-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A+YgLFcKYWaiY5qW81j21WZAFssBAQWLwftqYlcIGer9JJajUqRlTkTp+r587uZD 1ogVyjEK2Ji64wb5aXhYmw== 0000912057-02-035670.txt : 20020916 0000912057-02-035670.hdr.sgml : 20020916 20020916171802 ACCESSION NUMBER: 0000912057-02-035670 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020916 GROUP MEMBERS: CALIFORNIA PACIFIC CAPITAL LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: 24/7 MEDIA INC CENTRAL INDEX KEY: 0001062195 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] IRS NUMBER: 133995672 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-54665 FILM NUMBER: 02765230 BUSINESS ADDRESS: STREET 1: 1250 BROADWAY STREET 2: 27TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 2122317100 MAIL ADDRESS: STREET 1: 1250 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10001 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WAECHTER JOSEPH CENTRAL INDEX KEY: 0001177312 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O MERCHANTS GROUP INTERNATIONAL STREET 2: 465 CALIFORNIA ST STE 640 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4153152015 MAIL ADDRESS: STREET 1: C/O MERCHANTS GROUP INTERNATIONAL STREET 2: 465 CALIFORNIA ST STE 640 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 SC 13D/A 1 a2089390zsc13da.txt SC 13D/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A UNDER THE SECURITIES EXCHANGE ACT OF 1934 24/7 REAL MEDIA, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 901314 10 4 - -------------------------------------------------------------------------------- (CUSIP Number) David Michaels, Esq. Joseph Waechter c/o Fenwick and West LLP c/o California Pacific Capital LLC 275 Battery Street, Suite 1600 50 California Street, Suite 1500 San Francisco, CA 94111 San Francisco, California, 94111 (415) 875-2300 (415) 315-2015 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 9, 2002, September 10, 2002, September 13, 2002 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / / *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ---------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) JOSEPH WAECHTER - ---------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) / / (b) / / - ---------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) PF - ---------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ---------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION California - ---------------------------- -------- ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER 1,765,263 OF SHARES -------- ------------------------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED 40,175,310 BY EACH -------- ------------------------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON 1,765,263 WITH -------- ------------------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 40,175,310 - ---------- --------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 41,940,573 - ---------- --------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) / / - ---------- --------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 44.78% - ---------- --------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) IN - ---------- ---------------------------------------------------------------------------------------------------------
- ---------- --------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) CALIFORNIA PACIFIC CAPITAL LLC - ---------- --------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) / / (b) / / - ---------- --------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------- --------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) WC - ---------- --------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ---------- --------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ---------------------------- -------- ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF SHARES -------- ------------------------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED 40,175,310 BY EACH -------- ------------------------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH -------- ------------------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 40,175,310 - ---------- --------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 40,175,310 - ---------- --------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) / / - ---------- --------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 42.89% - ---------- --------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) CO - ---------- ---------------------------------------------------------------------------------------------------------
Statement on Schedule 13D/A This Statement on Schedule 13D/A is being filed on behalf of the Reporting Persons (as defined below), amends and restates in its entirety the Statement on Schedule 13D filed by Joseph Waechter on July 12, 2002, and relates to the beneficial ownership of common stock, par value $0.01 per share (the "COMMON STOCK"), of 24/7 Real Media, Inc., a Delaware corporation (the "COMPANY"). ITEM 1. SECURITY AND ISSUER. The class of equity securities to which this statement relates is the Common Stock of the Company. The principal executive offices of the Company are located at 1250 Broadway, New York, New York 10001. ITEM 2. IDENTITY AND BACKGROUND. This statement is filed by Joseph Waechter and California Pacific Capital LLC, who are collectively referred to as the "REPORTING PERSONS" in this Schedule 13D. Although this statement is being made jointly by the Reporting Persons, each of them expressly disaffirms membership in any group under Rule 13d-5 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or otherwise. The principal business address of Joseph Waechter is c/o California Pacific Capital LLC, 50 California Street, Suite 1500, San Francisco, California 94111. The principal occupation of Mr. Waechter is to act as an officer, director or other manager of various entities engaged in investment activities. Mr. Waechter has not been convicted in a criminal proceeding in the past five years (excluding traffic violations or similar misdemeanors). During the past five years, Mr. Waechter was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Mr. Waechter is a citizen of the United States. California Pacific Capital LLC ("CPC") was formed on August 15, 2002, as a limited liability company under the laws of the state of Delaware. The principal business address of CPC is California Pacific Capital LLC, Attn: Joseph Waechter, 50 California Street, Suite 1500, San Francisco, California 94111. The principal business of CPC is to engage in various investment activities, including providing investment advice. CPC has not been convicted in a criminal proceeding in the past five years (excluding traffic violations or similar misdemeanors). During the past five years, CPC was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On July 2, 2002, Sunra Capital Holdings Limited, a Bermuda company ("SUNRA"), purchased preferred stock of the Company and was issued certain warrants, each of which is either convertible or exercisable, as the case may be, into the subject securities, all as described more fully below. Sunra's acquisition of such securities on July 2, 2002 was conducted under the direction of Joseph Waechter pursuant to a management agreement, dated as of June 21, 2002, a form of which is listed as Exhibit A hereto (the "ORIGINAL MANAGEMENT AGREEMENT"). Under the Original Management Agreement, Sunra engaged Mr. Waechter as the sole manager of the investment capital of Sunra and any investments made with such capital. By virtue of the Original Management Agreement, Sunra granted Mr. Waechter absolute control over the subject shares held by Sunra with respect to, among other things, the voting and disposition of such shares, until the termination of the Original Management Agreement on September 9, 2002 as described below. Mr. Waechter acquired control over the Company's shares held by Sunra in the ordinary course of his business as an investment advisor and not with the purpose of effecting change or influencing the control of the issuer in connection with or as a participant in any transaction having such purpose or effect, including any transaction subject to Rule 13d-3(b) of the Exchange Act. On September 9, 2002, Sunra and CPC entered into a management agreement, a form of which is listed as Exhibit B hereto (the "NEW MANAGEMENT AGREEMENT"), pursuant to which Sunra engaged CPC as the sole manager of the investment capital of Sunra and any investments made with such capital. The Original Management Agreement was terminated effective September 9, 2002 pursuant to a Termination Agreement between Mr. Waechter and Sunra dated September 9, 2002, a form of which is listed as Exhibit C hereto. Pursuant to the New Management Agreement, Sunra has granted CPC absolute control over the subject shares held by Sunra with respect to, among other things, the voting and disposition of such shares. By virtue of the fact that Mr. Waechter is the sole member and manager of CPC, and that CPC has absolute control over the subject shares held by Sunra with respect to the voting and disposition of such shares, Mr. Waechter may be deemed to beneficially own the subject shares held by Sunra. The New Management Agreement does not have a specific term of existence, but does give Sunra the unilateral right to terminate the New Management Agreement with CPC on notice that must exceed 90 days. The Reporting Persons acquired control over the shares held by Sunra in the ordinary course of their business as an investment advisor and not with the purpose of effecting change or influencing the control of the issuer in connection with or as a participant in any transaction having such purpose or effect, including any transaction subject to Rule 13d-3(b) of the Exchange Act. On July 1, 2002, the Company entered into a Series A and Series A-1 Preferred Stock and Common Stock Warrant Stock Purchase Agreement, attached hereto as Exhibit D (the "PURCHASE AGREEMENT"), in connection with a private placement of securities by the Company. Pursuant to the Purchase Agreement, at the initial closing of the private placement on July 2, 2002 (the "CLOSING"), the Company sold to Sunra 160,000 shares of its newly created Series A Convertible Preferred Stock, par value $0.01 per share, of the Company ("SERIES A PREFERRED Stock") at a per share price of $10, for an aggregate purchase price of $1,600,000. Also pursuant to the Purchase Agreement, the Company sold to Sunra at the Closing 340,000 shares of its newly created Series A-1 Non Voting Convertible Preferred Stock, par value $0.01 per share, of the Company ("SERIES A-1 PREFERRED STOCK") at a per share price of $10, for an aggregate purchase price of $3,400,000. Pursuant to the terms of the Certificate of Designation of Series A-1 Preferred Stock of the Company listed as Exhibit E hereto (the "SERIES A-1 CERTIFICATE OF DESIGNATION"), each issued and outstanding share of Series A-1 Preferred Stock automatically converted into one share of Series A Preferred Stock at the close of business on September 10, 2002, the date of the Company's annual stockholders meeting (the "CONVERSION"). Each issued and outstanding share of Series A Preferred Stock is convertible into Common Stock at any time at the option of the holder thereof at an initial conversion price of $0.20535 (the "PER SHARE PURCHASE PRICE"), or at an initial conversion rate of approximately 48.697 shares of Common Stock for each share of Series A Preferred Stock converted, which conversion rate is subject to "weighted average" antidilution adjustments (subject to certain exceptions) and certain other adjustments as set forth in the Certificate of Designation of Series A Preferred Stock of the Company listed as Exhibit F hereto (the "SERIES A CERTIFICATE OF DESIGNATION"; the Series A Certificate of Designation and the Series A-1 Certificate of Designation are collectively referred to herein as the "CERTIFICATES OF DESIGNATION"). Pursuant to the Purchase Agreement, as amended by that certain Amendment No. 1 to Series A and Series A-1 Preferred Stock and Common Stock Warrant Purchase Agreement dated as of August 7, 2002 by and between Sunra and the Company listed as Exhibit G hereto (the "PURCHASE AGREEMENT AMENDMENT"), Sunra purchased 250,000 shares of Series A Preferred Stock at a per share price of $10, for an aggregate purchase price of $2,500,000 at an "Additional Closing" (as defined in the Purchase Agreement) on September 13, 2002 (the "ADDITIONAL CLOSING"). Also at the Additional Closing, the Company sold 25,000 shares of Series A Preferred Stock at a per share price of $10, for an aggregate purchase price of $250,000, to the Joseph W. Waechter and Anita A. Waechter Revocable Trust Dated June 10, 1998 (the "WAECHTER TRUST"). Mr. Waechter and Anita A. Waechter are the sole beneficiaries and trustees of the Waechter Trust. At the Closing on July 2, 2002, Sunra was also issued three warrants at no further cost--a warrant to purchase up to 779,158 shares of Common Stock, a form of which is listed as Exhibit H hereto (the "SERIES A WARRANT"); a warrant to purchase up to 1,000,000 shares of Common Stock, a form of which is listed as Exhibit I hereto, which expired on September 10, 2002 (the "CONTINGENT WARRANT"); and a warrant to purchase up to 1,646,688 shares of Common Stock, a form of which is listed as Exhibit J hereto (the "SERIES A-1 WARRANT"). At the Additional Closing, Sunra was issued a warrant, at no further cost, to purchase up to 1,217,434 shares of Common Stock in the form listed as Exhibit H hereto (the "SUNRA ADDITIONAL CLOSING WARRANT"), and the Waechter Trust was issued a warrant, at no further cost, to purchase up to 121,743 shares of Common Stock in the form listed as Exhibit H hereto (the "WAECHTER TRUST ADDITIONAL CLOSING WARRANT"). The Series A Warrant, Contingent Warrant, Series A-1 Warrant, Sunra Additional Closing Warrant and Waechter Trust Additional Closing Warrant are referred to herein collectively as the "WARRANTS." Each Warrant is exercisable into shares of Common Stock at an initial exercise price equal to the Per Share Purchase Price, subject to adjustment upon the occurrence of certain dilution events, including a subdivision or combination of the outstanding shares of Common Stock (the "EXERCISE PRICE"). Each of the Series A Warrant, Sunra Additional Closing Warrant and Waechter Trust Additional Closing Warrant are immediately exercisable in full upon the issuance date of such Warrant, respectively. The Series A-1 Warrant became exercisable in full on September 10, 2002. Each Warrant other than the Contingent Warrant will expire on the fifth anniversary of the first date that they become exercisable. As noted above, the Contingent Warrant expired on September 10, 2002. Pursuant to a letter agreement dated as of August 8, 2002 between Sunra and the Company, a form of which is listed as Exhibit K hereto (the "VOTING AGREEMENT"), Sunra has irrevocably constituted and appointed the Company as its proxy to vote all "Excess Shares" (as defined in the Voting Agreement) at any meeting of the Company's stockholders or in connection with any written consent of such stockholders, in the same proportion as all other shares of Common Stock voted at such meeting or in such written consent, other than those shares voted by Sunra. Mr. Waechter is a member of Merchants Partners LLC, a California limited liability company, and, therefore, may be considered a beneficial owner of a warrant to purchase 400,000 shares of Common Stock at an exercise price equal to the Per Share Purchase Price that is immediately exercisable for a five-year term beginning as of the date of the Closing, a form of which is listed as Exhibit L hereto (the "FINDER'S WARRANT"). Merchant Partners LLC was assigned the Finder's Warrant by Merchant's Group International, a corporation for which Mr. Waechter is a director. In connection with the Closing, the Company also entered into an Investors' Rights Agreement dated as of July 1, 2002, in the form listed in Exhibit M hereto (the "INVESTORS' RIGHTS AGREEMENT"), pursuant to which the Company is obligated to file a registration statement covering the resale of the shares of Common Stock issuable upon conversion of Series A Preferred Stock issued under the Purchase Agreement and upon conversion of the Series A-1 Preferred Stock issued under the Purchase Agreement, and the shares of Common Stock issuable upon exercise of the Warrants and the Finder's Warrant, and has also granted piggyback registration rights to the holders of such shares, on a pari passu basis with existing registration rights holders, to participate in certain registered offerings of the Company's securities. Mr. Waechter was issued an option to purchase up to 50,000 shares of Common Stock at an exercise price of $0.21 per share on July 2, 2002, in connection with his service as a director of the Company, that is subject to vesting in three equal annual installments, pursuant to the form of Stock Option Agreement in the form attached as Exhibit O hereto. On September 10, 2002 Mr. Waechter was granted another option to purchase up to 2,778 shares of Common Stock at an exercise price per share of $0.46 per share, that is subject to vesting in three equal annual installments, pursuant to the form of Stock Option Agreement in the form attached as Exhibit O hereto, and was also issued 26,087 shares of Common Stock. The shares issuable upon exercise of the stock options issued to Mr. Waechter described in this paragraph, and the shares directly issued to Mr. Waechter described in this paragraph, are referred to herein as the "DIRECTOR'S SHARES." This Item 3 does not provide a complete description of the Original Management Agreement, the New Management Agreement, the Purchase Agreement, the Purchase Agreement Amendment, the Certificates of Designation, the Warrants, the Finder's Warrant, or the Voting Agreement and each such description is qualified in its entirety by reference to the respective agreement or document, which is listed as an exhibit hereto and is either attached hereto or is incorporated by reference from the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission (the "COMMISSION") on July 3, 2002, Amendment 1 to the Company's Current Report on Form 8-K filed with the Commission on July 12, 2002, Mr. Waechter's Statement on Schedule 13D filed with the Commission on July 12, 2002, and the Company's Current Report on Form 8-K filed with the Commission on August 13, 2002, as applicable. The total amount of the funds required to purchase the subject securities was and is anticipated to be furnished from the personal funds of the Reporting Persons or the investment capital of the client or clients of the Reporting Persons. No part of the purchase price is anticipated to be borrowed by such Reporting Persons or their clients for the purpose of acquiring such securities. ITEM 4. PURPOSE OF TRANSACTION. (a) The response to Item 3 is incorporated herein by reference. In addition, the Reporting Persons may from time to time, depending on prevailing market, economic and other conditions, acquire additional shares of the capital stock of the Company or become the beneficial owner of additional shares of the capital stock of the Company by causing Sunra to acquire such additional shares of the capital stock of the Company, or engage in discussions with the Company concerning further acquisitions of shares of the capital stock of the Company or further investments in the Company. The Reporting Persons intend to review their investment in the Company and Sunra's investment in the Company on a continuing basis and, depending upon the price and availability of shares of Common Stock, subsequent developments affecting the Company, the Company's business and prospects, other investment and business opportunities available to such Reporting Persons, general stock market and economic conditions, tax considerations and other factors considered relevant, may decide at any time to increase or to decrease the size of their investment in the Company or that of Sunra. The Company may choose to grant additional shares of Common Stock or options to purchase shares of Common Stock in the future to Mr. Waechter in connection with his service as a director of the Company. (b) Not applicable. (c) Not applicable. (d) Pursuant to the Purchase Agreement, the Company increased the size of its Board of Directors to eight (8) persons and Sunra caused the Company to appoint Mr. Waechter as a director of the Company. Pursuant to the Purchase Agreement, Sunra has the right to designate a second director in connection with the Conversion. (e) The response to Item 3 is incorporated herein by reference. Pursuant to the Purchase Agreement, the capitalization and dividend policy of the Company was altered by the Company's filing of the Certificates of Designation with the Secretary of the State of Delaware and by the execution of the Investors' Rights Agreement (described above) and the issuance of the Warrants and the Finder's Warrant (described above). A summary of the Certificates of Designation follows: THE CERTIFICATE OF DESIGNATION OF SERIES A AND SERIES A-1 PREFERRED STOCK. Each share of Series A Preferred Stock is convertible into Common Stock of the Company at any time at the option of the holder thereof at the Per Share Purchase Price. There will be no change to the Per Share Purchase Price of the Series A Preferred Stock based upon the future trading price of the Common Stock. The conversion ratio of the Series A Preferred Stock is subject to adjustment in the event of certain future issuances of Company equity at an effective per share purchase price lower than the Conversion Price. The Series A Preferred Stock is not redeemable. All then-outstanding shares of Series A-1 Preferred Stock were automatically converted into shares of Series A Preferred Stock upon the approval of the Company's stockholders of the Conversion, which was obtained on September 10, 2002, and were not otherwise convertible into Series A Preferred Stock or any other class of capital stock of the Company. The Series A-1 Preferred Stock was to be redeemable in full at the option of Sunra in the event the stockholders rejected the Conversion or failed to approve the Conversion by October 15, 2002, or if the Company's Board of Directors withdrew its recommendation that the stockholders approve the Conversion. To secure its potential obligation to redeem the Series A-1 Preferred Stock, the Company placed $3.6 million into escrow, which was released to the Company when stockholder approval for the Conversion was obtained. At any time after the second anniversary of the Conversion, each share of outstanding Series A Preferred Stock will automatically convert into the applicable number of shares of Common Stock if the Common Stock is then traded and the average per share closing price of the Common Stock on the Nasdaq National Market or the Nasdaq Smallcap Market, or similar quotation system or a national securities exchange, is greater than three (3) times the Per Share Purchase Price over a sixty (60) trading day period, the average daily trading volume of the Common Stock over such period is at least 200,000 shares and certain other conditions are satisfied. The Series A and Series A-1 Preferred Stock will accrue and cumulate dividends at a rate of 6% per year, compounded monthly, payable when, as and if declared by the Company's Board of Directors. All accrued dividends must be paid before any dividends may be declared or paid on the Common Stock, and shall be paid as an increase in the liquidation preference of the Series A and Series A-1 Preferred Stock payable upon the sale, merger, liquidation, dissolution or winding up of the Company. In the event of a liquidation, dissolution or winding up of the Company, if the holders of Common Stock would receive consideration per share equal to less than three (3) times the Per Share Purchase Price (assuming for this purpose the prior conversion in full of all Series A Preferred Stock into the applicable number of shares of Common Stock), then the holders of the Series A Preferred Stock are entitled to a liquidation preference payment per share equal to the Per Share Purchase Price, plus any dividends accrued but unpaid as of such date. After payment of the foregoing preference, the holder of each share of Series A Preferred Stock would then also participate with the holders of the Common Stock in the distribution of the proceeds from such a liquidation event to the holders of the Common Stock. A merger, consolidation or sale of the Company will be treated as a liquidation event unless such transaction has been approved by the holders of a majority of the outstanding Series A Preferred Stock. Holders of the Series A Preferred Stock generally will vote together with the holders of shares of Common Stock, with each share of Series A Preferred Stock representing that number of votes equal to that number of shares of Common Stock into which it is then convertible. However, the holders of the Series A Preferred Stock will be entitled to a separate class vote with respect to certain matters, including the creation of a class or series of stock having preferences or privileges senior to or on a parity with the Series A Preferred Stock and any amendment or waiver of any provision of the Company's Certificate of Incorporation or Bylaws that would adversely affect the rights, privileges and preferences of the Series A Preferred Stock. Additionally, at any time prior to the second anniversary of the Conversion, holders of the Series A Preferred Stock will be entitled to a separate class vote with respect to a proposed merger, consolidation, or sale of the Company, unless, at the time of the signing of a definitive agreement or taking of such other action necessary to effect such a transaction, the fair market value of one share of Common Stock is greater than three times the Per Share Purchase Price. In connection with the Additional Closing, the Series A Certificate of Designation was amended pursuant to a Certificate of Increase of Series A Convertible Preferred Stock filed by the Company with the Delaware Secretary of State, which increased the number of shares of Series A Preferred Stock from 700,000 to 800,000. This Item 4(e) does not provide a complete description of the Certificates of Designation, and such description is qualified in its entirety by reference to the respective document, which is listed as an exhibit hereto and is either attached hereto or is incorporated by reference from the Company's Current Report on Form 8-K filed with the Commission on July 3, 2002 and Amendment 1 to the Company's Current Report on Form 8-K filed with the Commission on July 12, 2002. (f) Not applicable. (g) The Certificates of Designation as filed with the Secretary of State of Delaware. Certain terms and conditions of the Certificates of Designation are described in Item 4(e) above. The Warrants issued pursuant to the Purchase Agreement. Certain terms and conditions of the Warrants are described in Item 3 above. (h) Not applicable. (i) Not applicable. (j) Not applicable. Except as set forth above in this statement, the Reporting Persons do not have any present plans or proposals that relate to or would result in: (i) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (ii) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (iii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iv) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (v) any material change in the present capitalization or dividend policy of the Company; (vi) any other material change in the Company's business or corporate structure; (vii) changes in the Company's charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (x) any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF.THE ISSUER. (a) and (b) The approximate percentages of shares of Common Stock reported as beneficially owned by the Reporting Persons are based upon 51,720,332 shares of Common Stock outstanding as of August 14, 2002, as reported in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002, plus shares currently issuable, or which will become issuable within the next 60 days, upon the exercise or conversion of Series A Preferred Stock, the Warrants, the Finder's Warrant and the Director's Shares as described in the following paragraphs. The amount shown as beneficially owned by Mr. Waechter includes: (i) the 37,740,441 shares of Common Stock into which the shares of Series A Preferred Stock held by Sunra and the Waechter Trust may presently be converted; (ii) the 4,174,045 shares of Common Stock for which the Warrants and the Finder's Warrant may presently be exercisable, and (iii) of the Director's Shares, the 26,087 shares of Common Stock currently held by Mr. Waechter. The 52,778 shares of Common Stock that are Director's Shares issuable upon exercise of the options issued to Mr. Waechter as described in Item 3 above are not currently exercisable and will not become exercisable by Mr. Waechter within the next 60 days, thus those shares are excluded from the amount shown as beneficially owned by Mr. Waechter and from the number of shares of Common Stock considered to be outstanding for purposes of determining the approximate percentages beneficially owned by the Reporting Persons. The amount shown as beneficially owned by CPC includes: (i) the 36,523,008 shares of Common Stock into which the shares of Series A Preferred Stock held by Sunra may presently be converted; and (ii) the 3,652,302 shares of Common Stock for which the Warrants (other than the Waechter Trust Additional Closing Warrant) may presently be exercisable. By virtue of the fact that, pursuant to the New Management Agreement, CPC has sole voting and dispositive power over the subject shares held by Sunra, and that Mr. Waechter is the sole member and manager of CPC, the Reporting Persons may be deemed to share voting and dispositive power over the subject shares held by Sunra. Please see Items 7, 8, 9, 10, 11, and 13 of the cover sheets for the Reporting Persons. (c) Except as set forth in Items 3 and 5 above, the Reporting Persons have not effected any transaction in the Company's Common Stock during the past 60 days. (d) Except as set forth in Item 3, no person other than the beneficial owners referred to herein is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, subject securities held by Sunra or the Director's Shares. No person other than Mr. Waechter and Anita Waechter, who is a co-trustee of the Waechter Trust, is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, subject securities held by the Waechter Trust. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER: The responses to Items 3 and 4 are incorporated herein by reference. Except as described therein, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 above or between such persons and any other person with respect to any securities of the Company. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit A Form of Management Agreement, dated as of June 21, 2002, between Sunra and Joe Waechter (filed as Exhibit 99.4 to Mr. Waechter's Statement on Schedule 13D filed with the Commission on July 12, 2002, and incorporated herein by reference). Exhibit B Form of Management Agreement, dated as of September 9, 2002, between Sunra and California Pacific Capital LLC. Exhibit C Form of Termination Agreement, dated as of September 9, 2002, between Sunra and Joseph Waechter. Exhibit D Series A and Series A-1 Preferred Stock and Common Stock Warrant Purchase Agreement, dated as of July 1, 2002, between the Company and Sunra (filed as Exhibit 10.1 to the Company's Form 8-K/A filed with the Commission on July 12, 2002, and incorporated herein by reference). Exhibit E Certificate of Designations of Series A-1 Non Voting Convertible Preferred Stock of the Company (filed as Exhibit 4.1 to the Company's Form 8-K filed with the Commission on July 3, 2002, and incorporated herein by reference). Exhibit F Certificate of Designations of Series A Convertible Preferred Stock of the Company (filed as Exhibit 4.1 to the Company's Form 8-K/A filed with the Commission on July 12, 2002, and incorporated herein by reference). Exhibit G Form of Amendment No. 1 to Series A and Series A-1 Preferred Stock and Common Stock Warrant Purchase Agreement dated as of August 7, 2002 by and between Sunra and the Company (filed as Exhibit 5.1 to the Company's Form 8-K filed with the Commission on August 13, 2002, and incorporated herein by reference). Exhibit H Form of Series A Warrant (filed as Exhibit 99.1 to Mr. Waechter's Statement on Schedule 13D filed with the Commission on July 12, 2002, and incorporated herein by reference). Exhibit I Form of Contingent Warrant (filed as Exhibit 99.2 to Mr. Waechter's Statement on Schedule 13D filed with the Commission on July 12, 2002, and incorporated herein by reference). Exhibit J Form of Series A-1 Warrant (filed as Exhibit 10.2 to the Company's Form 8-K filed with the Commission on July 3, 2002, and incorporated herein by reference). Exhibit K Form of Voting Agreement dated as of August 8, 2002 by and between Sunra and the Company (filed as Exhibit 5.2 to the Company's Form 8-K filed with the Commission on August 13, 2002, and incorporated herein by reference). Exhibit L Form of Finder's Warrant (filed as Exhibit 99.3 to Mr. Waechter's Statement on Schedule 13D filed with the Commission on July 12, 2002, and incorporated herein by reference). Exhibit M Investors' Rights Agreement, dated as of July 1, 2002, by and among the Company and the investors named therein (filed as Exhibit 10.3 to the Company's Form 8-K filed with the Commission on June 3, 2002, and incorporated herein by reference). Exhibit N Agreement relating to the filing of joint acquisition statements as required by Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended. Exhibit O Form of Stock Option Agreement's dated as of July 2, 2002 and September 10, 2002 by and between Mr. Waechter and the Company. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: September 16, 2002 /s/ JOSEPH WAECHTER - ---------------------------------- JOSEPH WAECHTER, an individual CALIFORNIA PACIFIC CAPITAL LLC /s/ JOSEPH WAECHTER - ---------------------------------- By: Joseph Waechter Its: Manager EX-99.B 3 a2089390zex-99_b.txt EXHIBIT 99.B EXHIBIT B MANAGEMENT AGREEMENT This Management Agreement (this "AGREEMENT") is entered into as of the 9th day of September, 2002 between Sunra Capital Holdings Limited, a Bermuda company ("SCH"), and California Pacific Capital LLC, a Delaware limited liability company ("ADVISOR"). APPOINTMENT OF ADVISOR. SCH hereby engages Advisor to provide the investment services described in this Agreement (the "SERVICES") with respect to SCH. Advisor agrees to use its diligent, commercially reasonable efforts to provide the Services. AUTHORITY AND DISCRETION OF ADVISOR. GENERAL AUTHORITY. SCH grants to Advisor absolute power and authority to manage and administer, in its sole discretion, the assets of SCH (now owned or hereafter acquired), including full power and authority to exercise all incidents of ownership with respect to such assets, including, but not limited to, the power of attorney, the sole power to vote or to direct the voting of any Securities (as defined below) held by SCH (now owned or hereafter acquired) and the sole power to dispose, or to direct the disposition of any such Securities, in the name, and for the account and risk, of SCH, including the power and authority to do any of the following things, in the sole discretion of Advisor, without prior approvals and directions from, or consultations with, SCH or any custodian of such assets: (a) to have and exercise, in its sole discretion all "Voting power" as such term is defined and used in the Securities Exchange Act of 1934 ("EXCHANGE ACT") and under Rule 13(d)-3, as promulgated under the Exchange Act; (b) to have and exercise, in its sole discretion all "Investment power" as such term is defined and used in the Exchange Act and under Rule 13(d)-3, as promulgated under the Exchange Act; (c) to authorize sub-advisers, in their discretion, to buy, sell, transfer, assign, pledge, lend, exchange, deliver and otherwise trade in Securities (as defined below), and purchase Securities in public offerings (including initial public offerings) and private placements; (d) to engage directly in investment activities of the kind contemplated by clause (c) above; (e) to select and engage custodians for SCH assets, enter into and terminate agreements with such custodians on terms and conditions approved by Advisor, and monitor the performance of such custodians; (f) to perform any other act, including the signing and delivering of contracts, instruments, orders, receipts and all other documents, incidental to the broad powers granted to Advisor under this Agreement; and (g) to select and engage other investment advisers as sub-advisers to SCH, enter into and terminate agreements with those sub-advisers on terms and conditions approved by Advisor, and monitor the performance of the sub-advisers; 1 PROVIDED, HOWEVER, that Advisor cannot invest assets of SCH in investment related limited partnerships, limited liability companies or other entities managed by Advisor for which Advisor is separately compensated, unless Advisor receives the prior written consent of SCH, and in such case, the assets so invested would not be included in the computation of the fees described in Section 3 below. As used in this Section 2, the term "SECURITIES" encompasses common stock, preferred stock, warrants, convertible securities, bonds, notes, options, shares of investment companies, partnership interests, limited liability company interests, interests in REITs, derivative instruments, and any similar or related investment instruments or vehicles. CUSTODIAN INSTRUCTIONS. SCH authorizes Advisor to give written instructions to any custodian for SCH assets at any time, and from time to time to (a) deliver any Securities sold, exchanged or otherwise disposed of from SCH to the relevant transferee, upon receipt of payment for such Securities, and (b) pay cash for any Securities delivered to a custodian upon acquisition for SCH. SCH authorizes and directs each custodian for SCH assets to follow such instructions. Except for payment of fees under Section 3 below, this authority shall not include the authority to cause Securities or cash to be delivered to Advisor. OTHER AUTHORIZATIONS. In connection and simultaneous with the execution of this Agreement, SCH will execute and deliver to Advisor a copy of the Power of Attorney attached as EXHIBIT A to this Agreement. SCH, at its expense, shall promptly and duly execute and deliver such other documents and assurances, including, but not limited to, any powers of attorney and authorizations to buy, sell or otherwise dispose of any assets held by SCH, and shall take such further action as the Advisor may from time to time request in order to carry out the intent and purpose of this Agreement and the other agreements and transactions contemplated herein, including, but not limited to, voting of the Securities and the acquisition and disposition thereof in accordance with the power and authority granted Advisor hereunder and thereunder, and to establish and protect the rights and remedies created or intended to be created in favor of Advisor hereunder. Further, SCH will furnish, and will direct any custodian engaged by SCH or Advisor to furnish, such additional authorizations as may be requested from time to time by Advisor, or by brokers or other third parties with which SCH has dealings, in order to implement the authority granted in this Section 2 or otherwise carry out the intent and purpose of this Agreement. FEES AND EXPENSES. MANAGEMENT FEE. SCH will pay Advisor a management fee ("MANAGEMENT FEE") at the annual rate of 2.0% of the Assets Under Management. For purposes hereof, "ASSETS UNDER MANAGEMENT" means the aggregate cash or other consideration paid into SCH as capital (whether or not then characterized as capital on SCH's books or otherwise) through the specified time, determined in U.S. dollars as of the date of investment, and without regard to distributions. The Management Fee will be paid quarterly in advance based on the Assets Under Management as of the first day of each calendar quarter. SCH will pay the Management Fee in U.S. dollars promptly following the beginning of such quarter, unless the Advisor elects to defer receipt of the Management Fee as further described below. The Management Fee will be prorated for any 2 period that is less than a full calendar quarter, and will be deducted in computing the net profit or net loss of SCH. For purposes of this Agreement the effective date for billing purposes is July 1, 2002. Notwithstanding the foregoing, upon request by SCH, and with the consent of the Advisor, the Management Fee may be waived or reduced with respect to Assets Under Management invested in SCH by employees or affiliates of the Advisor, relatives of such persons, and for certain strategic investors. INCENTIVE FEE. SCH will pay Advisor the incentive fees as set forth in this Section 3.2 ("INCENTIVE FEE"). (A) APPRECIATED NET ASSET VALUE. Within 60 days after the end of each fiscal year of SCH, SCH will determine the Appreciated Net Asset Value for such fiscal year. For purposes hereof, "NET APPRECIATED ASSET VALUE" means the increase in the value of SCH net assets, if any, during such fiscal year over the net assets of SCH, as of the end of the prior fiscal year. The value of SCH's assets will be determined as set forth below. For purposes of this clause (a) the Incentive Fee is an amount equal to twenty percent (20%) of Net Appreciated Asset Value. If SCH determines that it has generated a Net Appreciated Asset Value for a fiscal year, and Advisor elects in writing within 60 days following receipt of such determination to receive an Incentive Fee with respect to such Net Appreciated Asset Value, SCH will pay the Incentive Fee with respect to such Net Appreciated Asset Value within 15 days following receipt of such notice. If SCH incurs a net reduction in net assets for one or more fiscal years, and during a subsequent fiscal year or years SCH generates Net Appreciated Asset Value, no Incentive Fee will be payable under this clause until the aggregate amount of the net reductions in net assets previously allocated has been recouped against Net Appreciated Asset Value for applicable fiscal year(s). If any Distribution (as defined in clause (b) below) is made during a fiscal year, the value of the Distribution will be subtracted from the value of SCH net assets for the prior fiscal in determining Net Appreciated Asset Value for such fiscal year in which the Distribution is made, unless Advisor receives an Incentive Fee pursuant to clause (b) with respect to such Distribution. (B) DISTRIBUTIONS. SCH will notify Advisor at least 30 days prior to making any distribution to SCH shareholders on account of their equity holdings in SCH ("DISTRIBUTION"). For purposes of this clause (b), the Incentive Fee is an amount equal to twenty percent (20%) of the value of such distribution, calculated as of the time of such distribution. If Advisor elects in writing within 30 days following the date of such distribution to receive an Incentive Fee with respect to such distribution, SCH will pay the Incentive Fee with respect to such distribution within 15 days following receipt of such notice. If such distribution is made other than in cash in U.S. dollars, the value of such distribution in U.S. dollars will be determined by as set forth below. It is the intent of the parties that if Advisor receives an Incentive Fee with respect to a Distribution under this clause in a fiscal year, that Advisor may also receive an Incentive Fee under clause (a) with respect to such fiscal year, it being understood that the calculations of the fees under such clauses are intended not to double-count fees payable with respect to such Distribution. (C) CARRY OVER OF INCENTIVE FEES. In the event that Advisor does not elect to receive an Incentive Fee under clause (a) for a fiscal year in which Advisor would be entitled to receive such Incentive Fee, Advisor may elect to (i) carry over the Incentive Fee payable under clause (a) for such fiscal year, in which case such amount will be added to a future 3 Incentive Fee payable under this Section 3.2, at Advisor's discretion or (ii) with respect to contiguous fiscal years only, calculate the Incentive Fee payable under clause (a) with respect to such fiscal years, in which case Net Appreciated Asset Value will be calculated as the net change in the value of net assets over such fiscal years (net of any asset value reductions carried over from prior years). (D) TERMINATION. In the event that this Agreement is terminated prior to the last day of any fiscal year, the Incentive Fee under clause (a) for that fiscal year will be computed as if the termination date was the end of such fiscal year. Upon termination of this Agreement, except as set forth above, Advisor will not be entitled to an Incentive Fee under clause (a); HOWEVER, Advisor will continue to be entitled to receive Incentive Fees under clause (b) with respect to Distributions until the assets of SCH are liquidated in full. (E) FORM OF PAYMENT. Unless otherwise mutually agreed, Incentive Fees will be paid in cash, in U.S. dollars. If SCH does not have liquid assets sufficient to make a required Incentive Fee payment at the time required, Advisor may liquidate SCH assets, in Advisor's discretion, in order to make such payment. (F) VALUATION OF ASSETS. For purposes of valuing the assets of SCH under clause (a) and for valuing non-U.S. dollar denominated assets included within any Distribution, the following will apply. Advisor and SCH will attempt to reach mutual agreement with respect to such value within 30 days following notice by the party seeking such valuation, and if such mutual agreement is reached, the value of such assets will be the mutually agreed value. If such agreement is not reached within such time period, the parties will appoint a mutually acceptable independent appraiser within 15 days to make a determination in good faith of such value, and if such appraiser is so appointed, the value of such assets will be the value assigned by such appraiser. SCH will pay the expenses of such appraiser. If the parties fail to agree upon an appraiser within such period, each party will appoint an appraiser at such party's expense within 15 days, and such appraisers will within another 10 days appoint a third appraiser, whose expenses will initially be paid by SCH. Such appraisers will make a determination of the value of such assets. The value of the assets will be the average of the three values. If the value ascribed by the third appraiser is closer to the value ascribed by the appraiser appointed by Advisor, then Advisor will reimburse SCH for half of the cost of the third advisor. EXPENSES. In addition to the Management Fee and Incentive Fee described above, SCH will be responsible for all expenses related to the management of SCH, including all custodian fees and expenses, sub-adviser performance fees, sub-adviser asset-based fees, bank service fees, wire transfer fees, exchange fees, debit-balance interest and similar administrative and transaction costs. These costs and expenses will be debited to SCH as they are incurred and will be promptly paid by SCH. MANAGEMENT FEE BILLING. SCH specifically authorizes its custodian bank(s) to pay Advisor the Management Fee and Incentive Fee upon receipt of Advisor's invoice, pursuant to Section 4 of this agreement. STANDARD OF CARE. SCH acknowledges that the investment strategies contemplated for SCH entail inherent risks and that Advisor does not guarantee either that SCH will realize any particular return or that there will not be losses by SCH. 4 INFORMATION AND CONFIDENTIALITY. INFORMATION TO BE PROVIDED TO ADVISOR BY SCH. SCH hereby agrees to provide to Advisor such information regarding SCH and its properties, business and affiliates as Advisor shall reasonably request for the purpose of filing with the United States Securities and Exchange Commission or other applicable governmental authorities any reports or other filings, including any amendments or updates thereto, required by applicable law to be filed by Advisor and/or its managers, members, employees and affiliates in connection with this Agreement and the performance of the Services by Advisor. SCH hereby represents and warrants that such information provided by SCH shall be complete and accurate as of the time such information is provided to Advisor, and that SCH will promptly notify Advisor of any changes in such information during the term of this Agreement and for such additional periods following the termination of this Agreement as Advisor and/or its managers, members, employees and affiliates may be required to make such regulatory filings CONFIDENTIALITY. Advisor and SCH acknowledge that they will acquire information and materials from each other and knowledge about each other's business, financial condition, products, programming techniques, experimental work, customers and suppliers and that all such knowledge, information and materials acquired are and will be the trade secrets and confidential and proprietary information of such other party (collectively, the "CONFIDENTIAL INFORMATION"). Confidential Information will not include, however, any information that is or becomes part of the public domain through no fault of the receiving party or that the disclosing party regularly gives to third parties without restriction on use or disclosure. Advisor and SCH hereby agree to use all reasonable efforts to keep such Confidential Information in strict confidence and to not disclose it to others; PROVIDED, HOWEVER, that the provisions of this Section 7.2 will not restrict Advisor and its managers, members, employees and affiliates from disclosing SCH's Confidential Information to the extent required by any law or regulation or to the extent required to perform the Services hereunder. RELATIONSHIP OF PARTIES. INDEPENDENT CONTRACTOR. Advisor is an independent contractor to, and is not an employee of, SCH. Except as expressly set forth herein, Advisor has no authority to bind SCH by contract or otherwise. Advisor will determine, in Advisor's sole discretion, the manner and means by which the Services are accomplished, subject to the requirement that Advisor shall at all times comply with applicable law. SCH has no right or authority to control the manner or means by which the Services are accomplished. EMPLOYMENT TAXES AND BENEFITS. Advisor will report as income all compensation received by Advisor pursuant to this Agreement. Advisor will indemnify SCH and hold it harmless from and against all claims, damages, losses and expenses, including reasonable fees and expenses of attorneys and other professionals, relating to any obligation imposed by law on SCH to pay any withholding taxes, social security, unemployment or disability insurance, or similar items in connection with compensation received by Advisor pursuant to this Agreement. Advisor will not be entitled to participate in any plans, arrangements, or distributions by SCH pertaining to any bonus, stock option, profit sharing, insurance or similar benefits for SCH's employees. LIABILITY INSURANCE. Advisor will maintain adequate insurance to protect Advisor from the 5 following: (i) claims under workers' compensation and state disability acts; (ii) claims for damages because of bodily injury, sickness, disease or death that arise out of any negligent act or omission of Advisor or its managers, members or employees; and (iii) claims for damages because of injury to or destruction of tangible or intangible property, including loss of use resulting therefrom, that arise out of any negligent act or omission of Advisor or its managers, members or employees. MUTUAL INDEMNIFICATION. INDEMNIFICATION BY ADVISOR. Advisor will indemnify and hold harmless SCH and its officers, directors, agents and affiliates (the "SCH INDEMNIFIED PARTIES") from and against, and at SCH's option, Advisor will defend the SCH Indemnified Parties against all claims, damages, losses and expenses (or actions, including shareholder actions, in respect thereof), including court costs and reasonable fees and expenses of attorneys, expert witnesses, and other professionals ("LOSSES") arising out of or resulting from, and, any action by a third party that is based on any grossly negligent act or omission or willful conduct of Advisor or its managers, members or employees that result in: (a) any bodily injury, sickness, disease or death; (b) any injury or destruction to tangible or intangible property (including computer programs and data) or any loss of use resulting therefrom; or (c) any violation of any statute, ordinance, or regulation. INDEMNIFICATION BY SCH. SCH will indemnify and hold harmless Advisor and its managers, members, employees and affiliates (the "ADVISOR INDEMNIFIED PARTIES") from and against, and at Advisor's option, SCH will defend the Advisor Indemnified Parties against all Losses (a) which are related to or result from the performance by Advisor of the Services contemplated by or the engagement of Advisor pursuant to this Agreement or (b) arising out of or resulting from any action by a third party that is based on any negligent act or omission or willful conduct of SCH or its employees (including any negligent or willful misstatement in, or omission from, the information provided and to be provided by SCH to Advisor hereunder) that results in: (i) any bodily injury, sickness, disease or death; (ii) any injury or destruction to tangible or intangible property (including computer programs and data) or any loss of use resulting therefrom; or (iii) any violation of any statute, ordinance, or regulation. TERMINATION. This Agreement may be terminated: (i) at any time upon mutual agreement of SCH and Advisor; and (ii) by SCH or Advisor on 90 days written notice to Advisor or SCH, as applicable. The provisions of Sections 6, 8, 9 and 10 hereof will survive the termination of this Agreement. MISCELLANEOUS. ASSIGNMENT. Advisor may not assign Advisor's rights or delegate Advisor's obligations under this Agreement either in whole or in part without the prior written consent of SCH. Any attempted assignment or delegation without such consent will be void. COMPLETE UNDERSTANDING; MODIFICATION. This Agreement constitutes the complete and exclusive understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements (including without limitation that certain Management Agreement by and between SCH and Joseph Waechter, dated June 21, 2002), whether written or oral, with respect to the subject matter hereof. Any waiver, modification or 6 amendment of any provision of this Agreement will be effective only if in writing and signed by Advisor and SCH. GOVERNING LAW; SEVERABILITY. This Agreement will be governed by and construed in accordance with the laws of the State of California, excluding that body of law pertaining to conflict of laws. Any legal action or proceeding arising under this Agreement will be brought exclusively in the federal or state courts located in the Northern District of California and the parties hereby consent to the personal jurisdiction and venue therein. If any provision of this Agreement is for any reason found to be unenforceable, the remainder of this Agreement will continue in full force and effect. ATTORNEY'S FEES. If any action is necessary to enforce the terms of this Agreement, the substantially prevailing party will be entitled to reasonable attorneys' fees, costs and expenses in addition to any other relief to which such prevailing party may be entitled. SUCCESSORS. This Agreement shall be binding upon, and inure to the benefit of, SCH and Advisor and their respective successors and permitted assigns. WAIVER. The waiver of any breach of any provision of this Agreement shall not constitute a waiver of any subsequent breach of the same or other provisions hereof. NOTICES. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (a) at the time of personal delivery, if delivery is in person; (b) one business day after deposit with an express overnight courier for United States deliveries, or two business days after such deposit for deliveries outside of the United States; or (c) three business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. All notices for delivery outside the United States will be sent by express courier. All notices not delivered personally will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address set forth below the signature lines of this Agreement or at such other address as such other party may designate by one of the indicated means of notice herein to the other parties hereto. TITLES AND HEADINGS. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to "sections" and "exhibits" will mean "sections" and "exhibits" to this Agreement. COUNTERPARTS. This Agreement may be executed in counterparts. 7 IN WITNESS WHEREOF, SCH and Advisor have caused this Agreement to be executed by their duly authorized representatives, as of the date first written above. SUNRA CAPITAL HOLDINGS LIMITED CALIFORNIA PACIFIC CAPITAL LLC By: By: Joseph Waechter, Its Manager Name: Toshio Masuda 50 California Street, Suite 1500 San Francisco, CA 94111 Title: Chairman Address: Fax No.: [SIGNATURE PAGE TO MANAGEMENT AGREEMENT] EXHIBIT A POWER OF ATTORNEY Sunra Capital Holdings Limited, a Bermuda company (the "GRANTOR"), hereby appoints California Pacific Capital LLC, a Delaware limited liability company, as its agent (attorney-in-fact) ("AGENT"), with full power of substitution, to act in any lawful way with respect to all matters related to the assets of Grantor (now owned or hereafter acquired), including full power and authority to exercise all incidents of ownership with respect to such assets, including, but not limited to, the power of attorney, the sole power to vote or to direct the voting of any Securities (as defined below) held by Grantor (now owned or hereafter acquired) and the sole power to dispose, or to direct the disposition of any such Securities, in the name, and for the account and risk, of Grantor, including the power and authority to do any of the following things, in the sole discretion of Agent, without prior approvals and directions from, or consultations with, Grantor or any custodian of such assets: (a) to have and exercise, in its sole discretion all "Voting power" as such term is defined and used in the Securities Exchange Act of 1934 ("EXCHANGE ACT") and under Rule 13(d)-3, as promulgated under the Exchange Act; (b) to have and exercise, in its sole discretion all "Investment power" as such term is defined and used in the Exchange Act and under Rule 13(d)-3, as promulgated under the Exchange Act; (c) to authorize sub-advisers, in their discretion, to buy, sell, transfer, assign, pledge, lend, exchange, deliver and otherwise trade in Securities, and purchase Securities in public offerings (including initial public offerings) and private placements; (d) to engage directly in investment activities of the kind contemplated by clause (c) above; (e) to select and engage custodians for Grantor's assets, enter into and terminate agreements with such custodians on terms and conditions approved by Agent, and monitor the performance of such custodians; (f) to perform any other act, including the signing and delivering of contracts, instruments, orders, receipts and all other documents, incidental to the broad powers granted to Agent under that certain Management Agreement, dated September 9, 2002, by and among Grantor, Agent and Joseph Waechter; and (g) to select and engage other investment advisers as sub-advisers to Grantor, enter into and terminate agreements with those sub-advisers on terms and conditions approved by Agent, and monitor the performance of the sub-advisers. As used herein, the term "SECURITIES" encompasses common stock, preferred stock, warrants, convertible securities, bonds, notes, options, shares of investment companies, partnership interests, limited liability company interests, interests in REITs, derivative instruments, and any similar or related investment instruments or vehicles. THIS POWER OF ATTORNEY IS EFFECTIVE IMMEDIATELY AND WILL BE DEEMED TO BE COUPLED WITH AN INTEREST AND IS IRREVOCABLE. Grantor agrees that any third party who receives a copy of this document may act under it. Grantor hereby agrees to indemnify the third party for any claims that arise against the third party because of reliance on this power of attorney. Dated: ___________, 2002 - ------------------------------------- Sunra Capital Holdings Limited ACKNOWLEDGMENT AND ACCEPTANCE BY ACCEPTING OR ACTING UNDER THE APPOINTMENT, THE AGENT ASSUMES THE FIDUCIARY AND OTHER LEGAL RESPONSIBILITIES OF AN AGENT. The undersigned, the nominated attorney-in-fact, hereby agrees to act for the principal in accordance with the authority granted herein. Dated: ____________, 2002 - ---------------------------------------- California Pacific Capital LLC WITNESSES The undersigned witnesses hereby acknowledge the execution of this power of attorney on the date stated above. - ----------------------------------------- Name: - ----------------------------------------- Name: EX-99.C 4 a2089390zex-99_c.txt EXHIBIT 99.C EXHIBIT C TERMINATION AGREEMENT This Agreement is entered into as of the 9th day of September, 2002 between Sunra Capital Holdings Limited, a Bermuda company ("SCH"), and Joseph Waechter, an individual residing in California ("WAECHTER"). WHEREAS, on June 21, 2002, SCH and Waechter entered into a Management Agreement (the "OLD MANAGEMENT AGREEMENT"); and WHEREAS, concurrently with the execution of this Agreement, SCH and California Pacific Capital LLC, a new company formed by Waechter, will enter into a new Management Agreement (the "NEW MANAGEMENT AGREEMENT") and wish to terminate the Old Management Agreement. NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. TERMINATION OF OLD MANAGEMENT AGREEMENT. SCH and Waechter hereby terminate the Old Management Agreement, effective as of the date hereof and conditioned upon the execution of the New Management Agreement. 2. COMPLETE AGREEMENT. This Agreement constitutes the complete and exclusive understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements (including without limitation the Old Management Agreement), whether written or oral, with respect to the subject matter hereof. 3. MISCELLANEOUS. This Agreement may be executed in counterparts. This Agreement will be governed by and construed in accordance with the laws of the State of California, excluding that body of law pertaining to conflict of laws. Any legal action or proceeding arising under this Agreement will be brought exclusively in the federal or state courts located in the Northern District of California and the parties hereby consent to the personal jurisdiction and venue therein. This Agreement shall be binding upon, and inure to the benefit of, SCH and Waechter and their respective successors and permitted assigns. SUNRA CAPITAL HOLDINGS LIMITED By: --------------------------------- Toshio Masuda JOSEPH WAECHTER Title: Address: 32 Fallen Leaf Terrace Orinda, CA 94563 EX-99.N 5 a2089390zex-99_n.txt EXHIBIT 99.N EXHIBIT N EXHIBIT N to SCHEDULE 13D/A JOINT ACQUISITION STATEMENT PURSUANT TO RULE 13D-(k)(1) The undersigned acknowledge and agree that the foregoing statement on Schedule 13D/A is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D/A shall be filed on behalf of each of the undersigned without the necessity of filing additional joint acquisition statements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him, her or it contained herein, but shall not be responsible for the completeness and accuracy of the information concerning the other entities or persons, except to the extent that he, she or it knows or has reason to believe that such information is accurate. Dated: September 16, 2002 /s/ JOSEPH WAECHTER - ---------------------------------- JOSEPH WAECHTER, an individual CALIFORNIA PACIFIC CAPITAL LLC /s/ JOSEPH WAECHTER - ---------------------------------- By: Joseph Waechter Its: Manager EX-99.O 6 a2089390zex-99_o.txt EXHIBIT 99.O Exhibit O STOCK OPTION AGREEMENT Stock Option Agreement between 24/7 Real Media, Inc., a Delaware corporation with an address at 1250 Broadway, New York, NY 10001 (the "Company) and the individual whose name is set forth on the Option Grant page hereto (the "Participant"). PRELIMINARY STATEMENT The Stock Option Committee of the Board of Directors of the Company (the "Committee"), pursuant to the Company's 2002 Stock Option Plan, annexed hereto as Exhibit A (the "Plan") has authorized the granting to the Participant, as a Director, of stock options (the "Option") to purchase the number of shares ("Shares") of the Company's common stock, par value $.01 per share (the "Common Stock"), set forth below the Participant's name on the signature page hereto. The parties hereto desire to enter into this Agreement in order to set forth the terms of the Option. Accordingly, the parties hereto agree as follows: 1. TAX MATTERS. The Option granted hereby is not intended to qualify as an "incentive stock option" under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 2. GRANT OF OPTION. Subject in all respects to the Plan and the terms and conditions set forth herein and therein, the Participant is hereby granted the Option to purchase from the Company up to the number of Shares as is set forth on the signature page hereto, at an exercise price per Share as set forth on the signature page hereto, subject to adjustment in accordance with the Plan (the "Option Price"). 3. VESTING. The Option is exercisable in installments as provided on the signature page hereto, which shall be cumulative. To the extent that the Option has become exercisable with respect to a percentage of the Shares the Option may thereafter be exercised by the Participant, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein. The table on the Option Grant page indicates the timing upon which the Participant shall be entitled to exercise the Option with respect to the percentage of Shares indicated beside that indicated time. 4. TERMINATION. Unless terminated as provided in Section 5 below or otherwise pursuant to the Plan, the Option shall expire on the tenth anniversary of this Agreement, or earlier as provided in the Plan upon a Termination of the Participant's role as Director of the Company. 5. RESTRICTION ON TRANSFER OF OPTION. The Option granted hereby is not transferable other than by will or under the applicable laws of descent and distribution and during the lifetime of the Participant may be exercised only by the Participant or the Participant's guardian or legal representative. In addition, the Option shall not be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the Option, or in the event of any levy upon the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void. 6. NO RIGHTS AS A STOCKHOLDER. The Participant shall not have any rights as a stockholder with respect to any Shares covered by the Option until the Participant shall have become the holder of record of the Shares, and, no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in the Plan. 7. PROVISIONS OF PLAN CONTROL. This Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as may be adopted by the Committee and as may be in effect from time to time. Any capitalized term used but not defined herein shall have the meaning ascribed to such term in the Plan. The annexed copy of the Plan is incorporated herein by reference. If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly. If and to the extent that the grant information set forth on the Signature Page attached hereto conflicts or is inconsistent with the official records of the Company, the official records of the Company shall control, and this Agreement shall be deemed to be modified accordingly. 8. NOTICES. Any notice or communication given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, when dispatched by telegram or one business day after having been dispatched by a nationally recognized courier service or three business days after or by United States mail, to the appropriate party at the address set forth below (or such other address as the party shall from time to time specify by sending notice to the appropriate address set forth below). If to the Company, to: 24/7 Real Media, Inc. 1250 Broadway New York, New York 10001 Attention: Corporate Secretary. If to the Participant, to the most recent address furnished by the Participant to the Company. END OF TEXT OPTION GRANT PAGE TO FOLLOW -----END PRIVACY-ENHANCED MESSAGE-----