<PAGE>
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:
[X] PRELIMINARY PROXY STATEMENT. [_] CONFIDENTIAL, FOR USE OF THE
[_] DEFINITIVE PROXY STATEMENT. COMMISSION ONLY (AS PERMITTED BY
[_] DEFINITIVE ADDITIONAL MATERIALS. RULE 14A-6(E)(2)).
[_] SOLICITING MATERIAL PURSUANT TO
RULE 14A-11(C) OR RULE 14A-12.
XOOM.COM.INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO OF XOOM.COM APPEARS HERE]
XOOM.COM, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 1999
TO THE STOCKHOLDERS OF XOOM.COM, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of XOOM.com,
Inc., a Delaware corporation ("Xoom.com"), will be held on Wednesday, May 26,
1999 at 10:00 a.m., local time, at the Sir Francis Drake, 450 Powell
Street, San Francisco, California, 94102, for the following purposes:
1. To elect directors to serve until the 2000 Annual Meeting of
Stockholders or until their successors are elected and qualified;
2. To approve an amendment to our 1998 Stock Incentive Plan to increase
the number of shares of our common stock authorized for issuance over the term
of the 1998 Stock Incentive Plan by 2,000,000 shares from 2,000,000 shares to
4,000,000 shares;
3. To approve an amendment to our Certificate of Incorporation to
increase the number of authorized shares of common stock from 40,000,000 shares
to 80,000,000 shares; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 29, 1999 are
entitled to notice of and to vote at this meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed proxy card as promptly as possible in the enclosed self-
addressed envelope. Any stockholder attending the meeting may vote in person
even if he or she returned a proxy. However, if a stockholder's shares are held
of record by a broker, bank or other nominee and the stockholder wishes to vote
at the meeting, the stockholder must obtain from the record holder a proxy
issued in his or her name.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOHN HARBOTTLE
John Harbottle
Vice President, Finance, Chief Financial
Officer and Assistant Secretary
San Francisco, California
April __, 1999
<PAGE>
XOOM.COM, INC.
300 Montgomery Street, Suite 300
San Francisco, California 94104
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board") of XOOM.com, Inc., a Delaware corporation ("Xoom.com"), for use at
Xoom.com's Annual Meeting of Stockholders to be held on Wednesday, May 26, 1999
at 10:00 a.m., local time, at the Sir Francis Drake, 450 Powell Street,
San Francisco, California 94102, or at any adjournment thereof, for the purposes
set forth in this proxy statement and in the accompanying Notice of Annual
Meeting of Stockholders. Xoom.com's principal executive offices are located at
300 Montgomery Street, Suite 300, San Francisco, California 94104. Xoom.com's
telephone number at that location is (415) 288-2500.
Xoom.com intends to mail this proxy statement and accompanying proxy card
on or about April __, 1999 to all stockholders entitled to vote at the meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE AND SHARE OWNERSHIP
Stockholders of record at the close of business on March 29, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the Record Date, 13,830,588 shares of Xoom.com's common stock ("Common Stock")
were issued and outstanding and held of record by approximately 238
stockholders.
REVOCABILITY OF PROXIES
You may revoke any proxy you give pursuant to this solicitation at any time
before its use by delivering to Xoom.com (attention: Rajesh Aji, Vice President
of Corporate and Legal Affairs and General Counsel) a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person.
VOTING AND SOLICITATION
Each share of Common Stock outstanding on the Record Date is entitled to
one vote. The required quorum for the transaction of business at the Annual
Meeting is a majority of the votes eligible to be cast by holders of shares of
Common Stock issued and outstanding on the Record Date. For purposes of
determining the presence of a quorum, abstentions and broker non-votes will be
counted by Xoom.com as present at the meeting. Abstentions will also be counted
by Xoom.com in determining the total number of votes cast with respect to a
proposal (other than the election of directors). Broker non-votes will not be
counted in determining the number of
<PAGE>
votes cast with respect to a proposal. Directors are elected by a plurality of
votes cast. In determining whether a proposal has been approved, abstentions are
counted as votes against the proposal and broker non-votes are not counted as
votes for or against the proposal. If no specific instructions are given with
respect to matters to be acted upon at the Annual Meeting, shares of Common
Stock represented by a properly executed proxy will be voted FOR (i) the
election of management's nominees for Director listed in Proposal No. 1, (ii)
the approval of the amendment of the 1988 Stock Incentive Plan to increase the
number of shares authorized for issuance over the term of the 1988 Stock
Incentive Plan from 2,000,000 shares to 4,000,000 shares and (iii) the approval
of the amendment of Xoom.com's Certificate of Incorporation to increase the
number of authorized shares of Common Stock for 40,000,000 shares to 80,000,000
shares.
The cost of soliciting proxies will be borne by Xoom.com. Proxies may be
solicited by certain of Xoom.com's directors, officers and regular employees,
without additional compensation, in person or by telephone or facsimile. In
addition, Xoom.com may retain the services of one or more firms to assist in the
solicitation of proxies, for an estimated fee of $5,000 plus reimbursement of
expenses. In addition, Xoom.com may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation materials to such beneficial owners.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information known to Xoom.com with
respect to beneficial ownership of common stock as of February 28, 1999 by (A)
each person known to Xoom.com to own beneficially more than 5% of the
outstanding shares of Xoom.com's common stock, (B) each director or director
nominee of Xoom.com, (C) each executive officer of Xoom.com for whom information
is given in the Summary Compensation Table in this Proxy Statement and (D) all
directors and executive officers of Xoom.com as a group.
<TABLE>
<CAPTION>
Number of Shares
----------------
Beneficially Held (1) Percentage
--------------------- ----------
<S> <C> <C>
Chris Kitze(2)............................... 4,188,350 30.6%
Naveen Jain(3)............................... 702,702 5.1%
Bob Ellis(4)................................. 549,443 3.9%
Laurent Massa(5)............................. 209,896 1.5%
James Heffernan(6)........................... 139,157 1.0%
Russell S. Hyzen(7).......................... 125,277 *
Alicia Molnar(8)............................. 86,667 *
Janine Popick(9)............................. 26,937 *
Jeffrey Ballowe(10).......................... 17,363 *
Philip Schlein(11)........................... 12,732 *
Robert C. Harris, Jr.(12).................... 12,732 *
All executive officers and directors as a
group (12 persons)(13)...................... 6,013,576 41.6%
</TABLE>
_______________
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of February 28, 1999 and warrants to
purchase shares of common stock that are exercisable within 60 days of February
28, 1999 are deemed outstanding. Percentage of beneficial ownership is based
upon 13,699,555 shares of common stock outstanding as of February 28, 1999. To
Xoom.com's knowledge, except as set forth in the footnotes to this table and
subject to applicable community property laws, each person named in the table
has sole voting and investment power with respect to the shares set forth
opposite such person's name. Except as otherwise indicated, the address of each
of the directors, executive officers and 5% stockholders in this table is as
follows: c/o XOOM.com, Inc., 300 Montgomery Street, Suite 300, San Francisco,
California 94104.
(2) Includes 4,188,350 shares of common stock held by Flying Disc
Investments Limited Partnership, of which Mr. Kitze is a general partner. Mr.
Kitze may be deemed to be the beneficial owner of the shares held by Flying
Disc.
4
<PAGE>
(3) Includes 36,036 shares of common stock held by Internet Ventures LLC.
Mr. Jain is the managing member of Internet Ventures and may be deemed to be the
beneficial owner of the shares held by Internet Ventures. Mr. Jain's address is
16115 N.E. 49th Ct., Redmond, WA 98052.
(4) Includes 323,333 shares of common stock held by the Robert A. Ellis
Revocable Trust. Also includes options exercisable for 226,110 shares of common
stock exercisable within 60 days after February 28, 1999.
(5) Includes options exercisable for 209,896 shares of common stock
exercisable within 60 days after February 28, 1999.
(6) Includes options exercisable for 22,917 shares of common stock
exercisable within 60 days after February 28, 1999. Also includes 12,000 shares
of common stock held by J.J. Heffernan, LLC, of which Mr. Heffernan is the
managing member, and 100,239 shares of common stock held by the Heffernan Family
Trust. Mr. Heffernan may be deemed to be the beneficial owner of the shares and
warrants to purchase shares of common stock held by the Heffernan LLC and the
Heffernan Family Trust. Also includes 4,000 shares of common stock held by
Sandra Heffernan, who is Mr. Heffernan's wife.
(7) Includes options exercisable for 113,611 shares of common stock
exercisable within 60 days after February 28, 1999.
(8) Includes options exercisable for 76,667 shares of common stock
exercisable within 60 days after February 28, 1999.
(9) Includes options exercisable for 23,334 shares of common stock
exercisable within 60 days after February 28, 1999.
(10) Includes options exercisable for 16,694 shares of common stock
exercisable within 60 days after February 28, 1999.
(11) Includes options exercisable for 8,750 shares of common stock
exercisable within 60 days after February 28, 1999.
(12) Includes options exercisable for 8,750 shares of common stock
exercisable within 60 days after February 28, 1999.
(13) Includes options exercisable for 764,785 shares of common stock
exercisable within 60 days after February 28, 1999.
5
<PAGE>
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
GENERAL
The Bylaws of Xoom.com provide that the authorized number of directors
shall be fixed by resolution of the Board of Directors. The authorized number of
directors is currently fixed at seven. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the nominees named below, all
of whom are presently directors of Xoom.com. If any nominee is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee designated by the present Board of Directors to
fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director. If stockholders properly nominate persons other
than Xoom.com's nominees for election as directors, the proxy holders will vote
all proxies received by them to assure the election of as many of Xoom.com's
nominees as possible, with the proxy holder making any required selection of
specific nominees to be voted for. The term of office of each person elected as
a director will continue until the next annual meeting of stockholders or until
his earlier death, resignation or removal. There are no family relationships
among any of Xoom.com's Directors or executive officers other than between Mr.
Kitze and Ms. Molnar, the Company's Vice President of Advertising Sales, who is
Mr. Kitze's sister-in-law.
Certain information regarding the nominees is set forth below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Name of Nominee Age Principal Occupation Director
Since
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Chris Kitze 39 Chairman of the Board and Secretary of Xoom.com 1996
Laurent Massa 39 Chief Executive Officer and President of Xoom.com 1998
Bob Ellis 62 Publisher of Xoom.com 1997
James Heffernan 57 Executive Vice President of US Web Corporation 1998
Jeffrey Ballowe 43 Retired President of Interactive Media and 1998
Development Group of Ziff-Davis
Philip Schlein 64 General Partner of US Venture Partners 1998
Robert C. Harris, Jr. 52 Senior Managing Director of Bear, Stearns & Co. 1998
Inc.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Chris Kitze co-founded Xoom.com and has served as Chairman of the Board and
Secretary since that time. Since December 1996, Mr. Kitze has been an
independent investor. From April 1996 until December 1996, Mr. Kitze also served
as Xoom.com's President and Chief Executive Officer. In June 1995, Mr. Kitze co-
founded Point Communications Corporation, a Web directory company, which was
acquired by Lycos in October 1995, after which Mr. Kitze served as Lycos' Vice
President of Marketing until June 1996. From June 1994
6
<PAGE>
until June 1995, Mr. Kitze served as Publisher at Softkey International (now The
Learning Company). In September 1991, Mr. Kitze co-founded Aris Entertainment, a
CD-ROM publishing company and served as its President until June 1994. Mr. Kitze
holds a B.S. in Chemical Engineering from the University of Colorado.
Laurent Massa co-founded Xoom.com and has served as its Chief Executive
Officer and President since December 1996. Mr. Massa has also served on
Xoom.com's Board of Directors since February 1998. From September 1996 to June
1998, Mr. Massa also served as Xoom.com's Chief Financial Officer. From May 1995
until September 1996, Mr. Massa served as Vice President of New Ventures of
Olivetti Telemedia, a telecommunications company based in Milan. Prior to
joining Olivetti, Mr. Massa joined WordStar International in March 1991 as
Director of Marketing, Europe, and became Vice President, International of
Softkey International (now The Learning Company), following Softkey's merger
with WordStar and Spinaker in February 1993. Mr. Massa holds an MBA from the
European Business School.
Bob Ellis has served as one of the Directors and as Publisher of Xoom.com
since August 1997. From July 1995 to July 1997, Mr. Ellis was President of Paris
Productions, an online publishing company. In January 1988, he founded Compact
Publishing Company ("Compact"), a publishing company and served as its Chief
Executive Officer until its acquisition by Softkey International (now The
Learning Company) in July 1994, after which he served as Vice President of
Publishing of Softkey until July 1995. Prior to founding Compact, Mr. Ellis was
a Vice President of Time-Life, Inc. and President of Time-Life Software. Mr.
Ellis holds a B.A. in Philosophy from Yale and an M.A. in History from the
University of Chicago.
James Heffernan has served as one of the Directors of Xoom.com since June
1998. Mr. Heffernan co-founded USWeb Corporation, an Internet professional
services company, in December 1995 and has served as its Executive Vice
President, Chief Financial Officer, Secretary and a director since that time.
From May 1993 to July 1994, he worked as an independent consultant and then
joined Interlink Computer Sciences, Inc. in July 1994 as Chief Financial
Officer, where he served until January 1996. From March 1992 to May 1993, Mr.
Heffernan served as Chief Financial Officer and Chief Operating Officer of
Serius. Mr. Heffernan has also served as an officer of several other technology
companies, including Software Publishing Corp., Zital Inc. and Measurex Corp.
Mr. Heffernan is a director of Savoir Technology Group, Inc and USWeb
Corporation. Mr. Heffernan has a B.S. in Business and an MBA from Santa Clara
University.
Jeffrey Ballowe has served as one of the Directors of Xoom.com since July
1998. Mr. Ballowe retired at the end of 1997 from Ziff-Davis, where during his
11 years at the company he was instrumental in transforming Ziff-Davis from a
U.S. magazine publisher to an international, integrated media company. Aside
from serving in magazine publishing roles including Publisher of PC Magazine,
Mr. Ballowe held number of corporate posts in which he was responsible for
establishing Ziff-Davis' European operations, managing Ziff-Davis' largest
magazine group, launching the company's Internet publications, creating ZDNet,
and launching ZDTV. At his retirement he was President, Interactive Media and
Development Group, in charge of Ziff-Davis' Internet publications, ZDNet, ZDTV,
and all development at the company. Among his development activities included
spearheading Ziff-Davis' and Softbank's investments in Yahoo!, USWeb Corporation
(where he served as a founding Director), Gamespot, and Herring Communications.
Prior to his work at Ziff-Davis, Mr. Ballowe worked as a marketing executive
7
<PAGE>
at various technology and marketing services companies. Currently Mr. Ballowe is
Chairman of Deja News and serves on the boards of drkoop.com, VerticalNet and
ZDTV. He received a bachelor's degree from Lawrence University, a master's
degree in French from the University of Wisconsin-Madison, and an MBA from the
University of Chicago.
Philip Schlein has served as one of the Directors of Xoom.com since July
1998. Since April 1985, Mr. Schlein has been a general partner of U.S.
VenturePartners, a venture capital firm specializing in retail and consumer
products companies. From January 1974 to January 1985, Mr. Schlein served as
President and Chief Executive Officer of Macy's California, a division of R. H.
Macy & Co., Inc., a department store chain. Mr. Schlein also serves on the board
of directors of Ross Stores, Inc., ReSound Corporation, Quick Response Services,
Burnham Pacific Properties, Inc. and Bebe Stores. Mr. Schlein holds a B.S. in
Economics from the University of Pennsylvania.
Robert C. Harris, Jr. has served as one of the Directors of Xoom.com since
August 1998. Mr. Harris is a Senior Managing Director at Bear, Stearns & Co.
Inc. From 1989 to October 1997, he was a co-founder and Managing Director of
Unterberg Harris. From 1984 to 1989, he was a General Partner, Managing Director
and Director of Alex. Brown & Sons Inc. Mr. Harris is also a director of N2K,
Inc., MDSI Mobile Data Solutions, Inc. and SoftNet Systems, Inc. Mr. Harris
holds a B.S. and MBA from the University of California at Berkeley.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held three meetings during the fiscal year ended
December 31, 1998 and acted twelve times by unanimous written consent. The Board
of Directors has an Audit Committee and a Compensation Committee. From time to
time, the Board has created various ad hoc committees for special purposes. No
such committee is currently functioning.
The Audit Committee, consisting of James J. Heffernan and Philip Schlein,
recommends the selection of independent public accountants to the Board of
Directors, reviews the scope and results of the audit and other services
provided by Xoom.com's independent accountants, and reviews Xoom.com's
accounting practices and systems of internal accounting controls. The Audit
Committee held no meetings during the last fiscal year.
The Compensation Committee, consisting of James J. Heffernan and Bob Ellis,
reviews and approves the salaries, bonuses and other compensation payable to
Xoom.com's executive officers and administers and makes recommendations
concerning Xoom.com's employee benefit plans. The Compensation Committee held no
meetings during the last fiscal year.
During fiscal 1998, each director attended all of the meetings of the Board
of Directors and of the committees of the Board on which the director served
during the period for which he was director or committee member, respectively.
DIRECTOR COMPENSATION
Except as set forth below, directors receive no cash compensation from
Xoom.com for their services as Board members or committee members and Xoom.com
does not reimburse them for expenses incurred in connection with attending Board
and committee meetings. On May 15,
8
<PAGE>
1998, Mr. Heffernan, an outside director, entered into a consulting agreement
with Xoom.com under which he is entitled to receive compensation in the form of
common stock and options to purchase common stock for his services, which
services include serving as a member of the Board of Directors. See "Certain
Transactions."
On August 4, 1997, Bob Ellis, an outside director, entered into a letter
agreement with Xoom.com under which Mr. Ellis agreed to provide certain services
to Xoom.com, including serving as a member of the Board of Directors. This
agreement provided for compensation in the form of options to buy 222,222 shares
of common stock at an exercise price of $0.03 per share, which vest ratably over
an 18 month period. The agreement terminated on February 3, 1999.
On July 28, 1998, Jeffrey Ballowe, an outside director, entered into a
letter agreement with Xoom.com, which was amended as of December 2, 1998. Under
this agreement, as amended, Mr. Ballowe agreed to serve as a member of the Board
of Directors. The agreement provides for compensation in the form of options to
buy 23,334 shares of common stock at an exercise price of $6.75 per share, which
will vest monthly over a two year period or immediately upon a sale of Xoom.com.
Mr. Ballowe also receives a monthly fee of $10,000 as compensation for his
service as a Director. This fee is payable in shares of common stock based upon
the stock's closing price on the last trading day of the month. Mr. Ballowe will
also receive compensation equal to 5% of all funds he raises for Xoom.com,
payable in common stock. Mr. Ballowe's agreement has a term of 18 months.
On July 28, 1998, Philip Schlein, an outside director, entered into a
letter agreement with Xoom.com, which was amended as of December 2, 1998. Under
this agreement, as amended, Mr. Schlein agreed to serve as a member of the Board
of Directors. The agreement provides for compensation in the form of options to
buy 23,334 shares of common stock at an exercise price of $6.75 per share, which
will vest monthly over a two year period or immediately upon a sale of Xoom.com.
Mr. Schlein also receives a monthly fee of $10,000 payable in cash or in common
stock, at Mr. Schlein's option, as compensation for his service as a Director.
Mr. Schlein's agreement has a term of 18 months.
On July 28, 1998, Robert Harris, an outside director, entered into a letter
agreement with Xoom.com, which was amended as of December 2, 1998. Under this
agreement, as amended, Mr. Harris agreed to serve as a member of the Board of
Directors. The agreement provides for compensation in the form of options to buy
23,334 shares of common stock at an exercise price of $6.75 per share, which
will vest monthly over a two year period or immediately upon a sale of Xoom.com.
Mr. Harris also receives a monthly fee of $10,000 payable in cash or in common
stock, at Mr. Harris' option, as compensation for his service as a director. Mr.
Harris' agreement has a term of 18 months.
VOTE REQUIRED
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
9
<PAGE>
RECOMMENDATION OF THE BOARD
The Board of Directors recommends that the stockholders vote "FOR" election
of each of the nominees listed above.
10
<PAGE>
PROPOSAL NO. 2:
APPROVAL OF AMENDMENT TO 1998 STOCK INCENTIVE PLAN
Xoom.com's stockholders are being asked to approve an amendment to
Xoom.com's 1998 Stock Incentive Plan that will increase the maximum number of
shares of common stock authorized for issuance over the term of the 1998 Stock
Incentive Plan by an additional 2,000,000 shares from 2,000,000 shares to
4,000,000 shares.
The 1998 Stock Incentive Plan was adopted by the Board of Directors and
approved by the stockholders in February 1998. The amendment to the 1998 Stock
Incentive Plan for which stockholder approval is sought under this Proposal
Number. Two was adopted by the board in February 1999, subject to stockholder
approval at the Annual Meeting.
The proposed share increase will assure that a sufficient reserve of common
stock is available under the 1998 Stock Incentive Plan to attract and retain the
services of key individuals, essential to Xoom.com's long-term growth and
success.
The following is a summary of the principal features of the 1998 Stock
Incentive Plan. However, the summary does not purport to be a complete
description of all the provisions of the 1998 Stock Incentive Plan. Any
stockholder of Xoom.com who wishes to obtain a copy of the actual plan document
may do so upon written request to Xoom.com's Chief Financial Officer at
Xoom.com's principal executive offices in San Francisco, California.
1998 STOCK INCENTIVE PLAN
The Stock Incentive Plan provides for the grant of options intended to
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), nonqualified stock options and stock
appreciation rights. The Stock Incentive Plan also provides for the transfer or
sale of common stock to selected individuals in connection with the performance
of services for Xoom.com or Xoom.com's affiliates. Without giving effect to the
amendments which will become effective upon stockholder approval of this
Proposal No. Two, a total of 2,000,000 shares of common stock have been reserved
for issuance under the Stock Incentive Plan. As of February 28, 1999, 1,618,818
shares remained reserved for future issuance upon the exercise of outstanding
options, and 378,182 shares remained available for future grant. The Board of
Directors or a committee designated by the Board is authorized to administer the
Stock Incentive Plan, including the selection of individuals eligible for grants
of options, issuances of common stock, the terms of such grants or issuances,
possible amendments to the terms of such grants or issuances and the
interpretation of the terms of, and adoption of rules for, the Stock Incentive
Plan. The maximum term of any stock option granted under the Stock Incentive
Plan is ten years, except that with respect to incentive stock options granted
to a person possessing more than 10% of Xoom.com's combined voting power (a "10%
Stockholder"), the term of such stock options shall be for no more than five
years.
The exercise price of nonqualified stock options and incentive stock
options granted under the Stock Incentive Plan must be at least 85% and 100%,
respectively, of the fair market value of the common stock on the grant date
except that the exercise price of incentive stock options granted to a 10%
Stockholder must be at least 110% of such fair market value on the grant date.
The aggregate fair market value on the date of grant of the common stock for
which
11
<PAGE>
incentive stock options are exercisable for the first time by an employee during
any calendar year may not exceed $100,000. The purchase price of shares of
common stock granted under the Stock Incentive Plan must be at least 85% of the
fair market value of the common stock on the grant date except that the purchase
price of shares of common stock granted to a 10% Stockholder must be at least
100% of such fair market value on the grant date. The individual agreements
under the Stock Incentive Plan may provide for repurchase rights for Xoom.com
under the terms and conditions set forth in the Stock Incentive Plan. The Stock
Incentive Plan will terminate in 2008, unless earlier terminated by the Board.
In the event of a merger in which Xoom.com is not the surviving entity, the
sale of all or substantially all of Xoom.com's assets or a reverse merger
resulting in a change of control, each grant which is at the time outstanding
under the 1998 Stock Incentive Plan shall, unless the plan administrator in its
discretion decides differently, immediately prior to the specified effective
date of such transaction, automatically become fully vested and exercisable with
respect to 75% of the unvested shares at the time represented by such grant. To
the extent it has not been previously exercised, the grant will terminate
immediately prior to the consummation of such proposed transaction, unless the
grant is assumed or an equivalent grant is substituted by the successor
corporation.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding voting shares of
Xoom.com present in person or represented by proxy and entitled to vote present
or represented and entitled to vote at the Annual Meeting is required for
approval of the amendment to the 1998 Stock Incentive Plan. Should such
stockholder approval not be obtained, then the 2,000,000-share increase to the
share reserve will not be implemented. The 1998 Stock Incentive Plan will,
however, continue to remain in effect, and option grants and direct stock
issuances may continue to be made pursuant to the provisions of the 1998 Stock
Incentive Plan in effect prior to the amendments summarized in this Proposal
Number Two, until the available reserve of common stock as last approved by the
stockholders has been issued pursuant to option grants and direct stock
issuances made under the 1998 Stock Incentive Plan.
RECOMMENDATION OF THE BOARD
The Board of Directors recommends that the stockholders vote "FOR" the
proposal to amend Xoom.com's 1998 Stock Incentive Plan that will increase the
maximum number of shares of common stock authorized for issuance over the term
of the 1998 Stock Incentive Plan by an additional 2,000,000 shares from
2,000,000 shares to 4,000,000 shares.
12
<PAGE>
PROPOSAL NO. 3:
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK FROM 40,000,000 TO 80,000,000
The Board of Directors recommends an amendment to Xoom.com's Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 40,000,000 shares to 80,000,000 shares.
The Board of Directors believes that the proposed increase is desirable so
that, as the need may arise, Xoom.com will have more financial flexibility and
be able to issue shares of Common Stock, without the expense and delay of a
special stockholders' meeting, in connection with possible equity financings,
future opportunities for expanding the business through investments or
acquisitions, management incentive and employee benefit plans and sales to
employee savings plans and for other purposes. Therefore, the Board of
Directors proposes that the first sentence of Article Four of Xoom.com's
Certificate of Incorporation be amended to read in its entirety as follows:
"The total number of shares of all classes of stock that the
Corporation is authorized to issue is Eighty-Five Million
(85,000,000), consisting of Eighty Million (80,000,000) shares of
Common Stock, par value $.0001 per share, and Five Million
(5,000,000) shares of Preferred Stock, par value $.0001 per
share."
VOTE REQUIRED
The adoption of the proposed amendment will require the affirmative vote of
the holders of a majority of the outstanding shares of Common Stock.
RECOMMENDATION OF THE BOARD
The Board of Directors recommends a vote FOR the adoption of the proposed
amendment of the Certificate of Incorporation.
13
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of Xoom.com:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Chris Kitze............................................. 39 Chairman of the Board, Secretary and Director
Laurent Massa........................................... 39 Chief Executive Officer, President and Director
John Harbottle.......................................... 44 Vice President, Finance and Chief Financial Officer
Vijay Vaidyanathan...................................... 33 Chief Technology Officer
Rajesh Aji.............................................. 36 Vice President, Corporate and Legal Affairs and
General Counsel
Scott Duffy............................................. 28 Vice President, Sponsorships and Online Sales
Development
Russell S. Hyzen........................................ 33 Vice President, Business Development
Alicia Molnar........................................... 33 Vice President, Advertising Sales
Janine Popick........................................... 31 Vice President, E-commerce
Marc Sznajderman........................................ 32 Vice President, Corporate Development
</TABLE>
For biographical summaries of Chris Kitze and Laurent Massa, see Proposal
No. 1--Election of Directors."
John Harbottle has served as Xoom.com's Vice President, Finance and Chief
Financial Officer since August 5, 1998. From February 1996 to February 1998, Mr.
Harbottle was the Vice President of Finance and Chief Financial Officer of
Mastering Computers, Inc., an information technology training and CBT software
development and manufacturing company, and then worked as an independent
consultant for Mastering Computers, Inc. from February to July 1998. From
October 1994 to February 1996, Mr. Harbottle was the Vice President of Finance
and Chief Financial Officer of Zenger-Miller, an international
management/leadership training, consulting and education company. From January
1992 to October 1994, Mr. Harbottle was the Vice President of Finance and Chief
Financial Officer of IFS, an international consumer products and direct
marketing company. Mr. Harbottle is a director of WebSoftware Corporation. Mr.
Harbottle holds a B.S. in Business Administration from the University of
California, Berkeley.
14
<PAGE>
Vijay Vaidyanathan has served as Xoom.com's Chief Technology Officer and as
a Director since March 1998 and was a Director from March 1998 to February 1999.
Prior to joining Xoom.com, Mr. Vaidyanathan co-founded Paralogic Corporation, an
Internet software company, and served as its President and Chief Executive
Officer from January 1995 until we acquired it in March 1998. Prior to founding
Paralogic Corporation Mr. Vaidyanathan served as Engineering Manager at
Frontline Design Automation, an electronic design automation company from July
1994 until December 1994 and as Engineering Manager at Zycad Corporation, an
electronic design automation company from February 1991 until July 1994. Mr.
Vaidyanathan also serves on the board of Paralogic Software Corporation, a
software company, and Santa Clara Valley School, Inc., a non-profit school he
co-founded in 1995. Mr. Vaidyanathan holds an M.S. in Instrumentation Technology
from the Birla Institute of Technology and Science in India and an M.S. in
Computer Science from the State University of New York at Albany.
Rajesh Aji has served as Xoom.com's Vice President of Corporate and Legal
Affairs and General Counsel since January 1999. Prior to joining Xoom.com, Mr.
Aji was an attorney with the law firms of Wilson Sonsini Goodrich & Rosati and
McCutchen Doyle Brown & Enersen from September 1994 to January 1999, where he
served as primary outside counsel for more than twenty-five private and public
companies, specifically in the areas of venture capital and corporate financing,
public offerings, mergers and acquisitions, and securities and intellectual
property law. Mr. Aji holds a Bachelor of Technology degree from the Indian
Institute of Technology, a Master of Science degree from the University of Iowa
and a Juris Doctor degree from the University of California, Berkeley.
Scott Duffy has served as Xoom.com's Vice President, Sponsorships and
Online Sales Development since August 1998. Prior to joining Xoom.com, Mr. Duffy
served as Western Region Sales Manager for SportsLine USA, Inc. from August 1997
to August 1998. From January 1996 to March 1997, Mr. Duffy held a number of
positions for Quote.com, Inc., an Internet financial services company, including
Business Development Manager and most recently Director of Advertising Sales.
Prior to that, Mr. Duffy served as an Account Executive for Seven Worldwide,
Inc., a worldwide imaging company that manages the production of advertising,
promotional and packaging artwork and interactive multimedia, from 1993 to 1995.
Russell S. Hyzen has served as Xoom.com's Vice President, Business
Development since December 1997 and as Xoom.com's director of Business
Development from November 1996 to December 1997. Prior to joining Xoom.com, Mr.
Hyzen served as Business Development Manager for Quote.com, an Internet
Financial Services Company, from December 1995 to October 1996. From November
1993 to December 1995, he worked as an independent consultant. In August 1991,
Mr. Hyzen founded Pacific Coast Lending, a mortgage brokerage company, and he
served as its President until November 1993. Mr. Hyzen holds a B.S. in Business
Administration from California State University, Northridge.
Alicia Molnar has served as Xoom.com's Vice President, Advertising Sales,
since December 1997. From October 1995 to November 1997, Ms. Molnar held a
number of management positions with Lycos, most recently as Director of Sales,
Eastern Region. From December 1994 until September 1995, Ms. Molnar served as
Director of Network Sales for Point Communications. Prior to joining Point
Communications, Ms. Molnar was a Regional Sales Manager for College Bound
Magazine from September 1993 until October 1994. From February 1992 to August
1993, she was employed as a Senior Account Manager for Linnette & Harrison,
15
<PAGE>
an advertising agency. From January 1990 to December 1992, she worked as an
Account Manager for Chalek & Chalek, an advertising agency. Ms. Molnar holds a
B.A. in Communications from Montclair State University.
Janine Popick has served as Xoom.com's Vice President, E-commerce since
April 1998. From November 1997 until April 1998, Ms. Popick served as Manager of
Direct Marketing for FileMaker, Inc., a wholly-owned subsidiary of Apple
Computer. From January 1996 to November 1997, Ms. Popick served as Manager of
Direct Marketing of Insignia Solutions, a computer software company. Prior to
joining Insignia Solutions, Ms. Popick served as Manager of Direct Marketing of
Claris Corporation, a computer software company, from September 1994 to January
1996. From December 1993 to August 1994, Ms. Popick served as Manager of Direct
Marketing for Symantec Corporation, a software company. She was an account
executive at JDA Corp., an enterprise software solutions company, from September
1993 to December 1993. Ms. Popick holds a B.A. in Communications and English
from Hofstra University.
Marc Sznajderman has served as Xoom.com's Vice President, Corporate
Development since December 1998. From August 1993 until November 1998, Mr.
Sznajderman served as a member of the Investment Banking Division of Bear,
Stearns & Co. Inc., most recently as Vice President. Prior to joining Bear
Stearns, Mr. Sznajderman served as Vice President of Business Development for
Qantix Corporation, a manufacturer and marketer of computer accessories, from
August 1991 until June 1992. From August 1989 until July 1991 Mr. Sznajderman
was a member of the Investment Banking Division of Goldman, Sachs & Co. Mr.
Sznajderman holds a B.S. in Finance from Syracuse University and a Masters in
Management from the J.L. Kellogg Graduate School of Management at Northwestern
University.
16
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning compensation
of Xoom.com's Chief Executive Officer and each of Xoom.com's three other most
highly compensated executive officers whose aggregate salary, bonus and other
compensation exceeded $100,000 during the fiscal year ended December 31, 1998
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- -----------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)
- --------------------------------------------------------------------- ------- ------------ ----------- -----------------
<S> <C> <C> <C> <C>
Laurent Massa........................................................ 1998 216,124 15,593 158,333
President and Chief Executive Officer 1997 182,600 -- 83,333
1996 42,000 -- 258,334
Russell S. Hyzen..................................................... 1998 120,011 40,000 53,333
Vice President, Business Development 1997 120,000 3,333 53,333
1996 20,000 -- 83,333
Alicia Molnar........................................................ 1998 150,085 24,573 26,667
Vice President, Advertising Sales 1997 10,865 -- 120,000
1996 -- -- --
Janine Popick........................................................ 1998 73,547 26,480 136,666
Vice President, E-Commerce 1997 -- -- --
1996 -- -- --
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants to
purchase shares of common stock to each of the Named Executive Officers during
the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL OPTIONS POTENTIAL REALIZABLE VALUE AT
SECURITIES GRANTED TO ASSUMED ANNUAL RATES OF
UNDERLYING EMPLOYEES IN EXERCISE STOCK PRICE APPRECIATION FOR
OPTIONS FISCAL YEAR PRICE PER EXPIRATION OPTION TERM/(3)/
-------------------------------
NAME GRANTED/(1)/ 1998/(2)/ SHARE DATE 5%($) 10%($)
- ------------------ --------------- --------------- ----------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Laurent Massa 158,333 8.1% $14.00 12/7/2008 $1,394,047 $3,532,788
Russell S. Hyzen 13,333 0.7% $ 3.33 6/1/2008 27,922 70,760
40,000 2.0% $14.00 12/7/2008 352,181 892,496
Alicia Molnar 26,667 1.4% $14.00 12/7/2008 234,790 595,005
Janine Popick 43,333 2.2% $ 3.33 6/1/2008 90,749 229,975
33,333 1.7% $ 2.31 3/17/2008 48,424 122,717
60,000 3.1% $14.00 12/7/2008 528,271 1,338,744
</TABLE>
_________________________
17
<PAGE>
(1) Options granted under Xoom.com's 1998 Stock Incentive Plan have a
maximum ten-year term measured from the date of grant. Such options generally
vest over either a four-year period or a two-year period. The four-year period
options become exercisable for 25% of the option shares commencing upon the
optionee's completion of one year of service measured from the vesting
commencement date and the balance in a series of 36 successive monthly
installments upon the optionee's completion of each additional month of service
over the 36-month period measured from the first anniversary of the vesting
commencement date. The two-year period options vest in a series of 24 successive
monthly installments and become exercisable for 100% of the option shares upon
achievement of certain performance targets. Under the 1998 Stock Incentive Plan,
the exercise price per share generally is the closing selling price of
Xoom.com's common stock the day before the vesting commencement date. In the
event of a "change of control," as defined in the 1998 Stock Incentive Plan, 75%
of any outstanding unvested options shall accelerate to become exercisable in
full.
(2) Based on options to purchase an aggregate of 1,957,225 shares of
common stock granted during fiscal 1998.
(3) In accordance with the rules of the Securities and Exchange
Commission, shown are the hypothetical gains or "option spreads" that would
exist for the respective options. These gains are based on assumed rates of
annual compounded stock price appreciation of 5% and 10% from the date the
option was granted over the full option term, assuming a fair market value equal
to the exercise price per share on the date of grant. The 5% and 10% assumed
rates of appreciation are mandated by the Commission and do not represent
Xoom.com's estimate or projection of future increases in the price of Xoom.com's
common stock.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1998 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information as of December 31, 1998
concerning exercisable and unexercisable stock options held by each of the Named
Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE YEAR END (#) FISCAL YEAR END (#)(1)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------------- ----------------- -------------- ---------------------------- ---------------------------
<S> <C> <C> <C> <C>
Laurent Massa.................... -- -- 247,398 / 252,602 $8,156,712 / 6,116,376
Russell S. Hyzen................. -- -- 104,722 / 85,277 3,452,684 / 2,208,784
Alicia Molnar.................... -- -- 68,334 / 78,333 2,252,972 / 2,210,101
Janine Popick.................... -- -- 10,000 / 126,666 296,700 / 3,151,980
</TABLE>
_________________
(1) Based on the fair market value of our common stock at December 31,
1998, of $33.00 per share, less the exercise price for such shares.
18
<PAGE>
EMPLOYMENT AGREEMENTS
Laurent Massa
On July 1, 1998, Laurent Massa, Xoom.com's President and Chief Executive
Officer, entered into an employment agreement with Xoom.com. This agreement
provides for an annual salary of $216,000. Mr. Massa is also eligible for an
annual bonus of up to 33% of his base salary, paid quarterly based on the
following criteria: (A) exceeding quarterly revenue goals: 50% of the eligible
Bonus; (B) achieving specific management team goals: 25% of the eligible bonus;
and (C) achieving personal objectives that improve the organization: 25% of the
eligible bonus. The Compensation Committee will set the goals and review them
quarterly. Should Xoom.com terminate Mr. Massa without Cause (as defined in the
agreement), Xoom.com must provide Mr. Massa 180 days' advance written notice,
and Xoom.com may in Xoom.com's discretion terminate Mr. Massa's employment at
any time prior to the end of this notice period, provided Xoom.com pay Mr. Massa
an amount equal to his base compensation plus benefits Mr. Massa would have
earned through the balance of the notice period. If Xoom.com exercise Xoom.com's
right to terminate Mr. Massa without Cause, Mr. Massa shall be immediately
entitled to exercise 100% of any stock options Xoom.com has granted to him that
had not previously vested. Mr. Massa may exercise his vested stock options for a
four month period from the date Xoom.com notifies him of Xoom.com's intention to
terminate his employment.
Should Xoom.com terminate Mr. Massa for Cause, Xoom.com must pay Mr. Massa
all compensation due on the date of termination. In the event of a Change in
Control or Corporate Transaction (as defined in the agreement) as a result of
which Mr. Massa's employment with Xoom.com is involuntarily terminated, with or
without cause, Mr. Massa will be entitled to payment of an amount equal to one
year's base compensation plus benefits, and all stock options Xoom.com
previously granted to Mr. Massa will immediately become fully vested and
exercisable.
Under the terms of his agreement, Mr. Massa may terminate his employment
with Xoom.com at any time for any reason by providing Xoom.com with thirty days'
advance written notice. Should Mr. Massa's employment with Xoom.com terminate
for any reason, the agreement further provides that Mr. Massa: (A) will not use
any of Xoom.com's proprietary information without Xoom.com's prior written
consent; (B) will not use any confidential information to compete against
Xoom.com or any of Xoom.com's employees; and (C) will not, for one year
following termination, solicit any of Xoom.com's customers or employees.
Mr. Massa will be eligible for an annual review of his agreement no later
than July 20, 1999.
Pursuant to a letter agreement entered into prior to fiscal 1998, Xoom.com
granted Mr. Massa options to purchase up to an aggregate of 341,667 shares of
common stock at a per share exercise price of $0.03.
John Harbottle
On August 4, 1998, John Harbottle, Xoom.com's Chief Financial Officer,
entered into an employment agreement with Xoom.com. The agreement provides for
an annual salary of
19
<PAGE>
$144,000, which was increased to $180,000 in April 1999. Mr. Harbottle is also
eligible for a discretionary quarterly bonus of up to $10,000. Should Xoom.com
terminate Mr. Harbottle without Cause (as defined in the agreement), Xoom.com
must provide Mr. Harbottle 180 days' advance written notice, and Xoom.com may in
Xoom.com's discretion terminate Mr. Harbottle's employment at any time prior to
the end of this notice period, provided Xoom.com pay Mr. Harbottle an amount
equal to his base compensation plus benefits Mr. Harbottle would have earned
through the balance of the notice period. If Xoom.com exercise Xoom.com's right
to terminate Mr. Harbottle without Cause, Mr. Harbottle shall be immediately
entitled to exercise 100% of any stock options Xoom.com have granted to him that
had not previously vested. Mr. Harbottle may exercise his vested stock options
for a four month period from the date Xoom.com notifies him of Xoom.com's
intention to terminate his employment.
Should Xoom.com terminate Mr. Harbottle for Cause, Xoom.com must pay Mr.
Harbottle all compensation due on the date of termination. In the event of a
Change in Control or Corporate Transaction (as defined in the agreement) as a
result of which Mr. Harbottle's employment with Xoom.com is involuntarily
terminated, with or without cause, Mr. Harbottle will be entitled to payment of
an amount equal to 6 months' base compensation plus benefits, and all stock
options Xoom.com previously granted to Mr. Harbottle will immediately become
fully vested and exercisable.
Under the terms of his agreement, Mr. Harbottle may terminate his
employment with Xoom.com at any time for any reason by providing Xoom.com with
thirty days' advance written notice. Should Mr. Harbottle's employment with
Xoom.com terminate for any reason, the agreement further provides that Mr.
Harbottle: (A) will not use any of Xoom.com's proprietary information without
Xoom.com's prior written consent; (B) will not use any confidential information
to compete against Xoom.com or any of Xoom.com's employees; and (C) will not,
for one year following termination, solicit any of Xoom.com's customers or
employees.
Pursuant to a letter agreement entered into prior to Mr. Harbottle's
employment agreement, Xoom.com granted to Mr. Harbottle options to purchase up
to 86,667 shares of common stock at a per share exercise price of $6.75 and
options to purchase up to 20,000 shares of common stock at a per share exercise
price of $12.00.
Vijay Vaidyanathan
We have entered into an employment agreement, dated March 10, 1998, as
amended on August 12, 1998, with Vijay Vaidyanathan, Xoom.com's Chief Technical
Officer. The agreement provides that Mr. Vaidyanathan receives a yearly salary
of $120,000. Mr. Vaidyanathan is also entitled to participate in Xoom.com's
medical, dental and vision insurance plan and in any other employee benefit plan
Xoom.com adopt. Should Xoom.com terminate Mr. Vaidyanathan without Cause (as
defined in the agreement), Xoom.com must provide Mr. Vaidyanathan 90 days'
advance written notice, and Xoom.com may in Xoom.com's discretion terminate Mr.
Vaidyanathan's employment at any time prior to the end of this notice period,
provided Xoom.com pay Mr. Vaidyanathan an amount equal to his base compensation
plus benefits Mr. Vaidyanathan would have earned through the balance of the
notice period. In the event Xoom.com exercise Xoom.com's right to terminate Mr.
Vaidyanathan without Cause, Mr. Vaidyanathan shall be immediately entitled to
exercise 100% of any stock options Xoom.com has granted to him that had not
previously vested. Mr. Vaidyanathan may exercise his vested
20
<PAGE>
stock options for a four month period from the date Xoom.com notify him of
Xoom.com's intention to terminate his employment.
Should Xoom.com terminate Mr. Vaidyanathan for Cause, Xoom.com must pay Mr.
Vaidyanathan all compensation due on the date of termination. In the event of a
Change in Control or Corporate Transaction (as defined in the agreement) as a
result of which Mr. Vaidyanathan's employment with Xoom.com is involuntarily
terminated, with or without cause, Mr. Vaidyanathan will be entitled to payment
of an amount equal to 6 months' base compensation plus benefits, and all stock
options Xoom.com previously granted to Mr. Vaidyanathan will immediately become
fully vested and exercisable.
Under the terms of his agreement, Mr. Vaidyanathan may terminate his
employment with Xoom.com at any time for any reason by providing Xoom.com with
thirty days' advance written notice. Should Mr. Vaidyanathan's employment with
Xoom.com terminate for any reason, the agreement further provides that Mr.
Vaidyanathan: (A) will not use any of Xoom.com's proprietary information without
Xoom.com's prior written consent; (B) will not use any confidential information
to compete against Xoom.com or any of Xoom.com's employees; and (C) will not,
for one year following termination, solicit any of Xoom.com's customers or
employees.
Mr. Vaidyanathan will be eligible for an annual review of his agreement no
later than August 12, 1999. Under the agreement, Xoom.com granted Mr.
Vaidyanathan options to purchase up to 93,334 shares of common stock at a per
share exercise price of $2.31.
Russell Hyzen
On July 20, 1998, Russell S. Hyzen, Xoom.com's Vice President Business
Development, entered into an employment agreement with Xoom.com. The agreement
provides for an annual salary of $120,000 and a discretionary bonus of up to
$10,000 per quarter to be paid upon achievement of personal and company targets
to be defined. Should Xoom.com terminate Mr. Hyzen without Cause (as defined in
the agreement), Xoom.com is required to provide Mr. Hyzen 90 days' advance
written notice, and Xoom.com may in Xoom.com's discretion terminate Mr. Hyzen's
employment at any time prior to the end of this notice period, provided Xoom.com
pay Mr. Hyzen an amount equal to his base compensation plus benefits Mr. Hyzen
would have earned through the balance of the notice period. If Xoom.com exercise
Xoom.com's right to terminate Mr. Hyzen without Cause, Mr. Hyzen shall be
immediately entitled to exercise 100% of any stock options Xoom.com have granted
to him that had not previously vested. If Mr. Hyzen is terminated without Cause,
he may exercise his vested stock options for a four month period from the date
Xoom.com notify him of Xoom.com's intention to terminate his employment.
Should Xoom.com terminate Mr. Hyzen for Cause, Xoom.com must pay Mr. Hyzen
all compensation due on the date of termination. In the event of a Change in
Control or Corporate Transaction (as defined in the agreement) as a result of
which Mr. Hyzen's employment with Xoom.com is involuntarily terminated for any
reason, with or without cause, Mr. Hyzen will be entitled to payment of an
amount equal to 6 months' base compensation plus benefits, and any and all stock
options Xoom.com previously granted to him will immediately become fully vested
and exercisable.
21
<PAGE>
Under the terms of the agreement, Mr. Hyzen may terminate his employment
with Xoom.com at any time for any reason by providing Xoom.com with thirty days'
advance written notice. Should Mr. Hyzen's employment with Xoom.com terminate
for any reason, the agreement further provides that Mr. Hyzen: (A) will not use
any of Xoom.com's proprietary information without Xoom.com's prior written
consent; (B) will not use any confidential information to compete against
Xoom.com or any of Xoom.com's employees; and (C) will not, for one year
following termination, solicit any of Xoom.com's customers or employees.
Pursuant to a letter agreement entered into prior to fiscal 1998, Xoom.com
granted Mr. Hyzen options to purchase up to 136,667 shares of common stock at a
per share exercise price of $0.03.
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") of the Board of Directors
currently consists Bob Ellis and James Heffernan, both of whom are outside
directors of Xoom.com. The Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of Xoom.com and
establishes and reviews general policies relating to compensation and benefits
of employees of Xoom.com. The following is the report of the Committee
describing compensation policies and rationale applicable to Xoom.com's
executive officers with respect to the compensation paid to such executive
officers for the fiscal year ended December 31, 1998. The information contained
in this report shall not be deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under the Securities Act of
1933, as amended, or the 1934 Securities Exchange Act, as amended, except to the
extent that Xoom.com specifically incorporates it by reference in such filing.
COMPENSATION PHILOSOPHY AND REVIEW
Xoom.com's executive compensation program is generally designed to align
the interests of executives with the interests of stockholders and to reward
executives for achieving corporate and individual objectives. The executive
compensation program is also designed to attract and retain the services of
qualified executives in the highly competitive Internet and computer networking
marketplaces. Executive compensation currently consists of a base salary,
quarterly incentive plan, long-term equity incentives, and other compensation
and benefit programs generally available to other employees.
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code on the compensation paid to Xoom.com's executive officers.
Section 162(m) disallows a tax deduction for any publicly-held corporation for
individual compensation exceeding $1.0 million in any taxable year for any of
the executive officers, unless compensation is performance-based. In general, it
is the Committee's policy to qualify, to the maximum extent possible, its
executives' compensation for deductibility under applicable tax laws.
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<PAGE>
BASE SALARIES
Base salary levels for the Chief Executive Officer (the "CEO") and other
executive officers are intended to compensate executives competitively within
the high-technology marketplace. Base salaries are determined on an individual
basis by evaluating each executive's scope of responsibility, past performance,
prior experience and data on prevailing compensation levels in relevant markets
for executive talent. Regarding the latter measure, certain companies included
in the peer group index of the stock performance graph are also included in
surveys reviewed by the Committee in determining salary levels for the CEO and
other executive officers of Xoom.com. Base salaries for executives are reviewed
annually by the Committee.
QUARTERLY INCENTIVE PLAN
Xoom.com provides quarterly incentive bonuses for its executive officers as
well as other key management employees. The quarterly incentive plan is intended
to provide a direct link between management compensation and the achievement of
corporate and individual objectives. The level of bonus is based determined on
an individual basis by evaluating each executive's scope of responsibility. At
the beginning of each quarter, Xoom.com sets certain corporate objectives
(including financial performance goals) and each individual manager sets his or
her own personal objectives to support the achievement of the corporate
objectives. At the end of the quarter, performance is assessed and the level of
bonus payable, if any, is determined. Achievement of corporate objectives is
given more weight than achievement of individual objectives for purposes of
determining the quarterly bonus.
LONG-TERM EQUITY INCENTIVES
Xoom.com provides long-term equity incentives to its executive officers and
to all other employees through the grant of stock options under its stock option
plans. The purpose of granting stock options is to create a direct link between
compensation and the long-term performance of Xoom.com. Stock options are
generally granted at an exercise price equal to 100% of the fair market on the
date of grant, have a ten year term and generally vest in installments over 48
months. Because the receipt of value by an executive officer under a stock
option is dependent upon an increase in the price of Xoom.com's Common Stock,
this portion of the executives' compensation is directly aligned with an
increase in stockholder value. The primary stock options granted to executive
officers are generally in conjunction with the executive officer's acceptance of
employment with Xoom.com. When determining the number of stock options to be
awarded to an executive officer, the Committee considers the executive's current
contribution to Xoom.com's performance, the executive officer's anticipated
contribution in meeting Xoom.com's long-term strategic performance goals, and
comparisons to formal and informal surveys of executive stock option grants made
by other Internet and computer networking companies. The Committee also reviews
stock option levels for executive officers at the beginning of each fiscal year
in light of long- term strategic and performance objectives and each executive's
current and anticipated contributions to Xoom.com's future performance.
Reflecting the increasing scope of Xoom.com's business, the Committee
recommended (and the full Board of Directors granted) stock option grants in
December 1998 for the CEO of 158,333 shares and for the other Named Executive
Officers of an aggregate of 216,666 shares.
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OTHER COMPENSATION
Xoom.com's executive officers are also eligible to participate in
compensation and benefit programs generally available to other employees,
including Xoom.com's Employee Stock Purchase Plan. In addition, from time to
time, executive officers have received sign-on bonuses or other bonuses based on
extraordinary effort.
CEO COMPENSATION
Laurent Massa is President and Chief Executive Officer of Xoom.com. The
Committee reviews Mr. Massa's compensation annually using the same criteria and
policies as are employed for other executive officers. Mr. Massa's compensation
was initially determined in part by the terms of an employment agreement entered
into in July 1998. See "ManagementEmployment Agreements" above. However, the
Committee retains the discretion to increase Mr. Massa's compensation to levels
above those provided in the employment agreement. Mr. Massa did not receive a
salary increase during fiscal 1998, although he received bonuses under the
quarterly incentive plan equal to $15,593. In addition, he received stock
option grants in fiscal 1998 as described above.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Bob Ellis
James Heffernan
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of Xoom.com's Compensation Committee serves as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving as a member of Xoom.com's Board of Directors or
Compensation Committee.
CERTAIN TRANSACTIONS
Some of Xoom.com's Directors, executive officers and affiliates have
entered into stock purchase transactions with Xoom.com, as follows:
. Following Xoom.com's incorporation, Chris Kitze, one of Xoom.com's
founders, purchased 333,334 shares of common stock for cash at a price of
$0.0003 per share, resulting in aggregate proceeds to Xoom.com of $100; and,
pursuant to a Common Stock Purchase Agreement dated August 26, 1996, Naveen
Jain, an affiliate of Xoom.com, purchased 333,334 shares of common stock for
cash at a price of $0.0003 per share, resulting in aggregate proceeds to
Xoom.com of $100. In connection with these transactions, Xoom.com entered into a
Stockholders' Agreement with Mr. Kitze and Mr. Jain. This Stockholders'
Agreement was terminated on February 10, 1998.
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. Pursuant to a Common Stock Purchase Agreement dated December 31, 1996,
Mr. Kitze and Mr. Jain purchased an additional 2,333,334 and 1,000,000 shares,
respectively, of common stock in exchange for the cancellation of promissory
notes in the amount of $700,000 and $300,000, respectively. In the same
agreement, Mr. Jain contributed 666,667 shares of common stock to Xoom.com.
. Pursuant to Common Stock Purchase Agreements dated February 13, 1997
and November 23, 1997, Flying Disc Investments Limited Partnership, of which Mr.
Kitze is a general partner, purchased an additional 1,333,336 and 94,445 shares
of common stock, respectively, from Xoom.com for cash at $0.45 and $0.90 per
share, respectively, resulting in aggregate proceeds to Xoom.com of
approximately $685,000.
. Flying Disc purchased an additional 108,228 shares of common
stock in February 1998 pursuant to a Common Stock Purchase Agreement for cash at
a price of $2.31 per share.
. Under a Common Stock and Warrant Purchase Agreement dated as of April
25, 1998, Flying Disc purchased 30,030 shares of common stock for cash at a per
share price of $3.33 along with a warrant to purchase an additional 6,006 shares
at $3.33 per share, resulting in aggregate proceeds to Xoom.com of approximately
$100,000.
. Under a Common Stock and Warrant Purchase Agreement dated as of June
18, 1998, Internet Ventures, LLC purchased 30,030 shares of common stock for
cash at a per share price of $3.33 along with a warrant to purchase an
additional 6,006 shares at $3.33 per share, resulting in aggregate proceeds to
Xoom.com of approximately $100,000. Mr. Jain is the managing member of Internet
Ventures.
All of the warrants described above were exercised before the completion of
Xoom.com's initial public offering.
In addition to these purchases, under a Stock Purchase Agreement dated
February 13, 1997, Bob Ellis, one of Xoom.com's Directors, purchased 55,556
shares of common stock for cash at a price of $1.80 per share, resulting in
aggregate proceeds to Xoom.com of approximately $100,000. On August 4, 1997, due
to a revaluation of the shares Mr. Ellis purchased, he was awarded an additional
55,556 shares of common stock at the new price of $0.90 per share. In addition,
on the same date, Mr. Ellis purchased an additional 222,222 shares of common
stock for cash at $0.90 per share, resulting in aggregate proceeds to Xoom.com
of approximately $200,000.
Xoom.com has entered into a Consulting Agreement, dated May 15, 1998, with
James J. Heffernan, an outside Director. The agreement will terminate on
November 15, 1999. The agreement provides for Mr. Heffernan to receive a monthly
compensation of $10,000, paid in the form of common stock, and options to buy
16,667 shares of common stock at an exercise price of $3.33 per share. Mr.
Heffernan was granted stock options to buy an additional 16,667 shares of common
stock at an exercise price of $3.33 per share upon completion of Xoom.com's
initial public offering. In addition, Mr. Heffernan was entitled to a finder
fee, payable in shares of common stock, of 5% of any investment he secured on
Xoom.com's behalf between May 15, 1998 and June 30, 1998. Under this
arrangement, Mr. Heffernan received 50,203 shares of common stock.
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Xoom.com has entered into a Content License Agreement dated February 22,
1998, with Classic Media Holdings, whereby Xoom.com were granted certain non-
exclusive, perpetual, world-wide licensing rights in connection with Classic
Media Holdings' library of public domain movies. As consideration for the
license, Xoom.com issued 43,290 shares of common stock to Classic Media
Holdings' principals. Mr. Kitze is a principal of Classic Media Holdings.
Xoom.com entered into employment agreements, indemnification agreements and
other compensation arrangements with Xoom.com's directors and officers. See
"Management--Employment Agreements"
We believe that all of the transactions set forth above were made on terms
no less favorable to Xoom.com than could have been obtained from unaffiliated
third parties. We intend that all future transactions, including loans, between
Xoom.com and Xoom.com's officers, Directors, principal stockholders and their
affiliates will be approved by a majority of the Board of Directors, including a
majority of the independent and disinterested outside Directors on the Board of
Directors, and be on terms no less favorable to Xoom.com than could be obtained
from unaffiliated third parties.
STOCK PRICE PERFORMANCE
The following graph shows a comparison of cumulative total stockholder
returns for Xoom.com's Common Stock, the Nasdaq Stock Market Index for U.S.
Companies, and the Hambrecht & Quist Internet Index. The graph assumes the
investment of $100 from December 9, 1998, the date of Xoom.com's initial public
offering, through December 31, 1998. The data regarding the Company assumes an
investment at the initial public offering price of $14.00 per share of
Xoom.com's Common Stock. The performance shown is not necessarily indicative of
future performance.
- --------------------------------------------------------------------------------
Date Xoom.com NASDAQ Index Hambrecht & Quist
Internet Index
- --------------------------------------------------------------------------------
12/9/98 $100 $100 $100
- --------------------------------------------------------------------------------
12/31/98 $235.71 $106.94 $114.73
- --------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires Xoom.com's
officers and directors, and persons who own more than 10% of a registered class
of Xoom.com's equity securities, to file certain reports regarding ownership of,
and transactions in, Xoom.com's securities with the Securities and Exchange
Commission. Such officers, directors and 10% stockholders are also required by
Securities and Exchange Commission rules to furnish Xoom.com with copies of all
Section 16(a) forms that they file. Based solely on its review of the copies of
such forms received by it, or written representations from certain reporting
persons, Xoom.com believes that for the year ended December 31, 1998, all
reporting persons complied with Section 16(a) filing requirements except as set
forth below:
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Mr. Sznajderman timely filed a Form 3 in which a transaction was not
reported correctly, and subsequently filed a corrective amendment thereto.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of Xoom.com which are intended to be presented by
such stockholders at Xoom.com's 2000 Annual Meeting of Stockholders must be
received by Xoom.com no later than __________ to be included in the proxy
statement and form of proxy relating to that meeting. The deadline for
submitting a stockholder's proposal that will not be included in the proxy
statement and form of proxy for Xoom.com's 1999 Annual Meeting of Stockholders
but nonetheless will be eligible for consideration is __________, 2000.
OTHER MATTERS
Xoom.com knows of no other matters that will be presented for consideration
at the Annual Meeting. If any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of Proxy
to vote the shares they represent as the board of directors may recommend.
Discretionary authority with respect to such other matters is granted by the
execution of the enclosed Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOHN HARBOTTLE
John Harbottle
Vice President, Finance and Chief Financial
Officer
and Assistant Secretary
San Francisco, California
April __, 1999
27
<PAGE>
PROXY
XOOM.COM, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 26, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Laurent Massa and John Harbottle and each
of them as Proxies of the undersigned, with full power of substitution, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of Common Stock of Xoom.com, Inc. (the "Company"), held of record by the
undersigned on March 29, 1999 at the Annual Meeting of Stockholders of Xoom.com,
Inc. to be held on May 26, 1999, or at any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NOS. 1, 2 AND 3.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED ON THE REVERSE
SIDE. THIS PROXY WILL BE VOTED FOR PROPOSAL NOS. 1, 2 AND 3 IF NO SPECIFICATION
IS MADE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
The Board of Directors recommends a vote FOR Proposal Nos. 1, 2 and 3.
This Proxy will be voted FOR Proposal Nos. 1, 2 and 3 if no specification is
made.
1. To elect seven directors to serve for a one-year term or until their
successors are duly elected and qualified.
NOMINEES: Jeffrey Ballowe, Bob Ellis, James Heffernan, Robert C. Harris,
Jr., Chris Kitze, Laurent Massa and Philip Schlein
2. To approve an amendment to the Company's 1998 Stock Incentive Plan to
increase the number of shares of Common Stock authorized for issuance over the
term of the 1998 Stock Incentive Plan by an additional 2,000,000 shares.
3. To approve an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of the Company's Common Stock from
40,000,000 shares to 80,000,000 shares.
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting, including the election of any
director if any of the above nominees is unable to serve or for good cause will
not serve
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE
Please sign exactly as your name(s) is (are) shown on the shares
certificate to which the Proxy applies. When shares are held by joint tenants,
both should 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.
Signature:_______ Date:________ Signature:_________ Date:__________
