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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 (S) 240.14a-11(c) or (S) 240.14a-12
SCIQUEST.COM, 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.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
SCIQUEST.COM, INC.
5151 McCrimmon Parkway, Suite 208
Morrisville, North Carolina 27560
(919) 659-2100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
SciQuest.com, Inc. (the "Company") will be held at the Marriott at Research
Triangle Park, 4700 Guardian Drive, Durham, North Carolina 27703, at 9:00
a.m., Eastern Daylight Savings time, on Wednesday, May 24, 2000 (the "Annual
Meeting"), to consider and act upon:
1. the election of three (3) directors to the Company's Board of Directors;
2. a proposal to ratify the selection of independent public accountants for
the Company's current fiscal year; and
3. such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on April 10, 2000, as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting.
By Order of the Board of Directors,
/s/ M. Scott Andrews
-------------------------------
M. Scott Andrews,
Chairman of the Board of Directors
and Chief Executive Officer
April 20, 2000
Atlanta, Georgia
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN PROVIDED.
NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES. IN THE EVENT YOU ARE
ABLE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE>
SCIQUEST.COM, INC.
5151 McCrimmon Parkway, Suite 208
Morrisville, North Carolina 27560
---------------------
PROXY STATEMENT
---------------------
May 24, 2000
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
Stockholders Meeting
This Proxy Statement and the enclosed Proxy card ("Proxy") are furnished on
behalf of the Board of Directors of SciQuest.com, Inc., a Georgia corporation
("SciQuest" or the "Company" or "we"), for use at the Annual Meeting of
Stockholders to be held on May 24, 2000 at 9:00 a.m., Eastern Daylight Savings
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 Marriott at Research Triangle
Park, 4700 Guardian Drive, Durham, North Carolina 27703. The Company intends
to mail this Proxy Statement and the accompanying Proxy on or about April 20,
2000, to all stockholders entitled to vote at the Annual Meeting.
Stockholders Entitled to Vote
Only holders of record of the Company's $.001 par value per share common
stock (the "Common Stock") at the close of business on April 10, 2000 will be
entitled to notice of and to vote at the Annual Meeting. At the close of
business on April 10, 2000, the Company had outstanding and entitled to vote
26,730,441 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. Any stockholder who signs and returns a
Proxy has the power to revoke it at any time before it is exercised by
providing written notice of revocation to the Secretary of the Company or by
filing with the Secretary of the Company a Proxy bearing a later date.
Quorum; Counting of Votes
Our Bylaws provide that at any meeting of shareowners, the holders of a
majority of our issued and outstanding common stock present in person or by
proxy constitute a quorum for the transaction of business. The election of
directors will be decided by a plurality of the votes of the shares cast, in
person or by proxy, at the Annual Meeting. Accordingly, abstentions and broker
non-votes will not affect the outcome of the election of directors. A broker
non-vote occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power for that proposal and has not received voting instructions from
the beneficial owner. The ratification of the appointment of
PricewaterhouseCoopers LLP as independent auditors requires the affirmative
vote of a majority of the shares present in person or by proxy and entitled to
vote thereon. An abstention will be counted as a vote against the ratification
of PricewaterhouseCoopers LLP as independent auditors. With respect to broker
non-votes, the shares will not be considered present at the meeting for the
proposal to which authority was withheld. Consequently, broker non-votes will
have the effect of reducing the number of affirmative votes required to
approve this proposal, because they reduce the number of shares present at the
meeting from which a majority is calculated.
Proxies
When the enclosed Proxy is properly signed and returned, the shares that it
represents will be voted at the Annual Meeting in accordance with the
instructions noted thereon. In the absence of such instructions, the shares
represented by a signed Proxy will be voted in favor of the nominees for
election to the Board of Directors, and in favor of the approval of proposal
two.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of our capital stock as of February 29, 2000 and as adjusted to
reflect our sale of common stock in this offering by:
. all those known by us to be beneficial owners of more than five percent
of the outstanding shares of common stock;
. each of our directors;
. each of the named executive officers;
. all executive officers and directors as a group; and
. each selling stockholder.
For purposes of calculating the percentage beneficially owned, the number of
shares of common stock deemed outstanding as of February 29, 2000 is
26,464,525. The number of shares of common stock deemed outstanding after this
offering includes an additional shares that are being offered for sale by us
in this offering.
Options that are exercisable within sixty days of February 29, 2000 are
deemed to be outstanding and to be beneficially owned by the stockholder
holding the options for the purpose of computing that stockholder's percentage
ownership but are not treated as outstanding for the purpose of computing the
percentage ownership of any other stockholder. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission that deem shares to be beneficially owned by any person or group
who has or shares voting or investment power with respect to such shares.
Unless otherwise indicated, the persons named on this table have sole voting
and investment control with respect to all shares beneficially owned.
<TABLE>
<CAPTION>
Shares of Common
Stock Owned
--------------------
Name Shares Percent
- ---- --------- -------
<S> <C> <C>
Trinity Ventures VI, L.P. (1).............................. 1,907,190 7.2%
3000 Sand Hill Road
Building 1, Suite 240
Menlo Park, CA 94025
Bessemer Venture Partners IV L.P. (2)...................... 1,640,868 6.2%
1400 Old Country Road
Suite 407
Westbury, NY 11590
Noro-Moseley Partners IV, L.P. (3)......................... 1,555,793 5.9%
9 North Parkway Square
4200 Northside Parkway, NW
Atlanta, GA 30327
M. Scott Andrews........................................... 798,934(4) 3.0%
5151 McCrimmon Parkway
Suite 208
Morrisville, NC 27560
Peyton C. Anderson......................................... 853,112(5) *
5151 McCrimmon Parkway
Suite 208
Morrisville, NC 27560
Bruce J. Boehm............................................. 210,007(6) *
Lyle A. Brecht............................................. 112,316(7) *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Stock Owned
---------------------
Name Shares Percent
- ---- --------- -------
<S> <C> <C>
Noel J. Fenton.......................................... 1,907,190(8) 7.2%
Antony Francis.......................................... 172,096(9) *
Robert M. Fusillo....................................... 62,568(10) *
Gautam A. Prakash....................................... 1,640,868(11) 6.2%
James J. Scheuer........................................ 73,967(12) *
Alan J. Taetle.......................................... 1,555,793(13) 5.9%
Timothy T. Weglicki..................................... 1,205,812(14) 4.6%
All directors and executive officers as a group (14
persons) (4)(5)(6)(8)(11)(13)(14)(15).................. 8,604,663 32.5%
</TABLE>
- --------
* Less than one percent.
(1) Includes shares owned by Trinity VI Side-by-Side Fund, L.P., which is an
affiliate of Trinity Ventures VI, L.P.
(2) Includes shares owned by Bessemer Venture Investors L.P. and Bessec
Ventures IV L.P., which are affiliates of Bessemer Venture Partners IV
L.P.
(3) Includes shares owned by Noro-Moseley Partners IV-B Fund L.P., which is
an affiliate of Noro-Moseley Partners IV, L.P.
(4) Consists of shares owned by Andrews Properties of Wake County LLC.
(5) Consists of shares owned by Peyton C. Anderson and Little Lake Hill LLC.
(6) Includes 10,170 shares subject to a warrant that is currently
exercisable.
(7) Includes 28,176 shares subject to options that are exercisable within 60
days.
(8) Consists of shares owned by Trinity Ventures VI, L.P. and Trinity VI
Side-By-Side Fund, L.P. Mr. Fenton is managing general partner of these
entities and may be deemed to be a beneficial owner of these shares. Mr.
Fenton disclaims beneficial ownership of these shares.
(9) Includes 36,495 shares subject to options that are exercisable within 60
days.
(10) Includes 20,860 shares subject to options that are exercisable within 60
days.
(11) Consists of shares owned by Bessemer Venture Partners IV L.P., Bessemer
Venture Investors L.P. and Bessec Ventures IV L.P. Mr. Prakash is a
principal of these entities and may be deemed to be a beneficial owner of
these shares. Mr. Prakash disclaims beneficial ownership of these shares.
(12) Includes 23,360 shares subject to options that are exercisable within 60
days.
(13) Consists of shares owned by Noro-Moseley Partners IV L.P. and Noro-
Moseley Partners IV-B Fund, L.P. Mr. Taetle is a principal of these
entities and may be deemed to be a beneficial owner of these shares.
Mr. Taetle disclaims beneficial ownership of these shares.
(14) Includes 200,969 shares subject to warrants that are currently
exercisable. Mr. Weglicki is Managing Member of ABS Partners III, L.L.C.,
which is the general partner of ABS Capital Partners III, L.P., and may
be deemed to be a beneficial owner of these shares. Mr. Weglicki
disclaims beneficial ownership of these shares.
(15) Includes 120,891 shares subject to options that are exercisable within 60
days.
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Introduction
At the Annual Meeting, three directors are to be elected for the terms
described below. The board of directors is divided into three classes, with
members serving for staggered three-year terms. The board is comprised of
three Class I directors (Bruce J. Boehm, Gautam A. Prakash and Alan J.
Taetle), two Class II directors (Noel J. Fenton and Timothy T. Weglicki) and
two Class III directors (Peyton C. Anderson and M. Scott Andrews). At each
annual meeting of stockholders, a class of directors will be elected for a
three-year term to succeed the directors of the same class whose terms are
then expiring. The terms of the Class I directors, Class II directors and
Class III directors will expire upon the election and qualification of
successor directors at the 2000, 2001 and 2002 annual meetings of
stockholders, respectively. There are no family relationships between any of
our directors.
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 the Board of Directors may select. 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.
The Board of Directors recommends a vote FOR each named nominee.
Nominees
The name and age, principal occupation or employment, and other data
regarding each nominee, based on information received from the respective
nominees, are set forth below:
Nominees to Serve as a Class I Director
Bruce J. Boehm has served as a director of SciQuest.com since October 1997.
Mr. Boehm has been active as an originator of and investor in early stage
technology companies since 1992. Mr. Boehm holds M.B.A. and M.S. degrees from
Stanford University and a B.S. from the Massachusetts Institute of Technology.
Gautam A. Prakash has served as a director of SciQuest.com since October
1998. Mr. Prakash is a partner with Bessemer Venture Partners, which he joined
in 1993. He is a director of a number of privately held electronic commerce
and healthcare companies. Prior to joining Bessemer, Mr. Prakash worked for
McKinsey & Co. Mr. Prakash graduated from Yale University with a B.S. in
molecular biophysics and biochemistry and a B.A. in economics.
Alan J. Taetle has served as a director of SciQuest.com since August 1998.
Mr. Taetle has been a General Partner with Noro-Moseley Partners, a venture
capital firm, since May 1998. From March 1995 to April 1998, Mr. Taetle was
Executive Vice President of Marketing and Business Development for Mindspring
Enterprises, an Internet service provider. From November 1992 to March 1995,
Mr. Taetle served as Director of Operations and Product Management at
CogniTech Corporation, a developer of retail management software. Mr. Taetle
received an M.B.A. from Harvard Business School and a B.A. in Economics from
the University of Michigan.
Current Directors
The Directors of the Company continuing in office as Class III Directors,
elected to serve until the 2002 Annual Meeting, are as follows:
Noel J. Fenton has served as a director of SciQuest.com since November 1998.
Mr. Fenton has been a Managing General Partner of Trinity Ventures since 1986.
From 1964 to 1986, he was a co-founder of three
4
<PAGE>
venture capital backed start-up companies, for two of which, Acurex
Corporation and Covalent Systems Corporation, he served as CEO. Mr. Fenton
received an M.B.A. from Stanford University and a B.S. from Cornell
University.
Timothy T. Weglicki has served as a director of SciQuest.com since May 1999.
Since December 1993, he has been principally employed as a Managing Member of
ABS Partners, L.P., the General Partner of ABS Capital Partners, L.P., a
private equity fund. Prior to that date, he was principally employed as a
Managing Director of Alex.Brown & Sons Incorporated where he established and
headed its Capital Markets Group. Mr. Weglicki holds an M.B.A. from the
Wharton Graduate School of Business and a B.A. from Johns Hopkins University.
Mr. Weglicki is a director of ElderTrust, a healthcare real estate investment
trust, and a number of privately held companies.
The Directors of the Company continuing in office as Class III Directors;
elected to serve until the 2002 Annual Meeting, are as follows:
Peyton C. Anderson co-founded SciQuest.com in November 1995 and serves as
our Vice President of Business Development and as a director. From August 1989
to January 1996, Mr. Anderson was a sales manager for Butler Manufacturing
Company, a metal buildings company. Mr. Anderson is a director of the Council
for Entrepreneurial Development, a mentoring organization for the North
Carolina entrepreneurial community. Mr. Anderson received an M.B.A. from the
University of North Carolina at Chapel Hill and a B.A. from the University of
Richmond, Phi Beta Kappa.
M. Scott Andrews co-founded SciQuest.com in November 1995 and serves as our
Chief Executive Officer and as a director. From November 1995 to January 2000
Mr. Andrews also served as our President. From October 1991 to January 1996,
Mr. Andrews was a sales professional for Baxter Healthcare Corporation, a
scientific products company, which was acquired by VWR Scientific Products
Corporation. From May 1987 to October 1991, Mr. Andrews served in the U.S.
Army as an aviation officer. Mr. Andrews received an M.B.A. from the
University of North Carolina at Chapel Hill and a B.S. in business management
from the United States Military Academy at West Point. Mr. Andrews currently
serves as a director of the North Carolina BioScience Fund.
Board of Directors Meetings, Committees and Compensation
During 1999, the Board of Directors held 12 meetings. All of the incumbent
directors attended at least 75% of the aggregate total number of meetings of
the Board of Directors and meetings of committees of the Board of Directors on
which they served.
Messrs. Fenton, Weglicki and Boehm are members of the Audit Committee. The
Audit Committee reviews the scope and timing of our audit services and any
other services our independent auditors are asked to perform, the auditors
report on our financial statements following completion of their audit and
their policies and procedures with respect to internal accounting and
financial controls. In addition, the Audit committee makes annual
recommendations to the board of directors for the appointment of independent
auditors for the following year.
Messrs. Prakash, Taetle and Boehm are members of the Compensation Committee.
The compensation Committee reviews and evaluates the compensation and benefits
of all our officers, reviews general policy matters relating to compensation
and employee benefits and makes recommendations concerning these matters to
the board of directors. The Compensation Committee also administers our stock
option plan.
Our directors do not receive any compensation for services performed in
their capacity as directors. We reimburse each director for reasonable out-of-
pocket expenses incurred in attending meetings of the board of directors and
any of its committees.
5
<PAGE>
Executive Compensation
The following table sets forth the total compensation paid by SciQuest.com
during the year ended December 31, 1999 to our Chief Executive Officer and our
four other most highly compensated executive officers who earned more than
$100,000 during 1999. We may refer to these persons as our named executive
officers elsewhere in this proxy statement.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Award
--------------------------------------- ------------
Number of
Securities
Name and Principal Fiscal All Other Underlying
Position Year Salary Bonus Combination(1) Options
- ------------------ ------ -------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
M. Scott Andrews.......... 1999 $ 99,196 $150,000 $3,362 $ --
Chief Executive Officer
Robert M. Fusillo......... 1999 142,481 105,000 4,370 150,123(2)
Chief Information Officer
Lyle A. Brecht............ 1999 177,311 75,000 4,266 146,648(3)
Chief Business
Development Officer
James J. Scheuer.......... 1999 125,085 125,000 3,197 91,175(4)
Chief Financial Officer
Antony Francis............ 1999 134,895 75,000 3,166 150,123(5)
Vice President of
Operations
</TABLE>
- --------
(1) These amounts represent primarily life and health insurance premiums paid
by the Company on behalf of the named executive officers.
(2) Reflects total grants of 191,831 options, of which 41,708 have been
exercised.
(3) Reflects total grants of 230,250 options, of which 83,602 have been
exercised.
(4) Reflects total grants of 141,782 options, of which 50,607 have been
exercised.
(5) Reflects total grants of 150,123 options, none of which have been
exercised.
Options Granted During Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
% of Total Annual Rates for
Number of Options Stock Price
Securities Granted to Appreciation for
Underlying Employees Exercise Option Term(4)
Options in Fiscal Price Expiration ---------------------
Name Granted(1) Year Per Share Date 5% 10%
- ---- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
M. Scott Andrews........ -- -- -- -- -- --
Robert Fusillo.......... 25,000(2) 1.53% $47.50 12/16/09 $1,934,312 $3,080,069
Lyle A. Brecht.......... 103,890(3) 6.35% $ 0.18 02/09/09 31,242 49,748
45,000(2) 2.75% $47.50 12/16/09 3,481,762 5,544,125
James J. Scheuer........ 25,000(2) 1.53% $47.50 12/16/09 1,934,312 3,080,069
Antony Francis.......... 125,123(3) 7.65% $ 0.18 02/09/09 37,628 59,916
25,000(2) 1.53% $47.50 12/16/09 1,934,312 3,080,069
</TABLE>
- --------
(1) Unless otherwise indicated, each option vests and becomes exercisable as
follows: 25% on the one year anniversary of the employee's employment, and
in equal monthly increments of 2.084% per month for 36 months, with full
vesting at 48 months from the employee's initial date of employment.
6
<PAGE>
(2) Options were granted under the SciQuest.com, Inc. Stock Incentive Plan.
(3) Options were granted under the SciQuest.com, Inc. Stock Option Plan.
(4) The potential realizable value of the options reported above was
calculated by assuming 5% and 10% annual rates of appreciation of our
common stock based on the exercise price of the option from the date of
grant of the options until the expiration of the options. These assumed
annual rates of appreciation were used in compliance with the rules of the
Securities and Exchange Commission and are not intended to forecast future
price appreciation of the common stock. The actual value realized from the
options could be substantially higher or lower than the values reported
above, depending upon the future appreciation or depreciation of the
common stock during the option period and the timing of exercise of the
options. The potential realizable value computation does not take into
account federal or state income tax consequences of option exercised or
sales of appreciated stock.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option
Values
The following table sets forth certain information concerning option
exercises by executive officers named in the Summary Compensation table during
1999.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money Options
Shares End at Fiscal Year End(2)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
M. Scott Andrews........ -- -- -- -- -- --
Robert M. Fusillo....... 41,708 $ 611,664 6,953 150,123 $ 551,388 $10,723,953
Lyle A. Brecht.......... 83,602 1,226,025 13,274 146,648 1,052,808 9,502,067
James J Scheuer......... 50,607 742,171 7,785 91,175 617,456 6,048,576
Antony Francis.......... -- -- -- 150,123 -- 10,723,953
</TABLE>
- --------
(1) Upon exercise of the option, an option holder did not receive the amount
reported above under the column Value Realized. The amounts reported above
under Value Realized merely reflect the amount by which the value of our
common stock exceeded the exercise price of the option on the date of
exercise of the option. The option holder does not realize any cash until
the shares of common stock issued upon exercise of the options are sold.
(2) The value of our common stock at December 31, 1999 was $79.50 per share,
based on the closing price of the common stock on that date as reported by
Nasdaq. The value of options was determined by subtracting the aggregate
exercise prices of the options from the value of the common stock issuable
upon exercise of the options.
Employment Agreements
Our principal employees, including executive officers, are required to sign
an agreement prohibiting their disclosure of any of our confidential or
proprietary information and restricting their ability to compete with us
during their employment and for a period of two years thereafter, restricting
solicitation of customers and employees following their employment with us and
providing for ownership and assignment of intellectual property rights to us.
Compensation Committee Interlocks and Insider Participation
The following non-employee directors were the members of the Compensation
Committee of the Board of Directors during 1999: Bruce J. Boehm, Gautam A.
Prakash and Alan J. Taetle. None of the members of the Compensation Committee
has any direct or indirect material interest in the Company outside of his
position as a director.
7
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own beneficially more than
10% of the Company's Common Stock to file reports of ownership and changes in
ownership of such stock with the Securities and Exchange Commission. To the
Company's knowledge, its directors, executive officers and 10% stockholders
complied during 1999 with all applicable Section 16(a) filing requirements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General
The Compensation Committee of the Company's Board of Directors has furnished
the following report on Executive Compensation in accordance with the rules
and regulations of the Securities and Exchange Commission. This report
outlines the duties of the Committee with respect to executive compensation,
the various components of the Company's compensation program for executive
officers and other key employees, and the basis on which the 1999 compensation
was determined for the executive officers of the Company, with particular
detail given to the 1999 compensation for the Company's Chief Executive
Officer.
Compensation of Executive Officers Generally
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for establishing compensation levels for the executive officers of
the Company, including the annual bonus plan for executive officers and for
administering the Company's Stock Option Plan. The Committee is comprised of
three non-employee directors: Messrs. Boehm, Prakash and Taetle. The Company's
compensation program for all employees, including its executives, emphasizes
variable compensation, primarily through performance-based grants of short-
and long-term performance based incentives. Salaries at all employee levels
are generally targeted at median market levels. The Company has established a
cash-based incentive plan with awards targeted to provide fully competitive
levels of total cash compensation based on the degree of achievement of
Company financial and operational performance measures. In addition, the
Company's compensation program rewards individual performance that furthers
Company goals. Executive compensation generally consists of the following: (i)
base salary; (ii) incentive bonuses; (iii) long-term equity incentive awards
in the form of stock option grants; and (iv) other benefits. Each executive
officer's compensation package is designed to provide an appropriately
weighted mix of these elements.
The Company hired most of its executives either late in 1998 or in 1999,
including all of the Named Executive Officers other than the Chief Executive
Officer. Accordingly, the 1999 compensation for these executives, including
base salary, initial grant of stock options and range of bonus potential, was
generally negotiated with the individual prior to their joining the Company.
In arriving at these compensation packages, the Company strove to be
competitive with prevailing market conditions while staying within the
compensation principles described above.
Base Salary. Base Salary levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within a
range of base salaries that the Committee believes are paid equal to or
somewhat above the median salaries for similar executive officers at
comparable companies. The Committee does not use formulas but instead
exercises its judgment based on considerations including overall
responsibilities and the importance of these responsibilities to our success,
experience and ability, past short-term and long-term job performance and
salary history. In addition, the Committee generally takes into account the
Company's past financial performance and future expectations, as well as the
performance of the executives and changes in the executives' responsibilities.
The Committee places a strong emphasis on teamwork; therefore, annual base
salaries are not dependent on objective, corporate performance standards for
any executive officer, including the Chief Executive Officer.
Incentive Bonuses. The Committee recommends the payment of bonuses to
provide an incentive to executive officers to be productive over the course of
each fiscal year. These bonuses are awarded only if the Company achieves or
exceeds certain corporate performance objectives. The incentive bonus to each
executive officer is based on the individual executive's performance as it
relates to the Company's performance.
8
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Equity Incentives. Stock options are used by the Company for payment of
long-term compensation to provide a stock-based incentive to improve the
Company's financial performance and to assist in the recruitment, retention
and motivation of professional, managerial and other personnel. Generally,
stock options are granted to executive officers from time to time based
primarily upon the individual's actual and/or potential contributions to the
Company and the Company's financial performance. Stock options are designed to
align the interests of the Company's executive officers with those of its
stockholders by encouraging executive officers to enhance the value of the
Company, the price of the common stock, and hence, the stockholder's return.
In addition, the vesting of stock options over a period of time is designed to
create an incentive for the individual to remain with the Company. The Company
has granted options to the executives on an ongoing basis to provide
continuing incentives to the executives to meet future performance goals and
to remain with the Company. During the fiscal year ended December 1999,
options to purchase an aggregate of 549,928 shares of common stock were
granted to the Company's executive officers.
Other Benefits. Benefits offered to the Company's executive officers are
provided to serve as a safety net of protection against the financial
catastrophes that can result from illness, disability, or death. The Company
has also established a tax-qualified deferred compensation 401(k) Savings Plan
(the "Plan") covering all of the Company's eligible employees. The Plan
includes a salary deferral arrangement pursuant to which participants may
contribute, subject to certain limitations, a maximum of 20% of their salary
or $10,000 on a pre-tax basis. The Company does not match any portion of the
employee's contribution.
Compensation of the Chief Executive Officer
The Committee annually reviews the performance and compensation of the Chief
Executive Officer based on the assessment of his past performance and its
expectation of his future contributions to the Company's performance. M. Scott
Andrews served as the Company's Chief Executive Officer in 1999. In 1999,
Mr. Andrews received a base salary of $99,196 and a bonus of $150,000. The
Committee believes the compensation paid to Mr. Andrews was reasonable.
Policy with Respect to Qualifying Compensation for Deductibility
Section 162(m) of the Internal Revenue Code imposes a limit on tax
deductions for annual compensation (other than performance-based compensation)
in excess of one million dollars paid by a corporation to its Chief Executive
Officer and the other four most highly compensated executive officers of a
corporation. The Company has not established a policy with regard to Section
162(m) of the Code, since the Company has not and does not currently
anticipate paying cash compensation in excess of one million dollars per annum
to any employee. None of the compensation paid by the Company in 1998 was
subject to the limitations on deductibility. The Board of Directors will
continue to assess the impact of Section 162(m) on its compensation practices
and determine what further action, if any, is appropriate.
Compensation Committee
Bruce J. Boehm
Gautum A. Prakash
Alan J. Taetle
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STOCK PERFORMANCE GRAPH
The following line-graph provides a comparison of the cumulative total
stockholder return on the Company's Common Stock for the period from the date
of the Company's initial public offering on November 19, 1999 through December
31, 1999, against the cumulative stockholder return during such period
achieved by The Nasdaq Stock Market (U.S. Companies) ("Nasdaq US") and an
index of peer issuers selected by SciQuest.com (the "Peer Group"). The Peer
Group consists of other companies that provide Web-based marketplaces or
otherwise facilitate Web-based procurement. The graph assumes that $100 was
invested on November 19, 1999 in the Company's Common Stock and in each of the
comparison indices, and assumes reinvestment of dividends.
The Stock Performance Graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (collectively, the "Acts"), except to the
extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
[GRAPH APPEARS HERE]
CRSP Total Returns
Index for: 11/19/1999 12/31/1999
- ------------------ ---------- ----------
SciQuest.com, Inc. $100.00 $265.0
Nasdaq Stock Market (US Companies) $100.00 $120.9
Self-Determined Peer Group $100.00 $173.3
Companies in the Self-Determined Peer Group
ARIBA INC. CHEMDEX CORP.
COMMERCE ONE INC. FREEMARKETS INC.
PCORDER.COM INC. PURCHASEPRO.COM INC.
VERTICALNET INC.
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 11/19/1999.
10
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RELATED PARTY TRANSACTIONS
On March 1, 1999, we sold 89,408 shares of our series C convertible
preferred stock, at a price of $2.80 per share to Antony Francis, our Vice
President of Operations. The shares vest over a two-year period. Mr. Francis
was granted registration rights with respect to these shares.
In May and June 1999, as part of our sale of 3,312,720 shares of our series
D mandatorily redeemable convertible preferred stock at a price of $11.32 per
share and warrants to purchase 1,004,829 shares of common stock at an exercise
price of $7.46 per share, we sold:
. 662,544 shares of series D mandatorily convertible preferred stock and
warrants to purchase 200,969 shares of common stock to affiliates of
Timothy Weglicki, one of our directors;
. 163,469 shares of series D mandatorily redeemable convertible preferred
stock and warrants to purchase 49,584 shares of common stock to
affiliates of Gautam Prakash, one of our directors;
. 111,561 shares of series D mandatorily redeemable convertible preferred
stock and warrants to purchase 33,839 shares of common stock to
affiliates of Alan Taetle, one of our directors;
. 151,638 shares of series D mandatorily redeemable convertible preferred
stock and warrants to purchase 45,995 share of common stock to
affiliates of Noel Fenton, one of our directors;
. 15,085 shares of series D mandatorily redeemable convertible preferred
stock and warrants to purchase 4,576 shares of common stock to Dwight
Sawin, who was then one of our directors; and
. 7,371 shares of series D mandatorily redeemable convertible preferred
stock and warrants to purchase 2,236 shares of common stock to family
members of Peyton Anderson, one of our officers and directors.
These individuals acquired these shares and warrants on the same terms as
other purchasers in this transaction.
All references in the foregoing to number of shares and exercise price for
preferred stock do not reflect the effect of the 1.516643 to 1 common stock
split effected in November 1999. All of our outstanding preferred shares were
converted into shares of our common stock upon the completion of our initial
public offering and all of the outstanding warrants to purchase our preferred
shares were converted into warrants to purchase shares of our common stock.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed the accounting firm of
PricewaterhouseCoopers LLP to serve as its independent auditor for the fiscal
year ending December 31, 2000. The appointment of this firm was recommended to
the Board by its Audit Committee. A proposal to ratify that appointment will
be presented at the Annual Meeting. Representatives of PricewaterhouseCoopers
LLP are expected to be present at the meeting. They will have an opportunity
to make a statement if they desire to do so and will be available to respond
to appropriate questions from stockholders.
The Board of Directors recommends a vote FOR ratification of selection of
independent auditors.
11
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STOCKHOLDER PROPOSALS
Rules of the Securities and Exchange Commission require that any proposal by
a stockholder of the Company for consideration at the 2001 Annual Meeting of
Stockholders must be received by the Company no later than December 13, 2000 if
any such proposal is to be eligible for inclusion in the Company's proxy
materials for its 2000 Annual Meeting. Under such rules, the Company is not
required to include stockholder proposals in its proxy materials unless certain
other conditions specified in such rules are met.
In order for a stockholder to bring any business or nominations before the
Annual Meeting of Stockholders, certain conditions set forth in Article 1 of
the Company's Bylaws must be complied with, including, but not limited to,
delivery of notice to the Company not less than 30 days prior to the meeting as
originally scheduled.
OTHER MATTERS
Management of the Company is not aware of any other matter to be presented
for action at the Annual Meeting other than those mentioned in the Notice of
Annual Meeting of Stockholders and referred to in this Proxy Statement.
However, should any other matter requiring a vote of the stockholders arise,
the representatives named on the accompanying Proxy will vote in accordance
with their best judgment as to the interests of the Company and stockholders.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ M. Scott Andrews
-----------------------------------
M. Scott Andrews,
Chairman of the Board and Chief
Executive Officer
12
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SciQuest.com, Inc.
5151 McCrimmon Parkway, Suite 208, Morrisville, North Carolina 27560
This Proxy is solicited by the Board of Directors of SciQuest.com, Inc. (the
"Company") for the 2000 Annual Meeting of Shareholders to be held on May 24,
2000 (the "Annual Meeting").
The undersigned hereby appoints M. Scott Andrews and James J. Scheuer, and
each of them, with full power of substitution, as proxies to vote all of the
shares of Common Stock of the Company which the undersigned may be entitled to
vote at the Annual Meeting, and at any adjournments thereof, on the following
matters in the following manner:
1. Election of Directors [_] FOR all nominees [_] WITHHOLD
listed below AUTHORITY
(except as marked to to vote for all
the contrary below) nominees listed
below
Bruce J. Boehm Gautam A. Prakash Alan J. Taetle
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name below.)
-----------------------------------
2. Approval of the appointment of PricewaterhouseCoopers LLP as the independent
auditors of the Company for the fiscal year ended December 31, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In accordance with their judgment, upon such other matters as may properly
come before the Annual Meeting or any adjournment thereof.
When this Proxy is properly executed and returned, and not revoked, the
shares it represents will be voted at the meeting in accordance with the
choices specified above. If no choice is specified, it will be voted FOR the
election of the nominees listed in Proposal 1 above and FOR Proposal 2.
Please sign and date on reverse.
PLEASE DATE AND SIGN THIS PROXY EXACTLY AS YOUR NAME APPEARS BELOW.
Dated: ____________________, 2000
_________________________________
Signature
_________________________________
Signature (if jointly held)
NOTE: When signing as attorney,
trustee, administrator, executor
or guardian, please give your
full title as such. If a
corporation, please sign in full
corporate name by President or
other authorized officer. In the
case of joint tenants, each
joint owner must sign.
I PLAN TO ATTEND THE MEETING [_]
