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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange act of 1934
File by the Registrant [X]
Filed by a Party other than the registrant [ ]
Check the appropriate box:
[] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
(as permitted by Rul2 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Streamedia Communications, Inc.
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(Name of Registrant as Specified in Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14(a)-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value transaction computed
pursuant to the Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(3) Date filed:
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Notes:
[LOGO OF STREMEDIA]
Notice of Annual Meeting of Stockholders
to be held May 17, 2000
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TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders
of Streamedia Communications, Inc. ("Streamedia" or the "Company") which will be
held at the Williams Club located at 24 East 39th Street, New York, New York, on
May 17, 2000 at 11:00 am, local time, for the following purposes:
1. Discussion of the Company's operations;
2. Election of Directors for the ensuing year;
3. Approval of Amendment of a 500,000 share increase in the
maximum number of shares of Common Stock reserved for issuance
under the Company's 1999 Incentive and Nonstatutory Stock
Option Plan.
4. Ratification of Grant Thornton LLP as independent certified
public accountants for the Company for fiscal year ending
December 31, 2000.
5. To act upon such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 24,
2000, as the record date for determining those Stockholders who will be entitled
to vote at the meeting. The stock transfer books will not be closed between the
record date and the date of the meeting.
Representation of at least a majority of all outstanding shares of
Common Stock of Streamedia Communications, Inc., is required to constitute a
quorum. Accordingly, it is important that your shares be represented at the
meeting. Whether or not you plan to attend the meeting, please complete, date,
and sign the enclosed proxy card and return it in the enclosed envelope.
Please read the proxy material carefully. Your vote is important and
the Company appreciates your cooperation in considering and acting on the
matters presented.
If you plan to attend the meeting, please follow the advanced
registration instructions on the back of this Proxy Statement. An admission card
will be mailed to you prior to the meeting. If you plan not to attend, you can
be sure your shares are represented at the meeting by promptly voting and
submitting your proxy by completing, signing, dating, and Proxy Form in the
enclosed envelope.
Very Truly yours,
/s/ James Rupp
-------------------------------------
Director and Chief Executive Officer
New York, New York
April 24, 2000
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----------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS OF
STREAMEDIA COMMUNICATIONS, INC.
----------------------------------
TO BE HELD ON MAY 17, 2000
This Proxy Statement is furnished in connection with the solicitation
of proxies by Streamedia Communications, Inc., on behalf of the Board of
Directors for the 2000 Annual Meeting of Stockholders. The annual meeting will
be held at The William's Club located at 24 East 39th Street, New York, New
York, on May 17, 2000 at 11:00 am, local time, or any adjournments or
postponements thereof, for the purposes of set forth in the accompanying Notice
of Annual Meeting to Stockholders. This proxy Statement and the proxy card were
first mailed to Stockholders on or about April 25, 2000.
VOTING RIGHTS AND SOLICITATION
The close of business on April 24, 2000 was the record date for
Stockholders entitled to notice of, and to vote at, the Annual Meeting. As of
that date, Streamedia had 4,742,004 shares of common stock, $0.001 par value per
share (the "Common Stock"), issued and outstanding. All of the shares of the
Company's Common Stock outstanding on the record date are entitled to vote at
the Annual Meeting, and Stockholders of record entitled to vote at the meeting
will have one (1) vote for each share held on the matters to voted upon.
Shares of the Company's Common Stock represented by proxies in the
accompanying form which are properly executed and returned to Streamedia will be
voted at the Annual Meeting of Stockholders in accordance with the Stockholders'
instructions contained therein. In the absence of contrary instructions, shares
represented by such proxies will be voted FOR the election of the directors as
described herein under "Proposal 1 - Election of Directors," FOR proposal to
amend the 1999 Incentive and Nonstatutory Stock Option Plan (the "1999 Plan") as
described herein under "Proposal 2 - Approval of Amendment to the Company's 1999
Incentive and Nonstatutory Stock Option Plan," and FOR proposal to ratify the
selection of the independent accountants as described herein under "Proposal
3--Ratification of Grant Thornton LLP as Independent certified public
Accountants."
Election of directors by Stockholders shall be determined by a
plurality of the votes cast by Stockholders entitled to vote at the election
that are present in person or represented by proxy. The approval of the proposal
to increase the authorized shares available for issuance under the 1999 Stock
Option Plan and ratification of the appointment of the independent certified
public accountants require a majority of the votes cast to be affirmative.
Abstentions and broker non-votes are each included in the determination of the
number of shares present for quorum purposes. A broker "non-vote"
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occurs when a nominee holding shares for a beneficial holder does not have
discretionary voting power and does not receive voting instructions from the
beneficial owner. Abstentions are counted in tabulations of the votes cast on
proposals presented to Stockholders, where as broker non-votes are not counted
for purposes of determining whether a proposal has been approved
Management does not know of any matters to be presented at this Annual
Meeting other than those set forth in this Proxy Statement and in the Notice
accompanying this Proxy Statement. If other matters should properly come before
this meeting, the proxy holders will vote on such matters in accordance with
their best judgment.
Any Stockholder has the right to revoke his or her proxy at any time
before it is voted by giving written notice of such revocation to the Chief
Operating Officer of the Company. Any written notice revoking the proxy, and any
later dated proxy, should be sent to Nicholas Malino at Streamedia
Communications located at 244 W 54th Street, New York, New York 10019.
The cost of soliciting the proxies on the accompanying form has been or
will be borne by the Company. In addition to solicitation by mail, the Company
will request banks, brokers and other custodians, nominees, and fiduciaries to
send proxy materials to the beneficial owners and to secure their voting
instructions, if necessary. The Company will reimburse such banks, brokers,
custodians, and nominees and fiduciaries for their expenses in so doing. The
Company has retained American Securities Transfer and Trust, Inc., its transfer
agent, to assist in the solicitation of proxies at an estimated cost of $614.00
including expenses, which will be paid by the Company. These proxy materials are
first being mailed to Stockholders on or about April 25, 2000. The Company's
Annual Report to Stockholders for the fiscal year ended December 31, 1999, is
being furnished concurrently herewith to Stockholders of record. Additional
copies of the Annual Report may be obtained upon written request to Nicholas
Malino at Streamedia Communications located at 244 W 54th Street, New York, New
York 10019.
PROPOSAL 1
ELECTION OF DIRECTORS
At the 2000 Annual Meeting, all members of the Board of Directors are
to be elected and will hold office until the 2001 Annual Meeting and until their
successors have been elected and have qualified. The nominees listed on pages 5
through 8, with brief biographies are all Streamedia directors. Robert Shuey and
James Schroeder became members of the Board of Directors in January 2000. The
Board knows of no reason why any nominee is unable to serve. The shares
represented by all valid proxies will be voted for the election of such other
person as the board may recommend.
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<TABLE>
<CAPTION>
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NAME AGE DIRECTOR SINCE POSITION
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<S> <C> <C> <C>
Gayle Essary 59 1998 Chairman of the Board, VicePresident
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James Rupp 38 1998 Director, President, Chief
Executive Officer
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Nicholas Malino 49 1998 Director, Executive Vice President, Chief Operating
Officer, Chief Financial Officer
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Robert Wussler 60 1999 Director
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David Simonetti 30 1999 Director
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Henry Siegel 56 1999 Director
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Robert Shuey 45 2000 Director
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James Schroeder 50 2000 Director
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</TABLE>
Gayle Essary is one of the founders of Streamedia and has served as
Chairman of the Board of Directors and Vice President-Strategic Development
since its inception. From September 1996 to the present, Mr. Essary has served
as Chairman of the Board of Directors of IRI, Inc. a publicly-held company in
the investment data and information industry. He has also served as IRI's Chief
Executive Officer from July 1997 to the present. From 1995 to 1997, Mr. Essary
was founder and publisher of StreetLevel, the Waaco Kid's Forum newsletters, and
other electronic products which have since merged into Capital Markets
Communications Corporation. From 1988 to 1997, Mr. Essary was a Principal of New
York Management Group, which provided consulting and support services to various
firms and organizations, including The Thomson Corporation. From 1981 to 1988,
Mr. Essary was Managing Director of the Media Financial Group and The Media
Center, both companies engaged in consulting for media properties. From 1973 to
1980, Mr. Essary was President of ESCO Publishing Co., Inc., and Huthig-ESCO
Publishing, Inc., which published two international dental business magazines,
one of which led its field in distribution and advertising revenues. Mr. Essary
studied journalism at The University of Texas.
James D. Rupp is one of the founders of Streamedia and has served as
Chief Executive Officer, President and Director since Streamedia's inception.
From July 1997 to September 1998, Mr. Rupp served as President, Chairman and
Chief Executive Officer of Capital Markets Communications Corporation, an editor
and publisher of a series of electronic newsletters, including
StreetSignals(TM), TradeSignals(TM), PowerSignals(TM), AmexWire(TM), and the
Waaco Kid's Forum(TM). Mr. Rupp continues as Capital Markets' Chairman. Mr. Rupp
organized Web2Ventures, L.L.C., a company formed in February, 1998 to incubate,
capitalize, and invest in emerging internet firms. Since its inception,
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Mr. Rupp has served as the Manager of Web2Ventures. From 1990 to 1996, Mr. Rupp
served as General Manager of a restaurant management concern in New York City.
Mr. Rupp holds a Bachelor of Arts degree from the State University of New York
at Binghamton and has pursued graduate studies in information sciences and
literature at the Universities of Delaware and Maryland.
Nicholas Malino has served on the Board of Directors since December
1998 and as Streamedia's Chief Financial Officer since December of 1998 and as
Executive Vice President and Chief Operating Officer since August of 1999.
Previously, he served as President and Chief Executive Officer of ATC Group
Services, Inc., a $160 million national business services firm, providing
specialized technical and project management services to Fortune 500 companies
and federal, state, and local government agencies. During his tenure, he
completed 16 acquisitions, ranging in size from $1 million to $85 million in
gross revenues, during which time the company achieved the second highest
price/earnings ratio in its sector. ATC Group Services also led its sector in
profitability for 12 consecutive quarters. Mr. Malino has both a Masters of
Business Administration degree in Finance, and Masters and Bachelor of Science
degree in Biology from the University of Bridgeport.
Robert J. Wussler has served as a Director of Streamedia since February
of 1999. Mr. Wussler is the Chairman of the Board of Directors of US Digital
Communications, Inc., a publicly-held company. From 1992 to the present, he has
served as the President and Chief Executive Officer of the Wussler Group, a
media consulting firm. From 1994 to the present, Mr. Wussler has served as the
President and Chief Executive Officer of Affiliate Enterprises, Inc., a company
formed by ABC Television affiliates to pursue new business opportunities,
including emerging technology applications. From 1989 to 1992, Mr. Wussler was
the President and CEO of COMSAT Video Enterprises, a major supplier of satellite
entertainment to the nation's lodging industry. Between 1980 and 1989, Mr.
Wussler served as Senior Vice President, Corporate Executive Vice President, and
President of Turner Broadcasting's Superstation, WTBS. During his 10 years at
Turner, Mr. Wussler co-founded and organized CNN Headline News, and became a key
player in the development of WTBS and the formation of TNT. Prior to joining
Turner, Mr. Wussler served as President of CBS Sports and the CBS Television
Network. Mr. Wussler is a past Chairman of the National Academy of Television
Arts and Sciences, and recipient of five Emmy Awards. Mr. Wussler also serves on
the Board of Directors of Ednet, Inc., a publicly held company which develops
and markets integrated digital communications systems for the entertainment
industry, and the Board of Directors of The Cousteau Society.
David J. Simonetti has served as a Director of Streamedia since
September of 1998. Since October of 1998, Mr. Simonetti has served as
Co-Chairman and Chief Executive Officer of VentureNow, LLC., a private venture
capital concern. From August 1997 to December 1998, Mr. Simonetti was Chief
Executive Officer of Invoke Distribution, L.L.C., a marketing and advertising
company. From February 1997 to October 1998, Mr. Simonetti was Chief Executive
Officer of Projix Corporation, an Internet software company. From October 1994
through February 1997,
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Mr. Simonetti served as Vice President and Chief Operating Officer of Edmar,
Inc., a construction management company. Mr. Simonetti also serves on the Board
of Directors of NuOncology Labs, Inc., a publicly-held company. Mr. Simonetti
holds a Bachelor of Arts degree from Marlboro College, in Malboro, Vermont.
Henry Siegel has served as a Director of Streamedia since February of
1999. From 1995 to the present, Mr. Siegel has been the Chairman and Chief
Executive Officer of Kaleidoscope Media Group, a publicly held company.
Kaleidoscope is a worldwide distributor of television and home video programming
including the ESPY Awards Show. Mr. Siegel began his career at Grey Advertising
and in 1974 he was placed in charge of its media operation, managing all areas
of media planning, research and execution. In 1976, Mr. Siegel founded Lexington
Broadcasting Services (LBS), where he pioneered the concept of barter
syndication (advertiser-supported television). As Chairman and Chief Executive
Officer of LBS, Mr. Siegel developed numerous successful television series,
including Fame and Baywatch. Mr. Siegel has been named by Advertising Age
Magazine as one of the pioneers of the first 50 years of television.
Robert A. Shuey, III has served as a director of Streamedia since
January 2000. Mr. Shuey is the Chief Executive Officer and a Managing Director
of Investment Banking for Institutional Equity, Inc. From September 1997 to
December 1998, Mr. Shuey was a Managing Director of Investment Banking for Tejas
Securities Group (a broker/dealer). From June 1996 to September 1997, Mr. Shuey
was a vice president of investment banking at National Securities Corporation (a
broker/dealer). From April 1994 to June 1996, Mr. Shuey was a vice president of
investment banking at Centex Securities Corp. (a broker/dealer) and prior to
that he was associated with various securities broker/dealers. He is a member of
the Board of Director of Institutional Equity Corporation, Autobond Acceptance
Corporation, Transnational Finance Corporation, Rampart Capital Corporation, and
Bio Agua Systems, Inc. Mr. Shuey is a graduate of Babson College with a Degree
in Economics and Finance.
James W. Schroeder has served as a director since January 2000. Prior
to that and since March 1999, he served as Advisor to the Board of Directors of
Streamedia. Since 1984, Mr. Schroeder has been Vice President-Tax, Thomson U.S.
Holdings Inc. - the U.S. subsidiary of the Thomson Corporation, an e-commerce
and solutions company. Prior to joining The Thomson Corporation, he was Vice
President-Tax for BBDO, Inc., now Omnicom, Inc., where he started the company's
worldwide tax department and was Tax Supervisor for the Celanese Corp., now
Hoescht-Celanese, and Tax Analyst for Chase Manhattan Bank, NA. Mr. Schroeder is
a member of the Manhattan Chapter of the Tax Executives Institute, Chair of the
Electronic Publishing subcommittee of the Media Tax Group, Chair of its
delegation to the NTA Electronic Commerce and Telecommunications Project and a
member of the International Tax Foundation, International Fiscal Association,
Foreign Owned Group, Stamford Tax Association and the Newspaper Association of
America. Mr. Schroeder obtained his MBA from Pace University and his Bachelor's
Degree from the State University of New York at Albany
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The Board of Directors recommends that Stockholders vote FOR election
of all of the above nominees as directors.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held a total of eight meetings
during fiscal 1999. The average attendance by the directors at the board
meetings was over 80%.
AUDIT COMMITTEE.
The Audit Committee is composed of Messrs. Simonetti, Malino and
Schroeder. During fiscal year 1999, Mr. Siegel held the seat currently held by
Mr. Schroeder. The Audit Committee is charged with reviewing the Company's
annual audit and meeting with the Company's independent accountants of Grant
Thornton LLP., to review the Company's internal controls and financial
management practices. The Audit Committee held three meetings in fiscal 1999.
THE COMPENSATION COMMITTEE
The Compensation Committee consists of Messrs. Wussler, Schroeder, and
Essary. From March 25, 1999, to January 12, 2000, Mr. Simonetti held the seat on
the Compensation Committee now held by Mr. Schroeder. The Compensation Committee
makes recommendations to the board of directors with respect to the compensation
arrangements and plans for executive officers, senior employees, and directors
of the Company and administers the 1999 Incentive and Nonstatutory Stock Option
Plan. The Compensation Committee held one meeting in fiscal 1999.
COMPENSATION OF DIRECTORS
The directors of the Company who are employees do not receive any
compensation from the Company for services rendered as directors. Outside
directors receive $1,000 a month pay plus travel expenses, reimbursements, and
$500 per meeting attended. Under the 1999 Incentive and Nonstatutory Stock
Option Plan, Mr. Simonetti was issued 10,000 options and Mr. Siegel and Mr.
Wussler were issued 40,000 stock options.
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE COMPANY'S 1999 INCENTIVE AND
NONSTATUTORY STOCK OPTION PLAN TO INCREASE
AUTHORIZED SHARES
The Company's Stockholders are being asked to approve a 500,000 share
increase in the maximum number of shares of Common Stock reserved for issuance
under the Company's 1999 Incentive and Nonstatutory Stock Option Plan (the "1999
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Plan") from 500,000 shares of Common Stock to 1,000,000 shares of Common Stock.
The Company has granted options to purchase Common Shares which, if all such
options were exercised, would require the issuance of a number of Common Shares
which would exceed the number reserved for issuance under the 1999 Plan.
The proposed share increase will assure that a sufficient reserve of
Common Stock is available under the 1999 Plan to attract and retain the services
of key individuals essential to the Company's long term growth and success.
The 1999 Plan became effective on June 29, 1999 (the "Effective Date")
upon the adoption by the Board. The amendment to increase the share reserve was
retroactively adopted by the Board on December 22, 1999. The following is a
summary of the principle features of the 1999 Plan, as amended. The summary,
however, does not purport to be a complete description of all of the provisions
of the 1999 Plan. Any Stockholder of the Company who wishes to obtain a copy of
the actual plan document may do so upon written request to the Company at the
Company's principle executive offices in New York, New York.
Options granted under the 1999 Plan may be either incentive stock
options designed to meet the requirements of Section 422 of the Internal Revenue
Code or non-statutory options not intended to satisfy such requirements.
Administration
The Board of Directors has the exclusive authority to administer the
1999 Plan. However, the Board may delegate this authority to a compensation
committee which must be comprised of at least two non-employee directors.
The Board of Directors and/or the Committee have authority to (a)
grant, in its discretion, Incentive Stock Options in accordance with Code
section 422 or Nonstatutory Options; (b) determine in good faith the fair market
value of the stock covered by an Option; (c) determine which eligible persons
shall be granted Options, the number of shares to be covered by the Options and
the restrictions, terms and conditions thereof; (d) construe and interpret the
Plan; (e) promulgate, amend and rescind rules and regulations relating to its
administration, and correct defects, omissions and inconsistencies in the Plan
or any Option; (f) consistent with the Plan and with the consent of the
Optionee, as appropriate, amend any outstanding Option or amend the exercise
date or dates; (g) determine the duration and purpose of leaves of absence which
may be granted to Optionees without constituting termination of their employment
for the purpose of the Plan; and (h) make all other determinations necessary or
advisable for the Plan's administration.
Share Reserve
Currently, a total of 500,000 shares of Common Stock have been
authorized for issuance under the 1999 Plan. Assuming Stockholder approval of
the 500,000 share
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increase that forms part of this Proposal, 1,000,000 shares of Common Stock will
be authorized for issuance under the 1999 Plan.
Eligibility
Employees, officers, directors and consultants in the service of the
Company will be eligible to participate in the 1999 Incentive and Nonstutory
Stock Option Plan. As of March 10, 2000, three Executive Officers, four
non-associate Board members, and 28 other employees were eligible to participate
in the 1999 Plan.
Valuation
Fair market value per share of common stock on any relevant date under
the 1999 Plan will be the average of the bid and asked prices (or the closing
price if the stock is listed on the NASDAQ National Market System) on the date
of grant of the option, or if listed on a stock exchange, the closing price on
such exchange on the date of grant.
Price and Exercisability
Any Optionee who at the time of the grants owns stock possessing more
than ten percent (10%) of the total combined voting power or value of all
classes of stock of the Corporation, ("Ten Percent Holder") shall have an
exercise price of no less than one hundred ten percent (110%) of the fair market
value of the common stock as of the date of grant.
Incentive stock options granted to an optionee who at the time of the
grant is not a Ten Percent Holder shall have an exercise price of no less than
one hundred percent (100%) of the fair market value of the common stock as of
the date of grant.
Nonstatutory Options granted to optionee who at the time the grant is
not a Ten Percent Holder shall have an exercise price of no less than
eighty-five percent (85%) of the fair market value of the common stock as of the
date of grant.
No optionee will have any Stockholder rights with respect to the option
shares until such optionee has exercised the option and paid the exercise price
for the purchased shares. Options are generally not assignable or transferable
other than by will or the laws of inheritance and, during the optionee's
lifetime, the option may be exercised only by such optionee.
Termination of Service
Upon the Optionee's cessation of service, the optionee will have a
limited period of time in which to exercise any outstanding option to the extent
exercisable for vested shares. With respect to nonstatutory options, the Board
of Directors will have the authority to extend or accelerate the period after
the optionee's cessation of service during which optionee's outstanding options
may be exercised.
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STOCK AWARDS
The following table shows, as to each of the Named Executive Officers
in Summary Compensation Table and various indicated individuals and groups, the
number of shares of Common Stock that will be received or allocated to each of
the following under the plan being acted upon.
OPTION TRANSACTIONS
<TABLE>
<CAPTION>
Number of Common Shares Weighted
Subject to Options Granted Average
Under the Plan in Fiscal Year Exercise
Name and Position Ended December 31, 1999 Price(1)
- ----------------- ----------------------- -----
<S> <C> <C>
James Rupp, Director and Chief 0
Executive Officer
Nicholas Malino, Director, Chief 63,000 $7.50
Financial and Operating Officer
Gayle Essary, Chairman of the Board, 0
Vice President
Henry Siegel, Director 40,000 $3.38
Robert Wussler, Director 40,000 $3.38
David Simonetti, Director 10,000 $7.50
Robert Shuey, Director 0
James Schroeder, Director 25,000 $4.20
Executive Group 63,000 $7.50
Non-Executive Director Group 115,000 $3.91
Non-Executive Officer Employee Group 272,000 $4.38
</TABLE>
(1) The weighted option price is rounded to the nearest one-hundredth of a
dollar.
FEDERAL INCOME TAX CONSEQUENCES
Options granted under the 1999 Plan may be either incentive stock
options which satisfy the requirements of Section 422 of the Internal Revenue
Code or non-statutory options which are not intended to meet such requirements.
The Federal income tax treatment for the two types of options differs as
follows:
Incentive Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of disposition. For Federal tax purposes, dispositions are divided into
two categories; (i) qualifying and (ii) disqualifying. A qualifying disposition
occurs if the sale or other disposition is made after the optionee has held the
shares for two or more years after the option date and more
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than one year after the exercise date. If either of these holding periods is not
satisfied, then a disqualifying disposition will result.
Upon a qualifying disposition, the optionee will recognize a long-term
capital gain in an amount equal to the excess of (i) the amount realized upon
the sale or other disposition of the purchased shares over (ii) the exercise
price paid for the shares. If there is a disqualifying disposition of the
shares, then the excess of (i) fair market value of those shares on the exercise
date over (ii) the exercise price paid for the shares will be taxable as
ordinary income to the optionee. Any additional gain or loss recognized upon the
disposition will be recognized as a capital gain or loss by the optionee.
If the optionee makes a disqualifying disposition of the purchased
shares, then the Company will be entitled to an income tax deduction, for the
taxable year in which such disposition occurs equal to the excess of (i) the
fair market value of such shares on the option exercise date over (ii) the price
paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee disposition of the purchased shares.
Non Statutory Options. No taxable income is recognized by an optionee
upon the grant of non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
Deductibility of Executive Compensation
The Company anticipates that any compensation deemed paid by it in
connection with disqualifying disposition of incentive stock option shares or
exercises of non-statutory options granted with exercise prices equal to the
fair market of the option shares on the grant date will qualify as
performance-based compensation for purposes of Code Section 162(m) and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid to certain
executive officers of the Company. Accordingly, all compensation deemed paid
with respect to those options will remain deductible by the Company without
limitation under Code Section 162(m).
Stockholder Approval
The affirmative vote of a majority of the outstanding voting shares of
the Company present or represented and entitled to vote at the meeting is
required for
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approval for the amendment to the 1999 Plan. Should such Stockholder approval
not be obtained, options granted based on proposed share increase may have to be
rescinded. The 1999 Plan will remain in existence in accordance with the
provisions of the plan document in effect immediately prior to the new
amendment, and stock option and direct stock issuances may continue to be made
under the 1999 Plan until the share reserve, as last approved by the
Stockholders, is issued.
The Board of Directors recommends that Stockholders vote FOR the
approval of the amendment to the 1999 Plan.
PROPOSAL 3
RATIFICATION OF GRANT THORNTON LLP AS
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP, independent
certified public accountants, to examine the financial statements of Streamedia
Communications, Inc., for the year ending December 31, 2000, and to perform
other audit and accounting related activities as may be requested from time to
time by management and the Board of Directors.
The Board has directed that the appointment of Grant Thornton LLP be
submitted to the Stockholders for approval. The affirmative vote of a majority
of the shares of Common Stock present or represented and entitled to vote on the
proposal at the Annual Meeting is required for approval. If the Stockholders do
not approve, the Board will reconsider the appointment.
Representatives of Grant Thornton LLP are expected to be present at the
Annual Meeting. They will be available to respond to appropriate questions and
will have an opportunity to make a statement if they so desire.
The Board of Directors recommends that the Stockholders vote FOR the
ratification of the appointment of Grant Thornton LLP as independent certified
public accountants.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth information regarding the beneficial ownership
of the Company's Common Stock as of April 21, 2000 by (i) each person who, as of
the date hereof, was known by us to own beneficially more than five percent (5%)
of our issued and outstanding common stock; (ii) each of the named Executive
Officers; (iii) the individual Directors; and (iv) the Officers and Directors as
a group. As of the date hereof, there were 4,742,004 common shares issued and
outstanding.
The following sets forth the number of shares of our $.001 par value
common stock beneficially owned by (i) each person who, as of the date hereof,
was known by us
14
<PAGE>
to own beneficially more than five percent (5%) of our issued and outstanding
common stock; (ii) each of the named Executive Officers; (iii) the individual
Directors; and (iv) the Officers and Directors as a group. As of the date
hereof, there were 4,742,004 common shares issued and outstanding.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Name and Address of Beneficial Amount of Percent of
Owner Beneficial Ownership(1) Class(1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
James D. Rupp 1,155,000 25.34%
200 Walter Avenue
Hasbrouck Heights, NJ 07604
- --------------------------------------------------------------------------------------------------
Gayle Essary 1,427,500 31.47%
5605 Woodview
Austin, TX 78756
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Capital Markets Communications, Corp. 300,000 6.61%
287-101 Kinderkamack Road #190
Oradell, NJ 07649
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Nicholas Malino 150,000 3.33%
250 W. 90th Street, # PH2A
New York, NY 10024
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
David Simonetti 67,500 1.5%
2455 East Sunrise Blvd
Ft. Lauderdale, FL 33304
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Henry Siegel 0 0
205 West 57th Street
New York, NY 10019
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Robert Wussler 0 0
7904 Sandalfoot Drive
Potomac, MD 20854
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Robert Shuey, III 0 0
5910 North Central Expressway
Suite 1480
Dallas, Texas, 75206
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
James Schroeder 0 0
143 Cambridge Avenue
Garden City, NY 11530
- --------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
(1) The shares set forth on this chart do not include (i) the 1,089,000
shares issuable upon the exercise of the warrants included in the units which
were sold on August 24, 1999, private placement; (ii) the 1,240,000 shares
issuable and outstanding upon the exercise of the warrants included in the units
sold in the Company's initial public offering on December 22, 1999; and (v) the
options issued under the 1999 stock option plan.
Certain of the shares listed above are owned indirectly by entities
substantially controlled by principal Stockholders of Streamedia. Of the total
shares owned by Mr. Rupp, 1,050,000 shares are owned through his 100% ownership
in Web2Ventures, L.L.C., and 105,000 shares are owned through his 35% ownership
interest of Web2Ventures, L.L.C., in Capital Markets Communications Corporation.
Of the total shares owned by Mr. Essary, he owns 590,000 shares directly, and
has been given voting power over 360,000 shares owned by IRI, Inc., by the Board
of Directors of IRI, Inc. The remaining shares are held in family trusts or by
members of Mr. Essary's immediate family. Mr. Essary does not exercise direct
control over such shares. Capital Markets Communications Corporation is
controlled by Mr. Rupp and Mr. Essary. Mr. Simonetti's shares are owned through
Projix Corporation, a company of which Mr. Simonetti is the 90% owner.
In addition, certain officers and directors have been granted the right
to acquire additional shares, so long as they remain in their positions as
directors, and have been issued options pursuant to the 1999 stock option plan.
Mr. Malino has the right to earn an additional 45,000 shares upon the
achievement of certain business objectives to be determined by the compensation
committee of the Board of Directors. Mr. Malino was issued 63,000 stock options.
Mr. Simonetti was issued 10,000 options, all of which have vested. Mr. Siegel
has the right to acquire 40,000 stock options and Mr. Wussler has the right to
acquire 40,000 stock options. Mr. Schroeder was issued 25,000 options for his
services as a consultant to the Company. None of these options are represented
on the previous principal Stockholder chart.
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by the Company's
executive officers for services rendered in all capacities to the Company for
the fiscal year ended 1999 and from April 28, 1998 (date of inception) to
December 31, 1998.
16
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Annual Restricted Under- Other
Name Compen- stock lying LTIP Compen-
And sation Award(s) Options/ Payout sation
Principal ($) ($) SARs (#) ($)
Position Year Salary($) Bonus($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James Rupp, CEO and 1999 $180,000 ____ ____ ______
President 1998 ---
Gayle Essary, VP 1999 $140,000
1998 --- ___ ____ ______
Nicholas Malino 1999 $220,000 $100,000 ___ ____ ______
CFO, COO and EVP 1998 ---
</TABLE>
In accordance with the rules of the SEC, the compensation described in
this table does not include medical, group life insurance or other benefits
received by executive officers that are available to salaried employees of the
Company, and certain perquisites and other personal benefits received by
executive officers that do not exceed the lesser of $50,000 or 10% of any such
officer's salary and bonus disclosed on this table.
This table does not include a $250.00 a month non-accountable expense
allowance the named executive officers receive.
Mr. Malino's salary includes a $40,000 per annum housing allowance to
cover the costs associated with having to maintain a residence in New York, New
York. This number is reflected in the above-table.
Stock Options
The following table contains information concerning the grant of stock
options under the Company's 1999 Incentive and Nonstatutory Stock Option Plan
for the 1999 fiscal year to the executive officers. No stock appreciation rights
(SARs) were granted to those individuals during the 1999 fiscal year.
17
<PAGE>
Option/SAR in Last Fiscal Year
(Individual Grants)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Name Number of Percent of total Exercise or Expiration
Securities options/SARs base price date
Underlying granted to ($/Sh)
Options/SARs employees in
Granted (#) fiscal year
- -------------------------------------------------------------------------------------------------------------------
(a). . . ....................(b) . . . . . . . (c). . . . . . . . . . . . (d) . . . . . . ........ (e)......
<S> <C> <C> <C> <C>
Nicholas Malino 63,000 23.2% $7.50 8/13/09
</TABLE>
Option Exercises and Holdings
The following table provides information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year. The Company
does not have any stock appreciation rights.
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
Name Shares Value Number of Value of unexercised
acquired realized securities in-the-money-options/SARs
on ($) underlying at FY-end ($)
exercise (#) unexercised Exercisable/
option/SARs at unexercisable
FY-end (#)
exercisable
unexercisable
- ----------------------------------------------------------------------------------------------------------------------
(a). . . . . (b). . . . . . . (c). . . . . . . . (d). . . . . . . . . . . . . . . . . (e) . . . . . . . . .
<S> <C> <C> <C> <C>
Nicholas Malino 63,000 0 63,000 $61,110
</TABLE>
The value realized is equal to the fair market value of the purchased
shares on the option exercise date less the exercise price paid for those
shares.
The value of unexercised in-the-money options is based upon the market
price of $8.47 per share, which was the average of the high and low selling
price per share on the Nasdaq Smallcap Market on the last day of the 1999 Fiscal
Year, less the exercise price of $7.50 per share payable for such sales.
No executive officer exercised any options during the fiscal year 1999 and
no stock appreciation rights were exercised during such year.
18
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998 and 1999, and since the inception of Streamedia, certain
e-mail distribution systems owned and/or administered by one or both of two of
the Company's major Stockholders, IRI, Inc., and Capital Markets Communications
Corporation, were provided to the Company for its StreamWire division and its
predecessor. The Company currently does not anticipate using these e-mail
distribution systems. During 1998, the Company issued 25,000 shares of common
stock to its legal counsel, Kogan & Taubman, L.L.C., as partial consideration
for services rendered in connection with our initial public offering.
The Company has engaged Kaleidoscope Media Group to help it acquire
programming content for its sites and to develop a syndication strategy.
Kaleidoscope Media Group's CEO, Henry Siegel, is a member of the Company's Board
of Directors. In consideration of Kaleidoscope Media Group's providing of these
services, on August 2, 1999, Kaleidoscope Media Group was paid $10,000. In
September 1999, we paid $10,000 to Kaleidoscope Media Group for consulting
services and starting in October of 1999 the Company has paid $2,000 per month
to Kaleidoscope Media Group for their services. We have agreed to pay this
consulting fee through July 2000.
As an inducement to join the Company after our initial development
phase, and in consideration of his considerable expertise in financing and
public offerings, the Company agreed to pay Nicholas Malino a $100,000 bonus
upon the completion of its initial public offering, of which $50,000 has been
paid.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered at the Company's Annual
Meeting of Stockholders to be held in 2001 must be received by the Company no
later than January 26, 2001, in order be included in the Company's proxy
statement and form of proxy relating to that meeting. These proposals must
comply with the requirements as to form and substance established by the
Securities and Exchange Commission for such proposals in order to be included in
the proxy statement.
ANNUAL REPORT AND FORM 10-KSB
The Company filed an Annual Report on Form 10-KSB for fiscal year 1999
with the Securities and Exchange Commission on March 30, 2000. Stockholders may
obtain a copy of this report, without charge, by writing to Mr. Nicholas Malino,
the Chief Financial Officer of the Company, at the Company's principal offices
located at 244 W 54th Street, New York, New York 10019.
19
<PAGE>
OTHER BUSINESS
The Board does not know of any matter to be presented at the Annual
Meeting which is not listed on the Notice of Annual Meeting accompanying this
Proxy Statement.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Nicholas Malino
Nicholas Malino
Corporate Secretary
April 24, 2000
New York, New York
20
<PAGE>
STREAMEDIA COMMUNICATIONS, INC.
PROXY FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gayle Essary and James Rupp, and each
or any 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 Streamedia Communications, Inc., held of record by
the undersigned on April 24, 2000, at the Annual Meeting of Stockholders of
Streamedia Communications, Inc., to be held on May 17, 2000, or at any
adjournment thereof.
1. Election of Directors
FOR [ ] WITHHOLD AUTHORITY [ ]
all nominees listed below to vote for all nominees
(except as marked to listed below
the contrary below)
(INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below)
Gayle Essary James Rupp Nicholas Malino Robert Wussler
David Simonetti Robert Shuey James Schroeder Henry Siegel
2. Approval of share increase reserved for Company's Stock Option Plan.
FOR [ ] AGAINST [ ] [ ] ABSTAIN
3. Ratification of Grant Thorton, LLP as independent certified public
accountants.
FOR [ ] AGAINST [ ] [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
THE BOARD RECOMMENDS A VOTE FOR PROPOSALS NOS. 1, 2 AND 3. THIS PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED ABOVE. THIS PROXY WILL BE
VOTED FOR PROPOSALS. NOS. 1, 2 AND 3 IF SPECIFICATION IS MADE.
21
<PAGE>
PLEASE SIGN EXACTLY AS YOU NAME(S) IS (ARE) SHOWN ON THE SHARE
CERTIFICATES TO WHICH THE PROXY APPLIES. WHEN SHARES ARE HELD BY JOINT TENANTS,
BOTH SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE PROVIDE 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.
Dated ____________________, 2000
-----------------------------------------
(Signature)
-----------------------------------------
(Additional signature if held jointly)
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
22
