SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
HYPERMEDIA COMMUNICATIONS, 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 transactions applies:
(2) Aggregate number of securities to which transactions 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:
<PAGE>
HYPERMEDIA COMMUNICATIONS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 7, 1999
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 Monday, June 7, 1999 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 three directors to serve until the next Annual
Meeting of Shareholders and until their successors are
elected.
(2) To ratify the appointment of PricewaterhouseCoopers LLP to
serve as this corporation's independent accountants for fiscal
1999.
(3) 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 23,
1999 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
23, 1999 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
Chief Executive Officer and
Chairman of the Board
San Mateo, California
April 29, 1999
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 1999
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 Monday, June 7, 1999 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 (650) 573-5170.
These proxy solicitation materials and the Annual Report on Form 10-K
for the year ended December 31, 1998, including financial statements, were first
mailed on or about May 7, 1999 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 23, 1999 (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, 3,200,141 shares of the Company's authorized Common
Stock were issued and outstanding and held of record by approximately 500
shareholders. The Company has six Series of preferred shares outstanding,
designated Series E Preferred Stock, $.001 par value, Series F Preferred Stock,
$.001 par value, Series G Preferred Stock, $.001 par value, Series H Preferred
Stock, $.001 par value, Series I Preferred Stock, $.001 par value, and Series J
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, 82,250 shares of the Company's Series F Preferred Stock were
outstanding and held of record by one shareholder, 50,344 shares of Series G
Preferred Stock were outstanding and held of record by one shareholder, 117,000
shares of Series H Preferred Stock were outstanding and held of record by one
shareholder, 28,800 shares of Series I Preferred Stock were outstanding and held
of record by one shareholder and 169,281 shares of Series J Preferred Stock were
outstanding and held of record by one shareholder. The shares of Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H
Preferred Stock, Series I Preferred Stock and Series J Preferred Stock are
convertible under certain circumstances into approximately 2,092,050 shares of
Common Stock, 82,250 shares of Common Stock, 209,802 shares of Common Stock,
522,828 shares of Common Stock, 941,121 shares of Common Stock and 4,080,209
shares of Common Stock, respectively, and are entitled to the number of votes
each would be entitled to cast if converted to Common Stock.
<TABLE>
The following table sets forth certain information regarding the
beneficial ownership of Common Stock of the Company as of April 23, 1999 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.
<PAGE>
<CAPTION>
- --------------------------------------------------------------------------------------
Shares Beneficially Owned(1)
-----------------------------
Approximate
Five Percent Shareholders, Directors Percent of
and Certain Executive Officers Number Total
------------------------------ ------ -----
- --------------------------------------------------------------------------------------
<S> <C> <C>
MK Global Ventures 7,057,620(2) 78.1%
2471 E. Bayshore Road
Palo Alto, CA 94303
Michael Kaufman 7,058,870(3) 78.1%
c/o MK Global Ventures
2471 E. Bayshore Road
Palo Alto, CA 94303
Greg Lahann 6,999,215(4) 77.4%
c/o MK Global Ventures
2471 E. Bayshore Road
Palo Alto, CA 94303
Dr. Eugene C. Y. Duh 181,359 5.7%
c/o Orient Semi-Conductor Electronics, Ltd.
Bldg. 1, Section 4
NAN-TZE
Export Processing Zone
Taiwan, R.O.C
Richard Landry 211,390(5) 6.2%
c/o HyperMedia Communications, Inc.
901 Mariner's Island Blvd
San Mateo, CA 94404
John Topping -- --
Kenneth Klein -- --
Directors and executive officers as a group (5 persons) 7,271,510(6) 78.6%
- --------------------------------------------------------------------------------------
<FN>
- ----------
(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 60 days of April 23, 1999 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, 220,320 shares of Common
Stock owned by MK GVD Fund, 15,985 shares of Common Stock issuable upon exercise
of a warrant to purchase Common Stock held by MK Global Ventures II and 1,724
shares of Common Stock issuable upon exercise of a warrant to purchase Common
Stock held by MK GVD Fund. This also includes 82,250 shares of Common Stock
issuable upon conversion of the Series F Preferred Stock, 209,802 shares of
Common Stock issuable upon conversion of the Series G Preferred Stock, 522,828
shares of Common Stock issuable upon conversion of the Series H Preferred Stock,
941,121 shares of Common Stock issuable upon conversion of the Series I Preferred
Stock and 4,080,209 shares of Common Stock issuable upon conversion of the Series
J Preferred Stock all held by MK GVD Fund. This does not include 2,090,050 shares
of Common Stock issuable upon conversion of the Series E Preferred Stock (which
is not convertible until January 1, 2000) held by MK Global Ventures II or any
shares issuable as dividends upon the conversion of the Series E Preferred Stock.
MK Global Ventures II and MK GVD Fund own, in the aggregate, 8,512,191 shares of
Preferred Stock or 100% of the outstanding Preferred Stock.
(3) Includes 1,250 shares of Common Stock issuable upon the exercise of options to
purchase Common Stock that are exercisable within 60 days of April 23, 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, 220,320 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 and
1,724 shares of Common Stock issuable upon exercise of a warrant to purchase
Common Stock held by MK GVD Fund. This also includes 82,250 shares of Common
Stock issuable upon conversion of the Series F Preferred Stock, 209,802 shares of
Common Stock
-2-
<PAGE>
issuable upon conversion of the Series G Preferred Stock, 522,828 shares of
Common Stock issuable upon conversion of the Series H Preferred Stock, 941,121
shares of Common Stock issuable upon conversion of the Series I Preferred Stock
and 4,080,209 shares of Common Stock issuable upon conversion of the Series J
Preferred Stock all held by MK GVD Fund. This does not include 2,090,050 shares
of Common Stock issuable upon conversion of the Series E Preferred Stock (which
is not convertible until January 1, 2000) held by MK Global Ventures II or any
shares issuable as dividends upon the conversion of the Series E Preferred Stock.
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. MK Global Ventures II and MK GVD Fund own,
in the aggregate, 8,512,191 shares of Preferred Stock or 100% of the outstanding
Preferred Stock. Mr. Kaufman disclaims beneficial ownership of such shares.
(4) Includes 1,250 shares of Common Stock issuable upon the exercise of options to
purchase Common Stock that are exercisable within 60 days of April 23, 1999. Also
includes 925,450 shares of Common Stock owned by MK Global Ventures II, 220,320
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 owned by MK Global
Ventures II. This also includes 82,250 shares of Common Stock issuable upon
conversion of the Series F Preferred Stock, 209,802 shares of Common Stock
issuable upon conversion of the Series G Preferred Stock, 522,828 shares of
Common Stock issuable upon conversion of the Series H Preferred Stock, 941,121
shares of Common Stock issuable upon conversion of the Series I Preferred Stock
and 4,080,209 shares of Common Stock issuable upon conversion of the Series J
Preferred Stock all held by MK GVD Fund. This does not include 2,090,050 shares
of Common Stock issuable upon conversion of the Series E Preferred Stock (which
is not convertible until January 1, 2000) held by MK Global Ventures II or any
shares issuable as dividends upon the conversion of the Series E Preferred Stock.
Mr. Lahann, a director of the Company, is a general partner of MK Global Venture
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. MK Global Venture II and MK GVD Fund own, in the aggregate, 8,512,191
shares of Preferred Stock or 100% of the outstanding Preferred Stock. Mr. Lahann
disclaims beneficial ownership of such shares.
(5) Represents 211,390 shares of Common Stock issuable upon exercise of options to
purchase Common Stock that are exercisable within 60 days of April 23, 1999.
(6) Includes 17,709 shares of Common Stock issuable upon exercise of the warrants to
purchase Common Stock, and 5,836,210 shares of Common Stock issuable upon
conversion of Series F Preferred Stock, Series G Preferred Stock, Series H
Preferred Stock, Series I Preferred Stock and Series J Preferred Stock listed in
Notes 2, 3 and 4 above, and 213,890 shares of Common Stock issuable upon exercise
of options to purchase Common Stock listed in Notes 3, 4, and 5 above, that are
exercisable within 60 days of April 23, 1999.
</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, Series F Preferred Stock, Series
G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock and Series
J Preferred Stock is entitled to the number of votes such holder could cast if
such shares were converted into Common Stock. As of April 23, 1999, (i) each
share of Series E Preferred Stock was convertible into 0.3 shares of Common
Stock, (ii) each share of Series F Preferred Stock was convertible into 1 share
of Common Stock, (iii) each share of Series G Preferred Stock was convertible
into 4.17 shares of Common Stock, (iv) each share of Series H Preferred Stock
was convertible into 4.47 shares of Common Stock, (v) each share of Series I
Preferred Stock was convertible into 32.68 shares of Common Stock and (vi) each
share of Series J Preferred Stock was convertible into 24.10 shares of Common
Stock. 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
-3-
<PAGE>
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 four
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 Annual Meeting of Shareholders
for fiscal year 1999 must be received by the Company no later than January 7,
2000 in order that they may be considered for inclusion in the proxy statement
and form of proxy relating to that meeting.
Proposals of shareholders of the Company that are intended to be
presented by such shareholders at the Company's 1999 Annual Meeting of
Shareholders, which are not eligible for inclusion in the proxy statement and
form of proxy relating to that meeting, must be received by the Company no later
than March 23, 2000. If such shareholders fail to comply with the foregoing
notice provision, then the proxy holders will be allowed to use their voting
discretionary authority when the proposal is raised at the 2000 Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's bylaws provide that the Board of Directors shall be
composed of three directors. A board of three 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 three nominees named
below, two 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.
-4-
<PAGE>
Vote Required
If a quorum is present and voting, the three 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.
The Board of Directors unanimously recommends that the Shareholders
vote "FOR" each of the nominees listed below.
Nominees
<TABLE>
The names of the nominees and certain information about them as of
April 23, 1999 are set forth below:
<CAPTION>
Name of Nominee Age Position with the Company Director Since
--------------- --- ------------------------- --------------
<S> <C> <C> <C>
Richard Landry 42 Chief Executive Officer and 1992
Chairman of the Board
Michael Kaufman(1)(2) 57 Director 1991
Greg Lahann(1)(2) 40 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 1993 Director Option Plan, each nonemployee
director of the Company receives one initial nonstatutory stock option for
25,000 shares of Common Stock and additional nonstatutory stock option grant for
5,000 shares of Common Stock each year if he or she has been on the Board for at
least six months, provided such issuances are approved by the Board of
Directors. 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.
Richard Landry joined the Company in January 1992 as its President and
Publisher; he also became a director of the Company at that time. Mr. Landry
served as President and Publisher from 1992 until July, 1998. 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.
Michael Kaufman became a director of the Company in July 1991. Since
October 1987, he has been the President 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 Asante Technologies, Inc., a
-5-
<PAGE>
networking products company, Davox Corp., a telecommunications company, DISC, an
optical storage systems company and Syntellect, an interactive 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 3 meetings during
fiscal 1998. No director except Mr. Griffin attended fewer than 75% of the
meetings of the Board of Directors and committees thereof, if any, upon which
such director served. Mr.Griffin attended 67% of the meetings. 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 Michael
Kaufman and John Griffin at the end of fiscal 1998, 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. Mr.
Griffin has elected not to run for reelection to the Company's Board of
Directors.
The Audit Committee, which consisted of directors John Griffin and Greg
Lahann at the end of fiscal 1998, met once during the fiscal 1998. The Audit
Committee currently consists of Greg Lahann and Michael Kaufman. This Committee
is responsible for overseeing actions taken by the Company's independent
auditors and reviews the Company's internal financial controls.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consisted of the following directors during
fiscal 1998: Kaufman and Griffin, and currently consists of Kaufman and Lahann.
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 37.6% 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
-6-
<PAGE>
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.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP,
independent public accountants, to audit the financial statements of the Company
for the fiscal year ending December 31, 1999, 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.
PricewaterhouseCoopers LLP has audited the Company's financial
statements annually since 1991. Representatives of PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP as independent
accountants.
EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Compensation
The following table sets forth the compensation paid by the Company
during the fiscal years ended December 31, 1998, 1997 and 1996 to the Chief
Executive Officer and President (the "Named Executive Officers"). No other
executive officer of the Company received total annual salary and bonus in 1998
in excess of $100,000.
-7-
<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation Awards
--------------------- Securities Underlying
Name and Principal Position Year Salary($) Options
--------------------------- ---- --------- -------
<S> <C> <C> <C>
Richard Landry....................... 1998 $150,000 100,000
Chief Executive Officer and 1997 150,000 --
Chairman of the Board 1996 140,000 50,000
John Topping......................... 1998 $108,991(1) 120,000
President and Publisher
<FN>
- ------------------
(1) Mr. Topping joined the Company in July 1998. Base on an annualized salary
of $150,000, also reflects a guaranteed commission payment of $35,625.
</FN>
</TABLE>
<TABLE>
Option Grants in Fiscal 1998
<CAPTION>
Potential Realizable
Number of Value at Assumed
Securities Annual Rates of Stock
Underlying % of Total Price Appreciation for
Options Options Granted Exercise Option Term(3)
Granted to Employees in Price ----------------------
Name (#)(1) Fiscal Year(2) ($/sh.) Expiration Date 5% 10%
---- ------ -------------- ------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Richard Landry............... 100,000 18% 1.125 2/17/08 $183,251 $291,796
John Topping................. 120,000 21% 1.00 8/20/08 $195,467 $311,249
<FN>
- ------------------
(1) These options were granted under the Company's Stock Option Plan (the
"Option Plan"). Options granted under the Option Plan generally have a
ten-year term. Generally, 25% of the grant becomes exercisable 12 months
after the date of grant. The balance of the grant then vests monthly, with
full exercisability occurring on the fourth anniversary date. The per share
exercise price is the fair market value of the Company's Common Stock on
the date of grant. Unless otherwise determined by the Board of Directors,
the Option Plan provides for the automatic acceleration of vesting of all
outstanding options (such that they become exercisable in full) in the
event of a "change in control," as defined in the Option Plan.
(2) Based on options to purchase an aggregate of shares granted to employees
during 1998.
(3) Potential realizable value is based on an assumption that the stock price
appreciates at the annual rate shown (compounded annually) from the date of
grant until the end of the ten-year option term. These numbers are
calculated based on the requirements promulgated by the SEC and do not
reflect the Company's estimate of future stock price.
</FN>
</TABLE>
-8-
<PAGE>
Aggregated 1998 Fiscal Year-End Option Values
<TABLE>
The following table provides information on the value of unexercised
options held by the Named Executive Officers at December 31, 1998.
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options at
at December 31, 1998 December 31, 1998
-------------------- -----------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <S> <S>
Richard Landry....... 161,188 156,856 -- --
John Topping......... -- 120,000 -- --
</TABLE>
- ----------------------
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 that 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 that provide for indemnification to the
fullest extent permitted by California Law, including 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
Directors who are not employees of the Company are automatically
granted an option to purchase (i) 25,000 shares of the Company's Common Stock at
a purchase price equal to the fair market value of such shares on the date of
grant, upon becoming a director and (ii) an additional 5,000 shares of the
Company's Common Stock on June 1 of each year if on such date he has served on
the Board for at least six months. Such directors do not receive any other
compensation for their services as members of the Board of Directors.
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, 1998. 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.
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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 1998, the Compensation Committee determined the salaries of
Richard Landry, Chief Executive Officer, and John Topping, President and
Publisher. 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 1998.
Overview and Policies for 1999
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 1998, the Compensation Committee reviewed the base salaries
of the Company's two 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 1999.
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 John Topping in 1998 was
approved by the Compensation Committee.
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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
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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 December 31, 1993 and
ending on December 31, 1998. 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.
[GRAPHIC OMITTED]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG HYPERMEDIA COMMUNICATIONS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P PUBLISHING (NEWSPAPERS) INDEX
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
12/93 12/94 12/95 12/96 12/97 12/98
Hypermedia Communications Inc. 100 63 41 17 13 1
Nasdaq Stock Market (U.S.) 100 98 138 170 208 294
S & P Publishing (Newspapers) 100 92 116 148 247 250
(1) The graph assumes that $100 was invested on December 31, 1993 in the
Company's Common Stock and 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,
1998.
Certain Transactions with Management
Effective as of August 20, 1998, the Board of Directors unanimously
approved an option exchange program pursuant to which outside director optionees
at the Company, including Mr. Kaufman, Mr. Lahann
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and Mr. Griffin, were given the right to exchange all or a portion of their
outstanding options for newly issued repriced options that would be subject to a
four-year vesting schedule. Mr. Kaufman exchanged options to purchase 25,000
shares of Common Stock at an exercise price of $6.50 per share, 5,000 shares of
Common Stock at an exercise price of $7.75 per share, 5,000 shares of Common
Stock at an exercise price of $4.625, 5,000 shares of Common Stock at an
exercise price of $3.00 per share and 5,000 shares of Common Stock at an
exercise price of $2.875 per share for options to purchase the same number of
shares at an exercise price of $1.125 per share.
Mr. Lahann exchanged options to purchase 25,000 shares of Common Stock
at an exercise price of $6.50 per share, 5,000 shares of Common Stock at an
exercise price of $7.75 per share, 5,000 shares of Common Stock at an exercise
price of $4.625, 5,000 shares of Common Stock at an exercise price of $3.00 per
share and 5,000 shares of Common Stock at an exercise price of $2.875 per share
for options to purchase the same number of shares at an exercise price of $1.125
per share.
Mr. Griffin exchanged options to purchase 25,000 shares of Common Stock
at an exercise price of $6.50 per share, 5,000 shares of Common Stock at an
exercise price of $7.75 per share, 5,000 shares of Common Stock at an exercise
price of $4.625, 5,000 shares of Common Stock at an exercise price of $3.00 per
share and 5,000 shares of Common Stock at an exercise price of $2.875 per share
for options to purchase the same number of shares at an exercise price of $1.125
per share.
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 1998, all reporting
persons complied with Section 16(a) filing requirements applicable to them.
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 29, 1999
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Appendix A
HYPERMEDIA COMMUNICATIONS, INC.
PROXY FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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 29, 1999, and
hereby appoints Richard Landry and Kenneth Klein, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution and resubstitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 1999 Annual Meeting of Shareholders of HYPERMEDIA COMMUNICATIONS, INC. to be
held on Thursday, June 7, 1999, at 12:00 p.m., local time, at Company's offices
at 901 Mariner's Island Blvd., Suite 365, San Mateo, California 94404, and at
any and all continuation(s) or adjournment(s) 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 on the reverse side.
Both of such attorneys or substitutes as shall be present and shall act
at said meeting or any and all continuation(s) or adjournment(s) thereof (or if
only one shall be present and acting, then that one) and shall have and may
exercise all of the powers of said attorneys-in-fact hereunder.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF
THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR THE
COMPANY FOR FISCAL 1999, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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^ FOLD AND DETACH HERE ^
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1. ELECTION OF DIRECTORS:
WITHHOLD
FOR AUTHORITY Nominees: Richard Landry, Michael Kaufman and Greg Lahann
[ ] [ ] ----------------------------------------------------------
For all nominees except as noted above
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSE LLP AS
INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR FISCAL 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the proxies are authorized to vote upon such other matter
or matters which may properly come before the meeting or any and all
continuation(s) or adjournment(s) thereof.
Signature:__________________________________________ Date:____________________
Signature:__________________________________________ Date:____________________
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 a corporation,
please sign in full corporate name by an authorized officer. If a partnership,
please sign in partnership name by an authorized person. If shares are held by
joint tenants or as community property, both should sign.
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^ FOLD AND DETACH HERE ^
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