SCHEDULE 14A INFORMATION
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 sec. 240.14a-11(c) or sec. 240.14a-12
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HYPERMEDIA COMMUNICATIONS, INC.
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
HYPERMEDIA COMMUNICATIONS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 22, 1997
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
HYPERMEDIA COMMUNICATIONS, INC., a California corporation (the "Company"), will
be held on Thursday, May 22, 1997 at 12:00 p.m., local time, at the Company's
offices at 901 Mariner's Island Boulevard, Suite 365, San Mateo, California
94404, for the following purposes:
(1) To elect five directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected.
(2) To ratify and approve an amendment to the 1993 Director Option Plan
increasing the aggregate number of shares of Common Stock reserved for
issuance thereunder by 100,000 to 250,000.
(3) To ratify the appointment of Price Waterhouse LLP as independent public
accountants of the Company for the fiscal year ending December 31,
1997.
(4) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 1, 1997 as
the record date for the determination of shareholders entitled to vote at this
meeting. Only shareholders of record at the close of business on April 1, 1997
are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the postage
prepaid envelope enclosed for that purpose. Any shareholder attending the
meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
/s/ Richard Landry
Richard Landry
President, Chief Executive Officer,
Chairman of the Board and Publisher
San Mateo, California
April 7, 1997
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
HYPERMEDIA COMMUNICATIONS, INC.
PROXY STATEMENT FOR 1997
ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
HYPERMEDIA COMMUNICATIONS, INC., a California corporation (the "Company"), for
use at the Annual Meeting of Shareholders to be held Thursday, May 22, 1997 at
12:00 p.m., local time, or at any adjournment thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of Shareholders.
The Annual Meeting will be held at 901 Mariner's Island Boulevard, Suite 365,
San Mateo, California 94404. The Company's principal executive offices are
located at 901 Mariner's Island Boulevard, Suite 365, San Mateo, California
94404, and the Company's telephone number at that location is (415) 573-5170.
These proxy solicitation materials and the Annual Report on Form 10-K
for the year ended December 31, 1996, including financial statements, were first
mailed on or about April 7, 1997 to all shareholders entitled to vote at the
meeting.
Record Date and Principal Share Ownership
Shareholders of record at the close of business on April 1, 1997 (the
"Record Date") are entitled to notice of and to vote at the meeting. The Company
has one series of Common Shares outstanding, designated Common Stock, $.001 par
value. At the Record Date, 3,200,137 shares of the Company's authorized Common
Stock were issued and outstanding and held of record by approximately 600
shareholders. The Company has two series of Preferred Shares outstanding,
designated Series E Preferred Stock, $.001 par value, and Series F Preferred
Stock, $.001 par value. At the Record Date, 8,064,516 shares of the Company's
Series E Preferred Stock were outstanding and held of record by one shareholder
and 82,250 shares of the Company's Series F Preferred Stock were outstanding and
held of record by one shareholder. The shares of Series E Preferred Stock and
Series F Preferred Stock are convertible under certain circumstances into
approximately 200,000 shares of Common Stock and 82,250 shares of Common Stock,
respectively, and are entitled to the number of votes each would be entitled to
cast if converted to Common Stock.
The following table sets forth certain information regarding the
beneficial ownership of Common Stock of the Company as of April 1, 1997 as to
(i) each person who is known by the Company to own beneficially more than 5% of
the outstanding shares of Common Stock, (ii) each director and each nominee for
director of the Company, (iii) each of the executive officers named in the
Summary Compensation Table in "Executive Compensation and Other Matters" below
and (iv) all directors and executive officers as a group.
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<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
--------------------------------------
Five Percent Shareholders, Directors Approximate
and Certain Executive Officers Number Percent of Total
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<S> <C> <C>
MK Global Ventures................................................ 1,149,431(2) 35.7%
2471 E. Bayshore Road
Palo Alto, CA 94303
Michael Kaufman................................................... 1,171,931(3) 36.2%
c/o MK Global Ventures
2471 E. Bayshore Road
Palo Alto, CA 94303
Greg Lahann....................................................... 1,113,935(4) 34.4%
c/o MK Global Ventures
2471 E. Bayshore Road
Palo Alto, CA 94303
David Bunnell..................................................... 227,549 7.1%
c/o Upside
2015 Pioneer Court
San Mateo, CA 94403
Dr. Eugene C. Y. Duh.............................................. 226,698(5) 7.0%
c/o Orient Semi-Conductor Electronics, Ltd.
Bldg. 1, Section 4
NAN-TZE
Export Processing Zone
Taiwan, R.O.C.
Edmund Shea....................................................... 222,500(6) 6.9%
655 Brea Canyon Road
P.O. Box 489
Walnut, CA 92788
Richard Landry.................................................... 180,544(7) 5.0%
c/o HyperMedia Communications, Inc.
901 Mariner's Island Blvd.
San Mateo, CA 94404
John Griffin...................................................... 20,000(8) *
Patrick Ferrell................................................... - -
Todd Hagen ....................................................... 23,333(9) *
Dan Ruby - -
Directors and executive officers as a group (7 persons)........... 1,418,308(10) 40.7%
- ------------------------
<FN>
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options, warrants and convertible notes currently
exercisable or convertible, or exercisable or convertible within
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<PAGE>
60 days of April 1, 1997 are deemed outstanding for computing the
percentage of the person holding such option but are not outstanding
for computing the percentage of any other person. Except as indicated
by footnote, and subject to community property laws where applicable,
the persons named in the table above have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them.
(2) Includes 57,931 shares of Common Stock owned by MK Global Ventures,
925,450 shares of Common Stock owned by MK Global Ventures II, 150,000
shares of Common Stock owned by MK GVD Fund, 65 shares of Common Stock
issuable upon exercise of a warrant to purchase Common Stock held by MK
Global Ventures and 15,985 shares of Common Stock issuable upon
exercise of a warrant to purchase Common Stock held by MK Global
Ventures II. Does not include shares of Common Stock which may be
issuable upon conversion of the Series E Preferred Stock and Series F
Preferred Stock. MK Global Ventures II owns 8,064,516 shares of Series
E Preferred Stock and MK GVD Fund owns 82,250 shares of Series F
Preferred Stock, which are convertible under certain conditions into
approximately 200,000 shares and 82,250 shares of Common Stock,
respectively. If such shares were converted into Common Stock, the
percentage of the outstanding stock owned by MK Global Ventures would
be 40.9%.
(3) Includes 22,500 shares of Common Stock issuable upon the exercise of
options to purchase Common Stock that are exercisable within 60 days of
April 1, 1997. Also includes 57,931 shares of Common Stock owned by MK
Global Ventures, 925,450 shares of Common Stock owned by MK Global
Ventures II, 150,000 shares of Common Stock owned by MK GVD Fund, 65
shares of Common Stock issuable upon exercise of a warrant to purchase
Common Stock held by MK Global Ventures and 15,985 shares of Common
Stock issuable upon exercise of a warrant to purchase Common Stock held
by MK Global Ventures II. Does not include shares of Common Stock which
may be issuable upon conversion of the Series E Preferred Stock and
Series F Preferred Stock. MK Global Ventures II owns 8,064,516 shares
of Series E Preferred Stock and MK GVD Fund owns 82,250 shares of
Series F Preferred Stock, which are convertible under certain
conditions into approximately 200,000 shares and 82,250 shares of
Common Stock, respectively. If such shares were converted into Common
Stock, the percentage of the outstanding stock owned by Mr. Kaufman
would be 41.3%. Mr. Kaufman, a director of the Company, is a general
partner of MK Global Ventures, MK Global Ventures II and MK GVD Fund
and may be deemed to have voting and investment power with respect to
such shares, although he has disclaimed beneficial ownership of such
shares.
(4) Includes 22,500 shares of Common Stock issuable upon the exercise of
options to purchase Common Stock that are exercisable within 60 days of
April 1, 1997. Also includes 925,450 shares of Common Stock owned by MK
Global Ventures II, 150,000 shares of Common Stock owned by MK GVD Fund
and 15,985 shares of Common Stock issuable upon exercise of a warrant
to purchase Common Stock held by MK Global Ventures II. Does not
include shares of Common Stock which may be issuable upon conversion of
the Series E Preferred Stock and Series F Preferred Stock. MK Global
Ventures II owns 8,064,516 shares of Series E Preferred Stock and MK
GVD Fund owns 82,250 shares of Series F Preferred Stock, which are
convertible under certain conditions into approximately 200,000 shares
and 82,250 shares of Common Stock, respectively. If such shares were
converted into Common Stock, the percentage of the outstanding stock
owned by Mr. Lahann would be 39.7%. Mr. Lahann, a director of the
Company, is a general partner of MK Global Ventures II and MK GVD Fund
and may be deemed to have voting and investment power with respect to
such shares, although he has disclaimed beneficial ownership of such
shares.
(5) Includes 45,339 shares of Common Stock issuable upon exercise of a
warrant to purchase Common Stock that is exercisable within 60 days of
April 1, 1997.
(6) Includes 37,500 shares of Common Stock issuable upon exercise of a
warrant to purchase Common Stock that is exercisable within 60 days of
April 1, 1997.
(7) Represents 180,544 shares of Common Stock issuable upon exercise of
options to purchase Common Stock that are exercisable within 60 days of
April 1, 1997.
(8) Represents 20,000 shares of Common Stock issuable upon exercise of
options to purchase Common Stock that are exercisable within 60 days of
April 1, 1997.
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<PAGE>
(9) Represents 23,333 shares of Common Stock issuable upon exercise of
options to purchase Common Stock that are exercisable within 60 days of
April 1, 1997.
(10) Includes 16,050 shares of Common Stock issuable upon exercise of the
warrants to purchase Common Stock listed in Notes 2, 3 and 4 above, and
256,377 shares of Common Stock issuable upon exercise of options to
purchase Common Stock listed in Notes 3, 4, 8 and 9 above, that are
exercisable within 60 days of April 1, 1997.
</FN>
</TABLE>
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
Voting and Solicitation
Each holder of Common Stock is entitled to one vote for each share
held. Each holder of Series E Preferred Stock and Series F Preferred Stock is
entitled to the number of votes such holder could cast if such shares were
converted into Common Stock. As of April 1, 1997, each share of Series E
Preferred Stock and Series F Preferred Stock was convertible into 0.0248 shares
and 1 share of Common Stock, respectively. Every shareholder voting for the
election of directors (Proposal One) may cumulate such shareholder's votes and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of shares that such shareholder is entitled to
vote, or distribute such shareholder's votes on the same principle among as many
candidates as the shareholder may select, provided that votes cannot be cast for
more than five candidates. However, no shareholder shall be entitled to cumulate
votes unless the candidate's name has been placed in nomination prior to the
voting and the shareholder, or any other shareholder, has given notice at the
meeting, prior to the voting, of the intention to cumulate the shareholder's
votes. On all other matters, shareholders may not cumulate votes.
This solicitation of proxies is made by the Company, and all related
costs will be borne by the Company. In addition, the Company may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation material to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally or by
telephone, telegram or telefacsimile.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders of the Company that are intended to be
presented by such shareholders at the Company's 1997 Annual Meeting of
Shareholders must be received by the Company no later than December 8, 1997 in
order that they may be considered for inclusion in the proxy statement and form
of proxy relating to that meeting.
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<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's bylaws provide that the Board of Directors shall be
composed of five directors. A board of five directors is to be elected at the
Annual Meeting of Shareholders. Unless otherwise instructed, the proxy holders
will vote the proxies received by them for the Company's five nominees named
below, all of whom are presently directors of the Company. In the event that any
nominee of the Company is unable or declines to serve as a director at the time
of the Annual Meeting of Shareholders, the proxies will be voted for any nominee
who shall be designated by the present Board of Directors to fill the vacancy.
The Company is not aware of any nominee who will be unable or will decline to
serve as a director. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner (in accordance with cumulative voting) as will assure the
election of as many of the nominees listed below as possible, and, in such
event, the specific nominees to be voted for will be determined by the proxy
holders. The term of office for each person elected as a director will continue
until the next Annual Meeting of Shareholders or until a successor has been
elected and qualified.
Vote Required
If a quorum is present and voting, the five nominees receiving the
highest number of votes will be elected to the Board of Directors. Votes
withheld from any nominee are counted for purposes of determining the presence
or absence of a quorum. Abstentions and shares held by brokers that are present
but not voted because the brokers were prohibited from exercising discretionary
authority ("broker non-votes") will be counted as present for the purposes of
determining if a quorum is present.
<TABLE>
Nominees
The names of the nominees and certain information about them as of
April 1, 1997 are set forth below:
<CAPTION>
Name of Nominee Age Position with the Company Director Since
--------------- --- ------------------------- --------------
<S> <C> <C> <C>
Richard Landry 40 President, Chief Executive Officer, 1992
Chairman of the Board and Publisher
Patrick Ferrell 40 Director 1997
John Griffin(2) 48 Director 1994
Michael Kaufman (1)(2) 55 Director 1991
Greg Lahann (1) 38 Director 1990
- --------------------------
<FN>
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
</FN>
</TABLE>
All directors hold office until the next annual meeting of shareholders
of the Company or until their successors have been elected. Directors do not
receive any cash compensation for their service as directors of the Company, but
are reimbursed for expenses incurred in connection with attending Board or
committee meetings. Pursuant to the terms of the 1993 Director Option Plan, each
nonemployee director of the Company receives one initial nonstatutory stock
option for 25,000 shares of Common Stock and will receive an additional
nonstatutory stock option grant for 5,000 shares of Common Stock on June 1 of
each year if he or she has been on the Board for at least six months. These
options become exercisable cumulatively at the rate of 1/4th of the shares
subject to the option for every year after the date of grant, based on the Board
member's continued service. There is no family relationship between any director
or executive officer of the Company.
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<PAGE>
Richard Landry joined the Company in January 1992 as its President and
Publisher; he also became a director of the Company at that time. In July 1992,
Mr. Landry became Chief Executive Officer of the Company. In February 1997, Mr.
Landry became the Chairman of the Board. From 1988 to 1991, Mr. Landry was
Editor-in-Chief and Associate Publisher of PC World, a publication of PCW
Communications, Inc. From 1986 to 1988, Mr. Landry was Managing Editor and
Editor of PC World.
Patrick Ferrell became a director of the Company in February 1997. Mr.
Ferrell is currently a business strategy consultant. Since June 1989, Mr.
Ferrell has been the President and Chief Executive Officer of Infotainment
World, Inc., a diversified subsidiary of IDG Communications. Mr. Ferrell was
also the founder of GamePro magazine, the leading consumer publication servicing
the interactive entertainment market.
John Griffin became a director of the Company in April 1994. Since
September 1990, he has been the President of the Magazine Division of Rodale
Press, Inc., Emmaus, Pennsylvania, a publisher of consumer magazines in the
areas of health, fitness, gardening and crafts, including Prevention, Runner's
World and American Woodworker. Mr. Griffin has also been a director of Rodale
Press since October 1990. From January 1988 until April 1990, Mr. Griffin was
Chairman of the Board of Directors, President and Publisher of PC World.
Michael Kaufman became a director of the Company in July 1991. Since
October 1987, he has been the General Partner of MK Global Ventures, Palo Alto,
California, a venture capital firm specializing in early-stage and start-up
financing of high technology companies. From August 1981 until October 1987, Mr.
Kaufman was a general partner of Oak Investment Partners, a venture capital
firm. Prior to August 1981, Mr. Kaufman was President and Chief Operating
Officer of Centronics Data Corporation, a manufacturer of computer peripherals.
Mr. Kaufman serves on the boards of directors of AsantJ Technologies, Inc., a
networking products company, Davox Corp., a telecommunications company, Document
Technologies, Inc., a computer software and systems company, DISC, Inc., a
manufacturer of computer mass storage systems, and Proxim, Inc., a wireless
communications company.
Greg Lahann became a director of the Company in August 1990. From
October 1987 until December 1993, he was the Chief Financial Officer of MK
Global Ventures, and since January 1990 he has been a General Partner of MK
Global Ventures II. From 1981 to 1987, Mr. Lahann was employed by Price
Waterhouse LLP in various positions, the last of which was as manager in the
Audit Department. Mr. Lahann is a Certified Public Accountant.
Voting Agreement
MK Global and Richard Landry have entered into a Shareholder Voting
Agreement pursuant to which they have each agreed to vote the shares of stock
held by each of them to elect Richard Landry and a nominee of MK Global to the
Board of Directors of the Company. Pursuant to the Shareholder Voting Agreement,
MK Global will vote for nominee Richard Landry and Richard Landry will vote for
nominees Richard Landry and at least one of Michael Kaufman or Greg Lahann.
Board Meetings and Committees
The Board of Directors of the Company held a total of 9 meetings during
fiscal 1996. No director attended fewer than 75% of the meetings of the Board of
Directors and committees thereof, if any, upon which such director served. The
Board of Directors has a Compensation Committee and an Audit Committee. The
Board of Directors has no nominating committee or any committee performing such
functions.
The Compensation Committee, which consisted of directors Kaufman and
Griffin at the end of fiscal 1996, met once during the fiscal year. This
Committee is responsible for determining salaries, incentives and other forms of
compensation for directors and officers of the Company.
The Audit Committee, which consisted of directors Kaufman and Lahann at
the end of fiscal 1996, neither met nor acted by written consent during the
fiscal year. This Committee is responsible for overseeing actions taken by the
Company's independent auditors and reviews the Company's internal financial
controls.
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<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consisted of the following directors during
fiscal 1996: Kaufman and Griffin. The Compensation Committee makes
recommendations to the Board of Directors concerning salaries and incentive
compensation for directors and officers of the Company. Mr. Landry, President
and Chief Executive Officer of the Company, is not a member of the Compensation
Committee and cannot vote on matters decided by the Committee. He does
participate in all discussions and decisions regarding salaries and incentive
compensation for all employees of and consultants to the Company, except that
Mr. Landry is excluded from discussions and decisions regarding his own salary
and incentive compensation.
MK Global Ventures, MK Global Ventures II and MK GVD Fund
(collectively, "MK Global") own approximately 35% of the outstanding Common
Stock and 100% of the outstanding Preferred Stock. Michael Kaufman, a director
of the Company, is the General Partner of MK Global Ventures. Greg Lahann, a
director of the Company, is a General Partner of MK Global Ventures II. MK
Global and Richard Landry have entered into a Shareholder Voting Agreement
pursuant to which they have each agreed to vote the shares of Common Stock held
by each of them to elect Richard Landry and a nominee of MK Global to the Board
of Directors of the Company.
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<PAGE>
PROPOSAL TWO
APPROVAL OF AMENDMENT TO THE 1993 DIRECTOR OPTION PLAN
The 1993 Director Option Plan (the "Directors' Plan") which was adopted
by the Board of Directors in October 1993 and was approved by the Company's
shareholders in April 1995. The Company has reserved a total of 150,000 shares
of Common Stock for issuance pursuant to the Directors' Plan. In February 1997,
the Board of Directors authorized an amendment to 1993 Director Option Plan to
increase the aggregate number of shares of Common Stock reserved for issuance
thereunder from 150,000 to 250,000. The Directors' Plan is currently
administered by the Board of Directors. Under the Directors' Plan, each
nonemployee director automatically receives a nonstatutory option to purchase
25,000 shares of the Company's Common Stock, in the case of a new director, on
the date upon which such person first becomes a director and, in the case of
existing nonemployee directors, on the date a new nonemployee director is first
appointed to the Board. In addition, each nonemployee director is automatically
granted a nonstatutory option to purchase 5,000 shares of Common Stock on June 1
of each year if on such date he has served on the Board for at least six months.
Options granted under the Directors' Plan have a term of ten years
unless terminated sooner upon termination of the optionee's status as a director
or otherwise pursuant to the Directors' Plan. Such options are not transferable
by the optionee other than by will or the laws of descent or distribution, and
each option is exercisable during the lifetime of the director only by such
director. The exercise price of each option granted under the Directors' Plan is
equal to the fair market value of the Common Stock on the date of grant. Options
granted under the Directors' Plan vest cumulatively at the rate of 1/4th of the
shares subject to the option for every year after the date of grant.
In the event of a merger of the Company with or into another
corporation or a consolidation, acquisition of assets or like transaction
involving the Company, each option may be assumed or an equivalent option
substituted by the successor corporation. If the successor corporation chooses
not to assume the options or to substitute equivalent options, then the options
will be exercisable only to the extent they are vested on the date of merger or
sale.
Unless terminated sooner, the Directors' Plan will terminate in 2003.
The Board has authority to amend or terminate the Directors' Plan, provided no
such action may affect options already granted and such options shall remain in
full force and effect.
At the Annual Meeting, the Company's shareholders are requested to
approve the amendment to the Directors' Plan to increase the number of shares
reserved for issuance thereunder by 100,000 shares. There are currently only
10,000 shares available for option grants under the Directors' Plan. As such,
the Company will not likely be able to grant on June 1, 1997 to each nonemployee
director an option to purchase 5,000 shares of the Company's Common Stock, as
required by the Directors' Plan. The Company relies upon the Directors' Plan to
attract and retain the best available individuals for service as directors of
the Company. The Board of Directors believes it is in the Company's best
interests to increase the shares reserved for issuance under the Directors' Plan
so that the Company may continue to attract and retain the best available
individuals for service as directors of the Company by granting them options to
purchase the Company's Common Stock and providing additional incentive to the
directors of the Company and encouraging their continued service on the Board.
While encouraging directors to be shareholders, the Company also recognizes that
option grants to directors can result in dilution to existing shareholders.
Vote Required and Board of Directors Recommendation
The affirmative vote of a majority of the Votes Cast will be required
under California law to approve the Directors' Plan. For this purpose, the
"Votes Cast" are defined under California law to be the shares of the Company's
Common Stock represented and "voting" at the Annual Meeting. In addition, the
affirmative votes must constitute at least a majority of the required quorum,
which quorum is a majority of the shares outstanding on the Record Date. Votes
that are cast against the proposal will be counted for purposes of determining
(i) the presence or absence of a quorum and (ii) the total number of Votes Cast
with respect to the proposal. While there is no definitive statutory or case law
authority in California as to the proper treatment of abstentions in the
counting of votes with respect to a proposal such as the approval of the
Directors' Plan, the Company believes that abstentions should be counted for
purposes of determining both (i) the presence or absence of a quorum for the
transaction of business and (ii) the total number of Votes Cast with respect to
the proposal. In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner. Accordingly, abstentions
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<PAGE>
will have the same effect as a vote against the proposal. Broker non-votes will
be counted for purposes of determining the presence or absence of a quorum for
the transaction of business, but will not be counted for purposes of determining
the number of Votes Cast with respect to the proposal.
The Board of Directors recommends that shareholders vote "FOR" approval
of the amendment of the Company's 1993 Director Option Plan.
The essential features of the Directors' Plan, a copy of which may be
obtained from the Company, are outlined below.
General. The Directors' Plan, and the right of directors to receive
options thereunder, upon its initial adoption was intended to qualify as a plan
having "disinterested administration" under Rule 16b-3 pursuant to the Exchange
Act.
Purpose. The purposes of the Directors' Plan are to attract and retain
the best available individuals for service as directors of the Company, to
provide additional incentive to the directors of the Company and to encourage
their continued service on the Board.
Administration. The Directors' Plan is administered by the Board of
Directors, who receive no additional compensation for such service. All grants
of options under the Directors' Plan are automatic and nondiscretionary pursuant
to the terms of the Directors' Plan. All questions of interpretation or
application of the Directors' Plan are determined by the Board, whose decisions
are final and binding upon all participants.
Eligibility. Options under the Directors' Plan may be granted only to
nonemployee directors of the Company. As of the Annual Meeting, there will be
four nonemployee directors of the Company, all of whom have been nominated to
serve as directors for the 1997 fiscal year.
Participation in the Plan. Participation in the Directors' Plan
provides for grants of options to be made in two ways:
(1) Each nonemployee director is automatically granted a
nonstatutory option to purchase 25,000 shares of Common Stock of the
Company upon the date on which such individual first becomes a
director, whether through election by the shareholders of the Company
or by appointment by the Board of Directors in order to fill a vacancy;
(2) Each nonemployee director who has served at least six
months and who continues to serve on the Board on such date receives,
on June 1 of each year, a nonstatutory option for 5,000 shares.
Terms of Options. Each option granted under the Directors' Plan is
evidenced by a written stock option agreement between the Company and the
optionee. Options are generally subject to the terms and conditions listed
below:
(a) Exercise of the Option. Options granted under the
Directors' Plan become exercisable at the rate of 25% per year. Options
granted under the Directors' Plan have a term of ten years unless
terminated sooner upon termination of the optionee's status as a
director or otherwise pursuant to the Directors' Plan. An option is
exercised upon written notice of exercise to the Company specifying the
number of full shares of Common Stock to be purchased and tender of
payment of the purchase price. Payment for shares purchased upon
exercise of an option shall be in such form of consideration as is
authorized by the Directors' Plan.
(b) Exercise Price. The per share exercise price of options
granted under the Directors' Plan is 100% of the fair market value per
share of the Company's Common Stock on the date of grant of the option.
The fair market value is determined by the closing price on The Nasdaq
SmallCap Market on the date of grant.
(c) Termination of Employment. If an optionee ceases to serve
as a director, he may, but only within three months after the date he
ceases to be a director of the Company, exercise his option to the
extent that he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the
option on the date of such termination, or if he does not exercise such
option within the time specified, the option terminates.
-10-
<PAGE>
(d) Disability. In the event that a director is unable to
continue his service as such with the Company as a result of his total
and permanent disability (as defined in Section 22(e)(3) of the Tax
Code), he may, but only within twelve months from the date of
termination, exercise his option to the extent he was entitled to
exercise his option at the date of such termination. To the extent that
the option is not exercised within such twelve-month period, the option
terminates.
(e) Death. If an optionee should die while a director of the
Company, the option may be exercised at any time within twelve months
after death by the optionee's estate to the extent the option would
have been exercisable by the optionee on the date of death. To the
extent that the option is not exercised within such twelve-month
period, the option terminates.
(f) Liquidation or Acquisition. In the event of a proposed
liquidation or dissolution of the Company, options granted under the
Directors' Plan shall terminate, to the extent they have not previously
been exercised.
In the event of a proposed sale of all or substantially all of
the assets of the Company, or the merger of the Company with or into
another corporation, options shall be assumed or equivalent options
shall be substituted by such successor corporation or its parent or
subsidiaries. If such successor corporation refuses to assume the
options or to substitute equivalent options, then the options will
terminate on the date of merger or sale.
(g) Nontransferability of Options. Options granted pursuant to
the Directors' Plan may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the
laws of descent or distribution and may be exercised, during the
lifetime of the optionee, only by the optionee.
Options Outstanding. As of the Record Date, none of the options to
purchase shares have been exercised, options to purchase an aggregate of 140,000
shares held by five optionees were outstanding, and 10,000 shares remained
available for future grants under the Directors' Plan.
Capital Changes. In the event of any changes made in the Company's
capitalization which result in a change in the number of issued shares of Common
Stock without receipt of consideration, appropriate adjustments shall be made in
the exercise price and in the number of shares subject to options outstanding
under the Directors' Plan, as well as in the number of shares reserved for
issuance under the Directors' Plan.
Amendment and Termination of the Plan. The Board may at any time amend,
alter, suspend or discontinue the Directors' Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
optionee under any grant theretofore made, without such optionee's consent. In
addition, to the extent necessary and desirable to comply with applicable law,
the Company shall obtain shareholder approval of any amendment to the Directors'
Plan in such a manner and to such a degree as required.
Tax Information--Options. Options granted pursuant to the Directors'
Plan are Anonstatutory options" and will not qualify for any special tax
benefits to the optionee.
An optionee will not recognize any taxable income at the time the
option is granted. Upon exercise of the option, the optionee will generally
recognize ordinary income for federal tax purposes measured by the excess, if
any, of the fair market value of the shares over the exercise price. Because
shares held by directors might be subject to restrictions on resale under
Section 16(b) of the Securities Exchange Act of 1934, as amended, the date of
taxation may be deferred unless the optionee files an election with the Internal
Revenue Service pursuant to Section 83(b) of the Tax Code within thirty days
after the date of exercise.
Upon a resale of shares acquired pursuant to an option under the
Directors' Plan, any difference between the sales price and the exercise price,
to the extent not recognized as ordinary income as provided above, will be
treated as capital gain or loss. The tax rate on net capital gain (net long-term
capital gain minus net short-term capital loss) is capped at 28%. Capital losses
are allowed in full against capital gains plus $3,000 of other income.
-11-
<PAGE>
The Company will be entitled to a tax deduction in the amount and at
the time that the optionee recognizes ordinary income with respect to shares
acquired upon exercise of an option under the Directors' Plan. The Company is
not required to withhold any amount for tax purposes on any such income included
by the optionee.
The foregoing summary of the effect of federal income taxation upon the
optionee and the Company with respect to the grant of options under the
Directors' Plan does not purport to be complete, and reference should be made to
the applicable provisions of the Tax Code. In addition, this summary does not
discuss the provisions of the income tax laws of any municipality, state or
foreign country in which the participant may reside or the tax consequences of
the optionee's death.
Participation in the Directors' Plan. The Company is unable to predict
the amount of benefits that will be received or allocated to any particular
participant under the Directors' Plan. The following table sets forth the dollar
amount and the number of shares that would have been granted under the
Directors' Plan during the last fiscal year to (i) each of the Company's Named
Executive Officers, (ii) all current executive officers as a group, (iii) all
current directors who are not executive officers as a group and (iv) all
employees other than executive officers as a group.
-12-
<PAGE>
<TABLE>
Directors' Plan
=================================
<CAPTION>
Shares
Subject to Dollar Value
Options of Option
Name and Position Granted Grants(2)($)
- ----------------------------------------------------------------------------- ------------- ----------------
<S> <C> <C>
Richard Landry
President, Chief Executive Officer, Chairman of the Board and Publisher -- --
Todd Hagen
Vice President, Finance and Administration, Chief Financial Officer and
Secretary -- --
All current executive officers as a group (3 persons) -- --
All current non-executive directors as a group (4 persons) 20,000(1) $60,000
All other employees (excluding current executive officers) as a group -- --
- ----------
<FN>
(1) Reflects the number of options that would have been granted to the
current directors who are not executive officers if all such directors
were directors for the Company during fiscal year 1996.
(2) The dollar value of option grants under the Stock Plan is computed by
multiplying the number of shares subject to the option times the
exercise price of the option on the date that such option would have
been granted. All options that would have been granted under the
Directors' Plan would have been granted at an exercise price equal to
the fair market value of the Common Stock on the date of grant.
</FN>
</TABLE>
-13-
<PAGE>
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending December 31, 1997, and recommends that shareholders vote for
ratification of such appointment. In the event of a negative vote on
ratification, the Board of Directors will reconsider its selection.
Price Waterhouse LLP has audited the Company's financial statements
annually since 1991. Representatives of Price Waterhouse LLP are expected to be
present at the meeting with the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
Required Vote
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock voting in person or by proxy on this proposal at the
annual meeting is required to approve the appointment of the independent
auditors.
The Board of Directors unanimously recommends a vote "FOR" the
ratification of the appointment of Price Waterhouse LLP as independent public
accountants.
-14-
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Compensation
<TABLE>
The following table sets forth the compensation paid by the Company
during the fiscal years ended December 31, 1996, 1995 and 1994 to the Chief
Executive Officer and Chief Financial Officer (the "Named Executive Officers").
No other executive officer of the Company received total annual salary and bonus
in 1996 in excess of $100,000.
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
------------
Awards
------------
Annual Compensation Securities
---------------------- Underlying Other
Name and Principal Position Year Salary($) Options/SARs Compensation($)
- ---------------------------------------- ---------- ------------ -------------- ------------------
<S> <C> <C> <C> <C>
Richard Landry 1996 $140,000 50,000 --
President, Chief Executive Officer, 1995 120,000 -- --
Chairman of the Board and Publisher 1994 120,000 -- --
Todd Hagen 1996 $110,000 10,000 --
Vice President, Finance and 1995 55,000(1) 40,000 $ 75,396(3)
Administration, Chief Financial 1994 14,067(2) -- --
Officer and Secretary
- ----------
<FN>
(1) Based on an annualized salary of $110,000.
(2) Based on an annualized salary of $100,000.
(3) Represents consulting fees paid to Mr. Hagen during 1995.
</FN>
</TABLE>
-15-
<PAGE>
Option Grants in Fiscal 1996
<TABLE>
The following table sets forth information with respect to stock option
grants to each of the Named Executive Officers during the year ended December
31, 1996.
<CAPTION>
Individual Grants
-------------------------------------------------------------
Number of Percent of Potential Realized Value
Securities Total at Assumed Annual Rates of
Underlying Options/SARs Exercise Stock Price Appreciation
Options/SARs Granted to or Base for Option Term
Granted Employees Price Expiration ($)(3)
Name (#)(1) in Year (%)(2) ($/sh) Date 5% 10%
- ---------------------- ------------ --------------- -------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Richard Landry...... 50,000 34.5% $2.87 04/14/06 $90,246 $228,702
Todd Hagen.......... 10,000 6.9 2.375 10/16/06 14,936 37,851
- -----------------------
<FN>
(1) All of these stock option grants were pursuant to the Company's 1991 Stock
Plan, as amended, and are subject to the terms of such plan. These options
were granted at exercise prices equal to the fair market value of the
Common Stock as determined by the Board of Directors of the Company on the
date of grant.
(2) The total number of shares of Common Stock subject to options granted to
employees in fiscal 1996 under the 1991 Stock Plan was 145,000.
(3) The 5% and 10% assumed annual compound rates of stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of future prices of its
Common Stock.
</FN>
Aggregated 1996 Fiscal Year-End Option Values
</TABLE>
<TABLE>
The following table provides information on the value of unexercised
options held by the Named Executive Officers at December 31, 1996.
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 1996 December 31, 1996 (1)
---------------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard Landry....................... 168,044 50,000 $ 0 $ 0
Todd Hagen........................... 19,167 30,833 0 0
<FN>
(1) Market value of underlying securities at year-end, minus the exercise
price. The closing price for the Company's Common Stock on The Nasdaq
SmallCap Market on December 31, 1996 was $1.375 per share.
</FN>
</TABLE>
-16-
<PAGE>
Limitation of Liability and Indemnification Matters
Pursuant to the California Corporations Code ("California Law"), the
Company has adopted provisions in its Amended and Restated Articles of
Incorporation which eliminate the personal liability of its directors and
officers to the Company and its shareholders for monetary damages for breach of
the directors' fiduciary duties in certain circumstances. The Company's Bylaws
require the Company to indemnify its directors, officers, employees and other
agents to the fullest extent permitted by law.
The Company has entered into indemnification agreements with each of
its current directors and officers which provide for indemnification to the
fullest extent permitted by California Law, including in circumstances in which
indemnification and the advancement of expenses are discretionary under
California Law. The Company believes that the limitation of liability provisions
in its Amended and Restated Articles of Incorporation and the indemnification
agreements will enhance the Company's ability to continue to attract and retain
qualified individuals to serve as directors and officers.
There is no pending litigation or proceeding involving a director,
officer or employee of the Company to which the indemnification agreements would
apply.
Compensation of Directors
See the information set forth above under "Proposal One -- Election of
Directors -- Nominees."
Report of the Compensation Committee of the Board of Directors on its
Compensation Policies
The following is the report of the Compensation Committee of the Board
of Directors (the "Compensation Committee") describing compensation policies and
rationales applicable to the Company's executive officers with respect to the
compensation paid to such executive officers for the fiscal year ended December
31, 1996. The information contained in such report shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
General
The Compensation Committee is responsible for setting compensation
levels for the Company's executive officers. All decisions by the Compensation
Committee are reviewed by the entire Board of Directors.
In fiscal 1996, the Compensation Committee determined the salaries of
Richard Landry, President and Chief Executive Officer, and Todd Hagen, Vice
President of Finance and Administration and Chief Financial Officer. The
Compensation Committee also reviewed and approved employment compensation
matters for other management personnel. The Company formed the Compensation
Committee in October 1993, which is comprised of two nonemployee directors. The
Compensation Committee met once during fiscal 1996.
-17-
<PAGE>
Overview and Policies for 1997
The goals of the executive compensation program are to attract,
motivate, reward and retain the key executive talent necessary to achieve the
Company's business objectives and contribute to the long-term success of the
Company. The Compensation Committee currently uses salary and stock options to
meet these goals.
In fiscal 1996, the Compensation Committee reviewed the base salaries
of the Company's key executive officers by evaluating each executive's scope of
responsibility, prior experience and salary history, and also took into account
the salaries for similar positions at comparable companies. In reviewing the
base salaries, the Compensation Committee focused on each executive's prior
performance with the Company and expected contribution to the Company's future
success. The Compensation Committee will continue to perform this role in 1997.
The Company provides long-term incentives to executive officers through
its 1991 Stock Plan. The purpose of the 1991 Stock Plan is to attract and retain
the best employee talent available and to create a direct link between
compensation and the long-term performance of the Company. In general, the 1991
Stock Plan incorporates four-year vesting periods to encourage employees to
remain with the Company. The size of each option grant is based on the
recipient's position and tenure with the Company, the recipient's past
performance, and the size of previous stock option grants, primarily weighted
toward the recipient's position.
The compensation for Richard Landry and Todd Hagen in 1996 was approved
by the Compensation Committee. The Compensation Committee made its determination
of the Chief Executive Officer's salary after considering the same factors used
to determine the compensation of other executive officers.
Summary
The Compensation Committee believes that the Company's compensation
policies as practiced to date have been successful in attracting and retaining
qualified employees and in linking compensation directly to corporate
performance relative to the Company's goals. The Company's compensation policies
will evolve over time as the Company moves to attain the near-term goals it has
set for itself while maintaining its focus on building long-term shareholder
value.
John Griffin
Michael Kaufman
-18-
<PAGE>
Performance Graph
Set forth below is a line graph comparing the annual percentage change
in the cumulative return to the shareholders of the Company's Common Stock with
the cumulative return of the Nasdaq U.S. Index and the Standard & Poor's
Publishing (Newspapers) Index for the period commencing March 9, 1993 (the date
of the Company's initial public offering) and ending on December 31, 1996. The
information contained in the performance graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
[The following descriptive data is supplied in accordance with Rule
304(d) of Regulation S-T]
Cumulative Total Return
---------------------------------------------
3/09/93 12/93 12/94 12/95 12/96
Hupermedia Communications, Inc. 100 160 101 65 28
NASDAQ Stock Market-US 100 116 113 160 197
S & P Publishing (Newspapers) 100 110 100 128 162
(1) The graph assumes that $100 was invested on March 9, 1993 in the Company's
Common Stock or on February 28, 1993 in each Index, and that all dividends
were reinvested. No dividends have been declared or paid on the Company's
Common Stock. Shareholder returns over the indicated period should not be
considered indicative of future shareholder returns.
(2) The Company operates on a 52-week fiscal year which ended on December 31,
1996.
-19-
<PAGE>
Certain Transactions with Management
In September 1995, the Company entered into an agreement with David
Bunnell, the Company's then Chairman of the Board, pursuant to which Mr. Bunnell
received $11,000 per month as a consultant to the Company for an aggregate of
$99,000 during fiscal 1996. Also pursuant to the above mentioned agreement, the
Company forgave at the end of each of the first three quarters of fiscal 1996
$20,935.93 of a note payable by Mr. Bunnell to the Company for an aggregate of
$62,807.78 during fiscal 1996. Mr. Bunnell resigned as Chairman of the Board on
February 6, 1997.
In addition, see the information set forth above under "Executive
Compensation and Other Matters -- Limitation of Liability and Indemnification
Matters."
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's executive officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the National Association of
Securities Dealers, Inc. Executive officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely in its review of the
copies of such forms received by it, or written representations from certain
reporting persons, the Company believes that, during fiscal 1996, all reporting
persons complied with Section 16(a) filing requirements applicable to them,
except that each of John Griffin, Greg Lahann and Michael Kaufman did not file
on a timely basis a Form 5 with respect to each of their June 1, 1996 stock
option grants.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the shares they
represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: April 7, 1997
<PAGE>
APPENDIX A
1993 Director Option Plan
<PAGE>
HYPERMEDIA COMMUNICATIONS, INC.
1993 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 1993 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be "non-statutory stock options."
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means HyperMedia Communications, Inc., a
California corporation.
(e) "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(i) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the date of
grant, as reported in The Wall Street Journal or such other source as the Board
deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the bid and
asked prices for the Common Stock on the last market trading day prior to the
day of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable, or;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(j) "Option" means a stock option granted pursuant to the
Plan.
(k) "Optioned Stock" means the Common Stock subject to an
Option.
(l) "Optionee" means an Outside Director who receives an
Option.
<PAGE>
(m) "Outside Director" means a Director who is not an
Employee.
(n) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(o) "Plan" means this 1993 Director Option Plan.
(p) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code
of 1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 100,000 Shares (the "Pool") of Common Stock. The Shares
may be authorized but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Procedure for Grants. The provisions set forth in this
Section 4(a) shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. All grants of Options to Outside
Directors under this Plan shall be automatic and non-discretionary and shall be
made strictly in accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically
granted an Option to purchase 25,000 Shares (the "First Option") on the date on
which the later of the following events occurs: (A) the effective date of this
Plan, as determined in accordance with Section 6 hereof, or (B) the date on
which such person first becomes a Director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy.
(iii) After the First Option has been granted to an
Outside Director, such Outside Director shall thereafter be automatically
granted an Option to purchase 5,000 Shares (a "Subsequent Option") on June 1 of
each year, if on such date, he shall have served on the Board for at least six
(6) months.
(iv) Notwithstanding the provisions of subsections
(ii) and (iii) hereof, any exercise of an Option made before the Company has
obtained stockholder approval of the Plan in accordance with Section 16 hereof
shall be conditioned upon obtaining such stockholder approval of the Plan in
accordance with Section 16 hereof.
(v) The terms of a First Option granted hereunder
shall be as follows:
(A) the term of the First Option shall be
ten (10) years.
(B) the First Option shall be exercisable
only while the Outside Director remains a Director of the Company, except as set
forth in Section 8 hereof.
(C) the exercise price per Share shall be
100% of the fair market value per Share on the date of grant of the First
Option.
(D) the First Option shall become
exercisable in installments cumulatively as to twenty-five percent of the Shares
subject to the First Option on each anniversary of its date of grant.
(vi) The terms of a Subsequent Option granted
hereunder shall be as follows:
(A) the term of the Subsequent Option shall
be ten (10) years.
(B) the Subsequent Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 8 hereof.
(C) the exercise price per Share shall be
100% of the fair market value per Share on the date of grant of the Subsequent
Option.
(D) the Subsequent Option shall become
exercisable as to twenty-five percent of the Shares subject to the Subsequent
Option on each anniversary of its date of grant.
(vii) In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through action of the stockholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof. An Outside Director who has been granted an Option may, if he
is otherwise eligible, be granted an additional Option or Options in accordance
with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (v) any combination of the foregoing methods of payment.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and
method of payment allowable under Section 7 of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. A share certificate for the number of Shares so acquired
shall be issued to the Optionee as soon as practicable after exercise of the
Option. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Rule 16b-3. Options granted to Outside Directors must
comply with the applicable provisions of Rule 16b-3 promulgated under the
Exchange Act or any successor thereto and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
(c) Termination of Continuous Status as a Director. In the
event an Optionee's Continuous Status as a Director terminates (other than upon
the Optionee's death or disability), the Optionee may exercise his or her
Option, but only within three (3) months from the date of such termination, and
only to the extent that the Optionee was entitled to exercise it at the date of
such termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option at
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
(d) Disability of Optionee. In the event Optionee's Continuous
Status as a Director terminates as a result of his or her disability, the
Optionee may exercise his or her Option, but only within twelve (12) months from
the date of such termination, and only to the extent that the Optionee was
entitled to exercise it at the date of such termination (but in no event later
than the expiration of its ten (10) year term); provided, however, that if such
disability is not a Adisability@ as such term is defined in Section 22(e)(3) of
the Code, in the case of an Incentive Stock Option such Incentive Stock Option
shall automatically convert to a Nonstatutory Stock Option on the day three
months and one day following such termination. To the extent that the Optionee
was not entitled to exercise an Option at the date of termination, or if he or
she does not exercise such Option (to the extent otherwise so entitled) within
the time specified herein, the Option shall terminate.
(e) Death of Optionee. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it at the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger,
Asset Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the number of Shares covered by each
outstanding Option and the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been Aeffected
without receipt of consideration.@ Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option shall be assumed or an
equivalent option shall be substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation does not agree to assume the Option or to substitute an equivalent
option, each outstanding Option shall terminate as of the date of the closing of
the merger or sale of assets. For the purposes of this paragraph, the Option
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares).
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. Except as set forth in Section
4, the Board may at any time amend, alter, suspend, or discontinue the Plan, but
no amendment, alteration, suspension, or discontinuation shall be made which
would impair the rights of any Optionee under any grant theretofore made,
without his or her consent. In addition, to the extent necessary and desirable
to comply with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof. Notice
of the determination shall be given to each Outside Director to whom an Option
is so granted within a reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
14. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
17. Information to Optionees. The Company shall provide to each
Optionee, not less frequently than annually during the period such Optionee has
one or more Options outstanding, copies of annual financial statements. The
Company shall not be required to provide such statements to key employees whose
duties in connection with the Company assure their access to equivalent
information.
<PAGE>
APPENDIX B
PROXY HYPERMEDIA COMUNICATIONS, INC. PROXY
1997 ANNUAL MEETING OF SHAREHOLDERS
May 22, 1997
The undersigned shareholder of HYPERMEDIA COMMUNICATIONS, INC., a
California corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 7, 1997, and
hereby appoints Richard Landry and Todd Hagen, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1997 Annual Meeting
of Shareholders of HYPERMEDIA COMMUNICATIONS, INC. to be held on May 22, 1997 at
12:00 p.m. (noon) local time, at 901 Mariner's Island Boulevard, Suite 365, San
Mateo, California 94404, and at any adjournment or adjournments thereof, and to
vote all shares of Common Stock which the undersigned would be entitled to vote
if then and there personally present, on the matters set forth below:
(Continued, and to be signed on the other side)
<PAGE>
[x] mark
your votes
as this
1. ELECTION OF DIRECTORS:
Patrick Ferrell; John Griffin; Michael
Kaufman; Greg Lahann;
Richard Landry
INSTRUCTION: To withhold
authority to vote for any individual
nominee, write that nominee's name or names below.
- --------------------------------------
WITHHOLD
FOR* FOR ALL
[ ] [ ]
(*Except as marked to the
contrary below.)
2. Proposal to amend the Company's 1993 Director Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to ratify the appointment of Price Waterhouse LLP as the
Independent Public Accountants of the Company for fiscal 1997:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT OF THE COMPANY'S
1993 DIRECTOR OPTION PLAN AND FOR THE RATIFICATION OF THE APPOINTMENT OF PRICE
WATERHOUSE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
I PLAN TO ATTEND THE MEETING [ ]
Signature(s) ______________________________________ Date _________________, 1997
Signature(s) of Shareholder or Shareholders, (Executors, Administrators,
Trustees, etc. should give full title.)
(This Proxy should be marked, dated and signed by the shareholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
