SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT /_/
<TABLE>
<CAPTION>
CHECK THE APPROPRIATE BOX:
<S> <C>
/ / PRELIMINARY PROXY STATEMENT /_/ CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
/X/ DEFINITIVE PROXY STATEMENT (AS PERMITTED BY RULE 14A-6(E)(2))
/_/ DEFINITIVE ADDITIONAL MATERIALS
/_/ SOLICITING MATERIAL PURSUANT TO
RULE 14A-11(C) OR RULE 14A-12
</TABLE>
RARE MEDIUM GROUP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
_______________________________________________________________________________
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ NO FEE REQUIRED.
/ / FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
_______________________________________________________________________________
2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
_______________________________________________________________________________
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
_______________________________________________________________________________
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
_______________________________________________________________________________
5) TOTAL FEE PAID:
_______________________________________________________________________________
/_/ FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS:
_______________________________________________________________________________
/_/ CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE O-11(A)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS
PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT
NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID:____________________________________________________
2) FORM, SCHEDULE OR REGISTRATION NO._________________________________________
3) FILING PARTY:______________________________________________________________
4) DATE FILED:________________________________________________________________
RARE MEDIUM GROUP, INC.
565 FIFTH AVENUE, 29TH FLOOR
NEW YORK, NEW YORK 10017
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 15, 2000
To the holders of Common Stock and Series A Convertible Preferred Stock
(collectively, the "Stockholders") of Rare Medium Group, Inc., a Delaware
corporation (the "Company"):
Please take notice that an Annual Meeting of Stockholders (the "Annual
Meeting") of the Company will be held in the Forest Ballroom of the W
Hotel, 541 Lexington Avenue, New York NY 10022 on June 15, 2000, at 10:00
a.m., local time, for the following purposes, all as more fully described
in the attached Proxy Statement:
1. To elect three (3) Class 1 Directors;
2. To ratify the increase in the number of shares of Common Stock, par
value $0.01 per share, of the Company (the "Common Stock") that may be
issued under the Company's 1998 Long-Term Incentive Plan from 8,000,000
shares to 23,000,000 shares;
3. To ratify the appointment of KPMG LLP as the independent auditors of
the Company for the year ending December 31, 2000; and
4. To transact such other business as may come before the Annual Meeting
or any adjournment or postponement thereof.
Stockholders are urged to read carefully the attached Proxy Statement
for additional information concerning the matters to be considered at the
Annual Meeting. The Board of Directors of the Company has fixed the close
of business on April 21, 2000 as the record date (the "Record Date") for
the determination of Stockholders entitled to vote at the Annual Meeting.
Only Stockholders of record at the close of business on the Record Date
will be entitled to notice of, and to vote at, the meeting or any
postponement or adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE RESPECTFULLY
URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED FORM OF
PROXY. A SELF- ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
MEETING, YOU MAY VOTE IN PERSON, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR
PROXY CARD.
By Order of the Board of Directors,
/s/ Robert C. Lewis
-----------------------------------
New York, New York Robert C. Lewis
May 15, 2000 Vice President, General Counsel
and Secretary
Important
Please complete, sign, date and promptly mail your proxy card.
RARE MEDIUM GROUP, INC.
565 Fifth Avenue, 29th Floor
New York, New York 10017
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 2000
This Proxy Statement and the accompanying proxy card are being
furnished to the holders (the "Stockholders") of the common stock, par
value $0.01 per share (the "Common Stock"), and Series A Convertible
Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"),
of Rare Medium Group, Inc. (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the
"Board of Directors") for use in voting at the Annual Meeting of
Stockholders to be held at the time and place and for the purposes set
forth in the accompanying Notice of Annual Meeting, and any and all
adjournments or postponements thereof (the "Annual Meeting"). This Proxy
Statement and the accompanying proxy card are first being mailed or
delivered to the Stockholders on or about May 15, 2000.
Only holders of Common Stock and Series A Preferred Stock of record on
the books of the Company at the close of business on April 21, 2000 (the
"Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. On that date, there were outstanding 49,617,118 shares of Common
Stock and 924,837 shares of Series A Preferred Stock. The holders of a
majority of the votes entitled to vote at the Annual Meeting, present in
person or represented by proxy, will constitute a quorum for the
transaction of business at the meeting. Each share of Common Stock
outstanding on the Record Date is entitled to one vote on each matter which
may be brought before the Annual Meeting. The holders of the Series A
Preferred Stock are entitled to an aggregate of 9,750,000 votes as of such
Record Date, or 10.54 votes per share of Series A Preferred Stock. Other
than the election of directors, which requires a plurality of the votes
cast, Proposals II and III submitted to the Stockholders require the
affirmative vote of the holders of a majority of the total number of votes
of the capital stock of the Company represented and entitled to vote at the
Annual Meeting. Only holders of Series A Preferred Stock will vote on the
election of Michael S. Gross as a Class 1 Director. Abstentions and broker
non-votes will be counted for purposes of determining whether a quorum is
present at the meeting. In determining the outcome of the election of
directors, instructions withholding authority and broker non- votes will
not be taken into account and will have no effect on the outcome of the
vote. For purposes of tabulating the votes with respect to Proposals II and
III, abstentions will have the effect of a vote "against" such proposals
and broker non-votes will not be taken into account and will have no effect
on the outcome of the vote.
It is expected that the solicitation of proxies will be primarily by
mail. Proxies also may be solicited personally or by telephone, telecopy,
telegraph or teletype by officers, directors or employees of the Company
without additional compensation. The total expense of preparing, assembling
and mailing proxy material and the Annual Report to Stockholders will be
borne by the Company. Such expense may also include reimbursement for
out-of-pocket disbursements incurred by brokerage houses and other
custodians, nominees or other fiduciaries for forwarding such documents to
the Stockholders.
All proxies delivered pursuant to this solicitation are revocable by
giving written notice to the Secretary of the Company by the person
executing the proxy at any time before the voting thereof. On the
accompanying proxy a Stockholder may substitute the name of another person
in place of those persons presently named as proxies. In order to vote, a
substitute must present adequate identification to the Secretary before the
voting occurs. Proxies given in the form enclosed, unless previously
revoked, will be voted at the Annual Meeting in accordance with the
instructions contained therein and, if no choice is specified, will be
voted in favor of the election of the three nominees for director and for
the proposals set forth herein and in the Notice of Annual Meeting.
TABLE OF CONTENTS
THE ANNUAL MEETING.....................................................1
PROPOSAL I
ELECTION OF DIRECTORS..............................................2
PROPOSAL II
RATIFY THE INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR ISSUANCE UNDER THE 1998 LONG-TERM INCENTIVE
PLAN FROM 8,000,000 SHARES TO 23,000,000 SHARES....................8
PROPOSAL III
RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS
OF THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 2000...............13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........15
EXECUTIVE COMPENSATION................................................17
FORWARD-LOOKING STATEMENTS............................................26
OTHER BUSINESS........................................................26
STOCKHOLDER PROPOSALS.................................................26
ADDITIONAL INFORMATION................................................26
ANNUAL REPORT ON FORM 10-K............................................26
THE ANNUAL MEETING
DATE, TIME AND PLACE
This Annual Meeting is scheduled to be held at 10:00 a.m., local time,
on June 15, 2000, in the Forest Ballroom of the W Hotel, 541 Lexington
Avenue, New York, New York 10022.
PURPOSE
At the Annual Meeting the holders of the Common Stock and the Series A
Preferred Stock will be asked to consider and vote upon each of the
following matters:
1. The election of three Class 1 Directors;
2. The ratification of the increase in the number of shares of Common
Stock that may be issued under the Company's 1998 Long-Term Incentive Plan
from 8,000,000 shares to 23,000,000 shares;
3. The ratification of the appointment of KPMG LLP as the independent
auditors of the Company for the year ending December 31, 2000; and
4. The transaction of such other business as may come before the Annual
Meeting or any adjournment or postponement thereof.
The Board of Directors has unanimously voted for and approved the above
proposals and recommends a vote for approval of the election of the three
nominees for director set forth herein and for each of the above proposals
by the Stockholders entitled to vote at the Annual Meeting.
RECORD DATE
The Board of Directors has fixed the close of business on April 21,
2000 as the Record Date for the determination of Stockholders entitled to
notice of, and to vote at, the Annual Meeting. Only Stockholders of record
at the close of business on the Record Date will be entitled to notice of,
and to vote at, the Annual Meeting. On the Record Date, there were issued
and outstanding 49,617,118 shares of Common Stock and 924,837 shares of
Series A Preferred Stock. Each holder of Common Stock entitled to vote at
the Annual Meeting will be entitled to one vote per share. The holders of
the Series A Preferred Stock are entitled to an aggregate 9,750,000 votes
as of the Record Date, or 10.54 votes per share of Series A Preferred
Stock. The holders of Common Stock and Series A Preferred Stock will vote
together as a single class on each matter presented at the Annual Meeting,
except that only the holders of Series A Preferred Stock will vote on the
election of Michael S. Gross as a Class 1 director.
QUORUM
The holders of a majority of the votes entitled to vote at the Annual
Meeting, present in person or represented by proxy, will constitute a
quorum for the transaction of business at the Annual Meeting. If a quorum
is not present or represented at the Annual Meeting, the holders of a
majority of the shares represented at the Annual Meeting shall have the
power to adjourn the Annual Meeting from time to time, without notice,
other than by announcement at the meeting, until a quorum is present or
represented. At any such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted
at the original meeting. If and when a quorum is present or represented at
the Annual Meeting or any adjournment thereof, the Stockholders present or
represented at the meeting may continue to transact business until
adjournment notwithstanding the withdrawal from the meeting of Stockholders
counted in determining the existence of a quorum.
REQUIRED VOTE
Other than the election of directors, which requires a plurality of the
votes cast, Proposals II and III submitted to the Stockholders require the
affirmative vote of the holders of a majority of the total number of votes
of the capital stock of the Company represented and entitled to vote at the
Annual Meeting. Abstentions and broker non-votes will be counted for
purposes of determining whether a quorum is present at the meeting. In
determining the outcome of the election of directors, instructions
withholding authority and broker non-votes will not be taken into account
and will have no effect on the outcome of the vote. For purposes of
tabulating the votes with respect to Proposals II and III, abstentions will
have the effect of a vote "Against" such proposals and broker non-votes
will not be taken into account and will have no effect on the outcome of
the vote.
All votes cast by proxy or in person will be counted by a
representative of the American Stock Transfer & Trust Company, transfer
agent for the Common Stock, who will serve as the inspector of elections at
the Annual Meeting and who will separately tabulate affirmative votes,
negative votes, abstentions and broker non-votes for the election of
directors and each proposal. Broker non-votes occur where a broker holding
stock in street name votes the shares on some matters but not others. The
missing votes are deemed to be broker non-votes. The inspector of elections
will treat broker non-votes as shares that are present and entitled to vote
for the purpose of determining the presence of a quorum. However, for the
purpose of determining the outcome of any matter as to which the broker or
nominee has indicated on the proxy that it does not have discretionary
authority to vote, those shares will be treated as not present and not
entitled to vote with respect to that matter (even though those shares are
considered entitled to vote for quorum purposes and may be entitled to vote
on other matters).
As of the Record Date, directors and executive officers of the Company
and their affiliates had the right to vote approximately 16% of all votes
entitled to vote at the Annual Meeting. Such directors and executive
officers of the Company and their affiliates have indicated that they
intend to vote all of their shares "For" the election of each director
nominee and each of the proposals.
PROXIES
The enclosed proxies provide that each Stockholder may specify that his
or her shares be voted "For" the director nominees or to "Withhold
Authority" for the nominees and "For," "Against" or "Abstain" from voting
with respect to each of the proposals. All shares of Common Stock and
Series A Preferred Stock represented by properly executed proxies received
prior to or at the Annual Meeting and not revoked will be voted in
accordance with the instructions indicated in such proxies. Properly
executed proxies that do not contain voting instructions will be voted
"For" approval of the election of each director nominee and "For" approval
of each of the other proposals. Stockholders are urged to mark the box on
the proxy to indicate how their shares of Common Stock or Series A
Preferred Stock are to be voted.
It is not expected that any matter other than those referred to herein
will be brought before the Annual Meeting. If, however, other matters are
properly presented, the persons named as proxies will vote in accordance
with their own judgment with respect to such matters, unless authority to
do so is withheld in the proxy.
Any Stockholder who executes and returns a proxy may revoke such proxy
in writing at any time before it is voted at the Annual Meeting by: (i)
filing with the Secretary of the Company, at 565 Fifth Avenue, 29th Floor,
New York, New York 10017, written notice of such revocation bearing a later
date than the proxy or a subsequent, later dated and signed proxy relating
to the same shares; or (ii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute revocation of a proxy).
The cost of this solicitation of proxies will be borne by the Company.
Directors, officers and regular employees of the Company may solicit
proxies in person, by telephone, by telecopy, by mail or by other means of
communication, but such persons will not be specifically compensated for
such services. The Company will reimburse American Stock Transfer & Trust
Company for forwarding proxy materials to beneficial owners and serving as
inspectors of election. The Company has retained Morrow & Co. to assist it
in the solicitation of proxies and will pay Morrow & Co. a fee of
approximately $12,000. The total estimated cost for this solicitation is
approximately $50,000.
PROPOSAL I
ELECTION OF DIRECTORS
At the Special Meeting of Stockholders held on March 16, 1999, the
Stockholders approved an amendment to the Company's Certificate of
Incorporation establishing a classified Board of Directors, divided into
three classes having staggered terms of three years each. Pursuant to
Article Ninth of the Certificate of Incorporation, which was approved by
the Stockholders at such Special Meeting, and Article III, Section 1 of the
Amended and Restated By-Laws of the Company, the Board of Directors may
determine, with certain limitations, the total number of directors and the
number of directors to be elected at any Annual Meeting of Stockholders or
special meeting in lieu thereof. The Board of Directors has currently fixed
the total number of directors at seven, consisting of three Class 1
directors, two Class 2 directors and two Class 3 directors. The number of
directors is subject to increase to eight as contemplated by the Amended
and Restated Securities Purchase Agreement, dated June 4, 1999 (the
"Securities Purchase Agreement with Apollo"), by and among the Company and
Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P. and AIF
IV/RRRR LLC (hereinafter collectively referred to as the "Apollo
Stockholders" or the "Preferred Stockholders"). On June 4, 1999, the Apollo
Stockholders designated Andrew Africk as their Preferred Stock Director
pursuant to the Certificate of Designations governing the Series A
Preferred Stock (the "Certificate of Designations") and Mr. Africk now
serves as a Class 2 director at the discretion of the Preferred
Stockholders. On August 19, 1999, following stockholder approval of the
transactions pursuant to which the Series A Preferred Stock was issued, the
Apollo Stockholders designated Michael S. Gross as their second Preferred
Stock Director pursuant to the Certificate of Designations and Mr. Gross
now serves as a Class 1 director at the discretion of the Preferred
Stockholders. Although Mr. Rowan is a Class 1 nominee, and is affiliated
with the Apollo Stockholders, he has not been designated by the Apollo
Stockholders. The term of the Class 1 directors expires at the Annual
Meeting and until their successors are duly elected and qualified. The
Class 2 directors have a term expiring at the 2001 annual meeting of
Stockholders and until their successors are duly elected and qualified. The
Class 3 directors have terms expiring at the 2002 annual meeting of
Stockholders and until their successors are duly elected and qualified.
All nominees for director to be elected at the Annual Meeting are
currently members of the Board of Directors. The Company has no reason to
believe that any of the nominees will be unable to serve. In the event that
any nominee should not be available, the persons named in the proxy will
vote for the others and may vote for a substitute for such nominee.
INFORMATION WITH RESPECT TO DIRECTOR NOMINEES
Listed below are the nominees for Class 1 directors, with information
showing the principal occupation, business experience and current public
directorships, if any, of each, the age of each as of the date of this Proxy
Statement and the year each was first elected a director of the Company.
Unless authority is withheld, proxies in the accompanying form will be
voted in favor of electing the individuals identified in the table below as
Class 1 directors of the Company. If the proxy is executed in such a manner
as to withhold authority to vote for one or more nominees for director,
such instructions will be followed by the persons named as proxies.
Name Age Class Position Director Since
- -------------------------------------------------------------------------------
Class 1 nominees to be elected by Common Stockholders:
Jeffrey M. Killeen 46 1 Director 1998
Marc J. Rowan 37 1 Director 1999
Class 1 nominee to be elected by Preferred Stockholders:
Michael S. Gross 38 1 Director 1999
CLASS 1 NOMINEES
Jeffrey M. Killeen. Mr. Killeen has been a director of the Company
since October 1998. Mr. Killeen has been the Chief Executive Officer of
Forbes.com, the on-line division of Forbes magazine, since August 1999.
Prior to that, Mr. Killeen was the Chief Operating Officer of
barnesandnoble.com, an e-commerce company, from January 1998 to March 1999.
Before joining barnesandnoble.com, Mr. Killeen served as President and
Chief Executive Officer of Pacific Bell Interactive Media from August 1994
to January 1998.
Marc J. Rowan. Mr. Rowan has been a member of the Board of Directors
since June 1999. Mr. Rowan is one of the founding principals of Apollo
Advisors, L.P. (which, together with its affiliates, acts as the managing
general partner of several private securities investment funds, including
Apollo Investment Fund IV, L.P.) and of Lion Advisors, L.P. (a financial
advisor to, and representative of institutional investors with respect to,
securities investments). Mr. Rowan is also a director of Vail Resorts,
Inc., Quality Distribution, Inc., National Financial Partners, Inc.,
Samsonite Corporation, Wyndam International and NRT Incorporated.
Michael S. Gross. Mr. Gross has been a member of the Board of Directors
since August 1999. Mr. Gross is one of the founding principals of Apollo
Advisors, L.P. and of Lion Advisors, L.P. Mr. Gross is also a director of
Allied Waste Industries, Inc., Breuners Home Furnishing, Inc., Clark
Enterprises Inc., Converse, Inc., Florsheim Group, Inc., United Rentals,
Inc., Encompass Services Corporation and Saks Incorporated.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE CLASS I
NOMINEES.
INFORMATION WITH RESPECT TO CONTINUING DIRECTORS
Listed below are the continuing directors, with information showing the
principal occupation, business experience and current public directorships,
if any, of each, the age of each and the year each was first elected a
director of the Company.
Name Age Class Position Director Since
- -----------------------------------------------------------------------------
Glenn S. Meyers 39 3 Chairman and Chief 1998
Executive Officer
William F. Stasior 59 3 Director 2000
Richard T. Liebhaber 65 2 Director 1998
Andrew D. Africk 33 2 Director 1999
Glenn S. Meyers. Mr. Meyers, a Class 3 director, is the co-founder,
Chairman and Chief Executive Officer of the Company. He is also Chairman
and Chief Executive Officer of the Company's wholly-owned subsidiary, Rare
Medium, Inc. and has been a member of the Company's Board of Directors as
well as the Company's Chief Executive Officer since April 1998. Prior to
joining Rare Medium, Inc. in September 1996, Mr. Meyers was President of
Brookridge Capital Management, an Internet venture capital firm from 1994
to September 1996. Mr. Meyers is also a director of L90, Inc.
William F. Stasior. Mr. Stasior joined the Board of Directors in April
2000 as a Class 3 director, replacing Steven Winograd upon Mr. Winograd's
resignation. Mr. Stasior was the Chairman and Chief Executive Officer of
Booz Allen & Hamilton Inc., a management and technology consulting firm,
from 1991 to 1999, and had served on the Board of Directors of Booz Allen
since 1979. Since October 1999, Mr. Stasior has been the Senior Chairman of
Booz Allen. Mr. Stasior also serves on the Board of Directors of OPNET, a
software company that specializes in enhancing network performance for the
Internet and other applications and Emerging Vision Inc., an optical
retailer.
Richard T. Liebhaber. Mr. Liebhaber, a Class 2 director, has been a
member of the Board of Directors since June 1998. Mr. Liebhaber has been a
Managing Director of Veronis, Suhler & Associates, Inc., the New York media
merchant banking firm, since June 1, 1995. In addition, Mr. Liebhaber is
currently a member of the following boards of directors: Qwest
Communications, Inc., Advanced Radio Telecommunications, AVICI Systems,
Inc., Internet Communications Corporation, and Alcatel USA, Inc. Mr.
Liebhaber also serves as a consultant and member of the Advisory Board of
Corning, Inc.
Andrew D. Africk. Mr. Africk, a Class 2 director, has been a member of
the Board of Directors since June 1999. Mr. Africk is a partner of Apollo
Advisors, L.P. and of Lion Advisors, L.P. Mr. Africk is also a director of
Continental Graphics Holdings, Inc. and Encompass Services Corporation, as
well as several private venture companies.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held five (5) meetings during the year ended
December 31, 1999. Each director attended all of the meetings of the Board
of Directors.
The Board of Directors has an Audit Committee and a Compensation
Committee which meet as the need arises. The Audit Committee reviews and
makes recommendations with respect to the Company's internal controls and
financial reports and in connection with such reviews and recommendations,
communicates with and receives information independently from appropriate
Company financial personnel regarding the Company's financial condition.
The Audit Committee, with the Company's Executive Vice President and Chief
Financial Officer, also reviews the scope and results of the annual audit
with the Company's auditors and other activities the auditors perform with
the Company. The Audit Committee met four (4) times during the year ended
December 31, 1999. The Audit Committee met on February 14, 2000, with the
Company's auditors to discuss the results of the 1999 audit. During the
last fiscal year, the Audit Committee was composed of Steven Winograd,
Richard T. Liebhaber and Andrew D. Africk. In April 2000, Mr. Winograd
resigned as director and Mr. Stasior replaced Mr. Winograd on the Board of
Directors. The Audit Committee is currently composed of Richard T.
Liebhaber and Andrew D. Africk. The Compensation Committee met for the
first time on August 30, 1999. Prior to that meeting, the Board of
Directors as a whole considered, and from time to time considers, matters
relating to Executive Compensation. The Compensation Committee periodically
reviews and evaluates the compensation of the Company's officers and
administers grants of options from the Company's Equity Participation Plan,
Nonqualified Stock Option Plan, the Amended and Restated Equity Plan for
Directors and the Company's 1998 Long-Term Incentive Plan. The Compensation
Committee is currently composed of Jeffrey M. Killeen and Andrew D. Africk.
COMPENSATION OF DIRECTORS
Each non-employee director receives a per meeting fee of $1,000 for
each meeting of the Board of Directors and $500 for each committee meeting
attended, along with expenses incurred in connection with each meeting
attended.
Under the Company's 1998 Long-Term Incentive Plan, each new
non-employee director of the Company is automatically granted an option to
purchase shares of Common Stock as of the effective date of the
non-employee director's initial election to the Board of Directors and
thereafter at the close of business on the date of final adjournment of
each Annual Meeting of Stockholders. The number of shares of Common Stock
subject to each initial option will be 25,000 shares and the number of
shares subject to each annual option will be 25,000 shares or, if so
determined by the Board of Directors, such other number of shares specified
in the most recent resolution of the Board of Directors adopted on or prior
to the date of the Annual Meeting of Stockholders that coincides with or
most recently precedes the date of grant of the option. In general, the
exercise price per share of Common Stock purchasable upon exercise of a
non-employee director's initial or annual option will be equal to 100% of
the fair market value of a share of Common Stock on the date of grant of
the option.
Upon becoming directors of the Company in 1998, each of Steven Winograd
and Jeffrey M. Killeen was granted an option to purchase 75,000 shares of
Common Stock on October 28, 1998 under the Amended and Restated Equity Plan
for Directors, exercisable at $1.9375 per share, the fair market value of
the Common Stock on the date of grant. Richard T. Liebhaber was granted an
option to purchase 75,000 shares of Common Stock on November 2, 1998 under
the Amended and Restated Equity Plan for Directors, exercisable at $2.8125
per share, the fair market value of the Common Stock on the date of grant.
All of these options vest ratably over three years. It is anticipated that
future grants of stock options to directors will principally be made under
the Company's 1998 Long-Term Incentive Plan.
Upon becoming directors of the Company on June 4, 1999, each of Andrew
D. Africk and Marc J. Rowan was granted an option to purchase 75,000 shares
of Common Stock under the 1998 Long-Term Incentive Plan, exercisable at
$7.00 per share, both of which vest ratably over three years. Upon becoming
a director of the Company as of August 19, 1999, Michael Gross was granted
an option to purchase 75,000 shares of Common Stock under the 1998
Long-Term Incentive Plan, exercisable at $7.00 per share, which vests
ratably over three years.
EXECUTIVE OFFICERS
The names of the Company's executive officers, and certain information
about them, is set forth below.
<TABLE>
<CAPTION>
Name Age Position Officer Since
- -------------------- ------ ---------------------------------- --------------
<S> <C> <C> <C>
Glenn S. Meyers 39 Chairman and Chief Executive Officer 1998
Suresh V. Mathews 45 President and Chief Operating Officer 1999
Jeffrey J. Kaplan 51 Executive Vice President and 1999
Chief Financial Officer
Robert C. Lewis 35 Vice President, General Counsel 1998
and Secretary
Craig C. Chesser 39 Vice President and Treasurer 1998
Michael A. Hultberg 34 Vice President and Controller 1999
</TABLE>
Glenn S. Meyers - Chairman and Chief Executive Officer. Mr. Meyers is
the co-founder, Chairman and Chief Executive Officer of the Company. He is
also Chairman and Chief Executive Officer of the Company's wholly-owned
subsidiary, Rare Medium, Inc. and has been a member of the Company's Board
of Directors as well as the Company's Chief Executive Officer since April
1998. Prior to joining Rare Medium, Inc. in September 1996, Mr. Meyers was
President of Brookridge Capital Management, an Internet venture capital
firm from 1994 to September 1996. Mr. Meyers is also a director of L90,
Inc.
Suresh V. Mathews - President and Chief Operating Officer. Mr. Mathews
was appointed the Company's President and Chief Operating Officer in April
2000. Mr. Mathews has also been the President and Chief Operating Officer
of the Company's wholly-owned subsidiary, Rare Medium, Inc. since January
1999. Prior to joining Rare Medium, Inc., Mr. Mathews was Senior Vice
President and Chief Information Officer of Quaker State Corporation from
June 1991 to December 1998.
Jeffrey J. Kaplan - Executive Vice President and Chief Financial
Officer. Mr. Kaplan has been the Executive Vice President and Chief
Financial Officer of the Company since September 1999. Mr. Kaplan served as
Executive Vice President, Chief Financial Officer and Director of Safety
Components International, Inc., a leading manufacturer of airbag cushions
and fabric from February 1997 to August 1999. From October 1993 to February
1997, Mr. Kaplan served as Executive Vice President, Chief Financial
Officer and Director of International Post Limited, a leading provider of
post-production services for commercial and advertising markets.
Robert C. Lewis - Vice President, General Counsel and Secretary. Mr.
Lewis has been the Company's Vice President and General Counsel since May
1998 and Secretary of the Company since August 1998. Prior to joining the
Company, Mr. Lewis was an associate at the law firm of Fried, Frank,
Harris, Shriver & Jacobson from October 1992.
Craig C. Chesser - Vice President and Treasurer. Mr. Chesser has been a
Vice President of the Company since July 1998 and has been the Treasurer of
the Company since November 1999. Mr. Chesser served as Corporate Controller
of the Company from July 1998 to November 1999. Prior to joining the
Company, Mr. Chesser was Vice President, Finance for TransCare Corporation,
a health care industry consolidator. Previously, Mr. Chesser was Vice
President, Finance and Administration for Sunwestern Investment Group, a
venture capital organization.
Michael A. Hultberg - Vice President and Controller. Mr. Hultberg
joined the Company as Vice President and Controller in November 1999. From
July 1988 to November 1999, Mr. Hultberg was employed by KPMG LLP, most
recently as Senior Manager.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
APOLLO SECURITIES PURCHASE AND CONVERSION
On June 4, 1999, the Company issued and sold to the Apollo
Stockholders, for an aggregate purchase price of $87.0 million, 126,000
shares of Series A Preferred Stock, 126,000 Series 1-A warrants, 1,916,994
Series 2-A warrants, 744,000 shares of Series B Convertible Preferred
Stock, 744,000 Series 1-B warrants and 10,345,548 Series 2-B warrants.
Under the terms of the Securities Purchase Agreement with the
Apollo Stockholders, at the 1999 annual meeting of Stockholders held on
August 19, 1999, the holders of Common Stock approved the conversion of all
of the Series B Convertible Preferred Stock, Series 1-B warrants and Series
2-B warrants, including the additional Series B securities that have been
issued as dividends, into like amounts of Series A Preferred Stock, Series
1-A warrants and Series 2-A warrants, respectively. Pursuant to the
approval, all Series B Convertible Preferred Stock, Series 1-B warrants and
Series 2-B warrants were converted into Series A Preferred Stock, Series
1-A warrants and Series 2-A warrants, respectively. The Series A securities
are convertible into or exercisable for voting Common Stock whereas the
Series B securities were convertible into or exercisable for non-voting
Common Stock.
From time to time the Company has provided, and may in the future
provide, internet related professional advisory and consultative services
in the ordinary course of business and on terms believed to be comparable
to those obtainable by third parties to portfolio companies in which the
Apollo Stockholders have an investment or in which they have considered
investing. In addition, in March 2000 the Company committed up to
$2,806,000 to a special purpose investment vehicle and on terms coincident
with those of the other investors therein, who were, principals
of Apollo Advisors IV, L.P., for the purpose of making securities
investments.
TRANSACTIONS WITH BEAR, STEARNS & CO. INC.
Pursuant to an agreement dated April 12, 1999, the Company retained
Bear Stearns as its financial advisor to provide investment banking
services, including advisory services in connection with the investment
transaction consummated pursuant to the Securities Purchase Agreement with
the Apollo Stockholders for which it has received a fee of $2,392,500. In
addition, as acknowledged by the terms of the agreement with Bear Stearns,
an affiliate of Bear Stearns has invested, indirectly, $10,000,000 in the
securities of the Company in the transaction consummated with Apollo
Investment Fund IV, L.P and the other Preferred Stockholders pursuant to
the Securities Purchase Agreement with the Apollo, Stockholders. Steven
Winograd, a director of the Company until April 2000, invested $250,000
in the Company through AIF IV/RRRR LLC, one of the Apollo Stockholders.
In addition, the Company paid Bear Stearns a fee of $600,000 plus
expenses, for investment banking services that it rendered in connection
with the private placement of 2,500,000 shares of Common Stock in January
2000 and a fee of $500,000 plus expenses for investment banking services
rendered in connection with the acquisition of two of the Company's
Internet professional services subsidiaries in December 1999. Steven
Winograd, a director of the Company until April 2000, was also a Senior
Managing Director at Bear Stearns until April 2000.
EMPLOYMENT AGREEMENTS
For a description of the employment agreements between the Company and
certain executive officers, please see the descriptions under the heading
"Executive Compensation - Employment Contracts and Change-in-Control
Arrangements."
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's
securities, to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater-than-10% stockholders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no
other reports were required, the Company believes that during the year
ended December 31, 1999, its officers, directors and greater-than-10%
stockholders complied with all Section 16(a) filing requirements, with the
exception of late filings of Initial Statements of Beneficial Ownership of
Securities on Form 3 for each of Suresh V. Mathews, Jeffrey J. Kaplan,
Craig C. Chesser and Michael A. Hultberg. Such forms were subsequently
filed with the SEC.
PROPOSAL II
RATIFY THE INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE
FOR ISSUANCE UNDER THE 1998 LONG-TERM INCENTIVE PLAN
FROM 8,000,000 SHARES TO 23,000,000 SHARES
The Board recommends that the Stockholders ratify an increase in the
number of shares of Common Stock available for issuance under the Company's
1998 Long-Term Incentive Plan (the "Plan") from 8,000,000 shares to
23,000,000 shares. Initially, 8,000,000 shares of Common Stock were
authorized for issuance under the Plan. Since mid-September 1999, an
additional 15,000,000 shares of Common Stock were authorized by the Board
of Directors for issuance under the Plan. In the event the Stockholders do
not ratify the increase of the additional 15,000,000 shares of Common Stock
available for issuance under the Plan within 12 months of the Board of
Director's authorization of such increase, options granted under the Plan
with respect to these additional shares of Common Stock will not qualify
for treatment as incentive stock options ("ISOs"), as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code") (See "Certain
Federal Income Tax Consequences - Incentive Stock Options").
THE PLAN
The purpose of the Plan, which was adopted on May 6, 1998 by the Board
and ratified by the Stockholders on March 16, 1999, is to enable the
Company to compete successfully in attracting, retaining, motivating and
rewarding executive officers, key employees, directors and consultants of
and service providers to the Company and its subsidiaries and to enable
such persons to acquire or increase their proprietary interest in the
Company, thereby promoting a closer identity of interests between such
persons and the Stockholders. The Board believes that the Plan increases
the Company's flexibility in furthering such purposes. The Plan provides
for the grant of ISOs, non-qualified stock options ("NSOs"), stock
appreciation rights ("SARs"), restricted stock awards, deferred stock
awards, bonus stock awards, dividend equivalents and other types of
stock-based awards. Awards granted under the Plan may, at the discretion of
the Committee (as defined below) be granted alone or in addition to, in
tandem with or in substitution for any other award granted under the Plan.
Executive officers and key employees of the Company and its subsidiaries,
including any director or officer who is also an executive officer or key
employee; directors of the Company; and persons who provide consulting or
other services to the Company deemed by the Committee to be of substantial
value to the Company, are eligible to be granted awards under the Plan.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Compensation Committee of the Board
(the "Committee"). The Committee has the full authority, in its sole
discretion, among other things, to interpret the Plan, to establish from
time to time regulations for the administration of the Plan and to
determine the persons to whom awards will be granted and the terms of the
awards. In appointing members to the Committee, the Board will consider
whether each member will qualify as a "non-employee director" within the
meaning of Rule 16 b-3 ("Rule 16 b-3") under the 1934 Act and as an
"outside director" within the meaning of Treasury Regulation Section
1.162-27(e)(3) under Section 162(m) of the Code, but such members are not
required to so qualify at the time of appointment or during their term of
service on the Committee. The Board will perform the functions of the
Committee for purposes of granting awards to non-employee directors, and
the Board may perform any function of the Committee under the Plan for any
other purpose, including without limitation, for the purpose of ensuring
that transactions under the Plan by participants who are then subject to
Section 16 of the 1934 Act in respect of the Company are exempt under Rule
16 b-3.
STOCK OPTIONS
The Committee is authorized to grant awards of options, including ISOs
and NSOs. The exercise price per share of Common Stock purchasable under an
option will be determined by the Committee; provided, however, that such
exercise price must be at least 100% of the fair market value of such
shares of Common Stock on the date the option is granted. The Committee
will determine the date or dates at which an option may be exercised in
whole or in part, the methods by which the exercise price may be paid or
deemed to be paid, the form of such payment, including, without limitation,
cash, shares of Common Stock, other awards, other property or through
"cashless exercise arrangements" (to the extent permitted by applicable
law), and the methods by which Common Stock will be delivered or deemed to
be delivered to participants. The term of an option granted under the Plan
will be for such period as may be determined by the Committee; provided,
however, that in no event will the term of any ISO or any SAR granted in
tandem therewith exceed a period of ten years from the date of grant (or
such shorter period as may be applicable under Section 422 of the Code).
The terms of any ISO granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code. No ISO will be
granted more than ten years after the effective date of the Plan. No ISO
will be granted to any employee who immediately after the grant would own
more than 10% of the total combined voting power or value of all classes of
capital stock of the Company, or any subsidiary of the Company, unless the
option price is at least 110% of the fair market value of the shares of
Common Stock subject to the option, and the option on the date of grant
shall expire not later than five years from the date the option is granted.
In addition, the aggregate fair market value of the shares of Common Stock,
determined at the date of grant, with respect to which ISOs are exercisable
for the first time by a participant during any calendar year, shall not
exceed $100,000.
NON-EMPLOYEE DIRECTOR OPTIONS
Non-employee directors of the Company are eligible for automatic grants
of NSOs under the Plan. A non-employee director will automatically be
granted an initial option covering 25,000 shares of Common Stock as of the
effective date of the non-employee director's initial election to the
Board. In addition, unless an alternative arrangement has been made, a
non-employee director will automatically be granted an option covering
25,000 shares of Common Stock at the close of business on the date of final
adjournment of each annual meeting of stockholders of the Company, to the
extent such non-employee director then qualifies as a non-employee
director. Each option granted to a non-employee director will have an
exercise price equal to the fair market value of the shares of Common Stock
on the date of grant and will expire at the earlier of ten years from the
date of grant or one year after the date the non-employee director ceases
to serve as a director of the Company for any reason. Each option granted
to a non-employee director may be exercised, prior to expiration,
commencing one year after the date of grant, or at such earlier date as may
be specified by the Board; provided, however, that an option may be
exercised following a non-employee director's termination of service as a
director for reasons other than death or disability, but only if the
non-employee director served for, at least, eleven months after the date of
grant or the option was otherwise exercisable at the date of termination of
service. The exercise price of an option granted to a non- employee
director may be paid in cash or by surrender of shares of Common Stock
already owned by the non-employee director (except for shares acquired from
the Company by exercise of an option less than six months before the date
of surrender) having a fair market value at the time of exercise equal to
the exercise price, or by a combination of cash and shares. The other terms
of the options granted to non-employee directors will be consistent with
the terms of stock options granted to employees.
STOCK APPRECIATION RIGHTS
The Committee is authorized to grant awards of SARs. A SAR granted to a
participant will confer upon such participant a right to receive upon
exercise the excess of the fair market value of one share of Common Stock
on the date of exercise (or, if the Committee shall so determine in the
case of a SAR that is not related to an ISO, during a specified period
before or after the date of exercise) over the exercise price of the SAR as
determined by the Committee as of the date of grant, which will not be less
than the fair market value of one share of Common Stock on the date of
grant. The Committee will determine the date, or dates, at which a SAR may
be exercised in whole or in part, the method of exercise, method of
settlement, form of consideration payable in settlement, method by which
Common Stock will be delivered or deemed to be delivered to a participant,
whether a SAR will be in tandem with any other award, and any other terms
and conditions of any SAR. A SAR designated as a "limited SAR" may only be
exercised upon the occurrence of certain events constituting a "change in
control" of the Company as defined in the Plan. Limited SARs may be either
freestanding or issued in tandem with other awards.
RESTRICTED STOCK AWARDS
The Committee is authorized to grant awards of Common Stock that are
subject to restrictions on transferability and other restrictions imposed
by the Committee. Except to the extent restricted under the award agreement
relating to the restricted stock, a participant granted restricted stock
will have all the rights of a stockholder of the Company. Except as
otherwise determined by the Committee, upon termination of a participant's
employment or service during the applicable restricted period, the
restricted stock granted to such participant that is at that time subject
to restrictions will be forfeited and reacquired by the Company; provided,
however, that the Committee may provide, by rule or regulation or in any
award agreement, or may determine in an individual case, that restrictions
or forfeiture conditions relating to the restricted stock will be waived in
whole or in part in the event of termination resulting from specified
causes.
DEFERRED STOCK AWARDS
The Committee is authorized to grant awards of Common Stock that are
subject to restrictions on transferability and other restrictions imposed
by the Committee. Delivery of the shares of Common Stock will occur upon
the expiration of the deferral period applicable to the deferred stock, as
determined by the Committee. Except as otherwise determined by the
Committee, upon termination of a participant's employment or service during
the applicable deferral period, the deferred stock granted to such
participant that is at that time subject to forfeiture conditions will be
forfeited; provided, however, that the Committee may provide, by rule or
regulation or in any award agreement, or may determine in an individual
case, that restrictions or forfeiture conditions relating to the deferred
stock will be waived in whole or in part in the event of termination
resulting from specified causes.
BONUS STOCK AWARDS
The Committee is authorized under the Plan to grant shares of Common
Stock as a bonus, or to grant shares of Common Stock or other awards in
lieu of Company obligations to pay cash under other plans or compensatory
arrangements.
DIVIDEND EQUIVALENTS
The Committee is authorized under the Plan to grant dividend
equivalents entitling a participant to receive cash, shares of Common Stock
or other property equal in value to dividends paid with respect to a
specified number of shares of Common Stock. Dividend equivalents may be
awarded on a free-standing basis or in connection with another award.
OTHER STOCK-BASED AWARDS
The Committee is authorized under the Plan, subject to limitations
under applicable law, to grant other stock-based awards that may be
denominated, payable in, or valued in whole or in part or by reference to,
or otherwise based on, or related to, shares of Common Stock and factors
that may influence the value of Common Stock as deemed by the Committee to
be consistent with the purposes of the Plan.
ACCELERATION UPON A CHANGE IN CONTROL
Unless otherwise provided by the Committee in an award agreement, all
conditions and restrictions relating to an award granted under the Plan,
including limitations on exercisability, risks of forfeiture, deferral
periods and conditions and restrictions requiring the continued performance
of services or the achievement of performance objectives with respect to
the exercisability or settlement of such award, shall immediately lapse
upon the occurrence of certain events constituting a change in control of
the Company.
TRANSFERABILITY
Except as otherwise determined by the Committee, and in any event in
the case of an ISO and stock appreciation rights in tandem therewith, no
award granted under the Plan is transferable by a participant, except by
will or the laws of descent and distribution, and, in the case of ISOs and
SARs in tandem therewith, will be exercisable during the lifetime of a
participant only by such participant or his or her guardian or legal
representative.
AMENDMENT; TERMINATION
The Board may amend, alter, suspend, discontinue or terminate the Plan
or the Committee's authority to grant awards under the Plan without the
consent of the Stockholders or participants thereunder, except that any
such action shall be subject to the approval of the Stockholders at or
before the next annual meeting of Stockholders for which the record date is
after such Board action if such Stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted,
and the Board may otherwise, in its discretion, determine to submit such
other changes to the Plan to the Stockholders for approval; provided,
however, that, without the consent of an affected participant, no such
action may materially impair the rights of such participant under any award
theretofore granted to him or her. The Committee may waive any conditions
or rights under, or amend, alter, suspend, discontinue, or terminate any
award theretofore granted and any award agreement relating thereto;
provided, however, that without the consent of an affected participant, no
such action may materially impair the rights of such participant under such
award.
FEDERAL INCOME TAX CONSEQUENCES
The Company has been advised that ISOs and NSOs granted under the Plan
are subject to the following Federal income tax treatment:
Incentive Stock Options. An employee will recognize no taxable income
and no deduction is available to the Company upon either the grant or
exercise of an ISO.
In general, if Common Stock acquired upon the exercise of an ISO is
subsequently sold, the realized gain or loss, if any, will be measured by
the difference between the exercise price of the option and the amount
realized on the sale. Any such gain or loss on the sale will generally be
treated as long-term capital gain or loss if the holding period
requirements have been satisfied. The holding period requirements will be
satisfied if the shares are not sold within two years of the date of grant
of the option pursuant to which such shares were transferred or within the
one-year period beginning on the day of the transfer of such shares
pursuant to the exercise of the option.
If Common Stock acquired upon the exercise of an ISO is subsequently
sold and the holding period requirements noted above are not satisfied (a
"disqualifying disposition"), the employee will recognize ordinary income
for the year in which the disqualifying disposition occurs in an amount
equal to the excess of the fair market value of such Common Stock on the
date the option was exercised (or, if lower, the amount realized on the
sale) over the exercise price of the option. Any additional gain recognized
on the sale will be a capital gain, and will be long-term or short-term
depending upon whether the sale occurs more than one year after the date of
exercise. The amount recognized by the employee as ordinary income will be
treated as compensation and the Company will receive a corresponding
deduction. The Company may be required to withhold additional taxes from
the wages of the employee with respect to the amount of ordinary income
taxable to the employee.
The excess of the fair market value of the Common Stock acquired by
exercise of an ISO (determined on the date of exercise) over the exercise
price is in effect an item of tax preference which must be taken into
account for purposes of calculating the "alternative minimum tax" of
Section 55 of the Code. If a disqualifying disposition is made of such
Common Stock, however, during the same year acquired, there will be no tax
preference item for alternative minimum tax purposes.
Non-qualified Stock Options. NSOs granted under the Plan do not result
in any income to the participant at the time of grant or any tax deduction
to the Company at that time. Except as stated below with respect to
officers, upon exercise of a non-qualified option, the excess of the fair
market value of the shares of Common Stock acquired (determined at the time
of exercise) over its cost to the participant (i) is taxable to the
participant as ordinary income and (ii) is deductible by the Company,
subject to general rules relating to the reasonableness of compensation;
and the participant's tax basis for the shares is the fair market value at
the time of exercise.
Gain or loss recognized upon disposition of shares acquired pursuant to
the exercise of a NSO will generally be reportable as short or long-term
gain or loss depending on the length of time the shares were held by the
participant as of the date of disposition.
The Company believes that compensation received by participants on the
exercise of nonqualified stock options or the disposition of shares
acquired upon the exercise of ISOs will be considered performance-based
compensation and thus not subject to the $1,000,000 limit of Section 162(m)
of the Code.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the total number
of the votes of the capital stock of the Company represented and entitled
to vote at the Annual Meeting is required to approve this Proposal II.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE
UNDER THE 1998 LONG-TERM INCENTIVE PLAN FROM 8,000,000 SHARES TO 23,000,000
SHARES.
PROPOSAL III
RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS
OF THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 2000
The firm of KPMG LLP, independent accountants, audited the financial
statements of the Company for the year ended December 31, 1999. The Board
of Directors of the Company has unanimously reappointed, and recommends to
the Stockholders the ratification of the appointment of, KPMG LLP as
independent auditors for the Company for the year ended December 31, 2000.
If the appointment is not ratified by the Stockholders, the Board of
Directors may reconsider its recommendation.
A representative of KPMG LLP is expected to be available at the Annual
Meeting to respond to appropriate questions and will be given the
opportunity to make a statement if he or she so desires.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the total number
of the votes of capital stock of the Company represented and entitled to
vote at the Annual Meeting is required to approve this Proposal III.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS HAS REAPPOINTED, AND RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF, KPMG LLP AS INDEPENDENT AUDITORS FOR
THE YEAR ENDED DECEMBER 31, 2000.
In compliance with Item 304 of Regulation S-K and as reported in the
Company's Current Report on Form 8-K dated August 13, 1998, the Company
provides the following information:
1. The Board of Directors of the Company on August 13, 1998 chose KPMG
LLP to perform the auditing engagement for the Company.
2. In their report dated March 20, 1998, PriceWaterhouseCoopers ("PWC")
expressed an opinion that the December 31, 1997 financial statements were
prepared assuming that the Company will continue to exist as a going
concern and that the Company incurred losses accumulating to $54,184,410
through December 31, 1997. This factor, among others, raised substantial
doubt about the Company's ability to continue as a going concern. Other
than the above, the reports of PWC on the Company's financial statements
for the fiscal years 1997 and 1998 did not in either case contain an
adverse opinion or a disclaimer of opinion, nor were either of the same
qualified or modified as to uncertainty, audit scope or accounting
principles.
3. The decision to change accountants was approved by the Board of
Directors of the Company.
4. During the Company's 1997 and 1998 fiscal years there were no
disagreements with PWC on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
5. None of the events referred to in paragraphs (a)(1)(v)(A) through
(D) of Item 304 occurred within the Company's two most recent fiscal years
or any subsequent interim period.
6. KPMG LLP was engaged by the Company on August 13, 1998. The Company
did not consult KPMG LLP on any of the matters described in Items
304(a)(1)(iv) or 304 (a)(1)(v) of Regulation S-K.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information, as
of April 21, 2000, regarding beneficial ownership of the shares of Common
Stock of the Company by (i) each person who is known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of Common
Stock, (ii) each of the Company's named executive officers under the
Summary Compensation Table under the heading "Executive Compensation,"
(iii) each director and nominee for director, and (iv) all executive
officers and directors of the Company as a group. Unless otherwise
indicated, the Stockholders listed possess sole voting and investment power
with respect to the shares indicated as owned by them.
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Percentage
Name and Address Position Beneficially Owned (1) of Class
---------------- -------- ---------------------- ----------
<S> <C> <C> <C>
Glenn S. Meyers Chairman and Chief Executive Officer 266,666 * (2)
Suresh V. Mathews President and Chief Operating Officer 250,000 * (3)
Jeffrey J. Kaplan Executive Vice President and Chief Financial - * (4)
Officer
Robert C. Lewis Vice President, General Counsel and Secretary 57,500 * (5)
Craig C. Chesser Vice President and Treasurer 16,666 * (6)
Michael A. Hultberg Vice President and Controller - * (7)
John S. Gross Former Sr. Vice President and CFO - *
Jeffrey M. Killeen Director 25,000 * (8)
Steven Winograd Director (9) 25,000 *
(8)(10)
Richard T. Liebhaber Director 25,000 * (11)
Andrew D. Africk Director 37,984,871 43.4% (12)
c/o Rare Medium Group, Inc.
565 Fifth Avenue, 29th Floor
New York, New York 10017
Marc. J. Rowan Director 37,984,871 43.4% (13)
c/o Rare Medium Group, Inc.
565 Fifth Avenue, 29th Floor
New York, New York 10017
Michael S. Gross Director 37,959,871 43.4% (14)
c/o Rare Medium Group, Inc.
565 Fifth Avenue, 29th Floor
New York, New York 10017
Pilgrim Baxter & Associates, Ltd. 5,523,600 10.0%
825 Duportrail Road
Wayne, PA 19087
Putnam Funds 4,670,182 8.6% (15)
One Post Office Square
Boston, MA 02109
Apollo Investment Fund IV, L.P. 37,959,871 43.3% (16)
Two Manhattanville Road
Purchase, NY 10577
All Executive Officers, Directors and 38,675,703 43.8% (17)
Nominees as a group (12 persons)
</TABLE>
- ------------------------
* Represents beneficial ownership of less than 1%.
(1) Beneficial ownership has been determined pursuant to Rule 13d-3 under
the Exchange Act.
(2) Does not include options to purchase an additional 1,133,334 shares
of Common Stock that are not exercisable within 60 days of April 21,
2000.
(3) Does not include options to purchase an additional 750,000 shares of
Common Stock that are not exercisable within 60 days of April 21,
2000.
(4) Does not include options to purchase an additional 350,000 shares of
Common Stock that are not exercisable within 60 days of April 21,
2000.
(5) Does not include options to purchase an additional 37,500 shares of
Common Stock that are not exercisable within 60 days of April 21,
2000.
(6) Does not include options to purchase an additional 33,334 shares of
Common Stock that are not exercisable within 60 days of April 21,
2000.
(7) Does not include options to purchase 75,000 shares of Common Stock
that are not exercisable within 60 days of April 21, 2000.
(8) Does not include options to purchase 50,000 shares of Common Stock
that are not exercisable within 60 days of April 21, 2000.
(9) Mr. Winograd resigned as a director of the Company effective as of
April 26, 2000.
(10) On April 26, 2000, the Company and Mr. Winograd entered into an
agreement allowing the remainder of his options to vest as if he were
still a director of the Company.
(11) Does not include options to purchase 50,000 shares of Common Stock that
are not exercisable within 60 days of April 21, 2000.
(12) Includes an aggregate of 37,959,871 shares of Common Stock issuable
to the Apollo Stockholders upon conversion of the Series A Preferred
Stock and exercise of the Series 1-A warrants and the Series 2-A
warrants owned by them. Mr. Africk is a principal of Apollo Advisors
IV, L.P., which together with an affiliated investment manager,
serves as the manager of each of the Apollo Stockholders. Mr. Africk
disclaims beneficial ownership of such shares. Does not include
options to purchase 50,000 Shares at $7.00 that vest annually and
ratably through June 4, 2002 contingent on continued service as a
director.
(13) Includes an aggregate of 37,959,871 shares of Common Stock issuable
to the Apollo Stockholders upon conversion of the Series A Preferred
Stock and exercise of the Series 1-A warrants and the Series 2-A
warrants owned by them. Mr. Rowan is a principal of Apollo Advisors
IV, L.P., which together with an affiliated investment manager,
serves as the manager of each of the Apollo Stockholders. Mr. Rowan
disclaims beneficial ownership of such shares. Does not include
options to purchase 50,000 Shares at $7.00 that vest annually and
ratably through June 4, 2002 contingent on continued service as a
director.
(14) Includes an aggregate of 37,959,871 shares of Common Stock issuable
to the Apollo Stockholders upon conversion of the Series A Preferred
Stock and exercise of the Series 1-A warrants and the Series 2-A
warrants owned by them. Mr. Gross is a principal of Apollo Advisors
IV, L.P., which together with an affiliated investment manager,
serves as the manager of each of the Apollo Stockholders. Mr. Gross
disclaims beneficial ownership of such shares. Does not include
options to purchase 75,000 Shares at $7.00 that vest annually and
ratably through August 19, 2002 contingent on continued service as a
director.
(15) Based upon information provided to the Company by the Putnam Funds,
this includes Shares beneficially owned by the following affiliated
entities:
Putnam OTC & Emerging Growth Fund 2,443,100
Putnam Variable Trust - Putnam VT OTC & Emerging Growth Fund 83,000
Putnam Emerging Information Sciences Trust S.A. 50,000
Putnam New Opportunities Fund 1,354,520
Putnam Variable Trust - Putnam VT New Opportunities Fund 276,162
Putnam Voyager Fund II 421,700
Putnam Funds Trust - Putnam Investment Fund 98 40,400
Putnam Investment Funds - Putnam Worldwide Equity Fund 1,300
---------
4,670,182
(16) Represents 37,959,871 shares of Common Stock issuable upon the
conversion of an aggregate of 924,837 shares of the Company's Series
A Preferred Stock and exercise of an aggregate of 924,843 Series 1-A
warrants and 12,262,542 Series 2-A warrants held by the Apollo
Stockholders. Assuming conversion of all the Series A Preferred Stock
and exercise of all the Series 1-A warrants and Series 2-A warrants
held by the Apollo Stockholders, such 37,959,871 shares of Common
Stock would consist of 29,071,244 shares of Common Stock beneficially
owned by Apollo Investment Fund IV, L.P., 1,559,085 shares of Common
Stock beneficially owned by Apollo Overseas Partners IV, L.P. and
7,329,542 shares of Common Stock beneficially owned by AIF IV/RRRR
LLC. The holders of the Company's Series A Preferred Stock are only
entitled to an aggregate of 9,750,000 votes as of May 1, 2000, or
10.54 votes per share of Series A Preferred Stock. Messrs. Africk,
Rowan and Gross, directors of the Company and associated with Apollo
Advisers IV, L.P., disclaim beneficial ownership of the shares held
by the Apollo Stockholders.
(17) Messrs. Africk, Rowan and Gross, directors of the Company and
associated with Apollo Advisers IV, L.P., disclaim beneficial
ownership of the shares held by the Apollo Stockholders. See footnote
numbers 12, 13 and 14 above.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth, for the three
years ended December 31, 1999, the compensation for services in all
capacities earned by the Company's Chief Executive Officer and each other
named executive officer whose total annual salary, bonus and other annual
compensation exceeded $100,000 in 1999, including a former executive
officer whose compensation would have placed him in the disclosed group had
he been an executive officer as of December 31, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Securities
Restricted Underlying
Other Annual Stock Options LTIP All Other
Name and Principal Position Year Salary Bonus Compensation Award(s)($) SARs (#) Payouts($) Compensation
- --------------------------- ---- ------ ----- ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Glenn S. Meyers 1999 $257,192 $2,157,889 $ 17,600(4) - - - -
Chairman and 1998 178,082 35,193 20,000(4) - 2,000,000 - -
Chief Executive Officer
Suresh V. Mathews 1999 208,558(1) - - - 1,000,000 - $1,514(6)
President and
Chief Executive Officer
Jeffrey J. Kaplan 1999 64,039(2) - 3,850(4) - 350,000 - -
Executive Vice President and
Chief Financial Officer
Robert C. Lewis 1999 110,135 - - - 68,000 - 2,500(6)
Vice President, General 1998 47,596 - - - 32,000 - -
Counsel and Secretary
Craig C. Chesser 1999 118,692 10,000 3,000(4) - 32,500 - 2,500(6)
Vice President and Treasurer 1998 43,846 - - - 17,500 - -
Michael A. Hultberg 1999 25,096(3) - - - 75,000 - -
Vice President and Controller
John S. Gross 1999 169,327 - 100,000(5) - - - 1,924(6)
Former Sr. Vice President and 1998 113,750 - 3,875(4) - 150,000 - -
Chief Financial Officer
</TABLE>
- ------------------------
(1) Represents compensation from January 29, 1999.
(2) Represents compensation from September 27, 1999.
(3) Represents compensation from November 1, 1999.
(4) Represents non-accountable expense allowance.
(5) Represents payment pursuant to severance agreement.
(6) Represents 401(k) employer matching contributions in 1999.
The following table sets forth information concerning grants of stock
options to purchase Common Stock during the year ended December 31, 1999 to
the named executive officers.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST YEAR
Number of Percent of Potential Realizable Value at
Securities Total Options/ Assumed Annual Rates of Stock
Underlying SARs Granted to Exercise or Price Appreciation for Option Term
Options/SARs Employees in Base Price Expiration
Name Granted(#)(1) Fiscal Year ($/Share) Date 5% 10%
- ---- ------------- --------------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Glenn S. Meyers - 0.0% N/A N/A N/A N/A
Suresh V. Mathews 1,000,000(2) 8.3% $5.110 1/29/09 $3,213,652 $8,144,024
Jeffrey J. Kaplan 350,000(3) 2.9% $9.500 9/21/09 2,091,075 5,299,194
Robert C. Lewis 43,000(4) 0.4% $4.770 4/1/04 69,291 141,150
25,000(5) 0.2% $8.563 9/27/04 59,145 130,695
Craig C. Chesser 12,500(6) 0.1% $5.110 1/29/04 17,647 38,996
20,000(7) 0.2% $8.563 9/27/04 47,316 104,556
Michael A. Hultberg 75,000(8) 0.6% $14.750 11/1/04 305,636 675,377
John S. Gross - 0.0% N/A N/A N/A N/A
</TABLE>
- ------------------------
(1) The number of shares of Common Stock covered by the options are subject
to anti-dilution adjustments in the event of any stock dividend, stock
split or combination of shares, recapitalization or other change in the
Company's capital stock. The vesting of the options is subject to
acceleration in the event of a change in control of the Company, which
means, generally, the consummation of any merger or consolidation
involving the Company, any sale of substantially all of the Company's
assets or other transaction or related transactions as a result of
which a single person or several persons acting in concert own a
majority of the shares of Common Stock or a lower percentage of Common
Stock in certain cases (except for certain transactions that do not
involve a change in the holders of a majority of the outstanding shares
of Common Stock and the ownership of a majority of the outstanding
shares of Common Stock by a single person).
(2) These options were granted on January 29, 1999 at an exercise price of
$5.11, the per share fair market value of the Common Stock at that
time. The options have a term of ten (10) years. Options are
exercisable cumulatively in four (4) equal annual installments,
beginning on January 29, 2000.
(3) These options were granted on September 21, 1999 at an exercise price
of $9.50, the per share fair market value of the Common Stock at that
time. The options have a term of ten (10) years. Options are
exercisable cumulatively in four (4) equal annual installments,
beginning on September 21, 2000.
(4) These options were granted on April 1, 1999 at an exercise price of
$4.77, the per share fair market value of the Common Stock at that
time. The options have a term of five (5) years. Options are
exercisable cumulatively in three (3) equal annual installments,
beginning on May 18, 1999.
(5) These options were granted on September 27, 1999 at an exercise price
of $8.563, the per share fair market value of the Common Stock at that
time. The options have a term of five (5) years. Options are
exercisable cumulatively in two (2) equal annual installments,
beginning on May 18, 1999.
(6) These options were granted on January 29, 1999, at an exercise price of
$5.11, the per share fair market value at that time. The options have a
term of five (5) years. Options are exercisable cumulatively in three
(3) equal annual installments, beginning on July 27, 1999.
(7) These options were granted on September 27, 1999 at an exercise price
of $8.563, the per share fair market value of the Common Stock at that
time. The options have a term of five (5) years. Options are
exercisable cumulatively in three (3) equal annual installments,
beginning on July 27, 1999.
(8) These options were granted on November 1, 1999 at an exercise price of
$14.75, the per share fair market value of the Common Stock at that
time. The options have a term of five (5) years. Options are
exercisable cumulatively in three (3) equal annual installments,
beginning on November 1, 2000.
The following table sets forth information concerning the exercise of
options to purchase shares of Common Stock by the named executive officers
during the year ended December 31, 1999, as well as the number and
potential value of unexercised options (both options which are presently
exercisable and options which are not presently exercisable) as of December
31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST YEAR AND
YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Number of Securities Value of Unexercised
Underlying Underlying Options/ In-the-Money Options/
Options/SARs SARs at Fiscal Y/E(#) SARs at Fiscal Y/E
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized Unexercisable Unexercisable
- ---- ------------ -------- -------------- ---------------------
<S> <C> <C> <C> <C>
Glenn S. Meyers 600,000 $10,172,820 66,666/1,333,334 $2,116,646/42,333,355
Suresh V. Mathews - - 0/1,000,000 0/29,015,000
Jeffrey J. Kaplan - - 0/350,000 0/8,618,750
Robert C. Lewis - - 25,000/75,000 759,452/2,157,863
Craig C. Chesser 16,666 532,270 0/33,334 0/955,884
Michael A. Hultberg - - 0/75,000 0/1,453,125
John S. Gross 145,000 1,258,813 0/0 0/0
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
MEYERS EMPLOYMENT AGREEMENT
In connection with the transactions consummated pursuant to the
acquisition by the Company of Rare Medium, Inc., the Company entered into
an Employment Agreement effective April 15, 1998 with Glenn S. Meyers (the
"Meyers Employment Agreement"). Pursuant to the Meyers Employment
Agreement, Mr. Meyers was engaged as the Chairman, President and Chief
Executive Officer of the Company and Rare Medium, Inc. to serve for a term
of five years, expiring April 15, 2003. Mr. Meyers receives an annual base
salary of $250,000, with a minimum annual increase during the term of not
less than 4% per annum. In addition to base compensation, Mr. Meyers is
entitled to receive, for each calendar year during the term, incentive
compensation equal to 2.0% of revenues derived from activities of Rare
Medium, Inc. for such calendar year in excess of the revenues of Rare
Medium, Inc. for the preceding year. Effective June 4, 1999, the Meyers
Employment Agreement has been amended and restated to effect a ceiling of
$150,000,000 on revenues of the Company for determining such annual
incentive compensation payable to Mr. Meyers. In addition, the amended and
restated agreement provides that, in the event gross revenues exceed such
revenue ceiling, the Compensation Committee of the Board of Directors will,
with such assistance as it will deem necessary, establish an incentive
bonus program for Mr. Meyers based on objective and subjective factors to
appropriately incentivize him. Such revised incentive bonus program shall
be designed to allow Mr. Meyers to continue to receive increases in annual
bonuses based on, and subject to, the targets and criteria established by
the Compensation, in amounts similar to the incentive bonuses previously
received by the Employee. The Meyers Employment Agreement provides Mr.
Meyers with a right to terminate his employment agreement upon a breach of
such agreement or upon the occurrence of certain events constituting a
"change in control" of the Company as defined therein. Upon such a "change
in control," Mr. Meyers would be entitled to receive a lump sum payment
from the Company which shall be equal to all salary and incentive
compensation for the remaining term and the cash value of all benefits
which would have been received by him for the remaining term. In addition,
all of his unvested stock options shall immediately vest and become
exercisable. The Meyers Employment Agreement also contains a covenant not
to compete with the Company or any of its affiliates for the term of the
agreement, plus one additional year. Concurrently with the execution of the
Meyers Employment Agreement, the Company granted to Mr. Meyers options to
acquire an aggregate of 2,000,000 shares of Common Stock at exercise prices
equal to $2.375 per share (the fair market value at the time of issuance),
which options become exercisable ratably on a monthly basis over a period
of 60 months from the date of grant and expire ten years from the date of
grant.
MATHEWS EMPLOYMENT AGREEMENT
The Company entered into an Employment Agreement dated January 29, 1999
with Suresh V. Mathews (the "Mathews Employment Agreement"). Pursuant to
the Mathews Employment Agreement, Mr. Mathews has been engaged as the
President and Chief Operating Officer of Rare Medium, Inc. to serve for a
term of four years. Mr. Mathews receives an annual base salary of $225,000.
The Mathews Employment Agreement provides Mr. Mathews with a right to
terminate the Mathews Employment Agreement upon the occurrence of certain
events constituting a "change in control" of the Company as defined
therein. Upon such a "change in control", Mr. Mathews would be entitled to
receive all salary and incentive compensation for the remaining term, the
cash value of all benefits which would have been received by him for the
remaining term and the cash value of all unexercised stock options (whether
or not vested) or the cashless exercise value thereof. In the event the
Company discharges Mr. Mathews other than "for cause," Mr. Mathews would be
entitled to receive his base salary for a period of twelve months following
such discharge. The Mathews Employment Agreement also contains a covenant
not to compete with the Company or any of its affiliates for the term of
the agreement, plus one additional year. In connection with Mr. Mathews'
employment with the Company, the Company granted to Mr. Mathews options to
acquire an aggregate of 1,000,000 shares of Common Stock, at an exercise
price equal to $5.11 per share (the fair market value at the time of
issuance), which vest ratably over a four year period and expire ten years
from the date of the grant. In the event the Company terminates Mr.
Mathews' employment without cause, 50% of all unvested options will become
immediately vested and exercisable, and all options will be exercisable
through their initial expiration date. On April 26, 2000, the Board of
Directors of the Company appointed Mr. Mathews President and Chief
Operating Officer of the Company, in addition to his position at Rare
Medium, Inc.
KAPLAN EMPLOYMENT AGREEMENT
The Company entered into an Employment Agreement dated September 21,
1999 with Jeffrey J. Kaplan (the "Kaplan Employment Agreement"). Pursuant
to the Kaplan Employment Agreement, Mr. Kaplan has been engaged as the
Executive Vice President and Chief Financial Officer of the Company to
serve for a term of four years. Mr. Kaplan receives an annual base salary
of $225,000. The Kaplan Employment Agreement provides Mr. Kaplan with a
right to terminate his employment agreement upon the occurrence of certain
events constituting a "change in control" of the Company, as defined
therein. Upon such a "change in control," Mr. Kaplan would be entitled to
receive all salary and incentive compensation for the remaining term, the
cash value of all benefits which would have been received by him for the
remaining term and the cash value of all unexercised stock options (whether
or not vested). In the event the Company discharges Mr. Kaplan other than
"for cause," Mr. Kaplan would be entitled to receive his base salary for a
period of twelve months following such discharge. The Kaplan Employment
Agreement also contains a covenant not to compete with the Company or any
of its affiliates for the term of the agreement, plus one additional year.
In connection with Mr. Kaplan's employment with the Company, the Company
granted to Mr. Kaplan options to acquire an aggregate of 350,000 shares of
Common Stock, at an exercise price equal to $9.50 per share (the fair
market value at the time of issuance), which vest ratably over a four year
period and expire ten years from the date of the grant. In addition, in the
event the Company terminates Mr. Kaplan's employment without cause, 50% of
all unvested options will become immediately vested and exercisable, and
all options will be exercisable through their initial expiration date.
STOCK PLANS
The Company's Board of Directors has approved an equity participation
plan that allows the Compensation Committee to incentivize the Company's
employees by allocating to them up to 20% of any profit the Company might
recognize when and if the Company's investments in portfolio and incubator
companies become liquid, subject to vesting and other requirements. The
Company will have the right to pay such amount either in cash, in the
Company's Common Stock or a combination thereof. Although the Company
expects the Compensation Committee to make allocations of awards under this
plan in the first half of 2000, no awards have been made as of May 1, 2000.
Depending on the structure of the awards under this plan, the Company may
be required to record compensation expense in accordance with generally
accepted accounting principles.
On May 6, 1998, the Board of Directors adopted the Company's 1998
Long-Term Incentive Plan (the "Plan"). The Plan was approved by the
Company's stockholders on March 16, 1999. The Plan provides for the
granting of awards to directors (whether or not employees), executive
officers, key employees and consultants and other service providers in the
form of stock options, stock appreciation rights, restricted stock awards,
deferred stock awards, bonus stock awards, dividend equivalents, and other
types of stock based awards. The variety of awards authorized by the Plan
is intended to give the Company flexibility to adapt the Company's
compensation practices as the business environment in which it operates
changes. The maximum aggregate number of shares of Common Stock that may be
delivered for all purposes under the Plan is 23,000,000 (of which
15,000,000 have not yet been ratified by the Stockholders), subject to
adjustment. The Plan is administered by the Compensation Committee of the
Board of Directors. These options generally carry five-year terms and
become exercisable cumulatively in three equal installments, with the first
installment becoming exercisable on the one-year anniversary of each
grantee's date of employment.
The Company has a Nonqualified Stock Plan ("NQSOP") for directors,
officers and key employees of the Company. The NQSOP will expire on July
18, 2000. The Company does not intend to make any additional grants of
options under the NQSOP prior to the NQSOP's expiration. In 1994, the
Company adopted an Equity Plan for Directors (the "Equity Plan for
Directors") pursuant to which non-employee directors of the Company
received automatic option grants whose vesting was dependent on the market
price of the Common Stock. On October 26, 1998, the Board of Directors
amended and restated the Equity Plan for Directors to change the plan from
a formula-based stock option plan as described above to a discretionary
plan (the "Amended and Restated Equity Plan for Directors"), thereby
providing more flexibility in determining incentive based stock option
awards for non-employee directors of the Company. The Amended and Restated
Equity Plan for Directors authorized 500,000 aggregate shares of Common
Stock for the granting of such options under the plan, of which 108,000
were available for granting stock options as of December 31, 1999.
Subsequent grants of stock options to directors have been made under the
Company's 1998 Long-Term Incentive Plan and the Company does not intend to
make any additional grants to directors under the Amended and Restated
Equity Plan for Directors.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors reviews,
recommends and approves changes to the Company's compensation policies and
benefits programs, administers the Company's stock option plans, including
approving stock option grants, and otherwise seeks to ensure that the
Company's compensation philosophy is consistent with the Company's best
interests and is properly implemented. The members of the Compensation
Committee are Jeffrey M. Killeen and Andrew Africk.
COMPENSATION PHILOSOPHY AND REVIEW
The Company's compensation philosophy for its executive officers serves
two principal purposes: (i) to provide a total compensation package for
such officers that is competitive and enables the Company to attract and
retain key executive and employee talent needed to accomplish the Company's
business objectives, and (ii) to directly link compensation to improvements
in Company performance and increases in stockholder value as measured
principally by the trading price of the Common Stock.
The 1999 compensation levels for the Company's executive officers
generally were determined on an individual basis at the time of hiring, in
many cases pursuant to employment agreements entered into between the
Company and such individuals. The Company has continued to build its
management team at a rapid pace through the recruitment and hiring of
additional key officers and employees and through acquisitions of
additional Internet professional services firms.
Members of the Board of Directors reviewed and approved each employment
agreement entered into between the Company and an executive officer in
1999, as well as stock options granted to executive officers in 1999. In
determining compensation levels for 1999, the Company primarily relied upon
publicly available compensation information and informal survey information
obtained by management with respect to cash compensation and stock option
grants to similarly situated officers of Internet business service
companies of comparable size and market capitalization. The Compensation
Committee did not determine it necessary to, and did not attempt to,
specifically analyze compensation levels at companies included in the
indexes under the caption, "Performance Graph."
ELEMENTS OF EXECUTIVE OFFICER COMPENSATION
The Company's executive compensation consists primarily of salary,
health insurance and similar benefits, and the award of stock options. The
Company emphasizes the award of stock options and to date the Company has
made only limited use of cash incentive bonuses, although the Company paid
bonuses to its Chief Executive Officer in 1999. The Compensation Committee
believes that in the highly competitive, emerging markets in which the
Company operates, equity-based compensation provides the greatest incentive
for outstanding executive performance and the greatest alignment of
management and stockholder long-term interests.
Officer Salaries. The Compensation Committee reviews each senior
executive officer's salary annually. Except to the extent that salary
increases are prescribed by written employment agreements, in determining
the appropriate salary levels, the Compensation Committee considers, among
other factors, the officer's scope of responsibility, prior experience,
past accomplishments and data on prevailing compensation levels in relevant
markets for executive talent.
Compensation for the Company's Chief Executive Officer in 1999, Glenn
S. Meyers, was determined pursuant to the Meyers Employment Agreement,
dated effective April 15, 1998. The Meyers Employment Agreement provides
for an annual base salary of $250,000, with a minimum annual increase
during the term of not less than 4% per annum. In addition to base
compensation, the Meyers Employment Agreement provides for annual incentive
compensation equal to 2% of revenues, up to a maximum of $150 million in
revenues, derived from activities of Rare Medium, Inc. for such calendar
year in excess of the revenues of Rare Medium, Inc. for the preceding year.
In accordance with such formula, Mr. Meyers received incentive compensation
of $657,889 for 1999. Mr. Meyers also received a one-time bonus payment of
$1,500,000 in 1999 in connection with certain transactions not related to
the provisions of the Meyers Employment Agreement.
The Compensation Committee believes that the base salary levels of the
executive officers, including Mr. Meyers, are at or below the median of
base salary levels for comparable companies considered in the informal
information reviewed by the Compensation Committee. The Compensation
Committee believes this is appropriate in light of the Company's emphasis
on long-term equity compensation.
Stock Option Grants. As noted above, the Company has relied
substantially on long-term equity compensation as the principal means of
compensating and providing incentives for its executive officers and key
employees. It is the Company's practice to set option exercise prices at
not less than 100% of fair market value on the date of grant. Thus, the
value of the stockholders' investment in the Company must appreciate before
an optionee receives any financial benefit from the option. Options are
generally granted for a term of five years. Options granted to executive
officers and key employees become exercisable over time and are dependent
on continuing employment with the Company or one of its subsidiaries, thus
providing incentive to remain in the Company's employ.
In determining the size of the stock option grants, the Compensation
Committee considers various subjective factors primarily relating to the
responsibilities of the individual officers and key employees, and also
their current and expected future contributions to the Company, as well as
the number of shares owned by the officer or key employee or which remain
unvested under outstanding options. In addition, the Compensation Committee
examines the level of equity incentives held by each officer and key
employee relative to the other officers' and key employees' equity
positions and their tenure, responsibilities, experience and value to the
Company. Concurrently with the execution of the Meyers Employment
Agreement, and as an inducement for him to enter into such employment
agreement, the Company granted to Mr. Meyers options to acquire an
aggregate of 2,000,000 shares of Common Stock at an exercise price equal to
$2.375 per share, which was equal to the fair market value of the Common
Stock at the time of grant, which options became exercisable ratably on a
monthly basis over a period of 60 months from the date of grant and expire
ten years from the date of grant. As of the date of this Proxy Statement,
200,000 of Mr. Meyers' options have vested and remain unexercised. The
Compensation Committee believes that such grant is commensurate with Mr.
Meyers' level of responsibility and his contributions to the Company during
1999 and to date. In addition to Mr. Meyers, during 1999 the Compensation
Committee or the Board of Directors as a whole approved grants of options
to purchase an aggregate of 1,525,500 shares of the Common Stock to other
executive officers as a group.
POLICY OF DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the U.S. Internal Revenue Code limits the tax
deductibility of a corporation of compensation in excess of $1,000,000 paid
to any of its five most highly compensated executive officers. However,
compensation that qualifies as "performance-based" is excluded from the
$1,000,000 limit if, among other requirements, the compensation is payable
only upon attainment of pre-established, objective performance goals under
a plan approved by shareholders.
With the exception of Mr. Meyers, total cash compensation paid for salaries
and bonuses during 1999 did not exceed the $1,000,000 limit for any
individual executive. In addition, with the exception of Mr. Meyers, the
Compensation Committee does not anticipate that total cash compensation
paid for salaries and bonuses during 2000 will exceed the $1,000,000 limit
for any individual executive. Stock option grants to date do not meet the
requirement that such grants be "performance based" and are, therefore, not
exempt from the limitations on deductibility. The Compensation Committee
will continue to monitor the compensation levels potentially payable under
the Company's cash and stock option compensation programs, but intends to
retain the flexibility necessary to provide total cash and stock option
compensation in line with competitive practice, the Company's compensation
philosophy and the Company's best interests.
In conclusion, the Compensation Committees believes that the policies
and programs described in this report are competitive and effectively align
executive compensation with the Company's goal of maximizing the return to
Stockholders.
By the Compensation Committee
of the Board of Directors,
/s/ Jeffrey M. Killeen
/s/ Andrew D. Africk
Jeffrey M. Killeen
Andrew D. Africk
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder returns for the Company, the Nasdaq Market Index, and the
Internet Software and Services Index from December 31, 1994 through
December 31, 1999. The cumulative total shareholder returns on the
Company's Common Stock was measured by dividing the difference between the
Company's share price at the end and the beginning of the measurement
period by the share price at the beginning of the measurement period. The
total stockholder return assumes $100 invested at the beginning of the
period in Common Stock, in the Nasdaq Market Index and the Industry Index.
The Company did not pay dividends on its Common Stock during the
measurement period and the calculations of cumulative total stockholders
return on the Common Stock did not include dividends. The Company presents
below the Internet Software and Services Index as a comparative industry
index for the Company's Internet professional services business, which it
commenced upon the acquisition of Rare Medium, Inc. in April 1998.
COMPARISON OF CUMULATIVE 5-YEAR ANNUAL RETURN AMONG RARE
MEDIUM GROUP, INC., NASDAQ MARKET INDEX,
AND INTERNET SOFTWARE AND SERVICES INDEX
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts
the following plot points:
<TABLE>
<CAPTION>
LEGEND:
Fiscal Year Ending December 31,
------------------------------------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Rare Medium Group, Inc. 100.00 150.43 74.36 23.93 56.41 466.67
Internet Software and Services (1)(2) 100.00 134.62 99.17 58.79 154.26 448.96
NASDAQ Market Index 100.00 129.71 161.18 197.16 278.08 490.46
</TABLE>
Assumes $100 invested on January 1, 1994 and reinvestment of dividends.
(1) The Proxy Statement filed by the Company relating to the annual meeting
held in August, 1999 contained a comparison to the Industrial
Electrical Equipment Index in addition to the Internet Software and
Services Index shown above. The Industrial Electrical Equipment Index
was provided for purposes of comparison for the business of the Company
as it was conducted prior to October, 1998. As the Company is no longer
engaged in the electrical equipment business, this comparison is no
longer relevant to the business as currently conducted and thus has
been omitted from the performance graph for 1999.
(2) The "Internet Software Services and Index" relates to the business
currently engaged in by the Company, which it commenced upon the
acquisition of Rare Medium Inc. in April 1998. This index, issued by an
outside firm includes 1-800-Flowers.Com Inc A, 24/7 Media Inc.,
3Dshopping.Com, 724 Solutions Inc., Accrue Software Inc., Agency.Com
Ltd., Allaire Corporation, Allied Riser Cmmctns, Alloy Online Inc.,
Allscripts Inc., Alteon Websystems Inc., Amazon.Com Inc., Andover.Net
Incorporated, Appliedtheory Corp., Appnet Incorporated, Apropos
Technology, Ariba Inc., Arrowpoint Cmmunctns, Art Technology Group
Inc., Artistdirect Inc., ASD Systems Inc., Ashford.Com Incorporated,
Audible Inc., Audiohighway.Com, Autobytel.Com Inc., Autoweb.Com Inc.,
Backweb Technologies Ltd., Baltimore Tech Plc Ads, Barnesandnoble.Com
Inc., Be Free Inc., Beyond.Com Corporation, Bid.Com International,
Bigstar Entertainment, Biznessonline.Com Inc., Blaze Software Inc.,
Bluestone Software Inc., Braun Consulting Inc., Broadbase Software
Inc., Broadvision Inc., Buy.Com Incorporated, C-Bridge Internet Solutn,
Cacheflow Incorporated, Caldera Systems Inc., CDnow Inc., Checkfree
Holdings Corp. Citrix Systems Inc., Claimsnet.Com Inc., CMGI Inc.,
Cobalt Group Inc., Collegelink.Com., Crosswalk.Com Inc., Cybercash
Inc., Cyberian Outpost Inc., Data Return Corporation, Datalink.Net
Inc., Deltathree.Com Inc Cl A Digex Inc., Digital Courier Tech Inc.,
Digital Impact Inc., Digitalthink Inc., Dlj Direct, Doubleclick Inc.,
Drugmax.Com Inc., Drugstore.Com Inc., E*Trade Group Inc., E-Med
Soft.Com, E-Sim Ltd., E-Stamp Corporation, Ebay Inc., Ebenx
Incorporated, Ebookers.Com Plc, Ecollege.Com, Efax.Com., Egghead.Com
Inc., Egreetings Networks Inc., El Sitio Incorporated, Elec
Communications Corp., Eloquent Incorporated, Emusic.Com Inc., Engage
Technologies Inc., Eprise Corporation, Espeed Incorporated Cl A, Etoys
Inc., Exactis.Com Incorporated, Excelon Corporation, Exodus
Communications, Expedia Incorporated, Extreme Networks Inc., F5
Networks Inc., Fashionmall.Com Inc., Fastnet Corporation, Fatbrain.Com
Inc., Finet.Com, , Fogdog Incorporated, Freemarkets Incorporated,
Ftd.Com Inc., Garden.Com Inc., Getthere.Com Inc., Globix Corp., Gsv
Incorporated, Harbinger Corporation, Harris Interactive, Hearme, High
Speed Access Corp., Homegrocer.Com Inc., Ibasis Incorporated, Ifx
Corp., Imagex.Com Inc., Imaginon Inc., Imanage Incorporated, Improvenet
Incorporated, Inktomi Corporation, Innodata Corporation, Integrated
Info Systems, Interliant Inc., Internet Capital Group, Internet
Pictures Corp., Interworld Corporation, Intranet Solutions Inc.,
Intraware Inc., Iona Technologs Plc Adr, Iparty Corp., Iprint.Com Inc.,
Iss Group Inc., Iturf Inc., Itxc Corporation, Ixl Enterprises Inc.,
Jacada Ltd., Jfax.Com Inc., Juniper Networks, K2 Design Inc., Kana
Communications Inc., Keynote Systems Inc., Kpnqwest N.V. Cl C, L90
Incorporated, Landacorp Inc., Lendingtree Inc., Liberate Technologies,
Lifeminders.Com Inc., Lionbridge Technologies, Liquid Audio Inc.,
Litronic Inc., Loudeye Technologies, Mail.Com Inc Cl A, Marimba Inc.,
Matrixone Inc., Mcafee.Com Corporation, Mcglen Internet Group,
Mediaplex Inc., Medicalogic Incorporated, Messagemedia Inc.,
Mortgage.Com Inc., Mp3.Com Inc., Musicmaker.Com Inc., Mustang.Com Inc.,
Mypoints.Com Inc., Myweb Inc.Com, N2h2 Inc., National Info Consortium,
Neoforma.Com Inc., Net.Genesis Corporation, Netcreations Inc.,
Netgateway Incorporated, Netopia Inc., The Netplex Group Inc.,
Netpliance Incorporated, Network Solutions Inc A, Netzee Inc., Netzero
Inc., Ondisplay Incorporated, Online Resrcs & Cmmnctns,
Onlinetradinginc.Com., Onvia.Com Inc., Open Market Inc., Open Text Cp,
Opus360 Corporation, Otg Software Inc., Pacific Softworks Inc.,
Partsbase.Com Inc., Pcorder.Com Inc., Peapod Inc., Pets.Com
Incorporated, Phone.Com Inc., Planetrx.Com Inc., Popmail.Com Inc.,
Preview Systems Inc., Priceline.Com Inc., Primix Solutions Inc., Primus
Knowledge Solutns, Promotions.Com Inc., Prosoft Training.Com.,
Purchasepro.Com Inc., Quintus Corporation, Qxl.Com Plc Ads, Rainmaker
Systems Inc., Ramp Networks Inc., Rare Medium Group Inc., Realnetworks
Inc., Red Hat Inc., Redback Networks Inc., Retek Incorporated, Rhythms
Netconnections, S1 Corporation, Saba Software Inc., Safeguard
Scientific Inc., Saga Systems Inc., Savvis Communications Cp, Scient
Corporation, Sciquest.Com Inc., Selectica Incorporated, Shopnow.Com
Incorporated, Smarterkids.Com Inc., Snowball.Com Inc., Software.Com,
Sonicwall Incorporated, Spyglass Inc., Stamps.Com Inc., Stockwalk.Com
Group Inc., Streamedia Cmmnctns Inc., Streamline.Com Inc.,
Styleclick.Com Inc., Synergy Brands Inc., Talk City Inc., Talk.Com
Inc., Telemate.Net Software, Ticketmaster Online Cl B, Topjobs.Net Plc
Ads, Travelocity.Com Inc., Tumbleweed Communication, Ubid Inc.,
Ubrandit.Com., Ultimate Software Gp Inc., ERLINK
"../../reports/profile/puaxs1.htm"Universal Access Inc., Uproar
Incorporated, - Us Search Corp.Com., Usabancshares.Com Inc.,
Usinternetworking Inc., Value America Inc., Verisign Inc., Verity Inc.,
Viant Inc., Viewcast.Com Inc., Vignette Corporation, Vocaltec
Communications, Watchguard Technologies, Web Street Incorporated, Webb
Interactive Srvcs, Websense Incorporated, Webtrends Corporation, White
Pine Software Inc., Xpedior Incoroporated, Youbet.Com Inc., Ziff Davis
Inc Zdnet and Zixit Corporation.
FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The words
"believe," "anticipate," "expect," "estimate," "intent" and similar
expressions identify forward-looking statements. Forward- looking
statements necessarily involve risks and uncertainties, and our actual
results could differ materially from those anticipated in the
forward-looking statements. Factors that would cause actual results to
differ materially from the Company's current expectations include but are
not limited to those factors set forth in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 filed with the SEC.
OTHER BUSINESS
The Board of Directors knows of no business other than the matters set
forth herein which will be presented at the Annual Meeting. Inasmuch as
matters not known at this time may come before the meeting, the enclosed
proxy confers discretionary authority with respect to such matters as may
properly come before the meeting and it is the intention of the persons
named in the proxy to vote in accordance with their judgment on such
matters.
STOCKHOLDER PROPOSALS
Stockholders who wish to submit proposals pursuant to Rule 14a-8 of the
1934 Act for inclusion in the Proxy Statement for the Company's 2001 Annual
Meeting of Stockholders must submit the same to the Secretary of the
Company on or before January 17, 2001 at the Company's principal executive
office, 565 Fifth Avenue, 29th Floor, New York, NY 10017. In order for a
shareholder proposal at the 2001 annual meeting submitted outside of Rule
14a-8 to be considered "timely" within the meaning of Rule 14a-4(c) of the
1934 Act, such proposal must be received by the Company on or prior to
April 3, 2001.
ADDITIONAL INFORMATION
We are a reporting company and file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read
and copy these reports, proxy statements and other information at the SEC
public reference rooms in Washington, DC, New York, NY or Chicago, IL. You
can request copies of these documents by writing to the SEC and paying a
fee for the copying costs. Please call the SEC at 1-800-SEC-0330 for more
information about the operation of the public reference rooms. Our SEC
filings are also available at the SEC's Web site at "http://www.sec.gov."
In addition, you can read and copy our SEC filings at the office of the
National Association of Securities Dealers, Inc. at 1735 K Street,
Washington, DC 20006.
ANNUAL REPORT ON FORM 10-K
THE COMPANY IS REQUIRED TO FILE AN ANNUAL REPORT ON FORM 10-K WITH THE
SEC. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999, FILED WITH THE SEC IS AVAILABLE WITHOUT CHARGE BY
WRITING TO ROBERT C. LEWIS, VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY,
RARE MEDIUM GROUP, INC., 565 FIFTH AVENUE, 29TH FLOOR, NEW YORK, NEW YORK
10017.
IMPORTANT - MAIL YOUR SIGNED PROXY CARD
Please complete, sign, date and mail the enclosed Proxy Card.
By Order of the Board of Directors.
/s/ Robert C. Lewis
--------------------------------
May 15, 2000 Robert C. Lewis, Vice President,
New York, New York General Counsel and Secretary
RARE MEDIUM GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON JUNE 15, 2000
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Glenn S. Meyers, Chairman of the Board
and Chief Executive Officer of Rare Medium Group, Inc. (the "Company"), and
Jeffrey J. Kaplan, Executive Vice President and Chief Financial Officer of
the Company, or either of them individually and each of them with the full
power of substitution, as attorney and proxy of the undersigned for and in
the name, place and stead of the undersigned to appear at the Annual
Meeting of Stockholders of the Company to be held on the 15th day of June,
2000, at 10:00 a.m., local time, in the Forest ballroom at the W New York
Hotel, located at 541 Lexington Avenue, New York, New York 10022, and at
any postponement or adjournment thereof (the "meeting"), and to vote all of
the shares of Common Stock which the undersigned is entitled to vote, with
all the powers and authority the undersigned would possess if personally
present. The Board of Directors recommends a vote for approval of each of
the nominees for Director and for each of the proposals to be voted on at
the meeting.
The Board of Directors has fixed the close of business on April 21,
2000, as the record date for the determination of Stockholders entitled to
vote at the meeting. Only Stockholders of record at the close of business
on the record date will be entitled to notice of, and to vote at, the
meeting or any postponement or adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTIONS TO THE CONTRARY ARE INDICATED IN THE BOXES PROVIDED, THE PERSONS
NAMED HEREIN INTEND TO VOTE FOR APPROVAL OF EACH OF THE NOMINEES FOR
DIRECTOR AND FOR APPROVAL OF EACH OF THE PROPOSALS TO BE VOTED ON AT THE
MEETING.
THE SAID ATTORNEY AND PROXY PRESENT AT SAID MEETING MAY EXERCISE ALL
THE POWERS HEREUNDER. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE
ACCOMPANYING PROXY STATEMENT.
(Continued and to be dated and signed on other side)
Please Detach and Mail in the Envelope Provided
- -------------------------------------------------------------------------------
Please mark your votes as in this example: /X/
THE UNDERSIGNED HEREBY DIRECTS THAT THE PROXY BE VOTED AS FOLLOWS:
1. To elect two Class 1 directors, Marc J. Rowan and Jeffrey M. Killeen
FOR WITHHOLD
the two nominees authority to vote for
as a group the two nominees
/ / as a group
/ /
(To withhold authority to vote for any individual nominee, write the
nominee's name on the line below.)
---------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the increase of the number / / / / / /
of shares of Common Stock that may be
issued under the Company's 1998
Long-Term Incentive Plan from
8,000,000 shares to 23,000,000 shares;
3. To ratify the appointment of KPMG LLP / / / / / /
as the independent auditors of the Company
for the year ending December 31, 2000; and
4. To transact such other business as may come before the Annual Meeting or
any adjournment or postponement thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
Stockholder's Signature ____________________________________
Dated: ______, 2000
Signature __________________________________________________
Dated: ______, 2000
NOTE: It is necessary that you date this Proxy and sign your name (or
names) exactly as it appears on the label indicating any official position
or representative capacity.
RARE MEDIUM GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON JUNE 15, 2000
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Glenn S. Meyers, Chairman of the Board
and Chief Executive Officer of Rare Medium Group, Inc. (the "Company"), and
Jeffrey J. Kaplan, Executive Vice President and Chief Financial Officer of
the Company, or either of them individually and each of them with the full
power of substitution, as attorney and proxy of the undersigned for and in
the name, place and stead of the undersigned to appear at the Annual
Meeting of Stockholders of the Company to be held on the 15th day of June,
2000, at 10:00 a.m., local time, in the Forest ballroom at the W Hotel,
located at 541 Lexington Avenue, New York, New York 10022, and at any
postponement or adjournment thereof (the "meeting"), and to vote all of the
shares of Preferred Stock which the undersigned is entitled to vote, with
all the powers and authority the undersigned would possess if personally
present. The Board of Directors recommends a vote for approval of the
nominee for Director and for each of the proposals to be voted on at the
meeting.
The Board of Directors has fixed the close of business on April 21,
2000, as the record date for the determination of Stockholders entitled to
vote at the meeting. Only Stockholders of record at the close of business
on the record date will be entitled to notice of, and to vote at, the
meeting or any postponement or adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTIONS TO THE CONTRARY ARE INDICATED IN THE BOXES PROVIDED, THE PERSONS
NAMED HEREIN INTEND TO VOTE FOR APPROVAL OF EACH OF THE NOMINEES FOR
DIRECTOR AND FOR APPROVAL OF EACH OF THE PROPOSALS TO BE VOTED ON AT THE
MEETING.
THE SAID ATTORNEY AND PROXY PRESENT AT SAID MEETING MAY EXERCISE ALL
THE POWERS HEREUNDER. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE
ACCOMPANYING PROXY STATEMENT.
(Continued and to be dated and signed on other side)
Please Detach and Mail in the Envelope Provided
- -------------------------------------------------------------------------------
Please mark your votes as in this example: /X/
THE UNDERSIGNED HEREBY DIRECTS THAT THE PROXY BE VOTED AS FOLLOWS:
1. To elect one Class 1 director, Michael S. Gross.
FOR WITHHOLD
the nominee authority to vote for
the nominee
/ / / /
(To withhold authority to vote for the nominee, write the nominee's
name on the line below.)
--------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the increase of the number / / / / / /
of shares of Common Stock that may be
issued under the Company's 1998
Long-Term Incentive Plan from
8,000,000 shares to 23,000,000 shares;
3. To ratify the appointment of KPMG LLP / / / / / /
as the independent auditors of the
Company for the year ending
December 31, 2000; and
4. To transact such other business as may come before the Annual Meeting or
any adjournment or postponement thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
Stockholder's Signature ____________________________________
Dated: ______, 2000
Signature __________________________________________________
Dated: ______, 2000
NOTE: It is necessary that you date this Proxy and sign your name (or
names) exactly as it appears on the label indicating any official position
or representative capacity.
