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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
</TABLE>
24/7 MEDIA, INC.
------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
-------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction
applies:
------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid:
-----------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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</TABLE>
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24/7 MEDIA, INC.
1250 BROADWAY
NEW YORK, NEW YORK 10001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of 24/7 Media, Inc. will be held at the
offices of Proskauer Rose LLP, 1585 Broadway, 26th floor, New York, New York
10036 on Thursday, September 7, 2000, at 10:00 a.m., local time, for the
following purposes:
- to elect two nominees as our Class II directors to serve until the 2003
annual meeting of stockholders or until their respective successors shall
have been duly elected and qualified;
- to amend our 1998 Stock Incentive Plan to increase the number of shares
that may be subject to awards thereunder by 1,750,000, and to provide for
an automatic annual increase in such number of shares by an amount equal
to three percent (3%) of the total number of shares of Common Stock
outstanding on the last trading day of the immediately preceding calendar
year, provided that no such automatic increase will exceed 1,750,000;
- to ratify the appointment of KPMG LLP as our independent certified public
accountants for the fiscal year ending December 31, 2000; and
- to transact any such other business as may properly come before the
meeting and at any adjournment thereof; and
Our Board of Directors has fixed the close of business on July 20, 2000 as
the record date for determining stockholders entitled to notice of, and to vote
at, the meeting. Only stockholders of record at the close of business on
July 20, 2000 will be entitled to notice of, and to vote at, the annual meeting.
A list of stockholders eligible to vote at the meeting will be available for
inspection at the meeting and for a period of ten days prior to the meeting
during regular business hours at our corporate headquarters at the address
above.
All of our stockholders are cordially invited to attend the meeting in
person. Whether or not you expect to attend the annual meeting, your proxy vote
is important. To assure your representation at the meeting, please sign and date
the enclosed proxy card and return it promptly in the enclosed envelope, which
requires no additional postage if mailed in the United States or Canada. Should
you receive more than one proxy because your shares are registered in different
names and addresses, each proxy should be signed and returned to assure that all
your shares will be voted. You may revoke your proxy at any time prior to the
annual meeting. If you attend the meeting and vote by ballot, your proxy will be
revoked automatically and only your vote at the meeting will be counted.
YOUR VOTE IS IMPORTANT
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<TABLE>
<S> <C> <C>
By order of the Board of Directors,
/s/ DAVID J. MOORE
DAVID J. MOORE
President and Chief Executive Officer
</TABLE>
August 1, 2000
<PAGE>
24/7 Media, Inc.
1250 Broadway
New York, New York 10001
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to the stockholders of 24/7 Media, Inc., a
Delaware corporation, in connection with the solicitation of proxies by our
Board of Directors for use at our annual meeting of stockholders to be held at
10:00 a.m. (New York time) on September 7, 2000, and at any adjournment thereof.
A copy of the notice of meeting accompanies this Proxy Statement. It is
anticipated that the mailing of this Proxy Statement will commence on or about
August 1, 2000.
Only stockholders of record at the close of business on July 20, 2000, the
record date for the meeting, will be entitled to notice of and to vote at the
meeting. On the record date, we had outstanding 35,565,797 shares of common
stock, par value $.01 per share, which are our securities entitled to vote at
the stockholders meeting, each share being entitled to one vote.
PROPOSALS FOR CONSIDERATION
Our Board of Directors does not know of any matter that is expected to be
presented for consideration at the meeting, other than:
- to elect two Class II directors to serve until the 2003 annual meeting of
stockholders or until their respective successors shall have been duly
elected and qualified;
- to amend our 1998 Stock Incentive Plan to increase the number of shares
that may be subject to awards thereunder by 1,750,000, and to provide for
an automatic annual increase in such number of shares by an amount equal
to three percent (3%) of the total number of shares of Common Stock
outstanding on the last trading day of the immediately preceding calendar
year, provided that no such automatic increase will exceed 1,750,000; and
- to ratify the appointment of KPMG LLP as our independent certified public
accountants for the fiscal year ending December 31, 2000.
However, if other matters properly come before the meeting, the persons
named in the accompanying proxy intend to vote thereon in accordance with their
judgment.
COSTS OF PROXIES
We will incur the cost of the annual meeting and the cost of soliciting
proxies. In addition to solicitation by mail, our directors, officers, and
regular employees (who will not be specifically compensated for such services)
may solicit proxies by telephone or otherwise. Arrangements will be made with
brokerage houses and other custodians, nominees, and fiduciaries to forward
proxies and proxy material to their principals, and we will reimburse them for
their expenses.
VOTING RIGHTS AND PROXIES
Stockholders who execute proxies may revoke them by giving written notice to
our Chief Executive Officer at any time before such proxies are voted.
Attendance at the meeting shall not have the effect of revoking a proxy unless
the stockholder so attending shall, in writing, so notify the Secretary of the
meeting at any time prior to the voting of the proxy at the annual meeting.
All proxies received pursuant to this solicitation will be voted except as
to matters where authority to vote is specifically withheld and, where a choice
is specified as to the proposal, they will be voted in accordance with such
specification. If no instructions are given, the persons named in the proxy
solicited by our Board of Directors intend to vote:
- FOR the nominees for election as Class II directors listed herein,
<PAGE>
- FOR the approval of the amendments to our 1998 Stock Incentive Plan, and
- FOR the ratification of the appointment of KPMG LLP as our independent
certified public accountants for the fiscal year ending December 31, 2000.
With regard to the election of directors, votes cast may be withheld from
each nominee; votes that are withheld will be excluded entirely from the vote
and will have no effect. Abstentions may be specified on all proposals except
the election of directors, and will be counted as present for purposes of
determining the existence of a quorum regarding the item on which the abstention
is noted.
Pursuant to the NASD Rules of Fair Practice, brokers who hold shares in
street name have the authority, in limited circumstances, to vote on certain
items when they have not received instructions from beneficial owners. A broker
will only have such authority if (i) the broker holds the shares as executor,
administrator, guardian, trustee, or in similar representative or fiduciary
capacity with authority to vote or (ii) the broker is acting pursuant to the
rules of any national securities exchange of which the broker is also a member.
Broker abstentions or non-votes will be counted for purposes of determining the
presence or absence of a quorum at the meeting. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders, but broker
non-votes are not counted for purposes of determining whether a proposal has
been approved.
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PROPOSAL ONE:
ELECTION OF DIRECTORS
In accordance with the terms of our Certificate of Incorporation, our Board
of Directors has been divided into three classes, denominated Class I, Class II
and Class III, with members of each class holding office for staggered
three-year terms. At each annual meeting of our stockholders, the successors to
the Directors whose terms expire are elected to serve from the time of their
election and qualification until the third annual meeting of stockholders
following their election or until a successor has been duly elected and
qualified. The affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy and entitled to vote on the election
of directors at our annual meeting is required to elect the Class II Directors
named herein.
The Board of Directors currently has eight members. R. Theodore Ammon, Jacob
I. Friesel, and David J. Moore are Class I Directors whose terms expire at the
2002 annual meeting. John F. Barry and Adam Goldman are Class II Directors whose
terms expire at the 2000 annual meeting and are each a nominee for election.
Arnie Semsky, Charles W. Stryker and Linda Fayne Levinson are Class III
Directors whose terms expire at the 2001 annual meeting (in all cases subject to
the election and qualification of their successors or to their earlier death,
resignation or removal).
If any nominee is unable or unwilling to serve, the shares to be voted for
such nominee that are represented by proxies will be voted for any substitute
nominee designated by our Board of Directors; if none, the size of the Board of
Directors will be reduced. We have no reason to believe that the nominees will
be unable or unwilling to serve if elected. There are no family relationships
between any of the directors and executive officers of 24/7 Media.
OUR BOARD RECOMMENDS THAT YOU, AS STOCKHOLDERS, VOTE "FOR" THE ELECTION OF
MESSRS. BARRY AND GOLDMAN AS DIRECTORS UNTIL THE 2003 ANNUAL MEETING.
DIRECTOR INFORMATION
The following provides information about each nominee and continuing
director, including data on their business backgrounds and the names of public
companies and other selected entities for which they also serve as directors.
The persons named below have served as directors during the fiscal year ended
December 31, 1999, except for Mr. Goldman and Ms. Levinson who joined the Board
of Directors following our acquisition of Exactis.com on June 28, 2000. The
information concerning the directors and their security holdings has been
furnished to us by each director.
CLASS I DIRECTORS--CONTINUING IN OFFICE UNTIL 2002
DAVID J. MOORE has been our President and Chief Executive Officer and a
Director since February 1998. Mr. Moore was President of Petry
Interactive, Inc. from December 1995 to February 1998. From 1993 to 1994,
Mr. Moore was President of Geomedica, an online service for physicians, which he
sold to Reuters. From 1982 to 1992, Mr. Moore was a Group Vice President at
Hearst/ABC-Viacom Entertainment Services, where he participated in the launch of
Cable Health Network, Lifetime Television, Lifetime Medical Television, a
service targeted to physicians, and HealthLink Television, a physician waiting
room television service. From 1980 to 1982, Mr. Moore had a television
advertising sales position with Turner Broadcasting. Mr. Moore received a B.A.
degree in Communications from Northern Illinois University.
R. THEODORE AMMON, our Chairman of the Board, is the founder and Chairman of
the Board of Big Flower Holdings, Inc. since its inception in 1993. From 1990 to
1992, Mr. Ammon was a General Partner of Kohlberg Kravis Roberts & Co., a New
York and San Francisco-based investment firm, and he was an executive of such
firm prior to 1990. Mr. Ammon also serves on the board of directors of Host
Marriott Corporation and CAIS Internet, Inc. and serves on numerous boards of
privately held
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<PAGE>
companies. Mr. Ammon is involved in a number of not-for-profit organizations,
including as a member of the Board of Directors of the Municipal Art Society of
New York, The New York YMCA, Jazz@LincolnCenter, and the Board of Trustees of
Bucknell University. Mr. Ammon received a B.A. degree in Economics from Bucknell
University.
JACOB I. FRIESEL has been our Executive Vice President--Sales and a Director
since February 1998. From 1997 to 1998, Mr. Friesel was President of Katz
Millennium Marketing, the Internet media sales division of Katz Media
Group, Inc. He was Vice President, Strategic Planning for the Katz Television
Group from 1994 to 1997. From 1993 to 1994, he was a Vice President and General
Sales Manager of Katz American Television, a leading advertising representative
of major market television stations. He was Vice President, General Sales
Manager of Katz Continental Television from 1991 through 1993, and was employed
in various media advertising sales and management positions with the Katz Agency
from 1976 to 1991. Mr. Friesel received a B.A. degree in Mass Communications
from the City University of New York.
CLASS II DIRECTORS--TO BE ELECTED THIS YEAR
JOHN F. BARRY III, a Director, is presently the Managing General Partner of
Prospect Street Ventures, a private equity and venture capital firm, which he
joined in 1990. From 1988 to 1989, he was the head of investment banking at L.F.
Rothschild & Co. From 1983 to 1988, he was a corporate finance specialist at
Merrill Lynch and from 1979 to 1983, he was a securities attorney with Davis
Polk & Wardwell. Mr. Barry serves on the boards of directors of nine information
technology companies, including Skyline Multimedia, Inc. Mr. Barry is also the
chairman of Bondnet Trading Systems, Inc. Mr. Barry received a J.D. degree from
Harvard Law School and a B.A. degree in History from Princeton University.
ADAM GOLDMAN, a Director, served as a director of Exactis.com since
March 1996 and as chairman of the board of Exactis.com, Inc. since
January 1999. Mr. Goldman is a general partner of Centennial Fund IV, LP and
Centennial Fund V, LP, and is a managing principal of Centennial Fund VI, LLC.
Centennial Ventures manages over $750 million in private equity and specializes
in communication, media and technology investments. Mr. Goldman also serves on
the boards of VIA Net.Works, an Internet service provider. Mr. Goldman is a
senior vice president of Centennial Holdings, Inc., a venture capital investment
company, which he joined in 1992. Mr. Goldman received a B.A. from Northwestern
University and an M.M. from the J.L. Kellogg Graduate School of Management at
Northwestern University.
CLASS III DIRECTORS--TO CONTINUE IN OFFICE UNTIL 2001
ARNIE SEMSKY, a Director, has been self-employed as a media advisor since
January 1999. He previously served as the Executive Vice President, Worldwide
Media Director of the BBDO Worldwide unit of Omnicom Group for twenty years.
Prior to that he was Vice President, National Television for Grey Advertising.
Mr. Semsky is a Senior Advisor for ESPN and The ESPN/ABC Sports Customer
Marketing and Sales unit. Mr. Semsky currently serves on the Board of Directors
of iPing.com and the John A. Reisenbach Foundation. He is on the Board of
advisors of several Internet companies, including, Breakthrough Commerce, LLC,
BrandEra.com, On2.com and CoolHunter.com. Mr. Semsky received a B.A. degree in
English from Pace University.
CHARLES W. STRYKER, PH.D., a Director, is the President of Naviant, Inc.
Naviant's business is focus on providing information that will enable marketers
to precisely target their customers and prospects in both the physical and
on-line worlds. Dr. Stryker served as President of IQ2.net and Zona, both
subsidiaries of IntelliQuest Information Group Inc. from October 1997 to
November 1999. From 1991 to 1997, he was President and CEO of Information
Technology Forum, Inc., a management consulting firm specializing in the
development of content based electronic products and services. During this
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<PAGE>
period, he was also the founder and Executive Director of the MkIS User Forum.
The Forum is an international trade group composed of executives responsible for
design and implementation of their corporate marketing systems. Dr. Stryker
received a B.S. degree and a M.S. degree in Electrical Engineering and a Ph.D.
in Computer Science from New York University.
LINDA FAYNE LEVINSON, a Director, has served as a director of
Exactis.com, Inc. since July 1998. Ms. Levinson is a partner of Global Retail
Partners, L.P., a private equity investment fund, where she has been since
April 1997. From 1994 to 1997, she served as the president of Fayne Levinson
Associates, a senior management consulting firm. During 1993, Ms. Levinson
served as an executive at Creative Arts Agency, Inc., a talent agency. Prior to
that, Ms. Levinson was a partner at Alfred Checchi Associates, Inc., a merchant
banking firm; a senior vice president of American Express Travel Related
Services Company, Inc.; and a partner at McKinsey & Co., a global consulting
firm. She is a director of NCR Corporation, Administaff, Inc., Jacobs
Engineering Group Inc., GoTo.com, Inc., CyberSource, Inc. and
Lastminute.com, Inc. plc. Ms. Levinson received an A.B. from Barnard College, an
M.A. from Harvard University and an M.B.A. from New York University.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE. The Audit Committee, composed of Messrs. Ammon, Semsky and
Barry, who qualify as outside directors under Section 162(m) of the Code and as
non-employee directors under Rule 16b-3(c) of the Exchange Act, does the
following:
- makes recommendations concerning the engagement of independent public
accountants;
- reviews with the independent public accountants the plans and results of
the audit engagement;
- approves professional services provided by the independent public
accountants;
- reviews the independence of the independent public accountants;
- considers the range of audit and non-audit fees; and
- reviews the adequacy of our internal accounting controls.
COMPENSATION COMMITTEE. The compensation committee, composed of
Messrs. Ammon, Barry and Stryker, who qualify as outside directors under
Section 162(m) of the Code and as non-employee directors under Rule 16b-3(c) of
the Exchange Act, does the following:
- approves the salaries and other benefits of our executive officers and
administers any of our non-stock based bonus or incentive compensation
plans, excluding any cash awards intended to qualify for the exception for
performance-based compensation under Section 162(m) of the Code;
- consults with management regarding our pension and other benefit plans,
and compensation policies and practices;
- administers our stock-based incentive plans, including the 1998 Stock
Incentive Plan; and
- grants any cash awards intended to qualify for the exception for
performance-based compensation under Section 162(m) of the Code.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are R. Theodore Ammon,
John F. Barry and Charles W. Stryker. Each of Messrs. Ammon, Barry and Stryker
are independent, outside directors of 24/7 Media. Except for David J. Moore,
none of our executive officers serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
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<PAGE>
serving as a member of our Board of Directors or Compensation Committee. David
J. Moore serves as a director on the board of directors of Naviant, Inc., of
which Mr. Stryker is president.
COMPENSATION OF DIRECTORS
Directors do not receive salaries or cash fees for serving as directors or
for serving on committees. All members of the Board of Directors who are not
employees or consultants are reimbursed for their expenses for each meeting
attended and are eligible to receive stock options pursuant to our 1998 Stock
Incentive Plan. Under our 1998 Stock Incentive Plan, in 1998 each existing
non-employee director was granted an option to purchase 18,750 shares of common
stock at the fair market value on the date of grant, and each new non-employee
director will be granted an option to purchase 18,750 shares of common stock at
the fair market value on the date of grant. On June 8, 1999, each non-employee
director was granted an option to purchase 4,688 shares of common stock at a
fair market value on the date of the grant. Upon the date of each annual
stockholders' meeting, each existing non-employee director shall be granted an
option to purchase 4,688 shares of common stock, or a pro rata portion thereof
if the director did not serve the entire year since the date of the last annual
meeting. All options granted to non-employee directors will vest at the rate of
25% on each of the first four anniversaries of the date of grant, assuming the
non-employee director is a director on those dates, and all such options
generally will be exercisable for a period of ten years from the date of grant.
MANAGEMENT
The following table provides information concerning our executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES
---- -------- ------------------------------------------
<S> <C> <C>
David J. Moore............................ 47 President and Chief Executive Officer and
a Director
Jacob I. Friesel.......................... 50 Executive Vice President--Sales and a
Director
C. Andrew Johns........................... 40 Executive Vice President, Treasurer and
Chief Financial Officer
</TABLE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
C. ANDREW JOHNS has been our Executive Vice President, Treasurer and Chief
Financial Officer since April 1998. From 1996 to 1998, he was co-founder and
Managing Director of Manufacturers Renaissance Network, Inc., which provides
strategic consulting and investment banking services to small and medium-sized
businesses. From 1990 to 1996, Mr. Johns was President and owner of Strathmore
Hill Associates, Inc., an investment banking and strategic consulting firm.
Mr. Johns received a M.B.A. degree from Stanford University Graduate School of
Business and a B.S. degree in Commerce from The University of Virginia.
Mr. Johns is a Chartered Financial Analyst.
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
We have entered into employment agreements with our executive officers
providing for annual compensation in excess of $100,000. The material terms of
such employment agreements generally are as follows:
- the employment term runs through December 31, 2000, except as stated below
and is automatically renewable for successive one-year terms unless either
party gives written notice to the other at least six months prior to the
expiration of the then employment term;
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- during the employment term and thereafter, we will indemnify the executive
to the fullest extent permitted by law, in connection with any claim
against such executive as a result of such executive serving as one of our
officers or directors or in any capacity at our request in or with regard
to any other entity, employee benefit plan or enterprise;
- any dispute or controversy arising under or in connection with the
employment agreement (other than injunctive relief) shall be settled
exclusively by arbitration;
- we may terminate the agreement at any time with or without cause (as
defined in the agreement) and, if an executive is terminated without cause
(including our giving notice of non-renewal), he will receive severance
pay in an amount generally equal to six months' base salary and bonus,
plus continued medical benefits for a period equal to the severance period
as well as acceleration of outstanding options; and
- if termination is the result of the executive's death or disability, we
will pay to the executive or his estate an amount generally equal to six
months' base salary at his then current rate of pay (reduced in the case
of disability by his long-term disability policy payments).
The agreement of David J. Moore extends through January 1, 2001.
Mr. Moore's agreement provides for an annual base salary of $225,000 and a
target bonus of $325,000 for 2000. In 1998, Mr. Moore was awarded 56,250 shares
of restricted stock that vest over three years. In connection with this
issuance, we are recognizing $90,000 ratably over the three-year vesting period.
If we terminate Mr. Moore without cause, he is entitled to receive severance pay
in an amount equal to two times base salary, plus the maximum bonus for which he
is eligible during the fiscal year of termination.
The agreements of our other executive officers provide for base salaries
between $150,000 and $200,000 and target incentives, based on attainment of
corporate goals, between $80,000 and $135,500.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides information about the compensation paid or
payable by us for services rendered in all capacities to our Chief Executive
Officer and our other executive officers who earned more than $100,000 for 1999.
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------ -----------------------
OTHER RESTRICTED SECURITIES ALL
NAME AND ANNUAL STOCK UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
------------------ -------- -------- ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David J. Moore........... 1998 $259,137 $343,750 $0 56,250 0 $0
President and 1999 225,000 375,000 0 0 125,000 0
Chief Executive Officer
C. Andrew Johns.......... 1998 105,192(1) 66,706 0 0 62,500 0
Chief Financial 1999 150,000 112,500 0 0 75,000 0
Officer
Jacob I. Friesel......... 1998 153,125(2) 150,391 0 0 0 0
Executive Vice 1999 180,250 164,063 0 0 75,000 0
President
</TABLE>
------------------------
(1) Mr. Johns commenced his employment with us on April 17, 1998.
(2) Mr. Friesel commenced his employment with us on February 24, 1998.
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STOCK OPTIONS
The following table contains information concerning the grant of options
under our 1998 Stock Incentive Plan to each of our executive officers during the
year ended December 31, 1999. We did not grant any stock appreciation rights in
1999.
OPTIONS GRANTED DURING YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------ POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR(2) ($/SHARE) DATE(3) 5% 10%
---- ------------- -------------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David J. Moore............... 125,000 4.7% $28.00 1/1/09 $2,201,131 $5,578,099
Jacob I. Friesel............. 75,000 2.8% $28.00 1/109 $1,320,679 $3,346,859
C. Andrew Johns.............. 75,000 2.8% $28.00 1/1/09 $1,320,679 $3,346,859
</TABLE>
------------------------
(1) All options granted in 1999 were granted pursuant to the 1998 stock
incentive plan. The above grants are exercisable in annual increments of 25%
of the total grant, beginning on the first anniversary of the date of grant.
All options were granted at the fair market value of common stock on the
effective date of grant.
(2) The total number of options granted to directors and employees in 1999 was
2,659,791.
(3) Each option may be subject to earlier termination if the officer's
employment with us is terminated.
The following table provides information for each of our executive officers
with respect to the value of options exercised during the year ended
December 31, 1999 and the value of outstanding and unexercised options held as
of December 31, 1999. There were no stock appreciation rights exercised during
1999 and none were outstanding as of December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1999 AT DECEMBER 31, 1999(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David J. Moore.................... 0 0 0 125,000 $0 $3,531,250
Jacob Friesel..................... 0 0 0 75,000 0 2,118,750
C. Andrew Johns................... 15,625 $479,266 0 121,875 0 4,567,969
</TABLE>
------------------------
(1) Represents the difference between the closing market price of the common
stock as reported by Nasdaq on December 31, 1999 of $56.25 per share and the
exercise price per share of in-the-money options multiplied by the number of
shares underlying the in-the-money options.
Compliance with Section 16(a) of the Securities Exchange Act of 1934 Under
the securities laws of the United States, our directors, executive officers, and
any persons holding more than 10 percent of our common stock are required to
report their ownership of common stock and any changes in that ownership, on a
timely basis, to the Securities and Exchange Commission. Based on material
provided to us, all such required reports were filed on a timely basis in 1999.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth the beneficial ownership of our Common Stock as
of July 20, 2000 by (i) each director, (ii) each of our named executive officers
(iii) current directors and executive officers as a group, and (iv) all persons
known by the Board of Directors to be beneficial owners of more than five
percent of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNER NUMBER OF SHARES PERCENTAGE(1)
---------------- ---------------- -------------
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS:
David J. Moore(2)(3)........................................ 788,093 2.21%
R. Theodore Ammon(4)........................................ 1,765,938 4.84
Jacob I. Friesel(2)(5)...................................... 527,121 1.48
C. Andrew Johns(2)(6)....................................... 45,750 0.13
John F. Barry III(7)........................................ 1,765,937 4.84
Arnie Semsky(8)............................................. 15,234 *
Charles W. Stryker(9)....................................... 9,375 *
Linda Fayne Levinson(10).................................... 559,691 1.57
Adam Goldman(11)............................................ 0 *
ALL DIRECTORS AND OFFICERS AS A GROUP(8 PERSONS)............ 4,917,450 13.83
OTHER 5% STOCKHOLDERS:
The Travelers Insurance Company(12)....................... 1,817,415 5.08
</TABLE>
------------------------
*Represents less than 1% of the outstanding common stock.
(1) Applicable percentage ownership is based on 35,565,797 shares of Common
Stock outstanding as of July 10, 2000. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities,
subject to community property laws, where applicable. Shares of Common Stock
subject to options or warrants that are exercisable within 60 days of
July 10, 2000, and beneficially owned by the person holding such options and
warrants are treated as outstanding for the purpose of computing the
percentage ownership for such person, but are not treated as outstanding for
the purpose of computing the percentage ownership of any other person.
(2) The address of Messrs. Moore, Friesel, Johns and Semsky is c/o 24/7
Media, Inc., 1250 Broadway, New York, New York 10001.
(3) Includes 18,750 unvested shares of Common Stock issued pursuant to the 1998
Stock Incentive Plan and subject to forfeiture pursuant thereto. Includes
options to acquire 31,250 shares and 244,505 shares held by a family trust
and other trusts held for the benefit of family members, beneficial
ownership of which is disclaimed by Mr. Moore. Mr. Moore's wife is the
trustee of each such trust.
(4) Represents 875,351 shares, Class A warrants to purchase 437,676 shares and
Class B warrants to purchase 437,676 shares held by Big Flower
Holdings, Inc. Mr. Ammon is the Chairman of the board of directors of Big
Flower Holdings, Inc. Mr. Ammon owns 1,000 shares of our common stock and
options to purchase 15,235shares of common stock in his individual capacity
and expressly disclaims beneficial ownership of the shares held by Big
Flower Holdings, Inc. The address of Big Flower Holdings, Inc. is c/o Big
Flower Holdings, Inc., 3 East 54th Street, New York, New York 10022.
(5) Includes 253,830 shares held by a family trust, beneficial ownership of
which is disclaimed by Mr. Friesel, and options to purchase 18,750 shares
held by Mr. Friesel.
9
<PAGE>
(6) Includes 4,350 shares held by family trusts, options to acquire 18,750
shares and Class C warrants to purchase 9,375 shares.
(7) Represents 656,513 shares, Class A warrants to purchase 328,257 shares and
Class B warrants to purchase 328,257 shares held by Prospect Street NYC
Discovery Fund, L.P. and 218,838 shares, Class A warrants to purchase
109,419 shares and Class B warrants to purchase 109,419 shares held by
Prospect Street NYC Co-Investment Fund, L.P. and options to acquire 15,235
shares held by Mr. Barrry individually. Mr. Barry is one of our directors
and is the Managing General Partner of Prospect Street NYC Discovery Fund,
L.P., Mr. Barry does not own any shares of our common stock in his
individual capacity and expressly disclaims beneficial ownership of the
shares held by Prospect Street NYC Discovery Fund, L.P. and Prospect Street
NYC Co-Investment Fund, L.P. The address of each of these entities is c/o
Prospect Street Ventures, 10 East 40th St., 44th floor, New York, New York
10016.
(8) Includes options to purchase 15,235 shares. The address of Mr. Semsky is c/o
24/7 Media, Inc., 1250 Broadway, New York, New York 10001.
(9) Represents options to acquire 9,375 shares. The address of Mr. Stryker is
c/o Naviant, Inc., 14 Campus Boulevard, Suite 200 Newtown Square, PA
19073-3279.
(10) Represents 559,691 shares held by Global Retail Partners, L.P. and its
affiliates, beneficial ownership of which is disclaimed by Ms. Levinson. Ms.
Levinson is a Partner of GRP, which provides management services to Global
Retail Partners, L.P. The address of Ms. Levinson is c/o GRP, 2121 Avenue of
the Stars, Suite 1630, Los Angeles, California 90067.
(11) The address of Mr. Goldman is c/o Centennial Fund IV, L.P. is 1428
Fifteenth Street, Denver, Colorado 80202.
(12) Represents 1,264,329 shares, Class A warrants to purchase 437,676 shares
and Class B warrants to purchase 437,676 shares and options to acquire 4,687
shares held by The Travelers Insurance Company, and 34,359 shares held by
The Travelers Indemnity Company. The address of each of these entities is
c/o Travelers Group Inc., 388 Greenwich Street, 36th floor, New York, New
York 10013. None of Travelers Investment Group Inc., The Travelers Insurance
Company, The Travelers Indemnity Company or their respective affiliates has
assumed or has any responsibility for our management, business or
operations, or for the statements contained in this proxy, other than the
limited information regarding securities ownership contained in this table.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee determines our executive compensation policies.
The Compensation Committee determines the compensation of our executive officers
and other individuals compensated by us. The Compensation Committee also
approves and oversees the administration of our incentive compensation programs
for all employees including executive officers. The Compensation Committee has
reviewed and is in accord with the compensation paid to our executive officers
in 1999.
COMPENSATION POLICIES AND PROGRAMS
The Company's compensation program is part of a company-wide program
covering all employees. The program's goals are to attract, retain, and motivate
employees, and we utilize incentives such that employees and stockholders share
the same risks. The compensation program is designed to link each employee's
compensation to the performance of 24/7 Media. A portion of each employee's
compensation relates to the grant of stock options, and such grants are based on
the successful attainment of strategic corporate, business unit, and individual
goals.
10
<PAGE>
Grants of stock options are of great importance to executives as well as all
employees. Any long-term value to be derived from such grants will be consistent
with stockholder gains.
Executive and employee compensation includes salary, employment-related
benefits, and long-term incentive compensation:
SALARY. Salaries are set competitively relative to comparable positions
within and without the Internet advertising industry. Individual experience
and performance is considered when setting salaries within the range for
each position. Annual reviews are held and adjustments are made based on
attainment of individual and company goals.
BENEFITS. All employees are eligible for similar benefits, such as
health and life insurance.
LONG-TERM INCENTIVE COMPENSATION. An incentive compensation program is
established annually. The purpose of this program is to provide financial
incentives to executives and employees to achieve annual corporate, business
unit, and individual goals. The incentive program also aligns executive and
employee interests with those of stockholders by using grants of stock
options. Such grants vest over time thereby encouraging continued employment
with 24/7 Media.
Members of the Compensation Committee:
R. Theodore Ammon,
John F. Barry III
Charles W. Stryker
11
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the percentage change in our cumulative
stockholder return on our Common Stock from August 13, 1998 (the date of our
initial public offering) to December 31, 1999, the last day of our last
completed fiscal year. The cumulative stockholder return is measured by
dividing:
- the sum of (A) the cumulative amount of dividends for the measurement
period, assuming dividend reinvestment, and (B) the excess of our share
price as of the end of the measurement period over the price at the
beginning of the measurement period, by
- the share price at the beginning of the measurement period.
The cumulative total return on our Common Stock is compared with the Nasdaq
Stock Market (U.S.) Index and two self-constructed peer group indices.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG 24/7 MEDIA, INC., THE NASDAQ STOCK MARKET (U.S.)
INDEX AND PEER GROUPS
<TABLE>
<CAPTION>
8/13/98 12/31/98 12/31/99
-------- -------- --------
<S> <C> <C> <C>
247 Media.......................................... $100 $200.00 401.80
Nasdaq Stock Market (U.S.) Index................... 100 121.64 225.76
Prior Peer Group (1)............................... 100 127.05 342.66
New Peer Group (2)................................. 100 187.38 675.59
</TABLE>
------------------------
* Assumes $100 invested on 8/13/98 (including reinvestment of dividends).
(1) Prior Peer Group includes DoubleClick Inc., CNet, Inc., Infoseek Corp.,
Lycos, Inc., NetGravity, Inc. and Sportsline USA, Inc.
(2) New Peer Group includes DoubleClick, Inc., America Online, Inc.,
CNet, Inc., Lycos, Inc. and Yahoo!
12
<PAGE>
PROPOSAL TWO:
AMENDMENT OF THE
1998 STOCK INCENTIVE PLAN
The stockholders of 24/7 Media are asked to approve amendments to our 1998
Stock Incentive Plan. The amendments will:
- increase the aggregate number of shares of Common Stock subject to awards
under the Plan by 1,750,000 shares; and
- provide that the number of shares available for issuance under the Plan
will automatically increase on the first trading day of each calendar
year, beginning with the 2001 calendar year by an amount equal to three
percent (3%) of the total number of shares of Common Stock outstanding on
the last trading day of the immediately preceding calendar year, provided
that no such automatic increase will exceed 1,750,000 shares.
The affirmative vote of the holders of at least a majority of the
outstanding shares of our Common Stock present and entitled to vote at the
annual meeting is required to approve the amendments to the Plan.
OUR BOARD RECOMMENDS THAT YOU, AS STOCKHOLDERS, VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE 1998 STOCK INCENTIVE PLAN.
BACKGROUND OF THE PROPOSAL TO AMEND THE 1998 STOCK INCENTIVE PLAN. The Plan
was adopted by the Board of Directors and the stockholders on March 10, 1998.
The Incentive Plan was amended on May 28, 1998, June 30, 1998 and June 8, 1999
with the approval of our Board of Directors and stockholders. The Plan was
established for the benefit of our stockholders by enabling us (i) to offer
stock based incentives to our employees, our affiliates and our consultants,
thereby creating a means to raise the level of ownership in our common stock by
such individuals in order to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals and stockholders
and (ii) to grant nondiscretionary, nonqualified stock options to non-employee
directors thereby attracting, retaining and rewarding such non-employee
directors and strengthening the mutuality of interests between non-employee
directors and stockholders. The proposed increase in number of shares subject to
awards under the Plan, as well as the automatic annual increase, will assure
that a sufficient awards are available under the Plan to attract and retain the
services of qualified employees, which is essential to our long-term growth and
success. Our Board has approved and recommends the approval of the amendments to
the Plan.
SUMMARY OF THE 1998 STOCK INCENTIVE PLAN. The following is a brief summary
of the principal provisions of the Plan. This summary does not purport to be
complete and is qualified in its entirety by reference to the text of this Plan,
a copy of which may be obtained upon written request to the Company at our
principal business address.
BACKGROUND; PURPOSE; ELIGIBILITY. The Plan is intended to foster stock
ownership by employees and directors and thereby attract, retain and reward such
employees and directors. All of our employees, consultants and non-employee
directors that satisfy requirements are eligible to be granted awards under the
Plan.
ADMINISTRATION. The Plan may be administered and interpreted by a committee
or subcommittee of the Board appointed from time to time by the Board, which may
consist of two or more non-employee directors, each of whom is intended to be a
non-employee director as defined in Rule 16b-3 under the Exchange Act
("Rule 16b-3") and an outside director as defined under Section 162(m) of the
Code (the "Committee"). If no Committee exists which has the authority to
administer the Plan, the functions of the Committee will be exercised by the
Board.
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<PAGE>
The Committee has full authority to administer and interpret the Plan
(except that with respect to awards to non-employee directors, the Plan will be
administered by the Board), to grant discretionary awards under the Plan, to
determine the persons to whom awards will be granted, to determine the types of
awards to be granted, to determine the terms and conditions of each award, to
determine the number of shares of Common Stock to be covered by each award, to
prescribe the form or forms of instruments evidencing awards and to make all
other determinations in connection with the Plan and the awards thereunder as
the Committee (or the Board, in the case of non-employee directors' awards), in
its sole discretion, deems necessary or desirable. The terms and conditions of
individual awards are set forth in written agreements which are consistent with
the terms of the Plan. Awards under the Plan may not be made on or after
February 13, 2008.
ELIGIBILITY AND TYPES OF AWARDS. All of our employees, directors,
affiliates and consultants are eligible to be granted nonqualified stock
options, stock appreciation rights and restricted stock. In addition, our
employees and our affiliates that qualify as subsidiaries or parent corporations
(within the meaning of Section 424 of the Code) are eligible to be granted ISOs
under the Plan. Our non-employee directors are eligible to receive
nondiscretionary grants of nonqualified stock options.
AVAILABLE SHARES. The aggregate number of shares of Common Stock which may
be issued or used for reference purposes under the Plan or with respect to which
awards other than ISOs may be granted may not exceed 15,904,386 shares, which
may be either authorized and unissued Common Stock or Common Stock held in or
acquired for the treasury of 24/7 Media. The number of shares available for
issuance under the Plan will automatically increase on the first trading day of
each calendar year, beginning with the 2001 calendar year by an amount equal to
three percent (3%) of the total number of shares of Common Stock outstanding on
the last trading day of the immediately preceding calendar year, provided that
no such increase will exceed 1,750,000 shares. In addition, the Plan permits the
grant of awards to individuals who become employed by us or any of our
affiliates as a result of a merger or consolidation, as a conversion from, and
replacement of, comparable awards held by such individuals from the prior
employer, and to the extent of such substitution, such grants increase the
maximum number of shares of Common Stock which may be issued or used for
reference under the Plan. The Committee has issued an aggregate awards covering
approximately 8,404,386 shares of Common Stock pursuant to this provision.
The maximum number of shares of Common Stock with respect to which any
option may be granted under the Plan during any fiscal year to any individual
will be 250,000 shares. The maximum number of shares of Common Stock with
respect to which any stock appreciation right may be granted under the Plan
during any fiscal year to any individual will be 250,000 shares.
The number of shares of Common Stock available for the grant of awards and
the exercise price of an award may be adjusted to reflect any change in our
capital structure or business by reason of certain corporate transactions or
events.
AWARDS UNDER THE PLAN. The following types of awards are available under
the Plan:
- STOCK OPTIONS. The Committee may grant nonqualified stock options and ISOs
to purchase shares of Common Stock. The Committee will determine the
number of shares of Common Stock subject to each option, the term of each
option (which may not exceed 10 years (or five years in the case of an ISO
granted to a 10% shareholder)), the exercise price, the vesting schedule
(if any), and the other material terms of each option. No ISO or
nonqualified stock option may have an exercise price less than the fair
market value of the Common Stock at the time of grant (or, in the case of
an ISO granted to a 10% shareholder, 110% of fair market value).
14
<PAGE>
Options will be exercisable at such time or times and subject to such terms
and conditions as determined by the Committee at grant and the
exercisability of such options may be accelerated by the Committee in its
sole discretion.
- STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation
rights ("SARs") either with a stock option which may be exercised only at
such times and to the extent the related option is exercisable ("Tandem
SAR") or independent of a stock option ("Non-Tandem SARs"). A SAR is a
right to receive a payment either in cash or common stock, as the
Committee may determine, equal in value to the excess of the fair market
value of one share of Common Stock on the date of exercise over the
exercise price per share established in connection with the grant of the
SAR. The exercise price per share covered by a SAR will be the exercise
price per share of the related option in the case of a Tandem SAR and will
be the fair market value of the Common Stock on the date of grant in the
case of a Non-Tandem SAR.
- RESTRICTED STOCK. The Committee may award shares of restricted stock. Upon
the award of restricted stock, the recipient has all rights of a
stockholder with respect to the shares, including the right to receive
dividends, the right to vote the shares of restricted stock and,
conditioned upon full vesting of shares of restricted stock, the right to
tender such shares, subject to the conditions and restrictions generally
applicable to restricted stock or specifically set forth in the
recipient's restricted stock agreement. The payment of dividends, if any,
shall, unless the Committee specifies otherwise at the time of the award,
be deferred until the expiration of the applicable restriction period.
Recipients of restricted stock are required to enter into a restricted
stock agreement with us which states the restrictions to which the shares
are subject and the criteria or date or dates on which such restrictions
will lapse. Within these limits, based on service and such other factors as
the Committee may determine in its sole discretion, the Committee may
provide for the lapse of such restrictions or may accelerate or waive such
restrictions at any time.
CHANGE IN CONTROL. Unless determined otherwise by the Committee at the time
of grant, accelerated vesting and lapsing of any restrictions will occur and any
unvested awards will automatically become 100% vested upon a change in control
(as defined in the Plan) of 24/7 Media. The Committee may, in its sole
discretion, provide for accelerated vesting of an award at any time. The
Committee may also, in its sole discretion, provide for accelerated vesting of
an award upon a termination during the 180 day period prior to a Change in
Control.
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS. The Plan authorizes the
automatic grant of nonqualified stock options to each non-employee director,
without further action by the Board or the stockholders, as follows:
(i) options to purchase 18,750 shares of Common Stock will be granted to each
non-employee director as of the date he or she begins service as a non-employee
director on the Board (an "Initial Grant"); and (ii) options to purchase 4,688
shares of Common Stock (or a pro rata portion for less than a full year of
service) will be granted to each non-employee director upon the date of each
annual meeting of stockholders (an "Annual Grant"). The exercise price per share
of such options will be the fair market value of the Common Stock at the time of
grant or the par value of the Common Stock, whichever is greater. The term of
each such option will be 10 years. Options granted to non-employee directors
pursuant to an Initial Grant will vest and become exercisable at the rate of 25%
of the options granted, as of each anniversary of the date of grant. Options
granted pursuant to an Annual Grant will become vested in full on the date of
the fourth Annual Meeting of Stockholders held following the date of the grant,
provided that the non-employer director is a director on the Board on that date.
All options granted to non-employee directors and not previously exercisable
will become fully exercisable immediately upon a change in control.
15
<PAGE>
AMENDMENT AND TERMINATION. Notwithstanding any other provision of the Plan,
the Board may at any time amend any or all of the provisions of the Plan, or
suspend or terminate it entirely, retroactively or otherwise; provided, however,
that, unless otherwise required by law or specifically provided in the Plan, the
rights of a participant with respect to awards granted prior to such amendment,
suspension or termination may not be impaired without the consent of such
participant and, provided further, without the approval of our stockholders in
accordance with the laws of the State of Delaware, to the extent required under
Section 162(m) of the Code, or to the extent applicable to ISOs, Section 422 of
the Code, no amendment may be made which would: (i) increase the aggregate
number of shares of Common Stock that may be issued; (ii) increase the maximum
individual participant share limitations for a fiscal year; (iii) change the
classification of employees or consultants eligible to receive awards;
(iv) decrease the minimum exercise price of any stock option or SAR; (v) extend
the maximum option term; (vi) change rights under the Plan with regard to
non-employee directors; or (vii) require stockholder approval in order for the
Plan to continue to comply with the applicable provisions of Section 162(m) of
the Code or, to the extent applicable to ISOs, Section 422 of the Code.
MISCELLANEOUS. Awards granted under the Plan are generally nontransferable,
except that the Committee may provide for the transferability of nonqualified
stock options (other than those granted to non-employee directors) at the time
of grant or thereafter. Stock options granted to non-employee directors are
transferable solely to such non-employee director's principal employer (other
than us or our affiliate if the director should become employed by us or our
affiliate) at the time of grant if the terms of such non-employee director's
employment so require.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. The rules concerning the
Federal income tax consequences with respect to options granted and to be
granted pursuant to the Plan are quite technical. Moreover, the applicable
statutory provisions are subject to change, as are their interpretations and
applications which may vary in individual circumstances. Therefore, the
following is designed to provide a general understanding of the Federal income
tax consequences. In addition, the following discussion does not set forth any
gift, estate, social security or state or local tax consequences that may be
applicable and is limited to the U.S. federal income tax consequences to
individuals who are citizens or residents of the U.S., other than those
individuals who are taxed on a residence basis in a foreign country.
- INCENTIVE STOCK OPTIONS. In general, an employee will not realize taxable
income upon either the grant or the exercise of an ISO and we will not
realize an income tax deduction at either such time. In general, however,
for purposes of the alternative minimum tax, the excess of the fair market
value of the shares of Common Stock acquired upon exercise of an ISO
(determined at the time of exercise) over the exercise price of the ISO
will be considered income. If the recipient does not sell the Common Stock
received pursuant to the exercise of the ISO within either (i) two years
after the date of the grant of the ISO or (ii) one year after the date of
exercise, a subsequent sale of the Common Stock will result in long-term
capital gain or loss to the recipient and will not result in a tax
deduction to 24/7 Media. Capital gains rates may be reduced in the case of
a longer holding period.
If the recipient disposes of the Common Stock acquired upon exercise of the
ISO within either of the above mentioned time periods, the recipient will
generally realize as ordinary income an amount equal to the lesser of
(i) the fair market value of the Common Stock on the date of exercise over
the exercise price, or (ii) the amount realized upon disposition over the
exercise price. In such event, we generally will be entitled to an income
tax deduction equal to the amount recognized as ordinary income. Any gain
in excess of such amount realized by the recipient as ordinary income would
be taxed at the rates applicable to short-term or long-term capital gains
(depending on the holding period).
16
<PAGE>
- NONQUALIFIED STOCK OPTIONS. A recipient will not realize any taxable
income upon the grant of a nonqualified stock option and we will not
receive a deduction at the time of such grant unless such option has a
readily ascertainable fair market value (as determined under applicable
tax law) at the time of grant. Upon exercise of a nonqualified stock
option, the recipient generally will realize ordinary income in an amount
equal to the excess of the fair market value of the Common Stock on the
date of exercise over the exercise price. Upon a subsequent sale of the
Common Stock by the recipient, the recipient will recognize short-term or
long-term capital gain or loss depending upon his or her holding period
for the Common Stock. The Company will generally be allowed a deduction
equal to the amount recognized by the recipient as ordinary income.
- ALL OPTIONS. With regard to both ISOs and nonqualified stock options, the
following also apply: (i) any of our officers and directors subject to
Section 16(b) of the Exchange Act may be subject to special tax rules
regarding the income tax consequences concerning their nonqualified stock
options, (ii) any entitlement to a tax deduction on the part of 24/7 Media
is subject to the applicable tax rules (including, without limitation,
Section 162(m) of the Code regarding a $1,000,000 limitation on deductible
compensation), and (iii) in the event that the exercisability or vesting
of any award is accelerated because of a change of control, payments
relating to the awards (or a portion thereof), either alone or together
with certain other payments, may constitute parachute payments under
Section 280G of the Code, which excess amounts may be subject to excise
taxes.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for Federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and four
other executive officers whose compensation is disclosed in its proxy
statement, subject to certain exceptions. Options will generally qualify
under one of these exceptions if they are granted under a plan that states
the maximum number of shares with respect to which options may be granted
to any recipient during a specified period of the plan under which the
options are granted is approved by shareholders and is administered by a
compensation committee comprised of outside directors. The Plan is intended
to satisfy these requirements with respect to options.
17
<PAGE>
PROPOSAL THREE:
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, our Board of Directors has
appointed KPMG LLP, independent certified public accountants, to audit the books
and records of 24/7 Media for the fiscal year ending December 31, 2000. A
majority of the votes of the outstanding shares of our Common Stock is required
to ratify the appointment of the independent auditors.
Representatives of KPMG LLP are expected to be present at the meeting of
stockholders and will be given an opportunity to make a statement if they so
desire. They are expected to be available to respond to appropriate questions.
OUR BOARD RECOMMENDS THAT YOU, AS STOCKHOLDERS, VOTE "FOR" THE RATIFICATION OF
KPMG LLP AS INDEPENDENT CERTIFIED ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31,
2000.
STOCKHOLDER PROPOSALS
Stockholders of 24/7 Media wishing to include proposals in the proxy
material in relation to our annual meeting to be held in 2001 must submit the
same in writing so as to be received by the Secretary of 24/7 Media at the
executive office of 24/7 Media on or before July 7, 2001. However, if we
determine to change the date of the 2001 annual meeting more than 30 days from
September 7, 2001, we will provide you with a reasonable time before we begin to
print and mail our proxy materials for the 2001 annual meeting in order to allow
our stockholders an opportunity to make proposals in accordance with the rules
and regulations of the Securities and Exchange Commission. Such proposals must
also meet the other requirements of the rules of the Securities and Exchange
Commission relating to stockholders' proposals.
OTHER MATTERS
We know of no other matters that are to be presented for action at the
annual meeting other than those set forth above. If any other matters properly
come before the annual meeting, the persons named in the enclosed proxy form
will vote the shares represented by proxies in accordance with their best
judgment on such matters.
By order of the Board of Directors,
/s/ DAVID J. MOORE
DAVID J. MOORE
President and Chief Executive Officer
August 1, 2000
STOCKHOLDERS ARE REQUESTED TO MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOUR PROMPT RESPONSE WILL
BE HELPFUL, AND YOUR COOPERATION WILL BE APPRECIATED.
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[FORM OF PROXY]
24/7 MEDIA, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of 24/7 Media, Inc. hereby appoints David J. Moore,
C. Andrew Johns and Mark E. Moran, and each of them, with full power of
substitution, to represent and to vote on behalf of the undersigned all of the
shares of 24/7 Media, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held at the offices of Proskauer Rose LLP,
26th floor, 1585 Broadway, New York, New York 10036 on Thursday, September 7,
2000, at 10:00 a.m., local time, and at any adjournment or adjournments thereof,
hereby revoking all proxies heretofore given with respect to such stock, upon
the following proposals more fully described in the notice of and proxy
statement for the meeting (receipt of which is hereby acknowledged).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<S> <C>
(To be Signed on Reverse Side)
24/7 MEDIA, INC.
P.O. BOX 11401
NEW YORK, NEW YORK 10203-0401
See Reverse
</TABLE>
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1), (2), AND (3).
1. ELECTION OF DIRECTORS
Nominees: John F. Barry III and Adam Goldman
FOR the nominee listed above [_]
WITHHOLD AUTHORITY to vote for the nominee listed below [_]
EXCEPTIONS [_]
(INSTRUCTION: To withhold authority to vote for the nominee,
mark the "Exceptions" box and write that nominee's name on the space
provided below.)
2. PROPOSAL TO APPROVE THE AMENDMENTS TO THE 24/7 MEDIA, INC. 1998 STOCK
INCENTIVE PLAN.
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<S> <C> <C>
[_] FOR [_] AGAINST [_] ABSTAIN
</TABLE>
3. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS OF 24/7 MEDIA, INC.
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<S> <C> <C>
[_] FOR [_] AGAINST [_] ABSTAIN
</TABLE>
4. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
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<S> <C>
I will attend the meeting. [_] I will not attend the meeting. [_]
</TABLE>
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee, or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
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<S> <C>
Date
Signature
Date
Signature if held jointly
Votes must be indicated in Black or Blue ink.
</TABLE>
Please return promptly in the enclosed postage-paid envelope.
