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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
24/7 MEDIA, INC.
(Exact name of Registrant as specified in its Charter)
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<S> <C>
DELAWARE 13-3995672
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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1250 BROADWAY, 28TH FLOOR
NEW YORK, NEW YORK 10001
(212) 231-7100
(Address, including zip code, and telephone number,
Including Area Code, Of Registrant's Principal Executive Offices)
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DAVID J. MOORE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
24/7 MEDIA, INC.
1250 BROADWAY, 28TH FLOOR
NEW YORK, NEW YORK 10010
(212) 231-7100
FAX (212) 760-1081
(Name, address, including zip code, and telephone
number, including area code, of agent for service
of process)
--------------------------
COPIES TO:
MARK E. MORAN, GENERAL COUNSEL
24/7 MEDIA, INC.
1250 BROADWAY, 28TH FLOOR
NEW YORK, NEW YORK 10010
(212) 231-7100
FAX (212) 760-2811
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE ON OR AFTER THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED REGISTRATION
PROPOSED MAXIMUM MAXIMUM AMOUNT OF
AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING
TITLE OF EACH CLASS OF SECURITIES REGISTERED PER SHARE(1) PRICE(1) FEE(1)
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share....... 1,349,563 shares $41.34 $55,790,934 $15,510
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(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based
on the average of the high and low prices of the common stock as reported on
the Nasdaq National Market on October 28, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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SUBJECT TO COMPLETION, DATED OCTOBER 29, 1999
PROSPECTUS
24/7 MEDIA, INC.
1,349,563 SHARES
OF COMMON STOCK
This prospectus relates to the public offering, which is not being
underwritten, of 1,349,563 shares of our common stock that are held by the
stockholders listed on pages 14 and 15. The stockholders may offer their shares
of common stock through public or private transactions, on or off the Nasdaq
National Market, at prevailing market prices, or at privately negotiated prices.
We will not receive any of the proceeds from the sale of the shares.
Our common stock is listed on the Nasdaq National Market, under the symbol
"TFSM." On October 28, 1999, the last reported sale price for the common stock
was $41 7/8 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 1999
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TABLE OF CONTENTS
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PAGE
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24/7 MEDIA.................................................. 3
RISK FACTORS................................................ 5
FORWARD-LOOKING INFORMATION................................. 13
USE OF PROCEEDS............................................. 13
SELLING STOCKHOLDERS........................................ 14
PLAN OF DISTRIBUTION........................................ 16
INCORPORATION BY REFERENCE.................................. 18
WHERE YOU CAN FIND MORE INFORMATION......................... 18
LEGAL MATTERS............................................... 19
EXPERTS..................................................... 19
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24/7 MEDIA
We are an Internet advertising and direct marketing firm that enables both
advertisers and Web publishers to capitalize on the many opportunities presented
by Internet advertising, direct marketing and electronic commerce. We generate
revenue primarily by selling advertisements and promotions for our client Web
sites and email lists. In particular, we operate:
- the 24/7 Network, a network of over 300 high profile Web sites to which we
delivered an aggregate of more than 2 billion advertisements in
June 1999;
- the ContentZone, a network of over 3,000 small to medium-sized Web sites
to which we delivered an aggregate of more than 60 million advertisements
in June 1999;
- the 24/7 Media Europe Network, a network of over 150 Web sites, through
our majority owned subsidiary, 24/7 Media Europe N.V. , delivering over
300 million advertisements in June 1999;
- the 24/7 Canada Network, a network of over 75 Web sites in Canada, through
our wholly-owned subsidiary, Clickthrough Interactive Inc.;
- one of the Internet's largest cooperative "opt-in" email databases,
through our 24/7 Mail division; and
- 24/7 Profilz-TM-, our online co-op database of Web user profiles used to
deliver targeted online banner advertisements and email campaigns.
In addition, we are supporting the development of the 24/7 Media Asia
Network of Web sites through an agreement with China.com Corporation, a publicly
traded corporation. Furthermore, we have entered into a cross promotion and
equity exchange agreement with ShopNow.com, a publicly traded corporation,
pursuant to which we acquired approximately 15% ownership interest in
ShopNow.com. ShopNow.com provides e-commerce services, an online shopping
network, creative design services, and product fulfillment to approximately
30,000 merchants. Under the agreement, we co-brand our Click2Buy transactional
advertising banner service with ShopNow.com's e-commerce Web site, an online
shopping destination. Each party receives a share of the other party's revenues
generated under the cross promotion agreement.
We believe that advertisers seek to place Internet ads in ways to maximize
unduplicated "reach," which is the number of unique Web users that visit a Web
site or group of Web sites at least once in a given month. According to Media
Metrix, our networks of Web sites reached 55.5% of all U.S. Internet users in
September 1999. We believe that this reach figure is among the highest in the
Internet advertising industry.
We plan to aggressively recruit Web sites and email lists, both domestically
and internationally, to expand our business. We expect this strategy to further
extend our reach, provide advertisers with a broad and diverse base of online
content and Web page views, and improve our brand awareness and visibility with
media buyers.
In addition, as online advertisers and direct marketers increase their use
of the Internet, they seek solutions and technologies that allow them to
efficiently deliver highly targeted advertisements. Our customized solutions
allow advertisers and direct marketers to tailor their ad campaigns to reach
desired audiences, while reducing costs, easing time pressures and alleviating
the need to purchase a series of ad campaigns from numerous Web sites. We are
currently working on several initiatives to increase our ad targeting
capabilities, including the development of our Profilz-SM- database and
proprietary ad serving technology.
As Internet traffic grows, owners of Web sites increasingly seek to maximize
the value of their online advertising inventory. Our extensive sales and
marketing experience provides Web sites access to media buyers at large ad
agencies and enables them to sell advertising without incurring the costs and
challenges associated with building and maintaining their own ad sales force.
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Our senior management team includes several individuals with over fifteen
years of experience in advertising sales in the television and proprietary
online network industries. Other members of senior management contribute
extensive knowledge of the technology that causes advertisements to be delivered
to Web sites, or ad serving technology, and data base targeting. We leverage our
media sales and technology expertise to maximize the value of ad campaigns for
both advertisers and our Web sites.
Our principal executive offices are located at 1250 Broadway, 28th Floor,
New York, New York 10001. Our telephone number is (212) 231-7100. We currently
have offices in 28 cities in 15 countries. Our company's main Web site address
is www.247media.com < http://www.247media.com/ > . Information contained on our
Web site is not part of this prospectus.
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RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO BUY OUR COMMON
STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITIONS OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. IN THIS CASE, THE PRICE
OF OUR SECURITIES COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR
INVESTMENT.
WE HAVE A LIMITED OPERATING HISTORY ON WHICH AN INVESTOR CAN EVALUATE OUR
BUSINESS
None of our predecessor companies had an operating history of more than four
years. We, therefore, have a limited operating history. You must consider the
risks, expenses and difficulties typically encountered by companies with limited
operating histories, particularly companies in new and rapidly expanding markets
such as Internet advertising. These risks include our ability to:
- develop new relationships and maintain existing relationships with our Web
sites, advertisers, and other third parties;
- further develop and upgrade our technology;
- respond to competitive developments;
- implement and improve operational, financial and management information
systems; and
- attract, retain and motivate qualified employees.
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE SEVERAL COMPANIES THAT WE HAVE
ACQUIRED
We were formed in January 1998 to consolidate three Internet advertising
companies and have since acquired numerous companies and other majority
interests in other companies. In combining these entities, we have faced risks
and continue to face risks of integrating and improving our financial and
management controls, ad serving technology, reporting systems and procedures,
and expanding, training and managing our work force. This process of integration
may take a significant period of time and will require the dedication of
management and other resources, which may distract management's attention from
our other operations.
OUR DEVELOPMENT OF A NEXT GENERATION AD SERVING TECHNOLOGY MAY NOT BE SUCCESSFUL
AND MAY CAUSE BUSINESS DISRUPTION
We are currently developing a next generation ad serving technology that is
intended to serve as our sole ad serving solution. To complete this development,
we must, among other things, ensure that this technology will function
efficiently at high volumes, interact properly with our Profilz-SM- database,
offer all the functionality demanded by our customers and assimilate our sales
and reporting functions. This development effort could fail technologically or
could take more time than expected. Even if we successfully address all of these
challenges, we must then work with our Web sites to transition them to our new
system, which would also create a risk of business disruption and loss of any of
our Web sites.
LOSS OR FAILURE OF OUR THIRD PARTY AD SERVING TECHNOLOGY COULD DISRUPT OUR
BUSINESS
Unless and until the development of and transition to our own ad serving
technology is complete, we will be primarily dependent on AdForce, Inc. to
deliver ads to our networks and Web sites. If such service becomes unavailable,
fails to serve our ads properly, or fails to produce the frequent operational
reports required, our business would be adversely affected.
Additionally, our use of multiple systems to serve ads requires us to employ
significant effort to prepare information for billing, Web site statements and
financial reporting. We are upgrading our systems to integrate a new accounting
system with our ad serving technologies to improve our accounting, control
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and reporting methods. Our inability to upgrade our existing reporting systems
and streamline our procedures may cause delays in the timely reporting of
financial information.
WE ANTICIPATE CONTINUED LOSSES AND WE MAY NEVER BE PROFITABLE
We incurred net losses of $25.4 million, $14.4 million and $12.4 million for
the year ended December 31, 1998, the six months ended June 30, 1999 and the six
months ended June 30, 1998, respectively, and each of our predecessors had net
losses in every year of their operation. We anticipate that we will incur
operating losses for the foreseeable future due to a high level of planned
operating and capital expenditures. Although our revenue has grown rapidly in
recent periods, such growth may not continue and may not lead to profitability.
OUR FUTURE REVENUES AND RESULTS OF OPERATIONS MAY BE DIFFICULT TO FORECAST
Our results of operations may fluctuate significantly in the future as a
result of a variety of factors, many of which are beyond our control. These
factors include:
- the addition of new or loss of current advertisers or our Web sites;
- changes in fees paid by advertisers;
- changes in service fees payable by us to Web sites in our networks, or ad
serving fees payable by us to third parties;
- the introduction of new Internet advertising services by us or our
competitors;
- variations in the levels of capital or operating expenditures and other
costs relating to the expansion of our operations; and
- general economic conditions.
Our future revenues and results of operations may be difficult to forecast due
to the above factors.
In addition, our expense levels are based in large part on our investment
plans and estimates of future revenues. Any increased expenses may precede or
may not be followed by increased revenues, as we may be unable to, or may elect
not to, adjust spending in a timely manner to compensate for any unexpected
revenue shortfall.
As a result we believe that period-to-period comparisons of our results of
operations may not be meaningful. You should not rely on past periods as
indicators of future performance. In future periods, our results of operations
may fall below the expectations of securities analysts and investors, which
could adversely affect the trading price of our common stock.
OUR REVENUES ARE SUBJECT TO SEASONAL FLUCTUATIONS
We believe that our revenues are subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarters of each year. Expenditures by advertisers tend to vary in
cycles that reflect overall economic conditions as well as budgeting and buying
patterns. Our revenue could be materially reduced by a decline in the economic
prospects of advertisers or the economy in general, which could alter current or
prospective advertisers' spending priorities or budget cycles or extend our
sales cycle.
OUR BUSINESS MAY BE ADVERSELY AFFECTED AND MAY NOT GROW IF THE INTERNET
ADVERTISING MARKET DOES NOT CONTINUE TO DEVELOP
The Internet as an advertising medium has not been in existence for a
sufficient period of time to demonstrate its effectiveness. Our business would
be adversely affected if the Internet advertising market
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fails to continue to develop. There are currently no widely accepted standards
to measure the effectiveness of Internet advertising. We cannot be certain that
such standards will develop to sufficiently support Internet advertising as a
significant advertising medium. Actual or perceived ineffectiveness of online
advertising in general, or inaccurate measurements or database information in
particular, could limit the long-term growth of online advertising and cause our
revenue levels to decline.
Banner advertising, from which we currently derive most of our revenues, may
not be an effective advertising method in the future. We cannot be certain that
any other forms of Internet advertising will be developed or accepted by the
market. Even if new methods are developed, we may not be able to take advantage
of them.
GROWTH OF OUR BUSINESS DEPENDS ON THE DEVELOPMENT OF ONLINE DIRECT MARKETING
Adoption of online direct marketing, particularly by those entities that
have historically relied upon traditional means of direct marketing, such as
telemarketing and direct mail, is an important part of our business model.
Intensive marketing and sales efforts may be necessary to educate prospective
advertisers regarding the uses and benefits of our products and services to
generate demand for our direct marketing services. Enterprises may be reluctant
or slow to adopt a new approach that may replace, limit, or compete with their
existing direct marketing systems. In addition, since online direct marketing is
emerging as a new and distinct market apart from online advertising, potential
adopters of online direct marketing services will increasingly demand
functionality tailored to their specific requirements. We may be unable to meet
the demands of our clients.
LOSS OF OUR MAJOR CLIENT WEB SITES WOULD SIGNIFICANTLY REDUCE OUR REVENUES AND
HARM OUR BUSINESS
The 24/7 Network generates substantially all of our revenues and it consists
of a limited number of our Web sites that have contracted for our services under
agreements cancelable generally upon a short notice period. Loss of our major
Web sites would significantly reduce our revenues. For the year ended
December 31, 1998, approximately 47% of the 24/7 Network's and the CliqNow
Network's (which network was subsequently merged into the 24/7 Network)
advertising revenues were derived from advertisements on our top ten Web sites.
For the year ended December 31, 1998, the top ten Web sites included AT&T
WorldNet Service, Netscape Communications, Encompass, Reuters, Comedy Central,
TreeLoot, EarthLink, MapQuest, The Mining Company and Live World Productions. We
experience turnover from time to time among our Web sites, and we cannot be
certain that the Web sites named above remain or will remain associated with us.
LOSS OF OUR MAJOR CLIENT WEB SITES COULD LOWER OUR REACH LEVELS AND HARM OUR
BUSINESS
Our Web sites generally measure satisfaction by acceptable revenue levels,
high levels of customer service and timely and accurate reporting. Levels of
traffic on our Web sites may not remain consistent or increase over time, and we
may be unable to replace any departed Web site with another Web site with
comparable traffic patterns and user demographics. The loss or reduction in
traffic on these Web sites may cause advertisers or Web sites to withdraw from
the 24/7 Network which in turn could lower our reach levels.
LOSS OF OUR MAJOR ADVERTISERS OR AD AGENCIES WOULD REDUCE OUR REVENUES AND HARM
OUR BUSINESS
We generate our revenues from a limited number of advertisers and ad
agencies that purchase space on our Web sites. Loss of our advertisers or ad
agencies would reduce our revenues. We expect that a limited number of these
entities may continue to account for a significant percentage of our revenues
for the foreseeable future. For the year ended December 31, 1998, our top ten
advertisers and ad agencies accounted for an aggregate of approximately 38% of
the 24/7 Network's and CliqNow Network's advertising revenues.
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Advertisers and ad agencies typically purchase advertising under purchase
order agreements that run for a limited time. We cannot be certain that current
advertisers and ad agencies will continue to purchase advertising from us or
that we will be able to attract additional advertisers and ad agencies
successfully, or that agencies and advertisers will make timely payment of
amounts due to us.
COMPETITION IN THE INTERNET ADVERTISING AND RELATED MARKETS IS INTENSE AND IS
LIKELY TO INCREASE, AND OUR FAILURE TO SUCCESSFULLY COMPETE MAY HINDER OUR
GROWTH
The markets for Internet advertising and related products and services are
intensely competitive and such competition is expected to increase. Our failure
to successfully compete may hinder our growth. We believe that our ability to
compete depends upon many factors both within and beyond our control, including:
- the timing and market acceptance of new products and enhancements of
existing services developed by us and our competitors;
- changing demands regarding customer service and support;
- shifts in sales and marketing efforts by us and our competitors; and
- the ease of use, performance, price and reliability of our services and
products.
Many of our competitors have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than ours. We compete for Internet advertising
revenue with large Web publishers and web search engine companies, such as
America Online, @Home/Excite, Lycos, Microsoft, Infoseek and Yahoo! Further, our
networks compete with a variety of Internet advertising networks such as
Doubleclick, AdSmart, Flycast and Burst. We also compete with providers of ad
serving companies such as AdForce, and other online direct marketing companies.
We cannot be certain that we will be able to successfully compete against
current or future competitors.
In addition, the Internet must compete for a share of advertisers' total
budgets with traditional advertising media, such as television, radio, cable and
print. To the extent that the Internet is perceived to be a limited or
ineffective advertising medium, advertisers may be reluctant to devote a
significant portion of their advertising budgets to Internet advertising, which
could limit the growth of Internet advertising.
TECHNOLOGICAL CHANGE MAY RENDER OUR SERVICES OBSOLETE AND WE MAY BE UNABLE TO
ADAPT TO TECHNOLOGICAL TRENDS AND INDUSTRY STANDARDS
The Internet market is characterized by rapidly changing technology,
evolving industry standards, frequent new product announcements and
enhancements, and changing customer demands. The introduction of new products
and services embodying new technologies and the emergence of new industry
standards could render our products and services obsolete. Our success depends
on our ability to adapt to rapidly changing technologies and to improve the
performance, features and reliability of our services and products in response
to changing customer and industry demands. Furthermore, we may experience
difficulties that could delay or prevent the successful design, development,
testing, introduction or marketing of services. New services or enhancements to
existing services may not adequately meet the requirements of our current and
prospective advertisers and our Web sites or achieve any degree of significant
market acceptance.
WE DEPEND ON THE CONTINUED VIABILITY OF THE WEB INFRASTRUCTURE
Our success depends upon the ability of the Internet infrastructure to
support increased number of users. The performance and reliability of the Web
may decline as the number of users increases or the bandwidth requirements of
users increase. The timely development of products such as high speed modems and
communications equipment will be necessary to continue reliable Web access for
our users.
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Even if such infrastructure or complementary products, services or facilities
are developed, we may be required to incur substantial expenditures to adapt our
services to changing or emerging technologies.
Furthermore, the Web has experienced outages and delays as a result of
damage to portions of its infrastructure. Such outages and delays, including
those resulting from Year 2000 problems, could adversely affect Web sites and
the level of traffic on our networks.
WE DEPEND ON THIRD PARTIES TO MAINTAIN OUR CRITICAL SYSTEMS
Our primary computer hardware and software is housed at GlobalCenter, Inc.,
a third party provider of Internet communication services. Any damage from fire,
power loss, telecommunications failures, vandalism and other malicious acts,
human error, and similar unexpected events could adversely affect our business.
Any proprietary or third party ad server system failure, including failures that
delay the delivery of advertisements to Web sites, could reduce customer
satisfaction.
In addition, failure of our telecommunications providers to provide the data
communications capacity in the time frame required by us could cause
interruptions in the services we provide. Large increases in the volume of
advertising delivered through our ad servers could strain the capacity of the
software or hardware we deploy, which could lead to slower response time or
system failures. Despite precautions taken by us, unanticipated problems
affecting our computer and telecommunications systems in the future could cause
interruptions in the delivery of our services.
WE MAY BE UNABLE TO CONTINUE TO SUCCESSFULLY MANAGE RAPID GROWTH
We have experienced rapid growth and expansion in operations that have
placed a significant strain on our managerial, operational and financial
resources. We have grown from approximately 60 employees on a pro forma basis as
of September 30, 1997 to approximately 400 employees as of September 15, 1999.
We expect the number of employees to increase in the future. To successfully
compete in the evolving Internet industry, we must:
- continue to improve our financial and management controls;
- enhance our reporting systems and procedures;
- continue to scale our ad serving systems and upgrade their functional
capabilities; and
- expand, train and manage our work force.
We cannot be certain that our systems, procedures or controls will be
adequate to support our expanding operations, or that management will be able to
respond effectively to such growth. Our future results of operations also depend
on the expansion of our sales, marketing and customer support departments.
ACQUISITIONS OR STRATEGIC INVESTMENTS MAY DIVERT MANAGEMENT ATTENTION AND
CONSUME RESOURCES
We intend to continue pursuing selective acquisitions of businesses,
technologies and product lines as a key component of our growth strategy. Any
future acquisition or investment may result in the use of significant amounts of
cash, potentially dilutive issuances of equity securities, incurrence of debt
and amortization expenses related to goodwill and other intangible assets.
In addition, acquisitions involve numerous risks, including:
- the difficulties in the integration and assimilation of the operations,
technologies, products and personnel of an acquired business;
- the diversion of management's attention from other business concerns;
- the availability of favorable acquisition financing for future
acquisitions; and
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- the potential loss of key employees of any acquired business.
Our inability to successfully integrate any acquired company could adversely
affect our business.
OUR INTERNATIONAL EXPANSION MAY POSE NEW LEGAL AND CULTURAL CHALLENGES
We have operations in a number of international markets. To date, we have
limited experience in marketing, selling and distributing our solutions
internationally. International operations are subject to other risks, including:
- changes in regulatory requirements;
- reduced protection for intellectual property rights in some countries;
- potentially adverse tax consequences;
- general import/export restrictions relating to encryption technology
and/or privacy;
- difficulties and costs of staffing and managing foreign operations;
- political and economic instability;
- fluctuations in currency exchange rates; and
- seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world.
In addition to these factors, due to our minority stake in the 24/7 Media
Asia Network, we are relying on China.com Corporation to conduct operations,
establish our network, aggregate Web publishers and coordinate sales and
marketing efforts. The success of the 24/7 Media Asia Network is directly
dependent on the success of China.com Corporation and its dedication of
sufficient resources to our relationship.
IF WE LOSE OUR CEO, PRINCIPAL SALES MANAGERS OR OTHER SENIOR MANAGERS WE MAY NOT
BE ABLE TO GROW OUR BUSINESS
Our success depends upon our senior management and key sales and technical
personnel, particularly David J. Moore, Chief Executive Officer, and Jacob I.
Friesel, Executive Vice President. The loss of the services of one or more of
these persons could materially adversely affect our ability to develop our
business. Our success also depends on our ability to attract and retain
qualified technical, sales and marketing, customer support, financial and
accounting, and managerial personnel. Competition for such personnel in the
Internet industry is intense, and we cannot be certain that we will be able to
retain our key personnel or that we can attract, integrate or retain other
highly qualified personnel in the future. We have experienced in the past, and
may continue to experience in the future, difficulty in hiring and retaining
candidates with appropriate qualifications, especially in sales and marketing
positions. Although we have not experienced any material impact from the
difficulty in hiring and retaining qualified employees, our business may be
materially impacted in the future from such hiring difficulties.
WE RELY ON PROPRIETARY RIGHTS THAT MAY NOT ADEQUATELY PROTECT OUR INTELLECTUAL
PROPERTY
We rely upon patent, trademark, copyright and trade secret laws to protect
our intellectual property. Our trademark registrations or patent applications
may not be approved or granted or may be successfully challenged by others or
invalidated through administrative process or litigation. If our trademark and
patent registrations are not approved or granted due to the prior issuance of
trademarks and patents to third parties or for other reasons, we may be unable
to enter into arrangements with such third parties on commercially reasonable
terms to allow us to continue to use such trademarks or patented information. We
have pursued the protection of our trademarks by applying to register them in
the United States and internationally. We own a registration for the 24/7 Media,
Inc. trademark in the United States. Such
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patent, trademark, copyright and trade secret protection may not be available in
every country in which our services are distributed or made available.
In addition, we protect our proprietary rights through confidentiality
agreements with employees and affiliates and proprietary rights licensed to
third parties. There is a risk that:
- these agreements and licenses may not provide adequate protection of our
proprietary rights;
- our employees and affiliates may not keep such information confidential;
and
- this proprietary information will otherwise become known, or be
independently developed by competitors.
WE MAY BE LIABLE FOR INFORMATION DISPLAYED ON AND COMMUNICATED THROUGH OUR WEB
SITES
We may be subjected to claims for defamation, negligence, copyright and
trademark infringement or other theories relating to the information on our Web
sites. Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary and other rights in Internet-related
industries are uncertain and still evolving, and we cannot be certain as to the
future viability or value of any of our proprietary rights within the industry.
The steps we take to protect our proprietary rights may not be adequate and
third parties may infringe or misappropriate our proprietary rights. Claims of
alleged infringement of the trademarks and other intellectual property rights of
third parties by us and our business partners could subject us to significant
liability for damages and could result in invalidation of our proprietary rights
and, even if not meritorious, could be time-consuming and expensive to defend,
and could result in the diversion of management time and attention. These and
other claims have been brought against Internet companies in the past.
PRIVACY CONCERNS MAY PREVENT US FROM SELLING DEMOGRAPHICALLY TARGETED
ADVERTISING
We are developing our Profilz-SM- database to collect data derived from user
activity on our networks and from other sources. We cannot be certain that any
trade secret, copyright or other protection will be available for such data or
that others will not claim rights to such data. We must also keep information
regarding Web publishers confidential under our contracts with Web publishers.
Ad serving technology enables the use of identifying data, or cookies, to
deliver targeted advertising, to help compile demographic information, and to
limit the frequency with which an advertisement is shown to the user. Cookies
are placed on the user's hard drive without the user's knowledge or consent. Any
reduction or limitation in the use of cookies could limit the effectiveness of
our sales and marketing efforts and impair our targeting capabilities. Due to
privacy concerns, some Internet commentators, advocates and governmental bodies
have suggested that the use of cookies be limited or eliminated.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD ADD ADDITIONAL BURDENS TO
OUR DOING BUSINESS ON THE INTERNET
Due to the increasing popularity of the Web, laws and regulations applicable
to Internet communications, commerce and advertising are becoming more
prevalent. The adoption or modification of such laws or regulations could
inhibit the growth in use of the Web and decrease the acceptance of the Web as a
communications and commercial medium, which could have a material adverse effect
on our business, results of operations and financial condition.
Further, due to the global nature of the Web, governments of states or
foreign countries may attempt to regulate our Internet transmissions or levy
sales or other taxes relating to our activities. We cannot be certain that
violations of local laws will not be alleged by applicable governments or that
we will not violate such laws or new laws will not be enacted in the future.
Moreover, the applicability of existing laws
11
<PAGE>
governing issues such as property ownership, libel and personal privacy is
uncertain in regards to the Internet.
FAILURE OF OUR COMPUTER SYSTEMS TO PROPERLY RECOGNIZE THE YEAR 2000 COULD
DISRUPT THE OPERATION OF OUR BUSINESS AND TECHNICAL SYSTEMS
We depend upon complex computer systems for all phases of our operations.
The failure of any of our software or systems to be Year 2000 compliant could
prevent us from being able to deliver advertisements or could disrupt our
financial and management controls and reporting systems. We cannot assure you
that all of our material operating software and systems will be Year 2000
compliant. Additionally, we cannot be certain that unanticipated costs
associated with any Year 2000 compliance will not exceed our present
expectations.
Our ad servers and our customers may also be impacted by Year 2000
complications. Any failure by us, our ad servers or our customers to make their
products Year 2000 compliant could result in:
- a decrease in sales of our products;
- an increase in the allocation of resources to address Year 2000 problems
without additional revenue commensurate with such dedication of resources;
or
- an increase in litigation costs relating to losses suffered by our
customers due to such Year 2000 problems.
OUR PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS CAN ACT TOGETHER TO
SUBSTANTIALLY INFLUENCE OUR BUSINESS AND POLICIES
The directors and executive officers and their affiliates beneficially own
approximately 30% of the outstanding common stock. As a result, these
stockholders are able to exercise substantial control over all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. This concentration of ownership may have the
effect of delaying or preventing a change in our control.
SALES OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK AFTER THIS OFFERING COULD
DECREASE OUR STOCK PRICE AND OUR ABILITY TO RAISE CAPITAL
Sale of a large number of shares could decrease the market price of our
common stock and our ability to raise capital. As of June 30, 1999 we had
20,207,800 shares of common stock outstanding, excluding (a) 2,225,828 shares
subject to options outstanding as of that date under our 1998 stock incentive
plan, which options are exercisable at prices ranging from $.30 to $63.75 per
share, and (b) outstanding warrants to purchase 3,291,067 shares of common
stock, which warrants are exercisable at prices ranging from $1.60 to $26.05 per
share. No prediction can be made as to the effect, if any, that future sales of
common stock will have on the market price of common stock prevailing from time
to time. In addition, the filing of a registration statement with respect to the
common stock will trigger piggyback registration rights held by some of our
stockholders. Sales of substantial amounts of common stock or the perception
that such sales could occur may adversely affect prevailing market prices for
our common stock.
OUR SHARE PRICE MAY CONTINUE TO BE VERY VOLATILE, AS IS TYPICAL OF
INTERNET-RELATED COMPANIES
The trading price of our common stock has fluctuated widely in its short
history and is likely to continue to be highly volatile and subject to wide
fluctuations caused by, among other things:
- investors' perceptions;
- variations in quarterly results of operations;
12
<PAGE>
- the gain or loss of significant advertisers or Web sites;
- changes in our revenue or earnings estimates by industry analysts;
- announcements of technological innovations or new services by us or our
competitors; or
- general conditions in the economy in general or in Internet-related
industries.
The stock market in general has experienced extreme price and volume
fluctuations that have affected the market price for many Internet and
technology companies and that have been unrelated to the operating performance
of these companies. These market fluctuations may have a material adverse effect
on the market price of our common stock and could lead to securities class
action litigation being instituted against us.
FORWARD LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements. These forward-looking statements
are based on our current expectations, estimates and projections about our
industry, management's beliefs and certain assumptions made by us. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates"
and variations of these words or similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict. Therefore, our actual results could differ materially
from those expressed or forecasted in any forward-looking statements as a result
of a variety of factors, including those set forth in "Risk Factors" above and
elsewhere in, or incorporated by reference into, this prospectus. We undertake
no obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.
USE OF PROCEEDS
The selling stockholders are offering all of the shares of common stock
covered by this prospectus. We will not receive any proceeds from the sale of
these shares.
13
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of the
selling stockholders as of October 20, 1999. All information contained in the
table below is based upon information provided to us by the selling
stockholders, and we have not independently verified this information. We are
not able to estimate the amount of shares that will be held by the selling
stockholders after the completion of this offering because the selling
stockholders may offer all or some of their shares and because there currently
are no agreements, arrangements or understandings with respect to the sale of
any of their shares. The following table assumes that all of the shares being
registered will be sold. The selling stockholders are not making any
representation that any shares covered by the prospectus will be offered for
sale. The selling stockholders reserve the right to accept or reject, in whole
or in part, any proposed sale of shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY REGISTERED FOR
NAME OF SELLING STOCKHOLDER OWNED SALE HEREBY
- --------------------------- ---------------- ----------------
<S> <C> <C>
Eric P. Allman and Marshall K. Musick, JTWROS(1)............ 13,838 13,838
Charlie Bass, Trustee of The Bass Trust U/D/T(1)............ 7,922 7,922
John T. and Peggy L. Beck(1)................................ 820 820
Robin S. Bullock(1)......................................... 15,943 15,943
Robin S. Bullock, Cust. Emily Bullock UGMA(1)............... 15,943 15,943
Robin S. Bullock, Cust. Eric Bullock UGMA(1)................ 15,943 15,943
Timothy M. and Ellen M. Coleman(1).......................... 1,368 1,368
John and Kathleen Danielson(1).............................. 7,603 7,603
Prashant P. Devdhar(1)...................................... 2,620 2,620
Roy M. Dudley(1)............................................ 1,422 1,422
Dennis S. and Irene Hu Fernandez(1)......................... 1,547 1,547
Hector Garcia-Molina(1)..................................... 2,737 2,737
Michael A. and Susan G. Harrison(1)......................... 29,375 29,375
Nearchos Irinarchos(1)...................................... 15,166 15,166
Ivan Levinson(1)............................................ 547 547
Robert E. Patterson(1)...................................... 4,549 4,549
Michael and Julie Sears(1).................................. 1,149 1,149
Linda Soreff Seigel, Trustee
Linda Soreoff Seigel Trust(1)............................. 15,943 15,943
Linda Soreff Seigel, Trustee
Moon Family GST Trust(1).................................. 15,943 15,943
Mendl Seigel, Trustee
Mendl Seigel Trust(1)..................................... 184,035 184,035
Stanford University(1)...................................... 272 272
Mary Walsh(1)............................................... 456 456
Chaun Weng(1)............................................... 1,037 1,037
William Wells, Trustee Wells Family Trust(1)................ 15,167 15,167
Jeffrey K. and Irene L. Wilkins(1).......................... 110,715 110,715
Tak Woon Yan(1)............................................. 1,407 1,407
Jack Marshall Zoken and Mollee Sue Oxman Zoken(1)........... 267,035 267,035
Jay R. Aber(2).............................................. 3,750 3,750
Paine Webber International (UK) Ltd.(2)..................... 73,125 73,125
Paul Conrad Chachko(3)...................................... 619,796 206,597
Troy Scheer(3).............................................. 45,421 25,010
Ravi P. Yadav(3)............................................ 413,197 137,731
Marcus Peterzell(3)......................................... 5,348 5,348
Ramon Estevez(3)............................................ 5,761 5,761
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY REGISTERED FOR
NAME OF SELLING STOCKHOLDER OWNED SALE HEREBY
- --------------------------- ---------------- ----------------
<S> <C> <C>
Hartley Singer(3)........................................... 4,036 4,036
Kimberly J. Bamford(3)...................................... 3,379 3,379
David Conrad Chachko(3)..................................... 3,391 3,391
Dale Going(3)............................................... 1,611 1,611
Kent Rippey(3).............................................. 539 539
Mezzanine Financial Fund, L.P.(3)........................... 11,583 3,860
John Mazzacco(3)............................................ 124,885 41,628
Robert M. Skoro(3).......................................... 124,885 41,628
Kauppamainous Oy(4)......................................... 17,781 17,781
Interaktiivinen Satama Oy(4)................................ 10,251 10,251
Via Media Oy(4)............................................. 4,355 4,355
JMK-Invest Oy(4)............................................ 4,434 4,434
Asko Piekkola(4)............................................ 4,434 4,434
Keikki Leskinen(4).......................................... 412 412
--------- ---------
TOTAL................................................... 2,232,876 1,349,563
========= =========
</TABLE>
- ------------------------
(1) Shares issued in the acquisition of Sift, Inc., a California corporation, in
March 1999.
(2) Shares issued in the acquisition of ClickThrough Interactive Services, Inc.,
a Canadian corporation, in July 1999.
(3) Shares issued in the acquisition of Music Marketing Network, Inc.
(ConsumerNet), a New Jersey corporation, in August 1999.
(4) Shares issued in the acquisition of Netbooking OY, a Finnish corporation, by
our subsidiary, 24/7 Media Europe NV, in August 1999.
The above stockholders received their shares of common stock pursuant to one
of the acquisitions set forth in the footnotes above. The stockholders who
received their shares in connection with the acquisition of Sift are parties to
an agreement and plan of merger, dated March 8, 1999, pursuant to which we
agreed to register their shares in any registration statement that we filed
after the date of the agreement and plan of merger. The stockholders who
received their shares in connection with the acquisition of ClickThrough
Interactive are parties to a registration rights agreement, dated July 26, 1999,
pursuant to which we agreed to file a registration statement on or prior to
October 31, 1999, and to keep such registration statement effective for a period
of one year. The stockholders who received their shares in connection with the
acquisition of ConsumerNet are parties to a registration rights agreement, dated
August 17, 1999, pursuant to which we agreed to file a registration statement on
or prior to November 17, 1999 for certain holders named in the agreement and on
or prior to February 17, 2000 for other holders named in the agreement, and in
each case, to keep such registration statement effective for a period of two
years. The stockholders who received their shares in connection with the
acquisition of Netbooking are parties to a registration rights agreement, dated
August 26, 1999, pursuant to which we agreed to file a registration statement on
or prior to February 26, 2000, and to keep such registration statement effective
for a period of one year.
Several of the above stockholders currently hold positions with 24/7 Media
or its subsidiaries. Jeff Wilkins, Jay Aber, Paul Chachko and Troy Scheer are
each employed by 24/7 Media, Inc. in positions of vice president or above.
This prospectus also covers any additional shares of common stock that
become issuable in connection with the shares being registered by reason of any
stock dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an increase in
the number of our outstanding shares of common stock.
15
<PAGE>
PLAN OF DISTRIBUTION
We are registering the common stock on behalf of the above selling
stockholders. As used in this prospectus, the term "selling stockholders"
includes pledgees, transferees or other successors-in-interest selling shares
received from the selling stockholders as pledgors, borrowers or in connection
with other non-sale-related transfers after the date of this prospectus. This
prospectus may also be used by transferees of the selling stockholders,
including broker-dealers or other transferees who borrow or purchase the shares
to settle or close out short sales of shares of common stock. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner, and size of each sale or non-sale related transfer. We will
not receive any of the proceeds of this offering.
The selling stockholders are offering shares of common stock that they
received in connection the above acquisitions. This prospectus covers their
resale of up to 1,349,563 shares of common stock.
The selling stockholders may sell their shares of common stock directly to
purchasers from time to time. Alternatively, they may from time to time offer
the common stock to or through underwriters, broker/dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the selling stockholders or the purchasers of such securities
for whom they may act as agents. The selling stockholders and any underwriters,
broker/dealers or agents that participate in the distribution of common stock
may be deemed to be "underwriters" within the meaning of the Securities Act and
any profit on the sale of such securities and any discounts, commissions,
concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The common stock may be sold from time to time in one or more transactions
at fixed prices, at prevailing market prices at the time of sale, at varying
prices determined at the time of sale or at negotiated prices. The sale of the
common stock may be effected by means of one or more of the following
transactions (which may involve cross or block transactions):
- on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale,
- in the over-the-counter market,
- in transactions otherwise than on such exchanges or services or in the
over-the-counter market or
- through the purchase and sale of over-the-counter options.
In connection with sales of the common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker/dealers, which may
in turn engage in short sales of the common stock in the course of hedging the
positions they assume. The selling stockholders may also sell common stock short
and deliver common stock to close out such short positions, or loan or pledge
common stock to broker/ dealers that in turn may sell such securities.
At the time a particular offering of the common stock is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate
amount common stock being offered and the terms of the offering, including the
name or names of any underwriters, broker/dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the common stock will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers.
The selling stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the common stock by the
selling stockholders. The foregoing may affect the marketability of such
securities.
16
<PAGE>
Pursuant to the various registration rights agreements with the selling
stockholders who received their shares of common stock in connection with the
above acquisitions, all expenses of the registration of the common stock will be
paid by us, including, without limitation, SEC filing fees; provided, however,
that the selling stockholders will pay all underwriting discounts and selling
commissions, if any. The selling stockholders will be indemnified by us against
certain civil liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith. We will be
indemnified by the selling stockholders severally against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
In addition, any common stock covered by this prospectus that qualify for
sale pursuant to Rule 144, Rule 144A or any other available exemption from
registration under the Securities Act may be sold under Rule 144, Rule 144A or
such other available exemption rather than pursuant to this prospectus. There is
no assurance that any selling stockholder will sell any or all of the common
stock, and any selling stockholder may transfer, devise or gift such common
stock by other means not described herein.
We will be permitted to suspend the use of the prospectus which is a part of
the shelf registration statement for a period not to exceed 90 days in any
twelve-month period under certain circumstances relating to pending corporate
developments, public filings with the Commission and similar events.
17
<PAGE>
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information filed with the SEC will
update and supersede this information. The prospectus incorporates by reference
the documents set forth below that we have previously filed with the SEC. The
documents contain important information about 24/7 Media and its finances. We
incorporate by reference our:
- Annual Report on Form 10-K for the year ended December 31, 1998 (SEC file
number 000-29768;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (SEC
file number 000-29768);
- Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (SEC
file number 000-29768;
- Current Reports on Form 8-K dated April 28, 1999, March 23, 1999, and
September 1, 1999 (SEC file number 000-29768);
- Current Report on Form 8-K dated October 29, 1999 (SEC file number
000-29768); and
- The description of the 24/7 Media common stock contained in our
Registration Statement on Form 8-A dated July 28, 1998 registering the
24/7 Media common stock under Section 12(g) of the Exchange Act.
In addition, all of our filings with the SEC after the date of this
prospectus under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of the initial registration statement and prior to the effectiveness of the
registration statement shall be deemed to be incorporated by reference and to be
a part of this document until this offering is terminated or completed.
Any statement contained in the prospectus or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein (or in the any applicable prospectus supplement) or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's Web site at http://www.sec.gov.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
24/7 Media Inc.
Megan M. Hurley
Vice President, Associate General Counsel
1250 Broadway, 28th Floor
New York, New York 10001
(212) 231-7100
This prospectus is part of a registration statement on Form S-3 that we
filed with the SEC under the Securities Act. You should rely only on the
information incorporated by reference or provided in this
18
<PAGE>
prospectus or the prospectus supplement. We have authorized no one to provide
you with different information. We are not making an offer of these securities
in any state where the offer is not permitted. You should not assume that the
information in this prospectus or the prospectus supplement is accurate as of
any date other than on the front of this document.
LEGAL MATTERS
The validity of the securities offered under this registration statement
will be passed upon for 24/7 Media by Proskauer Rose LLP, New York, New York.
EXPERTS
The consolidated financial statements and the supplemental consolidated
financial statements of 24/7 Media, Inc. and subsidiaries as of December 31,
1998 and 1997 and for each of the years in the three-year period ended
December 31, 1998, have been audited by KPMG LLP, independent certified public
accountants, which have been incorporated by reference herein and in this
registration statement in reliance upon the reports of KPMG LLP, which are also
incorporated herein by reference, and upon the authority of said firm as experts
in accounting and auditing.
The financial statements incorporated by reference in this registration
statement for Music Marketing Network, Inc. (d/b/a ConsumerNet) as of
December 31, 1998 and 1997 and for the years then ended have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the expenses to be incurred by
24/7 Media, Inc. in connection with the issuance and distribution of the
securities being registered hereby. All such expenses will be borne by 24/7
Media, Inc.:
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
---------
<S> <C>
SEC Registration Fee........................................ $15,000
Legal Fees and Expenses..................................... $ 5,000
Accounting Fees and Expenses................................ $ 5,000
Miscellaneous............................................... $25,000
-------
Total................................................... $50,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation Law of the State of Delaware ("DGCL") permits the
Company and its stockholders to limit directors' exposure to liability for
certain breaches of the directors' fiduciary duty, either in a suit on behalf of
the Company or in an action by stockholders of the Company.
The Certificate of Incorporation of the Company (the "Charter") eliminates
the liability of directors to stockholders or the Company for monetary damages
arising out of the directors' breach of their fiduciary duty of care. The
Charter also authorizes the Company to indemnify its directors, officers,
incorporators, employees, and agents with respect to certain costs, expenses,
and amounts incurred in connection with an action, suit, or proceeding by reason
of the fact that such person was serving as a director, officer, incorporator,
employee, or agent of the Company. In addition, the Charter permits the Company
to provide additional indemnification rights to its officers and directors and
to indemnify them to the greatest extent possible under the DGCL. The Company
has entered into indemnification agreements with each of its officers and
directors and intends to enter into indemnification agreements with each of its
future officers and directors. Pursuant to such indemnification agreements, the
Company has agreed to indemnify its officers and directors against certain
liabilities, including liabilities arising out of the offering made by this
registration statement.
The Company maintains a standard form of officers' and directors' liability
insurance policy which provides coverage to the officers and directors of the
Company for certain liabilities, including certain liabilities which may arise
out of this registration statement.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Charter. The Registrant is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
II-1
<PAGE>
ITEM 16. EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of 24/7 Media,
Inc.'s Registration Statement on Form S-1 (File No.
333-70857)).
3.2 Bylaws (incorporated by reference to Exhibit 3.5 of 24/7
Media, Inc.'s Registration Statement on Form S-1 (File No.
333-70857)).
4.1 Agreement and Plan of Merger, dated March 8, 1999, by and
among 24/7 Media, Inc., Factor K Acquisition Corp. and Sift,
Inc. (incorporated by reference to Exhibit 10.25 to 24/7
Media, Inc.'s Registration Statement on Form S-1 (File No.
333-70857)).
4.2 Registration Rights Agreement, dated as of July 26, 1999, by
and among 24/7 Media, Inc. and the holders named therein.
4.3 Registration Rights Agreement, dated as of August 26, 1999,
by and among 24/7 Media, Inc. and the holders named therein.
4.4 Registration Rights Agreement, dated as of August 17, 1999,
by and among 24/7 Media, Inc. and the holders named therein.
*5 Opinion of Proskauer Rose LLP.
23.1 Consent of Proskauer Rose LLP, included in Exhibit 5.
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
24 Power of Attorney, included on the signature page of this
Registration Statement.
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act, and is, therefore, unenforceable. If a claim for indemnification
against such liabilities (other than payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities offered hereby, a post-effective amendment to this Registration
Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that the undertakings set forth in paragraphs (i) and (ii) above do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
REQUEST FOR ACCELERATION OF EFFECTIVE DATE
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in The City of New York, State of New York, on this 28th day of
October, 1999.
<TABLE>
<S> <C> <C>
24/7 MEDIA, INC.
By: /s/ DAVID J. MOORE
-----------------------------------------
David J. Moore
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
We, the undersigned directors and/or officers of 24/7 Media, Inc. (the
"Company"), hereby severally constitute and appoint David J. Moore, Chief
Executive Officer, C. Andrew Johns, Chief Financial Officer, and Mark E. Moran,
General Counsel, and each of them individually, with full powers of substitution
and resubstitution, our true and lawful attorneys, with full powers to them and
each of them to sign for us, in our names and in the capacities indicated below,
the Registration Statement on Form S-3 filed with the Securities and Exchange
Commission, and any and all amendments to said Registration Statement (including
post-effective amendments), and any registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, in connection with the
registration under the Securities Act of 1933, as amended, of equity securities
of the Company, and to file or cause to be filed the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys, and each of them, full power
and authority to do and perform each and purposes as each and every act and
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as each of them might or could do in person, and hereby
ratifying and confirming all that said attorneys, and each of them, or their
substitute or substitutes, shall do or cause to be done by virtue of this Power
of Attorney.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1999:
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ DAVID J. MOORE
------------------------------------------- Chief Executive Officer and Director
David J. Moore (Principal Executive Officer)
/s/ R. THEODORE AMMON
------------------------------------------- Chairman of the Board
R. Theodore Ammon
/s/ JACOB I. FRIESEL
------------------------------------------- Executive Vice President and Director
Jacob I. Friesel
/s/ JOHN F. BARRY III
------------------------------------------- Director
John F. Barry III
/s/ JACK L. RIVKIN
------------------------------------------- Director
Jack L. Rivkin
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ ARNIE SEMSKY
------------------------------------------- Director
Arnie Semsky
/s/ CHARLES W. STRYKER, PH.D.
------------------------------------------- Director
Charles W. Stryker, Ph.D.
/s/ C. ANDREW JOHNS Executive Vice President, Treasurer & Chief
------------------------------------------- Financial Officer (PrincipalFinancial
C. Andrew Johns Officer)
/s/ STUART D. SHAW
------------------------------------------- Senior Vice President and Controller
Stuart D. Shaw (Principal Accounting Officer)
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
3.3 Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of 24/7 Media,
Inc.'s Registration Statement on Form S-1 (File No.
333-70857)).
3.4 Bylaws (incorporated by reference to Exhibit 3.5 of 24/7
Media, Inc.'s Registration Statement on Form S-1 (File No.
333-70857)).
4.1 Agreement and Plan of Merger, dated March 8, 1999, by and
among 24/7 Media, Inc.,
Factor K Acquisition Corp. and Sift, Inc. (incorporated by
reference to Exhibit 10.25 to 24/7 Media, Inc.'s
Registration Statement on Form S-1 (File No. 333-70857)).
4.2 Registration Rights Agreement, dated as of July 26, 1999, by
and among 24/7 Media, Inc. and the holders named therein.
4.3 Registration Rights Agreement, dated as of August 26, 1999,
by and among 24/7 Media, Inc. and the holders named therein.
4.4 Registration Rights Agreement, dated as of August 17, 1999,
by and among 24/7 Media, Inc. and the holders named therein.
*5 Opinion of Proskauer Rose LLP.
23.1 Consent of Proskauer Rose LLP, included in Exhibit 5.
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
24 Power of Attorney, included on the signature page of this
Registration Statement.
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made as of this 26th day of July, 1999, by
and among 24/7 Media, Inc., a Delaware corporation (the "Company"), Jay Aber,
Bruce Claassen, in trust for Genesis Media Inc., Peter Simpson, in trust for
Genesis Media Inc., and Genesis Media Inc. (_Genesis_).
RECITALS:
WHEREAS, the parties have entered into a Share Purchase Agreement of even date
herewith (the _Purchase Agreement_), pursuant to which Genesis acquired certain
securities exchangeable for shares of the Company_s common stock, par value $.01
per share (the "Shares");
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is agreed as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Common Stock" means the common stock, par value $.01 per share, of the
Company.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(c) "Form S-3" means such form under the Securities Act as in effect on the date
hereof or any registration form under the Securities Act subsequently adopted by
the SEC which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(d) "Holder" means any Person owning or having the right to acquire Registrable
Securities, or any assignee thereof in accordance with Section 8.
(e) "Genesis" means Genesis Media, Inc.
(f) "Majority Holders" means the Holders of more than 2/3 of the then
outstanding Registrable Securities.
(f) "Person" means any individual, partnership, limited liability company, joint
venture, corporation, association, trust or any other entity or organization.
(g) "Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(h) "Registrable Securities" means any shares of Common Stock held by, issuable
to, or subsequently acquired by, Genesis and any shares of Common Stock issued
or issuable with respect to any such shares of Common Stock by
<PAGE>
way of stock dividend or stock split, or in connection with a combination of
shares, recapitalization, merger, consolidation, or other reorganization, or
otherwise; provided, however, that any Registrable Securities sold by a Holder
in a transaction in which such Holder's rights under this Agreement are not
assigned pursuant to Section 8 below shall cease to be Registrable Securities
from and after the time of such sale.
(i) "SEC" means the Securities and Exchange Commission.
(j) "Securities Act" means the Securities Act of 1933, as amended.
(k) "Violation" means any of the following statements, omissions or violations:
(i) any untrue statement or alleged untrue statement of a material fact
contained in a registration statement under this Agreement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto or any documents filed under state securities or "blue
sky" laws in connection therewith, (ii) the omission or alleged omission to
state in any of the foregoing a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
other federal, state or common law or any rule or regulation promulgated under
the Securities Act, the Exchange Act or any state securities law.
2. Registration.
(a) The Company shall prepare, and, on or prior to October 31, 1999, file with
the SEC a Registration Statement on Form S-3 (or, if Form S-3 is not then
available, on such form of Registration Statement as is then available to effect
a registration of the Registrable Securities) and pursuant to Rule 415 covering
the resale from time to time by the Holders thereof of all Registrable
Securities issued or issuable pursuant to the Securities Purchase Agreement;
provided, however, that (i) no later than September 15, 1999, the Majority
Holders may request that the Company delay registration of Genesis' Registrable
Securities pursuant to this Section 2(a), from which time the Majority Holders
shall have the right to demand one registration of their Registrable Securities
under this Section 2(a) on 120 days_ notice to the Company; and (ii) if prior to
the Company's filing of a Registration Statement pursuant to this Section 2(a),
the Holders have disposed of more than 60% of then then outstanding Registrable
Securities, the Company's obligations under this Section 2(a) shall cease.
(b) Notwithstanding Section 2(a) above, if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 2, a certificate
signed by the Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration statement
to be filed by reason of a material pending transaction and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than ninety (90)
days; provided, however, that the Company during such deferment may not file a
registration statement for securities to be issued and sold for its own account
or that of other
<PAGE>
stockholders.
(c) If (but without any obligation to do so) at any time the Company proposes to
register (including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other securities under
the Securities Act in connection with the public offering (whether for the
account of the Company or for selling stockholders) of such securities solely
for cash (other than a registration on Form S-8 relating solely to the sale of
securities to participants in a Company Stock Plan or to other compensatory
arrangements to the extent includible on Form S-8, or a registration on Form
S-4), the Company shall, at such time, promptly give each Holder written notice
of such registration. Upon the written request of each Holder given within ten
(10) days after receipt by such Holder of such notice by the Company in
accordance with Section 14, the Company shall, subject to Section 2.d, use its
best efforts to cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered. The
Company shall have no obligation under this Section 2.c to make any offering of
its securities, or to complete an offering of its securities that it proposes to
make, and shall incur no liability to any Holder for its failure to do so. No
registration effected under this Section 2.c shall relieve the Company of any of
its obligators to effect registrations upon request under Section 2(a).
(d) In connection with any offering involving an underwriting of shares being
issued by the Company, the Company shall not be required under Section 2.c to
include any Holder's securities in such underwriting unless such Holder accepts
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by the Company, and then only in such quantity as will
not, in the opinion of the underwriters, jeopardize the success of the offering
by the Company; provided, however, that (i) no Holder participating in such
underwriting shall be required to make any representations, warranties or
indemnities except as they relate to such Holder's ownership of shares and
authority to enter into the underwriting agreement and such Holder's intended
method of distribution, and (ii) the liability of such Holder shall be limited
to an amount equal to the net proceeds from the offering received by such
Holder. If the total amount of securities, including Registrable Securities,
requested by shareholders to be included in any offering referred to in Section
2.c exceeds the amount of securities sold other than by the Company that the
underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering. The securities so
included shall be apportioned pro rata among the selling shareholders subject to
any priority of registration rights heretofore granted to existing stockholders
under the April 9 Agreement (as hereinafter defined); Genesis acknowledges that
existing shareholders of the Company owning a substantial number of unregistered
shares have registration rights that are senior to those being granted
hereunder.
3. Obligations of the Company. Whenever required under this Agreement to effect
the registration of any Registrable Securities, the Company shall at its sole
cost:
<PAGE>
(a) Promptly prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective expeditiously, and, upon the request
of the Holders of a majority of the Registrable Securities being registered
thereunder, keep such registration statement effective for up to one year or
until the Holders have completed the distribution referred to in such
registration statement, whichever occurs first (but in any event for at least
any period required under the Securities Act); provided that before filing such
registration statement or any amendments thereto, the Company will furnish to
the Holders copies of all such documents proposed to be filed.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish (at no cost) to the Holders such number of copies of such
registration statement and of each amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus contained
in such registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act, and
such other documents incorporated by reference in the registration statement and
such other documents as Holders may reasonably request in order to facilitate
the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by such
registration statement under such other securities or "blue sky" laws of such
states or U.S. jurisdictions as shall be reasonably requested by the Holders and
do any and all other acts and things which may be reasonably necessary to enable
each participating Holder to consummate the disposition of the Registrable
Securities owned by it in such jurisdiction; provided that the Company shall not
be required in connection therewith or as a condition thereto (i) to qualify to
do business in any state or jurisdiction where it would not otherwise be
required to qualify but for the requirements of this clause (d), or (ii) to file
a general consent to service of process in any such state or jurisdiction.
(e) Use its best efforts to cause all Registrable Securities covered by such
registration statement to be, and remain during the period provided in Section
3(a), registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the Company's business or
operations to enable the seller or sellers thereof to consummate the disposition
of such Registrable Securities.
(f) Immediately notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
<PAGE>
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing and if it is necessary to amend or supplement such prospectus to comply
with law, and at the request of any other Holder, prepare and furnish, at no
cost, to such Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of Shares of Common Stock, such prospectus shall not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances then existing, not misleading and so that such
prospectus, as amended or supplemented, will comply with law.
(g) Immediately notify each Holder of Registrable Securities covered by such
registration statement and confirm such advice in writing: (i) when the
registration statement has become effective, (ii) when any post-effective
amendment to the registration statement becomes effective and (iii) of any
request by the SEC for any amendment or supplement to the registration statement
or prospectus or for additional information.
(h) Notify each Holder of Registrable Securities if at any time the SEC or any
state securities commission or other regulatory authority should institute or
threaten to institute any proceedings for the purpose of issuing, or should
issue, a stop order suspending the effectiveness of the Registration Statement.
Upon the occurrence of any of the events mentioned in the preceding sentence,
the Company will use its best efforts to prevent the issuance of any such stop
order or to obtain the withdrawal thereof as soon as possible. The Company will
advise each Holder of Registrable Securities promptly of any order or
communication of any public board or body addressed to the Company suspending or
threatening to suspend the qualification of any Registrable Securities for sale
in any jurisdiction.
(i) As soon as practicable after the effective date of the registration
statement, and in any event within sixteen (16) months thereafter, have "made
generally available to its security holders" (within the meaning of Rule 158
under the Securities Act) an earning statement (which need not be audited)
covering a period of at least twelve (12) months beginning after the effective
date of the registration statement and otherwise complying with Section 11(a) of
the Securities Act.
(j) Cause all Registrable Securities registered pursuant hereto on a
Registration Statement for resale by a Holder to be listed on each securities
exchange or included for trading in such automated quotation system on or in
which the Shares of Common Stock of the Company are then listed or included.
(k) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereto on a Registration Statement for resale by a Holder,
and a CUSIP number for the Shares of Common Stock, in each case not later than
the effective date of such Registration Statement.
(l) Otherwise use its best efforts in its performance of its
obligations hereunder to comply with all applicable rules and regulations of
<PAGE>
the SEC and of state securities commissions and any stock exchange or automated
quotation system.
(m) Deliver promptly, upon request, to any Holder participating in the offering
copies of all correspondence between the SEC and the Company, its counsel or
auditors and all memoranda relating to discussions with the SEC or its staff
with respect to the registration statement; permit each Holder and counsel for
each Holder, to participate in the preparation of such registration statement,
each prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto; and give each Holder, and counsel for each
Holder, access to the Company's books, records and properties and such
opportunities to discuss the business of the Company with its officers and
independent public accountants as shall be necessary, in the opinion of each
Holder and their respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
(n) In the event of an underwritten offering (or a shelf offering in which the
items listed in clauses (i) and (ii) below are delivered to any other selling
stockholder), furnish (at no cost), at the request of any Holder requesting
registration of Registrable Securities pursuant to this Agreement, to each
Holder participating in the offering and to each underwriter, (i) on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters and to the
Holders participating in such offering and (ii) on the date that the
registration statement with respect to such securities becomes effective, a
"comfort" letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters and to the Holders participating
in such offering, and a reaffirmation of such letter on the date that such
Registrable Securities are delivered to the underwriters for sale.
(o) Solely in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering.
4. Holder Shall Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
5. Expenses of Registration. The Company shall bear and pay all expenses
incurred in connection with any registration, filing or qualification of
Registrable Securities with respect to the registration of Registrable
Securities, including without limitation all registration, filing and
qualification fees, printers' and accounting fees relating or
<PAGE>
apportionable thereto, and reasonable fees and expenses of one counsel to the
selling stockholders, but excluding underwriting discounts and commissions
relating to Registrable Securities.
6. Indemnification. In the event any Registrable Securities are included in a
registration statement under this Agreement:
(a) The Company will indemnify and hold harmless each Holder, its heirs,
personal representatives and assigns, and each of such Holder's partners,
members, stockholders, managers, agents, officers, directors, employees and
affiliates, any underwriter (as defined in the Securities Act) for such Holder
and each Person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon a Violation; and the Company will pay to each
such indemnified party, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
to a particular indemnified party for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such indemnified
party.
(b) Each selling Holder will indemnify and hold harmless the Company, each of
its directors, each of its officers who has signed the registration statement,
each Person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter, any other Holder selling securities in such
registration statement and any controlling Person of any such underwriter or
other Holder, against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing Persons may become subject, under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by or on behalf of such Holder expressly for use
in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any Person intended
to be indemnified pursuant to this Section 6(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 6(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; and provided further,
that, in no event shall the liability of any Holder under this Section 6(b)
exceed the net proceeds from the offering received by such Holder.
<PAGE>
(c) Promptly after receipt by an indemnified party under this Section 6 of
written notice of the commencement of any action (including any governmental
action) involving a claim referred to in Section 6(a) or 6(b) of this Agreement,
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 6 except if, and only to the extent that,
the indemnifying party is actually prejudiced thereby; and such failure to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 6. The indemnifying party will not, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any person who controls such indemnified party is a party
to such claim, action, suit or proceeding), unless such settlement, compromise
or consent includes an unconditional release of such indemnified party from all
liability arising out of such claim, action suit or proceeding and such
settlement, compromise or consent involves only the payment of money and such
money is actually paid by the indemnifying party. Whether or not the defense of
any claim or action is assumed by the indemnifying party, such indemnifying
party will not be subject to any liability for any settlement made without its
consent, which consent will not be unreasonably withheld.
(d) The obligations of the Company and Holders under this Section 6 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
(e) Any indemnity agreements contained herein shall be in addition to any other
rights to indemnification or contribution which any indemnified party may have
pursuant to law or contract and shall remain operative and in full force and
effect regardless of any investigation made or omitted by or on behalf of any
indemnified party.
(f) If for any reason the foregoing indemnity is unavailable, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other or (ii) if the allocation provided by clause
<PAGE>
(i) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by or on behalf of the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Notwithstanding anything to the contrary in this Section 6,
no Holder shall be required, pursuant to this Section 6, to contribute any
amount in excess of the net proceeds received by such indemnifying party from
the sale of Shares of Common Stock in the offering to which the losses, claims,
damages, liabilities or expenses of the indemnified party relate.
7. Reports Under the Exchange Act. With a view to making available to the
Holders the benefits of Rule 144 under the Securities Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration on
Form S-3, the Company agrees at its sole cost to:
(a) make and keep public information available, as those terms are understood
and defined in Rule 144 under the Securities Act, at all times after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public;
(b) take such action as is necessary to enable the Holders to utilize Form S-3
for the sale of their Registrable Securities;
(c) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144 under the Securities
Act (at any time after the effective date of the first registration statement
filed by the Company) and the Securities Act and Exchange Act (at any time after
it has become subject to such reporting requirements) or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time it
so qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.
8. Assignment of Registration Rights. The rights to cause the
<PAGE>
Company to register Registrable Securities pursuant to this Agreement may be
assigned in whole or in part by a Holder to one or more of its partners,
employees or affiliates or to one or more transferees or assignees of
Registrable Securities (or securities exchangeable into Registrable Securities)
acquired by the Holder, provided that such transferee or assignee delivers to
the Company a written instrument by which such transferee or assignee agrees to
be bound by the obligations imposed on Holders under this Agreement to the same
extent as if such transferee or assignee was a party hereto.
9. Amendment; Waiver. Any provision of this Agreement may be amended only with
the written consent of the Company and each of the Holders and the observance of
any provision of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the party to be charged, provided that the Holders of 60% of
the Registrable Securities then outstanding may act on behalf of all such
Holders of Registrable Securities. Any amendment or waiver effected in
accordance with this Section 9 shall be binding upon each Holder of Registrable
Securities at the time outstanding, each future Holder of all such securities,
and the Company.
10. Changes in Registrable Securities. If, and as often as, there are any
changes in the Registrable Securities, by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions of this Agreement, as may be
required, so that the rights and privileges granted hereby shall continue with
respect to the Registrable Securities as so changed. Without limiting the
generality of the foregoing, the Company will require any successor by merger or
consolidation to assume and agree to be bound by the terms of this Agreement, as
a condition to any such merger or consolidation.
11. Entire Agreement. This Agreement (together with the Purchase Agreement)
constitutes the full and entire understanding and agreement among the parties
with regard to the subject matter hereof. Nothing in this Agreement, express or
implied, is intended to confer upon any Person, other than the parties hereto
and their respective successors and assigns, any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided herein.
12. Governing Law. This Agreement shall be governed in all respects by the laws
of the State of New York as such laws are applied to agreements between New York
residents entered into and to be performed entirely within New York, whether or
not all parties hereto are residents of New York.
13. Successors and Assigns. The provisions hereof shall inure to the benefit of,
and be binding upon, the successors, permitted assigns (as provided in Section
8), heirs, executors and administrators of the parties hereto.
14. Notices. All notices and other communications provided for herein shall be
dated and in writing and shall be deemed to have been duly given (i) on the date
of delivery, if delivered personally or by telecopier,
<PAGE>
receipt confirmed, (ii) on the second following business day, if delivered by a
recognized overnight courier service, or (iii) seven days after mailing, if sent
by registered or certified mail, return receipt requested, postage prepaid, in
each case, to the party to whom it is directed at the following address (or at
such other address as any party hereto shall hereafter specify by notice in
writing to the other parties hereto):
(i) If to the Company, to it at the following address:
24/7 Media, Inc.
1250 Broadway, 28th fl
New York, NY 10001
Attn: General Counsel
(ii) If to Genesis, to it at the following address:
Genesis Media, Inc.
175 Bloor Street East
South Tower, Suite 501
Toronto, Ontario Canada
M4W 3V3
Attn: President
15. Severability. Any invalidity, illegality or limitation on the enforceability
of this Agreement or any part thereof, by any party, whether arising by reason
of the law of the respective party's domicile or otherwise, shall in no way
affect or impair the validity, legality or enforceability of this Agreement with
respect to the other party. If any provision of this Agreement shall be
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
16. Titles and Subtitles. The titles of the Sections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
17. Delays or Omissions; Remedies Cumulative. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to the parties, upon
any breach or default of the Company under this Agreement, shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character by a party of any breach or default under this
Agreement, or any waiver by a party of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to a party, shall be cumulative and
not alternative.
18. Attorneys' Fees. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the
<PAGE>
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
19. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
20. Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
21. Remedies. In the event of a breach by any party to this Agreement of its
obligations under this Agreement, any party injured by such breach, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages and costs (including reasonable attorneys' fees), will be entitled to
specific performance of its rights under this Agreement. The parties agree that
the provisions of this Agreement shall be specifically enforceable, it being
agreed by the parties that the remedy at law, including monetary damages, for
breach of any such provision will be inadequate compensation for any loss and
that any defense in any action for specific performance that a remedy at law
would be adequate is waived.
22. Recapitalizations, Exchanges, Etc. The provisions of this Agreement shall
apply, to the full extent set forth herein, to any and all shares of the Company
capital stock or any successor or assign of the Company (whether by merger,
consolidation, sale of assets, or otherwise, including shares issued by a parent
corporation in connection with a triangular merger) which may be issued in
respect of, in exchange for, or in substitution of, shares of Common Stock, and
shall be appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, reclassifications and the like occurring after the date hereof.
23. No Inconsistent Agreements. The Company has not previously entered into any
agreement with respect to its Common Stock granting any registration rights to
any Person, and will not on or after the date of this Agreement enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the holders of Registrable Securities in this Agreement or which
otherwise conflicts with the provisions hereof. It is acknowledged and
understood that the Company has granted demand registration rights and piggyback
registration rights to holders of a substantial number of shares of Common
Stock, pursuant to a registration rights agreement dated April 9, 1998 (the
"April 9 Agreement") which has been publicly filed with the Securities and
Exchange Commission.
[END OF TEXT]
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date and year first above written.
<PAGE>
24/7 MEDIA, INC.
By: /s/ Mark E. Moran
-------------------------------------
Name: Mark E. Moran
Title: Senior Vice PResident
/s/ Jay Aber
- -----------------------------------------
JAY ABER
/s/ Bruce Classen
- -----------------------------------------
BRUCE CLASSSEN, in trust for Genesis Media Inc.
/s/ Peter Simpson
- -----------------------------------------
PETER SIMPSON, in trust for Genesis Media Inc.
GENESIS MEDIA, INC.
By: /s/ Bruce Classen
-------------------------------------
Name: Bruce Classen
Title: President and CEO
<PAGE>
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made as of this 26th day of August,
1999, by and among 24/7 Media, Inc., a Delaware corporation (the
"Company"), and the persons set forth on the signature pages hereto (each a
"Seller" and collectively, the "Sellers").
RECITALS:
WHEREAS, the parties have entered into a Share Purchase Agreement of even
date herewith (the "Purchase Agreement"), pursuant to which the Sellers
acquired certain shares of the Company's common stock, par value $.01 per
share (the "Shares");
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is agreed
as follows:
1. Definitions. For purposes of this Agreement:
(a) "Common Stock" means the common stock, par value $.01 per share, of the
Company.
(b) "Dispose of" means to (x) offer, sell, pledge, hypothecate
or otherwise dispose of Shares or (y) establish or increase any "put
equivalent position" (as defined in Rule 16a-1(h) under the Exchange
Act) with respect to Shares.
(c) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(d) "Form S-3" means such form under the Securities Act as in effect on the
date hereof or any registration form under the Securities Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the
SEC.
(e) "Holder" means any Person owning or having the right to acquire
Registrable Securities, or any assignee thereof in accordance with Section
8.
<PAGE>
(f) "Person" means any individual, partnership, limited liability company,
joint venture, corporation, association, trust or any other entity or
organization.
(g) "Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement or similar
document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(h) "Registrable Securities" means any unregistered shares of Common Stock
held by, issuable to, or subsequently acquired by, the Sellers or any
Holder and any shares of Common Stock issued or issuable with respect to
any such shares of Common Stock by way of stock dividend or stock split, or
in connection with a combination of shares, recapitalization, merger,
consolidation, or other reorganization, or otherwise; provided, however,
that any Registrable Securities sold by a Holder in a transaction in which
such Holder's rights under this Agreement are not assigned pursuant to
Section 8 below shall cease to be Registrable Securities from and after the
time of such sale.
(i) "SEC" means the Securities and Exchange Commission.
(j) "Securities Act" means the Securities Act of 1933, as amended.
(k) "The Sellers" means each of the persons other than 24/7
Media, Inc. whose names are set forth on the signature pages hereto.
(l) "Violation" means any of the following statements, omissions or
violations: (i) any untrue statement or alleged untrue statement of a
material fact contained in a registration statement under this Agreement,
including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto or any documents filed under state
securities or "blue sky" laws in connection therewith, (ii) the omission or
alleged omission to state in any of the foregoing a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any other federal, state or common
law or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities law.
2. Registration.
(a) The Company shall prepare, and, on or prior to the date that is six
months after the date of this Agreement, file with the SEC one or more
Registration Statements on Form S-3 (or, if Form S-3 is not then available,
on such form of Registration Statement as is then available to effect a
registration of the Registrable Securities) and pursuant to Rule 415
covering the resale from time to time by the holders thereof of all
Registrable Securities issued or issuable pursuant to the Purchase
Agreement; provided, however, that if prior to the Company's filing of a
Registration Statement pursuant to this Section 2(a), the Sellers
collectively have Disposed of or the Company shall have registered more
than 75% of the Registrable Securities and such registration statement
remains in effect for one (1) year, the Company's obligations under this
Section 2(a) shall cease.
(b) Notwithstanding Section 2(a) above, if, on one (1) occasion only, the
Company shall furnish to Holders requesting a registration statement
<PAGE>
pursuant to this Section 2, a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board
of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such registration statement to be filed by
reason of a material pending transaction and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than ninety (90) days;
provided, however, that the Company during such deferment may not file a
registration statement for securities to be issued and sold for its own
account or that of other stockholders.
(c) If (but without any obligation to do so) at any time or
from time to time the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than
the Holders) any of its stock or other securities under the Securities Act
in connection with the public offering (whether for the account of the
Company or for selling stockholders) of such securities solely for cash
(other than a registration on Form S-8 relating solely to the sale of
securities to participants in a Company Stock Plan or to other compensatory
arrangements to the extent includible on Form S-8, or a registration on
Form S-4), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after receipt by such Holder of such
notice by the Company in accordance with Section 15, the Company shall,
subject to Section 2.d, use its best efforts to cause to be registered
under the Securities Act at least 75% of the Registrable Securities that
each such Holder has requested to be registered. The Company shall have no
obligation under this Section 2.c to make any offering of its securities,
or to complete an offering of its securities that it proposes to make, and
shall incur no liability to any Holder for its failure to do so. No
registration effected under this Section 2.c shall relieve the Company of
any of its obligators to effect registrations under Section 2(a).
(d) In connection with any offering involving an underwriting of shares being
issued by the Company, the Company shall not be required under Section 2.c to
include any Holder's securities in such underwriting unless such Holder accepts
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by the Company, and then only in such quantity as will
not, in the opinion of the underwriters, jeopardize the success of the offering
by the Company; provided, however, that (i) no Holder participating in such
underwriting shall be required to make any representations, warranties or
indemnities except as they relate to such Holder's ownership of shares and
authority to enter into the underwriting agreement and such Holder's intended
method of distribution, (ii) the liability of such Holder shall be limited to an
amount equal to the net proceeds from the offering received by such Holder and
(iii) any Holder may withdraw its Registrable Securities from a registration
statement prior to entering into the underwriting agreement. If the total amount
of securities, including Registrable Securities, requested by shareholders to be
included in any offering referred to in Section 2.c exceeds the amount of
securities sold other than by the Company that the underwriters reasonably
believe compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters believe will not
jeopardize the success of the offering. The securities so included shall be
apportioned pro rata among the selling shareholders subject to any priority of
"piggyback" registration rights heretofore granted to existing stockholders
under the April 9 Agreement (as hereinafter defined); The Sellers acknowledges
that existing shareholders of the Company owning a substantial number of
unregistered shares have piggyback registration rights
<PAGE>
that are senior to those being granted hereunder.
3. Obligations of the Company. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall at
its sole cost and, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such
registration statement to become effective expeditiously, and keep such
registration statement effective for up to one year or until the Holders
have completed the distribution referred to in such registration statement,
whichever occurs first (but in any event for at least any period required
under the Securities Act); provided that before filing such registration
statement or any amendments thereto, the Company will furnish to the
Holders copies of all such documents proposed to be filed.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish (at no cost) to the Holders such number of copies of such
registration statement and of each amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under
Rule 424 under the Securities Act, in conformity with the requirements of
the Securities Act, and such other documents incorporated by reference in
the registration statement and such other documents as Holders may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or "blue sky" laws
of such states or U.S. jurisdictions as shall be reasonably requested by
the Holders and do any and all other acts and things which may be
reasonably necessary to enable each participating Holder to consummate the
disposition of the Registrable Securities owned by it in such jurisdiction;
provided that the Company shall not be required in connection therewith or
as a condition thereto (i) to qualify to do business in any state or
jurisdiction where it would not otherwise be required to qualify but for
the requirements of this clause (d), or (ii) to file a general consent to
service of process in any such state or jurisdiction.
(e) Use its best efforts to cause all Registrable Securities covered by
such registration statement to be, and remain during the period provided in
Section 3(a), registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the Company's
business or operations to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities.
(f) Immediately notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing and if it is necessary to amend or supplement
<PAGE>
such prospectus to comply with law, and at the request of any other Holder,
prepare and furnish, at no cost, to such Holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of Shares of
Common Stock, such prospectus shall not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances then existing, not misleading and so that such prospectus, as
amended or supplemented, will comply with law.
(g) Immediately notify each Holder of Registrable Securities covered by
such registration statement and confirm such advice in writing: (i) when
the registration statement has become effective, (ii) when any
post-effective amendment to the registration statement becomes effective
and (iii) of any request by the SEC for any amendment or supplement to the
registration statement or prospectus or for additional information.
(h) Notify each Holder of Registrable Securities if at any time the SEC or
any state securities commission or other regulatory authority should
institute or threaten to institute any proceedings for the purpose of
issuing, or should issue, a stop order suspending the effectiveness of the
Registration Statement. Upon the occurrence of any of the events mentioned
in the preceding sentence, the Company will use its best efforts to prevent
the issuance of any such stop order or to obtain the withdrawal thereof as
soon as possible. The Company will advise each Holder of Registrable
Securities promptly of any order or communication of any public board or
body addressed to the Company suspending or threatening to suspend the
qualification of any Registrable Securities for sale in any jurisdiction.
(i) As soon as practicable after the effective date of the registration
statement, and in any event within sixteen (16) months thereafter, have
"made generally available to its security holders" (within the meaning of
Rule 158 under the Securities Act) an earning statement (which need not be
audited) covering a period of at least twelve (12) months beginning after
the effective date of the registration statement and otherwise complying
with Section 11(a) of the Securities Act.
(j) Cause all Registrable Securities registered pursuant hereto on a
Registration Statement for resale by a Holder to be listed on each
securities exchange or included for trading in such automated quotation
system on or in which the shares of Common Stock of the Company are then
listed or included.
(k) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereto on a Registration Statement for resale by a
Holder, and a CUSIP number for the Shares of Common Stock, in each case not
later than the effective date of such Registration Statement.
(l) Otherwise use its best efforts in its performance of its
obligations hereunder to comply with all applicable rules and regulations
of the SEC and of state securities commissions and any stock exchange or
automated quotation system.
(m) Deliver promptly, upon request, to any Holder participating in the
offering copies of all correspondence between the SEC and the Company, its
counsel or auditors and all memoranda relating to discussions with the
SEC or its staff with respect to the registration statement; permit each Holder
and counsel for each Holder, to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
SEC, and each amendment thereof or supplement thereto; and give each
Holder,
<PAGE>
and counsel for each Holder, access to the Company's books, records and
properties and such opportunities to discuss the business of the Company with
its officers and independent public accountants as shall be necessary, in the
opinion of each Holder and their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities
Act.
(n) In the event of an underwritten offering (or a shelf offering in which
the items listed in clauses (i) and (ii) below are delivered to any other
selling stockholder), furnish (at no cost), at the request of any Holder
requesting registration of Registrable Securities pursuant to this
Agreement, to each Holder participating in the offering and to each
underwriter, (i) on the date that such Registrable Securities are delivered
to the underwriters for sale in connection with a registration pursuant to
this Agreement, an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and substance as
is customarily given to underwriters in an underwritten public offering,
addressed to the underwriters and to the Holders participating in such
offering and (ii) on the date that the registration statement with respect
to such securities becomes effective, a "comfort" letter dated such date,
from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed
to the underwriters and to the Holders participating in such offering, and
a reaffirmation of such letter on the date that such Registrable Securities
are delivered to the underwriters for sale.
(o) Solely in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering.
4. Holder Shall Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this
Agreement with respect to the Registrable Securities of any selling Holder
that such Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended method of
disposition of such securities as shall be required to effect the
registration of such Holder's Registrable Securities.
5. Expenses of Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registration of
Registrable Securities, including without limitation all registration, filing
and qualification fees, printers' and accounting fees relating or
apportionable thereto, transfer agent and registrar expenses, fees and
disbursements of counsel to the Company, and reasonable fees and expenses of
one counsel to the selling stockholders, but excluding underwriting discounts
and commissions relating to Registrable Securities.
6. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) The Company will indemnify and hold harmless each Holder, its heirs,
personal representatives and assigns, and each of such Holder's partners,
members, stockholders, managers, agents, officers, directors, employees and
affiliates, any underwriter (as defined in the Securities Act) for such
Holder and each Person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or
<PAGE>
actions in respect thereof) arise out of or are based upon a Violation; and
the Company will pay to each such indemnified party, as incurred, any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case to a particular
indemnified party for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon a Violation which occurs
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such indemnified
party.
(b) Each selling Holder will indemnify and hold harmless the Company, each
of its directors, each of its officers who has signed the registration
statement, each Person, if any, who controls the Company within the meaning
of the Securities Act, any underwriter, any other Holder selling securities
in such registration statement and any controlling Person of any such
underwriter or other Holder, against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing Persons may
become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information
furnished by or on behalf of such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any
legal or other expenses reasonably incurred by any Person intended to be
indemnified pursuant to this Section 6(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 6(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
the Holder, which consent shall not be unreasonably withheld; and provided
further, that, in no event shall the liability of any Holder under this
Section 6(b) exceed the net proceeds from the offering received by such
Holder.
(c) Promptly after receipt by an indemnified party under this Section 6 of
written notice of the commencement of any action (including any
governmental action) involving a claim referred to in Section 6(a) or 6(b)
of this Agreement, such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume the defense thereof
with counsel mutually satisfactory to the parties; provided, however, that
an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party
of any liability to the indemnified party under this Section 6 except if,
and only to the extent that, the indemnifying party is actually prejudiced
thereby; and such failure to deliver written notice to the indemnifying
party will not relieve
<PAGE>
it of any liability that it may have to any indemnified party otherwise than
under this Section 6. The indemnifying party will not, without the prior written
consent of each indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any person who controls such indemnified party is a party
to such claim, action, suit or proceeding), unless such settlement, compromise
or consent includes an unconditional release of such indemnified party from all
liability arising out of such claim, action suit or proceeding and such
settlement, compromise or consent involves only the payment of money and such
money is actually paid by the indemnifying party. Whether or not the defense of
any claim or action is assumed by the indemnifying party, such indemnifying
party will not be subject to any liability for any settlement made without its
consent, which consent will not be unreasonably withheld.
(d) The obligations of the Company and Holders under this Section 6 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
(e) Any indemnity agreements contained herein shall be in addition to any
other rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract and shall remain operative and in full
force and effect regardless of any investigation made or omitted by or on
behalf of any indemnified party.
(f) If for any reason the foregoing indemnity is unavailable, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and
the indemnified party on the other or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law or provides a lesser
sum to the indemnified party than the amount hereinafter calculated, in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying party
and the indemnified party as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by or on behalf of the indemnifying party
or the indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Notwithstanding anything to the contrary in
this Section 6, no Holder shall be required, pursuant to this Section 6, to
contribute any amount in excess of the net proceeds received by such
indemnifying party from the sale of Shares of Common Stock in the offering
to which the losses, claims, damages, liabilities or expenses of the
indemnified party relate.
7. Reports Under the Exchange Act. With a view to making available to
the Holders the benefits of Rule 144 under the Securities Act and any other
rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees at its sole cost to:
<PAGE>
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
(b) take such action as is necessary to enable the Holders to utilize Form
S-3 for the sale of their Registrable Securities;
(c) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144 under the
Securities Act and the Securities Act and Exchange Act or that it qualifies
as a registrant whose securities may be resold pursuant to Form S-3 (at any
time it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such
form.
8. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Agreement may be assigned
in whole or in part by a Holder to one or more of its partners, employees
or affiliates or to one or more transferees or assignees of Registrable
Securities (or securities exchangeable into Registrable Securities)
acquired by the Holder, provided that such transferee or assignee delivers
to the Company a written instrument by which such transferee or assignee
agrees to be bound by the obligations imposed on Holders under this
Agreement to the same extent as if such transferee or assignee was a party
hereto.
9. Resale Restrictions.
(a) Subject to Section 2(c), each Seller severally agrees that it will not
Dispose of through any automated quotation system any Shares, commencing on
any date specified by the Company (the "Commencement Date") following the
filing by the Company of a preliminary registration statement for a firm
commitment registered public offering of Common Stock for the account of
the Company managed by nationally recognized underwriters and ending (x) 30
days after the Commencement Date if the registration statement is not
declared effective by the SEC on or prior to such 30th day, or (y) if the
registration statement is declared effective by the SEC on, or within
thirty days after the Commencement Date, a period not to exceed 90 days
following the Effective Date of the registration statement, if required by
the underwriters of the public offering; provided, however, that this
Section 9 shall not apply unless all of the executive officers of the
Company are subject to substantially the same restrictions set forth in
this Section 9.
10 Amendment; Waiver. Any provision of this Agreement may be amended
only with the written consent of the Company and each of the Holders and the
observance of any provision of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only
with the written consent of the party to be charged, provided that the
Holders of 60% of the Registrable Securities then outstanding may act on
behalf of all such Holders of Registrable Securities.
<PAGE>
Any amendment or waiver effected in accordance with this Section 9 shall be
binding upon each Holder of Registrable Securities at the time outstanding, each
future Holder of all such securities, and the Company.
11. Changes in Registrable Securities. If, and as often as, there are
any changes in the Registrable Securities, by way of stock split, stock
dividend, combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions of this Agreement, as may be
required, so that the rights and privileges granted hereby shall continue
with respect to the Registrable Securities as so changed. Without limiting
the generality of the foregoing, the Company will require any successor by
merger or consolidation to assume and agree to be bound by the terms of this
Agreement, as a condition to any such merger or consolidation.
12. Entire Agreement. This Agreement (together with the Purchase
Agreement) constitutes the full and entire understanding and agreement among
the parties with regard to the subject matter hereof. Nothing in this
Agreement, express or implied, is intended to confer upon any Person, other
than the parties hereto and their respective successors and assigns, any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided herein.
13. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York as such laws are applied to agreements
between New York residents entered into and to be performed entirely within
New York, whether or not all parties hereto are residents of New York.
14. Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, permitted assigns (as
provided in Section 8), heirs, executors and administrators of the parties
hereto.
15. Notices. All notices and other communications provided for herein
shall be dated and in writing and shall be deemed to have been duly given (i)
on the date of delivery, if delivered personally or by telecopier, receipt
confirmed, (ii) on the third following business day, if delivered by a
recognized overnight courier service, or (iii) ten days after mailing, if
sent by registered or certified mail, return receipt requested, postage
prepaid, in each case, to the party to whom it is directed at the following
address (or at such other address as any party hereto shall hereafter specify
by notice in writing to the other parties hereto):
(i) If to the Company, to it at the following address:
24/7 Media, Inc.
1250 Broadway, 28th fl
New York, NY 10001
Attn: General Counsel
(ii) If to a Seller, to it at the address for such Seller set forth on the
signature pages hereto.
16. Severability. Any invalidity, illegality or limitation on the
enforceability of this Agreement or any part thereof, by any party, whether
arising by reason of the law of the respective party's domicile or otherwise,
shall in no way affect or impair the validity, legality or enforceability of
this Agreement with respect to the other party. If any
<PAGE>
provision of this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
17. Titles and Subtitles. The titles of the Sections of this Agreement
are for convenience of reference only and are not to be considered in
construing this Agreement.
18. Delays or Omissions; Remedies Cumulative. It is agreed that no
delay or omission to exercise any right, power or remedy accruing to the
parties, upon any breach or default of the Company under this Agreement,
shall impair any such right, power or remedy, nor shall it be construed to be
a waiver of any such breach or default, or any acquiescence therein, or of
any similar breach or default thereafter occurring; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character by a party of
any breach or default under this Agreement, or any waiver by a party of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in writing and that all
remedies, either under this Agreement, or by law or otherwise afforded to a
party, shall be cumulative and not alternative.
19. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
21. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
22. Remedies. In the event of a breach by any party to this Agreement
of its obligations under this Agreement, any party injured by such breach, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages and costs (including reasonable attorneys' fees), will be
entitled to specific performance of its rights under this Agreement. The
parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
23. Recapitalizations, Exchanges, Etc. The provisions of this Agreement
shall apply, to the full extent set forth herein, to any and all shares of
the Company capital stock or any successor or assign of the Company (whether
by merger, consolidation, sale of assets, or otherwise, including shares
issued by a parent corporation in connection with a triangular merger) which
may be issued in respect of, in exchange for, or in substitution of, shares
of Common Stock, and shall be appropriately adjusted for any stock dividends,
splits, reverse splits, combinations, reclassifications and the like
occurring after the date hereof.
<PAGE>
24. No Inconsistent Agreements. The Company has not previously entered
into any agreement with respect to its Common Stock granting any registration
rights to any Person, and will not on or after the date of this Agreement
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement or which otherwise conflicts with the provisions hereof. It is
acknowledged and understood that the Company has granted demand registration
rights and piggyback registration rights to holders of a substantial number
of shares of Common Stock, pursuant to a registration rights agreement dated
April 9, 1998 (the "April 9 Agreement") which has been publicly filed with
the Securities and Exchange Commission, that the Company is actively
discussing other acquisitions and that in October 1999, the Company may
register the resale of its securities by a substantial number of holders
other than the Sellers.
[END OF TEXT]
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date and year first above written.
24/7 MEDIA, INC.
By: /s/ Gordon Simpson
Gordon Simpson, Duly Authorized
KAUPPAMAINOS OY
By: /s/ Kauppamanios
Kauppamanios
INTERAKTIIVINEN SATAMA OY
By: /s/ Maiyut Dandelin
Maiyut Dandelin
VIA MEDIA OY
By: /s/ Ato Rowntsub
Ato Rowntsub
JMK-INVEST OY
By: /s/ Juha Pekka Katainen
Juha Pekka Katainen
ASKO PIEKKOLA
By: /s/ Asko Piekkola
Asko Piekkola
HEIKKE LESKINEN
By: /s/ Heikke Leskinen
Heikke Leskinen
<PAGE>
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made as of this 17th day of August, 1999,
by and among 24/7 Media, Inc., a Delaware corporation (the "Company"), and the
persons set forth on the signature pages hereto (each a "Seller" and
collectively, the "Sellers").
RECITALS:
WHEREAS, the parties have entered into an Agreement and Plan of Merger of even
date herewith (the "Merger Agreement"), pursuant to which the Sellers acquired
certain shares of the Company"s common stock, par value $.01 per share (the
"Shares");
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is agreed as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Common Stock" means the common stock, par value $.01 per share, of
the Company.
(b) "Dispose of" means to (x) offer, sell, pledge, hypothecate or
otherwise dispose of Shares or (y) establish or increase any "put equivalent
position" (as defined in Rule 16a-1(h) under the Exchange Act) with respect to
Shares; provided, however, such term shall not include transfers of Shares due
to (i) the death of a Holder; (ii) the merger, consolidation or sale of the
Company; (iii) the transfer of Shares to any wholly-owned subsidiary or parent
of a Holder; or (iv) any transfer to a trust of which there are no beneficiaries
other than the parents, spouse or children of such Holder.
(c) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(d) "Form S-3" means such form under the Securities Act as in effect on
the date hereof or any registration form under the Securities Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(e) "Holder" means any Person owning or having the right to acquire
Registrable Securities, or any assignee thereof in accordance with Section 8.
(f) "Management Holders" means Paul Chachko, Troy Scheer and Ravi
Yadav, or any assignee thereof in accordance with Section 8.
(g) "Non-Management Holders" means Mezzanine Financial Fund, L.P.,
Robert Skoro and John Mazzacco, or any assignee thereof in accordance
<PAGE>
with Section 8.
(h) "The Sellers" means the Management Holders, Non-Management Holders,
360 Capital and each of the persons other than 24/7 Media, Inc. whose names are
set forth on the signature pages hereto.
(i) "Person" means any individual, partnership, limited liability
company, joint venture, corporation, association, trust or any other entity or
organization.
(j) "Register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(k) "Registrable Securities" means any unregistered shares of Common
Stock held by, issuable to, or subsequently acquired by, the Sellers and any
shares of Common Stock issued or issuable with respect to any such shares of
Common Stock by way of stock dividend or stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation, or other
reorganization or otherwise and; provided, however, that any Registrable
Securities sold by a Holder in a transaction in which such Holder's rights under
this Agreement are not assigned pursuant to Section 8 below shall cease to be
Registrable Securities from and after the time of such sale.
(l) "SEC" means the Securities and Exchange Commission.
(m) "Securities Act" means the Securities Act of 1933, as amended.
(n) "360 Capital" means 360 Capital Corporation, or any assignee
thereof in accordance with Section 8.
(o) "Violation" means any of the following statements, omissions or
violations: (i) any untrue statement or alleged untrue statement of a material
fact contained in a registration statement under this Agreement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto or any documents filed under state securities or "blue
sky" laws in connection therewith, (ii) the omission or alleged omission to
state in any of the foregoing a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
other federal, state or common law or any rule or regulation promulgated under
the Securities Act, the Exchange Act or any state securities law.
2. Registration.
(a) The Company shall (i) prepare, and, on or prior to the date that is
three months after the date of this Agreement, file with the SEC one or more
Registration Statements on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
<PAGE>
registration of the Registrable Securities) and pursuant to Rule 415 covering
the resale from time to time of all Registrable Securities held by 360 Capital
and 33% of the Registrable Securities of Management Holders and Non-Management
Holders and (ii) prepare, and, on or prior to the date that is six months after
the date of this Agreement, file with the SEC one or more Registration
Statements on Form S-3 (or, if Form S-3 is not then available, on such form of
Registration Statement as is then available to effect a registration of the
Registrable Securities) and pursuant to Rule 415 covering the resale from time
to time of the remaining 67% of the Registrable Securities of Management Holders
and Non-Management Holders.
(b) Notwithstanding Section 2(a) above, if the Company shall furnish to
Holders a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for any such registration statement to be filed by reason of a material pending
transaction and it is therefore essential to defer the filing of any such
registration statement, the Company shall have the right to defer such filing
for a period of not more than ninety (90) days; provided, however, that the
Company during such deferment may not file a registration statement for
securities to be issued and sold for its own account or that of other
stockholders and; provided, further, the Company may not utilize this right more
than once in any 12-month period.
(c) If (but without any obligation to do so) at any time the Company
proposes to register (including for this purpose a registration effected by the
Company for shareholders other than the Holders) any of its stock or other
securities under the Securities Act in connection with the public offering
(whether for the account of the Company or for selling stockholders) of such
securities (other than a registration on Form S-8 relating solely to the sale of
securities to participants in the Company's 1998 Stock Incentive Plan or other
Company stock plan or to other compensatory arrangements to the extent
includible on Form S-8, or a registration on Form S-4), the Company shall, at
such time, promptly give each Holder written notice of such registration. Upon
the written request of each Holder given within fifteen (15) days after receipt
by such Holder of such notice by the Company in accordance with Section 15, the
Company shall, subject to Section 2(d), use its best efforts to cause to be
registered under the Securities Act all of the Registrable Securities that each
such Holder has requested to be registered. The Company shall have no obligation
under this Section 2(c) to make any offering of its securities, or to complete
an offering of its securities that it proposes to make, and shall incur no
liability to any Holder for its failure to do so. No registration effected under
this Section 2(c) shall relieve the Company of any of its obligations to effect
registrations under Section 2(a).
(d) In connection with any offering involving an underwriting of shares
being issued by the Company, the Company shall not be required under Section
2(c) to include any Holder's securities in such underwriting unless such Holder
accepts the terms of the underwriting as agreed upon between the Company and the
underwriters selected by the Company, and then only in such quantity as will
not, in the opinion of the underwriters, jeopardize the success of the offering
by the Company; provided, however, that (i) no Holder participating in such
underwriting shall be required to make any
<PAGE>
representations, warranties or indemnities except as they relate to such
Holder's ownership of shares and authority to enter into the underwriting
agreement and such Holder's intended method of distribution, and (ii) the
liability of such Holder shall be limited to an amount equal to the net proceeds
from the offering received by such Holder. If the total amount of securities,
including Registrable Securities, requested by shareholders to be included in
any offering referred to in Section 2(c) exceeds the amount of securities sold
other than by the Company that the underwriters reasonably believe compatible
with the success of the offering, then the Company shall be required to include
in the offering only that number of such securities, including Registrable
Securities, which the underwriters believe will not jeopardize the success of
the offering. The securities so included shall be apportioned pro rata among the
selling shareholders subject to any priority of registration rights heretofore
granted to existing stockholders under the April 9 Agreement (as hereinafter
defined). The Sellers acknowledge that existing shareholders of the Company
owning a substantial number of unregistered shares have registration rights that
are senior to those being granted hereunder and that such rights will not impact
the Sellers" rights under Section 2(a) hereof.
3. Obligations of the Company. Whenever required under this Agreement to effect
the registration of any Registrable Securities, the Company shall at its sole
cost:
(a) Promptly prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective expeditiously, and, upon the
request of the Holders of a majority of the Registrable Securities being
registered thereunder, keep such registration statement effective for up to two
years or until the Holders have completed the distribution referred to in such
registration statement, whichever occurs first (but in any event for at least
any period required under the Securities Act); provided that before filing such
registration statement or any amendments thereto, the Company will furnish to
the Holders copies of all such documents proposed to be filed.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish (at no cost) to the Holders such number of copies of such
registration statement and of each amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus contained
in such registration statement (including each preliminary prospectus and any
summary prospectus) and, one copy of the signed registration statement and any
post-effective amendment thereto, any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the Securities
Act, and such other documents incorporated by reference in the registration
statement and such other documents as Holders may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
<PAGE>
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or "blue sky" laws of
such states or U.S. jurisdictions as shall be reasonably requested by the
Holders and do any and all other acts and things which may be reasonably
necessary to enable each participating Holder to consummate the disposition of
the Registrable Securities owned by it in such jurisdiction; provided that the
Company shall not be required in connection therewith or as a condition thereto
(i) to qualify to do business in any state or jurisdiction where it would not
otherwise be required to qualify but for the requirements of this clause (d), or
(ii) to file a general consent to service of process in any such state or
jurisdiction.
(e) Use its best efforts to cause all Registrable Securities covered by
such registration statement to be, and remain during the period provided in
Section 3(a), registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the Company's business or
operations to enable the Seller or Sellers thereof to consummate the disposition
of such Registrable Securities.
(f) Immediately notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing and if it is necessary to amend or supplement such prospectus to comply
with law, and at the request of any other Holder, prepare and furnish, at no
cost, to such Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of Shares of Common Stock, such prospectus shall not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances then existing, not misleading and so that such
prospectus, as amended or supplemented, will comply with law.
(g) Immediately notify each Holder of Registrable Securities covered by
such registration statement and confirm such advice in writing: (i) when the
registration statement has become effective, (ii) when any post-effective
amendment to the registration statement becomes effective and (iii) of any
request by the SEC for any amendment or supplement to the registration statement
or prospectus or for additional information.
(h) Notify each Holder of Registrable Securities if at any time the SEC
or any state securities commission or other regulatory authority should
institute or threaten to institute any proceedings for the purpose of issuing,
or should issue, a stop order suspending the effectiveness of the Registration
Statement. Upon the occurrence of any of the events mentioned in the preceding
sentence, the Company will use its best efforts to prevent the issuance of any
such stop order or to obtain the withdrawal thereof as soon as possible. The
Company will advise each Holder of Registrable Securities promptly of any order
or communication of any public board or body addressed to the Company suspending
or threatening to suspend the qualification of any Registrable Securities for
sale in any jurisdiction.
<PAGE>
(i) As soon as practicable after the effective date of the registration
statement, and in any event within sixteen (16) months thereafter, have "made
generally available to its security holders" (within the meaning of Rule 158
under the Securities Act) an earning statement (which need not be audited)
covering a period of at least twelve (12) months beginning after the effective
date of the registration statement and otherwise complying with Section 11(a) of
the Securities Act.
(j) Cause all Registrable Securities registered pursuant hereto on a
Registration Statement for resale by a Holder to be listed on each securities
exchange or included for trading in such automated quotation system on or in
which the Shares of Common Stock of the Company are then listed or included.
(k) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereto on a Registration Statement for resale by
a Holder, and a CUSIP number for the Shares of Common Stock, in each case not
later than the effective date of such Registration Statement.
(l) Otherwise use its best efforts in its performance of its
obligations hereunder to comply with all applicable rules and regulations of the
SEC and of state securities commissions and any stock exchange or automated
quotation system.
(m) Deliver promptly, upon request, to any Holder participating in the
offering copies of all correspondence between the SEC and the Company, its
counsel or independent public accountants and all memoranda relating to
discussions with the SEC or its staff with respect to the registration
statement; permit each Holder, counsel and independent public accountants for
each Holder, to participate in the preparation of such registration statement,
each prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto; and give each Holder, and counsel and independent
public accountants for each Holder, access to the Company's books, records,
documents and properties and such opportunities to discuss the business of the
Company with its officers or directors and independent public accountants as
shall be necessary, in the opinion of each Holder and their respective counsel
and independent public accountants, to conduct a reasonable investigation within
the meaning of the Securities Act.
(n) In the event of an underwritten offering (or a shelf offering in
which the items listed in clauses (i) and (ii) below are delivered to any other
selling stockholder), furnish (at no cost), at the request of any Holder
requesting registration of Registrable Securities pursuant to this Agreement, to
each Holder participating in the offering and to each underwriter, (i) on the
date that such Registrable Securities are delivered to the underwriters for sale
in connection with a registration pursuant to this Agreement, an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters and to the
Holders participating in such offering and (ii) on the date that the
registration statement with respect to such securities becomes effective, a
"comfort" letter dated such date, from the independent certified public
accountants of the Company, in form
<PAGE>
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters and to the Holders participating in such offering, and a
reaffirmation of such letter on the date that such Registrable Securities are
delivered to the underwriters for sale.
(o) Solely in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering.
4. Holder Shall Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
5. Expenses of Registration. The Company shall bear and pay all expenses
incurred in connection with any registration, filing or qualification of
Registrable Securities with respect to the registration of Registrable
Securities, including without limitation all registration, filing and
qualification fees, printers' and accounting fees relating or apportionable
thereto, and reasonable fees and expenses of one counsel to the selling
stockholders (selected by the Holders of a majority of the Registrable
Securities being registered), but excluding underwriting discounts and
commissions relating to Registrable Securities.
6. Indemnification. In the event any Registrable Securities are included in a
registration statement under this Agreement:
(a) The Company will indemnify and hold harmless each Holder, its
heirs, personal representatives and assigns, and each of such Holder's partners,
members, stockholders, managers, agents, officers, directors, employees,
affiliates, any underwriter (as defined in the Securities Act) for such Holder
and each Person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon a Violation; and the Company
will pay to each such indemnified party, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage or liability; provided, however, that the
indemnity agreement contained in this Section 6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage or liability if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld or delayed), nor shall the Company be liable in any
such case to a particular indemnified party for any such loss, claim, damage or
liability to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such indemnified
party.
<PAGE>
(b) Each selling Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration
statement, each Person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter, any other Holder selling securities in such
registration statement and any controlling Person of any such underwriter or
other Holder, against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing Persons may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by or on behalf of such Holder expressly for use
in connection with such registration; and each such Holder will pay to each such
indemnified party, as incurred, any legal or other expenses reasonably incurred
by them, in connection with investigating or defending any such loss, claim,
damage or liability; provided, however, that the indemnity agreement contained
in this Section 6(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage or liability if such settlement is effected without the
consent of the Holder (which consent shall not be unreasonably withheld or
delayed); and provided, further, that, in no event shall the liability of any
Holder under this Section 6(b) exceed the net proceeds from the offering
received by such Holder; and provided, further, that the indemnity agreement
contained in this paragraph shall not apply in the case of a sale directly by
the Company of its securities (including a sale of such securities through any
lead institution or underwriter retained by the Company to engage in a
distribution solely on behalf of the Company) in which an untrue statement or
omission or alleged untrue state or omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus, and the Company or
such lead institution or underwriter failed to deliver a copy of the final or
amended prospectus at or prior to the sale of the Registrable Securities.
(c) Each Holder shall severally, and not jointly, indemnify, defend and
hold harmless the Company and its affiliates (including Cloop Acquisition Corp.
and Music Marketing Network Inc.), promptly upon demand at any time and from
time to time, against any and all losses, liabilities, claims, actions, damages
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements), arising out of or in connection with any misrepresentation or
breach of any warranty made by such Holder herein.
(d) Promptly after receipt by an indemnified party under this Section 6
of written notice of the commencement of any action (including any governmental
action) involving a claim referred to in Section 6(a), 6(b) or 6(c) of this
Agreement, such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party
<PAGE>
would be inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the indemnified party under
this Section 6 except if, and only to the extent that, the indemnifying party is
actually prejudiced thereby; and such failure to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 6. The indemnifying party
will not, without the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not such indemnified party or any Person who
controls such indemnified party is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability arising out
of such claim, action suit, or proceeding and such settlement, compromise or
consent involves only the payment of money and such money is actually paid by
the indemnifying party. Whether or not the defense of any claim or action is
assumed by the indemnifying party, such indemnifying party will not be subject
to any liability for any settlement made without its consent, which consent will
not be unreasonably withheld or delayed.
(d) The obligations of the Company and Holders under this Section 6
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
(e) Any indemnity agreements contained herein shall be in addition to
any other rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract and shall remain operative and in full
force and effect regardless of any investigation made or omitted by or on behalf
of any indemnified party.
(f) With respect to the indemnity in Section 6(a) and 6(b), if for any
reason such indemnity is unavailable, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages, liabilities or expenses (i) in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or
provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by or on behalf of the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the
<PAGE>
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything to the
contrary in this Section 6, no Holder shall be required, pursuant to this
Section 6, to contribute any amount in excess of the net proceeds received by
such indemnifying party from the sale of Shares of Common Stock in the offering
to which the losses, claims, damages, liabilities or expenses of the indemnified
party relate, nor shall any Holder be required to contribute any amounts in
excess of the amount such Holder would have been required to pay to an
indemnified party if the indemnity under Section 6(b) of this Agreement were
available.
7. Reports Under the Exchange Act. With a view to making available to the
Holders the benefits of Rule 144 under the Securities Act, as such rule may from
time to time be amended, and any other rule or regulation now or hereafter
adopted by the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration
statement, the Company agrees at its sole cost to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration statement filed by the Company for
the offering of its securities to the general public;
(b) take such action as is necessary to enable the Holders to utilize a
registration statement for the resale of their Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144 under the Securities
Act (at any time after the effective date of the first registration statement
filed by the Company) and the Securities Act and Exchange Act (at any time after
it has become subject to such reporting requirements) or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time it
so qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.
8. Assignment of Registration Rights. The rights contained herein may be
assigned in whole or in part by a Holder to one or more of its partners,
employees or affiliates or to one or more transferees or assignees of
Registrable Securities (or securities exchangeable into Registrable Securities)
acquired by the Holder, provided that such transferee or assignee delivers to
the Company a written instrument by which such transferee or assignee agrees to
be bound by the obligations imposed on Holders under this Agreement to the same
extent as if such transferee or assignee was a party hereto.
<PAGE>
9. Resale Restrictions.
(a) During the period of twenty (20) months from the date of this
Agreement, each Seller severally agrees that it will not Dispose of any Shares
(whether registered or unregistered), commencing on any date specified by the
Company (the "Commencement Date") following the filing by the Company of a
preliminary registration statement for a registered public offering managed by
nationally recognized underwriters and ending (x) 30 days after the Commencement
Date if the registration statement is not declared effective by the SEC on or
prior to such 30th day, or (y) if the registration statement is declared
effective by the SEC on, or within thirty days after the Commencement Date, a
period not to exceed 90 days following the effective date of the registration
statement, if required by the underwriters of the public offering and all
directors and officers of the Company have been prohibited from Disposing the
Company's common stock held by them for a period of at least 90 days following
the effective date of the registration statement and provided that the
restriction set forth in this Section 9(a) shall not apply to any Disposition of
Shares pursuant to the subject registered public offering if such shares are
registered pursuant to Section 2(c) hereof.
(b) In addition to the restriction in Section 9(a), each Non-Management
Holder agrees not to Dispose of any Shares except in accordance with the
following schedule:
Max. % of original
number of Shares of
each Holder that may be
# of Months After Disposed of Prior to
the Date Hereof End of Period
----------------- -----------------------
6 33%
7 44%
8 56%
9 67%
10 78%
11 89%
12 100%
(c) In addition to the restriction in Section 9(a), each Management
Holder agrees not to Dispose of any Shares except in accordance with the
following schedule:
<PAGE>
Max. % of original
number of Shares of
each Holder that may be
# of Months After Disposed of Prior to
the Date Hereof End of Period
----------------- -----------------------
12 40%
13 47.5%
14 55%
15 62.5%
16 70%
17 77.5%
18 85.0%
19 92.5%
20 100.0%
10. Amendment; Waiver. Any provision of this Agreement may be amended only with
the written consent of the Company and each of the Holders and the observance of
any provision of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the party to be charged, provided that the Holders of 60% of
the Registrable Securities then outstanding may act on behalf of all such
Holders of Registrable Securities; provided, however, that no amendment or
waiver shall affect the rights of a Holder under Section 2 or the obligations of
a Holder under Section 6(c) or Section 9 or the representations or warranties of
a Holder under Section 26 without the consent of such Holder. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Holder of Registrable Securities at the time outstanding, each future Holder of
all such securities, and the Company.
11. Changes in Registrable Securities. If, and as often as, there are any
changes in the Registrable Securities, by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions of this Agreement, as may be
required, so that the rights and privileges granted hereby shall continue with
respect to the Registrable Securities as so changed. Without limiting the
generality of the foregoing, the Company will require any successor by merger or
consolidation to assume and agree to be bound by the terms of this Agreement, as
a condition to any such merger or consolidation, provided, however, that the
restrictions in Section 9 hereof shall no longer be applicable upon such a
merger or consolidation of the Company.
12. Entire Agreement Effectiveness of Agreement. This Agreement (together with
the Merger Agreement) constitutes the full and entire understanding and
agreement among the parties with regard to the subject matter hereof. Nothing in
this Agreement, express or implied, is intended to confer upon any Person, other
than the parties hereto and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein. Notwithstanding the foregoing, this
Agreement shall not grant a Holder any
<PAGE>
rights until such Holder has delivered to the Company a copy of the Escrow
Indemnity Agreement, dated the date hereof, among the Company, the stockholders
named therein, Music Marketing Network Inc. and The Bank of New York, executed
by such Holder.
13. Governing Law. This Agreement shall be governed in all respects by the laws
of the State of New York as such laws are applied to agreements between New York
residents entered into and to be performed entirely within New York, whether or
not all parties hereto are residents of New York.
14. Successors and Assigns. The provisions hereof shall inure to the benefit of,
and be binding upon, the successors, permitted assigns (as provided in Section
8), heirs, executors and administrators of the parties hereto.
15. Notices. All notices and other communications provided for herein shall be
dated and in writing and shall be deemed to have been duly given (i) on the date
of delivery, if delivered personally or by telecopier, receipt confirmed; (ii)
on the second following business day, if delivered by a recognized overnight
courier service; or (iii) seven days after mailing, if sent by registered or
certified mail, return receipt requested, postage prepaid, in each case, to the
party to whom it is directed at the following address (or at such other address
as any party hereto shall hereafter specify by notice in writing to the other
parties hereto):
(i) If to the Company, to it at the following address:
24/7 Media, Inc.
1250 Broadway, 28th fl
New York, NY 10001
Attn: General Counsel
Fax: (212) 760-2811
(ii) If to a Seller, to it at the address for such Seller set forth on the
signature pages hereto.
16. Severability. Any invalidity, illegality or limitation on the enforceability
of this Agreement or any part thereof, by any party, whether arising by reason
of the law of the respective party's domicile or otherwise, shall in no way
affect or impair the validity, legality or enforceability of this Agreement with
respect to the other party. If any provision of this Agreement shall be
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
17. Titles and Subtitles. The titles of the Sections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
18. Delays or Omissions; Remedies Cumulative. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to the parties, upon
any breach or default of the Company under this Agreement, shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of any similar breach or
default thereafter occurring; nor shall any waiver
<PAGE>
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character by a party of any
breach or default under this Agreement, or any waiver by a party of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in writing and that all
remedies, either under this Agreement, or by law or otherwise afforded to a
party, shall be cumulative and not alternative.
19. Attorneys' Fees. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorney's fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
20. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
21. Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
22. Remedies. In the event of a breach by any party to this Agreement of its
obligations under this Agreement, any party injured by such breach, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages and costs (including reasonable attorneys' fees), will be entitled to
specific performance of its rights under this Agreement. The parties agree that
the provisions of this Agreement shall be specifically enforceable without the
posting of a bond or other security and without proof of actual damages, it
being agreed by the parties that the remedy at law, including monetary damages,
for breach of any such provision will be inadequate compensation for any loss
and that any defense in any action for specific performance that a remedy at law
would be adequate is waived.
23. Recapitalizations, Exchanges, Etc. The provisions of this Agreement shall
apply, to the full extent set forth herein, to any and all shares of the Company
capital stock or any successor or assign of the Company (whether by merger,
consolidation, sale of assets, or otherwise, including shares issued by a parent
corporation in connection with a triangular merger) which may be issued in
respect of, in exchange for or in substitution of, shares of Common Stock, and
shall be appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, reclassifications and the like occurring after the date hereof.
24. No Inconsistent Agreements. The Company will not on or after the date of
this Agreement enter into any (i) agreement with respect to its securities which
is inconsistent with the rights granted to the Holders of Registrable Securities
in this Agreement or which otherwise conflicts with the provisions hereof or
(ii) agreement with respect to the registration and
<PAGE>
right to resell its securities which is superior to the terms of this Agreement.
It is acknowledged and understood that the Company has granted demand
registration rights and piggyback registration rights to holders of a
substantial number of shares of Common Stock, pursuant to a registration rights
agreement dated April 9, 1998 (the "April 9 Agreement") which has been publicly
filed with the SEC, that the Company is actively discussing other acquisitions
and that in October 1999, the Company may register the resale of its securities
by a substantial number of holders other than the Sellers.
25. Expenses and Taxes. The Company will pay, and save each Holder harmless from
any and all liabilities (including interest and penalties) with respect to, or
resulting from, any delay or failure in paying, stamp and other taxes (other
than income taxes), if any, which may be payable or determined to be payable
upon the execution and delivery of this Agreement.
26. Representations and Warranties of Holders. Each of the Holders
severally, and not jointly, represents and warrants to the Company as
follows:
Securities Act Compliance .
(i) Such Holder understands that the Shares have not been registered
under the Securities Act or any state law, rule or regulation and are being
acquired under an exemption from registration under the Securities Act and,
therefore, such Shares cannot be resold without such registration under the
Securities Act or an exemption from such registration requirement.
(ii) Such Holder represents that he or it either (A) is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act or (B) has such knowledge and experience in financial and
business matters that he or it is capable of evaluating the merits and risks of
his or its prospective investment in the Shares. Such Holder has had the
opportunity to examine all documents, including the Merger Agreement and the
24/7 SEC Reports (as defined in the Merger Agreement), and to ask questions of
and to receive answers from the Company concerning the terms and conditions of
the Merger Agreement, and to obtain any additional information necessary to
verify the accuracy of any information given to the extent the Company possesses
such information or can acquire it without unreasonable effort or expense.
(iii) Such Holder represents that he or it is acquiring the Shares
solely for his or its own account for investment purposes only and not with a
view to or in connection with any resale or distribution thereof, except in
accordance with the Securities Act.
1 Legends .
(i) Such Holder understands that the certificates evidencing the Shares
will bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE SECURITIES ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER."
(ii) The certificates evidencing the Shares shall not be required to
bear such legend if an opinion of counsel reasonably satisfactory to the Company
is delivered to the Company to the effect that neither the legend nor the
restrictions on transfer contained in this Agreement or the Merger Agreement are
required to insure compliance with the Securities Act. The Company will bear the
reasonable costs and expenses in connection with such opinion where such opinion
relates to compliance with Rule 144 under the Securities Act. Whenever, pursuant
to the preceding sentence, any certificate is no longer required to bear the
foregoing legend, the Company may, and if requested by the Holder thereof,
shall, issue to the Holder, at the Company's expense, a new certificate not
bearing the foregoing legend; provided, however, a new certificate not bearing
the foregoing legend shall be issued to the Holders upon the effectiveness of a
registration statement covering the resale of the Shares.
1 Brokers. Such Holder represents that he or it has had no dealings with any
broker or finder in connection with the transactions contemplated by the Merger
Agreement.
<PAGE>
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.
24/7 MEDIA, INC.
By: /s/ Mark E. Moran
----------------------------
Name: Mark E .Moran
Title: Senior Vice President
SELLERS:
360 CAPITAL CORPORATION
c/o Experian
955 American Lane
Schaumburg, Illinois 60173
By: /s/ Jim Antal
----------------------------
Name: Jim Antal
Title: President
MEZZANINE FINANCIAL FUND, L.P.
Coast Capital Building
1011 Highway 71, Suite 200
Spring Lake, NJ 07762
By: /s/ Walter M. Craig Jr
----------------------------
Name: Walter M. Craig, Jr.
Title: Managing General Partner
/s/ Paul Chachko
- --------------------------------
Paul Chachko
611 Seven Bridges Road
Little Silver, NJ 07739
/s/ Robert Skoro
- --------------------------------
Robert Skoro
5320 Caminito Exquisito
San Diego, CA 92130
/s/ John Mazzacco
- --------------------------------
John Mazzacco
410 West 53rd Street, Apt. 606
New York, NY 10019
/s/ Ravi Yadav
- --------------------------------
Ravi Yadav
8 Gramercy Park, Apt. 6A
New York, NY 10003
/s/ Troy Scheer
- --------------------------------
Troy Scheer
29 West 8th Street, Apt. 3R
New York, NY 10011
<PAGE>
Exhibit 23.2
Independent Auditors' Consent
The Board of Directors
24/7 Media, Inc.:
We consent to use of our reports incorporated herein by reference and to the
reference to our to firm under the heading "Experts" in the registration
statement.
/s/ KPMG LLP
New York, New York
October 25, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our
report dated September 9, 1999 on the Music Marketing Network, Inc. financial
statements and to all references to our Firm included in or made part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
October 28, 1999
