan. The exercise price of
options granted under the Directors' Plan is equal to 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 are immediately exercisable upon grant. No
option may be exercised after the expiration of three years from the date it was
granted.
In October 1997, the Company entered into an agreement with Mr. Bregman,
under which Mr. Bregman was paid $33,500 in fiscal year 1999 and an aggregate of
$65,000 through December 31, 1999. Mr. Bregman is compensated under the
agreement at a rate of $2,000 for every board meeting attended and $500 for
every committee meeting attended, if the committee meeting was held in
conjunction with a board meeting. For each committee meeting not held in
conjunction with a board meeting, Mr. Bregman received $1,500. Additionally,
under the agreement, Mr. Bregman received an initial option grant as well as
option grants in the amount of 16,000 shares each year. As of December 31, 1999,
Mr. Bregman had been granted an aggregate of 112,000 shares of the Company's
stock outside of the 1997 Equity Incentive Plan with a weighted average exercise
price of $0.80 per share.
10
<PAGE> 13
COMPENSATION OF EXECUTIVE OFFICERS
As permitted by the rules promulgated by the SEC, the following table shows
for the fiscal years ended December 31, 1998 and 1999, compensation awarded or
paid to, or earned by, the Company's Chief Executive Officer and its other four
most highly compensated executive officers at December 31, 1999 (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------- -----------------------------------
OTHER RESTRICTED SECURITIES ALL OTHER
ANNUAL STOCK UNDERLYING COMPEN-
SALARY BONUS COMPEN- AWARDS OPTIONS/ SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) SATION($) ($) SARS(#) ($)
--------------------------- ---- -------- -------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan Ramadan................... 1999 $250,000 -- -- -- 300,000 --
President and Chief 1998 $214,583 -- -- -- -- --
Executive Officer
Alvaro Saralegui(3)............ 1999 $206,250 -- -- -- 1,000,000 --
Chief Operating Officer 1998 -- -- -- -- -- --
Les Schmidt.................... 1999 $234,256 $ 25,000 -- -- 250,000 --
Executive Vice President 1998 $172,051 -- -- -- 200,000 --
and Chief Financial Officer
Michael W. Gough(4)............ 1999 $300,521 -- -- -- 200,000 --
Chief Creative Officer 1998 $162,083 $ 15,500 -- -- -- --
and Executive Producer
Mark J. Ellis(5)............... 1999 $100,000 $100,220 -- -- 150,000 --
Vice President, Sales 1998 -- -- -- -- -- --
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission, the
compensation described in this table does not include medical, group life
insurance or other benefits received by the Named Executive Officers that
are available generally to all salaried employees and various perquisites
and other personal benefits received by the Named Executive Officers that do
not exceed the lesser of $50,000 or 10% of any officer's salary and bonus
disclosed in this table.
(2) See the table under "Option Grants in Last Fiscal Year" for a detailed
description of the 1999 option grants. All option grants in this table were
granted under the Company's 1997 Equity Incentive Plan, have a term of 10
years and vest as to 20% of the shares on the first anniversary of the
grant, and 1/48 of the shares on a monthly basis thereafter. The exercise
price per share of each option was equal to the fair market value of the
common stock as determined by the board of directors on the date of grant.
(3) Mr. Saralegui joined the Company in April 1999 in his current position.
(4) Mr. Gough joined the Company in July 1997 as Vice President, Design and
Creative Director and was promoted to his current position in September
1998.
(5) Mr. Ellis joined the Company in May 1999 in his current position.
11
<PAGE> 14
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1997 Equity
Incentive Plan. As of February 29, 2000, options to purchase a total of
8,054,750 shares were outstanding under the Incentive Plan and options to
purchase 4,585,647 shares remained available for grant thereunder.
In the event of certain changes in control, all outstanding options under
the incentive plan either will be assumed or substituted for by any surviving
entity. If the surviving entity determines not to assume or substitute for these
awards, the vesting provisions of these stock awards will be accelerated and
these stock awards will be terminated upon the change in control if not
previously exercised. In the event of an acquisition under Section 13(d) or
14(d) of the Securities Exchange Act of 1934 of securities representing at least
50% of the Company's combined voting power, the vesting provisions of stock
awards will either be assumed, continued or substituted by the Company (or a
controlling affiliate of the Company) or accelerated immediately upon the
occurrence of such event and such stock awards will be terminated upon such
acquisition if not previously exercised.
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, the Named Executive Officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER % OF TOTAL ANNUAL RATES OF
OF SECURITIES OPTIONS/SARS STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS/SARS EMPLOYEES EXERCISE OPTION TERM(4)
GRANTED IN FISCAL OR BASE PRICE EXPIRATION ---------------------
NAME (#)(1) YEAR(2) ($/SH)(3) DATE 5%($) 10%($)
---- ------------- ------------ ------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan Ramadan............. 300,000 4.1% $8.00 03/16/09 2,792,102 5,867,554
Alvaro Saralegui......... 1,000,000 13.6% $8.50 04/02/09 8,807,005 19,058,514
Les Schmidt.............. 250,000 3.4% $7.00 02/26/09 2,576,751 5,139,628
Michael W. Gough......... 200,000 2.7% $7.00 02/26/09 2,061,401 4,111,703
Mark J. Ellis............ 150,000 2.0% $8.50 05/17/09 1,321,051 2,858,777
</TABLE>
- ---------------
(1) Each of the options was granted under the Company's 1997 Equity Incentive
Plan ten years before the expiration date referenced and terminates on the
expiration date, subject to earlier termination upon the occurrence of
events related to termination of employment. All options referenced in this
table are immediately exercisable to the extent permitted under applicable
regulations of the Internal Revenue Service and any unvested shares issued
pursuant to early exercise provisions are subject to a repurchase option in
favor of the Company at the original exercise price upon the termination of
employment. The options granted to Messrs. Ramadan, Saralegui and Ellis vest
as to 1/5 of the shares one year from the date of grant and 1/48 of the
shares on a monthly basis thereafter. The options granted to Messrs. Schmidt
and Gough vested as to 1/6 of the shares on October 1, 1999 and as to 1/50
of the shares on a monthly basis thereafter.
(2) Based on an aggregate of 7,354,500 shares subject to options granted to the
Company's employees in 1999, including the Named Executive Officers.
(3) The exercise price per share of each option was equal to the fair market
value of the common stock as determined by the board on the date of grant.
(4) The potential realizable values are computed by (a) multiplying the number
of shares of common stock subject to a given option by the closing price of
the Company's common stock on March 31, 2000 of $10.625, (b) assuming that
the aggregate stock value derived from that calculation compounds at the
annual 5% or 10% rate shown in the table for the entire ten-year term of the
option and (c) subtracting from that result the aggregate option exercise
price. The 5% and 10% assumed annual rates of stock price appreciation are
mandated by the rules of the SEC and do not represent the Company's estimate
or projection of future common stock prices.
12
<PAGE> 15
AGGREGATED OPTION/SAR EXERCISES IN 1999, AND YEAR-END OPTION VALUES AT DECEMBER
31, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
ACQUIRED OPTIONS AT MONEY OPTIONS AT
ON VALUE DECEMBER 31, 1999(1) DECEMBER 31, 1999(2)
EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#)(3) ($)(4) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan Ramadan......... -- -- 300,000 -- $1,537,500 --
Alvaro Saralegui..... 23,528 $108,817 976,472 -- $4,516,183 --
Les Schmidt.......... 3,500 $ 3,500 414,500 -- $3,630,813 --
Michael W. Gough..... 11,875 $ 89,063 288,125 -- $2,337,578 --
Mark J. Ellis........ -- -- 150,000 -- $ 693,750 --
</TABLE>
- ---------------
(1) Options may be exercised immediately under early exercise provisions
contained in option agreements. Any unvested shares issued under such early
exercise provisions are subject to a repurchase option in favor of the
company upon termination of employment. Such repurchase option terminates at
a rate reflecting the vesting schedule of the underlying option.
(2) Based on the difference between the exercise price and the fair market value
of the common stock at close of market on December 31, 1999, which was
$13.125.
(3) Mr. Schmidt exercised his shares on March 15, 1999 at a strike price of
$8.00 per share (with a fair market value of $7.00 at the time of exercise),
Mr. Saralegui exercised his shares on December 31, 1999 at a strike price of
$8.50 per share (with a fair market value of $13.125 at the time of
exercise) and Mr. Gough exercised his shares on March 25, 1999 at a strike
price of $0.50 per share (with a fair market value of $8.00 at the time of
exercise).
(4) Based on the fair market value of the common stock at the time of exercise,
minus the per share exercise price, multiplied by the number of shares
issued upon exercise of the option.
EMPLOYMENT SEVERANCE AND CHANGE OF CONTROL AGREEMENTS
In April 1999, the Company entered into a key employee agreement with Mr.
Saralegui, under which Mr. Saralegui is compensated at a rate of $275,000 per
year, paid on a semi-monthly basis. The agreement also provides for a stock
option grant, pursuant to the Company's 1997 Equity Incentive Plan, for the
purchase of 1,000,000 shares the Company's common stock at an exercise price of
$8.50 per share. To the extent permissible under applicable IRS rules, this
grant will be an incentive stock option grant. In the event Mr. Saralegui is
terminated without cause, he is entitled to receive from us an amount equal to
twelve months of his base salary as well as acceleration of a portion of his
unvested options under certain circumstances.
13
<PAGE> 16
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
PLEASE NOTE: 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.
The Compensation Committee of the Board of Directors is currently composed
of three non-employee directors: Messrs. Bregman, Shennan and Weinman.
The Compensation Committee is responsible for establishing the Company's
overall compensation programs for all its employees, including its executives.
In addition, the Compensation Committee is responsible for evaluating the
performance of the Company's executive officers and for establishing the
components and levels of their compensation. The Compensation Committee also
administers the Company's 1997 Equity Incentive Plan, with responsibility for
determining the awards to be made under the plan to the Company's executive
officers and certain other eligible individuals. The Board of Directors has
given independent authority to Mr. Ramadan to approve the grant and acceleration
of stock options under the 1997 Equity Incentive Plan to employees below the
senior vice president level, as long as the grants are made within Compensation
Committee guidelines. The Board of Directors has also given independent
authority to Messrs. Ramadan and Bertrand to approve stock option grants under
the 1997 Equity Incentive Plan to employees below the senior vice president
level outside of the Compensation Committee guidelines.
Generally, the Compensation Committee reviews compensation programs for
executive officers in the on the anniversary of the executive's employment
commencement date. However, in early 1999, the Compensation Committee also
reviewed executive compensation in light of the Company's initial public
offering of its common stock. Consequently, compensation paid to executive
officers in 1999 reflects both decisions made in 1998 that were effected at the
beginning of 1999 as well as decisions made in the summer of 1999 that were
effected prior to the Company's initial public offering.
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:
- The Company pays competitively with comparable technology and media
companies, both inside and outside its industry, with which the Company
competes for talent. To ensure that compensation is competitive, the
Company compares its practices with technology companies and uses these
parameters to determine executive compensation.
- Because the Company is not yet profitable, the Company provides no or
limited short-term incentives such as cash bonuses. When limited cash
bonuses are awarded, they are designed to acknowledge individual
performance and to generate rewards that bring total 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 and not just as employees. In connection with this philosophy, the
Company currently takes into consideration the equity of the Company held
by an executive officer and accordingly certain officers may receive
smaller compensation packages than other officers of the Company with
comparable responsibilities.
BASIS FOR DETERMINING COMPETITIVE COMPENSATION
In reviewing competitive pay practices for the purposes of establishing
salary, bonus and option increases to be effective at the beginning of 2000, the
Compensation Committee reviewed information on the 1999
14
<PAGE> 17
compensation levels of executive officers of a blend of companies similar in
business to the Company in the technology, media and broadcast, print and
publishing and e-commerce-related industries. The ownership structure of the
pool of companies in these industries were distributed among the following:
public companies owned or controlled by a parent company; independent public
companies; private companies owned or controlled by a parent company; and
independent private companies. These companies were not identical to the
companies used in the performance graph. For purposes of setting the salary,
bonus and option components of the compensation program for 1999, similar
information was reviewed by the Compensation Committee throughout 1999 and
related information regarding private company practices in these sectors was
reviewed in the fall of 1998.
1999 EXECUTIVE COMPENSATION
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, equity position in the Company and competitive pay practices. In
general, the Company sets its salaries for executive officers, including the
CEO, at about the fiftieth percentile of the range of salaries paid by the
companies referred to above. Based on the information reviewed, the Committee
determined to increase base salaries for the Company's executive officers and
accordingly base salaries for executive officers were increased by an average of
12.5% for 1999 compared to 1998.
CASH INCENTIVE COMPENSATION. In accordance with its compensation
philosophy, the Company does not have a formal cash bonus program for executive
officers. In 1999, only the Company's Executive Vice President and Chief
Financial Officer received a cash bonus pursuant to the terms of his original
offer letter.
LONG-TERM INCENTIVES. Stock options typically have been granted to
executive officers when the executive first joints the Company, in connection
with a significant change in responsibilities and, occasionally, to bring an
executive's equity position in line with the Company's overall compensation
philosophy. The Committee may also grant additional stock options to executives
to continue to retain such executives and to provide additional long-term
incentives. The number of shares subject to each stock option granted is based
upon anticipated future contribution, past performance, levels of
responsibility, prior experience, breadth of knowledge and competitive option
practices as well as the current equity position of the executive. In general,
in recognition that its philosophy regarding cash bonuses results in overall
cash compensation that is below the fiftieth percentile, the Committee sets
target option levels at about the fiftieth to sixtieth percentile. As described
above however, an executive's existing equity in the Company may result in
options being set at a lower level. Stock options generally become exercisable
over a four-year or five-year period and are granted at a price that is equal to
the fair market value of the Company's common stock on the date of grant. In
1999, stock options were granted, at the Committee's discretion, to 19 executive
officers who were not Named Executive Officers and to each of the five Named
Executive Officers, as either incentives for these individuals to become
employees or as adjustments in response to competitive practices.
CORPORATE PERFORMANCE AND CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Ramadan's base salary at the beginning of 1999 as President and Chief
Executive Officer was $250,000, reflecting a $50,000 increase from 1998. This
increase was approved by the Committee in 1998 and effected at the beginning of
1999. Following the Committee's review of his total compensation program and
competitive practices in December 1999, Mr. Ramadan's base salary was increased
to $300,000 per year, effective retroactively to December 1, 1999. The Committee
uses the same procedures described above for the other executive officers in
setting the annual base salary, cash bonus and stock option awards for the Chief
Executive Officer. In particular, in evaluating Mr. Ramadan's base salary and
stock option awards, the Committee considered individual and corporate
performance, level of responsibility, prior experience, breadth of knowledge,
equity position in the Company and competitive pay practices. Mr. Ramadan's
overall compensation was not specifically tied to any particular financial
performance criteria, although the Committee did take into consideration the
milestone marked by the Company's initial public offering of its common stock
and the added responsibilities relating thereto. The Committee believes Mr.
Ramadan's total compensation for 1999 was appropriate given the Company's size
and financial performance at that time.
15
<PAGE> 18
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.
The Compensation Committee has determined that stock options granted under
the Company's 1997 Equity Incentive Plan with an exercise price at least equal
to the fair market value of the Company's common stock on the date of grant
shall be treated as "performance-based compensation." Provisions contained in
the 1997 Equity Incentive Plan, which has been approved by the Company's
stockholders, allow any compensation recognized by a Named Executive Officer as
a result of the grant of such a stock option to be deductible by the Company.
From the members of the Compensation Committee of Quokka Sports, Inc.
Walter W. Bregman
James G. Shennan, Jr.
Barry M. Weinman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the compensation committee of the board of directors
is an officer or employee of Quokka. None of the Company's executive officers
serves as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving on the Company's board of
directors or compensation committee.
16
<PAGE> 19
PERFORMANCE MEASUREMENT COMPARISON
Please note: 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
The following graph shows the total stockholder return of an investment of
$100 in cash on July 28, 1999 (the date public trading commenced in the
Company's common stock) for (i) the Company's Common Stock, (ii) the Russell
2000 index (the "Russell 2000") and (iii) the Chase H&Q Internet 100 Index. All
values assume reinvestment of the full amount of all dividends and are
calculated as of December 31 of each year:
COMPARISON OF 5 MONTH CUMULATIVE TOTAL RETURN*
AMONG QUOKKA SPORTS, INC., THE RUSSELL 2000 INDEX
AND THE CHASE H&Q INTERNET 100 INDEX
<TABLE>
<CAPTION>
CHASE H & QINTERNET CHASE H & Q
QUOKKA SPORTS, INC. 100 INTERNET 100
------------------- ------------------- ------------
<S> <C> <C> <C>
7/28/99 100.00 100.00 100.00
12/31/99 109.38 95.62 213.34
</TABLE>
* $100 INVESTED ON 7/28/99 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
17
<PAGE> 20
CERTAIN TRANSACTIONS
The sales of preferred stock described and identified in the table below
were converted into the Company's common stock in July 1999, on a one-to-one
basis, in connection with the Company's initial public offering.
In January 1997, the Company issued and sold and aggregate of 3,800,000
shares of common stock in exchange for all of the properties, rights, interests
and other tangible and intangible assets of Ozware Developments Unit Trust, an
Australian unit trust. From March 1997 to August 1997, the Company issued and
sold an aggregate of 5,851,566 shares of common stock at $0.50 per share. In
October 1997, the Company issued warrants to purchase an aggregate of 212,800
shares of common stock at an exercise price of $0.50 per share that will expire
upon the closing of this offering. In December 1997, the Company issued and sold
an aggregate of 7,720,590 shares of Series A preferred stock at $0.68 per share.
Between March 1998 and December 1998, the Company issued and sold warrants to
purchase up to 245,098 shares of Series A preferred stock at an exercise price
of $1.02 per share, 245,098 shares of Series B preferred stock at an exercise
price of $1.02 per share, 72,727 shares of Series B preferred stock at an
exercise price of $1.50 per share and 72,727 shares of Series C preferred stock
at an exercise price of $3.25 per share. The warrants were amended and partially
exercised in December 1998 for 145,559 shares of Series A preferred stock,
145,559 shares of Series B preferred stock, 24,242 shares of Series B preferred
stock and 24,242 shares of Series C preferred stock. The warrants, as amended,
are currently exercisable for 99,539 shares of Series A preferred stock at an
exercise price of $1.02 per share, 99,539 shares of Series B preferred stock at
an exercise price of $1.02 per share, 48,485 shares of Series B preferred stock
at an exercise price of $1.50 per share and 48,485 shares of Series C preferred
stock at an exercise price of $3.25 per share and will expire upon the closing
of the Company's initial public offering. From June to August 1998, the Company
issued and sold an aggregate of 10,737,068 shares of Series B preferred stock at
$1.50 per share. In December 1998, the Company issued and sold an aggregate of
4,938,756 shares of Series C preferred stock at $3.25 per share.
From February 1999 to March 1999, the Company issued and sold warrants to
purchase up to an aggregate of 2,391,750 shares of Series C preferred stock at a
weighted average per share price of $5.33. In April 1999, the Company issued and
sold warrants to purchase up to an aggregate of 161,538 shares of Series C
preferred stock at an exercise price of $3.25 per share. In May and June 1999,
the Company issued and sold an aggregate of 4,522,223 shares of Series D
preferred stock at $9.00 per share. In May 1999, the Company issued and sold a
warrant to purchase up to 110,000 shares of Series D preferred stock at an
exercise price of $9.00 per share. In July 1999, the Company issued and sold
warrants to purchase up to an aggregate of 30,000 shares of common stock at an
exercise price of $9.00 per share.
18
<PAGE> 21
The following table identifies the directors, executive officers and five
percent stockholders who have made equity investments in Quokka to purchase
shares of the Company's capital stock. See "Principal Stockholders" for
additional information relating to the beneficial ownership of these
stockholders.
<TABLE>
<CAPTION>
SHARES OF SERIES A SERIES B SERIES C SERIES D
INVESTOR COMMON STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
-------- ------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Alan S. Ramadan(1).......... 2,090,572 -- -- -- --
Richard H. Williams(2)...... 2,500,000 208,823 -- -- --
John Bertrand A.M........... 2,116,204 -- -- -- --
Walter W. Bregman(3)........ 200,000 22,058 89,381 30,769 --
Roel Pieper................. 500,000 257,353 305,523 215,679 --
Les Schmidt(4).............. 35,500 -- 200,000 76,923 --
David A. Riemer............. -- -- -- 20,000 --
Media Technology Ventures,
LP(5)..................... -- 2,941,177 1,185,524 769,231 --
MediaOne Interactive
Services, Inc.(6)......... -- -- 2,666,667 1,230,770 --
Intel Corporation(7)........ -- 1,322,030 1,311,003 1,255,012 --
Accel VI LP(8).............. -- -- 3,333,333 153,846 --
Trinity Ventures V, LP(9)... -- 2,205,883 884,752 153,846 --
Wakefield Group II
LLC.(10).................. 800,000 577,942 555,791 92,308 --
</TABLE>
- ---------------
(1) Includes 1,900,000 shares of common stock held by Pogmohane Partners, LP,
an entity for which Mr. Ramadan serves as a general partner.
(2) Excludes warrants to purchase 56,800 shares of common stock issued to Mr.
Williams in October 1997.
(3) Includes 200,000 shares of common stock, 22,058 shares of Series A
preferred stock, 89,381 shares of Series B preferred stock and 30,769
shares of Series C preferred stock held in the Bregman Revocable Trust
u/a/d 8/21/92, for which Mr. Bregman, a director of Quokka, serves as a
trustee. Does not include warrants to purchase 6,000 shares of common stock
issued to the Bregman Revocable Trust u/a/d 8/21/92 in October 1997.
Excludes options to purchase 112,000 shares of common stock granted to Mr.
Bregman outside of the 1997 Equity Incentive Plan.
(4) Includes 182,000 shares of Series B preferred stock and 76,923 shares of
Series C preferred stock held in The Les Schmidt and Joanne P. Hattum
Family Trust u/t/d 4/8/92, for which Mr. Schmidt, an executive officer of
Quokka, serves as a trustee. Also includes 6,000 shares of Series B
preferred stock held by each of The Schmidt Family Irrevocable Trust, dated
12/27/95, FBO Caryn H. Schmidt, The Schmidt Family Irrevocable Trust, dated
12/27/95, FBO Bryan P. Schmidt and The Schmidt Family Irrevocable Trust,
dated 12/27/95, FBO Taylor G. Schmidt.
(5) Includes 696,290 shares of Series C preferred stock held by Media
Technology Equity Partners, LP, 48,464 shares of Series C Preferred Stock
held by Media Technology Entrepreneurs Fund II, LP and 24,477 shares of
Series C Preferred Stock held by Thomson Management Growth Fund, LP, and
336,337 shares of Series A preferred stock and 135,570 shares of Series B
preferred stock held by Media Technology Ventures Entrepreneurs Fund, L.P.
Mr. Weinman, a director of Quokka, is affiliated with the Media Technology
entities.
(6) Excludes warrants to purchase 153,846 shares of Series C preferred stock
issued to MediaOne Interactive Services, Inc. in April 1999.
(7) Excludes warrants to purchase 99,539 shares of Series A preferred stock,
warrants to purchase 148,024 shares of Series B preferred stock and
warrants to purchase 48,485 shares of Series C preferred stock issued to
Intel Corporation in December 1998. These warrants represent the balance of
warrants issued upon the amendment and partial exercise of the original
warrants issued between March 1998 and December 1998.
19
<PAGE> 22
(8) Includes 346,667 shares of Series B preferred stock and 16,000 shares of
Series C preferred stock held by Accel Internet Fund II LP, 230,000 shares
of Series B preferred stock and 10,615 shares of Series C preferred stock
held by Accel Investors '98 LP, and 43,333 shares of Series B preferred
stock and 2,000 shares of Series C preferred stock held by Accel Keiretsu
VI LP.
(9) Includes 121,791 shares of Series A preferred stock, 48,849 shares of
Series B preferred stock and 7,692 shares of Series C preferred stock held
by Trinity V, side-by-side fund, LP. Mr. Shennan, a director of Quokka, is
affiliated with Trinity Ventures V, LP and Trinity V, Side-by-Side Fund,
LP.
(10) Excludes warrants to purchase 100,000 shares of common stock issued to
Wakefield Group LLC in October 1997.
Pursuant to an investors' rights agreement dated May 27, 1999 between
Quokka and certain investors, the investors have certain registration rights for
the shares of common stock held by them, or subject to acquisition upon exercise
of certain warrants. See "Description of Capital Stock -- Registration Rights"
for a description of these registration rights.
In March 1998, the Company entered into a software license and development
agreement with Intel Corporation, a holder of more than five percent of the
Company's outstanding capital stock. Under this agreement, Intel is developing
transport level software that will allow end users to view multiple video
streams that are delivered over a satellite network. In connection with this
agreement, the Company issued warrants to Intel to purchase 635,650 shares of
the Company's common stock at prices ranging from $1.02 to $3.25 per share.
Intel has exercised warrants to purchase 635,650 shares of the Company's common
stock.
In April 1999, the Company entered into a trial agreement with MediaOne
Interactive Services, Inc., a holder of more than five percent of the Company's
outstanding capital stock. Under this agreement, Quokka and MediaOne are working
together to implement and test streaming media over the MediaOne cable modem
infrastructure. In connection with this agreement, Quokka has issued warrants to
MediaOne to purchase 153,846 shares of the Company's preferred stock at an
exercise price of $3.25 per share. These warrants will expire in April 2009 if
not earlier exercised.
In September 1999, the Company entered into a Memorandum of Agreement with
Intel, a holder of more than five percent of the Company's outstanding capital
stock, relating to the provision of $25.0 million of sponsorship and advertising
services by the Company to Intel, and the provision of an aggregate of $35.0
million of development, promotional and hosting services by Intel to the
Company.
Since February 1, 1999, in connection with Mr. Bertrand's relocation to
London, England, the Company has been paying, and will continue to pay, Mr.
Bertrand an amount equal to $3,000 per month to secure Mr. Bertrand's residence
in San Francisco, California as short-term corporate housing for various persons
associated with Quokka.
Since August 1999, the Company has been paying to Mr. Williams, the
Company's Chairman and a holder of greater than five percent of the Company's
common stock, $11,250 per month pursuant to a consulting arrangement. In 1999,
the Company paid less than $60,000 to Mr. Williams under the arrangement.
20
<PAGE> 23
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/ Les Schmidt
--------------------
LES SCHMIDT
Secretary
April 6, 2000
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, QUOKKA SPORTS,
INC., 525 BRANNAN STREET, GROUND FLOOR, SAN FRANCISCO, CA 94107.
21
<PAGE> 24
DETACH HERE
PROXY
QUOKKA SPORTS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2000
The undersigned hereby appoints Alan S. Ramadan and Les Schmidt 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 Quokka Sports, Inc. which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
Quokka Sports, Inc. to be held at The Ritz-Carlton Hotel, 600 Stockton Street,
San Francisco, California on May 3, 2000 at 9:00 AM local time, and at any and
all postponements, continuations and adjournments thereof, with all power 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 PROPOSAL 2 AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE> 25
<TABLE>
<CAPTION>
VOTE BY TELEPHONE VOTE BY INTERNET
<S> <C>
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)
FOLLOW THESE FOUR EASY STEPS: FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY 1. READ THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND PROXY CARD. STATEMENT/PROSPECTUS AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER 2. GO TO THE WEBSITE
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/qkka
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER 3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER
LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME. LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS. 4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/qkka anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE
</TABLE>
<TABLE>
<CAPTION>
- ----- Please mark
X votes as in
- ----- this example.
<S> <C>
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR
DIRECTOR LISTED BELOW.
1. To elect three directors to hold office until the 2003 Annual
Meeting of Stockholders.
Nominees: (01) Alan S. Ramadan, (02) John Bertrand A.M. and MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
(03) Roel Pieper FOR AGAINST ABSTAIN
2. To ratify selection of ----- ------- -------
FOR ----- ----- WITHHELD PricewaterhouseCoopers
ALL FROM ALL LLP as independent ----- ------- -------
NOMINEES ----- ----- NOMINEES accountants of the
Company for its fiscal
----- year ending December 31,
2000.
----- --------------------------------------
For all nominees except as noted above MARK HERE ----- MARK HERE -----
FOR ADDRESS IF YOU PLAN
CHANGE AND ----- TO ATTEND -----
NOTE AT LEFT THE MEETING
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.
Signature: Date: Signature: Date:
------------------------------- -------------- ------------------------------- --------------
</TABLE>
